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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!
8/23/21 Credit Unions Working Towards Equity Through High Profile Fee Reductions (CU Times)
Whether as an equitable trend or as a smart business decision, credit unions (CUs) are eliminating or reducing traditional fees, primarily on overdraft and non-sufficient funds and some are taking this decision as a step towards industry’s eighth cooperative principle, diversity, equity and inclusion (DEI). Many CUs have taken this step, including the 83% reduction in overdraft and non-sufficient funds fee by the $4.6 billion UW Credit Union(UWCU), and complete elimination of both these fees by the $14 billion Alliant Credit Union in Chicago. Some other names who have taken decisions in this direction are Ally bank, Ohio-based Huntington Bank, the Pittsburgh banking powerhouse PNC, and some others.
UCWU’s decision of revising its policies was due to its overall goal of creating a more equitable banking experience for everyone, as per Paul Kundert, president/CEO of UWCU. As per Alliant President, the desire to challenge the historic norms and overdraft fee system was the main driver of their bold move.
8/23/21 What the Credit Unions Should in a Changing Mortgage Market (CU Times)
After being hit strongly by the COVID-19 pandemic, the economy has evolved and a surge has been noticed in both refinances and purchase loans due to a record fall in the interest rates. With all this going on, credit unions are now trying to anticipate the upcoming trends in order to tap the opportunities which they can leverage upon. The market is expected to see a huge demand for purchase mortgage loans as the millennial section is aggressively purchasing homes. There are some other key areas as well on which CUs can keep their eyes on to tap the upcoming opportunities, such as developing a creative first mortgage strategy to suit different members’ needs.
8/23/21 This is Why Some Credit Unions are Able to Break 2020’s Origination Records (CU Times)
The boom in the mortgage market that began in the year 2020 is continuing this year. CU Times interviewed the executives of four out of the top 10 credit union (CU) mortgage originators. Last year, these four CUs collectively doubled what they originated in the year 2019 and this is how they did this, according to their respective executives:
8/23/21 This is Why Some Credit Unions are Able to Break 2020’s Origination Records (CU Times)
The boom in the mortgage market that began in the year 2020 is continuing this year. CU Times interviewed the executives of four out of the top 10 credit union (CU) mortgage originators. Last year, these four CUs collectively doubled what they originated in the year 2019 and this is how they did this, according to their respective executives:
Lake Michigan Credit Union: First mortgage originations increased by 72% in 2020 as compared to the previous year. The Company acquired two major banks in recent years including Naples-based Encore Bank and Pilot Bank of Tampa, which helped it align its resources with them.
PenFed Credit Union: It originated 4 times more first mortgages in 2020 than in 2019. Credit goes to the talented employees and software acquired for handling the non-delegated underwriting, according to Mark Garces, vice president of secondary marketing.
State Employees’ Credit Union: Executed $4.5 billion first mortgage originations in 2020, 10.4% more than previous year’s. During the given period, it started social media marketing (check this site) and adopted a sleek new online portal, which boosted its first mortgage figures.
Star One Credit Union: First mortgage originations worth $3 billion during the last year as compared to $1.1 billion in 2019. Since the last year, SOCU has expanded in the 5 adjoining counties, according to Victoria L. Tabler, vice president of real estate lending. Rising prices of homes in San Francisco due to increasing demand is another growth driver.[/vc_column_text][vc_single_image image=”16366″ img_size=”large”][vc_column_text]8/23/21 Total Credit Union Assets in the U.S. Surpass $2 Trillion (CU Today)
For the first time, the credit unions in the US have surpassed the $2 trillion in assets threshold, revealed by Callahan & Associates during its second-quarter 2021 Trendwatch webinar. Apart from some other interesting stats, it was also revealed that credit unions originated $388.4 billion during the 1st half of 2021, a figure which has never been achieved by the industry in the past, even in a full calendar year. Around 5.1 million Americans joined a credit union during the past 12 months and the total membership grew 4.1% year-over-year to cross a mark of 128.8 million.
