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Jul 10, 2020
The COVID-19 pandemic has highlighted the plight of the unbanked and underbanked in America. For all of our progress as a nation over the past decade, more than a quarter of US households lack access to a basic bank account or other basic financial services.
Here is the Forbes.com Article on Unbanked discussed on our call:
https://www.forbes.com/sites/boblegters/2020/07/10/what-banking-for-the-unbanked-means-for-you/
Shai Stern Forbes Councils Member
July 26, 2019
Despite mobile payments providers and credit cards, my mother and other members of the Silent Generation will continue to pay by check. Paper check remains the most common method of paying rent, even among millennials and Gen Z. Many medical bills, utility bills, taxes and nonprofit donations are also still made by check. On the business side, companies continue to pay vendors by check and accept check payments, alongside electronic methods.
Some financial technology (fintech) businesses have ignored check payments, focusing instead on card and mobile payment processing, and card companies that ignore cash and check are only touching a portion of payments. The most successful fintech providers are able to remain demographic agnostic and adapt to payments convergence by aligning their business to these three pillars: checks, Automated Clearing House/electronic and cards. To ensure these pillars function together, fintech companies should consider both integrated receivables and integrated payables to assist with all aspects of a payment from start to finish.
Check use up 7.5%
Debit card use up 10.4%
Prepaid up 10.5% which makes you ask...
Wouldn’t Debit be up 21.1% if people had access to a basic bank account?
INSTEAD of EXPENSIVE prepaid cards that were a grass roots payment solution BECAUSE
there wasn’t any other choice AND Deposit & GO wasn’t available at time of study...
This brief provides 2017 national estimates and 2016 to 2017 growth rates for card payments. These estimates are based on survey data from a census of general-purpose card networks, payment processors, and issuers of private-label cards. The surveys covered four types of debit cards (non-prepaid, general-purpose prepaid, private-label prepaid, and electronic benefits transfer (EBT) supporting certain government assistance programs) and two types of credit cards (general purpose and private label).
This brief also provides new estimates of 2016 to 2017 growth rates for ACH and check payments as well as ATM withdrawals.
https://www.federalreserve.gov/paymentsystems/2018-December-The-Federal-Reserve-Payments-Study.htm
National Alliance of Buy Here,Pay Here Dealers
National Independent Automobile Dealers Association
Feb 13, '19
I'm sure you've heard the term FinTech being thrown around lately in regards to tech giants Amazon, Google and how they might
threaten the banks. Tech giants may affect the traditional bank space but does that really affect your non-traditional market space?
Probably not, here's why and what you can do to leverage your dealership locations.
Banks have started to embrace FinTech's and their state of the art technology to help grow their footprint and offer "digital" services
to their "bankable" clients. Retailers have started enhancing their locations with online delivery, pick up and financial services. But
what about the auto dealer and their subprime customer?
Chances are your dealership is located in a "Bank Desert". Bank Deserts have formed all over the US covering as much as one third to
half of your State. Bank Deserts form when expensive traditional branches close due to a change in the neighborhood or a $3 million
branch is just not viable to build. Or low to moderate income areas are redlined by the bank ie not enough income to support a bank
branch. It's against regulations to redline addresses but the banks get caught doing it more often that you would think. The most
telling feature of a Bank Desert are the number of check cashers, presently growing at 15-30%, as the bank move back into the cities.
That doesn't mean Bank Deserts don't exist in cities. Most major cities have large pockets of low income people living in Bank
Deserts. California has 5 of the top ten most unbanked cities in America and two more are runners up! The highest percentage of the
Unbanked live in a large region of States from North Carolina through the entire South East and West across to California.
But what is a FinTech and how might it apply to your operation?
We've all heard the words, "Game Changer" before. Financial Technology (FinTech) companies developing state of the art bank and
payment systems have been around for a while but are now just starting to make waves across many markets and concern in some.
Recently the Banks themselves were terrified FinTech's would somehow impact their market. Then they embraced prepaid cards as
a solution to servicing the subprime market. Prepaid cards are NOT bank products at all, far from it in fact! A new true bank product
and delivery system was required.
Enter a FinTech which now offers mini bank branch terminals partnered with a bank in the same model as you would find an "Bank
Branded" ATM in a retail store. The smaller POS footprint terminal banks anyone, "bankable" or the "unbanked" non-traditional
subprime person we call "Bank Challenged"©. No or poor banking history, no or poor credit history, no questions asked, instant
issue bank account with a Debit Card printed on the spot. And allows for automatic vehicle loan payments from the bank account
that add up for you with no staffing or cash handling issues or long lines to be serviced on pay day! These are real "entry level" basic
bank accounts not to be confused with non bank prepaid cards that are now rendered obsolete by this new bank product. This new
mini bank branch opens your doors to become a Destination Dealership for banking and thus leveraging your location plus driving
traffic and increasing vehicle sales!
