Remittances and the White House

A piece on the “White House Blog” lauds pending Wall Street reform Legislation as something that will provide “benefits (to) hardworking individuals here in the United States as well as their families abroad” by overcoming certain barriers which are specified as;

“Remittance transfer providers currently are not required to disclose, prior to initiating a transaction for a consumer, the amount that will be received at the other end, making it essentially impossible for consumers to effectively comparison shop. No federal agency is specifically charged with protecting the rights of consumers using remittance services and federal regulations that apply to many other consumer payments transactions generally do not apply to remittance transfers. Although most states regulate remittance transfer providers to some degree, few require disclosures designed with consumers in mind. Meanwhile, researchers have found that the millions of families sending financial assistance Mexico frequently have difficulty understanding the total cost of sending a remittances, specifically the exchange rate and fees charged by the provider, before they engage in a transaction.”

Will this legislation also extend to millions of illegals who really do need protection too?

Read the full entry at http://www.whitehouse.gov/blog/2010/05/20/wall-street-reform-and-sending-money-home

The US’ best mobile banking apps

Not every bank has jumped into the mobile banking market at full steam. This is also true of the US where even some of the coutries most popular banks don’t yet offer iPhone apps or mobile-ready websites.

A recent web based survey, looking for the most convenient “on-the-go” banking experiences found the following mobile banking offerings from four of the US’ most popular banks.

Chase

Chase offers applications for iPad, iPhone, iPod Touch and BlackBerry as well as access to accounts via standard text messaging.

Chase iPhone App

• Cost: Free. Client must be enrolled in Chase Mobile to make transactions with app.
• Standard functions: Text banking allows client to see account balances, review transaction history and check credit card due dates. The mobile app is much more helpful: Client can pay bills and schedule payments through Chase Online Bill Pay, transfer money between Chase accounts, wire money to outside accounts, and check balances and history.
• Extras: The Chase Mobile app includes a helpful “Find ATM/Branch” feature that uses the phone’s geo-location capabilities to find the nearest Chase branches. The app also provides the hours, contact information and number of ATMs at each branch. If the client needs help managing his/her accounts, the “Contact Us” tab includes one touch dialing to Chase’s help lines.
• Aesthetic appeal: The Chase Mobile app runs quickly on the iPhone and features easy-to-read white text on Chase’s familiar blue background.

Bank of America

Bank of America has a standard text messaging banking system as well as apps that work on the BlackBerry, iPad, iPhone and iPod Touch devices.

Bank of America iPhone App

• Cost: Free. Clent must be enrolled in the Bank of America “Online Banking” service to use certain features of the app.
• Standard functions: Bank of America’s text banking lets client check account balances, view credit card account details and see transaction history. The BofA app allows the client to access account details and balances, transfer funds to other Bank of America accounts and pay bills.
• Extras: The BofA app helps the cleint find nearby locations based on the phone’s geo-location abilities. One can also input a zip code or address in order to plan ahead.
• Aesthetic appeal: The BofA app uses smaller fonts and weaker colors than the Chase platform does. It also takes a bit longer to load pages.

Citibank

Citibank boasts three separate mobile apps. One works on the iPhone and iPad, the second on the iPod Touch, BlackBerry and Palm smartphones, and the third on many kinds of basic cell phones.

Citibank iPhone

• Cost: Free. User must be a Citibank client to make any transfers or view account information.
• Standard Functions: All three of Citbank’s apps allow the user to view balances, wire money to others and transfer money between your Citibank accounts. The iPhone and iPad versions also allows the client to track their Citibank credit card accounts.
• Extras: If the user wants to be reminded often of the status of her accounts, the cleint can sign up for a very comprehensive text alert system. The cleint can choose to be alerted when your balance dips below a certain level, when deposits are made, when bills are due or when CD accounts are about to mature, for example. The iPhone and smartphone apps provide lists of the bank branches closest to the phone’s current location. The user can also search by zip code or address.
• Aesthetic appeal: Citigroup’s app suffers from the same ailment as many other iPhone and smartphone platforms: Some of the fonts are too small for comfortable reading.

Wells Fargo

Wells Fargo users have access to apps for Blackberry, iPhone, iPad and iPod Touch, as well as the ability to get account info via text message.

Wells Fargo iPhone

• Cost: Free. To access account information or make transactions you must be a Wells Fargo Mobile customer.
• Standard Functions: The iPhone app allows the cleint to check available balances, monitor credit card activity, transfer funds and pay bills. The bank’s text service provides balance and account activity information.
• Extras: The Wells Fargo application includes bank-finding functionality and the ability to filter search results depending on what services each particular branch offers. If the user does not have any room for additional apps on his iPhone, he can visit wf.com, which has a fast and easy-to-use site that fits the iPhone perfectly.
• Aesthetic appeal: Wells Fargo’s mobile properties have a very standard look (not nearly as slick as Chase’s offering). But the apps load screens quickly and the app’s toggle menus make searching for branches easy.

