virginia banking march/april 2012
DESCRIPTION
12th Annual Banker Day draws more than 400 attendees; protecting your bank against data breaches aimed at small businesses; how the SBA 504 Refinance Program provides long-term working capital for small business; and how the advent of the iPad has increased demand for completely integrated online financial management.TRANSCRIPT
IN THIS ISSUE PREVENTING DATA BREACHES | TEMPORARY SBA REFINANCING CHANGES
March/April 2012
VIRGINIA BANKERS ASSOCIATION — SERVING VIRGINIA’S FINANCIAL COMMUNITY SINCE 1893
RECORD ATTENDANCE at 12th Annual Banker Day
VBA BENEFITS CORPORATION
VBA BENFITS CORPORATION
PROVIDING COMPETITIVE BENEFITS FOR YOUR EMPLOYEES HAS NEVER BEEN SO EASY.
VBA Benefits Corporation4490 Cox Road
Glen Allen, VA 23060(800) 643.5599
Visit our website at www.vabankers.org
Our all-inclusive, cost-effective plans are developed by bankers for bankers and include:
• Full-time partnership with a professional consulting firm, legal counsel, and audit firm
• State-of-the-art on-line enrollment and billing systems
• Representation and program management through a Board of Directors, comprised of peer banks
• Toll-free member services number to address benefit needs and inquiries
• Consolidated monthly billing for all benefit programs
• Preparation of plan documents and IRS filings, as well as assistance with filings required of individual banks
• Training services, staff meetings, regional seminars and users conference
• Administration of Flexible Spending Accounts and COBRA continuation
2011-2012 OFFICERS AND DIRECTORS OF THEVIRGINIA BANKERS ASSOCIATION
William Couper, Chairman, Bank of America
Jeffrey M. Szyperski, Chairman-Elect, Chesapeake Bank
Charles H. Majors, Immediate Past Chairman, American National Bank & Trust Co.
O.R. Barham, Jr., StellarOne Corporation
Frank Bell, III, Chesapeake Bank
Katherine E. Busser, Capital One Financial Corporation
Tim Butturini, Wells Fargo Bank, N.A.
Larry G. Dillon, C&F Bank
Randy K. Ferrell, The Fauquier Bank
Larry Heaton, Franklin Community Bank
Gail Letts, SunTrust Bank
John R. Milleson, Bank of Clarke County
Samuel L. Neese, Highlands Union Bank
Susan Ralston, Bank @Lantec
Gary R. Shook, Middleburg Bank
David P. Summers, Virginia Heritage Bank
Daniel G. Waetjen, BB&T
Richard T. Wheeler, Jr., Franklin Federal Savings Bank
AT-LARGE MEMBERS
Benefits Corporation Chair
Richard M. Liles, Bank of McKenney
Management Services Inc. Chair
Frank Bell, III, Chesapeake Bank
Government Relations Committee Chair
Christopher W. Bergstrom, Cardinal Bank
VBA Education Foundation Chair
J. Peter Clements, The Bank of Southside Virginia
EDITORIAL & EXECUTIVE OFFICES4490 Cox Road Glen Allen, VA 23060804-643-7469 Fax 804-643-6308www.vabankers.org
Bruce T. WhitehurstPresident and CEOVirginia Bankers Association
Chandler DeweyManager, Communications/
Marketing and Financial LiteracyVirginia Bankers Association
SUBSCRIPTIONSIf you would like to subscribe to Virginia Banking, contact Chandler Dewey at [email protected]. Virginia Banker is published bi-monthly. Copyright 2012.
Statements of fact and opinion aremade on the responsibility of theauthors alone and do not imply anopinion or endorsement on the partof the officers or members of VBA.
features
Banker Day 2012 Draws Record AttendanceMore than 400 people attended the 12th annual event.
4 Calendar of Events 5 Insights 6 Compliance Corner 8 Legal Line 10 Legislative Update
11 Worth Noting 14 Washington Update15 Welcome New Associate Members 22 Bankers on the Move
Send us your thoughts or ideas on Virginia Banking! Please email Chandler Dewey at
[email protected]. Has your information changed? Please email Kellee Edelin at
[email protected] with your new contact information.
12
16
18
20
in every issue
Data Breach and Identity Fraud: How to Proactively Mitigate Fraud Loss Financial institutions are paying the price for online security breaches over consumer websites.
SBA 504 Refinancing Program Provides Long-Term Working Capital for Small BusinessesThe Small Business Administration has temporarily modified its SBA 504 Program.
Taking a Different App-ti-tudeCustomers’ expectations of their online experience is changing. Are you ready?
The Warren GroupDesign / Production / [email protected]
©2012 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210. Call 800-356-8805.
PUBLISHED BY
280 Summer Street, Boston, MA 02210Phone: 617-428-5100 Fax: 617-428-5118 www.thewarrengroup.com
March/April 2012 | Virginia Banking 3
March/April 2012
INSTRUCTOR-LED SEMINARS
BRANCH MANAGER – SESSION 3, GLEN ALLEN APRIL 12
ADVANCED COMMERCIAL LENDING SCHOOL, GLEN ALLEN APRIL 17
SECURITY WORKSHOP, CHARLOTTESVILLE APRIL 25
HR & BENEFITS SYMPOSIUM, CHARLOTTESVILLE MAY 6
BRANCH MANAGER – SESSION 4, GLEN ALLEN MAY 10
OPERATIONS & TECHNOLOGY CONFERENCE, STAUNTON MAY 15
APPRAISAL TRAINING, GLEN ALLEN MAY 21
2012 MASTERING HMDA SEMINAR, CHESAPEAKE MAY 22
INTRODUCTION TO LENDING COMPLIANCE SEMINAR, CHESAPEAKE MAY 22
MORTGAGE UPDATE – B TO Z SEMINAR, CHESAPEAKE MAY 23
TRUST & WEALTH MANAGEMENT CONFERENCE, GLEN ALLEN MAY 24
ANNUAL CONVENTION, HOT SPRINGS JUNE 17
2012 ANTI-MONEY LAUNDERING AND BANK SECRECY ACT COMPLIANCE SEMINAR, ROANOKE JUNE 19
2012 ANTI-MONEY LAUNDERING AND BANK SECRECY ACT COMPLIANCE SEMINAR, CHARLOTTESVILLE JUNE 20
2012 ANTI-MONEY LAUNDERING AND BANK SECRECY ACT COMPLIANCE SEMINAR, SANDSTON JUNE 21
SCHOOL OF BANK MANAGEMENT, CHARLOTTESVILLE JULY 29
CFO CONFERENCE, CHARLOTTESVILLE AUGUST 27
CONSUMER LENDING SCHOOL, GLEN ALLEN SEPTEMBER 18
CREDIT MANAGEMENT CONFERENCE, CHARLOTTESVILLE OCTOBER 1
COMMERCIAL LENDING SCHOOL, GLEN ALLEN OCTOBER 17
ONLINE SEMINARS
AIB PRINCIPLES OF BANKING APRIL 16
AIB CONSUMER LENDING APRIL 16
AIB GENERAL ACCOUNTING APRIL 16
INTRODUCTION TO AGRICULTURAL LENDING APRIL 16
AIB BASIC ADMINISTRATION DUTIES OF A TRUSTEE APRIL 23
AIB PRINCIPLES OF BANKING ACCELERATED APRIL 23
Live Event Online Seminar
Information and online registration is available at the VBA website. Please either go to www.vabankers.org or use this form to check the box next to the program you want information about, then fax the form to the VBA office at 804-643-6308. The VBA will send you information about the program as soon as it is available, usually eight weeks before the program.
