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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!
5/26/2021 3 Trends Changing the Business of Payments (Forbes)
There was a time when businesses insisted on cash payments. And now, because of the pandemic, consumers find digital payments safer. Three trends let us know how businesses conduct payments. The first one is the trend of faster payments. The instant payments model is creating a competitive edge for companies who have adopted this trend earlier. The next one is cash and checks losing ground in payments. The third one is the advancements in AI and data analytics. These are deepening customer engagements and driving efficiencies as well. Along with that, it is helping businesses to benefit their customers with contextual offers.
5/25/2021 P2P Lending Platform Mintos Reports Reaching Nearly 400,000 Registered Users (Crowd Fund Insider)
The coronavirus pandemic changed the dynamics of the global markets. This also includes the market for investing in loans. And the growth in new registrations dropped by almost 50%. Despite the 5-year upward journey, Mintos had to face the effects of the pandemic. But with the roll-out of vaccinations, it has witnessed tremendous growth. As of May 2021, Mintos has hit a milestone of 400,000 registered users. Also, Mintos is excited to see the trend of more women investors.
5/21/2021 Credit Unions Continue to Lose Auto Loan Share (Credit Union Times)
Credit Union’s auto shares have been declining since 2018. This is because many borrowers have shifted their shares towards the used car market. Credit unions aren’t getting as much love as other lenders. They have a higher proportion of prime borrowers as compared to banks and notably more than captive lenders. Credit unions financed an average amount of $38,387 for new cars in the first quarter. Also, terms of 73 to 84 months accounted for 26.4% of loans on used cars in the first quarter. This was up from 24.1% in 2020 and 21.7% in 2019.
5/20/2021 As Paycheck Protection Program Runs Dry, Desperation Grows (New York Times)
Whether it was April 2020 or May 2021, the Paycheck Protection Program had been having challenging times since its inception. Though the program has come to an end, millions of people are still waiting to know their application status. The Small Business Administration announced that it would not further process any new application. This is so because it has nearly run out of the program’s $292 billion for forgivable loans. Finding community financial institutions for taking up the backlog of applications has become like a game of musical chairs for banks and lenders.
5/19/2021 Post office, Fed checking accounts won’t solve underbanking, trade groups say (Banking Dive)
Banking Trade groups, in a statement, said that policymakers should look for more effective ways to address the problem of underbanking. And they should promote messaging and targeted financial education with which bank accounts meets customer’s needs. Also, various organizations like American Bankers Association said that using passports or driving licenses for checking accounts might be expensive for some demographics. With about 6% of U.S. households still unbanked, a lot more work is to be done to provide better access to bank accounts.
5/18/2021 SoFi Expected to Trade on Nasdaq on June 1st in SPAC Merger (Crowd Fund Insider)
SoFi became a publicly listed firm in a SPAC merger, worth $8.65 billion with Chamath Palihapitiya’s Social Capital Hedosophia Holdings Corp. V. It will start trading on the Nasdaq from the 1st of June. The multifaceted Fintech, SoFi, generated revenue of $621 million last year.
5/14/2021 Cutting the Gordian Knot: A Counterintuitive Approach to Post-M&A Digital Integration for CUs (Credit Union Times)
Financial institutions, be it large or small, are looking for opportunities to grow. The main drivers of M&A are the disruptive influence of technology and the need to meet today’s digital-first customer’s needs. They are also looking at deals to adopt new technologies, remain competitive and find efficiencies. Often, credit unions undergo the Post-M&A digital integration process. But that has two problems associated with it. So, technology integration is a better approach to cut the Gordian knot. This outside-in approach will benefit the credit unions to own the integration process in perpetuity. And will thus mitigate the risks associated with the post-M&A integration process.
5/14/2021 Passage of Debt Collection Bill Could Be a ‘Slippery Slope’ for Lenders (Credit Union Times)
The Comprehensive Debt Collection Improvement Act was passed by the House of Representatives on Thursday, much to the dismay of CUNA and NAFCU, who had been opposing the bill for the potential complications it could bring to the legal relationship between consumers, members, and lenders. The main issue seems to be with section 403 of the bill.
Another issue raised by many concerned stakeholders (CUNA, NAFCU, ABA, and other organizations) is about the Title VIII of H.R. 2547, the Non-Judicial Foreclosure Debt Collection Clarification Act.
However, despite the significant opposition, the bill has received praise for various reasons. NCLC also praised the bill for bringing a number of reforms for the consumers. Despite several benefits for the consumers, opposition remains strong on the bill, especially from various financial institutions and organizations.
5/11/2021 Credit-Card Debt Keeps Falling. Banks Are On Edge (The Wall Street Journal)
Americans are paying down their credit card debts at an increasing rate and this is good news for everyone except the credit card issuers. Capital One Financial Corp said that almost half of the credit card balances were paid during the first quarter. A year ago, the government issued stimulus checks, expanded unemployment benefits, and made it easy for borrowers to pause mortgages and student loan payments. Discover Financial Services chief executive believes that delinquencies can’t be lowered as it shall reduce the overall revenues and margins. Issuers are going on marketing blitz and are re-focusing on subprime with easier credit underwriting standards to grow origination.
5/8/2021 When central banks issue digital money (The Economist)
The first central-bank digital currency was launched by the Bahamas. China has had 100,000 people download a mobile app which allows them to spend digital cash/ e-yuan received in form of government handouts. Bank of England has also had a taskforce working on the idea since April. Eurozone is expected to have a digital Euro by 2025. All these developments mark a revolutionary turn on how central banks are adopting digital currency by developing “in-house digital versions of fiat” versus shunning all cryptos in their current avatar.
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