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News Scan June 2016

Credit Card News, Economy News, Banking Industry News - Apr 2014
  • The Federal Reserve gave the go-ahead to most banks to lift dividends and increase stock buybacks, a sign of the growing recognition the regulator has afforded the capital raised by the financial sector.
  • The U.S. arm of Banco Santander and parts of Deutsche Bank — both units of European-based institutions — failed on what were called “qualitative” concerns.
  • The Fed said the 33 banks had increased their common equity by more than $700 billion since 2009, lifting the ratio of high-quality capital to risk-weighted assets to 12.2% from 5.5%.
  • All of the banks passed the Fed’s stress test, which assesses a bank’s ability to withstand severe financial and economic shocks. These banks hold more than 80% of the total assets of all U.S. bank holding companies.
  • When it comes to credit cards, many Americans are doggedly attached to their paper statements.
  • A new survey from CreditCards.com found that 93 million credit card holders are still receiving their statements on paper instead of online, and 43 million of them actually prefer it that way.
  • Nearly 50% of those who are receiving paper financial statements say they would be willing to pay to get those mailings if they had to.
  • A recent study by PYMNTS.com found consumers increasingly demand Omni channel services, and when merchants fail to provide them, the majority will take their business elsewhere.
  • Less than 5 percent of consumers tend to avoid digital methods altogether when planning a purchase
  • 62 percent of consumers perform research online before visiting a store.
  • 69 percent of shoppers would be more likely to shop in-store if the store offered self-help technologies such as kiosks and interactive displays.
  • Despite a high demand and increased competition for digital banking solutions, only about one in five banking organizations offer consistent end-to-end digitization for any given process. This is a vast missed opportunity.
  • As consumers move towards greater digitalization of all aspects of daily life and competition enters the marketplace with superior digital offerings, financial institutions continue to fall short on providing optimal end-to-end digital journeys.
  • This impacts banking’s ability to provide a positive customer experience, a traditional bank’s competitive cost and revenue structure and the ability to create new digital solutions.
  • Banking organizations should take the following steps:
    • Evaluate the Value of Change
    • Conduct Assessment of Current Capabilities
    • Visualize Success
  • It is no longer a matter of whether digitalization of the customer journey in banking is needed. The consumer is already demanding this level of engagement and moving relationships based on an organization’s ability to meet their expectations in an increasingly digital marketplace.
  • Malicious attacks – Hackers have wide range of tool that can access information. They have a wide range of tools at their disposal including malware which can come in many forms, such as: spyware, backdoor access points, export data, capturing of stored data, command & control and downloader systems.
  • Application vulnerabilities - Having outdated software or web browsers is a serious security concern. CU should update their systems whenever they become available.
  • Inadequate security controls - Having clearly defined, successfully executed security controls in place is key to keeping your network and data safe.
  • Internal Threats - In any system the most common error is the human error. Employees should be well educated about security controls
  • Physical Loss - Electronics are among the top stolen items, but a thief isn’t just stealing a laptop or cell phone, they are stealing all the data that item has on it as well. But measures can be put in place to avoid too much damage coming from it.

Being ‘Just a Bank’ is Not Enough

Source: thefinancialbrand Category: Banking Industry
  • Powerful trends are transforming the banking industry, creating a consumer-to-business era where players like Google, Apple, Facebook and Amazon are setting the tone for the future.
  • In some instances, these large technology giants have begun to offer competing financial services such as mobile payments, digital wallets, P2P and even lending services.
  • 5 Key Role(s) to Get Closer to the Consumer
    • Relationship Player
    • Platform Provider
    • Core Financial Services Utility/Manufacturer
    • Innovation Playmaker
    • Digital ID Enabler
  • By learning from and applying the approach of the GAFA firms (Google, Apple, Facebook and Amazon), costs can be reduced while revenue opportunities multiply. Using these larger technology firms as a guide, banking can do better at being accessible 24/7, in real time, leveraging consumer insights to provide contextual financial and non-financial solutions.
  • Android Pay is the most popular proximity mobile payments system in the U.S. But the high-tech space remains a very small sliver of the overall payments market.
  • Android Pay was the top mobile payments app, with 19 percent of respondents saying they had used Google's, followed by a retailer's branded mobile app (with 12 percent) and Apple Pay (11 percent).
  • Household bills were the most popular payment method for mobile, with 6 percent saying they like to use their phones for such transactions.
  • Sixty-one percent of consumers cited security concerns as the primary factor they're hesitant to use mobile payments, and 58 percent of users said privacy was a major reason. Only 14 percent of those polled said they had no hesitations about using mobile payments offerings.
  • 64 percent of 18- to 25-year-olds were making mobile purchases in the last year. These users are crucial if mobile payments are ever to gain real traction and become a mainstream alternative to cash and credit cards.

