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The revised CRA rules give banks choices on how they will be assessed under CRA: the lending/investment/services performance test; the strategic plan, or the wholesale or limited purpose bank test. [...]

Integrated risk management, comprehensive risk management, managing enterprise risk, supervision by risk, CAMELS... Why? Why now? What's changed? What's different? There are a number of factors contributing to the new, [...]

The concept of credit scoring originated in academia, as have many business applications. Almost twenty years ago, corporate distress, failure, and default came under academic scrutiny, primarily as a result [...]

The transition from check to electronic payments by the federal government has moved at a steady pace over the last 20 years. In 1975, all payments by the Financial Management [...]

An updated study on the increasingly competitive environment of small business lending offers sobering statistics, plus suggestions on how to stay ahead in the race for this growing market. (Reprinted by permission of the publisher.), Over the past several years, banks and nonbanks have increasingly turned their attention to serving small business customers. Technology has increased the attractiveness of this market by enabling effective target [...]

The trend toward replacing paper-based payments with electronic payments via such media as smart cards and personal computers raises a host of issues related to the definition of and responsibility [...]

Who are your competitors? The answer to that question used to be the bank across the street, or the S&L down the block. Many financial services organizations still look at [...]

The assumption that without a convenient, physical, full-service, commercial bank branch, a community's financial service needs are unmet seems to be a broadly held view. Given that assumption, the current [...]

The results of a recent study for The Bankers Roundtable suggest that the banking industry's stake in one of its most valued franchises, the payments system, is at risk. The problem stems partly from the bankers' narrow perception of the system. They often see the payments system only as a means to support their banks' core businesses and to exchange monetary value. Banks have been slow to respond to increasing competition and changing customer perceptions. Titled 'Ensuring a Role for Banks,' the study suggests that survival and success in the payments system business will only be achieved by those banks that are proactive in preserving their stake in this franchise, work towards making the system faster, safer and cheaper, and offer fee-generating payments products that suit the changing needs of their customers.

The small business market is increasingly capable of finding other financial sources other than banks due to overregulation of banks, new technologies and changing customer attitudes. Banks should keep on developing their advantages with small businesses to compete and keep their customers. Securitization will be the future trend in small business lending. Some ways banks can protect themselves are by strengthening their offense against regulations which increase costs and affect small business lending and by obtaining more information of other financial institutions' activities on small business lending.

Data on borrowing and savings activity suggest that U.S. consumers have too much debt and not enough savings. While consumer debt facilitates economic prosperity, it can also be a crutch [...]

Move over, Alex Trebek. 'Jeopardy' and 'Double Jeopardy' have been supplanted. The final article in the RMAAlert series on risk management covers the least tangible, but arguably the most critical [...]

Risk Management Alert presents a nine-part risk management menu, serving up a look at credit, operational, market, asset/liability management, regulatory/compliance, privacy, fair lending/CRA, and strategic risk. Risk specialists from Ernst [...]

As a prelude to 'RMAlert,' a series that begins next month and looks at current practices in significant areas of risk management, Cynthia Glassman provides an overview of the evolution [...]

There are three types of risks involved when banks loan to small businesses: credit risk; industry risk; and interest rate risk. In addition to using standard financial analysis to evaluate and manage credit risk, peer group analysis, industry data from the Dun and Bradstreet file, and Z-score analysis can also be used. Industry risk is managed primarily through diversification of the bank's loan portfolio. Interest rate risk decisions should be made in the context of the bank's gap management strategy. If fixed rate loans are not feasible due to a bank's gap position, alternative techniques such as interest rate swaps should be considered, as floating rate loans can often adversely affect the credit risk of a small business loan.

Banks planning mergers need to be able to prove to federal regulators that they face enough competition in the market to limit any monopoly power. Banks need to provide the government thorough economic analysis on the competitive effects of a merger, including studies on the geographic market, products market and possible competition. A bank planning a merger also needs to provide information on how price increases will effect the market., Recent megamergers have returned antitrust policy to the fore in banking. In the 1980s, banks focused on mergers that extended their markets geographically, as interstate barriers fell. The focus in [...]

Opinion. Expresses concern over the competition between banks and nonbank financial institutions in the small-business market. Trends in small-business financing; Reporting required by regulation as a deterrent for business owners to borrow from banks; Other major lenders; Merrill Lynch Cash Management account; Securitization of loans; Cost-of-funds advantage; Recommendations.