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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!
09/26/22 Credit Unions Join With Bank Groups in Opposition to Credit Card Bill in House (CU Today)
NAFCU and CUNA have signed a letter to Congress opposing the House companion to the Credit Card Competition Act of 2022, along with the American Bankers Association, the Consumer Bankers Association, the Electronic Payments Coalition, and the Independent Community Bankers of America (CCCA). The groups argue that the law could have several negative repercussions, including fewer options for customers, increased risks to their personal information and privacy, weaker community banks and credit unions, and the elimination of card rewards programs. However, the legislation that seeks to increase interchange price controls will favor big box retailers by decreasing the number of credit card issuers vying for consumers’ business, removing the competitive differences between card products, and subjecting the country’s private-sector payments system to the Federal Reserve Board’s micromanagement.
09/26/22 How to Keep Members Engaged Before, During & After a Major Tech Overhaul (Credit Union Times)
In a world where 78% of Americans prefer to bank online and through mobile devices, credit unions must be aware of changing member expectations and develop methods to go above and beyond those expectations before the competition does. Figuring out member groups that could require particular attention throughout the tech overhaul will make it easier for credit unions to choose the best timing and strategy for conveying the changes. In addition, it’s critical to spread concise, consistent information regarding the advantages of the new digital services for members. Also, credit unions need to interact with their members to make sure they can use the new tools as intended and are aware of how to receive support if they run into problems. Credit unions can make members feel heard by reviewing input early on and modifying their strategic roadmap as necessary.
09/26/22 Mortgage Rates Hit 20-Year High, Forecasts Downgraded (Credit Union Times)
For the sixth month in a row, the Mortgage Bankers Association this week lowered its fourth-quarter purchase originations prediction. It now anticipates that homebuyers would obtain $372 billion in mortgages in the fourth quarter, down 4% from the $388 billion it predicted for the third quarter and down 23% from a year ago. The MBA also predicts that in 2023, overall originations will drop by around 3% to $2.24 trillion, while purchases will increase by 5% to $1.70 trillion and refinances by 24% to $540 billion. In the week ending October 9, 1998, while the country was experiencing an economic boom, the lowest rates from 1971 to 1999 were 6.49%. The lowest rate in the previous 51 years was 2.65% for the week ending January 7, 2021, which coincided with the top of the refinance boom, which was snuffed out as rates increased this year to combat inflation.
09/19/22 CFPB to Unleash BNPL Rules that Would Also Impact Data Mining (The Financial Brand)
Following a significant investigation into the buy now, pay later industry, the Consumer Financial Protection Bureau is starting to write guidelines that banks and other consumer lenders will need to follow rigorously. The CFPB has already invited BNPL companies to volunteer for data mining examinations, which would increase its involvement in the specifics of consumer lending. Based on the company’s data, the CFPB identified correlations between credit card payment patterns as reported in the New York Federal Reserve Bank’s quarterly consumer credit report. The Federal Trade Commission, which is creating regulations on data surveillance, and the CFPB would work together to coordinate their respective actions in this area. CFPB Director Rohit Chopra has expressed worry about the data financial corporations obtain and how it is utilized. As providers transition to creating apps that serve as marketing add-ons for retailers and place a heavy emphasis on data collection and analysis, this has grown to be a top concern for him in the BNPL space.
09/16/22 Digital Bank Marcus, Part of Goldman Sachs, Being Queried by Federal Reserve: Report (Crowdfund Insider)
Marcus, a digital bank owned by Goldman Sachs that offers services to customers in the US and the UK, is reportedly under investigation by the US Federal Reserve. Although Goldman is undoubtedly a systemically important financial institution, Marcus may not be; therefore, it is unclear what the Feds may be investigating or what sparked their curiosity. While the inquiry may be superfluous, with Fed just trying to understand digital banking, it is likely a burden for Goldman at a difficult time as the economy is in a recession and customers are anticipated to cut back more severely as inflation soars.
09/14/22 Milk, Diapers and Checking Accounts: Banking Comes to Walmart (Bloomberg)
This month, over 1.6 million US employees and hordes of weekly shoppers of the retail behemoth will have access to digital bank accounts through a venture that’s majority-backed by Walmart Inc. After years of sporadic attempts to expand its financial services capabilities, the move signals the beginning of Walmart’s fintech push. When Walmart petitioned to be an industrial bank in Utah in 2005, its critics were startled. The retailer has chosen a different course of action this time. With discounts on purchases, the One venture seeks to entice customers. Soon, the company will update the One app to give customers 2% back on every dollar spent at pharmacies, petrol stations, and Walmart itself.
09/13/22 Embedded Finance Transactions Predicted to Jump to $7 Trillion by 2026: Report (Crowdfund Insider)
By 2026, embedded finance is expected to grow to a $7 trillion market, according to a recent analysis by Bain & Company. Embedded finance, as per the report, is defined as a non-financial software platform that offers an adjacent financial function for which it takes some degree of economic ownership. While payments and loans will play a big role in the growth of embedded finance over the next ten years, the report also forecasts growth in a number of other sectors, including compliance, human resources, and procurement. Bain’s analysis also stated that while the shift from analog to digital and point-of-sale financing has already been tremendous, it is being driven by improved customer experiences, increased access to credit, as well as cost and risk reduction. Therefore, everyone benefits from it: customers, retailers, and providers.
09/12/22 Varo’s CEO on the Neobank’s Missteps & Rebuilding Strategy (The Financial Brand)
Varo Bank, the first and only consumer fintech to be granted a de novo national bank license, has reduced its workforce, re-evaluated the nature and purposes of its marketing, and intensified its focus on product development. The vision Varo had when it first set out to become a bank, though, is something that founder Colin Walsh is not questioning. Regulators typically predicted that community banks founded recently would become profitable in seven years, which was later lowered to five. Today, many fintech companies and neobanks have not yet become profitable after that time period. Also, some analysts and commentators appear to relish projecting that Varo, which has also been running through funds, is on thin ice. But Walsh believes that due to the bank’s substantial cash reserves, Varo might be the only neobank to celebrate when the Fed hikes rates by 75 basis points.
Payments processing for merchants has been utilized as a tool by fintech players to create ecosystems that have attracted eye-popping valuations. To counter threats from fintech companies like Stripe and Block, that have moved up the rankings in terms of transaction volume, JPMorgan Chase has agreed to acquire a payments startup Renovite. Although JPMorgan is happy to collaborate with fintechs frequently and purchase relatively minor holdings in them, the bank believed Renovite’s product was crucial, thus making sense to own it outright.
09/08/22 OCC zeroes in on bank-fintech partnership risk (CNBC)
Acting Comptroller Michael Hsu stated that the Office of the Comptroller of the Currency (OCC) is closely monitoring bank-fintech collaborations, which he described as a complex collection of arrangements that might put the financial system at risk of a crisis if not properly monitored. It has become more difficult for clients, authorities, and the banking sector to distinguish between where the bank stops and where the tech business starts as a result of the expansion of banking-as-a-service (BaaS) and the “de-integration” of banking, according to Hsu. In response, the regulator is developing a procedure to group bank-fintech agreements into cohorts with comparable safety and soundness risk profiles and characteristics.