Student loans account for a growing number of complaints service members and veterans make about financial products.
\nWhile consumers in general began filing more complaints when payments for federally owned student loans restarted in October 2023, service members face some unique challenges, the Consumer Financial Protection Bureau (CFPB) said in a Tuesday (Sept. 24) press release outlining findings from its Office of Servicemember Affairs Annual Report.
\nFor example, service members stationed overseas may have difficulty reaching their student loan servicer during regular call center hours, according to the release. Service members complained to the CFPB that they spend hours trying to reach their student loan servicer and often find that the call fails to resolve the issue.
\nAnother common complaint involves income-driven repayment (IDR) plans, the release said. Because service members often must move every two or three years, their spouses often change jobs and see a drastic change in income. Service members often complain to the CFPB that their loan servicers incorrectly calculate their monthly repayment amounts under IDR plan.
\nService members also complain that colleges and universities withhold transcripts when trying to collect a debt or disputed fees, per the release. Service members must frequently move to new duty stations, so they need timely access to transcripts.
\n\u201cService members who have worked hard to get an education while serving our country should not face additional obstacles that cause financial strain or put career opportunities at risk,\u201d CFPB Director Rohit Chopra said in the release. \u201cThe CFPB is committed to supporting and protecting the financial well-being of service members, veterans and their families.\u201d
\nBeyond student loans, all major consumer financial products were the subject of more complaints submitted to the CFPB by service members in 2023, according to the release. The number of such complaints was up 27% from 2022 and up 98% from 2021.
\nThe CFPB said in January that it was monitoring the experiences of student borrowers after the resumption of federal student loan repayments.
\nThe regulator found at that time that student borrowers were encountering long hold times when trying to reach student loan servicers, delays in application processing times for IDR plans, and inaccurate billing statements and disclosures.
\nThe post Service Members’ Complaints About Student Loans Rise, CFPB Says appeared first on PYMNTS.com.
\n", "content_text": "Student loans account for a growing number of complaints service members and veterans make about financial products.\nWhile consumers in general began filing more complaints when payments for federally owned student loans restarted in October 2023, service members face some unique challenges, the Consumer Financial Protection Bureau (CFPB) said in a Tuesday (Sept. 24) press release outlining findings from its Office of Servicemember Affairs Annual Report.\nFor example, service members stationed overseas may have difficulty reaching their student loan servicer during regular call center hours, according to the release. Service members complained to the CFPB that they spend hours trying to reach their student loan servicer and often find that the call fails to resolve the issue.\nAnother common complaint involves income-driven repayment (IDR) plans, the release said. Because service members often must move every two or three years, their spouses often change jobs and see a drastic change in income. Service members often complain to the CFPB that their loan servicers incorrectly calculate their monthly repayment amounts under IDR plan.\nService members also complain that colleges and universities withhold transcripts when trying to collect a debt or disputed fees, per the release. Service members must frequently move to new duty stations, so they need timely access to transcripts.\n\u201cService members who have worked hard to get an education while serving our country should not face additional obstacles that cause financial strain or put career opportunities at risk,\u201d CFPB Director Rohit Chopra said in the release. \u201cThe CFPB is committed to supporting and protecting the financial well-being of service members, veterans and their families.\u201d\nBeyond student loans, all major consumer financial products were the subject of more complaints submitted to the CFPB by service members in 2023, according to the release. The number of such complaints was up 27% from 2022 and up 98% from 2021.\nThe CFPB said in January that it was monitoring the experiences of student borrowers after the resumption of federal student loan repayments.\nThe regulator found at that time that student borrowers were encountering long hold times when trying to reach student loan servicers, delays in application processing times for IDR plans, and inaccurate billing statements and disclosures.\nThe post Service Members’ Complaints About Student Loans Rise, CFPB Says appeared first on PYMNTS.com.", "date_published": "2024-09-24T18:54:16-04:00", "date_modified": "2024-09-24T18:54:16-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/09/service-members-student-loans.jpg", "tags": [ "CFPB", "Consumer Financial Protection Bureau", "loans", "News", "Office of Servicemember Affairs Annual Report", "PYMNTS News", "Rohit Chopra", "student loans", "What's Hot", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2100733", "url": "https://www.pymnts.com/loans/2024/digital-platforms-promise-real-time-fix-loan-market-fax-problem/", "title": "Digital Platforms Promise Real-Time Fix for Loan Market\u2019s Fax Problem", "content_html": "For every fragmented ecosystem, there\u2019s a digital innovation being built and scaled to streamline it.
\nThe global syndicated loan market, a $7 trillion-plus industry where loans are extended by multiple lenders to a single borrower, is no different. These loans, often ranging from millions to billions of dollars, are too large for any one lender to handle alone. Instead, various financial institutions \u2014 banks, funds and other entities \u2014 join to pool their resources and share the risk.
\n\u201cFaxes and PDFs are still flying around,\u201d Versana Founding CEO Cynthia Sachs told PYMNTS. \u201cThey are still a significant part of how information moves in this market. And firms need to ultimately processes them and get them into systems.\u201d
\nData on loan performance, cash flows and interest payments is \u2014 in many cases \u2014 still being shared via manual processes, slowing down the system and leaving room for errors, she said.
\nSince the turn of the 21st century, what began as a private, niche space grew into a massive network of corporate loans, involving thousands of lenders, funds and financial institutions. But with its growth came operational challenges, as, despite this rapid growth, the infrastructure supporting the market remained largely outdated, with major, global players relying on antiquated processes to manage crucial data flows.
\n\u201cEveryone has to maintain their own books and records, which is a complicated, inefficient process when you\u2019re dealing with millions of dollars and multiple players,\u201d Sachs said. \u201cYou have a whole bunch of different things going on here, and nobody has managed so that everyone has good data to put into the right system to ultimately make the best decision off of.\u201d
\nRecognizing these inefficiencies, major financial institutions have started to embrace digital solutions designed to modernize and streamline in real time the way loan data is processed and shared within the fragmented syndicated loan and private credit ecosystem.
\nWhile big banks like J.P. Morgan, Bank of America (BofA), Barclays and others began to realize that the syndicated loan market needed to be digitized and modernized, regulators, including the Securities and Exchange Commission (SEC) also started to raise concerns about the lack of transparency and the potential risks posed by the current system.
\n\u201cThe SEC started to look at this and said, \u2018This isn\u2019t healthy,\u2019\u201d Sachs explained. \u201cThey didn\u2019t want to step in, but they made it clear that something had to change.\u201d
\nAgainst this backdrop, Versana, a centralized, real-time data platform that offers \u201cgolden source\u201d data for the market was formed, she said. The platform aims to address the inefficiencies plaguing the syndicated loan market and provide a centralized, real-time data hub that can bring clarity, speed and scalability to all players involved \u2014 whether they are originating loans, servicing them or investing in them.
\n\u201cJ.P. Morgan, BofA, Citi and Credit Suisse were the initial investors,\u201d Sachs said. \u201cNow, we\u2019ve grown that to nine investors, including major institutions like Barclays, Morgan Stanley, Deutsche Bank, Wells Fargo and U.S. Bank.\u201d
\nThese financial institutions are not just investors \u2014 they are also contributors to the platform\u2019s data. By committing their data digitally, in real time, from their source systems, they help create a unified, accurate dataset that the entire market can rely on.
\n\u201cFor fund managers, having the right data is critical,\u201d said Sachs, noting that Versana now has data on $2.7 trillion-worth of corporate loans.
\n\u201cIf you\u2019re managing a portfolio of corporate loans, you need accurate, timely information to make decisions and manage your books,\u201d she added.
\nOne of the key benefits of any digital platform is its scalability via network effects. As Sachs noted about Versana, the more institutions that adopt the platform, the more powerful it becomes, offering comprehensive coverage of loan portfolios.
\nThis kind of collaboration is particularly important in the syndicated loan market, where no single institution should realistically take on the risk of a large corporate loan alone. By enabling seamless data sharing between lenders, Versana helps ensure that everyone involved in a deal has the information they need to manage their positions effectively.
\n\u201cOur goal is to bring the entire market together,\u201d Sachs explained. \u201cWhen you have the best data, in real time, you can scale your business and make better decisions.\u201d
\nTo help scale its solution, Versana earlier this month raised $26 million and added Barclays, the company\u2019s first British bank, to its platform.