Name___________________________________________________ Bank/Firm _____________________________________________
Address ____________________________________________________________________________________________________________________
City________________________________________________________________ State/Zip ___________________________________
Phone___________________________ Fax_________________________ Email ___________________________________________________
For more information go to www.vabankers.org.
4 Virginia Banking | March/April 2012 www.vabankers.org
Calendar of Events
I bet you can quickly name the one teacher who had the most influence on you during your school years. Mine was Sue Moore, my
teacher for English 10 and Spanish 3 through 5 at Liberty High School in Bedford, Virginia. Not all that much older than I was – although it didn’t seem that way at the time – Ms. Moore was my favorite teacher and my least favorite teacher all rolled into one; it just depended on the day of the week as to how I viewed her! In hindsight, it is clear she was simply my favorite teacher all the way around.
We both had strong wills, which made clash-es inevitable, and there was this element, too: I thought I knew everything and she knew I did not. What Ms. Moore also knew was that I was capable of more than I believed I was, so she challenged me to push myself, not only academi-cally, but also as a person. She put up with my occasional shenanigans and she kept investing in me. My senior year of high school, I told Ms. Moore where I thought I would go to college; she replied that the school I had in mind was a good one, but said that I should aim higher. She strongly suggested that I consider The College of William & Mary and she had a lot to do with the fact that I did indeed apply (accompanied by her letter of recommendation), was admitted and had a great four years in Williamsburg.
Ironically, Ms. Moore followed my mother as a Spanish professor at Hollins University when my parents moved to the Richmond area after I graduated from high school; she taught at Hol-lins for a number of years. Ms. Moore now teach-es at Roanoke Catholic School, no doubt still in-fluencing students to stretch beyond where they think they can go.
I have been fortunate to have many great mentors in my life, including my parents; sev-eral excellent bankers at Jefferson National Bank, where I worked for 10 years before joining the VBA; my predecessor at the VBA, Walter Ayers; many Virginia banking leaders and my team-mates at the VBA, whom I learn from every day. At our Financial Forecast Event in January, past VBA Chairman Betsy Duke, a long-time Virginia banker who now serves on the Federal Reserve Board of Governors, observed that “… at the VBA we have raised Bruce from a pup!” and that was a precise statement. I was 28 years old when I joined the VBA and I am the beneficiary of many mentors who have invested in me; in fact, working with so many great banking lead-ers is a unique and incredible part of my role at the VBA.
We don’t all teach in a school setting, but without a doubt, we all teach. Others notice our actions and listen to our words. We make an impression on other individuals every day. As I reflect on Ms. Moore and all the other people who have invested in me and been great mentors to me, I realize how important it is for me to be that person to others.
In Virginia banking, we have a legacy of men-torship, not only within each of our member banks, but in the industry at large. We have in-credible volunteer support and bankers who take on leadership roles at the VBA. They learn from each other through their work together. We have a Leadership Division that is growing quickly in number and that is creating more op-portunities for emerging banking leaders to in-teract not only with each other, but also with cur-rent banking leaders who share their experiences and their time. Through community service and financial literacy initiatives, bankers are serving as mentors in their communities all over Virginia every day. As an industry, we do a terrific job of paying it forward.
I recently contacted Sue Moore to thank her for the valuable investment she made in me. If I get a similar call sometime in the future, I will have held up my end of the bargain.
Bruce Whitehurst can be reached by email at [email protected].
Bruce Whitehurst
President and CEO,
Virginia Bankers Association
Mentors
March/April 2012 | Virginia Banking 5 www.vabankers.org
Insights
”“ A lot of people have gone further than they
thought they could because someone else thought they could. — Unknown
6 Virginia Banking | March/April 2012 www.vabankers.org
Like buzzwords? Try “layered security.”That’s the latest regulatory catchphrase
intended to force bank IT and compliance managers to bring their Information Technology sys-tems up to newly established 2012 standards.
The FFIEC’s 2011 supplement to its 2005 Authenti-cation in an Internet Banking Environment Guidance – which applies to Internet, mobile and telephone banking – is the standard examiners are using to match bank compliance with new requirements. The guidance was published last summer, with an effec-tive date of Jan. 1, 2012.
Critical areas are risk assessments; a review of an institution’s current IT-Internet banking status; cre-ation of a business plan; and training.
There are clear indications that examination atten-tion will focus on:• Appropriate oversight and board reporting.• Comprehensive risk and controls assessment and
policy gap analysis.• Reasonable project plan and timeline.• Active coordination with service providers.• Enhancement to internal controls and customer
education programs.
According to the FFIEC 2011 Guidance, “Fraud-sters have continued to develop and deploy more sophisticated, effective and malicious methods to compromise authentication mechanisms and gain unauthorized access to customers’ online accounts.” Banks, the guidance continues, have not kept pace with these increased threats, as evidenced by the lev-el of ongoing fraud.
The 2011 guidance defines e-banking accounts as “high risk” when access to consumer nonpublic per-sonal information or the ability to transfer funds to other parties is involved.
The regulatory concern is that many banks don’t know what they’re up against. Criminals are now utilizing sophisticated attack methods that are silent and can bypass many of the security systems cur-rently in use.
The Zeus Trojan is one such weapon the bad guys continue to use against financial institutions and their customers. Unfortunately, anti-virus software often isn’t adequate protection.
How big a challenge is the Zeus Trojan? A study by Trusteer reported that 55 percent of 10,000 tested computers, all equipped with the latest updated se-curity software and antivirus, were unable to detect and remove the traces of the Zeus virus. New ver-sions of this malware are constantly being updated to avoid detection.
The FBI has reported that actual losses from Trojan total $70 million, and losses are growing.