Put up your hand if you are selling too many cars... Put up your hand if you don't want a leg up on your competition!
And by the way, why are you letting your customers use a check casher when handling all that cash gives you a headache?
Remember your Customer Service Course? Service, Service, Service ie customer contact w products your customer wants to buy!
The check casher knows... now your dealership knows and you can compete!
Here's why you should be more than interested in Servicing your customers...
How can I Service my Customers like a check casher does?
Am I letting found money walk out the door?
What if there was a service that combined your $70 billion market share and yet captured some of the $68 Billion check cashing
market AND other financial products your customer buys?
The subprime market you service is valued in excess of $325 Billion and yet buy here pay here auto dealers represent only about $70
Billion of that. And check cashers $68 Billion...
Said mini bank branch offers check cashing (deposit), with a financial product inventory that the subprime "Bank Challenged"©
market would normally purchase elsewhere... well why not from you?
All the inventory items are electronic without any need for physical inventory. Money Remittance, Bill Pay, Cell Phone Top Up, eGift
cards to name a few items. And every single purchase nets the dealership a revenue stream adding to your bottom line!
In the end, if you save your new customer the predatory fees that the check casher charges, 10% of their annual income ($2400-
$4500)... didn't that just make their vehicle payments for the year? What did the check casher give them...?
Ride with Me & Bank for Free!© Could be your new campaign!
What other areas of your business can FinTech's assist in?
Having trouble with recurring vehicle payments?
Paper checks may be going the way of the dinosaur but don't kid yourself, 20 billion paper checks per year are still written and if not
paper, electronic checks or ACH transactions count for another 24+ billion. Then there's the massive number of credit and debit card
transactions... 47 billion debit transactions alone in 2012... many of these are recurring transactions.
Sure that vehicle payment stream went well for a while and then those debits started bouncing. NSF payments are the bain of any
Merchant. The over head to handle NSF payments is huge. Staffing, letters, legal and court time, the black holes of profit margins,
sucking up cash and you probably don't even realize how much, until year end! Hopefully you do and there's a fix.
ACH NSF Electronic Payment recovery, falls under NACHA rules and regulations. NOT Check Collection Agent rules and regulations
that employ antiquated, expensive methods and DO NOT recover recurring credit or debit charges commonly found in a buy here
pay here contract. This means a new profit margin for your operation as you are NOT paying for Collection Agencies high fees ONLY
to recover 50% of NSF items, the industry average, with 40-50% fee on top of that or .25 cents on the dollar back to you.
NSF Electronic Payment Recovery services offer free recovery services, free web portal reporting, 70-90% of items collected, 100% of
funds returned and electronically deposited into your bank account with free support for as long as you require!
Now take a moment, have a coffee and think about this... all electronic, no staff, 100% of recovered funds returned (not 25%) and
70-90% of items recovered (not 50%) and all other services included are FREE!
Equals "found money" by moving into the future!
How is that possible?
Some pretty smart FinTech guys with a fancy algorithm and state of the art computers!
Under NACHA rules for NSF Electronic Recovery Services, the company is allowed to present the NSF item more often than the bank
and charge a State approved fee to the account holder on each NSF item. That's how the service is free to you... and the company
makes a few bucks...
When's the last time you brought your POS card processing up to speed?
FinTech's are pushing change more often than you take your wife out on a date... unless you're "that guy".
How about a free quote with aggressive rates even if other processors turn you down! And a comprehensive report of their rates...
But there's more! Free terminals, free support, free custom web portals with full reporting and no contracts!
The FinTech for you, crunches mammoth amounts of data and is laser focused on dealerships, the spin off information they can offer
you is mind boggling. To get your business they are happy to Service, call it over Service, you!
What about a virtual marketing program that targets the shopping habits of your prospective clients via their cell phone with a text
message within a defined geo-fenced area using Google Maps®? Sounds like Star Wars and you're not far off... but that's another
entire story...
No matter what you do, you owe it to yourself to research what a FinTech can do for your operation to make it more streamline and
ultimately more profitable than your Dinosaur competition will be down the street!
Drive your dealership into the future today with a FinTech and realize increased profits that impact your bottom line!
Mr. Kerridge is the CEO of SeeTek, LLC. Inventor and US Patent holder of SWORD® technologies.
More information may be found at www.BuyHereBankHere.com
Buy Here Bank Here is a registered Trade Mark.
62.5% would rather open a new bank account at the branch with a person!
The SWORD Mini Bank Branch Terminal may be installed anywhere and everywhere!
Globe & Mail
David Berman, BANKING REPORTER
March 25, 2017 September 29, 2015
Banks could lose up to 60 per cent of their retail profits to nimble fintech firms within the next decade, according to global consultancy McKinsey & Co., offering a particularly alarming outlook as new financial technology players nibble away at some of the more vulnerable areas of traditional banking.
