Housing foreclosures continue unabated while housing values continue to drop. And contrary to media stories about the housing market bottoming, it continues to worsen in some markets. We are far from seeing the end of foreclosures and the volume of homeowners who are underwater on their mortgages.

Late 2009 saw two major pieces of federal legislation aimed at curtailing bad business practices in both the credit card and checking account lines of business.

During 2009, the FDIC closed 140 banks with an additional 37 closures through March 19 of this year.

Arianna Huffington and friends launched a "Move Your Money" campaign as part of a New Year's Resolution aimed at the four big mega-banks.

Big Wall Street banks like Goldman Sachs and Morgan Stanley were allowed to become bank holding companies in order to participate in government bailouts via the TARP program.

Out of all this turmoil, we've seen the big mega-banks continue growing in size and market share at the expense of smaller community banks and credit unions.

The media has done a good job of reporting on the outlandish salaries and bonuses paid to senior executives of the major banks.

As a result, consumers' distrust of banks, in particular, continues to escalate.

Fortunately, it's during uncertain times like this when we often witness major technological innovations, performance improvements, new product introductions, and changes in the competitive environment of the impacted businesses.

Such is the situation today in the banking industry.

EXPANSION OF REMOTE DEPOSIT

For years, ask most consumers how they chose their bank or credit union and they told you their decision was based on locational convenience.

They did their banking at the branch that was most convenient to where they work, live, or shop. Or perhaps it was the most convenient branch on their drive to and from work.

All other selection criteria were secondary.

Considered an excellent example of disruptive innovation, online banking caused many consumers to change the order of their list of selection criteria.

For the past several years, many consumers have abandoned their conveniently located local branch and moved their banking services online to banks like ING Direct, iGoBanking, and E*Trade Bank.

Now, another disruptive innovation is again reordering this list of selection criteria.

It's the ability to remotely deposit checks from your computer or data-enabled cell phone.

Remote deposit eliminates one of the last major obstacles many consumers have to moving their checking account to a preferred financial services provider. Perhaps the best example here is USAA Bank located in San Antonio, Texas.

For well over fifty years, many members of the military have had their insurance with USAA. Over the years USAA acquired a bank and began offering credit cards, followed by traditional checking and savings accounts. Today, millions of active military and veterans get their investment services from USAA. Bottom line, USAA has become a full-service financial services company serving millions of customers worldwide.

Until recently, most USAA customers banking with USAA had to rely on direct deposit or mailing their checks to San Antonio for processing. Many others kept a local bank or credit union simply for their checking account and ready access to a local ATM network.

USAA changed this by being the first consumer bank to offer remote deposit, introducing Deposit@home on December 6, 2006. Recently, it was, again, the first bank to introduce remote deposit via the iPhone – launching USAA Deposit@Mobile on August 10, 2009.

Today, a number of big and small banks and local credit unions offer remote deposit for their retail consumers. In fact, as this newsletter is being written, a local credit union in Sacramento has a remote deposit campaign underway utilizing both billboards and radio spots.

On the other hand, your newsletter editor recently contacted the folks at ING Direct, inquiring about the availability of remote deposit. On March 5, an e-mail arrived advising me the online bank currently does not offer this service and that my suggestion would be forwarded to the appropriate area for review.

Of all the banks offering remote deposit, you'd think the innovative folks at ING Direct would have made it available along with the launch of their Electric Orange Checking Account.

Remote deposit was made possible by the federal government enacting the Check Clearing for the 21st Century Act – better known simply as Check 21 – on October 28, 2004. This act legalized the scanning of a digital image of a check into a computer and transmitting the image to the bank for deposit.

It makes the digital check image legally acceptable for payment purposes.

Shortly after Check 21 became law it was the big banks which first introduced remote deposit for their business customers. Bank of America began testing its remote deposit service for business customers in late 2003 or early 2004 in anticipation of the new law.

As a reminder for those of you new to banking or bank marketing, Check 21 is the reason most consumers no longer receive their actual cancelled checks in their monthly statements – assuming they even receive a monthly statement.

It makes you wonder how the legion of programmers working with the PayPalX platform [covered below] are going to use remote deposit to their advantage as they continue developing new products and services for today's wired generation of consumers.

GROWTH OF THE "BUY LOCAL" MOVEMENT

Thanks to the growing "Buy Local" movement, local community banks and credit unions are gaining new customers and market share at the expense of the local branches of the out-of-town regional and mega banks.

The "Buy Local" movement has its origins in Boulder, Colorado, where it was started by the Boulder Independent Business Alliance in 1998. The goal was simple – convince local Boulder residents to spend more of their discretionary dollars at locally-owned merchants and not the mega-retailers invading the community.