Even today, more than two years after the study, Zeus remains a difficult enemy: New variants come to life almost daily and can be purchased by criminals for $700 to $15,000 dollars, depending on the mod-ules purchased. Infected computers have their online banking credentials stolen, which gives the criminal perpetrator access to account information.
The malware typically infects a computer through directed e-mail phishing schemes. In particular, small to medium sized businesses and government ac-counts have been targeted and attacked.
Resolution can be messy. Commercial accounts, for example, are not governed under Regulation E. Consequently, financial institutions and commercial customers who have been the victim of fraud often become involved in lawsuits as customers sue the bank in an attempt to recover money lost in the fraud.
There are actions VBA members can take to assure that their IT programs are compliant with the layered security approach the guidance requires:• The first step is a risk assessment to determine
how well your bank manages its Internet authen-tication program. The use of simple cookies or validation questions is no longer good enough. A customer’s mother’s maiden name, for example, is too easy to determine from easily obtainable public records.
• Look at both consumer and commercial accounts, because both are vulnerable.
By Steve Field Information Technology Compliance Consultant,
Thomas Compliance
Associates, Inc.
CornerCompliance
Internet Banking Requirements Get Tougher‘Layered Security’ is New Standard as Regulators Push Banks to Combat Internet Frauds
March/April 2012 | Virginia Banking 7 www.vabankers.org
• Assess how your bank monitors security at the time of transaction.
• If your bank uses outside vendors for its IT secu-rity, as many institutions do, make certain their systems are current with the new guidance.
• If there are shortcomings in your security pro-gram, develop a plan indicating the steps that will be taken to make the bank compliant. Exam-iners will especially look for a how-we’re-going-to-fix-the-problem response.
• IT and compliance should create an IT security presentation for the board and senior manage-ment, both of which are more seriously tasked than ever with compliance management. If there are issues, include them in the presentation – and explain how they will be solved.
• Develop an IT Internet security training pro-gram for customer contact and backroom staff – and for senior management and directors as well.
These what-to-do recommendations are based on what examiners will be looking for during regula-tory reviews: Diligent, good-faith efforts by man-agement to comply, within a reasonable timeframe, in 2012.
The guidance indicates banks should take the fol-lowing steps:
Perform periodic risk assessments of e-banking services.• Identify and assess threats and associated risks
to the institution and customers.• Assess and adjust information security pro-
grams, controls and customer education efforts.• Conduct the assessment at least annually or
whenever new technology or significant events occur.
Maintain authentication controls commensu-rate with risk exposure.• Single factor authentication by itself is inad-
equate.• Multifactor authentication and layered security
controls or other controls should be put in place.• Different levels of security should be applied to
your customer base, based on the risk of the ac-count type.
Establish customer awareness programs.• Educate customers on threats, risks, bank con-
trols and Regulation E applicability. Too often customers are taken in by phishing and other scams.
Establish, and implement, an action plan to bring the bank into compliance with the 2011 guidance.• Well documented risk assessment and policy gap
analysis.• Timely coordination with service providers, if
applicable.• Reasonable project plan and timeline.
Examiners will cite exceptions as Matters Requir-ing Attention or issue enforcement actions if an ac-ceptable effort has not been made.
VBA members seeking information or assistance with IT compliance issues should call Steve Field, a CISSP (Certified Information Systems Security Professional) and TCA’s compliance consultant for information technology. The toll-free number is 800-934-7347. TCA is the VBA’s endorsed provider of compliance consulting and support.
Money Mules
Victims
Malware
Exploiters
Malware coders develop malicious software that is sold on the black market.
Malware exploiters purchase malware and use it to steal victim banking credentials. They launch attacks from compromised machines that allow them to transfer stolen funds and deter any tracking of their activities.
Money mule networks are comprised of individuals engaged in the transfer of stolen funds who retain a percentage for their services.
Victims include individuals, businesses, and financial institutions.
Cyber Theft Ring
Victims are both financial institutions and owners of infected machines.
Money mules transfer stolen money for criminals, shaving a small percentage for themselves.
Criminals come in many forms:Malware coderMalware exploitersMule organization
3. Banking
credentials
siphoned
4. Hacker
retrieves
banking
credentials
Targeted
victim
6. Hacker logs into victim’s online bank account
Victim bank
Money mules
7. Money
transferred
to mule
8. Money
transferred from
mule to organizers
2. Victim infected
with credential-
stealing malware
Hacker
Compromised
collection server
5. Remote
access to
compromised
computer
1. Malware coder writes malicious
software to exploit a computer
vulnerability and installs a trojan
Malware coder
Compromised
proxy
Fraudulent
company
How the Fraud Works
Hacker
Global Reach
Total FBI cases: 390Attempted loss: $220 million
Actual loss: $70 million
United States: 92 charged and 39 arrestedUnited Kingdom: 20 arrested and eight search warrants
Ukraine: Five detained and eight search warrants
Law Enforcement
Response To Date:
victims
mule organization
malware coder/exploiters
This FBI graphic traces the cyber fraud process that worries banking regulators – and should worry bank IT and compli-ance officers.
8 Virginia Banking | March/April 2012 www.vabankers.org
ATM Disclosures, Standards and Bank Liability
Beware the Ides of March this year, especial-ly if your bank has ATMs. The Department of Justice established March 15, 2012, as the
date by which banks must make sure their ATMs comply with important communication-related as-pects of the 2010 Americans with Disabilities Act (ADA) standards. Some of the new standards in-clude requirements for new and existing ATMs. These new requirements aren’t the only ATM concerns banks have on their radars. Increasingly, banks are being pulled into litigation over compli-ance issues with the Electronic Funds Transfer Act requirements to provide ATM fee disclosures to customers. In addition, we have received a few in-quiries about the applicability of ATM surcharge fees and withdrawal limits on federal benefit and tax refund debit card programs. This article will touch on all these issues below and provide some helpful guidance.
ADA ACCESSIBILITY STANDARDS AND ATMS
The ADA prohibits discrimination against indi-viduals with a disability and imposes a number of standards for access to public facilities, products, and services. Two of the access standards are of par-ticular importance to banks: the requirement to re-move architectural barriers in existing facilities and the obligation to provide auxiliary aids and services to existing facilities. Banks with existing ATMs are not required to modify them to remove architectural barriers as long as the ATMs comply with the 1991 ADA specifications. The real compliance challenge lies in upgrading the communication-related as-pects of ATMs to meet the 2010 ADA requirements.