The consultancy said that altogether banks are producing profit of some $1-trillion (U.S.) globally, providing a powerful incentive for startups to grab even a thin slice of that business with cheaper or more convenient services. Given that the number of startups is now estimated at 12,000, these slices can add up to a major threat.
There are bank closures... and then to make matters worse... there are bank failures...
| Year | Bank failure cost to DIF | Number of bank failures Total: 491 |
|---|---|---|
| 2016 (estimated) | $9.6 million | 1 |
| 2015 (estimated) | $894 million | 8 |
| 2014 (estimated) | $398.8 million | 18 |
| 2013 (estimated) | $1.165 billion | 24 |
| 2012 (estimated) | $2.785 billion | 51 |
| 2011 (official) | $7.945 billion | 92 |
| 2010 (official) | $22.904 billion | 157 |
| 2009 (official) | $38.732 billion | 140 |
Nov. 9, 2016
By Renée Loth
Boston Globe
That's what more than 16 million Americans learn every time they try to cash their paychecks, settle a bill, or swipe a debit card. They pay fees and fines for financial services most of us take for granted, and they submit to interest rates that keep them trapped in debt. They are "the unbanked" - Americans operating in an alternate economy without access to basic financial tools.
Monday, Sep. 14, 2016, 02:22 PM UPDATED 2:27 PM
By BHPH Report Staff
SAN CLEMENTE, Calif. -
Cindy Liebes, director of the FTC’s Southeast region, shared what she deemed to be the “seven deadly advertising sins” buy-here, pay-here dealers commit that place them in the center of her regulatory radar.
“No doubt, one of the FTC’s top priorities is protecting consumers in the auto marketplace. However, I’ve also heard from many honest dealers saying they can’t compete with the dealer down the street who doesn’t follow the rules,” Liebes said.
“Regulatory actions against unscrupulous dealers promote fair competition, which is good for any industry and protects the players trying to do the right thing,” she continued.
Liebes will discuss more about compliant advertising and auto financing on the second day of Innovate: The Independent Dealer Industry Conference, hosted by DealerSocket starting on Sunday in Fort Worth, Texas.
Liebes will outline lessons for dealers learned from Operation Ruse Control, an initiative she led where the FTC partnered with 32 other governmental agencies. The regulatory project resulted in 252 enforcement actions against dealers nationwide.
Ahead of her keynote, Liebes shared a list of seven deadly advertising sins, all of which draw suspicion from regulators.
“While I can’t speak about current non-public investigations, it’s important for dealers to know that the FTC is committed to bringing law enforcement actions in the auto industry,” Liebes said. “We don’t pay attention to the size of a dealer either. Big and small stores need to get their house in order.”
According to Liebes, dealers’ violations include:
To get more detailed, real-world knowledge on BHPH compliance, operators can join Liebes and other legal experts at Innovate: The Independent Dealer Industry Conference. The show will feature more than 80 different classes — all more than one hour long — that dive deep into compliance, technology, collections, finance, accounting, operations and more.
“In total, attendees will access more than $10,000 in legal insight for the price of admission,” organizers said.
DealerSocket expects more than 600 attendees at this year’s conference, including major exhibitors and financial institutions that will showcase the latest dealership technology, best practices and industry solutions.
August 23, 2016
Trend is consistent with Mercator Advisory Group Banking Channels research, which has found that customers and members strongly desire the option of having face-to-face contact at a branch -- when and where desired. This access to subject matter experts, even if only agree occasionally, can be an important driver of customer satisfaction and increased product deepending and long-term loyalty.
Bank executives argue, however, that branches remain crucial for acquiring new customers and doing more business with new ones. Closures, they say, would hurt revenue more than help reduce costs.
“Our customers still want to visit us,” Jonathan Velline, Wells Fargo's head of ATM and store strategy, told Reuters in an interview. “They're still coming to our stores and our ATMs at pretty consistent rates.”
Evans Bancorp has settled a lawsuit by New York Attorney General Eric Schneiderman that accused the Buffalo-area bank of violating the federal Fair Housing Act by engaging in redlining, or the practice of denying mortgages to predominantly African-American neighborhoods. The bank was accused of creating a map that defined its "trade area," but much of Buffalo's East Side -- which is predominantly African-American -- was excluded from that area. Prosecutors argued that African-Americans were denied mortgages regardless of their credit scores and that the bank's pattern of lending did not arise from an absence of willing borrowers, as its rivals were much more generous in their lending. Part of the nearly $1 million settlement will support the development of affordable housing in Buffalo. Evans Bank also will invest $200,000 in advertising and marketing in the city's East Side.