\nStill, Sachs acknowledged that while some institutions are eager to adopt new technologies, others are more hesitant.
\n\u201cSome of our clients are early adopters,\u201d she said. \u201cThey see the value of the platform and are ready to integrate it into their accounting software right away. Others are more cautious and want to wait until there\u2019s more coverage before they fully commit.\u201d
\nSachs said this is just the beginning.
\n\u201cOnce we have all this great data centralized in one place, we can build new products on top of it,\u201d she said. \u201cVersana is not just about modernizing the market. We want to continue to innovate and offer new solutions that help the market grow and scale. Everyone wins when the market has the best data and the technology to use it.\u201d
\nThe post Digital Platforms Promise Real-Time Fix for Loan Market\u2019s Fax Problem appeared first on PYMNTS.com.
\n", "content_text": "For every fragmented ecosystem, there\u2019s a digital innovation being built and scaled to streamline it.\nThe global syndicated loan market, a $7 trillion-plus industry where loans are extended by multiple lenders to a single borrower, is no different. These loans, often ranging from millions to billions of dollars, are too large for any one lender to handle alone. Instead, various financial institutions \u2014 banks, funds and other entities \u2014 join to pool their resources and share the risk.\n\u201cFaxes and PDFs are still flying around,\u201d Versana Founding CEO Cynthia Sachs told PYMNTS. \u201cThey are still a significant part of how information moves in this market. And firms need to ultimately processes them and get them into systems.\u201d\nData on loan performance, cash flows and interest payments is \u2014 in many cases \u2014 still being shared via manual processes, slowing down the system and leaving room for errors, she said.\nSince the turn of the 21st century, what began as a private, niche space grew into a massive network of corporate loans, involving thousands of lenders, funds and financial institutions. But with its growth came operational challenges, as, despite this rapid growth, the infrastructure supporting the market remained largely outdated, with major, global players relying on antiquated processes to manage crucial data flows.\n\u201cEveryone has to maintain their own books and records, which is a complicated, inefficient process when you\u2019re dealing with millions of dollars and multiple players,\u201d Sachs said. \u201cYou have a whole bunch of different things going on here, and nobody has managed so that everyone has good data to put into the right system to ultimately make the best decision off of.\u201d\nRecognizing these inefficiencies, major financial institutions have started to embrace digital solutions designed to modernize and streamline in real time the way loan data is processed and shared within the fragmented syndicated loan and private credit ecosystem.\nReal-Time Digital Data Platforms Are Revolutionizing the Syndicated Loan Market\nWhile big banks like J.P. Morgan, Bank of America (BofA), Barclays and others began to realize that the syndicated loan market needed to be digitized and modernized, regulators, including the Securities and Exchange Commission (SEC) also started to raise concerns about the lack of transparency and the potential risks posed by the current system.\n\u201cThe SEC started to look at this and said, \u2018This isn\u2019t healthy,\u2019\u201d Sachs explained. \u201cThey didn\u2019t want to step in, but they made it clear that something had to change.\u201d\nAgainst this backdrop, Versana, a centralized, real-time data platform that offers \u201cgolden source\u201d data for the market was formed, she said. The platform aims to address the inefficiencies plaguing the syndicated loan market and provide a centralized, real-time data hub that can bring clarity, speed and scalability to all players involved \u2014 whether they are originating loans, servicing them or investing in them.\n\u201cJ.P. Morgan, BofA, Citi and Credit Suisse were the initial investors,\u201d Sachs said. \u201cNow, we\u2019ve grown that to nine investors, including major institutions like Barclays, Morgan Stanley, Deutsche Bank, Wells Fargo and U.S. Bank.\u201d\nThese financial institutions are not just investors \u2014 they are also contributors to the platform\u2019s data. By committing their data digitally, in real time, from their source systems, they help create a unified, accurate dataset that the entire market can rely on.\n\u201cFor fund managers, having the right data is critical,\u201d said Sachs, noting that Versana now has data on $2.7 trillion-worth of corporate loans.\n\u201cIf you\u2019re managing a portfolio of corporate loans, you need accurate, timely information to make decisions and manage your books,\u201d she added.\nThe Evolution of the Syndicated Loan Market\nOne of the key benefits of any digital platform is its scalability via network effects. As Sachs noted about Versana, the more institutions that adopt the platform, the more powerful it becomes, offering comprehensive coverage of loan portfolios.\nThis kind of collaboration is particularly important in the syndicated loan market, where no single institution should realistically take on the risk of a large corporate loan alone. By enabling seamless data sharing between lenders, Versana helps ensure that everyone involved in a deal has the information they need to manage their positions effectively.\n\u201cOur goal is to bring the entire market together,\u201d Sachs explained. \u201cWhen you have the best data, in real time, you can scale your business and make better decisions.\u201d\nTo help scale its solution, Versana earlier this month raised $26 million and added Barclays, the company\u2019s first British bank, to its platform.\nStill, Sachs acknowledged that while some institutions are eager to adopt new technologies, others are more hesitant.\n\u201cSome of our clients are early adopters,\u201d she said. \u201cThey see the value of the platform and are ready to integrate it into their accounting software right away. Others are more cautious and want to wait until there\u2019s more coverage before they fully commit.\u201d\nSachs said this is just the beginning.\n\u201cOnce we have all this great data centralized in one place, we can build new products on top of it,\u201d she said. \u201cVersana is not just about modernizing the market. We want to continue to innovate and offer new solutions that help the market grow and scale. Everyone wins when the market has the best data and the technology to use it.\u201d\nThe post Digital Platforms Promise Real-Time Fix for Loan Market\u2019s Fax Problem appeared first on PYMNTS.com.", "date_published": "2024-09-18T04:00:43-04:00", "date_modified": "2024-09-17T22:48:47-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/09/fax-machine-lending.jpg", "tags": [ "banking", "Banks", "credit", "Cynthia Sachs", "data", "digital transformation", "Featured News", "funding", "Innovation", "Investments", "loans", "News", "PYMNTS News", "Technology", "Versana", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2099976", "url": "https://www.pymnts.com/loans/2024/memo-to-lenders-go-digital-or-go-home/", "title": "Memo to Lenders: Go Digital or Go Home", "content_html": "The benefits of swapping analog, manual processes for digital ones are obvious.
\nBut that doesn\u2019t mean they don\u2019t bear repeating \u2014 especially against a backdrop of fierce demand for streamlined, efficient and customer-friendly financial processes.
\n\u201cDigital basically upends manual, paper-heavy and operationally cost-intensive processes,\u201d Andrea Moe, vice president of customer success at Amount, told PYMNTS during a conversation for the series \u201cWhat\u2019s Next in Payments: How Do You Do Digital?\u201d
\nIt\u2019s these processes that have traditionally defined legacy banking systems, Moe added, stressing that adopting digital tools within the financial services space not only enhances operations and customer engagement, but also drives greater profitability.
\nThis shift is especially important as customer expectations increasingly favor speed, convenience and automation in financial services.
\n\u201cModern money experiences typically engage younger generations of banking customers,\u201d Moe said.
\nAmount\u2019s core offering lies in its loan origination and account opening software solutions. These tools help lenders, from community banks to nonbanking financial institutions, move away from creaking and outdated workflows that result in friction-filled experiences for their customers.
\n\u201cPart of our role is helping our clients with their own customers by looking at the overall effectiveness of their funnel, of their policies, of the ways that they\u2019re mitigating fraud,\u201d Moe said. \u201cAnd each of our customers comes to us with some nuance as it relates to their own unique priorities and what\u2019s important. Together, we help them in striking a balance between risks and outcomes.\u201d
\nThis dual focus ensures that lenders can expand their reach and deepen customer relationships without compromising on security or compliance.
\n\u201cThe time is always ripe for disruption, regardless of the segment,\u201d Moe said. \u201cLenders that typically have relied on in-person relationships and the more traditional modes of application intake, verification and contract signing are also increasingly leaning into digital and automation.\u201d
\nOne of the key insights Moe shared was the shift in digital engagement across different customer groups. While younger generations have long been early adopters of digital financial services, more traditional lenders that have historically relied on in-person relationships are also beginning to try automation and digital processes. The ability to adapt to customer preferences is a critical component of modern banking, and Amount provides the tools necessary to enable that adaptability.
