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News Scan Apr 2016

Credit Card News, Economy News, Banking Industry News - Apr 2014

U.S. economy only grows 0.5% in Q1

Source: cnn money Category: Economy News
  • The U.S. economy only grew 0.5% in Q1 2016 - lower than what the economists had expected at 0.7%. It follows the very slow pace of growth of 1.4% in the last three months of last year
  • The first quarter figure is a far cry from the expectations that economists had started the year with. At one point in February, the Atlanta Federal Reserve projected that economy would grow 2.5% annually between January and March.
  • American consumers are still wary of spending. The savings rate increased to 5.2% in the first quarter from 5% at the end of last year. That's higher than the pre-recession levels and a sign that Americans are still cautious spenders since the recession ended in June 2009
  • There are, however, a few good signs. Economists expect growth to pick up later this year. First quarter growth has been a low the last few years, only to see growth pick up for the rest of the year.
  • Personal consumption expenditures, excluding volatile categories like food and energy prices, rose to 2.1% in the first quarter from 1.3% at the end of last year.

New Rule Proposed for Big U.S. Banks’ Liquidity

Source: wsj Category: Banking Industry
  • Though U.S. regulation is somewhat stricter than global version, banks already largely comply, having anticipated the rule
  • Regulators said that banks’ current balance sheets point to a small shortfall of stable funding. To meet the new requirement, banks would need to boost such funds by 0.5%, translating to an additional $39 billion in funding among the 35 largest U.S. banks, according to the proposal.
  • That requirement calls on large banks to hold highly liquid assets such as central bank reserves, and government and corporate debt, which can be converted into cash quickly to cover a firm’s obligations over a 30-day period.
  • The FDIC and OCC signed on the draft on Tuesday. Federal Reserve Board will held open meeting to discuss the rule on May 3. All three agencies are required to approve the plan before it can be released to the industry and the public for comment. Comments on the proposal are due by Aug. 5.
  • Drop in pensions for workers in the U.S. has cost both the workers and the economy in general. According to the U.S. Bureau of Labor Statistics, currently, about 43% of private workers take part in their 401(k) or other defined contribution plan.
  • Without pensions, older workers are being forced to work longer hours and stay in the workforce longer. This translates to keeping out some of the most productive workers of all, known as core workers, according to a study by the University of Paris-Sorbonne.
  • On one hand, the U.S. economy has become more productive by pushing older workers into the labor force, however, by doing so the U.S. has also decreased its productivity per worker, the Sorbonne study showed.
  • The drop in U.S. pensions also contributed to the rising gap between the rich and poor because low- and middle-class workers cannot afford pensions, whereas the wealthy can.

CUNA backs HMDA reporting ‘stop and study’ bill

Source: cuna Category: Credit Union News
  • Legislation that would delay the implementation of new Home Mortgage Disclosure Act (HMDA) requirements until their impact can be studied has the full support of CUNA.
  • The Consumer Financial Protection Bureau recently finalized amendments to Regulation C that would significantly increase the amount of data mortgage lenders, including credit unions, will be required to provide.
  • This will lead to mortgage credit and other credit union service being more expensive and less available to Members
  • The CFPB’s new requirements include requiring credit unions that have originated 25 or more closed-end mortgage loans, or 100 or more open-end loans, to report dozens of data points in addition
  • This would incur significant expense to bring credit union systems into compliance with the new rule

