Finovate Blog

Continuing on the 2015 strategic planning theme (see part 1: insurance, lifetime transaction archives and subscription fees)….

Here are numbers 4, 5 and 6 in my semi-prioritized list of 2015 priorities:

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4. Small business debt crowdfunding
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While commercial lending in the United States is up this year, the small business segment is still vastly underserved. And while there are good reasons why banks choose to avoid riskier SMBs, none of the reasons make a lick of sense to a business owner. I know from experience. 

Luckily, we live in an era where strangers are willing to lend directly to other strangers via the Internet, provided the returns are attractive enough (thank you Zopa, Prosper, & Lending Club for leading the way). So banks and credit unions, time is a-wasting. Partner with one of the many crowdfunding platforms to extend credit to your small business customers. You can even grab some no-risk loan-fee income in the process. 

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5. Mobile deposit time-based fees
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Mobile check deposit is one of the more magical services to appear in the digital age. Who would have guessed even five years ago that you could instantly deposit a paper check by snapping a picture of it from your smartphone? And strangely, that there would be no fee for such a miraculous service. 

This feature, that gets people talking about their bank (in a good way), probably needs to live on as a free benefit. However, there is no reason that all deposits must be treated the same. We recommend a tiered approach based on the time it takes to access deposited funds and the amount of the deposit. 

For example, Regions Bank has a brilliant, and from what I hear, very profitable pricing strategy (see post). 

     Immediate credit >>> 1% to 3% of check amount, with $5 minimum
     Credit the same night (8 PM cutoff) >>> $3 per check
     Credit within two days >> $0.50 per check

     There is also a $1 fee to temporarily raise your daily deposit limit to deposit a large check.

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6. Relationship mortgages
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In late 2009, I refinanced my home through what was then ING Direct. While the process wasn’t perfect (see post), it went pretty smooth, and I’ve been happy with the bank even as it transitioned to Capital One ownership. I chose a 5-year term (with 30-year amortization) because it was an absurdly low rate at the time (though who knew that wasn’t even close to the bottom). 

The bank has been encouraging me to refinance almost a year in advance of the end of that deal. I finally took them up on their offer. You’d think that since they knew my life history and have pretty much owned my home for 4.5 years, that it would be relatively simple to update. But it doesn’t work that way. While the phone-based refi process has been relatively smooth (there was no online refi option for my loan), I feel like I’m going through the exact same process as a new customer. 

I know the bank has its hands tied by regulation and secondary market requirements, but they could at least make me FEEL as if I were saving time by rolling over an existing loan. How about accessing my account (which I’ve had for 13 years) and letting me verify that the info is correct instead of making me fill out every field over and over again? 

To most families, the home mortgage is the biggest financial bet they will ever make, and it’s time that financial institutions create relationships with the mortgage at the core.  

To be continued………..