Welcome To
The Bottom Line

The Federal Reserve recently released its annual report on debit card interchange fees and, to the untrained eye, the results are thoroughly unremarkable. The Fed has tracked this data annually since the Durbin Amendment took effect in late 2011, as a means of deciphering the interchange landscape.

Following a visible jolt to the trend line in 2012 reflecting Durbin’s targeted intent, the Fed’s charts have remained quite stable. Beneath the surface, however, factors like volume mix shifts, pricing differences between network providers, and newly added detail on certain transaction types reveal a wealth of information that can be used for card portfolio optimization.

Is cash dead? You could certainly reach that conclusion based on recent headlines. The story on the front lines isn’t so simple, however. NCR, a global POS and ATM service provider, recently launched its Silver One tablet-based point of sale platform, a clear counter to the success of competitors like Square and Clover, and a play for the next generation of small business retailers. Given this strategic push, you’d expect NCR to be firmly on the “cash is dead” bandwagon.

Speaking at FinTech South the day after Silver’s rollout, NCR acknowledged that while digital retail transactions are growing briskly, old-fashioned currency and coins aren’t going away anytime soon. Cash is still used in nearly one-third of all counter transactions, it reported, a ratio that varies meaningfully by geography and demographic.

Major League Baseball just completed its All-Star Break, which is traditionally seen as an opportunity to assess the season’s performances to date. We at SRM do something similar, revisiting our annual list of industry trends impacting banks and credit unions’ growth strategies and vendor contract relationships.

It’s been an action-packed first half of 2019. The trends we highlighted at the beginning of 2019 are actively shaping the financial services market and decisions being made by banks and credit unions. Here’s a quick summary to detailed analysis of the topics we’ve provided throughout the year. 

Last Tuesday, NCR acquired D3 Banking Technology (D3), a digital banking software company that provides solutions to regional banks. This comes just six years following NCR’s purchase of Digital Insight, a move that NCR explained would allow it to offer financial institutions a complete “omni-channel consumer experience.” Others saw the purchase as part of a “makeover” that NCR needed to survive. Whatever the case, the $1.65 billion paid for DI would suggest this was no trivial action on the part of NCR.

Is D3 another arrow in the quiver as NCR continues to remake itself? Does the acquisition signal a “reboot” to the makeover centered around DI that has stalled? Could the purchase suggest an attempt by NCR to go to market with two technologies, one more fit for smaller institutions and the other an up-market option? In fact, in the July 2 press release announcing the deal, NCR claimed that the latter question could be answered in the affirmative. The news release noted that D3 “immediately expands” NCR into new markets, notably “U.S. large banks and over time, international banks.”