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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!
11/22/21 House, Senate Out This Week But CUs Watching Negotiations Over Bills (CUtoday)
Although the House and Senate are both out of session for the Thanksgiving holiday, credit union members in Washington are watching how the Senate will interpret the recently enacted Build Back Better Act. Ryan Donovan, CUNA’s chief advocacy officer, applauded credit union leagues, workers, and members for making 800,000 communications to Congress countering that proposal. He also said that provided where credit unions stand in the legislative process, it appears that any concessions or alternative suggestions would be erroneous and inadequate at this point. Credit unions will be paying close attention to the Senate upon Congress return next week, which is likely to continue debating the National Defense Authorization Act (NDAA) and any revisions.
Credit unions may now have a better idea of what interest rates will look like in the near future, after President Biden’s announcement that he plans to nominate Jerome Powell for a second term as chairman of the Federal Reserve. It was also stated that Lael Brainard will be the Fed’s vice-chair. However, both nominees still need to be approved by the Senate. There had been much speculation in the leadup to the nomination about whether Biden meant to propose Powell or a Democrat, as many in his party had urged.
The election of the Fed chair has also experienced increased scrutiny as inflation continues its upward trajectory and there is growing discussion about whether the Fed should begin raising interest rates. On the other hand, both Powell and Brainard, following their nominations, have issued statements and are deeply honoured and thankful for getting the opportunity to serve the American people.
11/22/21 New Data Shows Fraud Trends as the Holidays Approach (CUtoday)
A report has revealed the most recent statistics on fraud trends, indicating increasing risks around the holidays, an increase in bot assaults, and a revival in attacks on travel businesses. The Q4 Arkose Labs Fraud and Abuse Report highlight the top six fraud-fighting indicators from the preceding three months, as well as statistics demonstrating that no digital firm is immune to attacks. As per the research, financial businesses had 32% more attacks than in the first half of 2021. As we approach 2022, the severity and frequency of fraud will continue to cause serious harm to every enterprise that conducts business online. Other highlights of the report reveal that holiday season is also a cybercrime season, travel industry is back in the crosshairs, Asia leads the globe in attacks, and credential stuffing continues to plague online businesses.
11/19/21 Banks ordered to promptly flag cybersecurity incidents under new U.S. rule (Reuters)
The U.S. banking authorities enacted a regulation requiring banks to report any serious cybersecurity issues to the government within 36 hours of discovery. Meanwhile, the banking industry announced the completion of a huge cross-industry cyber security rehearsal aimed at ensuring Wall Street knows how to respond in the event of a ransomware assault that threatens to disrupt a variety of financial services. Moreover, banks must notify their clients as early as possible if a cybersecurity event causes disruptions that persist for more than four hours. The new bank rule was approved by the Federal Deposit Insurance Corporation, Federal Reserve, and Office of the Comptroller of the Currency.
11/19/21 Responsible Business Lending Coalition Voices Support for Small Business Lending Disclosure Act of 2021 (Crowdfund Insider)
The Responsible Business Lending Coalition (RBLC), a group that includes online lenders LendingClub and Funding Circle, has supported the Small Business Lending Disclosure Act of 2021, both in the US House and Senate. The act is defined as introducing “common-sense transparency measures in small company finance at a crucial time in Main Street’s revival.” The federal Truth in Lending Act, according to the RBLC, assures transparency in consumer lending but does not extend to small business financing. This lack of transparency can make it impossible for small company owners to assess their financing decisions fully, and it can mask APRs as high as 358%. According to RBLC, the Small Business Lending Disclosure Act of 2021 will result in more than $4.7 billion yearly savings for over one million smaller businesses.
11/18/21 Amazon vs. Visa and the Coming Fintech Wars (Bloomberg|Quint)
The e-commerce giant Amazon.com Inc. has begun a(n) (indirect) battle with payments corporation Visa Inc. over the charges of using its credit cards. It recently informed Visa credit cardholders in Australia and Singapore that they will be charged a 0.5% fee for using their cards on its websites in those countries. Beginning next year, it will no longer accept Visa-branded credit cards from customers in the UK. However, this does not apply to Visa-branded debit cards or MasterCard Inc. offerings.
Visa and MasterCard are both facing a swarm of threats from emerging forms of payment and fintech businesses that are faster and less expensive than any sort of debit or credit card. Amazon has its own buy-now-pay-later program in some countries and is attempting to expand the payment alternatives accessible to consumers in general, particularly those that are the quickest and cheapest to use. It appears that it is taking advantage of the increasing competition to wring concessions from the existing network businesses. That’s why Visa and MasterCard are working hard to diversify, developing their own buy-now-pay-later solutions and even dabbling with cryptocurrency.
11/15/21 Americans’ Shadow Financial Lives: Why Banks Don’t Know Jack (Or Jill) (Forbes)
The rapid expansion of fintech providers has increased the number of providers with whom consumers have accounts, as well as, perhaps more crucially, the variety of tools with which consumers manage those accounts. These accounts and tools include checking accounts, savings accounts, credit cards, mobile payments, investing/trading options, and financial management. In the quest for more convenience in one’s financial life, managing financial life has become more complex. And the impact of consumers’ shadow financial lives reveals that a primary bank account is no longer a valid concept for a Gen Zer or millennial. Traditional financial products have become unbundled as a result of the growth of fintech technologies. While the businesses behind these tools have garnered a lot of attention and engagement, they are not solution providers.
The latest survey from Plaid and Harris Poll reveals that fintech has become an essential part of the financial lives of 88% of American customers, and experienced 52 percent year-on-year growth from 2020 to 2021, bringing fintech adoption closer to traditional banking territory, which comprises 95% of American consumers.
According to the survey, the unique value propositions of fintech are driving the shift to digital banking, with a surge in usage across all age groups. The number of fintech users who use their financial applications on a daily basis increased by 11 percentage points, from 37% before the pandemic to 48% now. The research also claims that fintech improves general financial well-being, citing that 7 in 10 customers feel more secure about their finances when they use fintech. Fintech has proven its potential to increase financial inclusion and reach out to areas that are underbanked or at the borderlines of the traditional banking system.
11/02/21 Nubank officially files for IPO on NYSE (LendIt Fintech)
The Brazilian digital bank stated that it aims for a $50 billion valuation based on 48.1 million customers in Q3, with 2.1 million additions per month. The co-founder and managing director of Gilgamesh Ventures, Miguel Armaza, has invested millions in LatAm Fintechs and thinks that the lofty valuation of Nubank is no surprise. Nubank, by customer count, is the world’s largest digital bank, with 35.3 million — or more than 70% of Nubank members — active monthly. Despite the stunning results in client acquisition and scalability, Nubank reported a three-year deficit, losing $171 million in 2020 but making a $505 million gross profit in the first nine months of 2021. The Nu ecosystem intends to sell 289 million shares at $10-$11 a share in order to raise $3 billion from stock investors, making it the third-largest IPO in the U.S. this year. According to Yahoo Finance, the stock should be priced by December 8 and will be listed on the NYSE soon after.
11/02/21 Q3 global fintech funding smashes records (Business Insider)
Fintechs raised $31.1 billion in 1,185 transactions, the second-largest haul on record after the $36.8 billion raised in Q2. Global financing equaled $94.7 billion, about $200 million less than the total spending of the previous two years. The numbers indicate that the fintech financing trend will continue for the rest of the year. With the usage of fintech solutions becoming practically universal in key countries such as the United States, start-up values are bound to rise, generating a flywheel that entices additional investors to fund them, which boosts valuations even further—and so on. As a result, funding activity in Q4 is likely to exceed $120 billion.
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