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Entries in Banking (4)

Saturday
Jun292013

First Mobile-Only Bank Is Pay-As-You-Wish

GoBank(NEW YORK) -- The first bank that was designed for mobile use launched to the public this week, allowing users to pay what they want in fees.

GoBank, launched by publicly traded Green Dot Corp., has no overdraft or penalty fees. The company says that it “works for tips,” allowing users to pay up to $9 a month as a membership fee. But members can use the same account features even if they don’t pay a fee.

Customers get a free debit card, or they can create a custom debit card with a photo of their choice for $9. The company gets most of its money through debit card swipe fees from merchants. There’s a bill-pay feature and the accounts are FDIC-insured.

NerdWallet’s senior analyst John Gower had positive reviews, saying, “GoBank’s concept and ease-of-use resonates well with younger, tech-savvy consumers but isn’t beyond the grasp of newer mobile users either.  The app, website, and various features are quite easy to navigate and understand, which is something many banks still struggle with.”

Gower said offering customers the chance to pay what they feel is fair “is a unique and refreshing strategy among banks.”

Starting next week, the company will offer free custom debit cards as part of a promotion with store partners, like Rite Aid and Barnes & Noble College bookstores.

Members can use fee-free ATMs from more than 42,000 locations around the country and add cash at over 3,900 ATMs.

The number of ATM locations is a very competitive option for people who don’t want to deposit checks to their GoBank account by snapping a photo on their smart phones, or enroll in GoBank’s direct deposit. (Bank of America, for example, has 5,400 retail banking offices and approximately 16,300 ATMs. Chase says it has 19,500 ATMs and 5,500 branches.)

GoBank is available in the iTunes App store. Android phone users can download the app for free via Google Play and MetroPCS will distribute the mobile application across its compatible Android device portfolio.

One of the coolest features of GoBank is that users can view their balance on the login screen, which the company says is the primary reason why a person logs into their bank account.

GoBank also allows users to send money with no charge through text or email. If you want to send money to someone not using GoBank, they can move the money with PayPal.

GoBank says its product offers a “high tech/low price proposition.”

“I think we’re going to see more innovation with regard to financial products and services, both mobile and online, and whatever the next big thing is,” said Michael Schreiber, editor-in-chief of Credit.com. “As issuers innovate in this space, data security will be of paramount importance.”

Copyright 2013 ABC News Radio

Friday
Oct052012

Morgan Stanley CEO Says Banking Industry Is 'Overpaid'

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Morgan Stanley CEO James Gorman has folks in the banking sector buzzing with his comments that the industry is "still overpaid."

"There's way too much capacity and compensation is way too high," Gorman told the Financial Times. "As a shareholder I'm sort of sympathetic to the shareholder view that the industry is still overpaid."

A spokeswoman for Morgan Stanley declined to elaborate or make Gorman available for comment. Gorman's doing pretty well though. He received a $10.5 million pay package in 2011, a pay cut of 25 percent from 2010. He's was the 23rd highest-paid CEO in America last year, according to Bloomberg Markets magazine.

Earlier this year, Deutsche Bank co-chief executives Anshu Jain and Juergen Fitschen said compensation reform was one of their three key objectives.

Gorman's comments come a week before the major U.S. banks report their third-quarter earnings. JPMorgan Chase and Wells Fargo will be the first with their earnings releases next Friday, Oct. 12.

Back in July, Morgan Stanley reported a 50 percent drop in its second-quarter earnings to $591 million. The company reported revenue had dropped to $6.95 billion from $9.21 billion the prior year.

Brian Foley, pay consultant and managing director of Brian Foley & Co. in White Plains, N.Y., said with little evidence in the financial markets that the tide has turned, Gorman's comments seem somewhat foreboding.

"My sense is that what's coming in the third quarter is likewise not going to be pretty or even uglier," he said.

Anthony Polini, analyst with investment firm Raymond James, said he agreed with Gorman that there are too many banks in the U.S., but he disagreed that the banking industry as a whole is underpaid.

"The banking industry is overregulated, not overcompensated," Polini said.

Although, Polini conceded, it depends which industry one uses as a comparison.

Comparing to professional athletes and film stars would make most bankers look like they got the short end of the stick, he said.

By international standards, Polini said executives at Bank of America, the second-largest U.S. bank measured by assets, are not overcompensated. Its CEO, Brian Moynihan, receives compensation of $8.1 million, which includes a salary of $950,000, $6.1 million in performance-based stock, $420,000 worth of tax and financial advice and use of the company's aircraft.

"It's all who you compare them to," he said. "I'll take a stand and say I think teachers should make a lot more money."

Polini also points out that the large number of U.S. banks, approximately 7,000 which are dominated by a handful of national corporations, could mean greater competition and choices for consumers.

"Excess capacity is a bad thing on one hand, but if you're looking for a low-interest bank or convenience, even if you live in the suburbs, you probably don't have to drive to a bank," he said. "You could probably walk to one."

Low interest rates have been negatively affecting banks, but Polini said he expects banks to report positive quarterly earnings in terms of commercial loan growth and mortgage banking.

"It doesn't mean that the outlook is going to get much better. We still have a weak economy and a low-interest rate environment," he said.

Copyright 2012 ABC News Radio

Friday
Sep142012

Pittsburgh Ice Cream Store Owner's Banking Business Miffs Regulators

Ryan McVay/Photodisc/Thinkstock(PITTSBURGH) -- Ethan Clay, owner of Whalebone Cafe Bank in Pittsburgh, has offered low-cost banking services with no overdraft fees since January, but the state's banking regulator is taking issue with his operation. The reason? Clay is offering services from his coffee shop and ice cream business.

