Online Banking Population Matures in 06

A new report has found that the U.S. online banking population grew 9.5% last year, compared to 27% in 2005 and 47% in 2004. The report found that even though aggregate growth dropped into the single-digits, Citibank and Washington Mutual increasing their number of online banking customers by more than 20%. VA-based comScore says its research showed that 58% of online banking customers believe the Internet is more secure than one year ago, 68% believe online banking is more secure than one year ago. Among the top five banks, Wachovia customers were the most satisfied both in terms of their overall banking relationship and with the bank’s Web site, maintaining the lead for the third year in a row. Three-fourths of Wachovia customers responded that they were highly satisfied with their banking relationship, up from 73% in 2005. Of these highly satisfied customers, 96% were also highly satisfied with the Wachovia Web site. Washington Mutual ranked second on both measures. Interestingly, less than a quarter of those who currently bank online are interested in mobile bank account access.

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Henry Founder Dies at 71

Jack Henry & Associates founder, acting Vice Chairman and SVP, John W. Henry, died of natural causes last week. Henry was one of the early pioneers in community bank software. In 1976 after the bank in which he worked as the Data Processing Manager was acquired and his position was eliminated, Jack, along with business partner Jerry Hall, started Jack Henry & Associates. Jack and Jerry ran the company from a space rented in a small engine repair shop in Purdy, Missouri, and started with a handful of community banks as customers. Today the company provides software and services to more than 8,700 financial institutions. Jack Henry & Associates, Inc. is a provider of integrated technology solutions and data processing services for financial institutions.

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Online Households Write Less Checks in 06

For the first time Internet-connected households are paying more of their bills online than by paper check. An annual survey shows that online payments made up 39% of the total volume of bill payments among online households, while the volume of checks sent through the mail fell to 34% of the overall volume. The “2007 Consumer Bill Payment Survey,” conducted by Harris Interactive and the Marketing Workshop, for CheckFree, also found that nationwide, consumers paying at least one bill online per month rose to 74%, compared to 69% of respondents in the previous 2005 survey. Consumer adoption of online bill payment has more than doubled since January 2002, when only 37% of online households reported paying at least one bill online. The average survey respondent paid 11.5 bills in a typical month, with 4.5 bills, paid online, and 3.9 bills, paid by paper check. Some 85% of consumers surveyed said paying bills online saves the paper, stamps and the hassle of paying bills by check.

EBP/Month
2001: 13%
2002: 14%
2003: 22%
2004: 23%
2005: 25%
2006: 35%
2007: 39%
Source: CheckFree

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GE Money to Issue Sotheby MasterCards

Sotheby’s and GE Money have teamed to launch two invitation-only affluent MasterCards later this spring. The new “Sotheby’s World Elite MasterCard” and “Sotheby’s World MasterCard” will offer a suite of luxury experiential rewards not available on other MasterCard products. Cardholders for both “Sotheby’s MasterCards” will receive gratis admission for up to four visitors at participating museums such as the San Francisco Museum of Modern Art. Additionally, cardholders will earn one point for every dollar spent, which can be redeemed for benefits ranging from donations to partner museums; having Sotheby’s auctioneers or specialists assist in the cardholder’s private events; access to Sotheby’s special events; to a yacht or private jet charter. All cardholders will have the option of choosing either a standard issue card or a work of art depicted on their card from a selection of paintings by artists such as Claude Monet, Rene Magritte, Frida Kahlo and Canaletto.

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Citi Card Revenues Up 2%; Profits Down 3%

Citigroup reported that 1Q/07 profits for its U.S. Cards unit declined 3% year-on-year to $897 million due to the absence of an $89 million tax benefit recorded in 1Q/06. However, U.S. card revenues increased 2% to $3.29 billion, driven by growth in non-interest revenues and a $161 million pre-tax gain on the sale of MasterCard shares. Bank credit card outstandings for the U.S. were down 2% to $107.3 billion compared to one-year ago. However, private label card outstandings increased 15% to $30.2 billion, but down sequentially. Purchase volume for the first quarter rose 6% to $72.4 billion. Citi’s account base at the end of the first quarter rose 14% to 150.0 million accounts, but down more than 3 million accounts from 4Q/06. Citi’s charge-offs for bankcard and private label cards rose to 4.63% compared to 4.35% in the prior quarter and 3.90% one-year ago. Overall delinquency (90+ days) declined slightly from 1.62% for 4Q/06 to 1.57% for the first quarter 2007. For complete details on Citigroup’s 1Q/07 performance, visit CardData (www.carddata.com).

