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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, while also you can improve your finance by learning online trading, as there are resources like trade fx that help you with this. 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!
02/18/22 Realizing the Opportunity in the Subordinated Debt Market (Credit Union Times)
As most low designated credit unions (LICUs) have increased and the NCUA’s Final Rule on Subordinated Debt has expanded issuer eligibility, the industry now has more opportunities than ever before to reap the benefits of the subordinated debt market. The wider subordinated debt market has grown and evolved over time. From 2014 through mid-2021, a total of $33.8 billion was issued, including a significant increase in issuance in 2020. NCUA regulations require credit union-issued subordinated debt to have a minimum of five years and a maximum maturity of twenty years. Furthermore, subordinated debt cannot be repaid before five years have passed from the date of issuance. Whether a qualified credit union is aiming to promote balance sheet growth, merge, or increase regulatory capital levels, the possibility in the subordinated debt market is worth considering as part of a long-term plan for a forward-thinking cooperative.
02/18/22 CUSOs Find Members Ready to Spring Into Spending (Credit Union Times)
According to statistics from two payments CUSOs, credit union member spending in January indicated that they are eager to get out and return to pre-pandemic practices. As seen by PSCU’s Payments Index, credit card expenditure for both entertainment and travel surged in January compared to January 2021, when customers had cut their spending in half from pre-pandemic January 2020. John Patton, CO-OP Senior Payments Advisor, stated that federal and state officials had shifted the narrative from “pandemic” to “endemic,” with the underlying message that it is time for society to adapt themselves living with the virus. The average credit card balance in January 2022 was $2,736 – steady from January 2021. This is the first time the year-over-year average credit card balance has not decreased since the beginning of 2019, as reported by PSCU.
02/17/22 Concerns Over CFPB’s Proposed Rule, Ability to Serve Small Biz Are Raised by NAFCU (CUtoday)
Concerns about the CFPB’s proposed rule under Section 1071, along with other critical matters, were raised in a letter from NAFCU to the House Financial Services Subcommittee on Consumer Protections and Financial Institutions. These bills might limit credit unions’ flexibility and heighten their regulatory compliance obligations, making it more challenging to assist small businesses. NAFCU, in the letter, also requests the CFPB to extend the compliance deadline to more than 36 months instead of 18 months after the final rule is released. It even recommended lowering the revenue barrier to one million dollars under the proposed rule’s definition of small businesses.
02/17/22 Despite Winter, Total Retail Sales Heated Back Up in January (CUtoday)
On a seasonally adjusted basis, retail sales rebounded to a 10-month high in January. It’s worth noting that retail sales are reported on a nominal basis, so some of the recent advances may simply reflect quickly rising prices rather than increases in quality or quantity. As per the NAFCU analysis, numerous industries benefited in January, with nonstore retailers (+14.5 percent), furniture and home fixture stores (+7.2 percent), and motor vehicle and parts dealers (+5.7 percent) leading the way. Overall, retail sales increased 12.7% year on year during the month, down from 16.8% in December. Sales in the control group – which excludes auto, gas, and building materials – were up 11.5% year on year.
02/17/22 Crypto-curious consumers would prefer to hold with banks: Survey (LendIt Fintech)
While more people are growing interested in cryptocurrencies, the majority of them would prefer to keep them in a bank, according to the findings of a new EY poll of cryptocurrency holders. 80% of users prefer this approach, although most assets remain on crypto exchanges. Given these figures, this is likely to alter as banks navigate the maze of regulatory difficulties. Senior director Jochen Kaempfer believes that most consumers view cryptocurrency as a long-term investment, particularly among older investors. Also, the fundamental reason so many people are prepared to transfer digital assets to a bank is that they trust the bank to hold them and do the right thing. Cryptocurrency may have libertarian roots, and some of them who do not trust a bank to protect them may retain those views. Still, a libertarian perspective is inappropriate for where we are now. According to EY partner/principal Aaron Byrne, there is a convergence of several types of innovations happening right now in the context of decentralized finance. However, some areas will impact the way people use digital assets in the future that aren’t fully in place or imagined now.
