TowerGroup says it is finding that the popularity of private label store gift cards is "plummeting." According to the research firm, "he reduction in card spending is reflective of a weakened economy, decreased holiday sales and less confidence in retailer inventories and stability. TowerGroup expects store gift card spending volume to fall by 7%, with a modest increase of 3% in general purpose cards in 2009." READ MORE »

New research from TowerGroup titled "Shuffling the Cards: The Migration of Frugal Consumers and Cautious Lenders to a Debit Card World" finds that "debit cards are far more resilient in the current recessionary economy than credit cards. In less than 15 years, debit card transactions in the United States grew from 1 percent of noncash transactions to more than 50 percent. TowerGroup predicts that debit card transaction volume and card spend will grow through 2015, through the current recession and ensuing economic recovery." READ MORE »

New research titled "Credit Cards 2.0: Smaller Balances and Tighter Margins" from TowerGroup predicts that "the ripple effect of the economic downturn will significantly impair balance growth for the credit card industry through 2010 and that modest growth will resume only in 2011. TowerGroup finds that the payment rate of US credit cardholders declined below 15% through the end of May 2009, a rate last seen in 2002, and attributes the decline mainly to increased unemployment rates." READ MORE »

A new research report titled "Protecting Personal Information: We Lost the Battle, Can We Win the War?" by TowerGroup declares that the financial services industry has lost the battle to protect consumers' personally identifiable information (PII) data. TowerGroup's George Tubin points out that "in light of the loss or theft of hundreds of millions of data records containing PII, the financial services industry must consider the ramifications of past, present and future data losses." READ MORE »

Despite the general downturn in the banking industry, new research from TowerGroup finds that 2009 will be a pivotal year for mobile banking as it turns from a niche channel to a mainstream channel for consumer banking. TowerGroup estimates that mobile banking usage will grow from 10 million active users in 2009 to over 53 million active users in 2013, representing a compound annual growth rate of 51.8%. READ MORE »

TowerGroup has published a new research report titled "After Boom and Bust: Navigating the Credit Card Industry into the Next Economic Cycle". According to the report, "the severe contraction that the credit card industry is experiencing after decades of business boom is a direct result of antiquated business models used to measure risk and monitor changing consumer profiles. TowerGroup believes it will take time for the industry to change its business model, but that forward-thinking issuers should begin planning for the post-recession era even as they struggle in a down economy today." READ MORE »

TowerGroup is predicting that US branded total card credit losses will peak at $55.6 billion in 2009 because the recessionary economic conditions are making it difficult for consumers to repay credit card debt. TowerGroup's Brian Riley points out, however, that not all losses are the result of honest inability to pay, warning that intentional cardholder losses from abuse and fraud may cost the industry as much as $10 billion. READ MORE »

New research from TowerGroup finds that the gross dollar volume (GDV) of the U.S. noncash person-to-person (P2P) market in 2008 was $1.1 trillion in over 3 billion transactions. Checks are in decline, but they remain the most significant person-to-person payment method, amounting to over $1 trillion of the noncash P2P payments volume. READ MORE »

New research from TowerGroup shows that "unfettered protectionism from national governments, in response to the financial crisis, could pose significant risks for the global financial services industry and its stakeholders worldwide. The research finds that although a short-term economic lift often results from governments’ use of protectionism, history has shown it to be an artificial solution that limits sustainable growth and puts a nation behind the global economic curve." READ MORE »

TowerGroup has announced new research finding that total gift card sales for the 2008 holiday season will take nearly a 9 percent hit - owing largely to the downturn in the US economy. "That 9 percent decrease will be largely due to an expected 14 percent decline in the sales of merchant-sponsored (also “closed-loop” or private label) gift cards. Sales of bank sponsored (network-branded) gift cards are expected to increase 5.6 percent, a positive showing in the current climate." READ MORE »

TowerGroup has released a new report titled “Disruptive Technology Spawns Market Revolution: The Ascent of Mobile Remittances into the Mainstream” finding the "accelerating investments being made in ubiquitous mobile payment platforms will be a disruptive industry force. As a consequence TowerGroup believes the emerging revolution occurring for sending and receiving remittances may well undercut existing fee structures and traffic volume of incumbent brick-and-mortar money transfer operators, which already appear to be under pressure in this current economic climate." READ MORE »

New research from TowerGroup titled "Check, Please! Checks Still the Most Common Noncash Payment Type in the United States" concludes that while the rapid adoption of electronic payments is driven by the desire of payers (both businesses and consumers) for faster, easier, and more efficient ways to make purchases and pay bills, B2B payments remain the last bastion of checks - making up nearly 60 percent of US check dollar value. These persistent challenges in making and receiving electronic payments are a main reason why average US check values are increasing faster than any other payment type, even as the numbers of checks themselves decline. READ MORE »

In a new report titled "The Impact of Online Personal Finance Offering: The Good, the Bad, and the Ugly", TowerGroup analyst George Tubin finds the capabilities of new non-bank online personal finance web sites are of interest but raises concerns about whether the sites have "adequate fraud prevention capabilities to protect both the consumer and the bank from account takeover and identity theft." READ MORE »

TowerGroup will be holding a complementary webinar on mobile banking and payments on Thursday, June 19, from 12 Noon to 1 PM Eastern led by Charul Vyas, Analyst, Emerging Technologies.

