State of the Industry
Working its way back to 2007 levels, the comeback is underway!
By Ryan Kazmark - Managing Partner


Several years have past since my last “State of the Industry” message and much has changed. Some of which was predictable and some was not. As originally stated, consumer based credit did hit record high default rates that year and lenders indeed scrambled to adjust their lending policies to compensate. What we didn’t realize is just how conservative they would become. Currently, other than the continued existence of “Pay Day” type loans, sub prime lending has virtually disappeared. With the demise of HSBC Bank’s consumer lending product line in the U.S. coupled with Bank of America’s continued “write downs” of the toxic home loan portfolio they absorbed in their brilliant acquisition of Countrywide, there isn’t a whole lot of liberal lending taking place from the two past juggernauts. Citigroup has rebounded faster than expected but has yet to return to their former glory. American Express experienced a short term “hiccup” but is back on track, their great business model carried them though unscathed. Discover Card experienced a down turn but seems to be back on track now. They also have adopted a more conservative lending policy and it seems to be serving them well. Meanwhile, throughout all of this, JP Morgan and Wells Fargo haven’t missed a beat. Their ability to identify good credit worthy candidates and appropriately set their credit limits has always set them apart from other lenders. Those organizations continue to surge forward and other lenders could learn something from their business model.


We are now seeing the larger banks actually lose customer market share to the small and mid size banks. Some have reported losing upwards of 10% of their checking account customer base over the last 12 months. This shift is in part due to the latest in banking reform legislation which has resulted in banks losing millions in fee revenue that it can no longer charge customers for certain products, and now in response have increased other products’ fees to compensate. Checking accounts, savings accounts, and credit card memberships are just some of the products that have had their fees increased. That coupled with the consumers’ new negative image of these mega banks have resulted in the creation of the phrase “Big Bad Bank”, now used regularly by the public to describe these larger banks. Smaller to Midsize banks and Credit Unions are cashing in on this, with their aggressive low or no fee product lines, and are continuing to board new customers fleeing from the “Big Bad Banks”. We expect this trend of market share redistribution to continue for some time. Expect some mid-size banks to take advantage of this time to move their organization up to “Mega-Bank” status over the next several years.


Analysts the world over have all reported that the consumer mindset regarding their spending habits has not changed since the economic downturn despite the public displays of consumer attestations that they have pledged their allegiance to the new “Frugality” and have implemented that as the backbone of their new lifestyles. The truth is that spending is impossible to contain. Entire generations of consumers have grown up with the idea of instant gratification and the credit culture that comes with it. Ever since Henry Ford popularized the installment loan to sell his newly mass-produced cars, the idea of saving to buy something has nearly vanished from the American financial vocabulary.


Creditors, with the new understanding of this imbedded cultural mindset, will need to fortify their receivables management strategies by adding new vendors and re-tooling older procedures to improve performance and efficiency. P&B is re-known for leading in all of its clients’ champion challenges consistently each and every month. Adding P&B as your newest receivables management vendor will significantly improve the competition amongst the top vendors in your network, thus improving the overall performance of the entire network. The time is now to begin a relationship with P&B to fortify your future. Please feel free to contact me by clicking here, or call the toll free number on the home page. Let us put our technology and advanced capabilities to work for you.


P&B Capital Group LLC
455 Center Rd
West Seneca, NY 14224
Phone: 877-743-9600
Fax: 716-891-5810