\nAs financial institutions move to embrace the adaptability offered by digital platforms, measuring success becomes both a qualitative and quantitative exercise. According to Moe, data plays a crucial role in showing firms where they can achieve the highest return on investment as they digitize.
\n\u201cLenders can expand their reach, they can add new households, they can also deepen that wallet share within their existing base of customers, too,\u201d she explained, noting that it\u2019s important to think through \u201cnot just the tech, but also the organizational change management that needs to accompany that in order to best facilitate the move from manual to digital.\u201d
\nMoe pointed out that many lenders miss out on potential revenue because customers abandon online applications. Additionally, fraud losses and penalties from compliance infractions can deplete margins. The marketplace is full of digital solutions like Amount\u2019s that address these pain points in a measurable way.
\nFor example, one of Amount\u2019s clients launched a new consumer loan program and saw that 80% of applications were funded without human intervention. Another client reduced application-to-funding time from two weeks to just 15 minutes, underscoring the operational efficiency gains that digital technology can bring.
\nIn an industry that is rapidly evolving, financial institutions are under increasing pressure to modernize their operations. Looking ahead, Moe expressed excitement about the future of digital lending and Amount\u2019s role in shaping it. The company is focused on continuing to develop innovative solutions, including around artificial intelligence, that drive customer engagement, enhance risk management and deliver superior performance outcomes \u2014 all combined with a deep understanding of client needs.
\n\u201cYou\u2019re able to incorporate new technology in a safe and responsible way that drives real efficiencies,\u201d Moe said.
\nThe post Memo to Lenders: Go Digital or Go Home appeared first on PYMNTS.com.
\n", "content_text": "The benefits of swapping analog, manual processes for digital ones are obvious.\nBut that doesn\u2019t mean they don\u2019t bear repeating \u2014 especially against a backdrop of fierce demand for streamlined, efficient and customer-friendly financial processes.\n\u201cDigital basically upends manual, paper-heavy and operationally cost-intensive processes,\u201d Andrea Moe, vice president of customer success at Amount, told PYMNTS during a conversation for the series \u201cWhat\u2019s Next in Payments: How Do You Do Digital?\u201d\nIt\u2019s these processes that have traditionally defined legacy banking systems, Moe added, stressing that adopting digital tools within the financial services space not only enhances operations and customer engagement, but also drives greater profitability.\nThis shift is especially important as customer expectations increasingly favor speed, convenience and automation in financial services.\n\u201cModern money experiences typically engage younger generations of banking customers,\u201d Moe said.\nRevolutionizing Digital Engagement in Lending\nAmount\u2019s core offering lies in its loan origination and account opening software solutions. These tools help lenders, from community banks to nonbanking financial institutions, move away from creaking and outdated workflows that result in friction-filled experiences for their customers.\n\u201cPart of our role is helping our clients with their own customers by looking at the overall effectiveness of their funnel, of their policies, of the ways that they\u2019re mitigating fraud,\u201d Moe said. \u201cAnd each of our customers comes to us with some nuance as it relates to their own unique priorities and what\u2019s important. Together, we help them in striking a balance between risks and outcomes.\u201d\nThis dual focus ensures that lenders can expand their reach and deepen customer relationships without compromising on security or compliance.\n\u201cThe time is always ripe for disruption, regardless of the segment,\u201d Moe said. \u201cLenders that typically have relied on in-person relationships and the more traditional modes of application intake, verification and contract signing are also increasingly leaning into digital and automation.\u201d\nOne of the key insights Moe shared was the shift in digital engagement across different customer groups. While younger generations have long been early adopters of digital financial services, more traditional lenders that have historically relied on in-person relationships are also beginning to try automation and digital processes. The ability to adapt to customer preferences is a critical component of modern banking, and Amount provides the tools necessary to enable that adaptability.\nThe Digital Transformation Imperative and Role of Data in Measuring Success\nAs financial institutions move to embrace the adaptability offered by digital platforms, measuring success becomes both a qualitative and quantitative exercise. According to Moe, data plays a crucial role in showing firms where they can achieve the highest return on investment as they digitize.\n\u201cLenders can expand their reach, they can add new households, they can also deepen that wallet share within their existing base of customers, too,\u201d she explained, noting that it\u2019s important to think through \u201cnot just the tech, but also the organizational change management that needs to accompany that in order to best facilitate the move from manual to digital.\u201d\nMoe pointed out that many lenders miss out on potential revenue because customers abandon online applications. Additionally, fraud losses and penalties from compliance infractions can deplete margins. The marketplace is full of digital solutions like Amount\u2019s that address these pain points in a measurable way.\nFor example, one of Amount\u2019s clients launched a new consumer loan program and saw that 80% of applications were funded without human intervention. Another client reduced application-to-funding time from two weeks to just 15 minutes, underscoring the operational efficiency gains that digital technology can bring.\nIn an industry that is rapidly evolving, financial institutions are under increasing pressure to modernize their operations. Looking ahead, Moe expressed excitement about the future of digital lending and Amount\u2019s role in shaping it. The company is focused on continuing to develop innovative solutions, including around artificial intelligence, that drive customer engagement, enhance risk management and deliver superior performance outcomes \u2014 all combined with a deep understanding of client needs.\n\u201cYou\u2019re able to incorporate new technology in a safe and responsible way that drives real efficiencies,\u201d Moe said.\nThe post Memo to Lenders: Go Digital or Go Home appeared first on PYMNTS.com.", "date_published": "2024-09-17T04:00:42-04:00", "date_modified": "2024-09-16T21:55:04-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/09/Amount-lenders.jpg", "tags": [ "Amount", "Andrea Moe", "automation", "banking", "Banks", "digital transformation", "Featured News", "FinTech", "Lending", "loans", "News", "PYMNTS News", "pymnts tv", "software", "video", "WhatsNextInPaymentsSeries", "What\u2019s Next In Payments: How Do You Do Digital 2024", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2098818", "url": "https://www.pymnts.com/loans/2024/consumer-delinquency-rates-decline-inflation-slows/", "title": "Consumer Delinquency Rates Decline as Inflation Slows", "content_html": "More consumers are making their loan payments on time, aided by slower inflation and other trends.
\nLate payments on loans have leveled off after increasing earlier in the year, Reuters reported Friday (Sept. 13).
\nDelinquency rates across all household liabilities \u2014 including credit cards, auto loans, personal loans, retail cards and first mortgages \u2014 declined to about 2% in August, lower than the 2.5% seen in the pre-pandemic year of 2019, the report said, citing data from Equifax.
\nNet charge-off rates, which reached their highest level since 2011 in the second quarter, have also leveled off, according to the report.
\nThe report attributed the earlier increases in delinquencies and defaults to consumers being challenged by a drop in the savings they built up during the pandemic and to the rise in living costs.
\nNow, however, many consumers\u2019 financial positions are improving as inflation slows, the report said. In addition, banks tightened their lending standards amid fears of a potential recession.
\nMoving forward, consumers\u2019 financial status could continue to improve if the economy and the labor market remain resilient and the Federal Reserve cuts interest rates, per the report.
\nThe Federal Reserve\u2019s Consumer Credit Outstanding report released Monday (Sept. 9) showed a jump in most forms of consumer debt. The $25 billion bump in credit outpaced the roughly $12 billion that had been the consensus.
\nForty-three percent of consumers revolve their debt, according to the PYMNTS Intelligence report \u201cNew Reality Check: The Paycheck-to-Paycheck Report: The Credit Card Use Deep Dive Edition.\u201d
\nThe percentage rises to 65% among consumers who live paycheck to paycheck with issues paying bills and 51% for those who live paycheck to paycheck but without issues paying bills, the report found.
\nBank of America CEO Brian Moynihan cautioned last month that if the Federal Reserve does not cut interest rates soon, American consumers could become disheartened.
\n\u201cThey\u2019ve told people rates probably aren\u2019t going to go up, but if they don\u2019t start taking them down relatively soon, you could dispirit the American consumer,\u201d he said.
\nThe post Consumer Delinquency Rates Decline as Inflation Slows appeared first on PYMNTS.com.
