Lure back mortgage lenders.
The crisis in the sub-prime mortgage market leaves financial institutions with potential clients desperately needing to be calmed (and educated) after a torrent of media reports on lending dangers.
The Independent Community Bankers Association (ICBA) tried to fill that void by launching National Community Bank Mortgage Week in November.
“Changes started to happen this summer in the broader mortgage marketplace and in terms of access to credit,” said Karen Tyson, ICBA’s director of communications and senior vice president. “A lot of news stories showed up and we saw fear in the marketplace. We had a lot of members say they weren’t facing those issues, and they wanted to let the public know they were stable lenders.”
Nearly 1,000 banks participated, each one developing events to fit their community. For some markets, the issue had reached critical mass. Granite Community Bank, a $155 million bank in Sacramento, saw an opportunity to reach beyond its customer base to a community caught in the crisis.
“We have unbelievably high foreclosure rates in the region, a lot of ARMS, and a lot of turmoil,” said David Kaiser, president and CEO. “Everybody’s looking for someone to blame. There’s a lot of talk about predatory practices and people being taken advantage of. I’m anticipating the news media running human interest stories this coming holiday season with Christmas trees and presents …and a foreclosure note on the front door.”
In that environment, getting out the right message was crucial. “We always maintained our underwriting standards when the rest of the world went insane,” Kaiser said. “We’re taking the position that we’re here doing what we’ve always done, which is getting people in their houses and keeping them there.”
Across the country, conveying a sense of stability to potential customers will make the difference in who sees their lending grow.
Green Investments.
Bob Olson, chairman of St. Stephen State Bank in St. Cloud, Minn., has spent years promoting the ever-growing alternative energy movement, which he believes will offer prime business ventures in coming years. Minnesota is 4th in the nation in terms of wind energy production, which Olson thinks will lead to a windfall of payoffs for investors.
The numbers back up his view: An October 2007 report from the National Renewable Energy Lab predicted that by 2010 demand for clean energy will outstrip supply by at least 37 percent, highlighting the need for new projects. In 2003, only 10 states had requirements for a substantial percentage of a utility’s energy portfolio to include green energy—now 25 states have established such parameters.
Mostly large companies are involved in the financing for alternative energy, such as wind energy, as those companies can reap not only profits, but financial and tax incentives. But smaller players have a role as well.
Around Sioux Center, Iowa, three ethanol plants that make renewable fuel from corn have been have nearly doubled the price of corn, plus generated jobs and wealth. American State Bank, a $600 million-asset bank, invested in an ethanol plant, years ago, loaning money to individuals to buy shares in the plants. During the past two years, the bank has experienced a 20 percent increase in assets, loans and deposits expand.
With 124 ethanol plants located across the Midwest, banks in the region have started paying attention to the possibilities. United Bankers Bank (UBB) in Bloomington, Minn. UBB partnered with more than 250 of the 750 Midwestern banks it serves to invest in close to a dozen ethanol plants.
Technological Enhancements
MOBILE BANKING: For an increasingly convenience-geared society, mobile banking seems like an inevitable next step. The basic idea is to check balances, pay bills, and transfer funds through your cell phone or Blackberry®. Already you can access bank Web sites through mobile devices, but mobile banking sites are specifically designed to fit tiny cell phone screens. The applications are widespread, but increasing numbers of banks are looking to mobile banking for basic account presentation—balances, payments, transfers. Wachovia®, Wells Fargo®, and other big banks led the way, but smaller institutions are rapidly following.
SMART CARDS: Think of a credit card with a lot of extra bells and whistles. Actually, a smart card only looks like a credit card: it uses an embedded microprocessor that replaces the typical magnetic strip on a credit or debit card. Used extensively in Europe for both health insurance and banking, the cards allow for greater security and multiple functions. According to the Smart Card™ Alliance, the number of “contactless” payments across North America skyrocketed in 2005 with growth in numbers of issuers, numbers of cards, and merchant locations. “Leading banks are issuing millions of contactless credit and debit cards to consumers, and leading retailers are installing contactless readers that can accept contactless payment and are integrated with point-of-sale (POS) systems,” notes an Alliance report.
EMAIL AUTHENTICATION: According to Anti-Phishing Working Group reports, the number of phishing sites quadrupled in the last year, with nearly 90 percent of phishing messages singling out financial brands. With e-mail authentication, recipients can verify the sender, an option gaining popularity.
By verifying the actual sender, recipients can be sure the email in question isn’t a hoax. So what’s the advantage for companies? At the recent Authentication and Online Trust Alliance Summit, experts noted that messages from verified senders who authenticate their email were delivered 99 to 100 percent of the time, since recipients could confirm the sender’s identity and didn’t run the message through an obstacle course of content filters.