What a Brexit could mean for US banks

Source: cnbc Category: Banking Industry
  • Banks in the U.S. that have operations in the EU will have a new headache in an already-difficult year should U.K. voters opt out of the political and economic union. U.S. banks benefited from "passporting" regulations that let them run trading operations in U.K. locations like London would have to hastily revisit those operating plans.
  • According to Reuters report, United States financial regulators are demanding updates from Wall Street firms about their plans to manage their way through a Brexit and related fallout that could impact banks.
  • One of the U.S. banks analyst said that, the large banks are uniformly against Brexit due to the confusion of re-doing banking, clearing, [and other] relationships.
  • The new chip-enabled cards flowing into the U.S. marketplace have already made a dent in fraud, with some of the biggest merchants seeing a dip of more than 18% in counterfeit transactions, according to Visa.
  • Among the 25 merchants who were suffering the most instances of counterfeit fraud at the end of 2014, five that began processing credit and debit cards equipped with the new EMV technology saw those infractions fall 18.3% as of the final quarter of 2015, says Stephanie Ericksen, vice president of risk products at Visa. Meanwhile, five of those merchants who were not yet equipped to handle chip-enabled cards saw an increase in fraudulent transactions of 11.4%.
  • Visa says that it has issued roughly 265 million chip enabled credit and debit cards so far, making the U.S. the world’s biggest market. And over one million, or about 20%, of merchant locations were processing chip cards. MasterCard meanwhile says that as of last month, 70% of its consumer credit cards were chip equipped.
  • Big multinational companies that shelter overseas profit from federal taxation cost the U.S. economy more than $100 billion a year by withholding more than $1 trillion collectively, according to a new study that may inflame the debate over tax fairness.
  • Oxfam America published a report that analyzed the financial reports of the 50 largest publicly traded U.S. companies.
  • The organization found that behemoths such as Apple, General Electric, Microsoft and Google engage in tax havens that costs the U.S. $111 billion annually.
  • The U.S's effective corporate tax rate is 35 percent, but the study found that companies used a variety of tax strategies to cut that rate to just 26.5 percent—with only 5 of the 50 companies paying the full 35 percent.
  • Oxfam said that an "opaque and secretive network" of over 1600 subsidiaries have conspired to stash around $1.4 trillion offshore, and linked that amount to the widening gap between rich and poor.

Analytics Help Credit Unions Engage Social Media

Source: cutimes Category: Credit Union News
  • The analytics wave has been sweeping financial institutions and Credit Unions have not been far left behind. Credit Unions have realized that the strategic use of social media coupled with analytics can significantly help them engage their member communities like never before and influence how to market and sell products to them.
  • There have been innovations in technologies that can optimize the social media experience. Consider Yak! Tracker, a lead generation application developed by “Chatter Yak!” .Yak! Tracker offers a responsive application, one that is intuitive and gets leads to the credit union as fast as possible. It uses customizable questions to gather contact information and member financial interests.
  • Other tech-savvy credit unions have started using Facebook’s Insights, an analytics app, and Pages Manager, which helps monitor activity. This allows them to engage members and observe member interaction more distinctly than with.
  • It’s about time other credit unions also start picking up and leverage the great offerings by social media analytics

