Celent Banking Newsletter, March 2012

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23 March 2012
City, State, Country

From the Senior Vice President

Why efficiency matters more than ever

Retail bankers are feeling the one-two punch of Durbin and Reg E and reacting in various ways. Some have made headlines, such as Bank of America, with its aborted move to charge $5 per month for debit cards. Wells Fargo just announced a plan to end free checking by levying a $7 per month fee in six more states.

What’s going on? Fundamentally, banks are seeing their revenues decimated by regulation and need to figure out a way to make checking accounts profitable again. With fee regulation and NIM compression, they need to change the game.

What can banks do? In the Celent report Reg, Reg Go Away: Sorry Banks, They’re Here to Stay, April 2010, Celent lays out a number of alternatives, and we are now seeing banks respond in some of the ways that are clearly laid out in this report.

Another out-of-the-box option might be to look at new ways to reduce cost. Credit unions are able to operate much more efficiently than banks, as described in the report EfficienCU: An Examination of Bank and Credit Union Efficiency Ratios by Asset Tier, November 2011. Credit unions are able to enjoy a 10 to 15 point advantage in efficiency ratio over banks!

How do they do it? I suggest you read the report to find out what banks can learn from credit unions to address these trying times.

If you’d like to learn other techniques for managing challenges in banking, consider attending Celent’s Fifth Annual Banking Innovation and Insight Day on Wednesday June 13 in Charlotte, North Carolina. We’ll discuss tablet banking, mobile banking, and how to find new streams of revenue in retail banking. I hope you will be able to attend.

Bart Narter
Senior Vice President

Chart of the Month

From the Celent report EfficienCU: An Examination of Bank and Credit Union Efficiency Ratios by Asset Tier

Celent Published Reports

Research in Progress

  • Customer Analytics in Banking: Why Here, Why Now?
  • Top Trends in Online Cash Management
  • Building a Successful Rewards Proposition
  • E-Invoicing Vendor Models


13 June 2012
Fifth Annual Banking Innovation and Insight Day

Charlotte, NC, USA