Rita L. Carroll (黄立瑋)

To the likely surprise of providers of buy now, pay later (BNPL) financing, the #CFPB recently issued an interpretative rule stating that BNPL products are actually "credit cards" under the Truth in Lending Act and BNPL providers are "card issuers" and therefore "creditors" under, and subject to, Regulation Z. Scott Pearson, Bryan Schneider and Eric Knight explain the significance here:

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To all #CDFI #CreditUnions Worried About Losing Certification: On December 7, 2023, the Community Development Financial Institutions Fund (CDFI Fund) published a revised CDFI Certification Application. Since then, CUCollaborate has heard from many credit unions that they worry about retaining Certification under the revised application. So, over the last few months, we have been working hard to develop strategies -- and the necessary software to support them -- to provide credit unions the best chance of retaining Certification. Below are some of the strategies, including software we have developed: 1. Custom Investment Areas (IA): While the revised certification application has significantly diminished the potential impact of custom IAs, they are still a critical tool for credit unions within reach of Certification but not quite there. Our software draws mathematically optimized, custom IAs based on a credit union’s lending activity and financial services. 2. Financial Services Option Analysis: Under the revised application, credit unions that either have 60% by number and 50% of the dollar, or 50% by number and 60% by dollar, can retain Certification if at least 60% of the credit union's depository account holders are members of one or more eligible Target Markets. We have found that the combination of a mathematically optimized Custom IA and the Financial Services Option is particularly effective in retaining Certification, specifically in desperate cases. 3. Target Market API: We have developed a CDFI Target Market API which supports a number of strategies to ensure that you meet your target market lending requirements moving forward. We have established, and continue to add more partnerships, with Fintechs (like National Auto Loan Network, LoanStar Technologies, GreenLyne, etc.) and loan participation platforms (like Aluvy, etc.) to help source qualified lending to ensure credit unions retain certification in the future. 4. CDFI Certification Dashboard: We have also developed a data analytics platform, allowing credit unions to monitor the necessary statistics to retain certification on a rolling basis to ensure that if they start to fall behind, proactive action may be taken before it is too late. 5. CUSO Strategies: If all else fails, credit unions can leverage CUSOs to either help the credit union attain or retain Certification directly OR indirectly gain the many benefits conferred by CDFI Certification through a CDFI Loan Fund CUSO. We know the value of your CDFI Certification, which is why we have invested significantly in developing strategies and proprietary technology that help credit unions retain Certification. Moreover, the software we have developed allows us to help credit unions retain Certification in instances when it would simply be impossible without it. If you believe you are in jeopardy of losing your certification, please contact us: https://lnkd.in/gsysDMTp

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🔔 Major Milestone in Open Banking! 🔔 The Consumer Financial Protection Bureau (CFPB) has taken a crucial step in the enforcement of Open Banking standards. The CFPB has finalized a rule to recognize industry standard-setting bodies for Open Banking. This rule outlines qualifications for these bodies to ensure openness, transparency, balanced decision-making, and due process. The recognized standards will help implement the upcoming Personal Financial Data Rights rule, promoting innovation and fair competition. The rule includes a step-by-step guide for applications and mechanisms for maintaining recognition standards. NOTE: This is Not the publication of the final 1033 rule that will be published in the Fall but is a giant step in preparing for the 1033 implementation and to ensure its success. Follow OpenFinity and join http://openfinity.org today to stay informed. Read more here: https://lnkd.in/gJTm6NGs #openbanking #openfinance #CFPB #FDX Laurent Van Huffel, Laura Heritage Financial Data Exchange

