I am writing this
on Thanksgiving. Of course, not many of us celebrate it. Certainly
not in our London office, where another issue of Cards
International is being corralled towards the hungry presses,
the atmosphere in the office is more agitation than celebration…
And after their celebrations, the giants of the US retail banking
sector will, themselves, be returning to the rather fraught working
environments to which they have become accustomed.
It’s no great shock. A major
shake-up has been on the cards for the last few years, but we are
now starting to see the ramifications of the post-crisis regulatory
and legislative activity. It is too early to tell where it will
end, but we clearly see the way it’s going.
Go deeper with GlobalData
In this month’s issue, we take a
detailed look at the impact of the Durbin Amendment, and the
financial crisis more generally, on the cards and payments
sector.
In the four weeks after
Bank of America announced it would implement debit card usage
fees, credit
unions registered more new customers than they had in the
twelve months to year end 2010.
It is an indication that the US
financial industry is going through a tectonic shift. The tables
are turning and the small
players are growing their market positions, having spent so
long under pressure from the country’s banking giants.
Looking specifically at the upswing
being experienced by credit unions across the country, we are
seeing a “mass migration” caused, say the credit unions, by
“growing anger and mistrust” of the big banking players.
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By GlobalDataAs the reality of the Durbin
Amendment continues to bite, that angry sentiment is only going to
get worse. And it is difficult to see banks and their customers
kissing and making up any time soon.
The general feeling of agitation is
being felt in the M&A market too. Largely stagnant (petrified?)
over the past few years, life is returning in terms of the deals
being done. But premiums have plummeted, and are less stable than
in the past. So are we returning to a kind of normality? A new
normality?
The CARD Act has ensured that the
pricing of portfolios needs to be approached with more caution, and
even within the US, regional patterns are beginning to emerge.
The Mid-West – driven by its
agriculture and commodities focus – is outperforming other states.
As such, a return to regional specialisation – local services
delivered by institutions that understand their market – is
becoming increasingly apparent.
And, far from taking a parochial
view, those local credit unions are taking the initiative, and
making hay while the sun shines, launching major marketing drives
and offering attractive offers to keep up momentum in migration of
retail banking customers away from the big guys.
James Ratcliff
james.ratcliff@vrlfinancialnews.com