Communication-related aspects of ATMs are con-sidered “auxiliary aids or services.” Auxiliary aids and services are those designed to provide effec-tive communication. There are many questions as to what the Department of Justice (DOJ) considers to be a communication-related aspect of an ATM, but it does consider the speech output programs on ATMs to be communication-related elements. As auxiliary aids or services, these speech output ele-ments are subject to the upgrade compliance dead-
line on March 15, 2012.Banks may postpone making upgrades to their
auxiliary aids or services by establishing that do-ing so would impose an “undue burden.” The DOJ defines undue burden as “a significant difficulty or expense.” A number of factors go into classifying a measure as an undue burden, and ultimately it will be determined on a case-by-case basis. However, banks can take steps to comply with the new re-quirements and prove that upgrades will constitute an undue burden.
The American Bankers Association suggests that banks inventory their existing ATMs and compare each ATM’s specifications to the 1991 and 2010 ADA standards. In addition, they should work with their ATM vendors to determine the cost to upgrade the speech output capabilities. Lastly, banks should establish a budget, plan, and schedule for achieving ATM accessibility and revisit those plans annually. These steps can go a long way towards showing compliance with the new requirements or an undue burden.
Banks should also be aware that new ATMs must conform to all the requirements of the 2010 ADA standards, including physical access requirements and auxiliary aids and service requirements.
ATM FEE DISCLOSURE REQUIREMENTSNationwide, banks are increasingly being pulled
into litigation over ATM fee disclosures to custom-ers. A “cottage industry” has developed in finding ATMs that do not provide the fee notices required by the Electronic Funds Transfer Act (EFTA). This is especially costly for banks in violation of the EFTA as the Act provides for actual and statutory dam-ages AND attorney’s fees.
The EFTA provision at issue in these cases re-quires a bank charging an ATM fee to post a notice stating the fact that a fee will be charged for provid-ing the service and the amount of any such fee. This notice must appear in two places: in a prominent and conspicuous location on or at the ATM and on the screen or a printout before the customer decides to pay the fee. Banks may not charge ATM fees un-less they have provided the required notice in both
Mel Tull can be reached by email at [email protected].
LineLegal
Mel Tull General Counsel, Virginia Bankers
Association
March/April 2012 | Virginia Banking 9 www.vabankers.org
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JOB INFO FONTS & IMAGESAPPROVAL & NOTES
SAVED 2-20-2012 4:23 PM | BY Lexie Fiser | PREVIOUSLY BY Sandy Henehan | FILES SENT VIA Email » Contact Blair Vance · (816) 423-6096 · [email protected] ROUND
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places and then received the customer’s consent.Banks can take a number of steps to help avoid
EFTA liability, including performing and docu-menting regular inspections of their ATMs to confirm the presence of the required notice. They can also retain security photographs or videos for review upon receiving a complaint for failure to provide the necessary disclosure.
These practices can help banks establish proof towards the two main statutory defenses. The first defense allows a bank to avoid liability if it can prove the violation was not intentional and resulted from a bona fide error. A second way banks may avoid liability is by proving the notice was removed or changed by someone other than the ATM operator.
FEDERAL BENEFITS AND INCOME TAX REFUND DEBIT CARDS
Lastly, we have received a few comments and questions about federal debit card programs that allow individuals to withdraw money from ATMs to get cash from their Social Security ben-efits and/or federal income tax refunds.
U.S. Direct Express allows the Social Security Administration to load federal benefits to a recip-ient’s special debit card. There are no ATM fees for cash withdrawals at Direct Express network ATMs, but the program warns recipients they may incur service charges if they use ATMs not in the network. At least one bank does not impose withdrawal limits on cash withdrawals made with the Direct Express card. Other ATM own-ers may set limits on the maximum withdrawal limit.
The Treasury Department last year unveiled its pilot program to refund federal income taxes via the MyAccountCard debit card program. As above, card users have access to a network of sur-charge-free network ATMs. Card users can also load the card with cash, a paycheck, and future tax refunds.
Banks are likely to see an increase in the use of such cards as a way of distributing federal ben-efits. This is especially true with the Direct Ex-press cards as it will be the only way the Treasury sends Social Security benefits to those who do not receive direct deposits as of March 1, 2013.
10 Virginia Banking | March/April 2012 www.vabankers.org
VBA Successful in General Assembly Long Session
As of this writing, the Virginia General As-sembly was in the final days of its 60-day “long session.” While final agreement on
the Commonwealth’s biennial budget remained out of reach – and still might be pending as you read this – the vast majority of legislation had reached its ulti-mate outcome. The VBA had a successful session on legislative proposals impacting the banking industry in Virginia and we wanted to provide a summary of the actions that took place in Richmond.
The VBA board endorsed two proposals to proac-tively advance in the session. The first dealt with the ability to appoint a substitute attorney-in-fact for a confession of judgment. As there is no current process to appoint a substitute, this change was necessary as the need to confess judgment often arises many years after a note or loan document is prepared, by which time the attorney specifically named in the note or loan document often is no longer available to confess judgment.
The second bill eliminates the 10-year holding pe-riod limit and the requirement to write down the val-ue of bank owned real estate. This allows state banks to hold such property indefinitely without writing down the value of the asset on the bank’s books. The requirement that banks arbitrarily write down the value of DPC real estate on their books conflicts with accounting rules. The VBA thanks our legislative sponsors of these bills, Senators John Watkins and Bill Stanley and Delegates Terry Kilgore and Greg Habeeb. Gov. Robert McDonnell signed the bills into law at the beginning of March. These, as with most laws enacted during the legislative session, will come into effect on July 1 of this year.
In addition to our VBA agenda bills, we were also supportive of a number of successful bills related to our business. We worked to improve the effects of a proposal to implement the Dodd-Frank Act’s require-ment of the licensure of appraisal management com-panies, including securing an exemption for AMCs that are a subsidiary owned and controlled by a fi-nancial institution. There were also a number of bills related to the garnishment process beneficial to credi-tors’ ability to collect on their debts. The ability to
collect costs from prior garnishments in a subsequent collection and to initiate proceedings in the physical location of the debtor were two of the changes that advanced with VBA support. Finally, several com-mon sense adjustments to Virginia’s trust laws were approved that either add needed clarity or provide new trust service opportunities for customers.
The new changes in Virginia’s banking laws are positive developments. Unfortunately, not all the leg-islation submitted by lawmakers was constructive. Much of the time spent by the VBA’s government relations team at the Capitol was “playing defense” against those harmful items.
Similar to the 2011 session, there were many bills aimed at altering the state’s foreclosure process. Among the proposals debated were attempts to re-quire the recordation of a mortgage note every time it is assigned, mandate the cessation of the foreclosure process during a pending modification request and create a new civil cause of action when fraudulent documents are used in a foreclosure. The VBA argued that these and other foreclosure bills were unneces-sary or would only serve to increase costs and com-plexity to the process. Legislators were particularly interested in the various developments occurring at the federal level relative to mortgage servicing and regulatory oversight over the preceding year. Under-standing that those and further anticipated revisions are more appropriately addressed at the federal level and acknowledging that Virginia’s underlying fore-closure framework is and should remain efficient and effective in order to facilitate a housing recovery, the measures were defeated for the year.