\n", "content_text": "More consumers are making their loan payments on time, aided by slower inflation and other trends.\nLate payments on loans have leveled off after increasing earlier in the year, Reuters reported Friday (Sept. 13).\nDelinquency rates across all household liabilities \u2014 including credit cards, auto loans, personal loans, retail cards and first mortgages \u2014 declined to about 2% in August, lower than the 2.5% seen in the pre-pandemic year of 2019, the report said, citing data from Equifax.\nNet charge-off rates, which reached their highest level since 2011 in the second quarter, have also leveled off, according to the report.\nThe report attributed the earlier increases in delinquencies and defaults to consumers being challenged by a drop in the savings they built up during the pandemic and to the rise in living costs.\nNow, however, many consumers\u2019 financial positions are improving as inflation slows, the report said. In addition, banks tightened their lending standards amid fears of a potential recession.\nMoving forward, consumers\u2019 financial status could continue to improve if the economy and the labor market remain resilient and the Federal Reserve cuts interest rates, per the report.\nThe Federal Reserve\u2019s Consumer Credit Outstanding report released Monday (Sept. 9) showed a jump in most forms of consumer debt. The $25 billion bump in credit outpaced the roughly $12 billion that had been the consensus.\nForty-three percent of consumers revolve their debt, according to the PYMNTS Intelligence report \u201cNew Reality Check: The Paycheck-to-Paycheck Report: The Credit Card Use Deep Dive Edition.\u201d\nThe percentage rises to 65% among consumers who live paycheck to paycheck with issues paying bills and 51% for those who live paycheck to paycheck but without issues paying bills, the report found.\nBank of America CEO Brian Moynihan cautioned last month that if the Federal Reserve does not cut interest rates soon, American consumers could become disheartened.\n\u201cThey\u2019ve told people rates probably aren\u2019t going to go up, but if they don\u2019t start taking them down relatively soon, you could dispirit the American consumer,\u201d he said.\nThe post Consumer Delinquency Rates Decline as Inflation Slows appeared first on PYMNTS.com.", "date_published": "2024-09-13T10:16:31-04:00", "date_modified": "2024-09-13T10:16:31-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/09/bills-credit-loans-debt.jpg", "tags": [ "credit", "debt", "economy", "federal reserve", "inflation", "Interest Rates", "late payments", "loans", "mortgage payments", "News", "PYMNTS News", "savings", "What's Hot", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2097806", "url": "https://www.pymnts.com/loans/2024/parafin-begins-offering-financing-to-walmart-marketplace-sellers/", "title": "Parafin Begins Offering Embedded Financing to Walmart Marketplace Sellers", "content_html": "Parafin has begun offering financing to\u00a0Walmart Marketplace sellers.
\nThrough the\u00a0Walmart Marketplace Capital program, eligible sellers can access financing through Parafin, an embedded finance firm and an approved Walmart Marketplace solution provider, Parafin said in a Wednesday (Sept. 11) press release.
\nThe Capital by Parafin program under Walmart Marketplace Capital offers funding provided by Parafin with one fixed capital fee, no interest or late fees, payments based on a percentage of the seller\u2019s sales, and repayment periods of up to nine months, according to a Walmart Marketplace Capital\u00a0web page.
\n\u201cParafin is on a mission to help grow small business,\u201d\u00a0Sahill Poddar, CEO\u00a0of Parafin, said in the release. \u201cWalmart is a leader in the small-medium business economy and is driving life-changing growth for these businesses that ultimately deliver on Walmart\u2019s mission of helping people save time and money.\u201d
\n\u201cWe are incredibly fortunate to begin working with Walmart to offer SMBs new resources to grow on Walmart,\u201d Poddar added.
\nThis is the latest in a series of new offerings added to Walmart Marketplace, which is the retailer\u2019s eCommerce platform for third-party sellers.
\nIn August, Walmart said it added new product categories, omnichannel experiences and fulfillment solutions to the\u00a0eCommerce platform.
\n\u201cWe\u2019re bringing all the pieces together to be much more than a marketplace and investing in new ways for sellers to serve customers as we grow together,\u201d\u00a0Manish Joneja, senior vice president, Walmart Marketplace\u00a0and Walmart Fulfillment Services, said in an Aug. 27 press release.
\nAlso in August, Walmart partnered with\u00a0digital payments platform\u00a0WorldFirst to let eCommerce sellers based in China collect funds from Walmart Marketplace. This new digital payment collection service will provide online sellers with added security and compliance, with funds deposited straight into a merchant\u2019s World account, with no service charges.
\nWalmart Marketplace began working with\u00a0Cart.com in April to simplify onboarding and help both new and existing sellers grow their sales on Walmart\u2019s platform. Customers using\u00a0Cart.com\u2019s\u00a0multichannel management platform can access special incentives across Walmart Marketplace\u2019s shipping, advertising\u00a0and repricing services as well as support for onboarding and customer success.
\nThe post Parafin Begins Offering Embedded Financing to Walmart Marketplace Sellers appeared first on PYMNTS.com.
\n", "content_text": "Parafin has begun offering financing to\u00a0Walmart Marketplace sellers.\nThrough the\u00a0Walmart Marketplace Capital program, eligible sellers can access financing through Parafin, an embedded finance firm and an approved Walmart Marketplace solution provider, Parafin said in a Wednesday (Sept. 11) press release.\nThe Capital by Parafin program under Walmart Marketplace Capital offers funding provided by Parafin with one fixed capital fee, no interest or late fees, payments based on a percentage of the seller\u2019s sales, and repayment periods of up to nine months, according to a Walmart Marketplace Capital\u00a0web page.\n\u201cParafin is on a mission to help grow small business,\u201d\u00a0Sahill Poddar, CEO\u00a0of Parafin, said in the release. \u201cWalmart is a leader in the small-medium business economy and is driving life-changing growth for these businesses that ultimately deliver on Walmart\u2019s mission of helping people save time and money.\u201d\n\u201cWe are incredibly fortunate to begin working with Walmart to offer SMBs new resources to grow on Walmart,\u201d Poddar added.\nThis is the latest in a series of new offerings added to Walmart Marketplace, which is the retailer\u2019s eCommerce platform for third-party sellers.\nIn August, Walmart said it added new product categories, omnichannel experiences and fulfillment solutions to the\u00a0eCommerce platform.\n\u201cWe\u2019re bringing all the pieces together to be much more than a marketplace and investing in new ways for sellers to serve customers as we grow together,\u201d\u00a0Manish Joneja, senior vice president, Walmart Marketplace\u00a0and Walmart Fulfillment Services, said in an Aug. 27 press release.\nAlso in August, Walmart partnered with\u00a0digital payments platform\u00a0WorldFirst to let eCommerce sellers based in China collect funds from Walmart Marketplace. This new digital payment collection service will provide online sellers with added security and compliance, with funds deposited straight into a merchant\u2019s World account, with no service charges.\nWalmart Marketplace began working with\u00a0Cart.com in April to simplify onboarding and help both new and existing sellers grow their sales on Walmart\u2019s platform. Customers using\u00a0Cart.com\u2019s\u00a0multichannel management platform can access special incentives across Walmart Marketplace\u2019s shipping, advertising\u00a0and repricing services as well as support for onboarding and customer success.\nThe post Parafin Begins Offering Embedded Financing to Walmart Marketplace Sellers appeared first on PYMNTS.com.", "date_published": "2024-09-11T17:18:21-04:00", "date_modified": "2024-09-11T22:25:57-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/09/Parafin-Walmart-Marketplace-Financing.jpg", "tags": [ "financing", "News", "Parafin", "PYMNTS News", "spend management", "walmart", "Walmart marketplace", "Walmart Marketplace Capital", "What's Hot", "working capital", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2096921", "url": "https://www.pymnts.com/loans/2024/capital-costs-versus-economic-growth-federal-reserve-balancing-act-bank-lending/", "title": "Capital Costs vs. Economic Growth: The Fed\u2019s Balancing Act on Bank Lending", "content_html": "Regulators have scaled back capital requirements for banks, reducing the holdings that must be on the books to buffer against economic and other shocks.
\nBut the ripple effect, even with the lowered \u201ccushion\u201d that must be in place, may be that the banks tighten access to traditional lending products, spanning everything from personal loans to cards to working capital.
\nIn doing so, the door may be opened for digital platforms and FinTechs, unencumbered by such capital requirements, to make some competitive inroads.
\nAt a high level, the banks are reported to be facing a 9% boost in capital requirements, which is lower than the 19% increase that had been originally sought by regulators, including the Federal Reserve, the Federal Deposit Insurance Corp.\u00a0and the Office of the Comptroller of the Currency. The 9% push would apply to the biggest banks \u2014 J.P. Morgan and Bank of America among them. A full report of the requirements, commonly referred to as Basel III, will be published later this month.