The US faces a perfect economic storm

Source: cnbc Category: Economy News
  • In the weeks after the Federal Reserve raised interest rates in December global financial markets trembled and inflation expectations, as measured by the bond market, declined significantly.
  • Thus far, however, actual inflation numbers have refused to cooperate with the winter's bleak expectations. Both major core inflation measures — core consumer price index (CPI) and core deflator of personal consumption expenditure (PCE), the measure favoured by the Fed — have accelerated significantly in recent months; the 12-month growth rates of core CPI and core PCE now stand at 2.3 and 1.7 percent, respectively.
  • The main story in the U.S. economy right now is that it is gradually running into supply constraints, which by definition implies price pressures in the labour market and later on in goods and services.
    • Wages are only just beginning to accelerate and their impact will remain limited this year.
    • The ripple effects of lower oil and commodity prices are still moving through the supply chain, putting downward pressure on consumer prices.
  • The strengthening dollar is likewise still not fully reflected in consumer prices.
  • Don't be surprised to see the Fed act on inflation fears
  • Even the majority of banks that suggest they have an onboarding program admit the experience is likely “mediocre” for the client. That’s because many banks give control of the program to a third party that believe letters, emails and product pushes are the best way to roll out the welcome mat.
  • This process is not about dumping a slough of additional products in their lap. It’s not impersonal correspondence signed by a heartless robot. It’s not a tick mark or a check box for a sales manager or sales associate. It’s not a “campaign.”
  • Onboarding at Experience Bank is successful because multiple associates are engaged. It starts with the senior sales manager, moves to a board member (yep, that’s right) then on to the sales assistant. There is a joint call midway through the process and it all concludes with a customized message from the CEO. What they follow is :
    • Initial Follow-Up at Three Days
    • Board Outreach at One Week
    • Checking-In at Six Weeks
    • Face-to-Face at Three Months
  • Onboarding at Experience Bank is not just a snazzy buzzword. It’s a strategic process that improves client retention, the client experience and increases referrals. It’s a win-win all the way around.
  • The Virginia cooperative CommonWealth One Federal Credit Union views inactive account holders as unengaged members who just need a nudge to jump-start the relationship. That nudge comes in the form of a monthly $5 inactivity fee, which the credit union implemented in the summer of 2014.
  • An inactivity fee is not a new strategy for CommonWealth One; however, it hoped increasing the frequency from quarterly to monthly would more efficiently and effectively engage checking account holders.
  • Not every account with a low balance or infrequent transactions is truly inactive. Instead, the credit union defines “inactive” as accounts that fall below a certain threshold of transactions per month and with account owners who hold no other open products or services with the credit union.
  • The credit union implemented the monthly fee in the summer of 2014, but members did not react for several months.
  • What is a fallback transaction?
    • Simply stated, a fallback transaction occurs when a chip card is presented to a chip enabled terminal ("chip-on-chip"), but the transaction is conducted as a swipe, usually due to the terminal unable to read the chip on the card. And it is important to understand Fraud Liability.
  • Is it possible to counterfeit an EMV card
    • Extremely difficult but if fraudsters can get a hold of payment credentials (from a breach) then they can create a counterfeit card that looks like a real chip card, with the stolen credentials on the mag stripe.
  • How can I tell if the transaction is a fallback?
    • Terminal Entry Capability 5 (chip device)
    • Track 2 Equivalent Data Service Code (Digit 1) is 2 or 6 (chip card), and
    • POS Entry Mode 02 or 90 (magnetic-stripe read)

U.S. Bank Adds Touch ID To Mobile Banking

Source: pymnts Category: Banking Industry
  • U.S. Bank customers’ mobile banking experience just got an upgrade. The bank announced that the updated version of the U.S. Bank Mobile app for iPhone has added Touch ID as an easier way for customers to log in to access their financial details. This means the ability to swap passwords for the biometric option during mobile login.
  • For customers wanting to use this feature, Touch ID is available for U.S. Bank customers using iPhone 5s and later models. The feature will be available in future releases of the U.S. Bank Mobile app for iPad and Android users.
  • Beyond the Touch ID addition, the bank also announced that customers will have a new way to deposit checks via their mobile devices. Updated software in the U.S. Bank Mobile app has improved the image capture abilities by allowing customers to import a check into the app from various angles or under low-light conditions.
  • Recently announced from U.S. Bank was the ability to provide person-to-person mobile payments, including a real-time option through Early Warning‘s clearXchange network, which U.S. Bank began using on Feb. 21.

Mobile Banking Becomes a Credit Union Necessity

Source: cutimes Category: Credit Union News
  • Mobile banking is more than just a banking channel these days. Due to its increasing user friendliness, intuitiveness and comprehensiveness, it has become mainstream and grown into credit unions’ primary hub for member transactions and activity.
  • Android Fingerprint ID is one of the three biometrics solutions, which also includes Apple Touch ID and EyeVerify’s EyePrint ID, delivered through the Digital Insight platform.
  • The $1.3 billion, Phoenix-based Arizona Federal Credit Union, which now uses all three Digital Insight biometric methods, went live with Android Fingerprint in February. Biometrics is a part of Arizona FCU’s heavy focus on online and mobile banking.
  • 75% of the credit union’s 120,000 members are active online banking users; half are active in mobile banking and 30,000 of its members only use the mobile channel.
  • Another Digital Insight customer, the $695 million, Beaverton, Ore.-based Rivermark Community Credit Union, said it often responds to member demands for more innovative services and