BankMarketingCenter

Google’s initiative to offer checking accounts is, from what I hear, called Project Cache… or is it Cash?  Pretty bold.

There is, as we all know, a race among financial institutions toward “digital transformation.”  That is, to offer customers an online banking service that can earn new customers and keep existing.

It’s a race that requires patience, hard work and of course, a pretty significant investment of time and money.

But, there’s a short cut out there and some banks, instead of doing the work themselves, are taking it.  And that’s a partnership with Google.

It’s no secret that Google has a checkered past. Google has been before Congress more than once and more than once has been allusive on matters such as privacy and data sharing.  It seems to me that I’m pretty regularly reading articles about Google where the company “did not respond to a request for comment,” or “did not respond to lawmaker’s requests.”  Most recently, that reluctance to be transparent about the company’s policies and practices was chronicled in an American Banker article, “Google Checking Accounts: Why Banks Want In.”  The article was riddled with phrases such as “neither side was forthcoming,” “yet to be disclosed and discussed,” “declined to share any specifics,” and “no one will answer this today. Google declined a request for an interview on Monday.” 

Now, I get that sometimes these deals are still “evolving” as one interviewed individual put it, but vague statements like these seem to be an essential component of Google’s brand personality. Which brings us to what would make the most sense in a Google partnership:  Brand cache.  In the aforementioned article, Emmett Higdon, director of digital banking at Javelin Strategy & Research, puts it this way: “Banks are most likely looking for what some experts call an innovation halo effect.”  And, I believe he’s right.

Granted, Google has a tremendous brand. And, while surveys have indicated, supposedly, that Google and Amazon users would jump at the chance of signing up for banking services offered by either of these giant tech companies, I do wonder…

Is that really the reality?

 What might some of those survey questions have looked like?

1) If Google offered checking account services, would you be interested? 

Most people would probably say, “yes, absolutely.  Google’s a great company. I love my gmail!” 

What about a question phrased this way?

1) Would you like your banking information to be handled by the same company that worked with the Chinese government on a censored search engine,  refuses to answer questions from the US Congress, and can share your personal data with any third party without getting your permission?

The answer might have been quite different.

My point is this. There are no shortcuts in life. Trying to take a shortcut to digital transformation through co-opting Google’s brand halo is, I believe, a risk not worth taking.  Banks need to do the hard work and do it themselves, instead of taking shortcuts that, frankly, if the partnership goes south for some reason, can completely destroy their brand and their business.

But, I guess that’s a risk that some banks seem willing to take.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand.

To view our marketing creative, both print and digital – ranging from product and brand ads to in-branch brochures and signage –  visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

That’s right.  There’s not enough small change to go around and that’s a big problem.

Covid-19 has obviously changed people’s spending habits. No one wants to handle money for fear of the virus. As a result, they’re using debit and credit cards rather than cash. And why wouldn’t they?  Isn’t money filthy, or at least, isn’t that what we’ve always been told?  USA Today cites a study once conducted by Mastercard and the University of Oxford that found that the average banknote was home to 26,000 types of bacteria. Yuck!  But spending habits are not the only problem. Add the “disgustingness” of money to small businesses and banks being closed more than open, and we have a situation where the nation’s coins are simply not getting spent.

As the coronavirus continues to stymie an economic recovery, businesses continue to struggle to reopen. The slowdown, coupled with the US Mint decreasing production in response to the pandemic, has diminished the circulation of coins to the point where one, it threatens the survival of the smaller, cash-dependent businesses on which the US economy depends and two, can severely impact individuals who are unbanked or underbanked. According to a 2019 report by the Federal Reserve, approximately 6% of U.S. adults were unbanked while an additional 16% were underbanked, meaning they had an account at a bank but also used alternative services, such as money orders, check cashing services or payday loans.

 Federal Reserve Chairman Jerome Powell had this to say: “With the partial closure of the economy, the flow of funds through the economy has stopped. We are working with the Mint and the Reserve Banks and as the economy re-opens, we are starting to see money move around again.”  Meanwhile, the Mint is back to full production, minting almost 1.6 billion coins a month since early June. To address the disruption to coin circulation, the Federal Reserve has also created the U.S. Coin Task Force, a group of nearly two dozen industry leaders from institutions and organizations such as the U.S. Mint, Federal Reserve, Armored Carriers, ABA, ICBA, NAFCU, CUNA, Coin Aggregator representatives, and the Retail Trade Industry.

