Bad Moon Rising: The Big Guys Want Your Members
Credit unions have traditionally not had to pay much attention to the quarterly earning reports provided by the banking behemoths. But the second quarter of 2016 may well mark a turning point.
Both JP Morgan Chase and Goldman Sachs used the roll out of their second quarter results to underscore their intention to use technology to aggressively move into consumer banking. They are taking aim at your members like never before. At its conference call, JP Morgan Chase highlighted the fact that it recorded consumer deposit growth of 10% or $54 billion.
I just got done listening to Goldman Sachs CFO Harvey Schwartz recap his second quarter earnings. What I found most intriguing was that at the end of his initial comment, he highlighted Goldman’s initiative to roll out an online consumer lending platform later in the Fall. When one of the analyst asked him to flesh out the details, he noted that consumers want a simple, high quality user experience. Goldman will be offering them an online platform to get unsecured consumer loans but he was unwilling to commit to further details such as the target consumer, the size of the loan, or the length of its terms. Perhaps Goldman is waiting for the CFPB to finalize its payday lending rules.
Goldman’s impending foray into online lending comes on top of its aggressive move into traditional consumer banking with the purchase of $15 billion in deposits as part of its acquisition of GE Capital’s online banking platform. Goldman has offered attractive rate terms and it announced in yesterday’s conference call that since the acquisition, it had opened 20,000 new accounts.
The sudden embrace of consumer banking is remarkable. As recently as 2012, banking executives were openly explaining that unless you had $100,000 to put into an account, you weren’t worth their time. What has changed? For one thing, the Dodd-Frank Act and BASEL III reforms both emphasized capital buffers, particularly for the most systemically important banks. Another change is technological. Fintech is all the rage and none of these banks want to be left behind.
All this means, however, is that the biggest of the big are now competing directly for your members in a way not seen in at least a generation. Not only that, but their deep pockets will allow them to bring the latest technology and most competitive rate to this competition.