CITIGROUP
U.S. Credit Card Net Income
1Q/06: $ 926 million
2Q/06: $ 878 million
3Q/06: $1085 million
4Q/06: $1001 million
1Q/07: $ 897 million
Source: CardData (www.carddata.com)

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Chockstone Acquires Peppercoin

OR-based Chockstone has acquired MA-based Peppercoin, a small payments technology company providing card-based merchant loyalty programs and related consulting and analytical services. Founded in 2001, Peppercoin provides a PCI-compliant small payments suite for all payment models, including prepaid, subscription, and pay-as-you-go with “Intelligent Aggregation. Chockstone specializes in customer loyalty marketing programs and stored value solutions. More than 30,000 retail locations are currently using Chockstone’s loyalty marketing, gift card and payment programs worldwide. Chockstone recently made several major upgrades to its loyalty marketing platform, including a do it yourself “Promotions Manager” for marketers to launch and manage their own loyalty programs; and “Receipt and Respond,” a receipt-based national advertising network that delivers targeted ads at the point of sale. Both companies are privately-held.

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GE Money to Introduce Artic Card Card

Arctic Cat has signed a new consumer financing agreement with GE Money that includes a new “Cat Card” credit card. Arctic Cat’s financing program will enable dealers to offer special financing terms, including seasonal promotions, designed to generate sales momentum. Fast credit decisions and simple paperwork will help dealers keep customers in the store, and dealers also will benefit from Internet-based financing management tools. Arctic Cat produces all-terrain vehicles and snowmobiles under the Arctic Cat brand name.

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FMT Octopus Offers An EAI Solution

With over a GBP 10 million increase from 2005 to 2006 in online
banking fraud, according to APACS, E-Application Intelligence
(EAI) is becoming an increasingly important asset to banks. In total,
card not present fraud accounts for almost 50% of card fraud loss.
In response, FMT has introduced a new EAI solution, “FMT
Octopus”. The new solution will allow banks, e-commerce
organizations and online retailers to act on fraud before it happens,
rather than after, with a pre-processing filter. This filter includes
the implementation of a two-factor, human intervention and immediate
termination to work in all environments delivering immediate return
on investment. “FMT Octopus” does not change existing hardware
applications and does not require application program interfaces
(APIs). It is projected that by 2009, 50% of solutions such as these
will integrated into Web server applications.

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RBS Lynk Hires a Business Development Exec

Citizens Financial Group’s RBS Lynk has hired John Grendi, formerly with Deloitte Consulting, as SVP/Business Development. At Deloitte, Grendi served as client development leader, working with many of the top telecommunication, technology and media companies in the southeast. Prior to Deloitte, Grendi created the payment products group at Dell Computer. Grendi got his start in the payments industry at Chase Merchant Services. He held a variety of roles, including vice president of the direct commerce group.

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CCB and BofA to Create a Credit Card JV

China Construction Bank and Bank of America have inked a deal to create
a credit card joint venture in China. The roll-out would be implemented
in two stages. In the first stage, CCB would create a stand-alone credit
card unit, merging its current card operations into this new unit. CCB
would also form an advisory committee to determine and develop the
unit’s business structure. Bank of America would serve on this committee
and provide advisory services on the unit’s development. The second
stage would involve converting the credit card unit into a
Chinese-foreign credit card joint venture registered in China. Bank of
America would acquire 37% of the joint venture and would begin
launching co-branded credit cards. At the time of the second stage, both
companies would have board of director representation and be a part of
the company’s senior management team. The second stage would occur after
new joint venture regulations are enacted by the Chinese government and
subsequent regulatory approvals are obtained. CCB says it expects the JV
to break even within seven years. CCB currently has more than 6.3
million credit cards in force, making it the second largest issuer in the country with a market share of 20%. CCB reports that its cardholders
charged about 40 billion yuan in 2006. BofA is a strategic investor in
the bank with a 8.52% stake. CCB also reported a net profit of 46
billion yuan last year, compared to 47 billion yuan in 2005.

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AA Signs Card Processing Contract with NOVA

U.S. Bank’s NOVA Information Systems announced that American Airlines has entered into a multi-year credit card processing services agreement for its domestic bankcard business. In addition to performing all clearing and settlement functions, NOVA will provide a full range of services, including customer support and chargeback processing. NOVA and euroConex, its European affiliate, currently provide processing services to 87 airlines worldwide, with more than 40 airlines operating in the United States.

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OKI ATM21SX

Oki Electric has introduced the “ATM21SX” for the Chinese market.
The new ATM is small in size for smaller demand and effective use of
limited space which is expected to support sales of 10,000 by 2010.
“ATM21SX” reduces the installation space needed by 30%.
Efficiency is also increased by recycling cash, enabling deposited cash
to be reused as withdrawal cash, and enabling a long period of unattended
operation with a cash capacity of 7,000 banknotes and 5,000 receipts.
Oki Electric Industry (Shenzhen) Co., Ltd. (OSZ) plans expansion also in
South-East Asia, The Pacific, and European markets.

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