The mobile banking apps offered by these popular banks are more alike than they are different. Considering the fact that all the apps come free of charge and all offer similar benefits, a clear leader in the mobile banking market has not emerged.

Flash crash prompts circuit breaker roll-out

The Securities and Exchange Commission (SEC) has called for uniform circuit breakers on all S&P 500 stocks in response to the "flash crash" that caused mayhem earlier this month.

Under the proposed rules, which are subject to Commission approval following the completion of a comment period, trading in a stock would pause across US equity markets for five minutes if its price changes by more than 10%.

The pause rules, which will be piloted for six months from June, will give the markets a chance to attract new trading interest in the stock, establish a reasonable market price and resume trading in a "fair and orderly fashion", says the SEC.

The plan - which has the backing of the national securities exchanges and Finra - comes after tthe so-called "flash crash" on 6 May, which saw the Dow Jones industrial average plummet in minutes, with 30 stocks in the S&P falling at least 10%.

Mary Schapiro, chairman, SEC, says: "We continue to believe that the market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges. As such, I believe it is important that all the exchanges quickly reached consensus on a set of uniform circuit breakers that would be triggered when needed."

In a statement welcoming the rules, Nyse Euronext says: "The adoption of this market-wide mechanism will promote investor protection and is designed to help prevent similar events from taking place in the future. This result is a meaningful step towards re-affirming the integrity of, and confidence in, America 's capital market system."

Although the SEC says the plunge was compounded by a lack of consistency, it has still not identified the underlying cause.

A joint report, carried out in partnership with the US Commodity Futures Trading Commission (CFTC), suggest a "severe mismatch in liquidity" played a part.

However, it "found no evidence that these events were triggered by "fat finger" errors, computer hacking, or terrorist activity, although we cannot completely rule out these possibilities."

Meanwhile, CME Group has carried out its own investigation into the crash, concluding that high-frequency traders were not, as has been suggested, responsible.

CME Group says "there is no visible support of the notion that algorithmic trading models deployed in the context of stock index futures traded on CME Group exchanges caused the market fluctuations in question".

In fact the operator goes further, claiming "automated trading contributes to market efficiencies, generally bolsters liquidity and thereby contributes to the price discovery function served by futures markets".

The joint report may be downloaded at

http://www.sec.gov/spotlight/sec-cftcjointcommittee/sec-cftc-prelimreport_may62010.pdf

Operations Risk - Banks warned over World Cup fraud risks

This summer's World Cup could leave banks struggling to protect themselves and customers against card fraud, as a surge in unusual transactions throws off risk scoring mechanisms, claims vendor Actimize.

Banks generally see sharp increases in fraud during large one-off events such as the World Cup and Olympics, says the security firm, struggling to identify suspect transactions because of the statistical "noise" generated.

Jackie Barwell, manager, financial crime products, Actimize, says: "Because of the increased volume of amateurish 'noise' created by opportunists, many of the phishing emails created by organised criminals look incredibly professional. These more professional schemes will direct unsuspecting victims to convincing Web pages asking for credit card details or online banking log-ins."

Banks, already alert to the fact that customers' cards are at risk, should amend their transactional risk scoring and anti-fraud processes so as to distinguish genuine suspicious activity across all customer channels - ATM, debit and credit card transactions as well as online transactions, says Actimize.

The firm calls on banks to tap behavioral profiling to keep ahead of the scammers, using multiple scoring tiers and sophisticated analytics to identify high-risk transactions in real-time.

US regulators fines Deutsche Bank and National Financial Services over short sales violations

Deutsche Bank Securities and National Financial Services (NFS) have been fined a total of US$925,000 by US regulators for violating short order rules by circumventing their direct market access (DMA) trading systems.

The Financial Industry Regulatory Authority (Finra) fined Deutsche Bank's New York securities business US$525,000 and Fidelity unit NFS US$350,000 for executing "numerous short sale orders" in violation of Regulation SHO and related supervisory violations.

Regulation SHO says that brokers or dealers cannot make a short sale without identifying a source from which to borrow the security. This is generally referred to as obtaining a "locate" and these must be obtained and documented before making a short sale.

Finra says both Deutsche Bank and NFS implemented DMA trading systems for their customers that were designed to block the execution of short sale orders unless a "locate" had been obtained and documented. Yet on several occasions Deutsche Bank disabled its system and NFS created a separate one for certain customers, meaning some short orders were not blocked.

In Deutsche Bank's case, the firm's systems sometimes experienced outages that prevented the importing of locate data and, as a result, short sale orders placed for execution were automatically rejected, even when a client had already obtained a valid and properly documented locate. Finra says that during these outages, the bank disabled the system's automatic block, permitting client short sale orders to automatically proceed for execution.

Meanwhile, NFS created a separate manual locate request and approval process for around 12 prime brokerage clients. Requests for, and approvals of, the multiple simultaneous locates were transmitted via e-mail with account representatives on the firm's Prime Services Desk, and were not required to be entered into its stock loan system, says the watchdog.