The idea caught on and, thanks to The Great Recession, is spreading quickly across the country. According to the article, "Why More Are Buying Into 'Buy Local,'" appearing in the March 1, 2010 issue of BusinessWeek, "About 130 cities or regions now host 'buy local' groups, representing about 30,000 businesses, up from 41 in 2006."

Not only is there a rapid expansion in the number of cities launching buy local campaigns, the number of local businesses participating is exploding.

For example, Grand Rapid's Local First movement has seen significant growth in membership over the last four years, growing from 150 members in 2006 to almost 600 members today. In the sidebar to the right, you'll find some statistics showing the positive effects of its Local First effort.

Having the final word in BusinessWeek's "Buy Local" article is banker Art Johnson. "Art Johnson, chief executive of United Bank of Michigan, with 11 branches within 30 miles of Grand Rapids, says customers like the fact that he's not a Wall Streeter. 'People ask if we are really local,' he says. 'We have to prove it to them.' His response: Ask other bankers what their stock symbol is. 'If they have an answer, they're not locally owned.'"

If your local community hasn't joined the "Buy Local" movement, now is the time to take action. Details for getting started are available from the movement's trade organization, the Institute for Local Self-Reliance. You'll find its six steps to launching a Buy Local campaign here. According to the Institute, the most effective campaigns are those initiated by local business groups.

Giving the buy local movement a major shot in the arm is blogger Arianna Huffington and friends. As reported in the February and March issues of this newsletter, in late December they launched a nationwide campaign to persuade consumers to withdrawal their money from the nation's top four banks and move it to smaller, community banks and credit unions. The February issue of this newsletter is available here.

Details about this national campaign are available here.

Given consumers growing distrust and disdain for the mega banks, it would seem an excellent opportunity for local community banks and credit unions to help spearhead a buy local movement should one not already be available.

If one already exists, then make sure your bank or credit union is an active participant.

PAYMENT PROCESSING MOVES ONLINE

In the not too distant future, banks could find themselves out of the payment processing business as it moves online.

What impact this will have on the traditional checking account is yet to be determined. It's possible they could become obsolete for many consumers.

Are you aware that as you read this newsletter, there is a legion of computer programmers around the world diligently writing code using the innovative PayPalX payment transaction platform officially released in November, 2009?

Doubters can check it out immediately.

The ultimate goal of the folks at PayPal and their growing team of programmers is to take the movement of money out of the banking system and onto the Internet where it will be faster, smoother, less costly, and more transparent.

If you don't believe this, once you finish reading this issue of the newsletter, you should do whatever it takes to get a copy of the lead story in the March 2010 issue of Wired magazine and read it several times.

It's sure to be a giant wake-up call for you.

The title of the cover article is "Money Wants To Be Free." The cover subhead reads, "The reign of the bank and credit card cartel is ending. A new wave of financial upstarts is liberating your cash – and the economy."

Normally, you might believe the title and subhead to be a lot of hyperbole.

After reading the article you'll likely change your mind…and start to worry if you're in the traditional financial services business – e.g., banks, credit card issuers, and credit unions.

For example, just last year Michael Ivey, a computer programmer living in Atlanta, Georgia, used the PayPal transaction platform to link users' Twitter accounts to their PayPal accounts, creating peer to peer payment capability. His new company is Twitpay.

Ivey's new company is just one of many that will come online in the months and years ahead as more and more programmers and their friends look for ways to circumvent the banks and credit card companies.

Let this seminal article be your wakeup call.

POSTING TRANSACTIONS ON SOCIAL WEBSITES

Of the five developing trends covered in this issue, perhaps the most unusual one concerns participants in social media websites agreeing to post some or all of their daily purchase transactions online for others to see.

Welcome to Blippy.

Launched in early January, by mid-February over 13,000 participants were sharing transaction data online. You can enroll right now at blippy.com.

Information on this phenomenon was discovered in the article, "So, What Are You Buying?," appearing in the February 20, 2010 issue of The Sacramento Bee.

The idea behind Blippy is to have people share their spending behavior online for others to see and comment on, thus enabling all participants to learn of new products and services and special marketing deals.

Another benefit seen by some current participants is that by exposing their ongoing purchases for others to see, it will give them pause in making impulse purchases – especially for big ticket items like Blu-ray players, flat screen TVs, and sports cars.

One of Blippy's three founders is Philip Kaplan, co-founder of Twitter.

Participants begin by registering a credit card, followed by accounts at eBay, Apple's iTunes store, Netflix, and similar online merchants. In addition to these basic sources of purchase activity, participants are free to provide more sources on their own – including bank transactions and peer to peer transactions.

