This week in New York was grey and rainy. It certainly wasn’t bad weather, especially not for late February, but it wasn’t good either. It came and went, and it will be forgotten soon enough. This week in banking was similarly tepid. The same issues reared their heads, and the same innovations progressed. It was another week of banks dealing with low interest rates, new regulations, and new technologies. But just because this week wasn’t special for any particular reason, it doesn’t mean it was unimportant. This is an industry that is slowly evolving and adapting before our eyes — let’s watch it grow.
Almost predictably, the week kicked off with the two more mobile payments stories. Terrifyingly-named ISIS, the mobile wallet supported by a troika of mobile carriers, announced it has partnered with Chase, Capital One and Barclaycard to create virtual credit and debit cards for the platform. The mobile wallet will launch this summer in Salt Lake City, Utah, and Austin, Texas, — apparently ISIS is targeting the coveted Mormons-and-indie-rockers demographic.
Also, Facebook announced it is introducing mobile billing functionality to Facebook credits. Now people playing FarmVille can just enter their mobile phone number and buy a virtual goat or something right away. There’s no need to spend that extra 15 seconds or so digging out your credit card and entering those numbers — an advantage that any online-game addict should understand.
Why people use Facebook in the ways that they do is a never-ending source of befuddlement for people, even young people who spend an inordinate percentage of their waking hours in front of a computer. Why do people like and leave comments on corporate brands’ pages and posts? How connected can one feel to Johnson & Johnson? Why do we care about these things?
But every once in a while a Facebook innovation comes around that makes sense. American Express’ prepaid online payments service Serve announced a new feature this week: a Facebook app that allows users to send and request money from one another on their Facebook walls. Your pal forgot his wallet when you met up for drinks? Now you can shame him publicly into paying you back — that’s a use of Facebook that makes perfect sense.
Low interest rates were a source of pain for banks and customers both this week, as usual. On Monday, we reported on an interesting disagreement regarding who loses in a low-rates environment: big banks or small banks? Turns out it’s both, but both seem to envy the other. Banks are slowing regaining their profitability, however, according to the FDIC. In fact, the FDIC’s acting chairman called on banks this week to start lending again. They can help stimulate the economy if they’d only loosen their credit standards a bit. Given how much banks like listening to bureaucrats, it was certainly wise of Martin Gruenberg for employing such a failsafe tactic!
But even the greyest of overcast days has its bright spots. In this week’s case, the bright spot was more of a sideshow. The Wall Street Journal‘s lead story on Thursday was about Bank of America’s checking account fees, which was news about a year ago. That didn’t prevent the finance news world echo chamber from picking it up and amplifying it. By the end of the day, politicians were issuing aggressively-titled press releases condemning the bank.