From "Evans Bank Settles New York 'Redlining' Lawsuit"
New York Times (09/11/15) P. B6 Silver-Greenberg, Jessica; Corkery, Michael
Former Barclays chief executive Antony Jenkins laid it out in particularly stark terms in a speech last fall: The global industry, under pressure to meet customer demands for automation and cheaper services, will slash employment and branches by 20 percent to 50 percent over the next decade, he estimated.
“I have no doubt that the financial industry will face a series of Uber moments,” he said in the late-November speech in London, referring to the way that Uber and other ride-hailing companies have rapidly unsettled the taxi industry.
And that's not just the opinion of one well-informed man.
Francisco Gonzalez, CEO of BBVA Bank, said about “In 10 years, only 100 banks will have survived the digital wave.”
Realize these figures and representations are indicative of the "banked market" who have the education and unlimited access to online banking technology and therefore need not frequent a bank branch as a "bank challenged" person would have the need to. As proof of that, Check Cashers "thrive" in "Bank Desert" regions. Growing at a rate of 11% in 2014.
Without access to basic financial services, poor and minority communities are more likely to use dangerous, high-cost options.
Mar 2016
A neighborhood saturated with fast-food restaurants and bodegas but lacking a grocery store would make it difficult to stick to a healthy diet. It would be similarly hard to manage finances and build wealth without a bank branch nearby. Unfortunately, that is exactly what an increasing percentage of U.S. households are being told to do: manage their finances and build wealth without access to a nearby mainstream bank branch.
This does not mean, however, that the evidence couldn’t be used to draw mixed conclusions. The New York Fed reports that lower-income communities and communities of color have been less affected than higher-income and majority-white communities by bank branch closings that occurred in the shadow of the Great Recession. However, these communities had less to lose to begin with. Lower-income communities and communities of color have been experiencing a shuttering of bank branches for nearly two decades—devolving into “banking deserts” for quite some time.
Federal deregulation in the 1990s allowed banks to pivot from primarily serving local communities to serving larger and more profitable geographic regions. Banks withdrew from local communities, closing their less-profitable branches that were often in lower-income communities and communities of color. High-cost alternative financial services began to occupy the communities once served by mainstream banking services, expanding at a rate of 15 percent per year since the 1990s.
When alternative financial services like payday lenders and check-cashing stores—the equivalent of fast-food chains and convenience stores in this scenario—swoop into neighborhoods left behind by mainstream banks, residents pay a steep price to meet their financial needs: The average borrower spends over $500 a year in interest just on payday loans. Residents end up diverting money that could have otherwise been used to pay for irregular expenses or to build wealth, instead paying to use the basic financial products that they so desperately need to manage their financial lives. Because like convenience stores in food deserts that don’t sell nutritious food that promotes good physical health, alternative financial services don’t sell products that build long-term financial health.
Technology like mobile banking and fintech innovations help close the geographic distance between households and brick-and-mortar bank branches, thereby increasing access to basic financial products. Yet technology alone cannot repair the negative impact that bank branch closures have had on mortgages and small business lending. Simply put, brick-and-mortar bank branches still matter for accessing credit to build wealth. Without a bank branch in their community, households have limited access to safer and more affordable products, like a savings account that could be used to pay for irregular expenses, or to invest in the future. And, as the New York Fed’s study indicates, residents lose access to small business loans and mortgages when bank branches close, hindering the investment and entrepreneurship needed to drive local economic growth.
http://www.theatlantic.com/business/archive/2016/03/banking-desert-ny-fed/473436/
Overall, there are 1,614 fewer bank branches in the United States today than there were a year earlier [2015]. Banking companies of all sizes continue to close offices as more consumers turn to digital banking and as a means to trim expenses. [Note many low income people do not have access to the digital world. They may be older, not trained or, according to AARP studies, just not be able to afford PC's, lap tops and smart phones. Having said that, to be fair and balanced, we have witnessed many homeless people with state of the art smart phones!]
The number of branches in the U.S. dropped to 94,725 as of June 30, [2014], down 1,614, or 1.7%, from a year earlier and down 4,825 from the peak in 2009, according to the FDIC data.
http://www.wsj.com/articles/bank-branches-in-u-s-decline-to-lowest-level-since-2005-1412026235
By WINNIE HU AUG. 5, 2012
Many of New York City's poorest residents do not have bank accounts, so these window transactions, repeated hundreds of times every day, are their primary contact with the financial system. Check cashers are as familiar to them as corner bodegas, and as reliable.
But an industry built on mutual convenience has come under increased scrutiny over the past decade as its stores have continued to become full financial centers, improving services like electronic bill payment, wire transfers and prepaid debit cards.
The expansion has spurred renewed criticism from advocates for poor residents and from bank officials, who say the check-cashing industry takes advantage of those who have no other options, and it has prompted more calls for consumer protections. Many of the industry's leaders say that they have been unfairly tarnished, that they provide needed services and that they are making improvements to their operations.