Groupon announced its first-ever quarterly profit this week, but its stock is down more than 25% on the year. The business model for Groupon — and competitor LivingSocial, among others — is flawed in so many ways. For starters, merchants that take part in a daily deal give up as much as 75% of each daily deal sale to participate. This creates a high participation cost for the merchant, which does not know whether the daily deal will result in an incremental lift in overall sales from new customers or repeat business. Groupon and LivingSocial have yet to report the … Continue Reading →

Just last month I published a report, Quasi-Merchant, Meet the Quasi-Terminal: Merchant Acquiring Growth via the Mobile Device, in which I wrote that providing payment acceptance solutions to self-employed individuals would yield almost US$1 billion in net revenue by 2016. I also wrote the following: “Bank acquirers, in particular, seem well positioned to deliver solutions to this market. Their extensive distribution capabilities across consumer and small-business markets, pre-existing relationships with all different types of consumers and small businesses, extensive risk management capabilities, core competencies in the merchant acquiring space, and branding infrastructure should make them ideal candidates to penetrate this … Continue Reading →

As a consumer I have always been skeptical of some of the intangible cardholder benefits associated with certain credit cards. Typical among these benefits are purchase protection plans, car rental loss and damage insurance, lost/stolen baggage insurance, and delayed trip insurance. I never perceived a real value in these services and thought I would never have the occasion to use any of the benefits. I also typically do not like paying annual membership fees on credit cards that offer these benefits. All of that changed recently. I booked a flight to Italy with my American Express card, which provides trip … Continue Reading →

On March 20, the U.S. Senate failed to renew the charter for the U.S. Export-Import Bank, which provides significant financial support to parties that encourage global trade activity and thus benefit the U.S. economy. While the Ex-Im Bank offers some direct loans to international buyers of U.S. exported goods, the majority of its activity is in the form of guarantees and insurance-backing loans made by banks to small businesses. Government-sponsored guarantors are critically important to the ability of small businesses to trade internationally. Since the Ex-Im Bank does not contribute to U.S. debt, the Senate’s decision may well prove short-sighted. In fact, … Continue Reading →

Yesterday, I was giving a webinar with the Head of the RSA FraudAction Research Labs, Etay Maor. He shared some interesting intelligence about Citadel, one of the latest ZeuS offspring. The RSA research labs performed analysis on the Trojan and translated some language in its “user agreement,” which says, “Important: Our software does not work on Russian-language systems. If a Russian or Ukrainian layout is detected, the bot terminates. This is done to prevent installs on CIS systems. You may disagree, but that’s taboo for us.” This is indicative of a couple of things: It underscores the fact that many of the cybercrime … Continue Reading →

The plan to eliminate Fannie and Freddie is no magic bullet. Vaporize Fannie and Freddie and all will be right with our world, say some, who, given the depth of their life experience, should know. What is clearly so sad is that they really don’t know. Their cavalier “just do it” approach to destroy what has been since 1938 (with the exception of an 8- to 10-year blip) a credible and skilled approach to funding homeownership could be even more financially dangerous for the United States going forward than what the country has now. Case in point: In a recent … Continue Reading →

After reading the recent announcement that Bottomline Technologies is buying the commercial banking business of Intuit — the company that makes Quicken and Turbo Tax — I jotted down some comments: Bottomline may be revamping its strategy of purchasing IT assets, managing them on behalf of the partner and at the same time developing further to generate market opportunities for its own business. This is one step ahead in the strategy from the foundation of Bottomline buying Bank of America’s PayMode product in 2009. If this interpretation of the partnership with Intuit is right, then we can expect Bottomline to develop an integrated … Continue Reading →

Banks test fees on products all the time. Bank of America is the most recent bank to receive backlash for testing and considering changing fees on checking accounts. Subsequently, there was a public uproar from the suggestion that they may increase fees. And to that I say, stop the madness. I’m tired of the complaints about checking account fees. Like everyone else, I am also tired of the bad economy, of government regulation, of banks getting battered by Congress, of so-called “consumer advocate groups,” and of consumer complaints. Sure, the banks took advantage of the marketplace during the boom economy, … Continue Reading →

The years immediately following the financial crisis were extremely challenging ones for the financial services industry. For the last few years, most bank IT budgets have been monopolized by regulatory compliance, matters related to running the bank, and cost-cutting initiatives, with little to no focus on growth. Further, many of the growth initiatives banks planned for 2011 were put on a back burner or never came to fruition. Despite this, banks continued to see the value of technology and to invest in IT during even the most challenging times. Most institutions enjoyed a small increase in IT spending — about 3% … Continue Reading →

On Wednesday, February 15, Aite Group’s Wholesale Banking team will host a webinar discussion about key trends featured in our analysis of top 10 wholesale banking expectations in this Year of the Dragon. Ambition and innovation are two components often associated with the year in astrology, and Aite Group sees these as strong themes for planned wholesale banking initiatives in the year to come. Our team’s goal for this webinar is to to engage participants in a discussion about the trends and initiatives that are emerging in 2012, and to provide actionable advice on what these trends mean and how … Continue Reading →