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News Scan Sep 2016

Credit Card News, Economy News, Banking Industry News - Mar 2015
  • In 2016, consumers worldwide will spend about $23.2 trillion in card payment transactions and $22.6 trillion in cash.
  • The biggest share of card growth from 2015 to 2016 happened in the Asia Pacific region, accounting for $1.7 trillion in transactions, followed by North America, with an increase of $187 billion.
  • The rise of debit cards is another reason why cash has declined in recent years; debit card use worldwide grew about 8% in terms of cards in circulation from 2015 and 2016; by that same measure, credit card use grew about 5% worldwide.
  • Although a switch to a digital payment system would potentially save countries a lot of money, since cash is expensive to make and keep in circulation, many citizens have concerns about banks and governments having access to information on what they’re spending, regardless of whether they’re actually involved in any improper or illegal activities.
  • The Federal Reserve will seek significantly more capital from the largest U.S. banks and give some relief to smaller banks as it considers reforms to its annual "stress test," Fed Governor Daniel Tarullo said on Monday.
  • The reforms will include a new capital 'buffer' to better protect the financial system from a shock at the nation's largest lenders like JPMorgan Chase, Bank of America and Wells Fargo.
  • The plan would exempt some regional banks from scrutiny under the annual stress test, limiting the review to a '"quantitative" review of its systems.
  • More details of the capital plan will be offered next year, Tarullo said. The proposal will not impact the 2017 stress test, he said.

Credit Unions Engage on Social Media

Source: cutimes Category: Credit Union News
  • As credit unions follow their members into social media, they are finding they have to act boldly if they hope to engage in the call-and-response that puts the social into social media.
  • Credit unions can decide what they want to do with social media, and there's a way for that to happen,” Filene Research Institute Social Media Advisor Holly Fearing said.
  • Facebook has choked off most of the paths to organic page views for institutions. Now it is largely a pay-per-view environment. On the other hand, the cost is relatively modest and the impact is easy to measure.
  • A credit union can go a long way spending $50 a day to boost posts.
  • Erin Hennessy, who recently joined United Federal Credit Union in St. Joseph, Mich., as SVP of marketing, said credit unions are still trying to figure out how they benefit from social media.
  • The $450-a-year Sapphire Reserve card has points-and-miles-obsessed millennials fired up.
  • Since July, a fever had been building on social media among points-and-miles obsessives aware that Chase was preparing a premium card—one that would sit above its already-popular Sapphire Preferred, and offer rewards to match.
  • Almost a month before Chase introduced Reserve, the community discovered the card’s perks through some leaked information: a sign-up bonus of 100,000 points, triple points on travel and dining, airport lounge memberships, and credits that offset a $450 annual fee, among other goodies.
  • Chase is not the first issuer to offer a big-annual-fee-but-mucho-points card. American Express and Citibank have been playing in that part of the market for years. But Chase has entered at the right time—when a growing community of enthusiasts will do the company’s marketing online for free—and with the right card, one that assiduously checks every box the modern credit card deal-hunter cares about.
  • With the wheels coming off the proverbial Wells Fargo Bank stagecoach after its massive fraud fiasco surfaced, does it open marketing opportunities for credit unions?
  • That’s a key question marketers are debating. Some say credit unions should go for it. Others say stay far away from it.
  • A few marketers, however, contend the Wells Fargo sham can also serve as a wake-up call for credit unions to stop selling like banks do and build a demonstrable brand around the industry’s roots of its people helping people culture.
  • Lay and other marketing professionals have personally met and worked with credit unions that have operated a bit more like Wells Fargo.
  • Randomly select any credit union website and one will find its home page primarily dominated by product promotions, gimmicks and superlative marketing clichés, which signal to consumers that cooperatives are not different than commercial banks.
  • It’s simply not enough to talk about the credit union difference, Matt Purvis, a brand expert based in Eugene, Ore., explained – it must be demonstrated in all interactions with members and nonmembers.
  • “The single most defining activity to consumers is the sales process,” Purvis said. “If you don’t do that differently, people will sensibly conclude that you’re just another bank.”
  • Some credit unions, nevertheless, are not selling but helping their members through their financial journey.
  • Wells Fargo & Co. lost its title as the world’s most valuable bank to JPMorgan Chase & Co.
  • Wells Fargo, which is grappling with the fallout from claims that its employees created fake customer accounts, slumped 3.3 percent to close at $46.96 Tuesday in New York. That reduced the firm’s market value to $236.9 billion, compared with $240.3 billion for New York-based JPMorgan.
  • Wells Fargo was fined $185 million last week after the Consumer Financial Protection Bureau accused bank employees of creating deposit and credit-card accounts without clients’ approval to reach sales goals. 
  • CEO John Stumpf has been asked to testify in Washington about the alleged misconduct, while the San Francisco-based bank agreed to eliminate sales goals for retail bankers, effective Jan. 1.
  • Bank stocks also were pressured Tuesday as traders reduced bets that the Federal Reserve will increase interest rates at next week’s meeting. JPMorgan fell 0.8 percent, while the 24-company KBW Bank Index slid 1.6 percent, extending its decline for the year to 2.7 percent.
  • Having grown up with technology, Millennials should arguably be the demographic most aware of the need to protect their personal information on desktops and mobile devices.
  • However, TransUnion, one of the nation’s major credit reporting agencies, found this is not the case.
  • TransUnion found 86 percent of Millennials save bank account details on their smartphones.
  • In addition, 84 percent of Millennials surveyed admitted to using public Wi-Fi to perform online banking transactions or check accounts with sensitive financial information.
  • By comparison, 36 percent of Baby Boomers cited cybercrime as a concern, and 50 percent store sensitive financial information on their devices.
  • What’s more, 54 percent of Baby Boomers access their bank accounts via public Wi-Fi.