\nIn a speech Tuesday morning (Sept. 10), Federal Reserve Vice Chair for Supervision Michael Barr told the Brookings Institution that the 9% proposal means that \u201cThe largest, most complex firms should be subject to the most stringent requirements, in light of the costs that their potential failure would impose on the broader financial system and thus on businesses and households.\u201d
\nFor banks, higher capital requirements reduce the money that can be put to work in the markets, so capital itself becomes more expensive because liquidity is diminished. The banks, as is the case with any business, seek returns on their business, and would demand a higher cost paid to borrowers (to at least maintain or improve the rates of returns on loans).
\nThe 315-page Federal Register documentation of the regulators\u2019 proposal put forth last year contended that \u201cAlthough a slight reduction in bank lending could result from the increase in capital requirements, the economic cost of this reduction would be more than offset by the expected economic benefits associated with the increased resiliency of the financial system.\u201d
\nBarr said Tuesday that he intends to recommend to the Fed that the central bank lower the risk-weighting of certain loans, specifically for residential real estate and loans to retail customers. The risk-weighted assets (commonly referred to as RWA) determine how much capital the bank needs to have in its coffers to protect its depositors. PricewaterhouseCoopers said in an analysis published as banks pushed back (particularly on the high-teens percentage point bump), per the Fed\u2019s own data, that overall credit would decline by 4%.
\nSeparately, the Financial Services Forum said borrowing costs could be boosted by 0.25% (which can have an outsized impact on the costs of loans) while costing the U.S. economy over $100 billion. Shadow banking may benefit.
\nThe movement toward a finalized risk-based capital structure will be a work in process that spans months, and a commentary period will be in the works. In the meantime, the banks may scale back lending in the face of uncertainty, preserving capital ahead of time, so to speak.
\nOne segment that might be hit hard is small businesses, where lending has already been tightening. The National Federation of Independent Business reported Tuesday that small business \u201coptimism\u201d declined in August, as high inflation is a key concern. Sales expectations are waning, and yet more than half of businesses are still making capital outlays (as it takes money to keep up plant and equipment, no matter if a firm is expanding or not). Only 26% of firms said all their credit needs were met; 60% said they were not interested in a loan; and 7% said loans were harder to get.
\nThe need for capital may change amid economic volatility.
\nThe PYMNTS Intelligence report \u201cOne-Quarter of SMBs Plan to Increase Corporate Card Usage This Year\u201d found that 47% of small- to medium-sized businesses (SMBs) with annual revenues of $10 million or less had access to business or personal financing. That leaves roughly half without access.
\nThe initial winners for lending to consumers and businesses as new rules are hammered out for banks may be the lending platforms backed by nonbank capital, outside investors or peer-to-peer lending. That includes companies such as LendingClub, SoFi and others.
\nAs Barr noted Tuesday, \u201ccapital has costs too. As compared to debt, capital is a more expensive source of funding to the bank. Thus, higher capital requirements can raise the cost of funding to a bank, and the bank can pass higher costs on to households, businesses and clients engaged in a range of financial activities. These activities are critical to a well-functioning economy that works for everyone. That\u2019s why it is important to get the balance between resiliency and efficiency right.\u201d
\nThe 9% boost in capital requirements for the big banks may bring relief compared to the original 19% proposed increase, but time will tell if the balancing act has been pulled off.
\nThe post Capital Costs vs. Economic Growth: The Fed\u2019s Balancing Act on Bank Lending appeared first on PYMNTS.com.
\n", "content_text": "Regulators have scaled back capital requirements for banks, reducing the holdings that must be on the books to buffer against economic and other shocks.\nBut the ripple effect, even with the lowered \u201ccushion\u201d that must be in place, may be that the banks tighten access to traditional lending products, spanning everything from personal loans to cards to working capital.\nIn doing so, the door may be opened for digital platforms and FinTechs, unencumbered by such capital requirements, to make some competitive inroads.\nAt a high level, the banks are reported to be facing a 9% boost in capital requirements, which is lower than the 19% increase that had been originally sought by regulators, including the Federal Reserve, the Federal Deposit Insurance Corp.\u00a0and the Office of the Comptroller of the Currency. The 9% push would apply to the biggest banks \u2014 J.P. Morgan and Bank of America among them. A full report of the requirements, commonly referred to as Basel III, will be published later this month.\nIn a speech Tuesday morning (Sept. 10), Federal Reserve Vice Chair for Supervision Michael Barr told the Brookings Institution that the 9% proposal means that \u201cThe largest, most complex firms should be subject to the most stringent requirements, in light of the costs that their potential failure would impose on the broader financial system and thus on businesses and households.\u201d\nFor banks, higher capital requirements reduce the money that can be put to work in the markets, so capital itself becomes more expensive because liquidity is diminished. The banks, as is the case with any business, seek returns on their business, and would demand a higher cost paid to borrowers (to at least maintain or improve the rates of returns on loans).\nThe 315-page Federal Register documentation of the regulators\u2019 proposal put forth last year contended that \u201cAlthough a slight reduction in bank lending could result from the increase in capital requirements, the economic cost of this reduction would be more than offset by the expected economic benefits associated with the increased resiliency of the financial system.\u201d\nUncertain Impact\nBarr said Tuesday that he intends to recommend to the Fed that the central bank lower the risk-weighting of certain loans, specifically for residential real estate and loans to retail customers. The risk-weighted assets (commonly referred to as RWA) determine how much capital the bank needs to have in its coffers to protect its depositors. PricewaterhouseCoopers said in an analysis published as banks pushed back (particularly on the high-teens percentage point bump), per the Fed\u2019s own data, that overall credit would decline by 4%.\nSeparately, the Financial Services Forum said borrowing costs could be boosted by 0.25% (which can have an outsized impact on the costs of loans) while costing the U.S. economy over $100 billion. Shadow banking may benefit.\nThe movement toward a finalized risk-based capital structure will be a work in process that spans months, and a commentary period will be in the works. In the meantime, the banks may scale back lending in the face of uncertainty, preserving capital ahead of time, so to speak.\nOne segment that might be hit hard is small businesses, where lending has already been tightening. The National Federation of Independent Business reported Tuesday that small business \u201coptimism\u201d declined in August, as high inflation is a key concern. Sales expectations are waning, and yet more than half of businesses are still making capital outlays (as it takes money to keep up plant and equipment, no matter if a firm is expanding or not). Only 26% of firms said all their credit needs were met; 60% said they were not interested in a loan; and 7% said loans were harder to get.\nThe need for capital may change amid economic volatility.\nThe PYMNTS Intelligence report \u201cOne-Quarter of SMBs Plan to Increase Corporate Card Usage This Year\u201d found that 47% of small- to medium-sized businesses (SMBs) with annual revenues of $10 million or less had access to business or personal financing. That leaves roughly half without access.\nThe initial winners for lending to consumers and businesses as new rules are hammered out for banks may be the lending platforms backed by nonbank capital, outside investors or peer-to-peer lending. That includes companies such as LendingClub, SoFi and others.\nAs Barr noted Tuesday, \u201ccapital has costs too. As compared to debt, capital is a more expensive source of funding to the bank. Thus, higher capital requirements can raise the cost of funding to a bank, and the bank can pass higher costs on to households, businesses and clients engaged in a range of financial activities. These activities are critical to a well-functioning economy that works for everyone. That\u2019s why it is important to get the balance between resiliency and efficiency right.\u201d\nThe 9% boost in capital requirements for the big banks may bring relief compared to the original 19% proposed increase, but time will tell if the balancing act has been pulled off.\nThe post Capital Costs vs. Economic Growth: The Fed\u2019s Balancing Act on Bank Lending appeared first on PYMNTS.com.", "date_published": "2024-09-10T13:07:00-04:00", "date_modified": "2024-09-10T13:07:00-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2023/03/Federal-reserve-2.jpg", "tags": [ "banking", "Banks", "Basel III", "economy", "FDIC", "Federal Deposit Insurance Corp.", "federal reserve", "FinTech", "Lending", "loans", "News", "Office of the Comptroller of the Currency", "PYMNTS News", "regulations", "SMBs", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2096867", "url": "https://www.pymnts.com/loans/2024/moneylion-and-nova-credit-deliver-cash-flow-data-to-lenders/", "title": "MoneyLion and Nova Credit Deliver Cash Flow Data to Lenders", "content_html": "MoneyLion and Nova Credit have partnered to give credit issuers a more comprehensive view of consumers\u2019 financial health and expand consumers\u2019 access to credit.
