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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!
01/30/23 Most Americans Anticipating a Fed Rate Increase; Analysis Shows What Increase Will Cost People (CU Today)
With the Federal Reserve probably expected to raise rates again, a new consumer poll reveals that most Americans anticipate inflation to aggravate. According to the WalletHub poll, two-thirds of Americans believe inflation will be worse in 2023 than in 2022, with 87% of Americans worrying about inflation right now, 8% higher than in December 2022, and nearly nine in ten believing that inflation would affect their spending in 2023. In addition, 70% of Americans think inflation has had the greatest impact on their monthly grocery prices, followed by gas (21%) and housing (9%). Also, around 70% of Americans believe a recession is unavoidable, and 45% of them require more financial preparation.
01/29/23 A Look at What FTC Proposal Banning Non-Competes Could Mean for CUs, Other Employers (CU Today)
Credit unions, their vendors, and CUSOs are looking to join other businesses in examining the impact of the Federal Trade Commission’s proposed ban on noncompete terms in employment contracts on worker mobility, salaries, and the structure of future compensation agreements. According to Matthew Durham, a Salt Lake City-based attorney with Dorsey & Whitney LLP, employers have been functioning with the understanding that noncompete terms can protect their interests. However, the FTC proposal represents a burgeoning resentment to the idea that such restrictions should exist and is transforming the environment that employers have been convenient with in past years. Durham and others also expect that FTC would limit its rule after receiving public comments, including those from employers and business organizations that have already expressed objections to the present idea. In contrast, the observers on both sides believe that the constraints on the provisions will force companies to be more innovative in retaining people, utilizing everything from remuneration to career promotion to keep workers interested and loyal to the organization.
01/29/23 More Than a Quarter of ‘Fickle’ Members Would Leave for New Technologies Elsewhere, Survey Finds (CU Today)
As per a new survey, credit union members’ allegiance may prove “fickle” due to new technology, with more than a quarter indicating they would switch to another FI for product innovation. The current Credit Union Innovation Handbook, a product of a collaborative study between PYMNTS and PSCU, also highlights the advantages of technological breakthroughs in capturing consumer market share. Over half of the CU executives surveyed by PYMNTS indicated a lack of resources prohibits them from putting innovations to market, which is why many FIs are turning to partnership models to fine-tune their technology and provide new services and products to markets. It’s now on credit unions to discover methods and means to respond to those requests for innovation.
01/27/23 NCUA board maintains 18% FCU interest rate cap (CU Insight)
The NCUA Board kept the 18% federal credit union loan interest rate limit in place, extending it through September 2024 unless the board acts before then. The board also endorsed the agency’s 2023 Annual Performance Plan, which offers precise direction and guidance toward fulfilling the agency’s purpose as well as the strategic goals and objectives stated in NCUA’s 2022-2026 Strategic Plan, that include ensuring a secure, sound, and successful cooperative credit system that safeguards customers, improving individuals’ and communities’ financial well-being through accessible and equitable financial goods and services and enhancing organizational performance to boost mission success.
01/27/23 Stripe considers IPO, sparking hope in the industry (Fintech Nexus News)
The financial community learned about Stripe’s plans to go public on January 26, 2023, with the objective to provide current and former Stripes with consistent, continuing liquidity at market pricing, surging enthusiasm across the IPO-starved market. For many in the sector, 2022 was a challenging year, with several reports of layoffs and valuation reductions. This recent disclosure came just before the expiry date of some of Stripe’s oldest workers’ stock units. By going public, Stripe would eliminate the requirement for experienced staff to execute options and allow them to profit from the sale of the shares. The general reaction has been encouraging, with many seeing the announcement as an indication of brighter days ahead for the burgeoning fintech industry.