Along with the failure of foreclosure legislation, bills to grant priority lien status to condo and home-owner associations as well as local zoning violations were also defeated with opposition from the VBA. The same fate was accomplished for a bill mandating IOLTA.
Overall, the 2012 General Assembly session was a success for the banking industry. If you have any questions about the new laws taking effect or any-thing related to the VBA’s government relations, please do not hesitate to contact us.
Matt Bruning Director of
Government Relations,
Virginia BankersAssociation
UpdateLegislative
Matt Bruning can be reached by email at [email protected].
VCDC
Virginia Community Development Corporation // vacdc.org
Over 20 years of profitable investing
Housing Equity Funds of Virginia
For more information, please contact Arild Trent at 804.343.1200 x116 or [email protected]
March/April 2012 | Virginia Banking 11 www.vabankers.org
AUSTIN L. ROBERTS III HONORED WITH SENATE JOINT RESOLUTION
On March 6, Barbara Roberts received a resolution honoring the life of her husband, Austin Roberts, a well-known leader in the Commonwealth’s banking industry and admired community supporter from White Stone. Austin Roberts began his remarkable banking career at First & Merchants Bank; he then moved to First Peninsula Bank & Trust, where, at the age of 29, he became the youngest bank president in the Commonwealth at the time. After helping start Commerce Bank in Newport News, Roberts relocated to the Northern Neck and began an exemplary 21-year career as president and chief executive officer of the Bank of Lancaster. A visionary leader, Roberts recognized the importance of hometown banks to local consumers, overseeing the growth of the Bank of Lancaster. He was committed to helping the banking industry better serve its customers, and he shared his extensive experience and expertise with a variety of professional organizations, including the Virginia Bankers Association, the Virginia Association of Community Banks, and the American Bankers Association. He is dearly missed.
NotingWorth
Sen. Ryan Mc-Dougle presents the resolution to Barbara Roberts.
At the presentation, from left, were Matt Bruning, Genise Whitehurst, Linda Beale, Billy Beale, Bruce Whitehurst, Sen. Ryan McDougle, Barbara Roberts, Speaker of the House Bill Howell and Delegate Margaret Ransone.
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W ith more than 400 people attend-ing the 12th Annual Banker Day, Virginia bankers definitely left an
impression on their legislators at the General As-sembly on Jan. 12, 2012. The crowd was so large this year that the bankers relocated from their traditional meeting location in the Capitol to the Downtown Richmond Marriott, starting their day with breakfast and remarks from Regional President and Chief Credit Officer of Cardinal Bank and VBA Government Relations Committee Chairman Chris Bergstrom, VBA Director of Gov-ernment Relations Matt Bruning, and Speaker of the House Bill Howell. From there, the bankers dispersed to meet with their respective legisla-tors, discussing with them key industry issues and their stance on certain bills of importance. Topics that dominated conversation included foreclosures, IOLTA, state-owned banks, lien preferences, education and the state budget.
After the meetings took place in the General Assembly Building, bankers regrouped at the
Marriott for lunch and a presentation from Dan Palazzolo, Ph.D., a professor of political sci-ence at the University of Richmond. Palazzolo provided a timely and insightful update on the political landscape locally in Virginia and nation-ally. Meetings with legislators then continued all afternoon.
The VBA would like to thank everyone who participated in this event! This year’s record at-tendance number clearly demonstrates that Vir-ginia bankers are engaged and understand the importance of a strong grassroots effort.
We’d like to thank the Leadership Division, which also participated in the event. Division members met the night before Banker Day for a Pre-Banker Day Reception at Gibson’s Grill. Participants had the opportunity to network and hear from past attendees of Banker Day on what to expect from the event. More than 40 people at-tended the reception.
Please save the date for Banker Day 2013 on Thursday, Jan. 10.
BANKER DAY 2012 DRAWS RECORD ATTENDANCE
12 Virginia Banking | March/April 2012 www.vabankers.org
THE GROUP WAS THE LARGEST ITS EVER BEEN
SENATOR JOHN WATKINS MET WITH HIS CONSTITUENTS DELEGATE PETER FARRELL WITH CAPITAL ONE PARTICIPANTS
VBA CHAIRMAN BILL COUPER WELCOMED BANKERS TO THE LUNCHEON
SPEAKER OF THE HOUSE BILL HOWELL ADDRESSED THE GROUP SENATOR JEFF MCWATERS WITH TOWNEBANK AND MONARCH BANK PARTICIPANTS
SENATOR MARTIN WITH THE BANK OF SOUTHSIDE VIRGINIA PARTICIPANTS
BANKERS FROM MAINSTREET BANK AND BANK OF BOTETOURT WITH DELEGATE POINDEXTEROVER 400 BANKERS ATTENDEDUNION FIRST MARKET BANK PARTICIPANTS
LEADERSHIP DIVISION ATTENDEESGARY GORE, ERICK KAUDERS, VICTOR BRANCH AND BILL COUPER
14 Virginia Banking | March/April 2012 www.vabankers.org
Staying Ahead of Dodd-Frank
W e’ve got another big year ahead for Dodd-Frank Act implementation. To help bankers stay out in front of
this regulatory freight train, we’ve published and mailed to community banks our latest resource, “Dodd Frank & Community Banks: Your Guide to 12 Critical Issues.”
This 29-page guide, developed with the input of bankers like you, provides detailed information on 12 key implementation items for 2012. Each issue is explained in terms of why it matters to community banks and what to watch out for. Just as important, the guide examines each issue from the standpoint of how bankers can get involved and help shape the outcome.
Take the issue of capital, for example. As the guide explains, the advocacy challenge is to sensibly dial back capital requirements while
ensuring stable sources of capital.Sounds reasonable. The challenge, however, is
a big one, since every indicator in the regulatory and legislative spheres, as well as public sentiment, points to requiring more bank capital.
We’ve got to continue to tell, and sell, our story: That increasing capital requirements is a drag on banks’ lending, which hurts communities across the country.
Capital is just one of the dozen issues we’ve highlighted in our guide. There are also Consumer Financial Protection Bureau rules, FDIC coverage and the assessment base, housing finance, and the qualified mortgage and qualified residential mortgage rules, the Volcker Rule, and more.
Please read the guide, share it with others in your bank and get involved in shaping these important
Frank Keating President and CEO,
American Bankers Association
UpdateWashington
Gov. Frank Keating can be reached by email at [email protected].