\nWith this collaboration, lenders using MoneyLion\u2019s hosted decisioning engine will be able to integrate Nova Credit\u2019s cash flow underwriting data and analytics, the companies said in a Tuesday (Sept. 10) press release.
\n\u201cCash flow data is essential for understanding consumers more holistically and unlocking more ways to provide consumers with the services they need,\u201d MoneyLion Chief Product Officer Tim Hong said in the release. \u201cOur partnership with Nova Credit strengthens MoneyLion\u2019s ability to provide financial institutions with better tools to make informed credit decisions and expand the range of consumers they can serve.\u201d
\nMoneyLion\u2019s digital finance ecosystem powers distributable embedded marketplaces, enables financial product providers to acquire consumers at scale and connects consumers with real-time, personalized financial product offerings and services through its network of financial product providers, according to the release.
\nNova Credit\u2019s cash flow analytics platform, Cash Atlas, allows lenders to use consumer-permissioned bank transaction data to gain a more complete view of credit risk and make more informed underwriting decisions, the release said.
\nTogether, these solutions allow both expanded access to credit and enhanced risk management, per the release.
\n\u201cThe ability to see new lending opportunities within existing populations is a huge lift to lenders that work hard to acquire and build strong consumer experiences,\u201d Nova Credit CEO and Co-founder Misha Esipov said in the release.
\nForty-one percent of financial institutions are adopting embedded finance solutions and 48% are enhancing their banking-as-a-service (BaaS) capabilities, according to the PYMNTS Intelligence and NCR Voyix collaboration, \u201cEmbedded Finance and BaaS: From Marketing Buzz to Banking Bedrock.\u201d
\nThe report found that the growing adoption of these technologies reflects a broader industry shift toward more agile and integrated financial services, positioning banks to better compete with emerging digital and FinTech players.
\nMoneyLion\u2019s growth has been driven by an increasing number of suppliers (lead sources), an expanding consumer base and a broadening range of financial product options available on the platform, MoneyLion CEO Dee Choubey told PYMNTS CEO Karen Webster in an interview posted in August.
\n\u201cWe measure success by how many decisions a consumer\u2019s making on our platform in a recurring manner over time,\u201d Choubey said.
\nThe post MoneyLion and Nova Credit Deliver Cash Flow Data to Lenders appeared first on PYMNTS.com.
\n", "content_text": "MoneyLion and Nova Credit have partnered to give credit issuers a more comprehensive view of consumers\u2019 financial health and expand consumers\u2019 access to credit.\nWith this collaboration, lenders using MoneyLion\u2019s hosted decisioning engine will be able to integrate Nova Credit\u2019s cash flow underwriting data and analytics, the companies said in a Tuesday (Sept. 10) press release.\n\u201cCash flow data is essential for understanding consumers more holistically and unlocking more ways to provide consumers with the services they need,\u201d MoneyLion Chief Product Officer Tim Hong said in the release. \u201cOur partnership with Nova Credit strengthens MoneyLion\u2019s ability to provide financial institutions with better tools to make informed credit decisions and expand the range of consumers they can serve.\u201d\nMoneyLion\u2019s digital finance ecosystem powers distributable embedded marketplaces, enables financial product providers to acquire consumers at scale and connects consumers with real-time, personalized financial product offerings and services through its network of financial product providers, according to the release.\nNova Credit\u2019s cash flow analytics platform, Cash Atlas, allows lenders to use consumer-permissioned bank transaction data to gain a more complete view of credit risk and make more informed underwriting decisions, the release said.\nTogether, these solutions allow both expanded access to credit and enhanced risk management, per the release.\n\u201cThe ability to see new lending opportunities within existing populations is a huge lift to lenders that work hard to acquire and build strong consumer experiences,\u201d Nova Credit CEO and Co-founder Misha Esipov said in the release.\nForty-one percent of financial institutions are adopting embedded finance solutions and 48% are enhancing their banking-as-a-service (BaaS) capabilities, according to the PYMNTS Intelligence and NCR Voyix collaboration, \u201cEmbedded Finance and BaaS: From Marketing Buzz to Banking Bedrock.\u201d\nThe report found that the growing adoption of these technologies reflects a broader industry shift toward more agile and integrated financial services, positioning banks to better compete with emerging digital and FinTech players.\nMoneyLion\u2019s growth has been driven by an increasing number of suppliers (lead sources), an expanding consumer base and a broadening range of financial product options available on the platform, MoneyLion CEO Dee Choubey told PYMNTS CEO Karen Webster in an interview posted in August.\n\u201cWe measure success by how many decisions a consumer\u2019s making on our platform in a recurring manner over time,\u201d Choubey said.\nThe post MoneyLion and Nova Credit Deliver Cash Flow Data to Lenders appeared first on PYMNTS.com.", "date_published": "2024-09-10T11:52:54-04:00", "date_modified": "2024-09-10T11:52:54-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/09/MoneyLion-Nova-Credit.png", "tags": [ "credit", "data analytics", "Lending", "loans", "MoneyLion", "News", "Nova Credit", "partnerships", "PYMNTS News", "risk management", "What's Hot", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2096180", "url": "https://www.pymnts.com/loans/2024/fdic-sees-non-depository-financial-institution-loans-surge-hinting-new-risks/", "title": "FDIC Sees Non-Depository Financial Institution Loans Surge, Hinting at New Risks", "content_html": "The Federal Deposit Insurance Corp.\u2019s latest quarterly banking industry report hints at where risks lie if additional pressures come to bear on financial services firms \u2014 particularly those that don\u2019t have deposit insurance in the mix.
\nIn the tables and discussions that give a read-across on risk \u2014 in this case, the risks tied to the proverbial money in the bank \u2014 there is granularity on insured and uninsured deposits.
\nInsured deposits refer to the deposit accounts at FDIC-insured banks that are protected in the event of a bank failure, where the backstop is $250,000 per depositor (across a variety of ownership categories).
\nAcross the industry, deposits were lower overall. The FDIC noted in its report that insured deposits decreased $96 billion (0.9%) from the first quarter. Uninsured deposits decreased $50.4 billion (0.7%).
\n\u201cBanks with assets greater than $250 billion, in aggregate, reported lower uninsured deposits in the second quarter, while banks with assets less than $250 billion, in aggregate, reported higher uninsured deposits,\u201d the FDIC said.
\nIn the meantime, lending activity picked up. Loan balances were up \u201cmodestly\u201d from the most recent quarter and from a year ago, as total loans gained 1% from the first quarter, inching ahead by $125.8 billion, per the report.
\nLoans to non-depository financial institutions (NDFIs) surged by 9.6%, or $76 billion, and \u201cmuch\u201d of the growth came as certain loans were reclassified, the report said. Generally speaking, NDFIs are classified as everything from private equity to private credit to peer-to-peer lenders.
\nThe rise of lending to NFDIs, as recently as the end of last year and as detailed in a request for comment, has attracted more scrutiny of regulators, including the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the FDIC, seeking input on revising and expanding the reporting on loans held by the NDFIs, which now top $786 billion.
\nBanks with $10 billion or more in total assets would report the loans to mortgage credit, business credit, and consumer credit firms. Modifications to the proposal have included more reporting on delinquencies and foreign exposure.
\nThe risks have been highlighted in recent months, and the risks transcend borders. As reported over the summer, Financial Stability Board (FSB) Chair Klaas Knot said recent \u201cincidents of market stress and liquidity strains\u201d have been tied to nonbank financial firms (also known as shadow banks, which could include the finance firms mentioned above).
\nThe Federal Reserve estimated that the credit line commitments to nonbanks stand at about $1.5 trillion, with investments ranging from mortgage-backed securities firms to private equity firms to warehouse financing to asset-backed securities firms.
\n\u201cThe common view is that banks and NBFIs operate in parallel, performing different activities, or they act as substitutes of each other, performing substantially similar activities, with banks inside and NBFIs outside the perimeter of prudential regulation,\u201d the Fed said in the June blog post \u201cBanks and Nonbanks Are Not Separate, but Interwoven.\u201d \u201cWe argue instead that NBFI and bank activities and risks are so interwoven that they are better described as having transformed over time rather than as being unrelated or having simply migrated from banks to NBFIs.\u201d
\nThe post FDIC Sees Non-Depository Financial Institution Loans Surge, Hinting at New Risks appeared first on PYMNTS.com.