Digital Bankers Are MVPs: Study

Source: cujournal Category: Banking Industry
  • If you want dedicated members, you'll need to get them onboard with digital banking.
  • That's the conclusion from a new Fiserv study, which found that "digital bankers" are financial institutions' most valuable players.
  • After digital enrollment, the study revealed, product adoption rates for digital versus non-digital bankers were 58.4% to just .04%.
  • The referenced Fiserv research report, "Quantifying the Value of Digital Engagement," surveyed 412,000 Bank of West customers over a two-year period (August 2013 to August 2015). Among areas of study were millennials and Gen Xers (ages 18 to 55 years old). Banked consumers in this age span engaged in high ACH activity and had a high frequency of transactions offline, online and via mobile.
  • With fall around the corner, many credit unions are entering the budget planning stages for the next year. There are a number of practices to improve budget planning and optimize the potential of your budget to prepare you for data analytics.
  • If you are planning to remain competitive in the industry, this does not mean you are simply tweaking minor adjustments from last year’s budget.
  • At the same time, the financial services industry is starting to experience incredible innovations and disruptors, which have the potential to permanently alter the financial services industry. It’s time to make sure your budget is up-to-date so it won’t put you at a competitive disadvantage.
  • Start With Your Goals - Starting with your goals is certainly not unique to credit unions, but it is still a very important first step before putting numbers into your budget.
  • Plan Ahead for Large Purchases and Changes - Look ahead at which purchases and investments you may need to make.
  • Remember You’re Not Alone - Credit unions are part of a very collaborative industry and it is possible for one credit union to learn from the experiences and data of other credit unions.
  • Review it Often - Track your expenses, while simultaneously maximizing the analytic capabilities of the credit union.
  • Once the reputation of traditional banks in the UK was tarnished by seemingly continuous scandals, customers started looking at alternatives to the “big four” banks which have monopolized the market for so long.
  • Enter the fintech movement and a swathe of emerging banks looking to disrupt the industry and fight back against the age-old processes currently in play.
  • In the age of contactless payments, banks need to offer a seamless digital experience which can be enjoyed on any device, regardless of location or time of day.
  • Far too often, professionals don’t directly take customer requirements into consideration before creating a product and instead move forward with the idea they have in their head of exactly what client-facing platforms should look like. Unsurprisingly, this rarely heads positive results.
  • This is where emerging banks and the fintech movement come into play, pushing forward with the banking revolution by taking two approaches to disrupt the market: modelling products around user experience and modelling user experience around products. Both of these approaches are viable and clearly working in the digital age.
  • While emerging banks are finding a niche in the market, traditional banks must question their own services, the technology behind them and exactly how they can contend with the exciting and innovative platforms currently being developed.

PayPal, MasterCard reach deal for store payments

Source: reuters Category: Credit Card News
  • MasterCard Inc said on Tuesday it had expanded its deal with payment processor PayPal Holdings Inc, which would allow customers to use PayPal's payment services in stores. PayPal's partnership follows a similar deal with MasterCard's larger rival Visa Inc in July as the company looks to expand its payments network.
  • PayPal will allow users to select a credit or debit card as the default payment method and share data on transactions made through MasterCard's tap-and-pay feature, which allows the shopper to wave a card or mobile phone over a reader to pay, the companies said in a statement.
  • As part of the deal, MasterCard will allow PayPal users to withdraw cash from their accounts using a debit card and also waive the digital wallet fee it currently charges PayPal. The two companies have an existing partnership for co-branded consumer credit cards in the United States and Puerto Rico

Lending and Delinquencies Increase in Q2: NCUA

Source: cutimes Category: Credit Union News
  • Total loans outstanding at federally insured credit unions increased to $823.4 billion during the second quarter of 2016, an increase of 10.5% from a year ago, the NCUA said Tuesday.
  • Year over year, loans grew in every major category, with new auto loans leading the pack, with a 15.6% increase, to $107.3 billion. Used auto loans increased 13.1%, to $173 billion.
  • Total real estate lending grew 8.7%, to $411.2 billion, while payday alternative loans rose 4.2%, to $119.9 million at an annual rate.
  • Total investments by federally insured credit unions dropped 2.5%, to $271.9 billion.
  • The delinquency rate for credit cards was 93 basis points, compared with 86 points a year earlier, the agency said. The delinquency rate for fixed real estate was 55 basis points, down from 68 basis points in the second quarter of 2015.
  • Consolidation among credit unions continued in the second quarter. There were 272 fewer credit unions during the second quarter of the year, with the number of federally insured credit unions standing at 5,887.
  • The percentage of federally insured credit unions that were well capitalized remained steady, with 97.8% reporting a net worth ratio at or above the 7% required by law.
  • The strategic partnership Visa and PayPal announced in July has generated an unusual amount of speculation, even for the payments world.
  • The agreement's talking points also included a veiled reference to PayPal having secured "Cost certainty."
  • The market continues to move toward consumer choice in that regard, and PayPal is now better equipped to offer it.
  • The benefits to Visa are obvious: Removal of a barrier to card use, higher volume, incremental revenue, and arguably the buying of some research and development runway, as discussed below.
  • PayPal's executive suite is stacked with seasoned industry veterans and it's hard to imagine them getting hoodwinked in this deal.