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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!
10/28/22 Trends & Challenges in Protecting CUs From Cyber-Attacks in 2022 & Beyond (Credit Union Times)
As we enter a new year, we may assess what trends are helpful for shielding credit unions from cyber threats as well as what difficulties may come up in the future as credit unions continue to be a top target for hackers. When creating their cybersecurity strategy, credit unions must overcome a number of obstacles due to the significant financial threats they face. As a result, user education and ongoing diligence are crucial parts of any cyber resilience plan. Although establishing and adhering to a cybersecurity plan might make the process easier, it can seem like a challenging endeavor at the start. One can be in the best possible position to defend a credit union from a cyber-attack by strengthening end-user training, allocating an adequate budget, outsourcing to adopt 24-7 coverage, as well as cutting-edge solutions, and prioritizing remediation plans.
10/28/22 Delinquencies darken the horizon for credit unions. Is yours prepared? (CU Insight)
The general credit health of many Americans continues to be reasonably resilient, partly due to pandemic-era relief packages protecting savings accounts in 2020 and 2021. But the current increase in delinquencies indicates a pattern that reveals that particular places or people are dealing with challenging market realities. These trends could be a sign that pre-pandemic delinquent behaviors are making a comeback. Outsourced collection services can be a quick, affordable way to reduce collection queues and the amount of time your team spends on the collection process in the face of escalating interest rates and delinquencies. Also, a vital component of remaining current, captivating, and offering value to borrowers is having a creative approach to collections communication. Omnichannel communication techniques can enable collections departments to scale up considerably more quickly.
10/27/22 New home sales dip in September (CU Insight)
To 603,000 yearly units, new home sales decreased 10.9% in September and were down 17.6% from the same month last year, as analyzed by NAFCU Chief Economist and Vice President of Research Curt Long from data in the latest Macro Data Flash report. Long also said that there are many ways to interpret this particular period in the housing market, but the fact that sales are essentially at pre-COVID levels despite a 300-basis-point increase in mortgage rates is still rather impressive. As long as rates stay on their current path, sales should continue to drop. Still, a decline in rates, or even a lengthy pause, would free up trapped demand, provided that the labor market has not significantly deteriorated by then.
10/27/22 More Pain to Follow GDP Gain, CUNA Predicting ‘Growth Will Not Last’ (Credit Union Times)
After two-quarters of minor contractions, the U.S. economy recovered in the third quarter, but the good times might not last forever. Between the second and third quarters, the real gross domestic product (GDP) grew at a seasonally adjusted annual rate of 2.6%. Gains in exports, consumer expenditure, fixed non-residential investment, and government spending were all contributing factors. However, the recent robust policy reaction by the Federal Reserve to persistently high inflation essentially ensures that fourth-quarter output will slow — possibly dramatically. It is also predicted that economic growth will slow down in the upcoming quarters, and the economy will enter a recession in 2023. Parts of the economy, particularly the property market, are starting to feel the weight of sharp slowdowns in global growth and tighter financial conditions, with early indications of the employment market faltering, including falling job openings and slower monthly payroll growth.
According to CUNA Mutual’s most recent Trends Report, credit union liquidity has drastically decreased over the past year. The report advises CUs to prepare for lower mortgage volumes and notes that, despite slowing down, CU membership growth still reflects growing market share by credit unions. The report also states that compared to August of 2021, credit union loan balances expanded at a seasonally adjusted, annualized growth rate of 22.6% in August. Going forward, credit growth is expected to slow down until 2023 as consumer demand is satisfied, debt becomes less appealing due to increased interest rates, and economic uncertainty rises. Due to active indirect car lending, competitive interest rates, and increasing vehicle prices, credit union new-auto loan balances have increased by 19.6% over the past year. The report also highlights the record-low credit union loan delinquency rates that result from the unemployment rate being at its lowest point in more than 40 years, as well as the decelerated membership growth after reaching a 4% growth rate in 2021.
