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News Scan May 2016

Credit Card News, Economy News, Banking Industry News - Apr 2014
  • Mobile wallets continue to shake up the payments industry with new offerings entering the market on a frequent basis. The speed and convenience of these emerging payment methods make them attractive options for busy, tech-savvy consumers.
  • Just like other payment methods, however, mobile payments run the risk of fraud. Community financial institutions (FIs) should educate their cardholders on the following best practices to avoid falling victim to fraudsters taking advantage of mobile payment platforms.
  • Know your app — Remind consumers to only install apps from trusted sources. Encourage consumers to review user ratings and reviews prior to installing a mobile payment app.
  • Password protection — The importance of enabling password settings and creating unique passwords on mobile devices cannot be stressed enough. Educate consumers on the ways these additional layers of security help
  • Connections matter — Advise consumers to be cautious of any network to which they connect their devices. Remind them secure networks will require passwords and will be identified as Wi-Fi Protected Access (WPA) or Wi-Fi Protected Access II (WPA2).
  • Keep it to yourself — Instruct cardholders to never share sensitive information over the phone, via email or mobile apps. And to keep passwords, account numbers and social security information private.

New home sales surge in April

Source: cnbc Category: Economy News
  • Based on the data released from The Commerce Department, there is surge in new home sales which is more than eight-year high in April. The sales jumped 16.6 percent to a seasonally adjusted annual rate of 619,000 units, the highest level since January 2008. The percent increase itself is the largest since January 1992.
  • The report came following a fairly positive data on home resales and residential construction. It also added to retail sales and industrial production reports in suggesting that the economy was gathering momentum after growth almost stalled in the first quarter.
  • New home sales are volatile month-to-month and April's increase probably exaggerates the housing market strength with an increase in three regions, but a drop in the Midwest. New single-family homes sales soared highest in 52.8% in the Northeast, followed by 18.8% in the west and 15.8% in the populous South, while it fell by 4.8 percent in the Midwest.
  • With supply tight, the median price for a new home increased 9.7 percent from a year ago to a record $321,100. The housing market is being reinforced by a tightening labor market, which is starting to lift wages. But a shortage of properties available for sale remains a hurdle and house prices have risen faster than wages, putting aside some first-time buyers.

