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News Scan Mar 2016

Credit Card News, Economy News, Banking Industry News - Mar 2015
  • Loyalty programs in Credit Cards: Earlier
    • Rewards can be used in future at physical Point of sell.
    • Issuer’s goal was to be at: TOP OF WALLET
  • Loyalty programs in Credit Cards Now:
    • Rewards can be used in future at virtual (online) and Physical point of sell.
    • Issuer’s goal now is to be at: TOP OF PHONE
  • Key drivers for these change:
    • American Express announced a new mobile app that will allow membership rewards to be used at the POS
    • Rapid increase in Apple/Samsung/Android Pay, and online wallets
    • Issuers started offering points for loading a card into Apple Pay/Mobile App
  • Challenges for Credit Union:
    • Use the digital wallet and use social media to spread the word.
    • Create the type of behavioral changes needed for the next generation of loyalty programs.

Banking on the Unified Wealth Model

Source: fiserv Category: Banking Industry
  • Current-state wealth management platforms enable consumers to evaluate investment and retirement accounts in relation to cash-flow analysis and long-term investment goals.
  • New apps provide clients with an aggregated view of banking, mortgage, savings and credit accounts, as well as automated payment functionality.
  • Many other firms will find up-sell opportunities in this new environment. Providers that plan to remain autonomous while expanding services might benefit from creating or enhancing investment partnership programs that banks can then market to high-net worth investors on retail platforms.
  • By streamlining with banking sector technology, professional services and accounting firms might gain perspective and data essential to align investment, tax mitigation and lifestyle management objectives, finally realizing the vision of the unified wealth network.

Easter Commerce Hops All Over The Place

Source: WSJ Category: Banking Industry
  • According to the National Retail Federation (NRF), American consumers will be buying stuff in record numbers this Easter, with purchases related to the holiday expected to reach $17.3 billion. Broken down to an average spend of $146 per person, that’s the highest figure tallied in the 13-year history of the NRF’s Easter Spending Survey
  • Some of the key spending areas according to survey are:
    • $5.5 billion will be spent on food
    • $2.4 billion will be spent on candy
    • $2.7 billion will be spent on gifts
  • The average consumer cannot and will not attempt to justify spending money on whatever whim moves them, at any day of the year. What they’ll do instead is find specific events — particularly widely recognized holidays — to treat others (and themselves) to a little something extra.
  • Monetary policy easing in Europe and Japan hasn’t had much of an impact on exchange rates this year, with both the yen and euro strengthening against the dollar.
  • Monetary policy easing typically reduces the value of a currency, which both these central banks need if inflation is going to rise below current low levels.
  • Monetary easing has driven investors into longer dated securities, since the return on bonds with closer maturities is now so low.
  • In Europe, a bout of panic about credit in February has completely faded since the ECB announced its intention to buy up investment grade corporate debt later this year.
  • Making it easier for companies to raise cash encourages them to borrow and invest. There is a spillover impact for smaller firms. Making it easier for large companies to borrow facilitates their own ability to offer credit across their sectors.


