The emergence of electronic bank account management (eBAM) in 2007, developed by Swift and a small group of banks, firms and IT vendors, revolutionized bank-to-corporate relationships. This has standardized the banking processes, leading to identical relations of corporates with their different banking partners.

It leads to significant time and cost savings and enhances visibility and cash management for the firms. It allows banks to enhance client experience, reduce turnaround times, and create a straight through process within the bank. To enjoy these benefits, both banks and corporates need to work towards it.

Banks are considering developing eBAM services to win new clients and to improve customer loyalty. However, half-hearted efforts by banks’ IT departments may end up making the system reengineering needed a sluggish process.

Companies, on one hand, want to reduce the cumbersome manual process of opening, closing and maintaining bank accounts; and replace it with a smooth and standardized way of operation and communication. On the other hand is their lackadaisical approach and lack of IT resources that makes it difficult to adopt eBAM and similar initiatives.

Fortunately, there are continuous advancements in technology that can lead to automated and streamlined workflows through eBAM. Even the role of vendors is critical, as their full involvement is needed in successfully adopting and integrating operations on both sides - bank and corporate.  

Bored with bank accounts, credit cards, statements and the like? Adopt mobile banking initiatives to continue transacting while on the move. Mobile banking is getting widespread attention and investment support from the banks, with continued search for more features and functions. 

Checking account balances and funds transfer are some of the time-saving mobile banking activities. They help reduce transaction costs, simplify banking services, and also reduce the risks associated with holding on to cash.

However, security, privacy and associated costs are some of the issues that need to be addressed to retain existing customers and attract new ones. Criminals and terrorists may exploit these services by creating a false ID to gain a mobile subscription or use a prepaid phone, thereby complicating the growth of such services.

However, as benefits outweigh the potential hazards, customers should soon be at ease using mobile device for browser-based and point-of-sale contactless financial transactions.

Gradually, mobile banking may call for collaboration between mobile operators and banks, with the role of mobile taking a prominent place. The products and implementation experience of mobile banking providers and agent networks of mobile operators will be used to deliver payment services to markets. The uniqueness will come from the communication processing and authentication capabilities of the mobile handset.

Therefore, banks need to come up with solutions to serve the payment requirements while complying with anti-fraud and AML policies as well as KYC regulations.

The turmoil in U.K. financial market caused a crisis of confidence in the large banks in the eyes of the public. Several players from different backgrounds see this as an opportunity and are planning to set up operations in the country. According to market research firm Datamonitor, the entrants have the option to choose from many technologies. They can leverage new technologies to create competitive advantage while serving their particular market segments.

The background of these potential entrants varies extensively, from major retail brands to highly focused organizations. They include retailers, such as UK’s largest food retailer Tesco, which plans extensive national network. Other overseas players also have shown interest in entering U.K.’s financial market. The major ones are entrepreneurs from US and Middle East, planning to bring in cost optimization into their IT infrastructure spending, through a shift from capital expenditure to operating expenditure.

Vernon Hill, the U.S. entrepreneur who founded Commerce Bancorp plans to float ‘Metro bank’ to provide a differentiated banking service experience -  providing evening and weekend banking for busy urban professionals and free coin-counting machines for small business customers. Hill has entered into partnership for its IT solutions with Swiss core banking provider Temenos, which would be based on a model wherein the money has to be paid per account per month rather than up front.

The entry of new players provides large opportunities for IT vendors and also gives them a chance to differentiate themselves from their competitors.

With increasing consolidation in the banking industry and multinational banks dominating the arena through economies of scale, focus on pricing strategies is critical for banks to gain competitive edge. Simultaneously, online banks are posing a threat to traditional banks as they can save on infrastructure costs and pass it on to customers.

Effective pricing strategies allow banks to maximize growth as well as retain customers. For growth, a bank needs to have the capability to introduce new products faster. It has to reduce the time to market and time to value for new products in order to deliver appropriately priced and customized products to customers. For retaining customers, a bank needs to have the ability to deliver quality services by eliminating any operational errors and targeting right products to right customers. Moreover, pricing strategies require a reassessment at this time more than any other time as banks needs to lower their costs along with increasing revenues.

Banks can incorporate an effective pricing strategy by using advanced analytics, innovative technology, and tailored business processes. Technology can help banks streamline pricing processes by:

• Allowing banks to evaluate customer response to pricing, determine pricing goals, and formulate pricing strategies
• Helping banks reduce the time to market significantly for implementing new pricing policies.
• Establishing a centralized platform for pricing to trim maintenance costs, thereby reducing cost of ownership considerably
• Allowing business analysts to maintain a record of pricing rules
• Serving as a common platform to enforce pricing policies throughout various channels and operating systems

Banks can reap several secondary benefits such as greater returns on assets, improved control over risk, comprehensive view of central performance indicators, better performance and increased profitability by adopting

Social Media or online user-centered media has changed the way people interact, make decisions, learn from, and communicate with each other. These changes have transferred power from businesses to consumers. Consumers can find information, assess a bank’s transparency, and easily compare the bank’s services and reputation with those of its competitors. 

