There has been a lot of recent press on the charging of monthly debit card fees by large banks, with charges ranging from $3 to $5 per month. We don’t charge a fee and, in fact, offer a number of checking accounts that are fee-free. So we’d love to hear your thoughts on these debit card fees.

For some perspective on why this is happening, here is a link to an interview with a local business professor from The Baltimore Sun.

With the start of the school year, the folks over at the  Network for Teaching Entrepreneurship (NFTE) start their engines as well. NFTE’s mission” is to provide programs that inspire young people from low-income communities to stay in school,  recognize business opportunities and to plan for successful futures.” I, along with several other colleagues at the bank, have been involved in the program at various Baltimore City schools for the last four years. As Baltimore’s community bank,  we work with the teachers as they incorporate the NFTE curriculum into their lesson plans. We go into the classroom on a weekly basis and work with these young entrepreneurs to help them identify business ideas, develop their business plan, and get their businesses started.

These rising young entrepreneurs in waiting then compete in local business plan competitions, first in their classroom and then against other students in a city-wide competition. At these events, they present their business plans to panels of judges for cash prizes. For those who win their local competition, there are even opportunities to compete with other young entrepreneurs from around the country. A couple of the young entrepreneurs we worked with at Patterson High School were even featured in a movie, “Ten9Eight” about a national business plan competition in New York. We’ve stayed in touch with one of these students who is now a sophomore pursuing a business degree at the University of Baltimore.

NFTE is a terrific organization that can really make a difference in our community. Teaching our young people financial literacy and business insight  is extremely important to the Baltimore Community and we at 1st Mariner Bank are proud to be involved in such a meaningful organization.  If you are looking for an opportunity to work with the youth in the city, there are plenty of ways to get involved. Visit the NFTE-Baltimore website to find out more.

I recently attended the Net.Finance conference in Chicago . It is, by far, one of the best conferences for those of us focused on the digital channels of financial services. Over the two and half days, there were three topics that dominated the event: Mobile, Personal Financial Management (PFM) tools, and Social Media. I’m going to specifically talk about the first two topics.

The first day of the conference focused on Mobile Banking services for  customers. Jeff Dennes, SVP Chief Digital Officer of Huntington National Bank (and formerly with USAA), gave the Keynote address. His presentation was full of interesting observations including:

• There are over 285 million mobile subscribers in the US, a 91% penetration rate.
• 13.2 million people accessed their bank accounts through mobile sites, up 70% from a year ago.
• The expansion of the 4G network over the next 2 years will increase bandwidth equal to a cable modem at home.
• Mobility is driving convergence. The gap between the traditional web and related services is closing, with the increase in smart phones and the movement of the Gen Y’s into the workforce.

Jennifer Wilson, SVP Internet Channel Director, BBVA Compass shared her experience with the introduction of ZashPay, a Person to Person payments service from Fiserv. From an adoption perspective, they found that building a web page with a simple enrollment process was key. When they looked at the user base, they found a surprising number of small business customers who were using as an alternative to more expensive ACH services. Given these pilot results, they may develop a mobile invoicing service for their business customers.

We rolled out our Mobile Money offering in August, 2010 and have seen a significant adoption rate. Mobile continues to be a hot topic among financial services providers and may prove to be the most signficant game changer in the next couple of years.

With the winter season comes the inevitable snow and the associated disruption. Given the challenge Marylanders have driving in it, we often open our branches and Contact Center later than our scheduled hours. During last years “Snowmageddon”, our locations were closed for a number of days as we all dug out of the blizzard.

In the past, this meant that customers who had a question or needed some help where unable to contact us. Last year, for the first time, we were able to connect with customers from our web site using our “Click to Chat” feature. Our Contact Center employees were able to log in from home and monitor and respond to chats with customers. While our ability to address some issues was limited, they were, for example, able to help someone sign up for online banking. We’ll continue to use this during outages and delays this year.

So, if you find yourself stuck at home in the snow and have a question for us, check out our website. There’s a good chance we’ll be available to “Chat”.