Continued on page 19
2012 Virginia Bankers Association Annual Convention: Register Now!
Perspectives:119th
Annual VBA Convention
Banking
Explore Others. Challenge Your Own.
Michelle Bernard: The View from
Washington
Frank Keating: Banking Legislative
& Regulatory Priorities
Dennis Gartman: Economic Outlook
Dean Browell: The Social Revolution
June 17-20 • The Homestead •Hot Springs, VA
Learn more by scanning the QR code to visit our website, www.vabankers.org.
March/April 2012 | Virginia Banking 15 www.vabankers.org
CREDIT & LENDING RESOURCES, INSURANCEALLIED SOLUTIONS
19301 Winmeade Drive, Suite 208Leesburg, VA 20176Phone: (804) 301-9135CONTACT: JASON POOLEmail: [email protected]
Allied Solutions is proud to be one of the largest providers of insurance, lending, and marketing products to financial institutions in the country. They believe it is their impartial perspective that has earned them the trust of more than 4,000 clients nationwide. At Allied Solutions, their team is focused on your goals.
EMPLOYEE BENEFITS, INSURANCEBANK FINANCIAL SERVICES, INC.
1315 East Blvd., Suite 409Charlotte, NC 28203Phone: (704) 906-4728Fax: (866) 467-5260CONTACT: DENNIS KINGSLEY OR TIM HUNTEmail: [email protected]
BFS Group works exclusively with financial institutions to create and manage supplemental benefit plans for top executives and directors. With more than 75 years of combined experience in the banking industry, BFS Group is uniquely qualified to design and administer meaningful benefit plans while positively impacting the bottom-line through specialized BOLI financing strategies.
INVESTMENT & TRUST SERVICESEATON VANCE
2 International PlaceBoston, MA 02110Phone: (617) 672-8306CONTACT: JIM MAKI, BANK TRUST RELATIONSHIP MANAGEREmail: [email protected]
Eaton Vance Corp. (NYSE: EV) is one of the oldest investment management firms in the United States, with a history dating to 1924. Eaton Vance and its affiliates managed $177.8 billion in assets as of September 30, 2011, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The company’s long record of exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors.
MARKETING, SECURITY SERVICESAFFINITY MARKETING
476 Old Barn RoadLake Barrington, IL 60010-1721Phone: (847) 304-6672Fax: (847) 304-1638CONTACT: JIM THOMPSON, PRESIDENTEmail: [email protected]
Strategically placed marketer of consumer ID Theft restoration services providing account holder retention & loyalty while producing Financial Institutions with a non-interest revenue stream and breach mitigation services. Also offer strategic and tactical marketing services.
MORTGAGE & REAL ESTATE SERVICESARCHWOOD MORTGAGE, LLC
11781 Lee Jackson Hwy, Suite 250Fairfax, VA 22033Phone: (703) 277-1055Fax: (703) 562-1940Website: www.archwoodmortgage.comCONTACT: ROLAND VARBLOWEmail: [email protected]
At Archwood Mortgage, they offer better rates and better service than those “big banks” and military credit unions ever could. They bring decades of experience to every mortgage transaction. They work hard to ensure a smooth, efficient process for every borrower.
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The growth of online shopping increased risks associated with consumer identity theft and fraud. These concerns escalated
in the early 2000s with some high profile “break-ins.” Today, identity theft has reached a new level of concern. Consumers no longer speculate wheth-er or not they will become a victim of identity fraud, but rather when and how often their personal information will be obtained and used fraudulent-ly. In many cases, financial institutions are paying the price for these security breaches.
According to a study released by Javelin Strat-egy & Research in February 2012, one in 20 indi-viduals became victims of identity theft in 2011. In 2011, there were 7.7 million victims of debit card and credit card fraud. Identity theft losses totaled $18 billion. Time spent trying to recover from identity fraud can amount to many hours – not to
mention the mental and emotional anguish that consumers experience.
Today, the targets most at risk include small businesses. Identity thieves know that small busi-ness fraud typically yields higher returns than consumer fraud due in part to higher credit lim-its. Furthermore, cyber hackers know that small businesses house large numbers of personal re-cords that can be sold very profitably on the black market, used for fraudulent purchases, or used to falsify “identification” for perpetrators. Busi-nesses face greater challenges and expenses than ever before in protecting the security of their data. Many do not have the manpower or the resources to manage the escalating costs of fraud losses and maintaining a strong risk management infrastruc-ture.
According to an upcoming study from the Iden-tity Theft Resource Center (ITRC), previewed in January 2012 by “Information Week,” 22.9 million records were affected in breaches that were pub-licly disclosed in 2011. Attacks by hackers were the leading cause of data breaches for the year, re-sponsible for 26 percent of all known data breach incidents.
A small business that suffers a data breach must respond by notifying affected customers and, to protect both the customers and its own reputa-tion, provide services such as credit monitoring. Responding to a breach diverts attention from running the business. The combination of loss of focus, expenses to respond, and damage to the reputation of the damage can be devastating to the small business and can even call into question its longer-term viability.
Financial institutions are affected as well. They often bear the burden of investigating and
NXG Strategies, LLC, founded in January 2005, is a pioneer in the industry of identity fraud identification and
resolution and corporate risk mitigation, working with many of the nation’s organizations and financial institu-
tions to provide quality programs for the protection of consumers and companies at risk. NXG Strategies under-
stands the impact of record breach and fraud on both consumers and small businesses, not only for these individu-
als and entities but also for the financial institutions that often must bear the cost of fraud losses. Their services
include complete response plans for breach incidents, fraud monitoring to detect fraud early and prevent damage,
and fully managed recovery when fraud occurs. With a full suite of solutions, they effectively serve the needs of
accountholders and small businesses, while at the same time helping to reduce expenses associated with fraud risk
mitigation, ultimately helping the financial institution to improve ROE.
By Vickie J. Storm
Chief Marketing Officer,
NXG Strategies
Data Breach and Identity Fraud: How to Proactively Mitigate Fraud Loss
16 Virginia Banking | March/April 2012 www.vabankers.org
March/April 2012 | Virginia Banking 17 www.vabankers.org
reimbursing financial losses. If the small business’ profitability is damaged, its credit relationships with the financial institution may be compromised as well.
As a leader in your financial institu-tion, a thorough assessment of identity theft risk must consider the following issues. To start, it might be surprising to note the number of fraud claims that your institution is receiving on a weekly basis. From there, evaluation criteria would include:• The amount of employee time spend
on responding to accountholder incidents of identity theft and small business breach.
• The amount of time spent by your risk management personnel and other employees to monitor accountholder accounts in a plethora of ways, from overdraft management to unusual credit card usage to processing investigations of possible false claims of fraud.
