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As discussed in a previous blog, the Federal Reserve began seeking comments on proposed changes to Reg II of the Durbin Amendment in May. At that time, the Fed said that it felt the changes would be non-substantial and would not include more compliance obligations. Currently, the Fed bars issuers from restricting the number of unaffiliated networks for debit card transactions to fewer than two, including one signature network and one PIN network. The new proposal would make issuers responsible for ensuring that all transactions with US merchants can be routed across two unaffiliated networks.

While the Fed characterized this change as a simple clarification, it is anything but, as evidenced by the over 2,600 comments received. It is clear this issue is complex, substantial, and would increase compliance obligations.

We have sorted through the comments posted on the Fed's website and various government sites to summarize the key points for both sides of this argument.

Budgeting and planning season is usually a routine time for evaluating your business priorities and associated costs. However, while some banks and credit unions have already set their 2022 budgets, others are still calculating forecasts or waiting for more data.

Too often, management teams and boards plug vendor costs into their annual budgets and forecasts without questioning whether those contracts can be improved. This is undoubtedly a more complex task than ever as we face the coming winter months and the uncertainties surrounding the lingering impact of COVID-19.

There is, however, one area that is a sure opportunity for cost savings in your budgeting cycle – vendor contracts.

Banks and credit unions tend to plug vendor costs into their budgets and forecasts without questioning whether those contracts can be improved. This is often a mistake.

The truth is, no matter what the economic conditions, it is possible to reduce vendor costs without switching vendors or impacting service levels.

Here are 5 questions to ask when it comes to vendor contracts during this critical budget season:

As discussed in a recent blog post, banks and credit unions of all sizes continue to navigate a bizarre disconnect. Awash in a steady stream of deposit inflows from both businesses and consumers, institutions are hard-pressed to generate sufficient loan demand to put these funds to profitable use.

A crucial part of the challenge stems from account acquisition capabilities not keeping pace with customers’ digital evolution. This trend was already well underway but accelerated during the pandemic. SRM’s recent white paper, How Financial Institutions Can Boost Account Growth to Move with Changing Margins, outlines an actionable methodology for leveraging data analysis and market expertise to identify and act on a consistent stream of opportunities.

Here’s a preview of some of the insights covered in the white paper.

If there were any lingering doubts about the potential impact of the buy now, pay later (BNPL) installment credit model on card economics, Square’s recently announced $29 billion acquisition of Afterpay likely put them to rest. Nonetheless, we see Apple’s plan to enter the fray with a feature built into Apple Pay as the more significant near-term concern.

Though much is still unknown, the unofficially dubbed “Apple Pay Later” could potentially be more threatening to card issuers than existing BNPL products. It could also further complicate the Apple - bank/credit union/debit issuers relationship, which could already be described as “frenemies” at best.

SRM recently released its list of 2021 midyear trends that banks and credit unions should monitor during the second half of this year. Naturally, these developments didn’t appear out of thin air – our top-performing project managers and experts make it their business to examine and spotlight those topics which carry the greatest strategic impact for payments and financial services.

In this post, SRM shines a light on some big acts we’ve long anticipated will draw attention by the millions, billions, and trillions.

Bitcoin has lost half of its value since reaching an all-time high mid-April. Although one might think this setback would cast a pall over a gathering of cryptocurrency enthusiasts, the overall tone of Coindesk’s Consensus conference in late May remained constructive and upbeat.

For those keeping their eyes on the prize, these two paths are not contradictory. Crypto’s long term value proposition hinges on its adoption as a means of exchange, not its volatile pricing as a speculative asset class. And there’s no sign of slowing down among large financial institutions and scrappy entrepreneurs creating trading and custody platforms and expanding payment capabilities for digital coins. These are the areas where banks and credit unions of all sizes need to take note.

Over the last year, chaotic disruptions have upended traditional operating models at financial institutions (FIs) worldwide, and many are only now stepping back from "fire drill" mode. As for the leaders of these institutions, their task is to now scale up and rebuild operating models - ones adapted to their current (and future) post-pandemic environment.

After a period of such intense disruption, here are three ways to check and double-check the blueprint when rebuilding an FI's business models.

With vaccinations ramping up and most businesses reopening this spring, it’s getting easier to envision a return to normalcy later in 2021. Even so, neither Main Street entrepreneurs nor bankers are quite ready to heave a sigh of relief.

As has been seen...and experienced, some need more assistance than others, and some have proven adaptable to new conditions, whatever comes next.

The winds have shifted since 2020 made game-changing waves in debit card usage on multiple fronts, including:

• In-person versus online spending
• Categories of merchants patronized
• Contactless/mobile app adoption

Each of these factors carries implications for banks, credit unions, and other card issuers and their existing revenue models. Below are a few opportunities and recalibrations to consider for your next PIN network vendor negotiation.

In a recent blog post, we elaborated on several trends that our payments experts expect will impact the banking industry in 2021 - including trends regarding digital banking investments and the branch’s evolving role with consumers.

Let’s continue that conversation by exploring additional factors directly related to the retail banking industry’s current environment, specifically:

• The ongoing shifts in payments preferences
• Battening down for the next economic wave
• Changes in the regulatory climate