10/21/22 Appeals Court Ruling Casts Shadow Over CFPB Activities (The Wall Street Journal)
An appellate court’s ruling that the US Consumer Financial Protection Bureau is unconstitutionally funded could damage the agency’s efforts over its almost 12-year existence, including regulations that guarantee the efficient operation of the $13 trillion mortgage market. The decision could invalidate a number of current laws and open the door for legal challenges to any new regulations put forth by the agency, such as anticipated limitations on lending to small businesses and on the amount of money that can be borrowed for checking account overdrafts. The bureau has mostly withstood legal challenges to its establishment, and it continued to operate as a separate lawsuit questioning its constitutionality made its way to the Supreme Court.
10/18/22 SBA wants to add fintechs to its biggest lending program (American Banker)
The Small Business Administration is prepared to overturn a 40-year prohibition on nondepository lenders’ involvement in the flagship 7(a) program, representing a significant policy shift. The SBA wants to increase the number of lenders who obtain its loan guarantee through this policy change, leading to an increase in small-business lending, especially in low-revenue and underserved regions. Serving underserved communities has become a top concern for SBA Administrator Isabella Casillas Guzman, who last year suggested allowing the SBA to play a direct role in providing loans of $250,000 or less in an effort to increase access to 7(a). Fintech lenders have backed the SBA’s proposed rule as well as recent legislation that has increased nondepository lenders’ access to the 7(a) program.
10/18/22 Goldman Sachs Restructures Its Divisions, Elevating Tech Offerings as Profit Falls (The New York Times)
With the adoption of a new three-pronged structure that unifies investment banking and trading into one unit, asset and wealth management into another, and elevates its digital products into a third entity, Goldman Sachs is moving further away from its origins as an overweighted Wall Street partnership. The bank’s CEO, David Solomon, has been overhauling Goldman’s culture and processes to make them more streamlined and better suited for a future in which technology is likely to diminish major banks’ ability to generate money as intermediates. He acknowledged that the reorganization represented a step back from the bank’s apparent earlier goal of creating a well-liked consumer service that could compete with other prominent retail banks and targeting the employees of client companies as customers would significantly lower the cost of attracting new users.
10/17/22 Mastercard will help banks offer cryptocurrency trading (CNBC)
It’s implausible that the cryptocurrency sector will achieve widespread adoption without collaborating with the financial industry. Ironically, the purpose of cryptocurrencies was to replace intermediaries like Visa and Mastercard and banks. But Mastercard hopes to increase its popularity by facilitating banks’ participation in cryptocurrency. The market leader in payments will serve as a “bridge” between banks and Paxos, a cryptocurrency trading platform that PayPal currently uses. Mastercard’s program will handle security and regulatory compliance, two key arguments used by banks to justify ignoring the asset class. There are a lot of consumers out there that are very interested in this and captivated by cryptocurrency but would feel much more confident if those services were provided by their financial institutions. Even though the sector is currently experiencing a bear market or “crypto winter,” increased activity in the future could result in more transactions, thus supporting Mastercard’s main business.
10/12/22 Chase’s Playbook to Beat PayPal and Square in Digital Payments (The Financial Brand)
The market valuations of PayPal, Stripe and Square (now Block) outpaced those of even the largest banks, giving banking a harsh awakening. JP Morgan, TD Bank, and other large banks are now keeping pace with innovative offerings that bring banking, payments, and other services under one roof. Because traditional institutions bring established trust to the table, they can greatly benefit from fintech-type merchant skills. Chase’s most recent actions are precisely what one can expect from a fintech playbook. The bank has made significant recent investments in fintech expertise and skills. Chase introduced Customer Insights, a business intelligence tool with analytics, in June 2022 to assist small business owners in expanding their customer base and managing their cash flow. Additionally, according to Chase, organizations are looking to fewer vendors to deliver the variety of services they want. Most people today anticipate receiving completely integrated services from a single source, including banking, payment processing, marketing analytics, and accounting, without the need for a separate login or user interface. Chase is one of many companies using the strategy of integrating several commercial services inside a bank platform.