• The amount of money credited back to accountholders due to identity theft, especially the smaller claims that are credited without an investigation because the manpower is not available.
Expenses associated with fraud risk mitigation are increasing and are nega-tively impacting the FIs ROE, an increas-ing important ratio for financial analysts to track. Combining the impact of in-creased expenses, rising fraud losses and lost revenue due to regulatory changes produces a significant, negative effect on profitability. Financial institutions are seeking ways to replace lost revenue, but such initiatives must be well-exe-cuted and enjoy consumer acceptance in order to produce the right results for FIs. Recent attempts to charge monthly debit card fees to supplant lost income were poorly executed with devastating results. The key is to create value. When consumers see greater value in their re-lationships, they are generally willing to pay for it.
Financial institutions can reposition the value proposition of checking ac-counts (the most at-risk accounts due to the frequency of use and the attachment to an ATM/debit card) by establishing a security assessment for these accounts. The security assessment is tied to the
checking account itself rather than to any specific benefits that come with it. Such benefits remain free; for example, online banking, bill pay, ATM/debit card, first order of checks, identity fraud protections, etc. (The foregoing list con-tains examples of the types of benefits that may be offered free with a check-ing account.) Some accountholders may object to paying for a checking account, and for them it is possible to create a no-frills, basic checking account with very limited benefits and no fee.
Similarly, for small business, a set of benefits and features can be provided as a way to open the door to more small business relationships, a way to differ-entiate your financial institution by be-ing provided at no charge or to be com-bined with your other product features to justify a price (or price increase) for the business checking account. Features vary from product to product. Following are some of the features that you should seek:• Business fraud detection and
prevention – Securely store up to 25 credentials (EIN, account numbers, etc.), for each business, for use in
monitoring black market sites, chat room and social networking sites.
• A complete breach response plan, including communication to minimize brand damage, fines, and class action law suits, provided within 48 hours.
• Fully managed identity fraud recovery services for up to 100,000 compromised records.
• Unlimited business fraud recovery service with NO time limit.
• Consumer identity protection for the businesses employees and board members.
Best-in-class identity fraud solutions today will include pre-event monitor-ing to prevent fraud (or minimize dam-age) in addition to gold-standard post-event recovery services. While there is an expense associated with providing these services, the cost of not providing them can be far greater in the long run. In this arena, the old cliché that “igno-rance is bliss” needs an update. For all of us, consumers, small businesses and financial institutions, ignorance is risk – and costly.
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Temporary SBA 504 Refinancing Program Provides Long-Term Working Capital for Small Businesses
18 Virginia Banking | March/April 2012 www.vabankers.org
Recognizing the dilemma faced by small businesses as a result of the contraction in the credit markets, the Small Busi-
ness Administration has temporarily modified its SBA 504 Program to allow the refinancing of existing debt and the use of the equity in the property for long term working capital needs.
Small businesses have historically had lim-ited access to long-term financing at attrac-tive interest rates. As a result, many elected to finance long-term projects or long-lived assets with short-term balloons in anticipation that the lender would renew the balance at maturity on similar terms. The recent financial crisis and economic downturn caused many businesses to scramble as their commercial mortgages ma-tured, but their renewal was not assured. Ad-ditionally, such short-term financing often cre-ates havoc in budgeting, planning for long-term growth and effectively allocating scarce financial resources. This new SBA refinance program is designed to meet your long term financial needs.
PROGRAM BENEFITSThis program enables you to refinance your
existing debt with a long term loan and, if you
have more than 10 percent equity in your prop-erty, you can also borrow against that equity for your working capital needs. SBA 504 loans are funded by the sale of 10-year and 20-year bonds guaranteed by the SBA. Thus, this loan has an interest rate that is generally lower than market. Recent interest rates have been as low as 5.15 percent for 20-year SBA 504 refinancing loans.
PROGRAM ELIGIBILITYYour small business must have been in exis-
tence at least two years before the loan applica-tion is received by the SBA. It must be for-profit and have a tangible net worth of less than $15 million and an after tax profit of less than $5 million for the previous two years. Your small business must currently occupy at least 51 per-cent of the existing commercial real estate to be refinanced, and the property must have been ac-quired at least two years ago with debt. In addi-tion, you must demonstrate that the loan is cur-rent and that you have not made any payments more than 30 days after the due date under origi-nal or modified bank terms for the past 12 months. Such modifications of terms must have been en-tered into prior to Oct. 12, 2011.
REFINANCING A $1,100,000 NOTE WITH CASH OUT FOR WORKING CAPITAL
Current Appraised Value of Property $1,400,000
New Maximum Outstanding Balance of Debt $1,260,000 90% LTV
LOAN STRUCTURE
ENTITY LOAN AMOUNT % OF LOAN SECURITY
New Bank First Trust Loan $ 560,000 40% 1st Lien
New CDC/SBA 504 Loan $ 560,000 40% 2nd Lien
Borrower contribution (equity) $ 280,000 20%
Appraised Value of Property: $1,400,000
Existing Note Payoff: $1,100,000
Cash out for Working Capital: $160,000
By Barbara A. Vohryzek Regulatory
Affairs Advisor,National
Association of Development Companies
March/April 2012 | Virginia Banking 19 www.vabankers.org
PROGRAM FEATURESLoans under this temporary 504 refi-
nance program are structured like tradi-tional 504 loans. With a traditional 504 loan, a bank provides up to 50 percent of the project cost and holds the first lien position. A Certified Development Company (CDC) provides up to 40 per-cent of the project cost and takes a sec-ondary position to the bank loan. The small business borrower must provide equity of as little as 10 percent. The amount of the bank loan must be at least as much as the 504 loan.
While there is no limit on project size, the 504 loan is limited to $5 million maximum for the majority of refinance projects just as with the regular 504 pro-gram. The upper loan limit increases to $5.5 million for eligible manufacturing projects and projects that incorporate energy saving technologies.
The project structure is based on the current appraised value of the collat-eral, and up to 90 percent of this value may be refinanced.
A huge benefit of the SBA 504 refi-nance loan is that you are able to refi-nance your existing debt and use excess equity to obtain long term working capital for payment of eligible business expenses. These expenses can include items such as rent, utilities, inventory and other business obligations.
The National Association of Develop-ment Companies (NADCO) – the trade association representing the nation’s CDCs – has actively worked with SBA to promote the 504 refinance program. NADCO President Chris Crawford noted, “Over the past two years, our in-dustry has worked to assist more small businesses as they deal with the impact of this recession. We believe thousands of small businesses can improve their cash flow and extend existing debt un-der this new refinancing program.”
