OSA CFPB TICKER Mar 26, 2013
The Ticker is a weekly update from the CFPB Research, Markets, & Regulations Team that highlights key market events, as well as industry and consumer trends. The Office of Servicemember Affairs (OSA) has extracted items that we hope will be of interest to DOD personnel delivering personal financial management education and coaching services.
Hot Off the Press The Growing Market Share of Direct Online Banks: In a study by research firm TNS, the country’s four major direct banks, Ally, Discover, Capital One 360 (formerly ING Direct), and USAA, are starting to gain market share from traditional brick-and-mortar banks and have been attracting retail customers establishing or moving their primary banking relationships. Over the past decade, the share of new relationships captured by large, national banks, regional banks, and even the community banks and credit unions was either flat or down. But the direct banks, which a decade ago attracted about 3.5 percent of new, primary retail banking relationships, have since increased that share to about 8 percent. Deposits at the major direct banks have more than doubled over the past five years-a growth rate, which is three times the industry average for the period. Ally Bank, for example, says its deposits hit $35 billion last year, up 25 percent from 2011, while deposits at Discover Bank reached $27.9 billion in 2012, up 5 percent for the year, according to the company. Despite only holding about 5 percent of total primary banking relationships in the U.S., direct banks have shown some success in attracting customers from key demographics: the young, wealthy, and those who own investable assets. HOPE NOW: Loan Modifications and Short Sales Continue YoY Decrease in January: In its latest mortgage industry data report, HOPE NOW estimated that more than 78,000 homeowners received permanent, affordable loan modifications from in January. This total includes modifications provided by proprietary programs and the U.S. Treasury’s Home Affordable Modification Program (HAMP). Since HOPE NOW began tracking modification data, the organization estimates approximately 6.2 million modifications have been completed since 3Q 2007. The organization also reported that more than 140,000 loans began the foreclosure process in January, while around 60,000 foreclosures were completed. Incoming PNC CEO: Consumer Banking Model Broken: William Demchak, the incoming chief executive of PNC Financial Services Group, says the consumer banking model centered around free checking is outmoded, and that banks must begin considering charging for services that are currently free, such as mobile banking. Demchak said that free checking was paid for by swipe fees and overdraft fees, but that new laws passed in the wake of the financial crisis have