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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!
03/28/22 The strategic cryptocurrency opportunity for credit unions (CUInsight)
There is growing mainstream curiosity and inquisitiveness about cryptocurrency, especially among Gen Z and millennials. It now may be the time for credit unions to enter the cryptocurrency market as part of their attempts to acquire and retain Gen Z and millennial members. In December, the NCUA released guidelines emphasizing that it does not restrict credit unions from cooperating with third-party suppliers of digital asset services that harness developing technology. This involves establishing member interactions with third parties that enable credit union members to purchase, sell, and hold a variety of uninsured digital assets. But when the time comes, credit unions focused on acquiring and maintaining members, particularly those from younger generations, will need to have a cryptocurrency strategy in place. As the cryptocurrency market evolves, credit unions must keep abreast from a regulatory, technological, and member-demand standpoint.
03/28/22 COVID-19 Has Driven Changes in Remittance Habits, Analysis Finds (CUtoday)
According to a new survey, people transferring money from the United States, the United Kingdom, and Canada have continued to change their remittance practices as a result of the COVID-19 outbreak. Approximately 68% of those polled transferred money abroad at least regularly, with another 28% sending it many times each year. The most common were education, daily expenses, medical expenses, and gifts. These habits will also define the mode of the payment and the future winner in the market.
Credit unions and the financial community at large are seeking to have a clearer understanding of the CFPB’s future priorities, including the possibility of additional regulatory frameworks for compliance. The major concern for credit unions, of course, is how much heavier the regulatory burden would grow. Brad Thaler, NAFCU’s VP of legislative affairs, said that NAFCU is endeavoring to ascertain what the CFPB has in its sights.
According to a survey conducted by PYMNTS, National banks are preferred by younger consumers over credit unions. But the bright spot is that as more consumers aged between 18 to 24 use credit unions than those aged between 24 to 34 and 35 to 44, CUs have a chance to make a comeback with the youngest generation of banking customers if they can provide the digital tools in correlation with the member-focused goal that has long been a CU trademark. The survey also found that 23% of CU members would think of switching their primary financial institutions (FIs) for new digital banking solutions.
03/25/22 NCUA Issues New Cyber Warning to CUs (Credit Union Times)
NCUA Board Chairman Todd Harper cautioned credit union boards of directors and CEOs in a Risk Alert letter that the current turmoil in Ukraine has generated worries about potential cyberattacks in the United States, particularly those against the financial services industry. Regardless of size, all credit unions and vendors are potential targets for cyberattacks such as social engineering and phishing attempts and must remain cautious. The letter also included ways to avoid being a victim of a phishing attack. The NCUA has also developed the Automated Cybersecurity Evaluation Toolbox, or ACET, for federally insured credit unions to utilize when assessing their cybersecurity preparedness.
03/25/22 Credit Unions Find Appetite for Loan Participations (Credit Union Times)
According to NCUA statistics, Alliant ($15.2 billion in assets and 646,111 members) was the fifth-largest supplier of non-real estate loans last year by selling $1.1 billion amount of loan participations. At the same time, all credit unions ($2.08 trillion in assets, 131 million members) sold $22.7 billion in non-real estate loans. The appetite for participation arose due to the spike in savings during the pandemic, which reduced loan-to-share ratios. Moreover, participation in auto loans has been strong in the last two quarters. RV loans have accounted for a sizable share of Alliant’s participation sales. Charles Krawitz, chief capital markets officer and head of commercial lending at Alliant, believes that Credit unions are becoming more comfortable purchasing RV participations as they acquire prominence and trust in Alliant’s understanding of the lending niche.
03/23/22 Apple acquires UK open banking startup Credit Kudos (The Block Crypto)
Apple, the world’s largest technology company, has acquired Credit Kudos, a UK open banking startup that helps lenders make better judgments. The deal valued the startup at about $150 million, giving a significant uplift in valuation. Credit Kudos last raised funds in April 2020, amid the Covid-19 outbreak, raising £5 million (about $6.5 million) in a round managed by AlbionVC. Although it is unclear what Apple has in store for Credit Kudos, this Silicon Valley-based company presently provides financial services largely through its mobile wallet Apple Pay and a credit card.
03/22/22 Will Banks Overtake Fintechs As Interest Rates Rise? Don’t Bet On It (Forbes)
As interest rates increase and money becomes less readily available, the issue is whether fintech startups that have flourished on market funding will find themselves at a disadvantage once again. There is little doubt that higher interest rates will increase the profitability of banks’ lending. However, the premise that rising funding costs will unfairly penalize Fintechs, turning the lending flow back to banks, misses key realities. As loan rates climb, Fintechs have four advantages in the lending game. Firstly, Fintechs are better positioned than banks to proactively detect consumers’ financing requirements and respond faster. Secondly, a few banks can compete with Fintechs, who mostly provide a better digital loan application experience. Thirdly, Fintechs have targeted the sector from the edges, lending to people who have previously been disregarded by banks. Lastly, Fintechs, on average, outperform banks in terms of digital marketing and client acquisition, providing some respite from the higher costs of funds they must incur.
03/15/22 CFPB urged to act quickly on buy now/pay later loans (American Banker)
The Consumer Financial Protection Bureau may take action once the window for accepting consumer comments expires on March 25 due to the rapid evolution of the buy now/pay later lending business. According to CB Insights, the global BNPL industry could surpass $1 trillion in annual volume by 2025, as many consumers shift away from credit cards and traditional loans that are more heavily regulated and subject to formal underwriting processes and towards new instant-financing options at the point of sale.
The research by US PIRG examined specific consumer concerns about BNPL loans that caused the CFPB to investigate the business activities of leading BNPL Fintechs such as Afterpay, Affirm, Zip, Klarna, and PayPal. Although many BNPL businesses do not charge interest on BNPL loans, late penalties are frequent if payments are missed, US PIRG said. Consumers who use BNPL loans need protection in the same way as other loans and credit cards have under the Electronic Funds Transfer Act, the Fair Credit Billing Act, and the Truth in Lending Act.
03/01/22 The Growing Domination Of Chime, Cash App, And PayPal In Banking (Forbes)
Since 2020, the proportion of Americans who have their primary checking account with a digital bank such as Chime, PayPal, or Cash App has increased significantly. Only two years ago, the megabanks—Bank of America, JPMorgan Chase, and Wells Fargo—controlled the majority of people’s primary checking account assignments. Bucking the trend, community banks increased their share of primary checking account status across all four generational groups. The percentage of Gen Z, Millennials, and Gen Xers that use a credit union as their primary checking account provider decreased between Oct 2020 and Jan 2022.
But, a new study from Cornerstone Advisors reveals what’s going on in the checking account market. Digital banks aren’t the “challenger” banks anymore. It’s misleading to describe what the digital providers provide for “checking accounts.” Checking account usage is increasingly being used for specific objectives, such as expenses for certain things or sending money to others. PayPal and Cash App are becoming popular among Gen Z. The increase in main customer market share for community banks shows a rising desire among some consumers for a more personalized experience.