For more information on this new debt refinancing program, contact a certified development company in your area right away. Visit the NADCO website at www.nadco.org for a list of member CDCs in Virginia. They will be pleased to meet with you to explain the unique advantages of the program. Act fast; the program expires Sept. 27, 2012, unless Congress acts to extend it.
It’s only a sampling, but look what’s in the compliance services package TCA provides VBA member banks:
• Hands-on help, with scheduled on-site audits.• Timely, accurate information about compliance issues and trends.• Advice about how to meet federal compliance requirements.• An e-newsletter heads-up when the rules change.• Access to the TCA compliance professionals, the people who make TCA the
most respected source of compliance information and assistance in banking.
Whether your need is BSA/AML, IT vulnerability scans and web site security reviews, or training that keeps your staff — and directors — up-to-date, TCA is your Compliance Advantage.
Call us . . . today . . . to learn more. 1-800-934 -7347.
Thomas Compliance Associates, Inc.2846 N. Mildred Avenue, Suite 150Chicago, Illinois 606571-800-934-7347
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issues. Don’t hesitate to tap into ABA’s staff expertise (1-800-BANKERS) and our tremendous online resources, such as our up-to-the-minute ABA Dodd-Frank Tracker (www.regreformtracker.aba.com).
You can also look to us for support through peer networking, training and education, and products and services.
The challenge for our industry is not to put the Dodd-Frank Act behind us, but to stay out in front of it. Working together, we can do that.
Continued from page 14Barbara A. Vohryzek is president of
Vohryzek & Co., a consulting firm which
specializes in SBA lending. She currently
serves as the regulatory affairs advisor for
the National Association of Development
Companies, the trade association for certified
development companies. She can be reached
at (703) 748-2575 or [email protected].
Taking a Different App-ti-tude
By Jennifer Geis Strategic Business
Development Manager
Jack Henry & Associates, Inc.
With each passing day, it seems that there is a gizmo, gadget or app for virtually everything, from grocery shopping or
finding the cheapest gas in town, to organizing photos or finding a long-lost relative.
The most recent consumer craze is the tablet device. Ownership of this technology is growing exponen-tially – tablet users in the U.S. are estimated to grow 51 percent from 2010 to 2015. At last count, Apple has sold more than 44 million iPads, with several other vendors following suit. Amazon has now introduced its own set of tablets, and Forrester Research estimates that it could sell anywhere from three to five million tablets in its first quarter on the market.
It’s tough to keep up with all of these newly-released gadgets, and tougher still if you’re a first-generation computer user. With the myriad applications available on the market today, it can be difficult to determine which apps you need, which ones are worth paying for, or perhaps more importantly, which ones you will actually use.
Many iPad and tablet users are flocking to a new application called Flipboard. Flipboard packages im-ages, videos, articles, Facebook updates and tweets in a consolidated format. It organizes personal prefer-ences and offers them up in a one-page block format that is optimized for easy browsing. Flipboard even collects information published by friends on Facebook and Twitter, turning disparate links to photos, videos and articles into an accessible potpourri of your favor-ite things.
This is the new expectation of the online experience – a place for everything and everything in its place. With all of the online options at our fingertips, con-sumers are gravitating more and more to the online channel to simplify and solve the challenge of organiz-ing their lives.
This methodology not only applies to the way we interact online in general, but it also applies to the way we bank online. Just as apps come and go, our attitude toward banking is evolving. Consumers are expecting easy and immediate access to organized and consoli-dated financial information.
So how can your bank meet this consumer demand and consolidate transactions into a pretty package of financial services in the same way that Flipboard does for the iPad? Three small initials – OFM, or online fi-
nancial management.OFM (also known as PFM, or personal financial
management) is growing in popularity as more and more banking functions move online and consumer demand grows for all-in-one financial control. OFM sites are marketed as “dashboards,” where users can view multiple accounts, categorize financial transac-tions, manage alerts, create and manage budgets, ac-curately analyze spending, and even establish savings goals and track net worth – all in one place.
According to a recent Celent report, online banking is no longer about using personal computers and log-ging into an online banking website. It is about an in-tegrated, fully functional online banking and bill pay user experience.
Celent reports that in the future of electronic bank-ing, an ideal scenario for banks would be to house all of its electronic banking components in one place. In-terchangeable modules such as bill pay, money move-ment and PFM widgets would be served up to the de-vice, and modality would be selected by the consumer, along with a properly skinned front end. This shift clearly has implications for OFM and will contribute to it becoming the cornerstone of online banking.
Although OFM has come a long way in recent years, in some respects it still has a long way to go. Many OFM solutions on the market today are bolt-on solu-tions that create a disconnected user experience; their solutions open up in new browser windows, have dif-ferent interfaces and menu structures, varied naviga-tion and an inconsistent look and feel.
Progressive technology vendors, however, antici-pated the demand for a seamless consumer experi-ence, and developed OFM services that encompass the comprehensive and cohesive features that consumers crave. Smart OFM solutions allow consumers to easily monitor account balances, transfer funds, create attrac-tive graph-like pictures of their overall financial sta-tus, and even pay bills through one simple and secure connection to their online banking website. They offer individualized homepages that integrate online bank-ing, OFM and bill pay, along with bank-specific mar-keting to create a consistent, comfortable and targeted user experience. Progressive technology providers are also introducing online banking iPad apps, which will allow users to be even more mobile and flexible with their financial management.
Expectations of the Online Experience are Changing
20 Virginia Banking | March/April 2012 www.vabankers.org
Jennifer Geis is a strategic business development manager for Jack Henry & Associates, Inc. She can be reached
at 727-525-2107 or [email protected].
www.vabankers.org March/April 2012 | Virginia Banking 21
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So, while banking online and paying bills probably isn’t on the top-10 list of fun things to do on the weekend for most con-sumers, seamless features like OFM and mobile features like the iPad app certainly make financial management much easier and possibly more entertaining for today’s tech savvy, convenience-driven consumer. And perhaps more importantly, OFM aligns their online banking experience with the “everything in its place” methodology that is so common among other new tech-nologies available on the market today.
Your customers are gravitating toward the online channel to simplify their finan-cial management experience. If you aren’t offering the premiere technology, online features and simplified user experience they expect, there’s likely a bank just down the street that can. Talk to your technology vendor about these high-demand features today and develop a plan to adopt them at your bank right away. Your convenience-driven customers, and ultimately your bank’s bottom line, will benefit from your progressive thinking and organizational shift in app-ti-tude!
((( VBA COMMUNICATION CORNER )))
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MoveBankers on the
Dickinson Jordan Hardin Robertson Dysart Dull Brown White O’Toole
Are your bankers on the move? Email submissions to [email protected].
22 Virginia Banking | March/April 2012 www.vabankers.org
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