Upcoming Changes in Banking Regulations Present Good News/Bad News Scenario for Community Banks

Dec. 2, 2010 - PRLog -- Thousands of community banks risk losing a substantial amount of business checking activity to the big national banks and other competitors as a result of the upcoming repeal of Regulation Q, which will permit interest on business checking for the first time since the Depression. “There is an enormous opportunity here that represents at least one trillion dollars returning to business checking accounts nationwide from sources that now involve sweeps and other short-term investments,” says John Hamby, President and CEO of Advanced Business Checking Solutions (ABCS). “Community banks must not blow this opportunity.”

To assist, ABCS has launched Power Checking, a nationwide program of education and growth initiatives designed to help community banks turn a corner toward increased strength in the marketplace, higher value to business customers, and more profitability.
“Rarely has such a good news/bad news scenario for banks been kept so quiet in the industry. There is both great opportunity and great potential for loss, depending on what banks decide to do,” adds Hamby, whose 40 years of banking experience and advocacy have given him a formidable perspective on the issues involved. “We want to help. That’s why we’re not keeping quiet about it.”

Most community banks, he notes, have done little more than note the Reg Q repeal in their budgeting for the next fiscal year. Larger institutions, however, appear to be focusing on the July 2011 implementation date and in turn are making plans to maximize their gains.

Seizing the Moment

Power Banking is ABCS’s prologue to a suite of products designed by the company to help banks make the adjustments that will be necessary to take full advantage of the coming changes. As an advocate of banks utilizing their core processing capabilities to implement action plans, ABCS has developed unique, timely and cost-effective programs and tools, which are being  rolled out to the national banking marketplace.

“Much of the opportunity for banks lies in the enhancement of their existing products, especially ‘analyzed’ business checking accounts. To avoid reactive and uninformed action later, banks need to be better informed of the pitfalls and opportunities today,” Hamby says. “Knowledge is power, and this is the time to capture the knowledge and grab the power. In short, now is the time to seize the moment.”

In related news, the FDIC is attempting to entice the market by announcing that only transaction accounts which do not earn interest will receive unlimited FDIC insurance through December 2012. “By restricting the unlimited coverage to accounts paying no hard dollar interest, or having the potential to do so, the FDIC has created a tremendous opportunity for banks well versed in providing business customers with service fees to reduce ‘earnings credits’ in lieu of hard dollar interest,” Hamby explains.  

“For the enlightened bank, the opportunity also includes the potential to acquire substantial new accounts, relationships and balances from banks that are less alert to the situation or lack the confidence to make bold, imaginative and timely decisions about business checking product enhancements.”

According to ABCS, while most banks see the issue as one of large account vulnerability, the core of smaller business ‘free’ and bundled pricing accounts are at risk. These packaged accounts are attractive to businesses whose potential activity costs are higher than what can be offset by earnings credits possible from the modest balances maintained in these accounts. Many banks justify their numerous unprofitable accounts by pointing to the substantial profitability of the few large accounts.

“It is these few that are likely to be more attracted to messages of ‘value rather than free’ from the more aggressive large national banks,” Hamby says.

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About Advanced Business Checking Solutions

Advanced Business Checking Solutions (ABCS) is dedicated to helping banks create a more dynamic sales and operations environment by strategically integrating commercial checking and fee income growth strategies. Founded by industry veteran John Hamby in 2009, ABCS has developed a line of software products and analytical tools and provides hands-on analytical and sales assistance to enable banks to grow income, build customer value, and strengthen the role of community banking nationwide. The company’s ‘Full Value Technology’ platform expedites a bank’s analysis of commercial checking accounts and the development of new concepts and presentations for current and prospective customers. Banks interested in the Power Banking program may contact Advanced Business Checking Solutions at 860-828-2058. ABCS can be found on the web at www.advancedbusinesschecking.com.