In its first official statement, the task force described the situation this way. “Many have referred to this as a shortage,” says the July 24th statement, “however it is not. There is approximately $48 billion in coin already in circulation, most of which is sitting dormant inside America’s 128 million households.”  So, perhaps this isn’t as much a coin shortage as it is a coin “misplacement,” although no matter how you phrase it, the problem still remains.

Now, as businesses begin to reopen, the demand for coins still exceeds the available supply. What can we do? The task force’s July 24th statement had these suggestions, urging the American public to “do the following while it is completing its work:

• Start spending your coins
• Deposit coins at your financial institutions; and
• Redeem coins at coin kiosks
• Use the hashtag #getcoinmoving in your own social media posts to promote awareness and understanding of this issue”

The Mint, meanwhile, is asking people to pay for things with exact change. “We ask that the American public start spending their coins, depositing them or exchanging them for currency at financial institutions or taking them to a coin redemption kiosk,” the Mint said in a statement. “Until coin circulation patterns return to normal, it may be more difficult for retailers and small businesses to accept cash payments.”

For millions of Americans, cash is the only form of payment and cash transactions rely on coins to make change. The coin supply problem can be solved with each of us doing our part. 

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand. Our coin circulation disruption ads are a good example:

To view our messaging, both print and digital – ranging from product and brand ads to in-branch brochures and signage –  visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

In addition to the physical, emotional, and economic hardship brought about by COVID-19, Americans now face another danger:  Predatory lending practices.

On July 7, CNBC ran a story entitled, New payday lending rules could leave 12 million Americans exposed to unaffordable payments.  In it, Alex Horowitz, senior research officer with Pew Charitable Trusts’ consumer finance project, said “that by eliminating the ability-to-repay protections, the Consumer Financial Protection Bureau (CFPB) is making a grave error that leaves the 12 million Americans who use payday loans every year exposed to unaffordable payments at annual interest rates that average nearly 400%.”

Now, 12 million is a lot, for sure.  But, that’s a pre-Covid-19 pandemic number. The job losses induced by COVID-19 are a catastrophic development for millions of Americans who could least afford it. The payday loan industry – comprised of companies that lend to financially vulnerable consumers while charging enormous, often unaffordable, fees and interest rates – has spent years and millions lobbying for more relaxed restrictions.  And last month, they were rewarded for their efforts.

It began back in 2017, when the CFPB released a multi-part payday loan regulation that, among other things, prevented lenders from attempting to recover their money by taking it directly from a borrower’s account, as well as requiring payday lenders to check that borrowers could afford to pay back their loan on time before lending, using information such as income and living expenses.

When Mick Mulvaney took the reins at the CFPB a few years back, the bureau did an abrupt about face when it came to payday lenders. During his two years heading the bureau, among other things, Mulvaney torpedoed efforts to impose tighter restrictions on short-term payday loans and put an end to an investigation into a South Carolina lender accused of charging interest rates of nearly 1,000%.  He also received nearly $63,000 in campaign funding from payday lending groups.

With its recent ruling to eliminate the ability-to-pay protections, the CFPB has put millions of Americans at risk at a time when they are increasingly looking for ways to make ends meet. One out of three Americans has lost income because of the pandemic, according to the Financial Health Network’s 2020 U.S. Financial Health Pulse, a survey of over 2,000 U.S. adults fielded between April 20 and May 7, 2020. 

It couldn’t get any worse, right?  It sure could.

While Americans engage in a financial struggle and payday lenders bask in the glow of shattered, Obama-era financial restrictions on predatory loans, U.S. banks are tightening standards on credit-card loans, auto loans, and mortgages. In fact, banks are tightening lending standards at the fastest rate since the 2008 financial crisis.

Credit card limits are being sharply reduced, and the minimum qualifying score for credit cards has increased. Auto loan standards have tightened some, but not like other forms of consumer credit; it helps when people don’t have a job to drive to. According to Barron’s Banks are Tightening Lending Standards like it was 2008 Again, “it’s understandable why lenders wouldn’t want to get exposure to borrowers who could be losing their jobs or facing pay cuts.”

Unfortunately, that is where millions of Americans are right now, and the number will more than likely grow over the coming months. Americans need money. Between skyrocketing healthcare costs, a lack of safety net, and now unemployment, these are desperate times for many people. Unfortunately, many will fall prey to a payday lender.

Unless a local bank is there to help.

About Bank Marketing Center

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; messaging that will help you build trust, relationships, and with them, your brand. Our predatory lending ads are a good example:

To view our messaging, both print and digital – ranging from product and brand ads to in-branch brochures and signage –  visit bankmarketingcenter.com. Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com. As always, I would love to hear your thoughts on this subject.