MIA In The Healthcare Debate

MIA In The Healthcare Debate
The recent passing of Sen. Edward Kennedy and the imminent opening of the U.S. Congress’ Fall legislative session turned my attention back to the healthcare reform debate. Reaching out to my healthcare banking industry contacts and reviewing various healthcare-related web sites, I quickly came to the obvious conclusion that this debate has yet to address some key issues for healthcare banking industry players. The first missing component is actually something I blogged about in May. Congress still has yet to determine sufficient minimal coverage in terms of health plan design. Once such coverage has been defined, the next thing to look out for is something called “actuarial equivalence”. Actuarial equivalence is an approach used to measure health plans against each other, using expected average benefit payouts as the comparitive yardstick. If HSA-compliant high deductible health plans (HDHPs) are the actuarial equivalent of the congressionally-defined sufficient minimal coverage, we can expect HSAs to flourish. If not, HSAs will likely wither on the vine… Needless to say, there is a lot of lobbying activity taking place in DC to ensure that HDHPs make the actuarial equivalent cut. A key argument being made is that HSA contributions (especially those provided by employers) should be considered the same as paid out benefits. Another missing element in the healthcare debate is that of wellness behavior. Healthcare reform is squarely predicated upon the rapidly rising cost of healthcare, much of which is behavioral-based. As described in my report Fit To Be Paid: The Dynamics Of The Wellness Reward Market, behavioral-based health problems cost the U.S. economy hundreds of billions of dollars in medical costs, and hundreds of billions of more in lost productivity. However, healthcare reform is proposing scant little to encourage/force behavioral change. Asking Americans to go to the gym, eat less (or heaven forbid) stop smoking may be a political pipe dream. Given this, institutionalizing financial rewards for behavioral change may be an alternative approach which could be supported by healthcare banking. As mentioned in my Fit To Be Paid… report, financial rewards almost always have a positive ROI. Fasten your healthcare banking seatbelts, the Fall promises to be quite the ride…

Chase-ing away customers

Chase-ing away customers
I, like many Americans, hold a Chase credit card. With their recent purchase of WaMu with a huge branch network on the West Coast, they were continuously making offers of increasing dollar amounts to open a checking account. After about a dozen of these, culminating with one for $150, I finally relented. The experience was an eye opener. I opened the account on August 13th, and because of an account I had closed many years ago, the customer service representative (CSR) at the branch was unable to set up internet banking. Strike 1. He called the operations center and was unable to solve the problem. I was told I would get an email with in two days. I didn’t. I waited a week and still no email. Strike 2. I then went to wamu.com, called the 800 number when unable to log in and reached an off-shore call center. I immediately asked for a supervisor, who looked into the matter in real time. He told me that the incorrect form had been filled out in the operations center and that he would fill out the correct form. I should wait two days, then visit a branch where I should create a new internet banking account. I visited a branch and sat down with a CSR. We couldn’t set up internet banking. The rep called on-line banking operations. It turned out that while the correct form was filled out in operations, it wasn’t filled out correctly. Strike 3. I should wait a day and go back to a branch to authenticate with my debit card and PIN and open up internet banking. I have saying for customer service: Strike three and I’m out. Then I thought about what a great topic this would be for a blog post, and continued the process. I then went to the branch and tried to open up internet banking asking for the branch manager. It failed. Strike 4. The CSR and the branch manager printed out the error message and told me to go to the branch where I opened the account which was 8 miles down the road. I drove to the originating branch, where I asked to speak to the manager. I told her about the process I had been through, and that I would close the account if I didn’t have internet banking set up this visit. She was willing to close the account. I also presented my business card and told her that I would be blogging about this experience. That finally got someone’s attention. The manager sat down with a CSR, who had me authenticate and create an internet banking account. It failed. Stike 5. They then called the operations center, asked for a manager, spent a good bit of time on the phone and finally I received an email on my iPhone with a temporary password. It worked! I was late for my next meeting, but the account WITH internet banking was open.
  • Time spent opening account: 3.7 hours
  • Chase employees involved: 12
  • Time since opening account: 13 days
What went wrong here? 1. No one was willing to own the problem to resolution. Westpac Bank has an initiative called “Ask Once.” When a customer contacts the bank with a problem, the first point of contact owns the problem and brings it to resolution. http://www.westpac.com.au/internet/publish.nsf/Content/WIOC+Ask+Once+Commitments Nedbank in South Africa offers a similar commitment. ask once http://www.nedbank.co.za/website/content/askonce/askonce.asp Should American banks consider such an initiative? Until I identified myself as someone in the industry who would raise the issue with a blog post, the branch manager was more than willing to close the account rather than try to get internet banking to work and gain a customer. 2. The world of legacy systems makes it difficult to solve problems immediately. Between complex integrations, batch operations, and remote operations centers, it’s hard to solve problems. 3. Off-shoring made the problem harder for me to solve. While off-shoring reduces cost, and works for simple requests, when there are complex problems they need to be escalated to more experienced long-time employees. What didn’t go wrong? This wasn’t an integration issue. I was on 100% WaMu systems here in Calfornia, but I’m told that we will be migrating over to Chase systems in October. I’ll keep you informed. As banks cut costs are you seeing customer service levels drop? Is there an opportunity for banks to invest in service to gain share? I welcome your comments.

