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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!
04/20/23 Blackstone is in talks to help regional banks with lending (Reuters)
Blackstone Inc (BX.N), which manages a significant amount of private equity and real estate assets, has revealed that it is engaged in discussions with regional banks in the United States to explore potential partnerships. These partnerships would aim to assist the banks with challenges they are facing in specific lending areas such as car loans and home improvement financing. Due to a decrease in their capital base, some banks are struggling to maintain their relationships with borrowers, and Blackstone would be supporting these banks by helping facilitate lending flow. Blackstone has been dealing with redemption issues at its flagship real estate income trust (BREIT), causing the company to utilize its right to block investor withdrawals at 5% of the quarterly net asset value of the fund each month since November. Moreover, the commercial real estate sector has slowed down due to factors such as higher interest rates, economic slowdown concerns, and companies consolidating office space in the aftermath of the COVID-19 pandemic, making it difficult for Blackstone to sell assets for optimal prices in many of its real estate funds. Morningstar analysts have suggested that these challenges, coupled with a decline in fundraising, have put pressure on Blackstone’s valuation, creating an attractive opportunity for investors to invest in the company’s stock.
04/19/23 Earnings Watch: Uninsured Deposits & Commercial Real Estate Loans Are the Focus (The Financial Brand)
As bank earnings season approaches, it will provide a crucial opportunity to assess the current state of the U.S. banking system following recent bank failures and broader economic difficulties. The reallocation of uninsured deposits from regional banks to larger banks and the ongoing commercial real estate (CRE) obstacles faced by regional and community banks are two stressors that are likely to have a more significant impact on the strength of the banking industry and the economy as a whole than the effects of the two significant regional bank failures that occurred in mid-March. Currently, the largest banks are in a favorable position, as they are receiving an influx of uninsured deposits while also having lower levels of CRE exposure. While many community banks may face challenges due to CRE losses in the coming years, they are protected from any shifting of uninsured deposits. However, it seems that regional banks will face the most stress, and their earnings reports will provide crucial information about the industry’s state.
04/14/23 Keeping Your Loans at Home: Servicing Retention Boosts Income & Member Satisfaction (Credit Union Times)
To boost capital and balance their portfolio risk, many credit unions opt to sell mortgage loans to Government Sponsored Enterprises (GSEs) or other investors. With the recent surge in inflation and interest rates dampening loan applications, keeping servicing in-house can benefit both credit unions and members by enhancing the member experience and generating income through servicing fees and other sources. Credit unions can build borrower trust and loyalty by retaining loan servicing in-house. This approach allows credit union servicers to provide exceptional communication and customer service, which is expected by members and regulators. Moreover, in-house servicing generates significant revenue for credit unions. By keeping servicing in-house, credit unions can maintain their relationship with members who may refinance or use other products in the future. To ensure efficient and effective in-house servicing, credit unions should leverage modern mortgage servicing software designed to handle the complexities of the process. While digital mortgage technology, such as mortgage servicing software and web applications, can provide loan information on demand, borrowers still desire the human touch. Therefore, credit unions that use a hybrid approach, combining self-service technology with support from well-trained mortgage professionals, can create more satisfied and loyal members.
If you’re considering investing in new equipment, you may be unsure whether to finance it or buy it outright. Several factors, including cash flow, credit score, and personal preferences, influence the decision to purchase or finance business equipment. Stretching out payments and maintenance costs over longer periods of time is one advantage of financing equipment, as it involves lower upfront costs and allows for investment in higher-quality equipment. Financing offers greater ease of obtaining and flexible terms. Deducting payments as a business expense on tax returns is also possible when financing equipment, which can lower the overall cost. Even if cash is available, financing equipment can help establish long-term business credit.
04/12/23 SoFi bolsters mortgage unit with Wyndham deal (Banking Dive)
SoFi Technologies, the online bank and personal finance company, acquired fintech mortgage lender Wyndham Capital Mortgage in an all-cash deal. The acquisition is aimed at expanding SoFi’s range of mortgage products and improving its economics. SoFi plans to integrate Wyndham’s origination platform into its lending business and has also offered jobs to the 170 Wyndham employees who were part of the company before the acquisition. SoFi customers, both old and new, will have access to financial tools such as career advisors, certified financial planners, special discounts, as well as competitive rates on personal loans, savings, and checking. The acquisition of Wyndham Capital Mortgage by SoFi Technologies is expected to strengthen the neobank’s mortgage offerings, which have been impacted by higher interest rates and challenges with fulfillment partners.