EMV Gaining Speed for U.S. ATMs

Source: cuinsight Category: Banking Industry
  • According to a survey 2016 ATM Channel EMV Readiness Survey from the ATM Industry Association (ATMIA) following were results regarding EMV adoptions
  • 51 percent of the 120 respondents have already upgraded more than half of their fleet.
  • 19 percent of those machines were reported as actively capable of accepting EMV chip transactions
  • This percentage is projected to reach 58 percent by the end of 2016, but ATIMA 2014 report projected it to reach 88% by end of 2015
  • Visa implements their own liability shift on 1st October 2016.
  • “We’re seeing a lot of fraud in the U.S. as criminals try to exploit the lack of EMV protection before it is implemented” said Martin Warwick, FICO’s fraud chief in Europe, the Middle East and Africa.
  • ATMIA’s survey report is good news for the industry – reporting a significant portion of ATM operators on their way to EMV compliance. However, as fraud migration in other countries has shown, this puts non-compliant ATMs at even greater risk.
  • A recent report has found that 8 out of 10 banks and credit unions in the United States have made increasing their life insurance sales a priority.
  • Research industry group LIMRA has released its Bank and Credit Union Life Insurance Study for 2016, and it reveals that 78% of American banks and credit unions with established life insurance programs have made selling the product a priority at their institutions.
  • LIMRA notes that banks in the US have had trouble generating life insurance sales in the past, and says many remain unsatisfied with their current programs. However, about half say they are gaining ground
  • Approximately 50% of all bank and credit union life sales are for single premium products, and 75% of the institutions surveyed indicated they wish to change this and make recurring premium products a core part of their sales mix.
  • Bank and credit union optimism is also supported by a finding in the 2016 Insurance Barometer Study that shows 25% of consumers are willing to buy life insurance from banks, with Millennials and Gen X consumers more likely (both 30%) than other age groups
  • U.S. factory output expanded in April as makers of machinery and cars posted solid increases in production. Manufacturing output rose 0.3%, Overall industrial output rose 0.7%
  • The gain in factory output, coming after recent strong retail sales data, bolsters the view that the U.S. economy could re-accelerate in the second quarter after growing sluggishly in the first three months of the year.
  • Manufacturing output has been flat or negative in four of the last six months. Mining output, another component of total industrial production, fell 2.3 percent. But there are signs the worst of the industrial sector's downturn is over, with recent manufacturing surveys turning higher
  • The largest gains in manufacturing came from producers of machinery, who increased output by 2.4 percent. Production of motor vehicles and auto parts increased 1.3 percent. With output increasing, industrial capacity use jumped 0.5 percentage point to 75.4 percent.
  • Jorie Johnson, a financial planner with Financial Futures in New Jersey, said in an email. "Typically, it takes seven years after removing a negative item for it to be 100% removed from affecting your credit score."
  • Items that are particularly damaging to your credit score include bankruptcy, tax liens, accounts that have gone to collections and foreclosures. You'll likely see a substantial increase in your score when these items age.
  • The best way to build your credit score is to have credit issued in your name, to use it monthly and to pay it on time, Johnson said. "If you have a credit card, every few months you should call to get the credit amount allowed increased. It is all about ratios: available credit to used, or outstanding, credit."
  • Keep in mind, increasing your credit limit doesn't mean you should spend more. Many financial and credit experts recommend keeping credit card balances at less than 30%, and ideally at less than 10%, of the credit limit to boost credit standing.
  • The use of APIs by banks is becoming increasingly common as they help to drive speed and cost-effectiveness compared to traditional legacy systems. Developing a global Open Banking Standard would set the framework for security and consumer protection as data sharing increases.
  • Under the Open Banking Standard, banking data will be shared through secure open APIs so that customers, be it individuals or businesses, can more effectively manage their wealth.
  • The Open Banking Standard, opens up a new set of banking models that will help consumers transact, save, borrow, lend and invest their money in better ways than before.
  • In the United States, fintech companies like Mint pioneered the concept of independent financial apps that aggregate various bank accounts and credit cards to provide consumers with a 360-degree financial view and the ability to compare various banking products.
  • Google is now adding more requirements for ads for and related to personal loans.
  • This will essentially not allow loans like payday loans, which are often predatory, putting individuals at risk of greater debt and financial strife.
  • Credit unions now have a leg up on advertising, to help people get the funds they need without ridiculous terms and rates.
  • In order for you to successfully get your ads through the Google review, CU need to have proper disclosures including: Minimum and maximum period for repayment, Maximum Annual Percentage Rate (APR), which includes the interest rate plus fees and other costs for a year, A representative example of the total cost of the loan, including all applicable fees
  • If your loan doesn’t have all the disclosures, then no Googles for your CU.
  • The U.S. regulator responsible for ensuring the soundness of the country's banking sector and so Office of the Comptroller of the Currency will assess the spill over effect of continued low oil prices and evaluate the banks' practices for stress testing affected loans. Credit problems could arise from commodity volatility and other specialized risks even though energy loans tended to be well-managed and conservatively underwritten.
  • Stress testing of banks involves calculating how an institution's balance sheet would be affected by various hypothetical situations. A sharp fall in oil prices during the last two years has squeezed the energy sector, making it difficult for companies to pay back loans from banks made during earlier boom times.
  • The agency also plans to focus on how banks measure interest rate risk to ensure they properly assess "vulnerability to changes in interest rates." and "funding pressure that may arise with deposits."
  • The comptroller's office also plans to analyse how well banks are complying with anti-money laundering laws, handling cybersecurity threats, managing their concentrated risks, planning their business strategies and meeting "heightened standards for risk governance."

