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News Scan Feb 2016

Credit Card News, Economy News, Banking Industry News - Feb 2015
  • What clients are saying: 86% of respondents said they plan to make the solutions available to their cardholders. 54 % of TMG clients expected Samsung Pay to be more attractive to their cardholders. 40% answered Android Pay.
  • Mode of Connection at POS terminal: Samsung Pay uses magnetic secure transmission (MST), which mimics the technology used by credit and debit cards. Android Pay and Apple Pay, on the other hand, only work in point-of-sale environments where near field communication (NFC) is enabled
  • According to a recent survey, 30 % of consumers said they would be willing to switch FIs to gain access to mobile payments. Though people love their plastic, recent media attention to data breaches
  • What this means: For credit unions and community FIs, enabling mobile payments today is about readiness for enhanced consumer demand and merchant acceptance tomorrow.
  • In a survey of 146 of the borrowers from nine credit unions, 94 percent said the loan helped with an emergency, and 89 percent said they would use the program again if the need arose.
  • The industry has changed drastically since 1990, when the five largest banks held less than 10% of all bank assets. Now they control 44%
  • Here's how smaller players can win when competing against giant-sized opponents:
    • Change perspective. View yourself as a specialty store that provides higher-quality
    • Pamper customers. Cultivate a culture that goes the extra mile to keep clients satisfied.
    • Leverage your size. Innovate with new products.
    • Capitalize on your sociability.
    • Think local. Focus on local needs, products and filling competitive gaps.
  • The US economy grew at a faster pace than previously thought in the fourth quarter of 2015, according to the latest official figures. The US economy grew at an annualized pace of 1% in the quarter, compared with an initial estimate of 0.7%.
  • Most economists had taken a more pessimistic view, expecting the figure would be revised downwards.
  • But businesses bought more stock than previously estimated, which meant inventory levels were $13bn higher. The downside is that next month's growth figures may be lower than expected if businesses do get round to cutting back on inventory spending.
  • U.S. banking industry profits rose in the fourth quarter of 2015 and its interest margin improved for the first time in five years, but the industry's outlook was cloudy as a regulator warned of growing credit risk.
  • The Federal Deposit Insurance Corp. Tuesday said 6,182 U.S. banks reported $40.8 billion in profits for the final quarter of 2015, up 11.9% from the prior year, thanks to a boost in revenues and a decline in one-time legal expenses at large banks that paid massive fines a year ago.
  • The strong quarter capped a year in which profits rose 7.5% from 2014, the FDIC said. Loan growth accelerated and the Fed's decision to raise interest rates in December buoyed revenues.
  • The White House released its annual Economic Report of the President on Monday, which summarizes the state of the economy and also provides insight to what’s on the mind of the president’s top economic advisers.
  • The 400-page report offers a compendium of analysis and tables on a range of topics. Here’s a look at five of the more thought-provoking dynamics highlighted in the report.
  • 1. If you thought U.S. growth was disappointing, then don’t look abroad: Global growth has been the big story so far this year, but the report shows just how much economists have had to cut back global growth forecasts during the current decade.
  • With shoppers adopting digital wallets at a rapid pace, MasterCard and CU Wallet are partnering to deliver a customized digital service to credit unions.
  • CU Wallet will speed the development and deployment of mobile wallets and payment solutions for community financial institutions by offering the MasterPass digital service.
  • It will also provide a seamless and secure shopping experience to credit union members wherever they shop – in-store, in-app and online – on the device of their choice.
  • Consumers used Venmo to transfer $1 billion in January, which is two and a half times the volume from January 2015, and ten times the volume from January 2014.
  • In the fourth quarter of 2015, Venmo handled $2.5 billion in payment volume, up 174% from the same quarter in 2014.
  • PayPal revealed that merchants like food delivery service Munchery and event tickets seller Gametime will soon be able to accept payments using Venmo. Venmo charges merchants a standard 2.9% of the transaction amount plus 30 cents per transaction.
  • Gone are the days when the only credit cards gas stations would take were their own private-label cards. Nowadays, most people buying gas on credit are using general-purpose credit cards. And it's no wonder: Proprietary gas cards, which can only be used at certain gas stations such as Shell, Chevron or BP, often come with mediocre rewards, high interest rates and an array of restrictions.
  • The number of gas card accounts has been falling. In 2012, there were only about 7.3 million active proprietary gas card accounts, according to Nilson Report data. Compare that with the nearly 188 million active general-purpose credit cards that year.
  • In 2013, the number of active proprietary gas card accounts slid to about 6.7 million, with 17.7 million circulated cards in total. The number of cards circulated is greater than the number of accounts because in some cases more than one card is tied to each account.
  • Housing’s as hot as it’s been since, well, the last time it got so hot it ended up crashing the economy. Manufacturing, by contrast, is a mess, with the dollar’s strength and oil’s weakness doubling up to bash the factory sector.
  • The latest data on both highlight the week’s economic calendar. Data on housing starts, industrial production and two regional manufacturing gauges are set for release, as are the minutes of the Fed’s last meeting and the consumer price index for January.
  • Unlike the last time housing was hot, the sector isn’t seen as capable of single-handedly driving the economy forward. A survey of professional forecasters is finding a gloomier outlook. According to 40 forecasters polled by the Philadelphia Fed, the U.S. economy will grow 2.1% this year, a half-point worse than what those same forecasters predicted just three months earlier.
  • Average rates on new card offers dipped Wednesday after rising the previous week to a four-year high, according to the CreditCards.com Weekly Credit Card Rate Report.
  • The national average annual percentage rate fell to 15.16 percent after subprime lender Credit One cut its minimum card interest rates so low they rivaled rates offered to consumers with above-average credit scores.
  • Consumers who apply for a Credit One Visa Platinum card are now offered a range of APRs starting at 15.65 percent and topping out at 24.15 percent. Previously, the lowest available rate cardholders with imperfect credit could get was 18.15 percent. Credit One also slashed the Platinum card's minimum annual fee range from $35 to starting at $0 while leaving the card's $100 maximum fee alone.

From ZIRP to NIRP: What's the Fed's next move?

Source: CNBC Category: Banking Industry
  • Negative interest rates in the U.S. may seem like a far-fetched idea, but the Federal Reserve is telling banks to prepare, just in case.
  • For the first time ever, the governing agency and U.S. central bank is requiring banks to include, in a round of stress tests commencing this year, to prepare for the possibility of negatively yielding Treasury rates. The scenario is purely hypothetical and not a forecast, according to a Jan. 28 Fed news release .
  • However, the development is part of a larger scenario of a world where zero rates are morphing into negative rates. This is how beggar-thy-neighbor monetary policies work, and perhaps why they ultimately fail.

Long-term bear turns bull on financials

Source: CNBC Category: Economy News
  • Energy, economic data and recently the financials sector continue to weigh on the market, raising questions on the odds of a recession, or whether the Fed will raise interest rates.
  • "I think that a lot has to go right for the Fed to feel as comfortable as they were in December," global chief investment strategist at Citi Private Bank, told "Closing Bell" on Monday. "The Fed could come back to its comfort zone by the end of the year," he said.
  • Wieting suggested that uncertainty in the financials was able to sideline the committee in January. While 9 out of 10 sectors of the S&P were negative Monday, one of the greatest contributors was the financials sector, down almost 3 percent. It hit new 52-week lows on the day. The S&P ended down 27 points Monday.