On one hand, social media has the potential to damage banks’ reputations, defame brand names, and determine winning or losing position in the market. On the other, it provides access to genuine customer opinions and enables banks to leverage the user-generated content for developing customized products and services.

Two most popular ways that banks use for social media marketing are:

Communities:
Banks leverage enterprise communities, online groups centered on consumers that are the bank’s current or potential customers, to market products. The community approach is successful as users within a community have common interests and spend more time than non-community users. According to a leading research firm, community users spend over 50 percent more time than non-community users. Moreover, cost per transaction for an enterprise community is less as compared to customer interaction through contact centers.
     
Widgets:
Widgets are interactive tools focused on a single, specific service such as displaying stock quotes, focused or general news, time, weather, and other useful information. Leading technology firms such as Google, Microsoft, and Apple offer free widgets that can be accessed easily via desktop, personalized web pages, or mobile devices. Banks can leverage these as a targeted marketing channel, as consumers select and download widgets according to their own preferences. Additionally, widgets offer tremendous flexibility and viral marketing capability as users can share them with their colleagues wit

Markets had mixed reactions to U.S. Treasury Secretary Timothy Geithner’s announcement about using public-private partnerships to rescue banks. The plan would involve private investments supplemented with government aid to buy toxic assets in the nation’s banks. The U.S. government’s guarantees against potential losses as well as the debt put in by government up to the leverage ratios of six is to one will make the deal look even more eye-catching for private investors. The plan is expected to generate USD 500 billion and might get bigger up to USD one trillion over a period.

The program was criticized because of the view that government debt to subsidize the banks did not address the causes of  the crisis or help in recession nrecovery; and was also adding to the wealth of hedge funds. The group supporting nationalization of banks was also not enthusiastic about the program because they felt the measures would not restore confidence in the markets.

However, according to Fed officials, the program was not so much to hide losses but to gain a better handle over them; since given the present scenario, only the government is capable of injecting liquidity into the economy. Private lender’s participation will add liquidity to the market and hence will further boost market confidence. Thus, the plan, though not ideally perfect for economic recovery, will certainly add to the bank’s capability to extend credit

Expectations outside the U.S. were neutral regarding the public-private investment program. Industry analysts are hopeful that the plan should work; however, it needs to be supported by optimistic market efforts in order to revive the economy as a whole.

Even as Barack Obama is sworn as the 44th U.S. president, unprecedented challenges await him, both in the domestic and foreign arenas, including the war in Afghanistan and Iraq and dwindling economic growth. Expectations are naturally high from his administration and living up to them would prove out to be a Herculean task.

A top priority for the new president will be to restore confidence in the financial markets. He is likely to push banks, especially those receiving public support, to start lending. Expert opinion suggests that Obama may form an “aggregator bank” to rid the U.S. banking system of toxic assets. In addition, Obama’s plans to inject a fiscal stimulus worth USD 825 billion will be aimed at reducing the number of foreclosures and creating new jobs.

Although toxic assets have been a hot topic of discussion within Obama’s administration, government regulators, and the Treasury department, the issue still awaits a satisfactory solution. In addition, as credit markets wait for liquidity to return, banks will look at the new administration with hope to clear up the mess. The “aggregator bank” concept to free up capital is gaining support from many bankers, although top officials are skeptical about new lending that could end up as fresh losses.        

American Express Co, the fourth largest U.S. credit card company, and CIT Group, the commercial finance firm, have chosen to become bank holding companies by executing debt-for-equity swaps. This change has made both firms eligible to raise funds under the U.S. Treasury’s USD 700 billion Troubled Asset Relief Program (TARP).

Until now, the U.S. Treasury has spent around USD 350 billion of the TARP funds. Now CIT Group and American Express are the latest to get approval. They will get USD 3.39 billion and USD 2.33 billion, respectively, in exchange for preferred shares and warrants. Neither firm disclosed any information about how they will use taxpayer’s money. The market did not approve, and the share values of both companies fell by about a couple of percentage points.
 
Since the beginning of this year, the market cap of American Express has fallen to a third, while CIT has fallen by four-fifths. The Fed, American Express, and CIT hope that these funds will relieve the firms from the pressures arising because of the financial losses.

However, in the longer-term, increased regulation and capital maintenance requirements targeted at banks may shrink the scope of activities of these firms, and as a consequence, their income as well. And given the uncertainty in the markets, it remains to be seen whether these funds have a positive impact in the long-term.