\n", "content_text": "The Federal Deposit Insurance Corp.\u2019s latest quarterly banking industry report hints at where risks lie if additional pressures come to bear on financial services firms \u2014 particularly those that don\u2019t have deposit insurance in the mix.\nIn the tables and discussions that give a read-across on risk \u2014 in this case, the risks tied to the proverbial money in the bank \u2014 there is granularity on insured and uninsured deposits.\nInsured deposits refer to the deposit accounts at FDIC-insured banks that are protected in the event of a bank failure, where the backstop is $250,000 per depositor (across a variety of ownership categories).\nDeposits Trend Down but Loans Tick Up\nAcross the industry, deposits were lower overall. The FDIC noted in its report that insured deposits decreased $96 billion (0.9%) from the first quarter. Uninsured deposits decreased $50.4 billion (0.7%).\n\u201cBanks with assets greater than $250 billion, in aggregate, reported lower uninsured deposits in the second quarter, while banks with assets less than $250 billion, in aggregate, reported higher uninsured deposits,\u201d the FDIC said.\nIn the meantime, lending activity picked up. Loan balances were up \u201cmodestly\u201d from the most recent quarter and from a year ago, as total loans gained 1% from the first quarter, inching ahead by $125.8 billion, per the report.\nLoans to non-depository financial institutions (NDFIs) surged by 9.6%, or $76 billion, and \u201cmuch\u201d of the growth came as certain loans were reclassified, the report said. Generally speaking, NDFIs are classified as everything from private equity to private credit to peer-to-peer lenders.\nThe rise of lending to NFDIs, as recently as the end of last year and as detailed in a request for comment, has attracted more scrutiny of regulators, including the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the FDIC, seeking input on revising and expanding the reporting on loans held by the NDFIs, which now top $786 billion.\nBanks with $10 billion or more in total assets would report the loans to mortgage credit, business credit, and consumer credit firms. Modifications to the proposal have included more reporting on delinquencies and foreign exposure.\nThe risks have been highlighted in recent months, and the risks transcend borders. As reported over the summer, Financial Stability Board (FSB) Chair Klaas Knot said recent \u201cincidents of market stress and liquidity strains\u201d have been tied to nonbank financial firms (also known as shadow banks, which could include the finance firms mentioned above).\nThe Federal Reserve estimated that the credit line commitments to nonbanks stand at about $1.5 trillion, with investments ranging from mortgage-backed securities firms to private equity firms to warehouse financing to asset-backed securities firms.\n\u201cThe common view is that banks and NBFIs operate in parallel, performing different activities, or they act as substitutes of each other, performing substantially similar activities, with banks inside and NBFIs outside the perimeter of prudential regulation,\u201d the Fed said in the June blog post \u201cBanks and Nonbanks Are Not Separate, but Interwoven.\u201d \u201cWe argue instead that NBFI and bank activities and risks are so interwoven that they are better described as having transformed over time rather than as being unrelated or having simply migrated from banks to NBFIs.\u201d\nThe post FDIC Sees Non-Depository Financial Institution Loans Surge, Hinting at New Risks appeared first on PYMNTS.com.", "date_published": "2024-09-09T13:25:19-04:00", "date_modified": "2024-09-09T13:25:19-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2023/11/FDIC.jpg", "tags": [ "banking", "Banks", "FDIC", "Federal Deposit Insurance Corp.", "federal reserve", "fraud", "loans", "News", "Office of the Comptroller of the Currency", "PYMNTS News", "regulations", "Security", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2094622", "url": "https://www.pymnts.com/loans/2024/nubank-defends-lending-practices-as-late-payments-jump/", "title": "Nubank Defends Lending Practices as Late Payments Jump", "content_html": "Lending practices at Brazil\u2019s\u00a0Nubank\u00a0reportedly have Wall Street analysts uneasy.
\nAs Bloomberg News\u00a0reported\u00a0Thursday (Sept. 5), the lender \u2014 Latin America\u2019s largest \u2014 is enjoying rapid growth, with around 60% of Brazilian adults using its app and its stock up 109% over the past year.
\nHowever, the report adds, there is a growing number of skeptics who are puzzled by Nubank\u2019s popularity, finding its approach to lending troubling.
\nThe bank reported last month that non-performing loans of 90 days or more reached a record 7% during the second quarter, while also lowering provisions for bad debts to $760 million from $831 million three months earlier.
\nAccording to Bloomberg, late payments for 90 days or more are now substantially higher than the 5.5% average for the banking sector calculated by Brazil\u2019s central bank.
\nWhile Nubank doesn\u2019t break down non-performing loan or credit data by country \u2014 it does business in Brazil,\u00a0Mexico\u00a0and\u00a0Colombia\u00a0\u2014 Bloomberg notes that 90% of its customers are in Brazil.
\n\u201cThe discussion on credit quality made us decide to follow this from a little further away,\u201d Fernando Fontoura, a portfolio manager at Persevera Asset Management in Sao Paulo, told Bloomberg.
\nIn June, Persevera sold the entirety of its Nubank shares it held as the position became \u201ccrowded,\u201d said Fontoura. The Bloomberg report notes that JPMorgan Chase UBS reduced their recommendations on the company to neutral in July, due to worsening asset quality.
\nExecutives have defended the pace of lending growth, with Chief Operating Officer Youssef Lahrech saying in an earnings call that the bank prioritizes long-term strategies over \u201cshort-term non-performing loan metrics.\u201d
\nAnd the bank\u2019s press office told Bloomberg that concerns about Nubank\u2019s performance are not the Wall Street consensus, pointing the news outlet to the strategy outlined on its earnings calls in lieu of additional comment.
\nReached for comment by PYMNTS, Nubank pushed back against aspects of the Bloomberg report, arguing that the news outlet references reports based on Brazilian Central Bank data using a different loss provision methodology than the one Nubank employs.
\nA bank spokesperson added that Nubank’s credit philosophy prioritizes decisions that optimize its credit cohorts’ long-term net present value (NPV) instead of short-term non-performing Loan (NPL) metrics.
\n\u201cWhen Nubank identifies an asset class or customer segment with compelling risk-adjusted returns that also encourages responsible customer behavior, the company actively pursues growth in these areas,\u201d the spokesperson said. \u201cThis strategy has yielded increased revenue and greater resilience that are more than offsetting the higher delinquency rates that come with it.\u201d
\nNubank announced in May that it had amassed\u00a0more than 100 million customers, saying it was the first digital banking platform to reach this milestone outside of Asia. At the time, the bank said it had more than 92 million customers in its home country, upwards of 7 million in Mexico and nearly 1 million in Colombia.
\n\u201cIn 2013, we had set ourselves the ambitious goal to reach 1 million customers in five years, which seemed almost impossible at the time,\u201d Nubank founder and CEO David V\u00e9lez said in a news release. \u201cIn a decade, we have surpassed 100 million, which is a testament to the trust our customers place in us and to the power of a truly customer-centric business model.\u201d
\nThe post Nubank Defends Lending Practices as Late Payments Jump appeared first on PYMNTS.com.