NRI Analysts visiting 1st Mariner Bank

We recently had the honor and pleasure of hosting five Senior Analysts from the Information Technology Research Department of Nomura Research Institute (NRI). NRI is a Tokyo-based technology consulting firm with over 6,200 emloyees around the world. They were visiting various organizations across the United States doing reserach on new technologies. We were the first stop on their tour.
Along with other topics, they mainly were here to talk to us about Mariner360, our newest online offering powered by Geezeo. According to our guests, there is not any type of Personal Financial Management (PFM) software available to Japanese consumers today. They are interested in offering this type of system to them.
They did note one signficant difference between the Japanese and American consumer. Their consumers do not typically have credit cards or carry the associated balances, unlike many American consumers today. So their consumers desire to aggregate their accounts is less important than the budgeting and goal setting tools available in the PFM.

Last Chance Gas

A recent change enacted by Visa© could have an impact on you the next time you go to fill up the car. Beginning in August, gasoline dealers have been given the option to replace the one dollar status check toany amount, up to $500.  In the past few weeks, we’ve seen pre-authorized amounts ranging from $25 to $120. These typically drop off in one to two business days, once the actual transaction posts to a customers account. So what does this mean to you?

Let’s look at this from the perspective of Reg E and the opt in/out option. (see my previous post on this subject here) Say you go to the pump to get $25 worth of gas and you have $75 in your account. If you’ve opted out and the merchant puts through a pre authorized amount of $120, your purchase will be denied. If you’ve opted in, the purchase would go through but you’d still have a hold on your account for the $120 until the purchase posts. Imagine being in a hurry, your almost out of gas and being denied. Not a very pleasant thought.

So next time you go to buy some gas, check to see what amount is being pre authorized by that merchant. If it’s for $120, you may want to find another dealer for your next fill up.

In the most recent edition of the USBanker magazine, two articles caught my attention. The first, entitled “Say Goodbye to Checks“, addresses the declining use of checks by consumers. With a new study coming out from the Federal Reserve later this year, the decline is expected to be much higher than the 4.1% percent decrease in 2007. Here are a couple of reasons why:

• The number of bills paid on line by consumers increased by 1 billion a year from 2006 to 2009
• With increased debit card usage, retailers are reporting a 15% decline in checks annually

A second article, entitled “Banking 2020:Smartphones Rule“, discusses the impact of technology innovation on the branch banking system. With the introduction of alternatives like ATM’s and online banking, and now the advent of the smartphone, consumers have more ways to bank then ever before.

Both of these articles highlight the impact technology’s had on consumer behavior and the likelihood that it will continue. We’ve been tracking these trends as well and are constantly looking for innovative ways to service our customers. In the coming weeks, we’ll be introducing some new services that we think will help you more effectively manage your financial life. The future is now. Stay tuned!

I recently attended an eCommerce conference for financial institutions called Net.Finance. Over the two day period, there were two consistent themes across most of the presentations. They were the growth of mobile as a servicing and delivery channel and the use of social media by banks. I’m going to focus todays’ post on mobile.

Over a year ago, we began offering an iPhone Branch/ATM Finder application, one of the first in the country. Even with the limited functionality, we’ve been pleasantly surprised to see over 1,500 downloads. This simple application confirmed that there is definitely a demand for these services. And why not? Over 78% of the US Consumer market, close to 242 million people, are expected to have mobile access by the end of 2010. Of those mobile users, 1 in 5 will be using the so-called “smart phones” like the iPhone and Android. When we launched the iPhone app, we were one of a handful of banks. Now, there are over 78 financial institutions offering 86 mobile apps for iPhone users.

As we follow these national trends, we realize that our customer and prospect needs are changing as well. So in the very near future, we’ll be rolling out a mobile solution that will meet the needs of our community. We are very excited about this solution. Stay tuned for more in the months ahead.

The financial services industry has had a pretty rough couple of years, and 1st Mariner is no exception. Recognizing that we needed to get a better understanding of the relationship between us and our customers, we began phone surveys using the metric of the Net Promoter Score (NPS).  Developed by Fred Reichheld in 2003, NPS measures customer loyalty by asking one simple question, ”How likely is it that you would recommend 1st Mariner Bank to a friend or colleague?”. Using a scale of 0-10, it identifies your loyal customers (Promoters) and those who are less satisfied (Detractors). NPS is the percentage of Promoters minus the percentage of Detractors. The highest NPS score in the industry is 81% for USAA, the large credit union serving military personnel and their families. Most of the national banks are well below that, averaging in the 30% range. Our average score in 2009 was 66%, a very respectable score. 

