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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!
6/23/2021 Letting Digital Drive Young Member Adoption (Credit Union Times)
The importance of digital banking has increased massively in the past months. COVID-19 has been the major reason behind digital adoption. Digital banking will play a crucial role for credit union leaders in the foreseeable future. To remain on top of the mind and provide better experiences post-COVID, credit unions must keep in mind all the essential elements of the digital banking system.
A well-planned digital strategy will help credit unions better understand individualized needs. Credit unions must also incorporate communications in their digital strategy. Over 62% of millennials and 61% of Generation Z would switch their primary account for a better digital experience in 2020. This is an increase from 47% and 54% respectively in 2019.
6/23/2021 10 Credit Unions Invest $9.5M in CU NextGen (Credit Union Times)
CU NextGen announced that it had raised $9.5 million in capital from credit unions. Ten credit unions, having $41.2 billion in assets invested in the initial share offering of CU NextGen. The capital was used by CU NextGen to buy 37 shares from ClaySys Technologies, an India-based technology firm, and CU NextGen’s second co-founder. With the help of technologies offered by ClaSys, CU NextGen has built-in several solutions, such as a member relationship management platform. The technologies will help improve member service as well as experiences. The ten investing credit unions hold 18% of the CU NextGen shares.
6/22/2021 Credit Unions Lose Share in Still-Booming Mortgage Market (Credit Union Times)
The Mortgage Bankers Association expects refinances to be stronger than expected in the third quarter. The latest data by MBA and NCUA showed that credit unions’ first mortgage share was sharply down from the first quarter. The total of purchases and refinances are expected to be $3.47 trillion this year, which is down almost 10% from 2020. Credit unions accounted for 6.8% of first-mortgage originations in the first quarter. The ten largest credit union originators produced $16.8 billion in first mortgages in the first quarter and accounted for 16% of credit union assets and 23% of first-mortgage originations.
6/21/2021 Legacy Financial Institutions Losing the Battle For Consumer Trust (The Financial Brand)
Almost 37% of consumers believe that a Fintech or a big-tech firm is their most trusted financial brand, according to research by EY. However, senior population (above 65) believes that national banks are more trustworthy than Fintech firms. The research also found that 35% of the consumers may increase their usage of mobile channels of their primary financial institutions post-pandemic. The pandemic has taught consumers the possibilities of the digital world. Trust comes with great experiences. The research done shows that 24% of the consumers believe PayPal to be the most trusted financial brand. This erodes the historical trust advantage of the legacy financial institutions.
6/17/2021 Digital Pound: Bank of England Updates on CBDC Progress (Crowd Fund Insider)
Tom Mutton, the director responsible for CBDC (Central Bank Digital Currency) at the Bank of England, provided an update on the progress of Central Bank Digital Currency. He believes that CBDCs are viewed as a support system for future payment needs. Also, CBDCs act as building blocks for cross-border payments. Mutton notes that the use case for CBDCs still needs to be better articulated. There is also a need to protect the privacy and support financial inclusion. Also, the design principles of CBDCs are challenging to deliver. To overcome these concerns, Muton outlines certain principles regarding the digital pound, including financial inclusion, competitive CBDC ecosystem, users’ privacy, and opportunities to meet the bank’s policy objectives.
6/17/2021 JPMorgan Buys Nutmeg to Bolster Digital Banking Push in U.K. (The Wall Street Journal)
JPMorgan announced in January that it would launch a new digital bank in the UK. It is entering the crowded digital market space in the UK for offering consumer banking services. To be a part of the push, JPMorgan Chase has agreed to buy the digital wealth manager Nutmeg Saving and Investment Ltd. However, Nutmeg’s products won’t be offered initially by the bank. Like other investment sites, Nutmeg sells access to funds, pensions, and ETFs and provides insights into the ins and outs of the financial world.
6/17/2021 Gen Z Craves Good Tech from Banks+Credit Unions, Not Neobanks (The Financial Brand)
According to a study by Marqeta, 87% of Gen Z consumers prefer traditional banking providers to competitive Fintechs and neobanks. They have a more practical approach to personal finance. Financial institutions that cater to the Gen Z must earn the loyalty of this trend-setting generation. The shocking part of the report is that 80% of Gen Z still use cash on a weekly basis. Around 67 million people are Gen Z, which is almost one-fifth of the U.S. population. They are concerned about their long-term financial goals. The study also reveals that Gen Z is interested in banking with leading tech companies like Google, Amazon, PayPal, and Apple. So, to keep them onboard for the long term, financial institutions must provide them with a mobile banking experience that includes discounts and rewards, the ability to make easy transfers, competitive interest rates, etc.
6/15/2021 Credit union flips script on branching with tech makeover (American Banker)
Andrews Federal Credit Union are focusing on tech-empowered branches as the next stage of evolution. Andrew’s vice president of marketing, Brain, said their mantra is to leave the best impression on its members. This can be done by bringing the branch experience at par with the digital experience. The credit union moved to a new branch location at a mall in Springfield, Virginia, with an entirely new branch design. It worked with a creative branding agency for the branch design. Andrew’s is working towards providing a self-service model to its members. The new branch also features three video teller machines with which customers can make transfers, request an exact change, and more. This very branch has taken Andrew’s to another level as a brand and a credit union.
6/15/2021 Why a high-cost consumer lender is buying a tiny Utah bank (American Banker)
KMD Partners, the parent company of CreditNinja, a high-cost digital lender, has agreed to buy a tiny Utah-based bank in a deal. It is also planning to sign a deal for buying Salt Lake City-based Liberty Bank. It plans to offer credit cards, checking and savings accounts, and other banking services through Liberty Bank. CreditNinja will still be making high-cost loans as the direct lender in partnership with the Utah-based bank. After the deals, KMD Partners will become a Fed regulated bank holding company, with CreditNinja and Liberty functioning as separate subsidiaries. Liberty Bank’s CEO believes that KMD’s digital abilities will help Liberty serve its customers in a competitive environment.
6/14/2021 Banking Must Digitally Transform Consumer Lending (The Financial Brand)
According to research done by Digital Banking Report, the completion of online or mobile loan applications by financial institutions is simple and fast. In the case of online applications, 85% of the applications took more than five minutes. In contrast, the same time range was taken by 80% of mobile applications. Digital lending transformations must be a top priority for credit unions and banks to improve customer experiences. This should be viewed from the perspective of a consumer by banks and credit unions. The automation process is a major stumbling block in digital lending transformation. There is an urgent need for an agile approach with built-in flexibility in the lending process. So, to improve customer experiences, banks and credit unions must start modifications in transforming the lending process digitally today itself.
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