As for the detail, today a participant's use of a debit card at a grocery store would show up as one total under the name of the merchant. The participant then has the option of providing a detailed list of the items purchased.

Basically, if you've spent money to acquire it or elected to save it in a bank account, you can add it to your Blippy account.

So what are the implications for banks and credit unions?

You can expect some number of participants to post banking transactions online including auto loan payments, mortgage loan payments, deposits to savings accounts and CDs…even amounts paid in overdraft fees. Each of these transaction amounts will be accompanied by the name of the bank or credit union used.

You can bet the mega-banks like BofA and Wells Fargo are already monitoring sites like Blippy to see if they can climb aboard and capitalize on this wealth of data.

While it's probably too soon to see where Blippy is headed, you can be sure that some of the online programmers working from the PayPalX platform are already thinking of ways to leverage the Blippy data.

At a minimum, someone at your bank or credit union should join Blippy to keep tabs on what's happening.

UK'S TESCO TO ADD BANKING SERVICES

If all goes as planned, sometime in 2011, British grocery shoppers will be able to open checking accounts and apply for a mortgage inside their Tesco stores.

According to the one-page article in the March 1, 2010 issue of BusinessWeek, since spring of 2009, Tesco shoppers in selected stores have been able to buy insurance, obtain credit cards, and open savings accounts. The number of Tesco stores offering financial services continues expanding this year.

Liz Hartley of Datamonitor, a leading provider of global business information and analysis, predicts that within five years, Tesco will be one of Britain's top ten banks.

Tesco is the world's third largest retailer behind Walmart and French-owned Carrefour. All three are major players in the grocery business.

Tesco entered the competitive U.S. grocery market in late 2007 by opening several Fresh & Easy specialty stores in California, Arizona, and Nevada. As of January, 2010, there are 132 Fresh & Easy stores with additional stores coming on line in March.

You can be sure the folks at Walmart are keeping close tabs on what happens with Tesco's entry into financial services.

In the meantime, on June 20, 2007, Walmart unveiled its plans to open 1,000 in-store money centers focusing on consumers without traditional bank accounts. To date, through these centers, Walmart offers its customers an array of financial services including check cashing, money orders, bill pay, money transfers, a private label credit card, and a reloadable, prepaid Visa debit card called the Walmart MoneyCard. Both cards are issued by GE Money Bank.

In some non-money center Walmart stores, customers often discover a local bank or credit union branch offering financial services.

Like Tesco, Walmart's ultimate goal is to own a bank and offer a full range of financial services in every store.

Walmart began its efforts to acquire a bank in 1998. Its fourth attempt to gain government approval to acquire a bank was finally withdrawn on March 16, 2007. At the time, Walmart was waiting approval to create an industrial loan corporation, more commonly referred to as an Industrial Bank, in Utah. An ILC would have enabled Walmart to issue debit and credit cards, take deposits, and make loans but not offer checking accounts.

In every instance, Walmart's attempts at buying or establishing a bank has met with stiff opposition from the banking community – especially from community banks.

For a number of years there's been a President of Walmart Financial Services. It's likely that Walmart will continue its efforts at entering the retail banking business…ultimately achieving success sometime in the not too distant future.

After all, it's in the best interests of consumers that giant retailers like Tesco, Walmart, Target, and others be allowed to provide checking and savings accounts to consumers.

In the meantime, all retail bankers should have contingency plans for the day Walmart begins promoting its no frills checking and savings accounts.

WHAT WILL YOU DO?

Thanks largely to the Internet, a growing number of restless programmers, and venture capitalists' money, events are happening at a pace today that's unprecedented.

Not all new ventures will have a dramatic impact on the world of banking. A good example is Linden Lab's Second Life.

On the other hand, doing nothing about the emerging technologies until they've already been adopted by some of your competitors isn't a good strategy either.

While most bankers are extremely busy worrying about and planning for their overdraft opt-in campaigns in the next few months, it's easy to forget the need to closely monitor the emerging trends either impacting your institution today or possibly catching you by surprise in the future.

At a minimum, at least one employee – preferably someone in marketing – should be tasked with keeping a list of emerging trends, collecting data as it becomes available, and reporting on these activities at least quarterly.

Today, you can no longer sit back and wait for a handful of futurists to gather the information, synthesize it, and write a book providing us with the details.

You need to be proactive by tapping into what's happening on the Internet. The best way to do so is read the right magazines, like Wired, read at least one or two newspapers daily, listen to the relevant radio talk shows, participate in the social media websites, and listen to what the younger consumers are talking about today.

There's a wealth of information out there enabling each of us to become futurists should we wish to do so.

The future of our banks, our credit unions, our jobs, and careers may depend on it.