 In October of 2009, we rolled out an internal training program focusing on the customer. Called “Providing Red Carpet Service the 1st Mariner Way”, all customer facing personnel, including Tellers, Contact Center Representatives, and Branch Managers, attended. Beginning with mystery shops of a competitor and a retail store, employees were asked to focus on service from the customers perspective. The response was extremely positive from the attendees. The training has been reinforced with monthly Red Carpet Service awards to individuals and groups highlighting these service “stars”. In addition, there are efforts to promote teller referrals and increase product knowledge across the branches. The next phase of the program will be rolling this out to internal support areas inside the bank.

Often it is hard to quantify the success or impact of training. With NPS, we have a tool that gets us real time feedback from our customers. Preliminary results are very encouraging, as scores for the first three months of 2010 have averaged 71%, a 7% increase over last year. As they say in academia, this is a statistically significant increase. Coincidence? I don’t think so, but I’d love to hear what you think.

As many people know by now, one of the largest banks in the country recently announced changes to the way they will deal with overdrafts on certain ATM and debit card purchases later this summer. This announcement is a direct result of regulatory changes mandated by the Federal Reserve around Regulation E, the Electronic Funds Transfer Act. They’ve chosen to make the decision for the customer by eliminating this service completely.

We will admit that the changes are somewhat challenging to understand and it would probably be easier for us to handle these changes the same way. But franky, we don’t think that is the right approach for our customers. Rather, we want to you to understand how this is going to impact you (if at all) and provide you the opportunity to make the decision based on facts.  Below I’ve provided some information on the changes, when they go into effect, and examples of how this could impact customers. Please feel free to comment and provide feedback.

Regulation E, Electronic Funds Transfer Act changes in 2010

Regulation E provides a basic framework that establishes the rights, liabilities, and responsibilities of participants in electronic fund transfer systems such as automated teller machine (ATM) transfers, telephone bill-payment services, point-of-sale (POS) terminal transfers in stores, and pre-authorized transfers from or to a consumer’s account (such as direct deposit and social security payments).

The term “electronic fund transfer” (EFT) generally refers to a transaction initiated through an electronic terminal, telephone, computer, or magnetic tape, instructing a financial institution to either credit or debit a consumer’s asset account.

Beginning in 2009, in response to consumer advocacy groups, the Federal Reserve revised Regulation E to address retail checking account overdraft fees on certain consumer transactions. The final rule prohibits a financial institution from assessing an overdraft fee applicable to overdraft services for ATM and one-time debit card transactions unless the consumer agrees to the overdraft service for those types of transactions.

When do the new regulations go into effect?

• July 1, 2010 - for any new consumer checking accounts
• August 15, 2010 – for all existing consumer checking accounts opened prior to July 1, 2010

What transactions are included in the rule change?

• Automated Teller Machine (ATM) transactions
• One- time debit card transactions, such as gas purchases

What transactions aren’t included in the rule change?

• Checks, including paper and electronic
• ACH electronic payments, like your mortgage or insurance premiums
• Recurring Visa Debit Card transactions, such as a monthly gym membership
• Payments of an overdraft through a line of credit

What do I have to do?

In the next couple of months, you will receive a mailing from us with a form to “opt in” or “opt out” of overdraft protection for ATM and one-time debit card transactions for each consumer checking account you have with us. You will have until August 15, 2010 to respond. If we don’t receive a response from you, we will assume that you do not want the overdraft protection service for ATM and one-time debit card transactions.

How could this impact me?

If you don’t have this overdraft service as to ATM and debit card transactions, such transactions would be declined if you do not have sufficient funds in your account. For example, if you went to the grocery store and attempted to pay using your debit card, your transaction would be declined.

“Opting in” versus “opting out” of accounts with the overdraft service

For consumer accounts that have our overdraft service, here is an example of how these items might be handled differently between a customer who “opts in” or “opts out” of overdraft protection for ATM and one-time debit card transactions. Included in this example are both types of transactions.

So, a retail customer who has the overdraft privilege for ATM and one-time debit card transactions, would have the items paid and be charged the appropriate fees for this service. We would love to hear your thoughts and questions about these changes. Please feel free to respond to this post and look for continuing updates on our web site.