Why Canada is Hotter than the United States

Why Canada is Hotter than the United States
I know it sounds counter-intuitive, but Canada is hotter than the United States, at least when it comes to core banking. After visiting clients and prospects in Canada it is clear that core banking is heating up, but not quite ready to boil. Certain banks in Canada have been examining core banking migrations and have been doing so for a long time. Some will start to move soon. Reasons core banking in Canada is moving forward more quickly than in US:
  1. Canadian banks are experiencing specific pain points around core banking in certain LOBs.
  2. There is fuel (cash) for the fire. Canadian banks are in much better financial shape than US ones.
  3. Canadian banks have mostly internally developed systems; many American banks have licensed systems.
  4. Canadian banks see their Australian peers moving forward with core banking.
  5. When one of the big five in Canada move, it moves the market.

cdnbanks1

When the pot does eventually boil, and one of the big five moves, it impacts the market strongly. Others in this group will need to form a response.

Islamic Banking in India : Stumbling at the Regulatory Block

Islamic Banking in India : Stumbling at the Regulatory Block

Islamic banking has been on the rise in the Asia-Pacific region, accounting for 60% of the global Islamic banking market. However, despite its rise in the rest of the region, the penetration of Islamic banking in India has been low. This is especially surprising with India having approximately 154 million Muslims and being the second largest Muslim population of the world. As mentioned in the Celent report Rise of Islamic Banking in the Asia-Pacific Region, this is primarily due to a regulatory block which allows Islamic banking to operate only in the form of a Non-Banking Financial Corporation. An amendment in the Banking Regulation Act of India, 1949 is required to allow the Islamic banking system to operate in banks in India.

The primary reason for the regulation can be mainly attributed to the socio-religious nature of the Indian political scene. This is especially evident in the Raghuram Rajan Committee of Financial Sector Reforms report submitted to the Prime Minister of India last year. Although the report recommended principles based on Islamic banking, the term “Islamic banking” was deliberately replaced by “interest-free banking”. The committee recommended that measures be taken to permit the delivery of interest-free finance on a larger scale, including through the banking system. With this recommendation, the ball is in government’s court and it is up to them to come up with appropriate measures to introduce these products in the Indian banking sector. However, a rebranding of the various Islamic banking products must be done to achieve widespread acceptance and serve its foremost purpose of financial inclusion.

In addition to the regulations, some experts feel that the infrastructure for Islamic banking is not yet in place and steps must be taken in that regard. In fact, last week, Kerala State Industrial Development Corporation (KSIDC) announced setting up India’s first interest-free financial institution along Islamic banking principles in Kerala. It is beyond doubt that there exists a huge potential for Islamic banking in India. But, it will take strong policy decisions to tap the same.

JHA Acquisition of Goldleaf – Bigger than it Looks

JHA Acquisition of Goldleaf – Bigger than it Looks
Goldleaf Financial Solutions is not a big company (US$80 million in 2008) – certainly not by US core system vendor standards, but the acquisition of Goldleaf by Jack Henry & Associates may be bigger than it appears. For its size, Goldleaf has a large share of the distributed capture market. With more and more financial institutions adopting branch capture (in many cases at the teller line) JHA was wise to be interested in Goldleaf’s installed base. Conversely, JHA provides the teller system of choice to roughly 12% of small banks (<$1b in assets) and 18% of midsize banks ($1b – $10b in assets) by our calculation. That’s a great installed base of teller systems to equip with distributed capture technology.
JHA Brings a Big Teller System Installed Base

JHA Brings a Big Teller System Installed Base

Properly integrating teller and capture systems has proven to be easier said than done. Doing so is a prerequisite for a smooth running teller capture implementation. After a few years (since Check 21) now, there have been relatively few “certified” integrations, and Goldleaf leads the pack by a large margin. Its experience in this area will likely prove valuable to JHA which, despite its size, has had little to show in this area.