May Edition
Welcome to the May edition of our newsletter, your go-to source for insights, updates, and news from the world of lending and financial services.
This month, some banks have started trimming deposit rates even as Fed cuts remain elusive, and the U.S. economy continues to add jobs despite hotter-than-expected inflation.?
In other news, the CFPB is taking action against illegal practices and junk fees charged by mortgage servicers, and Empower's acquisition of Petal continues the consolidation trend in FinTech.?
Confronting tech debt and sharing data?
Learn how your credit union can confront tech debt and start fresh with a proactive approach.
Have you heard the latest podcast episode?
In this 22 Minutes in Lending episode, Gary Lewis , Senior Managing Director of Lending and Deposit Solutions at?Jack Henry , discusses the impact of AI on the financial services industry and strategies for navigating market cycles.
Industry Insights
Liquidity management
A handful of banks start reducing deposit rates
Goldman Sachs' Marcus, Ally, and Discover have all slightly cut rates as the competition for deposits cools down. Traditional banks are also shifting gears by lowering CD rates and offering shorter terms. As a result, online high-yield savings rates have dipped from 4.49% earlier this year to 4.43% this month. Read more.
Banks see a strong start to earnings season?
Big banks showed a considerable jump in consumer loans: 27% at JPM, with Citi's retail banking up 18.4%, branded cards up 11.1%, and retail services up 5.9%. The rise primarily came from increases in credit card loan balances. Read more.
Economy and regulation
Economy still adding jobs, highest numbers since July
The U.S. economy continues to add jobs, with private payrolls growing by 184,000 in March, the largest increase since July, and wage growth also rising for job changers. Read more.
Rate cut hopes are tempered
March inflation was hotter than expected, rising 3.5% year over year and dampening hopes for an early rate cut, with traders now predicting two rate cuts starting in September. Persistent inflation is raising doubts about the Fed's ability to cut rates this year without an economic downturn. Read more.
Junk fees make headlines again, this time in the mortgage space
The Consumer Financial Protection Bureau (CFPB) released a report showcasing its work to tackle illegal practices and junk fees charged by mortgage servicers, like unauthorized property inspection fees and misleading notices to homeowners. Financial institutions have been forced to refund fees and stop illegal practices, and the agency is still working to address anticompetitive mortgage fees and unfair fees across different consumer financial markets. Read more.
Technology
Visa+ gets new partners for cross-platform money movement?
PayPal, Venmo, Current, and Western Union will use Visa+ for cross-platform money movement, with plans for Cross River Bank, Fiserv, Brightwell, and Astra to also integrate it by fall, potentially reducing the reliance on third-party payment apps by incorporating this feature directly into users' banking services. Read more.
Empower acquires Petal, continuing consolidation in fintech?
Cash advance provider Empower is buying credit card startup Petal, which uses non-traditional data for cash flow underwriting just like Empower, adding 400,000 Petal users to Empower's subscriber base and continuing the trend of consolidation in the consumer FinTech space. Read more.
Consumer Insights
Consumer spending might be too hot...
The U.S. economy is thriving, with the IMF raising its GDP growth forecast to 2.7% for this year due to strong consumer spending. But it might actually be a little too active, as retail sales exceeded expectations in March. Read more.
...but not for everyone - early earning season commentary hints at struggles for low-income consumers?
Earnings season commentary suggests consumers are still spending, particularly on experiences, but there are signs of challenges for lower-income consumers facing pressures from debt and inflation. Discover noted a drop in card sales, and banks reported rising delinquencies and declining deposits. Read more.
Latest TransUnion numbers show credit unions leaning toward consumers with strong credit
Most credit categories, except for super prime, experienced drops in originations both month over month and year over year, but super prime bucked the trend with increases in both periods. This indicates that credit unions are playing it safe with riskier near-prime and subprime borrowers and putting more focus on lending to super-prime borrowers. Read more.
Items of Interest
Watch the latest NAFCU/America's Credit Union On Demand webinar about how network lending helps credit unions optimize their liquidity here.
Ent Credit Union sells a $54M unsecured consumer loan pool through ALIRO. Read more.
Members Choice Credit Union Automates Investor Reporting and Remittance on ALIRO. Read more.