Source: pymnts Category: Credit Card News
  • The FICO score has been a central part of consumer lending for the last 3 decades; however for the last 12 months or so, it has been challenged by an increasingly loud chorus of voices questioning whether it is obsolete
  • There are new entrants in the lending business who are backed by algorithms that they claim to do a better job in gauging the credit worthiness of potential borrowers.
  • To their support, the federal government pitched in and introduced HR4211 – the Credit Score Competition Act of 2015, which would allow Fannie Mae and Freddie Mac to use alternate credit scoring models, apparently to remove monopoly and have a level ground.
  • At first look, this might not seem to be a good news for Fair Issac (the entity behind the FICO score); however, the recent surge in default rates on some alternative lending platforms coupled with changing economic conditions have made the FIs to fall back to the good, old standard score.
  • Here’s a new definition of March madness: Stocks going up when prospects for the U.S. economy are going down.
  • Both Wall Street and the Fed still think the U.S. economy is going to be OK. The problem is mostly outside the U.S. Slower global growth has rattled markets around the world, hurt American exports and spurred other central banks to cut interest rates.
  • “Businesses are still cautious,” said Sam Bullard, senior economist at Wells Fargo Securities. “There’s more to lose and less to gain if they make the wrong decision about sales prospects going foward.”
  • Weaker profits might be partly to blame. The government’s third and final report on fourth-quarter GDP on Friday is expected to show that corporate earnings fell for fourth time in the past five quarters.
  • That’s a bad sign. If profits don’t pick up soon, there’s little reason to think companies will boost investment or continue to hire new workers at the current rate.
  • U.S. banks including Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co are spinning out or selling a range of tools that pertain to data security, mobile applications and "systems integration," the process of flattening layers of aging technology.
  • Goldman in their joint venture, which was announced in October, Synchronoss will market and sell Goldman's products, and the bank will receive a portion of earnings.
  • Morgan Stanley has started to take a similar tack and is looking to commercialize a technology it created called Treadmill, a so-called container management platform.
  • JPMorgan in February, the bank sold software it developed internally that smooths out the process of settling syndicated loan trades.
  • The increase influences rates paid on savings and interest earned on loans, making saving money more lucrative and borrowing more expensive. Credit unions can expect rate changes on most financial products including credit cards, mortgages, savings, CDs, and car loans.
  • The announced 25 bps increase, this creates an environment that credit unions were not familiar with since before the economic downturn. As a result, credit unions will need to be more focused on the credit card rate sensitivity of their cardholders.
  • A concentration around improved penetration, retention, activation and usage can help a credit union withstand the adverse effects of shrinking margins and the threat of declining demand so they can maintain a healthy and profitable program in 2016
  • To keep Member loyal , a credit union should provide complete product suite that is they should be enabled to provide emerging payments options like Apple Pay, Samsung Pay and Android Pay.
  • The world economy is visibly sinking, and the policymakers who are supposed to be its stewards are tying themselves in knots. The International Monetary Fund, having just downgraded its forecast for global growth, warned the assembled G20 attendees that yet another downgrade was pending.
  • The motivation is sound: someone needs to do something to keep the world economy afloat, and central banks are the only agents capable of acting. Below are some advises:
  • Governments should borrow to invest in research, education, and infrastructure. Currently, such investments cost little, given low interest rates
  • Productive public investment would also enhance the returns on private investment, encouraging firms to undertake additional projects.

Is 2016 the Tipping Point for Mobile Payments?

Source: cutimes Category: Credit Card News
  • According to eMarketer.com, the U.S. market is expected to triple this year to $27.05 billion, up from $8.71 billion in 2015. Also, the number of people making proximity payments is expected to increase by 61.8% to more than 37.5 million.
  • The emerging economics has been fastest adopters of technology compare to US as the latter’s economy reliance on legacy systems was put in place years before mobile existed.
  • Flawless Utility and experience , special offers and points and P2P payments are some of the factors leading to increase in mobile payments
  • In order to enhance the mobile payments, credit unions are advised to have tools which both simplify mobile and online transactions for members and provide them with a valuable layer of added security
  • The World Bank estimates the U.S. accounted for almost 23% of global growth last year, its highest contribution since 2003. This year, the U.S. is expected to contribute a still-strong 21% with faster growth than many advanced nations.
  • “The U.S. economy alone can’t pull the global economy along. We simply don’t have the torque” said Timothy Adams, head of the Institute of International Finance, a trade group representing financial institutions.
  • In Germany, the U.S. consumer has already helped. Exports to the U.S. rose 19.4% between January and November of last year, offsetting a 4.3% drop in exports to China, according to the German statistics office.
  • For emerging markets, focusing too much on exporting to the U.S. could bind them to American economic cycles, putting them at the mercy of not just U.S. monetary policy but also the whims of American consumers.