September Edition
Welcome to the September edition of our newsletter, your go-to source for insights, updates, and news from the world of lending and financial services.
This month, we explore emerging trends in consumer behavior and financial technology, including the TikTok-driven "underconsumption" movement that encourages saving over spending. Retail chains, particularly dollar stores, are profiting from millions in cash-back fees due to limited access to free cash points. While small banks benefit from AI in lending, they face regulatory hurdles, and the labor market remains resilient despite inflation causing an effective annual loss of $1,400 for workers. Additionally, small business lending fraud has increased and a JPMorgan strategist warns of a potential contraction in U.S. liquidity as temporary financial boosts fade.
Can old technology handle new data?
Credit report errors rank as the top consumer complaint, but given the outdated technology behind these systems, should we be surprised? Christian Widhalm, CEO of Bloom Credit, discuss how decades-old systems struggle to keep up with consumers' vast and complex data.?
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Industry Insights
Liquidity Management
U.S. Liquidity Set to Shrink
A JPMorgan strategist warns U.S. liquidity is expected to contract as temporary financial boosts, such as government spending and Federal Reserve interventions, begin to fade. This could lead to tighter financial conditions, impacting markets and the broader economy. Read more.
CFPB’s Small Business Lending Rule Wins Legal Battle
The CFPB's new rule on collecting small business lending data has overcome a significant legal challenge, paving the way for increased transparency and accountability in lending practices. This regulation aims to level the playing field for small businesses by ensuring fair access to credit, marking a crucial step forward in financial regulation. Read more.
Also in Small Business Lending ... Fraud Rose by 13.6%
The 2024 Small Business Lending Fraud Study reveals that small business lending fraud increased by 6.9% year-over-year, with the average cost per fraud attempt rising to $5,103. The study also highlights that 52% of lenders reported an increase in fraud attempts over the past 12 months, emphasizing the growing challenge of fraud prevention in the small business lending sector. Read more.
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Economy and Regulation
Jobless Claims Drop as Labor Market Stays Strong
The latest Reuters report shows a slight decline in U.S. weekly jobless claims, signaling continued resilience in the labor market despite broader economic uncertainties. This decrease highlights ongoing strength in employment, suggesting that the job market remains robust amid various economic challenges. Read more.
Inflation's Bite: Workers Lose $1,400 Annually
New data reveals that the typical U.S. worker effectively loses $1,400 annually due to inflation outpacing wage growth. This highlights the growing financial strain on Americans as the rising cost of living erodes purchasing power despite steady employment figures which could affect their rate of savings and deposits. Read more.
Technology
Fintech’s Secret Weapon: Banking as a Service
According to NPR, fintech apps, while not banks themselves, are increasingly harnessing Banking as a Service (BaaS) to offer full-fledged financial services by partnering with traditional banks. This strategy enables them to deliver innovative solutions without holding a banking license. Read more.
AI Lends Power, Regulators Pause
Artificial intelligence is emerging as a powerful tool for small banks, enabling more accurate and efficient lending decisions. However, regulatory challenges are preventing widespread adoption, creating a delicate balance between innovation and compliance in the banking sector. Read more.
Consumer Insights
Retailers Cash In with New Fees
The CFPB's report reveals that large retail chains, particularly dollar stores, charge millions in cash-back fees to customers using debit and prepaid cards. They exploit the lack of free cash access points due to widespread bank closures. Read more.
Underconsumption: The TikTok Trend Redefining Spending
A new money-saving trend called "underconsumption" is gaining popularity among the younger generation on TikTok. This movement encourages minimal spending and prioritizing savings, challenging the conventional consumerist mindset and reflecting a shift toward financial mindfulness in economic uncertainty. Read more.
LendKey Updates
LendKey Welcomes New Head of Product Karen French has joined the team to lead our product strategy and roadmap, focusing on developing innovative lending solutions and enhancing customer experiences. Read more.
CU Times Luminaries Awards Finalists LendKey's Founder and CEO, Vince Passione, and VP of Strategic Accounts, Amanda Bardonner, have both been named finalists in the CU Times Luminaries Awards. Read more.
Upcoming Events
Connect with our team at the upcoming America's Credit Union CFO Summit . Our team is thrilled to join industry leaders, credit unions, and professionals for this premier event. Sept. 17-19th in Greenville, SC. Read more .