In today’s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and securities firms. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately, it enables us to help you meet your goals and compete more effectively. By 2012, most banks will be retail and commercial banking institutions serving regional or local markets. Some big banks with strong regional franchises will divest loss-making divisions and instead focus on their core markets and customer segments. We anticipate that many European players may eventually fall into this category.

Indeed, soundness and solvency, balanced with generating returns, are the banking industry’s new imperatives. And we believe that most commercial banks in developed markets will settle for lower risk and moderate growth in their quest to achieve high performance by 2012. We estimate that at least 30 percent of the banks’ cost base will be variable by 2012, as successful banks use alliances, shared services and sourcing to manage noncore capabilities more competitively. For example, shared services arrangements with telecommunications companies and energy utilities could improve economies of scale (for both partners) and lower costs.

Product innovations like so-called green mortgages, which offer discounts for energy-efficient homes, will address consumers’ growing environmental and social concerns; surveys indicate, for instance, that customers are prepared to pay a premium for products and services that help cut carbon emissions. These and similar customer- and community-focused product initiatives will not only create new income streams but also provide banks with the opportunity to build and improve customer relationships.

For example, microfinance (providing financial services to low-income customers and small- and medium-size enterprises, mostly in the developing world) is a low-volatility lending model with limited risk that more banks are likely to adopt. Currently, between 50 percent and 80 percent of adults in many developing countries have inadequate access to financial services, along with up to 10 percent of the population in developed economies, according to The World Bank. So the extension of services to the bottom of the pyramid represents a market with significant growth potential.

Another example of an emerging new business: Islamic banking, the provision of financial products and services in compliance with Sharia law, which prohibits charging interest. The Asian Development Bank estimates that the combined global value of Islamic assets held by governments (including sovereign wealth funds), financial institutions and individuals is approaching $1 trillion and growing at an annual rate of 10 percent to 15 percent.

Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Implications of Non-payment: Some lenders in our network may automatically roll over your existing loan for another two weeks if you don't pay back the loan on time. Fees for renewing the loan range from lender to lender. Most of the time these fees equal the fees you paid to get the initial payday loan. We ask lenders in our network to follow legal and ethical collection practices set by industry associations and government agencies. Non-payment of a payday loan might negatively effect your credit history.

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