Clay, 31, has been the owner of Oh Yeah! Ice Cream, which also sells coffee and waffles, for five years.

Dismayed by what he calls excessive overdraft fees from his bank account, he decided to offer a savings account of sorts with a five percent interest rate, using the gift cards for his business.

Clay says his services are more akin to a Groupon deal, in which a customer receives more of what they paid for.

Customers can deposit a minimum of $100 and earn interest in "exclamation dollars," which can be used to buy items from his business. Each exclamation dollar is worth $1.10 in real dollars.

The name, Whalebone, uses the same letters as "whole bean."

"I don't think that we fall under the category of a bank. Our service is to support people and to protect them from the banks," Clay said.

However, a spokesman for the Pennsylvania Department of Banking disagrees.

"We're not OK with what he is doing. We're [going to be] telling him to stop," spokesman Ed Novak told the Pittsburgh Post-Gazette on Wednesday.

Novak did not return a request for comment.

Clay said the state's regulators had taken an interest in his services about two weeks ago to see if his business falls under the banking category.

"I think it all comes down to the ice cream," Clay said.

That is, a person who works with the Pennsylvania Department of Banking was a regular customer, Clay said.

As of Friday afternoon, Clay said he has not received notification asking him to shut down his services. But if he does, he said he won't put up a fight.

"I'm not interested in fighting the bank regulators. I'm more interested in regulating the banks," Clay said.

Clay said his services are designed to create micro-loans to "people who are struggling with overdraft fees so they can bridge that gap and save in the long run."

"Ultimately we want to transform the retail banking industry," he said.

To start, he plans to ask First Commonwealth Bank in Pittsburgh, to which Clay has been depositing money from his business, to eliminate its overdraft fee and instead put in place a flat interest rate such that a customer who does overdraft would be able to pay toward a buffer to be used toward any future overdraft costs.

Before the Post-Gazette article published a story about his business, he had five account holders with a total of $550. The number of account holders doubled after the report, and "we're continuing to grow," he said.

His goal is to have at least $100,000 by Dec. 21.

"That's an easy goal. That's nothing in the banking world," he said. "I know if we can do $100,000, we can do $100 million."

Clay said he has no problem with banks making money from fees like overdrafts.

"They're just making a little too much," Clay said. "The citizens of the United States put a lot of money into the bank industry. I know at the same time we defaulted on a lot of loans. The whole banking crisis was completely caused by the banks."

He said overdraft fees are "a sign of their archaic practices."

"Punitive banking is not the future of banking," he said. "It's going to be people using money together, saving money and really making things happen."

If anything, his financial services have boosted foot traffic in his store, with an increase in people visiting to inquire about banking.

Clay, formerly a graphic designer and construction worker, said his business has always encouraged savings.

"We've always had cool offerings like bottomless cups of coffee," he said. "And if you bring your own cup, we offer $1 coffee."

Copyright 2012 ABC News Radio

Thursday
Mar082012

Wells Fargo Adds $7 Monthly Checking Fee

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Wells Fargo customers in six states who had free checking accounts will pay $7 a month for paper statements starting in May, the bank said Thursday.

The plan is being rolled out in Georgia, New Jersey, Delaware, Connecticut, New York and Pennsylvania, but the bank may reportedly expand to other regions.  Banks across the country are seeking new ways to raise fees after new federal consumer-protection regulations that have cut into profits.

Stephanie Wei, vice president of deposit products for consumer finance site NerdWallet, said the latest announcement lowers the bank’s ranking in its list of Top 5 banks for checking accounts.

NerdWallet found that big banks charge consumers an average of $110 a year if consumers can’t meet conditions to waive fees.

Wells Fargo previously had the lowest average of $60 a year.

Monthly fees across banks ranged from $5 to $12 for basic accounts and $10.95 to $30 for premium accounts. Overdraft fees range from $25 to $35, but some banks make concessions for small overdraft amounts. Except for Bank of America, all five big banks waive fees for current students.

Except for Citibank, which has no opening deposit requirement, other banks require $25-$100, for at least 24 hours, to open an account.

A spokeswoman for Wells Fargo said the bank began informing customers in those states earlier this month they would be charged a $5 fee with online statements for the basic “Essential Checking” accounts, if they do not qualify for a fee waiver. Many customers qualify for the fee waiver by having monthly direct deposits totaling $500 or by maintaining a minimum balance of $1,500, the bank said.

Lisa Westermann, Wells Fargo spokeswoman, said a large majority of customers will continue to have their monthly service fee waived.

She said each of the consumer checking and savings accounts the bank offers at least one, and in most cases, several ways to waive the monthly service fee.  Other accounts may qualify for a fee waiver by having a Wells Fargo Home Mortgage.

“All of our accounts offer significant value to our customers and we offer many additional services at no extra charge,” she said.

Wells Fargo says it hasn’t offered free checking to new customers since 2010. The bank says it started moving customers in California and other western states to the $7 fee last year and is expanding to six more states.

Banks have been adding and experimenting with fees, including Bank of America and its failed $5 debit card fee last year. The second-largest U.S. bank by assets announced in early January that it was testing fees in Arizona, Georgia and Massachusetts, which represent about 10 percent of its consumer business.

Copyright 2012 ABC News Radio







ABC News Radio