2. Metavante
β’ Banking and payments technology for
financial institutions and businesses
β’ Technology to run checking, savings &
loan accounts; credit & debit cards;
eBanking/Internet bill payment; NYCE
Network; healthcare & government
payments; electronic check image, etc.
3. Impacts
β’ Bernanke & Fed Funds Rate
β’ Inverted Yield Curve
β’ Effects on Banks
β’ What it means to Metavante
β Software Purchases
β Growing Deposit Accounts
β Employment
4. Fedβs Dec. 12 Action
β’ Short-term interest rates remain
unchanged at 5.25%
β’ Balance effects of inflation with
continued stable economic growth
β’ Fed-funds futures predict 20% chance
of lower interest rates by April
5. Inverted Yield Curve
β’ Banks make money by taking short-term
deposits and lending them for longer periods,
and at higher rates
β’ Before 2006, the yield curve (the difference
between short- and long-term interest rates)
was steepβand lending was easy
β’ Higher short-term interest rates caused the
yield curve to flattenβand invert
6. Effect on banks
β’ Net income margin (NIM) squeezed
β’ Cautious about spending
β’ Ambitious about growing deposits in
highly competitive market
β Top 10 banks own 40% of all US deposit
accounts, & 51% of assets
7. Cautious spending
β’ Seeking to control expenses,
banks delay software purchases
β’ Metavante impact:
β Lower Q3β06 revenue
β Rebound in Q4β06
8. Hungry for deposits
β’ Consumers shift savings to higher
yield accounts or investments
β’ Metavante impact:
β Create new deposit accounts for
banks to offer
β HSAs grow 115% in 2006
