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MonJa’s Digital Banking and Lending Monthly Roundup – Why Subscribe?
Digital banking and lending are evolving rapidly. Recent fintech-banking partnerships and innovation in technology with the introduction of AI, ML and blockchain herald a new era in lending. Fintech’s are changing the competitive ecosystem, empowering lenders to process loans faster and smarter. In a world full of noise, understanding how the technologies and developments may impact your financial institution’s credit decisions and credit portfolio is of critical importance. With MonJa’s Digital Banking and Lending Monthly Roundup, it’s easy to stay up to date on what’s happening in the space. Get the latest updates, analysis and commentary on digital banking and lending segment!
4/22/2021 35% of CUs Expect Return of Pre-Pandemic Norms by Summer: CCUA Survey (Credit Union Times)
Nearly 35% of credit union members are ready to get back to pre-pandemic operations, as found in a survey by Cooperative Credit Union Association. Out of which 23.26% members said 4th July and 11.62% said 1st May as the return date for normal operations. The survey also outlined that around 28% of the members would return back to normal operations once their state restrictions get lifted. The strategies for returning back to branches were also assessed in the CCUA survey.
4/22/2021 SBA Issues New Procedural Notice for First-Draw PPP Users (CU Today)
The Small Business Administration (SBA) has given a sigh of relief to PPP borrowers by extending the loan increase deadline to May 31, which was earlier March 31. Though loan applications shall not be acceptable after May 31, the SBA will process the pending applications till June 30. During this time span hold codes and loan increase requests will be addressed by SBA. Also, NAFCU(National Association of Federally-Insured Credit Unions) has raised concerns to SBA for resolving hold codes of backlogged loans through machine learning.
4/22/2021 CUNA Urges Yellen to Amend PSPA Standards (CU Today)
According to CUNA, the amendments made to the Preferred Stock Purchase Agreement (PSPA) between the Federal Housing Finance Agency (FHFA) and Treasury needs credit unions to implement the new General QM standards by July 1, 2021 for selling mortgages to Fannie and Freddie. Owing to which, CUNA has written a letter to Treasury Secretary Janet Yellen. Wherein it has requested the Treasury to align the deadline for implementation with the General QM final Rule deadline (October 1, 2021). Along with that, the Treasury should clarify the provisions of the Subsection 5.15 before October 1. This shall not only help to ensure smooth operations of housing finance market but will also create simplicity and competency for credit unions.
4/21/2021 Credit Union Boards Face Challenging Times (Credit Union Times)
Despite being industry veterans and highly accomplished professionals, credit union board members have to face an extremely high-pressure environment. They also have a fiduciary responsibility of governing financial organizations and managing capital risks. They also have to face an ultra-competitive environment from larger and better funded players. Along with that, there are organizational stresses as well. To manage the credit union’s policies, operations and strategies, board members need to commit major effort and time.
Because of the changing markets and the demographic demands, the board’s work has become more challenging. To survive in the competitive environment, ever-increasing investments are a must. These requirements force credit unions to opt for merger strategies. And to seek outside advisors for traversing uncharted waters. Leveraging technology can allow for better oversight.
4/21/2021 SBA Improves Oversight of PPP Program, as CU Trades Note Forgiveness Delays (Credit Union Times)
Despite steps taken by SBA to reduce fraud risks pertaining to PPP, serious gaps in PPP management are still putting millions of dollars at risk. Even an informal risk assessment of PPP program was conducted by SBA officials. SBA’s Inspector General along with GAO (Government Accountability Office) also outlined the problems associated with the loan program. CUNA and NAFCU members also wrote letters to the House members indicating the on-going problems of the PPP program.
Although SBA has come up with a loan review process, the program still has a backlog of loan forgiveness applications. As per SBA rules, the decision was to be given within 90 days of submitting the loan forgiveness application. But many financial institutions and small businesses are still waiting to know the status of their applications.
4/21/2021 PenFed Reports Record Loan Growth as ‘Strongest’ in Its History (Credit Union Times)
Around 49% growth in 2021 Q1 loan originations marked the strongest quarter in the 86-year history of PenFed Credit Union. The loan origination growth of $5.3 billion is a result of te PenFed’s value proposition of great rates and zeal for member service. PenFed recorded 127% growth from 2020’s first quarter in mortgages division. It also recorded a 40% growth in the consumer lending division.
4/20/2021 Two Major Trends in Fintech Lending (LendIt Fintech News)
The Fintech lending space is witnessing two major trends. The first one is Fintech companies acquiring US bank licenses. Varo was the first Fintech Company to get approved as a national bank charter by the OCC in July 2020. The trend continues thereinafter followed by LendingClub, SoFi and many more. But what led to this trend? One reason is that Fintech’s are more open to consumer’s charter applications. Secondly, being a bank, Fintech’s can seek bigger margins and new opportunities.
The second on-going trend is that non-fintech companies will eventually become Fintech companies. Big Tech companies are a perfect example of this trend. They have been establishing their own Fintech arms and thus generating significant revenue. Apple Pay, Facebook Pay, Amazon One, Google Pay are all Fintech arms of big technology companies. Walmart also recently launched its Fintech unit, named Hazel. But will these non-fintech “Fintech companies” also launch a lending program in future?
4/19/2021 House passes CUNA-backed SAFE Banking Act in bipartisan vote (Credit Union National Association)
Through bipartisan vote, the house passed the CUNA vouched Secure and Fair Enforcement (SAFE) banking act. Financial institutions carrying out state legal cannabis-based businesses will be protected through this act. The bill shall act as a safe shield for financial institutions, providing services to businesses or individuals involved in legal marijuana commerce. And also for credit unions and their employees, that are unaware about their customers involved in this business.
4/13/2021 Banks crib fintechs’ playbook to make customers better savers (American Banker)
Automated savings, a digital tool made famous by Fintechs’ is now being embraced by traditional banks as well. It’s a win-win as this technology enables customers to save money without a second thought. Banks are also developing dedicated tools to help their customers save money in an automated manner. Automated savings features such as mobile deposits and peer-to-peer payments will help banks to stand apart from their peers. For instance, Money Scout, tool of Huntington’s Bank analyzes the income, expenses and spending patterns of customers before automatically saving money into their savings account. KeyBank is also following a similar approach along with other added options.
4/05/2021 And The Top-Performing CUs in S&P Global Rankings Are… (CU Today)
The S&P Global Market Intelligence has ranked Police and Fire FCU as the top performing credit union in the United States. Eastman Credit Union in Tennessee has bagged the second position and Long Beach Firemen’s CU in California was ranked third. Rankings are given on the basis of five metrics. Wherein PFFCU not only outperformed but also outpaced the top-100 median. Kingsport, Eastman CU, passed four out of the five metrics for beating the top-100 median. S&P Global ranked only CUs that had assets more than $100 million. A total of 1727 CUs were eligible. Vienna based Navy FCU; the nation’s largest CU by assets was ranked 499. The list was led by California and Texas with 11 CUs in top 100.
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