Oh, how the mighty have fallen. Following an erratic week culminating in major financial crisis, the Bush Administration and Congress presented a $700 billion rescue plan. However, during press time, the House of Representatives voted against the 110-page bill (228 to 205) causing the stock markets to plunge sharply at midday. According to The New York Times, proponents of the bill even extended the allotted voting time by 40 minutes in a drastic measure to convert undecided and “no” votes to “yes” votes. The Senate is expected to vote again later this week.
What exactly happened to the old Wall Street? Perhaps there is no definitive answer. But one thing is certain, there is an ample amount of negative fallout left behind. When heavy-hitters such as Lehman Brothers and Merrill Lynch declare bankruptcy or find rescue through Bank of America, respectively, trouble abounds. When predictions of smaller investment banks, leaner profits and fewer finance jobs available surface, that trouble needs to be addressed. And, when many rush to withdraw money from their bank accounts as phrases including “The Depression” are tossed around, something has to give—now.
While Congress scrambles to remedy the country’s economic plight, many are left to wonder what happens in the meantime. The printing industry, in particular, has seen hard times before. To obtain a supplier perspective on how these latest developments are affecting financial product sales, Print Professional spoke to three manufacturers:
• Tony Scarselletta, general manager, General Financial Supply (GFS), a division of Ennis, Bridgewater, Va., and eastern sales manager, GFS.
• Gary St. Onge, vice president of sales and marketing, AmeriPrint, Harvard, Ill.
• John Wombles, CEO, Rotary Print USA, Manchester, Ga.
PP: How has the struggling economy affected sales of financial products?
Scarselletta: GFS sales show that banks have become more conservative in their ordering patterns. Orders may be for smaller quantities and they have begun to be more aggressive in checking pricing by getting additional quotes. Repeat orders are not as automatic. Banks are continuing to look at electronic order fulfillment as a means to cut procurement costs.
St. Onge: The financial market has become increasingly competitive for us as a result of the fluctuating economy.
Wombles: The biggest effect would be on forms related to the housing market, and most of these are laser-generated forms that print on blank laser sheets which really does not impact the forms manufacturer.
PP: The American financial industry continues to shift as evidenced by the recent news regarding Wall Street. How can financial distributors stay afloat in an unpredictable market?
Scarselletta: Mergers and acquisitions provide opportunities for large conversions. Often, displaced banking officials will resurface in a couple of years with new startups. Be alert to these opportunities.
St. Onge: The best way to stay afloat in the financial industry—or any industry for that matter—is to aggressively seek new business to replace those that are lost to attrition.
PP: Please describe some of the financial products your company manufactures.
Scarselletta: General Financial Supply has 12 product categories—cash tickets, general ledgers, teller receipts, envelopes, control documents, counter forms, checks, deposit tickets, notices and custom forms. We also offer a holiday program and IRDs for Check 21.
St. Onge: We manufacture checks, deposit slips, debit memos, credit memos and bank statement stock.
PP: Which financial products have shown exceptional growth or decline this year?
Scarselletta: Areas that have experienced growth include financial envelopes, teller receipts and deposit tickets. Our holiday collection product line also continues to grow. The other areas are flat or show decline. The most notable decline occurred in cash tickets and control documents.
St. Onge: We have not seen any exceptional growth or decline in the financial products this year. Most growth is due to acquisition of new business.
Wombles: Our credit card statements, credit/debit forms and retail installment contracts productions have grown significantly.
PP: What types of secure document solutions does your company offer to combat fraud?
Scarselletta: Through the GFS Secure Star and Uncompromised Check Solutions programs, we offer extensive features including: holograms, prismatic printing, heat-sensitive icons (thermochromic ink), true watermarks, artificial watermarks, chemical protection, visible fibers, invisible fibers, warning bands, microprint, diagonal dimensional backer and toner grip.
St. Onge: We offer a variety of document security solutions including copy-resistant backgrounds, thermochromic inks, security papers, microprinting and scan survivable imaging. Our sister company, Security Printing Systems, offers digital security for electronic applications, false-positive reactive inks for authentication purposes and other high-tech security solutions.
Wombles: [Our company offers] safety papers, security inks, warning bands, void pantographs, microprint lines, bleed-thru MICR, bleed-thru numbering and artificial watermarks.
PP: What is the most common mistake distributors make when selling to the financial market? What types of questions should they be asking when trying to close a sale?
Scarselletta: They often view cash ticket orders—and similar products—as not having a large enough dollar value. Distributors can be intimidated by MICR. We have the expertise to help. Questions should include: How is their quality? Each reject costs a minimum of $1.00 and a 2 percent reject rate increases the total cost of the form by $20.00/M minimum. Other questions are: Do they have an electronic solutions for ordering forms? Have they converted to image processing? If not, there is a great opportunity for a forms conversion project.
St. Onge: Many distributors fail to do their homework before offering document security solutions. Distributors must educate their customers about all of the potential risks and expenses of using unprotected documents. Otherwise, end-users will not be willing to pay the added expense of security. We have also seen many distributors oversell features, as well. There are no guarantees.
PP: How is this particular market different today than this time last year?
Scarselletta: There are few conversions to image processing and changes in ordering. The window for ongoing image conversion is primarily in banks with [a] $1mm asset base or smaller.
St. Onge: The financial market is less profitable now than this time last year.
Wombles: We are not seeing a negative effect on our forms mix and overall, our sales are up tremendously.
PP: Are you surprised by the direction the financial market has taken? In your opinion, what still needs to be accomplished? Is a partnership with promotional products the next step?
Scarselletta: Many distributors have been successful with promotional products. For those selling these items, our holiday program is a good fit. From there, you can often find opportunities to quote on MICR forms.
Wombles: As a growing manufacturer up 50 percent this year, we have not been affected by any changes in the market and do not see promotional products as part of our future.
PP: How does your particular company’s financial products make doing business financially worthwhile? For instance, how are these products unique, or do you provide any value-added services?
Scarselletta: Outstanding quality and customer service—less than 1⁄10 of 1 percent of our forms have MICR rejection problems. We offer multiple electronic ordering solutions—often with no cost to the distributor or financial institution. We offer design help with image conversion projects. GFS has a variety of online ordering options for the distributor to take advantage of. Recently, we integrated our MicrLink site with e-Quantum, a popular distributor software package. We have been successful integrating MicrLink with other proprietary software. We actively work with Four51 for online order fulfillment. And, we offer warehouse fulfillment, including secure storage.
St. Onge: Document security solutions have attracted new business to our company. Other support services such as warehousing and deferred billing are also attractive in this market.
Wombles: We have the capability to produce probably [more than] 95 percent of the financial forms in use today. Over the years, checks have declined with us. However, this year our sales are pretty much up across all product lines.
PP: Is there anything you would like to add?
Scarselletta: MICR still drives the banking world. Despite changes in technology, MICR is still needed. Banks using their own printers with MICR toner have prove[n] to be more costly than initially thought and there can be quality issues.
Wombles: We at Rotary Print USA are still aggressively pursuing the financial market. Though it may be on [the] decline, we intend on growing our share of the remaining market.