8/19/21 America’s Love for the Credit Cards Starts Fading (Crowdfund Insider)
Credit cards may no longer be the most preferred spending mechanism in the near future, suggested by the results of the latest survey conducted by the UK-based payment services company GoCardless, in partnership with Propeller Insights. More than a thousand American adults participated in this survey and the results showed that around 63% of the respondents are less likely to use credit cards as compared to the pre-pandemic times. However, this proportion was only 39% in the case of respondents above 57. Fear of debt was voted by the majority as the reason for the reduction in using credit cards. Hiroki Takeuchi, CEO of GoCardless said that the pandemic left the people in a tough position financially, due to which they have reduced their credit card usage.
8/18/21 The Effects of COVID-19 on Consumer Banking May Outlive the Pandemic Itself, Study Revealed (Tearsheet)
The changes in the financial behavior due to COVID-19 will continue to persist and even grow in the future after the pandemic is over, according to a study conducted by the Chase, in which around 2,000 adults between the age of 18 and 57 participated. The study was more focused on respondents’ usage of digital banking tools, cash usage, online payment methods, and the demand for personalized banking services. The study revealed that around 47% of respondents either continued using the contactless payment methods or started using these methods in 2021. Around 89% said they prefer using mobile apps for depositing funds, 84% said they are using automated saving features on digital financial tools/platforms for saving up more after pandemic and 4 out of 5 GenZs said they want more personalized information and offers from their banking service providers in order to achieve their financial goals. Cash is the biggest loser in this situation.
8-18-21 Wells Fargo Drops the Idea of Shutting Down the Personal Credit Lines (American Banker)
Weeks after announcing its plan to discontinue personal credit lines, the San Francisco-based lender Wells Fargo has started informing the customers, who have been using the service that the terms of their accounts are not changing, according to Bloomberg. The lender is giving the inactive credit line customers until November to either tell the bank that they want to keep their accounts open or to start using their accounts. This decision of the company came after borrowers started taking their complaints public last month. One major reason the company reversed this decision was that eliminating the customer’s current financing options may affect his/her credit score.[/vc_column_text][vc_single_image image=”16369″ img_size=”large”][/vc_column_inner][/vc_row_inner][vc_column_text]8/18/21 How Afterpay Acquisition Will Help Square Towards its SMB, Consumer Banking Goals (Banking Dive)
Fintech player Square’s acquisition of the Australian firm Afterpay will help the San Francisco-based company to establish itself in the small business and consumer banking business segment, something worth a concern for some traditional banking institutions, according to many experts. The $29 billion worth acquisition will bring the Melbourne-based buy-now-pay-later (BNPL) firm’s merchant portfolio and point of sale financing technology under Square’s control. According to many fintech experts, the acquisition will allow Square to add more capabilities to its Cash App, which will give more reasons to the consumers to switch from traditional banking firms to the App, especially for their small business banking needs.
8/17/21 Why Fintech Firms are Acquiring Legacy Financial Services Companies (TechCrunch)
Earlier, a fintech startup, after reaching the growth or expansion stage, used to look for being acquired by an incumbent in the industry. However, nowadays the fintech startups are the ones acquiring the other businesses in the industry. This was witnessed by some of the most recent acquisitions in the industry, which include the acquisition of Radius bank by San Francisco based LendingClub for $185 million, completed early this year through a cash and stock value transaction and the acquisition of the Wadena-based Mid-Central National Bank by California based fintech Jiko, completed in the fall of 2020. Some acquisitions took place this year as well, including the acquisition of Golden Pacific Bancorp by California-based SoFi and the merger of the blockchain-based lender Figure Technologies with mortgage firm Homebridge Financial Services.
8/12/21 Citi Rolls Out a New Digital Platform Bridge to Connect SMEs and Local Banks (FinLedger)
New York-based Citi announced the launch of its digital platform Bridge, aiming to connect SMEs looking for loans up to $10 million, with local, regional, and community banks. The platform, which is currently at the pilot stage, has partnered with the 18 banks across the Southeast and Rockies regions. Digital will be the major element in the expansion of Citi’s services and they’ll like to see a higher concentration of customers in Citi’s digital channels, according to Anand Selva, CEO of Citigroup’s US Consumer Banking division. He also added that now consumers have started visiting bank branches for advisory conversations, thus making branches more of “advisory type centers.”