01/27/23 Where to Look for Value in the Fintech Wreckage (The Financial Brand)
The collapse of the fintech bubble gives an amazing opportunity for banking institutions to acquire their former competitors, accelerate their innovation plans, and position themselves to compete over the next decade. Many fintech startups, products, or features that still need to scale or demonstrate a viable business model on their own might benefit from the built-in distribution and cross-selling capabilities of traditional financial institutions. Fintech lenders have been constrained by weak funding mechanisms (increasing borrowing rates, shaky capital markets) as well as poor lending standards. Another prospect is the recent emergence of neobanks that serve niche markets. Similarly, vertically specialized software and payments firms have established footholds in a number of niche areas. Banks seeking to service a specific industry or those with established clients in that industry may find potential in purchasing customized software suppliers for that industry.
01/25/23 Coarse to fine-grain: CECL for loan participations (CU Insight)
As the first quarter of the 2023 CECL compliance deadline approaches, credit unions must consider many factors on how to model their portfolios, as CECL is a versatile standard that allows for a variety of approaches to calculating an institution’s Allowance for Credit Losses (ACL). When deciding which CECL methodology to use, credit unions must also analyze the complexity of their loan portfolios on an individual basis. Moreover, to assess loss rates utilizing data related to a single loan product and originator, the value of granularity in credit loss estimates is desirable due to the diversity and dynamics of an active participation portfolio. Credit unions should use CECL approaches that account for the diversity of their participating partners and the assets in their participation portfolio as a best practice. Furthermore, this more detailed method is easily accessible and can be automated — credit unions may execute this process internally or utilize a market-available technological solutions.
01/25/23 Four predictions credit union lenders should be tracking in 2023 (CU Insight)
After a year of excruciatingly tenacious inflation and a predicted stalemate in the coming year, credit unions are bracing for an uncertain 2023, and these four predictions will assist them in identifying the possibilities and threats that await them this year. First, credit unions will have to deal with significant losses in buy and refi mortgage activity but may optimize member lifetime value and provide additional products to members by leveraging demand for home equity and HELOC loans. Second, interest rates will stay far higher than most homeowners already had refinanced or bought, while the demand for cash and lendable assets will endure, providing a degree of stability for both credit unions and their clients, even if the housing market declines more than expected. Third, because of the low refi rate and high-interest rates, homeowners have turned to HELOCs, which some major banks refuse to give, thus presenting an opportunity for credit unions. Lastly, there are several sorts of collaboration between fintechs and credit unions, and building these partnerships will become increasingly vital as fintech becomes more integrated with the banking system as a whole.
01/25/23 How Well Is the Credit Card Market Functioning? The CFPB Is Asking (Credit Union Times)
In order to comply with the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act), the CFPB said that it is collecting public feedback on how the consumer credit market is working from financial institutions. The CFPB’s assessment is mandated by the CARD Act to evaluate if any credit card regulation changes are required. According to the CFPB, officials are interested in seeking input and observations on the terms of credit card agreements and the practices of credit card issuers, the efficacy of disclosure of terms, fees and other expenses of credit card plans, proficiency of protections against unfair or deceptive acts or practices relating to credit card plans. Another focus area is cost and accessibility of consumer credit cards, safety and soundness of credit card issuers, use of risk-based pricing for consumer credit cards and overall product innovation.
01/17/23 Goldman to exit personal loans as Marcus reshuffle continues (American Banker)
According to officials, Goldman Sachs will soon stop offering new personal loans under its Marcus brand as it continues to scale back its once-grand aspirations in consumer finance, as CECL altered the curve for scaling these lending enterprises from scratch. But personal loans ranging from $3,500 to $40,000 will not be affected immediately, and the Marcus website currently states that applications are being accepted. The New York bank is also abandoning plans to launch a checking account for its wealth management clients, an endeavor whose scope had already been reduced from Goldman’s early goals of Marcus gaining a significant presence among US depositors. Goldman also launched a new Platform Solutions business as part of the restructuring, which includes the company’s credit card relationships with Apple and GM, as well as its GreenSky loans.
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