02/16/22 JPMorgan Opens A Bank Branch In The Metaverse (But It’s Not What You Think It’s For) (Forbes)
JPMorgan announced the launch of a “lounge” in Decentraland, claiming to be the first bank in the metaverse. The bank’s blockchain unit, established by Onyx, greets visitors with a digitized picture of Jamie Dimon and a roaming tiger. JPMorgan does not appear to believe that its metaverse lounge will entertain random metaverse visitors who will create a checking account on a whim. Moreover, the bank plans to focus on three verticals in order to enable the gaming ecosystem. These include industrializing game platform providers by providing bank-grade products and platform access to digital assets, making it possible for game and content developers who specialize in development of the bingo for real money niche to commercialize their work, and scaling the metaverse industry globally across different currencies and payment methods.
02/16/22 Proposed Merger Would Create New Billion-Dollar Credit Union (Credit Union Times)
On the occasion of their 100th anniversary, the $299 million Alltrust Credit Union and the $748 million Align Credit Union announced plans to join, creating a new $1 billion financial cooperative in Massachusetts. Both credit unions will conduct due diligence in the coming weeks to evaluate whether the merger proposal should be pursued. After completing the due diligence phase, the credit unions will seek regulatory permissions. Members of both credit unions must approve the proposed consolidation by a majority vote in addition to receiving approval from state and federal regulators. Members are likely to cast votes in the second part of this year. Sylvester would be named President/CEO of the merged credit unions.
02/14/22 Barclays calls for more stringent regulation of BNPL market (Finextra)
Barclays, which offers interest-free and interest-bearing loans at the point of sale over a variety of lending durations, recently inked a BNPL arrangement with Amazon. It believes the buy now, pay later market should be under the same regulatory burden as the rest of the consumer credit sector. According to Barclays’ research conducted among 2000 BNPL shoppers, one of the reasons for growing BNPL payments catching buyers off guard is the relative ease with which they can accumulate debt across many suppliers, with nearly half confessing to having BNPL loans from different providers at the same time. The government is presently debating how to regulate the industry, and Barclays feels that a strong regulatory framework is critical to preventing consumers from incurring excessive debt.
02/13/22 Bank-fintech partnerships win key battle, but war is far from over (American Banker)
When the litigation began in 2020, the FDIC and OCC, backed by Trump administration officials, developed rules to ensure banks and fintechs could continue to partner and do business across state boundaries after the 2015 court judgment Madden v. Midlands Funding. However, with the help of many consumer activists, the states may be able to appeal the judge’s decisions. According to the lawsuit filed in August 2020 against the FDIC, the state AGs alleged that the two agencies had violated the APA by releasing guidelines that would “enable predatory lending through sham ‘rent-a-bank’ arrangements designed to circumvent state law.”
The Madden case cast doubt on the notion of “valid when made,” the secondary lending market for banks has been rife with legal uncertainty. Since the “valid when made” standards were first announced, the leadership of the financial agencies has swapped political parties, implying the regulators themselves may change their legal stances or tweak the existing laws in the coming months. It’s unclear whether regulators will change their minds about “valid when made” under Democratic leadership or not.
02/01/22 TD to let customers overdraw by $50 without fee (Banking Dive)
TD Bank, which received 8.9% of its operational revenue from deposit service charges between July 2020 and June 2021, will allow customers to overdraw their accounts by up to $50 without incurring a cost. Furthermore, TD will no longer charge a fee when clients with overdraft protection will transfer money from their savings account. This year, the bank is also implementing low-balance notifications and a 24-hour grace period to allow overdrawing customers to replenish their accounts without incurring a fee. The developments come as a slew of banks have taken steps in the last year to minimize their reliance on overdraft fees.