Majority of CUs See Loan Balance Growth: NCUA

Source: cutimes Category: Credit Union News
  • More than half of the federally insured credit unions in the U.S. reported loan balance growth over one year ending in the first quarter of 2016, according to the NCUA.
  • Median loan growth equaled 4.5% during that time period, while deposit and share growth was 3%.
  • The median loan to share ratio creeped above 60% and the median delinquency rate was basically unchanged from a year ago, at 0.7%.
  • The statement came two weeks after the Federal Bureau of Investigations sent a notice cautioning US banks after the hacking of Bangladesh's central bank. The FBI message warned of a "malicious cyber group" that had already targeted foreign banks. In February, hackers stole $81m (£56m) from Bangladesh's account with the Federal Reserve Bank of New York.
  • The hackers used the Bangladesh central bank's Swift credentials to transfer money to accounts in the Philippines. Swift is the system banks use to exchange messages and transfer requests. The hackers attempted to steal nearly $1bn, but several of their requests were rejected because of irregularities.
  • The Federal Financial Institutions Examination Council (FFIEC) - a group of US banking regulators- issued a statement encouraging banks to check the security of their links with interbank messaging and payment systems.
  • The FBI sent its warning to US banks on 23 May, telling them to pay particular attention to potentially fraudulent international transfer requests.
  • Visa Inc. introduced the Visa Digital Commerce App, an issuer-branded mobile commerce solution that enables financial institutions to offer their own mobile app to customers with valuable card management services – ultimately expanding and strengthening their Visa credit, debit and prepaid card offerings.
  • Through the mobile app, issuers can offer services such as real-time account balance information, card controls, alerts that inform accountholders about recent transactions or fraud concerns, and innovative token services that bring greater security to contactless payments, while keeping their brand and relationship with the cardholder front and center.
  • With the introduction of “Visa Token Service” and the recently launched “Visa Developer Platform”, Visa is helping to lead the transformation of payments from plastic to digital. The Visa Digital Commerce App is another important advancement in this evolution to provide issuers with additional deployment flexibility to better support their mobile strategies and capabilities.
  • According to John Fenton, President & CEO, Affinity Federal Credit Union, the app helped them quickly deliver a robust & highly intuitive mobile app to their members that allows them to manage & use their cards on their terms. The CU is already experiencing a higher usage rate from members who transact in their digital space.

Credit union lending up despite consolidation

Source: housingwire Category: Credit Union News
  • Lending increased year-over-year in the first quarter for credit unions as loans grew in every major category including total first-mortgage loans outstanding and other real estate loans
  • During the first quarter, first-mortgage loans outstanding increased annually by 10.4% to $327.9 billion, and other real estate loans increased 3.9% annually to $74.3 billion
  • Overall membership also increased at credit unions to nearly 104 million, an increase of 3.8%. Credit unions added 1 million new memberships within the last year, and 13 million during the last five years, all while consolidating.
  • The number of credit unions fell to 5,954 at the end of 2015, a decrease of 252 less than a year ago. The lack of new digital technology could be causing some credit unions to close. Credit unions are no exception to the growing demand for financial institutions to go digital.

U.S. Banks’ Profits Show First Drop in 2 Years

Source: cfo Category: Banking Industry
  • The industry's first-quarter results were mixed, with loan balances growing at the highest rate since 2009 and operating revenue up 2.7%
  • In its latest Quarterly Banking Profile, the Federal Deposit Insurance Corp. said federally-insured commercial banks and savings institutions reported aggregate net income of of $39.1 billion in the first quarter of 2016, down $765 million (1.9%) from a year earlier
  • Overall net interest margins in the first quarter remained low by historical standards at an average of about 3.1%, although community banks averaged nearly 3.6%.
  • The number of loan payments by commercial and industrial borrowers past due increased 65%, to $9.3 billion, in the first quarter.
  • Leadership of the United States will be turning back the tide of increasing regulatory burdens facing credit unions. Since passage of Dodd-Frank in 2010, led to the creation of the Consumer Financial Protection Bureau (CFPB), regulatory costs for credit unions have risen by 39%
  • This policy hits all of America’s credit unions regardless of size and impacts the financial benefits they extend to members, it hammers small credit unions and the communities they serve particularly hard.
  • CUNA’s comprehensive regulatory burden study, showed the regulatory cost impact on the credit union industry to be $6.1 billion in 2014 and the lost revenues to credit unions from services that were discontinued or reduced because of added regulation are at least an additional $1.1 billion.
  • As federally insured financial institutions there will be regulations, but the recent increase has been excessive, preventing the benefit to members and communities as the spend is more on compliance
  • A leading international group Wednesday downgraded its forecast for the U.S. economy and implored policymakers around the world to “act now” to boost growth.
  • The Organization for Economic Cooperation and Development, composed of the 34 most advanced economies, said the Federal Reserve and other central banks have done all they can with low – and in some cases below-zero – interest rates.
  • Now it is up to governments in the U.S. and elsewhere to increase spending to jolt the global economy out of a “low-growth trap.”
  • “Without comprehensive, coherent and collective action, disappointing and sluggish growth will persist, making it increasingly difficult to make good on promises to current and future generations,” Catherine L. Mann, the OECD’s chief economist, said as the group released its semiannual world economic outlook.
  • The U.S. economy will expand 1.8% this year, down from 2.4% last year, the OECD said. The forecast is down from 2.5% in November and 2% in an interim report in February.

U.S. Credit Card Debt Set to Reach New High

Source: nwahomepage Category: Credit Card News
  • Credit card debt in the U.S. is on track to reach $1 trillion this year, almost reaching the previous record of $1.02 trillion set back in 2008 during The Great Recession.
  • "The most important thing credit card holders can do is to not carry any revolving debt," said Mark Foster, Director of Education at non-profit Credit Counseling of Arkansas (CCOA). "Pay the debt off in full every month. People often have balances on several cards and struggle with a sizable debt load.
  • Foster says using credit can be a positive experience, but the way the credit scoring system works is that the less debt you owe on credit cards, the higher your credit score. Credit card debt doesn't have to be maxed out or over-the-limit to severely damage a person's credit score.