TowerGroup has published a new report titled 'Pointing in the Right Direction: Rethinking Card Payment Rewards in a Challenged Economy' by Brian Riley, senior research analyst in the Bank Cards practice that examines existing reward and loyalty programs and explores how credit card issuers may rework their programs to inspire customers to maintain the terms of their accounts.

TowerGroup has published a new report titled "The Ignition of US Mobile Banking in 2008: Do the Core Banking Vendors Hold the Key?" that finds that core banking technology vendors have a big role to play in helping mid-tier and small institutions take advantage of the emerging mobile banking channel and that doing so will soon just be a cost of doing business.

TowerGroup has announced new research that "finds that the most critical driver for the successful evolution of mobile banking and payments will be the ability of financial institutions and mobile operators to balance ease of use with security.

TowerGroup says that "the U.S. subprime mortgage crisis has forced banks to enter 2008 in a reactive mode. New research from TowerGroup examining the top retail banking trends for 2008 finds that bankers are anxious on two fronts. First, they worry about unseen threats that may not yet have surfaced in their credit portfolios. Second, they fret over how their institutions can compete rationally during the volatile days ahead." READ MORE »

TowerGroup has announced new research that finds that, even though "long stalled by lack of adoption and a range of technical issues", mobile banking is finally coming into its own. "Banking over the mobile channel, especially when considered in the context of an evolution toward mobile payments, is now fast becoming a market mandate -- and is no less important than the dawn of Internet banking in the late 1990s."

A research report titled "Crediting Debit: How Debit Cards Will Grow in a Changing Environment" from TowerGroup concludes that "the debit card's increasingly dominant position as a payment vehicle will continue through 2009 and beyond. Prepaid cards will also continue their rapid growth as a result of foreclosures affecting credit scores and consumers continuing to require the benefits of payment card access."

TowerGroup has announced a new research report titled "Mobile Peer-to-Peer Payments: Verizon Wireless and Obopay Take a Short Step Down a Long Road" that finds that "while online peer-to-peer payments and their mobile counterparts are not new to the payments arena, the use of mobile devices to exchange payments between consumers is still in its infancy. The newly announced deal between Verizon Wireless and Obopay is novel, given the fact that a major U.S. mobile operator has chosen to partner with a startup technology vendor to support peer-to-peer payments by means of a downloadable application on mobile phones."

TowerGroup says that while historically private equity has not been strongly attracted to the technology companies serving the financial services industry, private equity firms are now "starting to see beauty in the financial technology sector, reflected in the value of its products, its revenues and its client base. Stickier revenue models, more spending by clients, and a global business environment that demands innovation will encourage private equity firms to take a closer look at the technology providers to the financial services industry, accelerating investment in this sector."

TowerGroup has announced a new report titled "Price Optimization: A Practical Guide to a Retail Bank Implementation" that finds that the "strategies and procedures used by most banks today to set prices remain too simplistic. Banks are still relying heavily on manual processes and so are prone to errors, and they often exclude consideration of a critical factor -- the consumer's price elasticity of demand."

TowerGroup has announced a new research report titled "Lessons in Loyalty: A Look Inside the American Express Rewards Program" by Brian Riley, senior analyst in the Bank Cards practice.

Matt Hamblen reports for Computerworld on comments made about mobile banking in the US by Tower Group analyst Bob Egan, in an interview after a keynote address at the consulting firm's financial services conference this week. Egan said currently only about "400,000 consumers are using mobile banking out of almost 240 million mobile phone users in the U.S."

TowerGroup has announced new research finding that the "adoption of online banking by
U.S. consumers is going strong, outpacing growth rates for every other
method of retail banking delivery" - including everything from ATM to call centers. The firm says that "the long touted promise of online banking is now hitting its stride."

TowerGroup has published new research concluding that "financial institutions offering wholesale banking as a line of business to corporations currently face unrelenting pressure from clients to improve their integration technology services."

TowerGroup has issued a research note titled "Micropayments: Turning Nickels and Dimes into Profits" that "illustrates how card use for micropayments reinforces and can deepen issuers' relationships with their customers, thereby indirectly enhancing profitability. Customer retention is directly linked to product usage. Ideally, frequent use of cards for small everyday transactions will lead consumers to use the cards for larger and more profitable transactions."

TowerGroup has published a new research report titled "Fraud, Virus and ID Theft: Mobile Malware Stands to Create a New Beginning" - saying that as the use of mobile devices for banking and payments increases, incidents of mobile virus and mobile malware are likewise going to be on the upswing.

TowerGroup has published a new report titled "Check 21 in 2007: The Year of Image Exchange" on bank adoption of Check 21 - predicting that 2007 will be the first year in which monthly check image exchange volumes surpass paper check presentment volumes.