CUNA brings debt collection concerns to CFPB meeting

Source: cuna Category: Credit Union News
  • The CFPB issued an advance notice of proposed rulemaking (ANPR) in 2014, providing a list of 162 questions related to the rulemaking. CUNA urged credit unions and state leagues to comment.
  • During Monday’s meeting, CUNA reiterated concerns with this potential inclusion of first-party creditors in the rule, as well as problems that could stem from adding even more regulatory burden to credit unions.
  • CUNA also urged the agency to include small credit unions in an upcoming Small Business Regulatory Enforcement Fairness Act panel that will look at the impact the rule would have on small businesses.
  • CUNA is closely following both debt collection enforcement actions and the rulemaking on this topic.
  • TMG Financial Services announced an expansion of its ATIRAcredit card rewards program to empower charitable giving through points redemption.
  • Members of the Des Moines, Iowa-based CUSO's ATIRAcredit cards may designate redeemed points for up to three charities of their choice from a list of more than 1,000 major and local charities and causes.
  • “The way consumers view charitable giving is changing, particularly across generations. Our partners want to transcend generational differences by continuing to create initiatives that connect with cardmembers in meaningful ways,” TMGFS Relationship Manager Brian Storey said.
  • The giving impact of individuals correlates with the transformation in giving attitudes, TMGFS said in a release. Previous generations were motivated primarily by tax deductions.
  • Individual giving is on the rise in both current and inflation-adjusted dollars. According to Giving USA 2015, individuals make up the vast majority of contributions received by nonprofit organizations. In 2014, individual giving amounted to $258.51 billion, an increase of 5.7% in current dollars from 2013.
  • A top US rate-setter reiterated a moderately upbeat view on that country's economy, highlighting a recent increase in the so-called labour force participation rate.
  • Speaking at the City Week conference in London, the president of the Federal Reserve bank of Chicago, Charles Evans, emphasised strength in the labour market as the key element in his view of the American economy.
  • America's economy was on course to grow 2.5% in 2016, Evans said.
  • More recently, labor-force participation has improved noticeably, he added.
  • For years, many consumers opening credit cards or using almost any kind of financial product have been banned from challenging those companies in class action lawsuits.
  • Under the proposed rules financial companies would no longer be able to use arbitration clauses that prevent consumers from taking part in class action suits.
  • “Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them,” Richard Cordray, director of the Consumer Financial Protection Bureau, said
  • The CFPB estimates that tens of millions of consumers are subject to arbitration clauses. But despite their widespread use, 75 percent of consumers do not know if the clauses apply to them in a statement.
  • The bureau will now collect feedback during a 90-day comment period that will be incorporated into the final draft of the rule. The rule also needs to be reviewed by the Office of Management and Budget before it can be implemented.

Credit Union Auto Lending Climbs: CU Direct

Source: cutimes Category: Credit Union News
  • One in four vehicles sold are being financed by credit unions, which represents a 20% year over year increase, New car sales are expected to reach 17.7 million in 2016, In addition, more than one in four credit union members have auto loans.
  • The percentage of truck purchases has also continued to grow. For every vehicle sold, 1.4 trucks are now sold, easing also remains a popular option. In 2011, 19% of total vehicle transactions were leases; that has grown to 30% so far this year. Leasing has become popular around the world, while in the United Kingdom, 61% of vehicle transactions now consist of leasing arrangements.
  • Near prime and subprime borrowers are the fastest growing segments of the market, with more than 36% of the market now being non-prime, Loan delinquencies did not increase during the fourth quarter of last year compared to the same time period in 2014
  • Auto loans now comprise one-third of credit unions’ portfolios and are the fastest-growing part of their portfolios. At the same time, the indirect lending channel is the largest source of that growth, having almost doubled in the last five years.