The performance of the U.S. property & casualty insurance industry is more counterintuitive and potentially troubling today than ever before. And yet, across all products — including in personal and commercial lines — in a static market with paltry investment returns, in a soft pricing environment where price increases are hard to come by, and with year-over-year industry growth in 2011 of little more than 1%, most of the largest P&C carriers have continued to grow and profit. Unless you live under a rock like Rick in one of GEICO’s offbeat commercials, it is hard not to have noticed that the biggest auto … 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 →

It is well understood that the U.S. healthcare system is under tremendous pressure from all directions. Government fee reductions, declining private-sector program enrollments, provider and supplier cost and price increases, and uncertainties of impending regulatory change are simultaneously impacting healthcare economics. What is not so well understood are the repercussions of this pressure beyond the healthcare system. One relevant and glaring case in point is the significant and growing practice of cost shifting — charging the nation’s property and casualty (P&C) insurance companies, specifically the automobile insurance segment, for medical-provider services. This leakage has been masked until now by lower-than-usual … Continue Reading →

I am eager to get a closer look at PNC’s new online tool, Wealth Insight, which the bank will launch on September 19 for clients who hold US$1 million or more in assets. While other banks are focused on building online tools and apps for their mass-market clients and the young, PNC stands out with an exclusive online tool for high-net-worth clients. Many high-net-worth wealth management services are defined by face-to-face, white-glove service delivered by a team of experts. While these clients have traditionally been able to access balance information and statements through a website, online personal financial management capabilities for … Continue Reading →

I’ve done a fair amount of research into trading technology and capital markets spending. I can tell you that budgets have more than doubled in the last two years, and that most capital markets firms now spend more than 10% of their technology budget on risk and compliance. I think that should be more than enough. Unfortunately, it is not. Most firms will tell you those budgets will continue climbing. That’s good news for risk and compliance vendors, and bad news for, oh, I don’t know, people who invest in banks and might like them focused on revenue. Banks are … Continue Reading →

In a recent Aite Group survey of large bank CIOs and bank IT executives in North America, we investigated the long-term outlook of their vendor relationships. As some large enterprise vendors increasingly move into providing financial-services-specific applications (think Oracle), we wondered whether IT executives could see their banks moving away from working with traditional bank technology vendors (think FIS, Fiserv). We found that one in four bank IT executives “strongly agree” with the following statement: “Over the next decade, I expect my organization to rely more on large IT vendors for supplying not merely horizontal technology, but also a range of … Continue Reading →

The Federal Reserve Bank (FRB) has finally and reluctantly released compliance rules for the Durbin Amendment. It would be difficult to declare anyone a winner in this long-protracted battle; merchants want to eliminate interchange, banks cling on to the old ways of making money, and the once-revered Visa and MasterCard have been stripped of many of their powers. Gone are exclusivity and transaction-routing dominance.  Visa and MasterCard are left with shrinking margins on core transaction volume. Worst off is the consumer. Merchant cost savings will be kept by the merchants, banks will increase the cost of checking relationships, and the … Continue Reading →

More than 300 U.S. banks, mostly small community banks, have failed since the start of the financial crisis. While many banks are showing signs of optimism regarding the economy, many are expected to fail over the next couple of years. A speaker at a recent conference predicted that the total number of U.S. banks will decline by 50% over the next 10 years. Again, the smallest institutions are the most likely to fall victim to this continued industry consolidation. A recent Open Solutions announcement and service offering may give hope to these institutions. On May 1, Open Solutions officially launched … Continue Reading →

According to the World Payments Report 2010, December 2010: Payments and other transaction banking services proved resilient during the economic crisis, but the rapidly changing external environment will require banks to decide to what extent payments are core to their business strategies.  . . . [Some of] the key findings of this report include the following: The payments business has withstood the financial crisis well. Only time will tell the ultimate impact, but initial data suggest payments volumes continued to expand in 2009. The global use of non-cash payment instruments continued to grow in 2008, despite the financial crisis. The … Continue Reading →

As the end of the year approaches, many turn to thinking about their annual giving plans. Americans are actually a rather charitable lot; according to statistics from the National Philanthropic Trust, U.S. charitable giving topped out at US$314 billion in 2007. While that number has dipped since the onset of the credit crisis, Americans still give somewhere around US$300 billion a year, in the neighborhood of 2% of GDP, and roughly US$1,000 for every child, woman, and man in the States.  Non-trivial sums indeed. And, as one would expect, technology has changed the way we give.  It’s easy to go … Continue Reading →