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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!
1/25/22 NAFCU to NCUA: Give CUs flexibility in 2022-2026 strategic plan (CUInsight)
NAFCU Vice President of Regulatory Affairs Ann Kossachev called on the NCUA to give credit unions the necessary flexibility to adapt to emerging technology and make efforts to decrease regulatory compliance burdens on credit unions. NAFCU also suggested the NCUA to modify its goals and objectives to ensure they coincide with the final budget, take into account lessons learned from the COVID-19 pandemic, and continue to make efficient use of credit union dollars. The association also complimented the NCUA for its decision to repay any surplus from the Operating Fund to credit unions and urged the agency to continue to assess the fund for any surpluses in the future. It also asked the agency to raise the exam flex cap to $3 billion in order to provide credit unions more flexibility and allow examiners to focus on higher-risk institutions.
1/25/22 How credit unions can bridge the financial divide in underserved communities (CUInsight)
Today, financial institutions are adopting new technologies such as mobile banking and electronic payments, with some even considering digital currency. However, as these technologies advance, many underprivileged communities across the nation continue to fall behind. Credit unions can help bridge the gap and build a more inclusive financial system. Credit unions swiftly adapted to aid Main Street small businesses in need, even those turned down by big banks, through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Many credit unions are also Community Development Financial Institution (CDFI) certified, allowing them to give affordable loans to economically vulnerable communities. Credit unions are also well-positioned to assist those who may not have instant access, regardless of location or socioeconomic status.
1/24/22 Giving Members the Open Banking Services They Want (CUTimes)
Open banking is altering people’s perceptions of financial institutions, including credit unions, as well as the way these institutions function. Credit unions that choose to provide digital open banking app experiences to their members must first comprehend the industry landscape and regulatory environment. Partnerships with fintech companies and technology integrators can help credit unions accelerate the shift to more customer-centric banking operations. It will also assist them in remaining competitive in a dynamic market and performing a better job of putting member deposits to work. In this broader and more complicated cybersecurity threat landscape, they must also understand how to protect all transactions and personal financial information. Fortunately, technologies are available that leverage artificial intelligence and machine learning to protect account entry points with frictionless authentication, detect fraudulent transactions and protect against cyberattacks throughout the member journey.
1/24/22 Fed Starts Long Journey That Could Lead to a U.S. ‘CBDC’ (The Financial Brand)
The Federal Reserve’s paper, “Money and Payments: The United States Dollar in the Age of Digital Transformation,” makes no clear recommendation for a national digital currency. It does, however, make it clear that establishing an actual U.S. CBDC is a matter for Congress and the executive branch, not the Fed alone. The report also suggests that a CBDC could be used to execute micropayments. Moreover, a CBDC would be the safest digital asset available to the general public, with no related credit or liquidity risk. A CBDC in the United States might alter the competitive landscape of the payments industry by establishing a secure digital currency. The Fed’s paper also highlights the question of what occurs during natural catastrophes and other severe disruptions when the internet is unavailable – offline methods of accessing CBDC balances may be required.
1/21/22 Tips to Offset Lower Mortgage Volume in 2022 (CUTimes)
The COVID-19 pandemic prompted a record number of refinances, while purchasing volume remained strong despite constrained supply. Going forward, there are indications that a challenging market lies ahead. However, lenders will compete fiercely for new mortgages, and significantly fewer rate-term refinances. Credit unions, which have recently lost market share, should change their focus from handling an enormous influx of new originations to replenishing the pipeline. Credit unions can compensate for a drop in refi activity and position themselves for future success by reviewing their cost structure, doing proactive marketing, using member data for targeted marketing, identifying cash-out refinance candidates, and investing in an intuitive, seamless online pre-approval process.
1/19/22 Bank-Fintech Partnerships Are Under-Performing: What’s Going Wrong? (Forbes)
Over the last three years, fintech partnership activity among banks has intensified. The most frequently mentioned goals by nearly half of respondents were increasing loan volume and loan productivity, followed by new product development. However, fintech partnerships are falling short of financial institutions’ objectives. Banks that want to grow through fintech partnerships must take a hybrid organized approach to partnership, which includes establishing effective organizational structures, staffing up their efforts, and operationalizing the execution of their partnerships, just as they do with other business processes.
San Francisco-based SoFi obtained approval from the Office of the Comptroller of the Currency and the Federal Reserve to become a bank holding company. Following the announcement, the fintech’s shares rose more than 16% in after-hours trading. SoFi intends to acquire California community lender Golden Pacific Bancorp and operate its subsidiary as SoFi Bank in order to become a bank. The deal is expected to close in February. This significant move will enable SoFi to expand its broad portfolio of financial goods and services in order to better serve its members through big financial times in their life, as well as all of the moments in between.
1/18/22 Truist joins industry’s pivot away from overdraft fees (American Banker)
Truist Financial will shortly launch two new overdraft fee-free checking accounts, following a long list of banks lowering their reliance on the extremely unpopular source of income. Fees for insufficient cash, negative account balances, and overdraft protection transfers are also eliminated under the plan. Older accounts with overdraft penalties will progressively disappear from the company’s deposit base. Truist will also create a checking account for unbanked and underbanked customers. According to the company, the as-yet-unnamed product, like the Truist One account, will not incur overdraft fees, and qualifying clients will be able to access the $750 line of credit. Truist is also nearing the completion of a two-year integration process that began with the merging of two banks — BB&T in Winston-Salem, North Carolina, and SunTrust Banks in Atlanta.
1/18/22 Small banks set to go live with bitcoin trading (American Banker)
A group of community banks are on track to meet a high-tech target set last year: allowing consumers to purchase and sell bitcoin through mobile banking apps. According to participants, several regulatory and security concerns have been addressed in the months following the first announcement, and partnerships and integrations between NYDIG and the banks’ existing technology providers have been accomplished. In addition to aiding in customer retention, Bitcoin trading will provide revenue growth and keep banks competitive. Banks currently make loans based on physical assets such as trucks, farm equipment, and commercial real estate. However, as the trend toward digitizing assets and storing them on public blockchains continues, the banking industry will need to engage with crypto. A bank user can utilize their bank account funds to purchase and store bitcoin with NYDIG, but the bitcoin cannot be transferred to another wallet. This reduces the possibility of bitcoin being stolen through a bank partner’s mobile app.
Google is now placing major emphasis on using its technology to solve banking challenges for both traditional financial institutions and Fintechs. Cloud adoption will increase in the coming year, particularly in crucial areas such as security, fraud detection, and anti-money laundering. Furthermore, as the majority of innovation occurs in cloud ecosystems, banks will be excluded from new technologies if they do not have access to these cloud environments. While some banks prefer a single cloud service provider, another popular method is to opt for a multi-cloud strategy for their digital infrastructure rather than being beholden to a single vendor. It is also anticipated that self-service technologies will become ever more sophisticated. While fintech players have the agility to begin redesigning experiences and developing new capabilities much more quickly, they lack scale. Legacy institutions, on the other hand, have the scale but not the agility.
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