The recent survey by Fannie Mae revealed several key findings, including expectations about mortgage rates, good/bad times to buy or sell, home prices, concerns about job loss, and household income. The Fannie Mae Home Purchase Sentiment Index (HPSI) rose by 3.3 points in March. However, the index is still only slightly higher than its record low set in late last year, with a year-over-year decline of 11.9 points. Despite the arrival of the spring homebuying season, the majority of consumers still believe that it is not a good time to buy a home, citing unfavorable mortgage rates as the main reason. Homeowners are especially concerned about losing their lower rates, leading to the ‘lock-in effect.’ Renters, on the other hand, are primarily concerned about high home prices, which hinder their ability to purchase a home.
04/10/23 Bank Crisis Shows Signs of Easing as FHLB Debt Issuance Shrinks in Late March (Bloomberg)
In the last week of March, the Federal Home Loan Bank (FHLB) system issued $37 billion in debt, which is a significant drop from the all-time peak of $304 billion just two weeks prior. This indicates that the banking crisis may be subsiding, as member banks’ need for cash is either being met or decreasing, and depositors are no longer withdrawing their cash from financial institutions. The FHLBs have recently been in the spotlight for their role as a backstop for banks, as several institutions, including Silicon Valley Bank, Signature Bank, and Silvergate Capital Corp, sought financing from their local FHLB bank before their demises. Due to their implied government backing, loans from FHLBs have preferential interest rates, and their debt has priority in the event of bankruptcy, even ahead of the Federal Deposit Insurance Corp. If banks anticipate that they won’t need cash for an extended period, they may be hesitant to seek long-term loans from the FHLBs because these loans carry a prepayment penalty if a bank wants to exit.
04/07/23 Competitive Rates Lead to Significant Auto Market Share Growth for CUs (Credit Union Times)
According to Experian’s “State of the Automotive Finance Market Report: Q4 2022”, rising interest rates and decreased incentives have made it challenging for consumers to find affordable options in the vehicle market. As a result, credit unions have seen a substantial increase in market share for new vehicle financing, with one in four new vehicle loans being financed through credit unions in the last quarter. This growth marks the largest for credit unions in the new vehicle financing space, despite their historical focus on used vehicles. The reason for this growth is the lower interest rates credit unions offer for new vehicles.
Credit unions have gained a significant market share in both new and used financing and now hold the largest overall market share. While the majority of consumers still prefer used vehicles, credit unions should take note of the increasing trend in new vehicle financing. The majority of vehicle financing is currently done by prime borrowers, and the decrease in subprime borrowers may indicate that some consumers have not returned to the market while others are managing their credit and transitioning to the prime category. Credit unions should analyze this trend to ensure they reach the appropriate audience.
04/04/23 Poll Shows Small Business Shift to Credit Unions (Credit Union Times)
According to a survey by Alignable, a Boston-based company, a significant number of small businesses that moved their deposits after last month’s bank failures shifted them from banks to credit unions. About 17% of respondents reported moving their deposits to credit unions in February, a figure that rose to 28% in March. The report also suggested that businesses most affected by banking instability are moving their funds to their hometown credit unions. Another survey by Alignable revealed that concerns about a recession have increased due to the ongoing banking crisis, rising interest rates, and cumulative inflationary pressures.
04/03/23 How Credit Unions Can Compete for Home Equity Loans & Win (Credit Union Times)
According to Cornerstone Research, home equity loans are one of the top lending priorities for credit unions in 2023, with 59% of credit unions focused on this type of loan this year. As interest rates are on the rise and homeowners are holding record-high levels of home equity, credit unions are shifting their attention to home equity lending over other loan types. Last year, mortgage interest rates rose over 300 basis points, leading to homeowners suffering from the “I hate my house, but I love my mortgage” syndrome, according to the Urban Institute. Credit unions can take advantage of the thriving home equity market and establish long-term relationships with homeowners by acting promptly. Credit unions that adopt a strategic approach to home equity lending can enjoy both short-term and long-term advantages. Homeowners represent a valuable member segment for credit unions, as owning a home is a crucial means of building and maintaining wealth. In light of the current boom in home equity, credit unions can assist homeowners with various financial goals, such as renovating, consolidating debt to improve their borrowing power, or increasing retirement savings. By offering personalized loan solutions and educating members about the benefits of using their home equity, credit unions can build strong, long-lasting relationships with homeowners.