Category Archives: Banking

Are Banks Lending to Small Businesses?

The media has been quick to point out instances where banks have stopped lending to small business clients, either by reducing or eliminating lines of credit, changing terms, upping APRs, or simply refusing loans. The truth is that lending demand has also slowed appreciably, at the same time that banks are looking for ways to reduce risk.

But given all the bad press that is out there, banks are making sure that prospects and clients alike are seeing them less as the villains in a down economy, and more as partners who are in it for the long haul.

Today, to help manage its image despite its crippling losses, Citigroup announced that it is using its TARP monies to fund nearly $45BN in loans. While it is making loans to local governments, municipalities, universities and non-profit hospitals to stimulate local growth, Citi points out that it has been making loans to small businesses as well as consumers.  According to the report, “New lending to U.S. individuals and families, small and mid-sized businesses and large corporations, along with underwriting activity, totaled $120.1 billion in the first quarter of 2009, up from $81.2 billion in the fourth quarter of 2008.”

So what does that mean for small businesses specifically? According to Citi, small business loan balances outstanding rose from $1.1BN in March 2008 to $1.3BN in March 2009. Not much of an increase in the grand scheme of things, but $200MM is enough for Citi to report that it is lending, just like its peers.

The full report, which has the catchy title, “What Citi is Doing to Expand the Flow of Credit, Support Homeowners, and Help the U.S. Economy,” can be found on Citi’s website.

Reinventing Loyalty

Findings from EMI’s National Study

Customers may be satisfied with their banking relationships, but that satisfaction doesn’t always translate into more revenue or deeper relationships. And in today’s economy, acquiring new relationships while growing current ones is becoming an increasingly high-stakes game.

In EMI’s national consumer study, we uncover the role that loyalty programs play in acquisition and retention. What we found is that banks still have a long way to go towards turning loyalty into deep and profitable relationships:

  • Only 9% of consumers stated that loyalty is the most important reason for remaining with their primary bank or credit union
  • 69% of consumers have a primary credit card issued by a financial institution other than their primary bank, and they cite a better rewards program as the most important reason for looking elsewhere
  • Of the minority who have credit cards issued bt their primary bank, a high percentage of consumers chose the card simply out of convenience

Growing bank deposits

As banks reduce budgets for consumer lending, growing deposits has become ever more important, both to gather assets and to drive effective acquisition.  We’ve just released an in-depth benchmarking and analysis of the leading deposit generation programs in banking today to help banks assess competitive marketing messaging, media, and content, understand best practices and monitor deposit industry financials to learn who’s winning, and why.  

Specifically, the report includes two volumes:

  • 50 pages of trends and analysis including market share of the top banks, perspectives on how well each is doing in growing deposits (based on their deposit performance through 3Q08), categories of deposit programs – online and offline, marketing trends, with leading features and innovations recently seen.
  • A deep dive into the marketing programs of 20 banks — from the national leaders to regional innovators to the aggressive online banks (100+ pages of analysis). 

If you are interested in learning more about this report, please email Alicia at arecupero@emiboston.com.