Further, Finra says both firms supervisory systems were inadequate. Deutsche Bank was aware that its system to block short sale orders in the absence of locates was periodically disabled over a period of more than four years - from January 2005 through September 2009 - but failed to roll out a replacement. Similarly, NFS created a flawed system for certain customers that failed to ensure that some short sale orders had valid and timely locates for nearly four years - from January 2005 through August 2008).

James Shorris, acting chief of enforcement, Finra, says: "The locate requirement is an essential component of ensuring that short sales are executed properly. The failure to design, implement and supervise systems that reasonably ensure that shares of a security are available to be borrowed before a short sale is executed significantly undermines the effectiveness of Regulation SHO."

TRAINING COURSE “MIGRANT WORKERS REMITTANCES – ISSUES & OPPORTUNITIES”

Johannesburg, South Africa – 28 & 29 July 2010

The transfer of migrant’s remittances represents a huge business opportunity for banks and other financial institutions which is still largely overlooked. The financial services industry, which plays such an important role in the Payments Industry, is missing an important opportunity if they ignore a very large component – Remittances.

The flow of funds from migrant workers back to their families in their home country is an important source of income in many developing economies. The total value of these remittances has been increasing steadily over the past decade and it is estimated that in 2008 the total value worldwide was over US$ 397 billion equivalent, involving some 190 million migrants.

For some recipient countries, remittances can be as high as a third of GDP. Remittances also now account for about a third of total global external finance. Additionally the flow of remittances seems to be significantly more stable than that of other forms of external finance. This is borne out by evidence from the recent financial crisis. Because of measurement uncertainties, particularly about unrecorded or informal remittances, the actual flows may be much higher – estimated by experts at 50% or more.

Informal channels are the greatest competition to formal financial sector in the Remittance space. Understanding what these are and how they operate is key to understanding their success. And their success factors are themselves critical to permitting banks to successfully compete for this important market sector.

This course is the definitive A to Z on Remittances – from informal systems to the revolutionary appearance of the Mobile Phone as a remittance tool.

This intensive 2-day course provides an insight of the payment system aspects of remittances, and is designed to assist financial institutions that want to improve their understanding of this important market as well as extend and develop the many business opportunities that present themselves. Processing these money transfers is a business opportunity with vast potential especially with the recent rise of the Mobile Phone is now set revolutionize the Remittance world.

We examine how the public and private sectors can collaborate to encourage the providers of remittance services to switch from informal to formal channels and how they can make the formal sector more efficient and competitive.

The course has been specifically designed for Senior Bankers involved with

• Payment Systems and Money Transfers 
• Payment Strategy
• Micro Finance
• International & Correspondent Banking 
• Retail Banking Services
• Banking Product Development

Central Bankers involved with

• Payment Systems
• Payment Strategy & Policy
• International & Correspondent Banking 
• Payment System Regulation & Oversight

Senior Staff of

• Corporations who employ migrant workers
• Money Transfer Operators
• Government agencies involved in migrant workers
• Development Agencies

For a fully descriptive brochure please send a blank e-mail to courses@citadeladvantage.com with REM-JHB in the Subject line.

TRAINING COURSE - ENTERPRISE RISK MANAGEMENT (ERM)

Johannesburg, South Africa – 26 & 27 July 2010

Organisations are experiencing an increased concern and focus on risk management. The challenge for management of both private and public organizations today is to determine how much uncertainty to accept as it strives towards achieving the organization’s objectives and delivering value to its stakeholders.

The solution to this challenge is the establishment of an Enterprise Risk Management (ERM) system and processes that effectively identify, assess, and manage risk within acceptable levels.

The COSO Enterprise Risk Management – Integrated Framework is designed to provide best practice guidance for management of businesses and other entities to improve the way they are dealing with these challenges.

COSO – ERM integrates various risk management concepts into a solid framework in which a common definition is established, components are identified, and key concepts described. This enables COSO to provide a starting point for organizations to assess and enhance their Enterprise Risk Management.

This practical 2-day hands-on training course is designed for managers, professionals, consultants, internal and external auditors that deal with the complexities of organizational risk management function on a daily basis.

The objective is to provide participants with the necessary perception, knowledge and skill set to understand the risks and benefits of Enterprise Risk Management and learn how the COSO – ERM framework enables organizations and management to:

• Comply with the requirements for corporate governance (such as the various international standards like the Cadbury Report)
• Align risk appetite and strategy
• Enhance risk response decisions
• Reduce operational surprises and losses
• Identify and manage multiple and cross-organizational risks
• Provide integrated responses to multiple risks
• Improve the deployment of capital.

Additionally to provide attendees with an understanding of the requirements needed to design and implement an appropriate Enterprise Risk Management system, i.e. policies, procedures, practices, and accountability required to establish the right levels of Risk Management in compliance with current standards and other requirements for their organizations.

The course provides an opportunity for delegates to benchmark their ERM practices against the COSO – ERM framework, and learn how to implement an effective ERM system.

For a fully descriptive brochure please send a blank e-mail to courses@citadeladvantage.com with ERM-JHB in the Subject line.