\n", "content_text": "Lending practices at Brazil\u2019s\u00a0Nubank\u00a0reportedly have Wall Street analysts uneasy.\nAs Bloomberg News\u00a0reported\u00a0Thursday (Sept. 5), the lender \u2014 Latin America\u2019s largest \u2014 is enjoying rapid growth, with around 60% of Brazilian adults using its app and its stock up 109% over the past year.\nHowever, the report adds, there is a growing number of skeptics who are puzzled by Nubank\u2019s popularity, finding its approach to lending troubling.\nThe bank reported last month that non-performing loans of 90 days or more reached a record 7% during the second quarter, while also lowering provisions for bad debts to $760 million from $831 million three months earlier.\nAccording to Bloomberg, late payments for 90 days or more are now substantially higher than the 5.5% average for the banking sector calculated by Brazil\u2019s central bank.\nWhile Nubank doesn\u2019t break down non-performing loan or credit data by country \u2014 it does business in Brazil,\u00a0Mexico\u00a0and\u00a0Colombia\u00a0\u2014 Bloomberg notes that 90% of its customers are in Brazil.\n\u201cThe discussion on credit quality made us decide to follow this from a little further away,\u201d Fernando Fontoura, a portfolio manager at Persevera Asset Management in Sao Paulo, told Bloomberg.\nIn June, Persevera sold the entirety of its Nubank shares it held as the position became \u201ccrowded,\u201d said Fontoura. The Bloomberg report notes that JPMorgan Chase UBS reduced their recommendations on the company to neutral in July, due to worsening asset quality.\nExecutives have defended the pace of lending growth, with Chief Operating Officer Youssef Lahrech saying in an earnings call that the bank prioritizes long-term strategies over \u201cshort-term non-performing loan metrics.\u201d\nAnd the bank\u2019s press office told Bloomberg that concerns about Nubank\u2019s performance are not the Wall Street consensus, pointing the news outlet to the strategy outlined on its earnings calls in lieu of additional comment.\nReached for comment by PYMNTS, Nubank pushed back against aspects of the Bloomberg report, arguing that the news outlet references reports based on Brazilian Central Bank data using a different loss provision methodology than the one Nubank employs.\nA bank spokesperson added that Nubank’s credit philosophy prioritizes decisions that optimize its credit cohorts’ long-term net present value (NPV) instead of short-term non-performing Loan (NPL) metrics.\n\u201cWhen Nubank identifies an asset class or customer segment with compelling risk-adjusted returns that also encourages responsible customer behavior, the company actively pursues growth in these areas,\u201d the spokesperson said. \u201cThis strategy has yielded increased revenue and greater resilience that are more than offsetting the higher delinquency rates that come with it.\u201d\nNubank announced in May that it had amassed\u00a0more than 100 million customers, saying it was the first digital banking platform to reach this milestone outside of Asia. At the time, the bank said it had more than 92 million customers in its home country, upwards of 7 million in Mexico and nearly 1 million in Colombia.\n\u201cIn 2013, we had set ourselves the ambitious goal to reach 1 million customers in five years, which seemed almost impossible at the time,\u201d Nubank founder and CEO David V\u00e9lez said in a news release. \u201cIn a decade, we have surpassed 100 million, which is a testament to the trust our customers place in us and to the power of a truly customer-centric business model.\u201d\nThe post Nubank Defends Lending Practices as Late Payments Jump appeared first on PYMNTS.com.", "date_published": "2024-09-05T14:31:30-04:00", "date_modified": "2024-09-05T15:36:07-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2022/10/Nubank.jpg", "tags": [ "brazil", "credit", "Digital Banking", "Latin America", "Lending", "loans", "News", "Non Performing Loans", "NUBANK", "Wall Street", "What's Hot", "Loans" ] }, { "id": "https://www.pymnts.com/?p=2080958", "url": "https://www.pymnts.com/loans/2024/robinhood-continues-uk-expansion-with-stock-lending/", "title": "Robinhood Continues UK Expansion With Stock Lending", "content_html": "Robinhood\u00a0now offers stock lending for British customers, part of the platform\u2019s ongoing U.K. expansion.
\nIntroduced\u00a0Wednesday (Sept. 4), the offering lets customers lend out any fully paid stock in their portfolio, with Robinhood taking care of finding interested borrowers.
\n\u201cStock Lending is another innovative way for our customers in the UK to put their investments to work and earn passive income,\u201d said\u00a0Jordan Sinclair,\u00a0 president of Robinhood UK. \u201cWe\u2019re excited to continue to give retail customers greater access to the financial system, with the product now available in our intuitive mobile app.\u201d
\nOnce shares are loaned out, the company said, customers can use the app dashboard to track earnings, see their positions and enable or disable lending. Stocks are backed by cash collateral at a third-party bank for additional protection, Robinhood added.
\n\u201cSince launching Robinhood in the UK last November, we\u2019ve heard from customers what\u2019s resonating in-app and what features they\u2019d like to see in the future,\u201d the company said. \u201cSo far, we know they love no commission fees and no FX fees on trades, our easy-to-use mobile app and key features such as fractional shares and 24/5 trading.\u201d
\nRobinhood began\u00a0offering trading\u00a0to customers in the U.K. last year, part of a broader effort by the company to expand into international markets.
\nIn June of this year, the company\u00a0acquired\u00a0the cryptocurrency exchange\u00a0Bitstamp\u00a0for $200 million. The purchase of Luxembourg-based Bitstamp marks Robinhood\u2019s first institutional business, providing it access to Bitstamp\u2019s institutional offerings such as white-label solution Bitstamp-as-a-service, institutional lending and staking.
\n\u201cAt the same time, Robinhood\u00a0faces challenges, such as the recent Wells notice from the Securities and Exchange Commission (SEC), a sign of impending enforcement action against the company, one which raises concerns about the future of Robinhood\u2019s crypto trading arm,\u201d PYMNTS wrote last month.
\nThe company contends that the crypto assets listed on its platform are not securities, and that it would fight the SEC\u2019s enforcement efforts.
\n\u201cAfter years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to \u2018come in and register,\u2019 we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,\u201d said Dan Gallagher, the company’s legal and compliance officer.
\nRobinhood in August\u00a0issued a response\u00a0to the notice, CEO Vlad Tenev told Bloomberg Television.
\n\u201cWe\u2019ve spent a lot of time making sure that the response is as high-quality as possible,\u201d Tenev said, declining to provide additional updates.
\nThe post Robinhood Continues UK Expansion With Stock Lending appeared first on PYMNTS.com.
\n", "content_text": "Robinhood\u00a0now offers stock lending for British customers, part of the platform\u2019s ongoing U.K. expansion.\nIntroduced\u00a0Wednesday (Sept. 4), the offering lets customers lend out any fully paid stock in their portfolio, with Robinhood taking care of finding interested borrowers.\n\u201cStock Lending is another innovative way for our customers in the UK to put their investments to work and earn passive income,\u201d said\u00a0Jordan Sinclair,\u00a0 president of Robinhood UK. \u201cWe\u2019re excited to continue to give retail customers greater access to the financial system, with the product now available in our intuitive mobile app.\u201d\nOnce shares are loaned out, the company said, customers can use the app dashboard to track earnings, see their positions and enable or disable lending. Stocks are backed by cash collateral at a third-party bank for additional protection, Robinhood added.\n\u201cSince launching Robinhood in the UK last November, we\u2019ve heard from customers what\u2019s resonating in-app and what features they\u2019d like to see in the future,\u201d the company said. \u201cSo far, we know they love no commission fees and no FX fees on trades, our easy-to-use mobile app and key features such as fractional shares and 24/5 trading.\u201d\nRobinhood began\u00a0offering trading\u00a0to customers in the U.K. last year, part of a broader effort by the company to expand into international markets.\nIn June of this year, the company\u00a0acquired\u00a0the cryptocurrency exchange\u00a0Bitstamp\u00a0for $200 million. The purchase of Luxembourg-based Bitstamp marks Robinhood\u2019s first institutional business, providing it access to Bitstamp\u2019s institutional offerings such as white-label solution Bitstamp-as-a-service, institutional lending and staking.\n\u201cAt the same time, Robinhood\u00a0faces challenges, such as the recent Wells notice from the Securities and Exchange Commission (SEC), a sign of impending enforcement action against the company, one which raises concerns about the future of Robinhood\u2019s crypto trading arm,\u201d PYMNTS wrote last month.\nThe company contends that the crypto assets listed on its platform are not securities, and that it would fight the SEC\u2019s enforcement efforts.\n\u201cAfter years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to \u2018come in and register,\u2019 we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,\u201d said Dan Gallagher, the company’s legal and compliance officer.\nRobinhood in August\u00a0issued a response\u00a0to the notice, CEO Vlad Tenev told Bloomberg Television.\n\u201cWe\u2019ve spent a lot of time making sure that the response is as high-quality as possible,\u201d Tenev said, declining to provide additional updates.\nThe post Robinhood Continues UK Expansion With Stock Lending appeared first on PYMNTS.com.", "date_published": "2024-09-04T09:20:16-04:00", "date_modified": "2024-09-04T09:20:16-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2022/03/robinhood-stocks-lending.jpg", "tags": [ "Cryptocurrency", "EMEA", "News", "PYMNTS News", "Robinhood", "Robinhood UK", "stock lending", "Stock Trading", "What Is Investing?", "What's Hot", "Loans" ] } ] }