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It's a difficult thing in the digital world for banks to attract young consumers — and garner the loyalty of kids while they're young. U.S. Bank has found a promising solution through a partnership with fintech Greenlight. By integrating Greenlight's accounts and services into its own mobile banking app, U.S. Bank aims to attract the next generation of customers while providing valuable financial education and practical money management experience for kids The partnership addresses a critical gap in traditional banking offerings: the lack of transaction accounts for children. With Greenlight's debit card and money app, kids as young as 10 can learn to handle money and transact cashlessly, all while being subject to parental oversight. Parents can set spending limits, monitor transactions, and establish savings goals for their children, fostering financial responsibility from an early age. U.S. Bank sees two key benefits in this partnership. First, it differentiates the bank's "Bank Smartly" accounts, potentially attracting and retaining depositors who value financial education for their children. Second, by engaging with kids through Greenlight, the bank hopes to establish itself as the go-to institution when these young customers are ready for their first checking account. Greenlight's Brandon Horne, general manager of partnerships, emphasizes that the company's bank and credit union partnerships are an additional channel for growth, not a strategic shift. By embedding the parental experience in the bank's app, Greenlight gives financial institutions more ownership in the customer experience and facilitates a smooth transition as kids approach adulthood. Learn more in the full article by Steve Cocheo:

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New blog post: CECL implementation is creating new norms for banks and credit unions. Learn which model inputs your financial institution should be evaluating to ensure you're maintaining a proactive approach to CECL. Read today: https://lnkd.in/eSHWeF-t Thanks to Zach Englert for sharing! Empyrean Solutions

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🚀 Brand new blog post on modernizing #ACH processing for banks and credit unions from Kent Brown (CTO) and Blake Herring (Staff Engineer and ACH Expert). 🌐💸 The Automated Clearing House (ACH) network is the backbone of electronic payments in the U.S., but it's facing significant challenges in today's digital age. 🔍 Explore the Challenges: Learn about the obstacles banks and credit unions face with outdated ACH processing systems and how manual entry woes impact operational efficiency. 💡 The Solution: Discover how Payment Manager bridges the gap between traditional banking systems and modern digital environments, offering advanced features like API-driven initiations and automated processing. 📈 Results and Impact: Dive into the transformative results experienced by our customers, including boosted operational efficiency, increased reliability, and enhanced transparency. 🔑 Why It Matters: Understand why modernizing ACH processing is crucial for community banks and credit unions to stay competitive in today's rapidly evolving financial landscape. Read the blog and start a conversation: https://lnkd.in/gFtPAFvg #ACH #Fintech #Innovation #Payments #DigitalTransformation #banking #creditunions

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Same Day ACH v RTP - Battle Round 1Q 2024 I look at Faster Payments trends on a quarterly basis. One of the ongoing questions I struggle with is the need for #Realtimepayments v #fasterpayments. Most #Banks and #creditunions offer ACH and Same Day ACH already. So the question many ask ....... Do I need to add The Clearing House RTP or Federal Reserve Board Fed Now or does #SameDayACH suffice for most of our clients? The Stats- Same Day ACH volume is up 47% YoY on a basis of $565B TCH is harder to get, but it looks like 61% YoY ($42B v $26B) Same Day continues to grow volume at >40% is about 17x bigger than #RTP. Clearing House is growing RTP at about 61% off a base of 26B. The 14% higher growth rate, while impressive, is not really a fair comparison. For context Same Day ACH GREW volume by more than 3X TOTAL RTP volume. So What? - RTP represents about 6% of Same Day ACH Volume up from about 4% last year. I believe much of the RTP growth has been a function of many banks and credit unions adding it along with their #FedNow launch. I will be curious to see how these growth curves continue to trend and if true use cases for Real-Time V Faster becoming compelling enough to shift this volume rather than both just replacing and disrupting checks and other non-digital payments. Do you think the Real-Time Payments use cases will displace the Faster Payments growth that is already happening. Or is Real-Time a solution looking for a problem? Jessica Pinkston Kevin Von Holten Brandi Gregory Lindsay Hooks Mary Wisniewski

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⚠️ Core banking projects are falling short on risk mitigation. In our experience working with banks and credit unions, we’ve noticed a concerning trend - core banking projects rarely have a robust risk mitigation framework in place. This leaves these mission-critical initiatives exposed to potential issues like: • Cost overruns 💰 • Missed deadlines ⌛ • Compliance failures ❌ • Security vulnerabilities 🔒 As regulatory scrutiny increases and customer expectations rise, financial institutions can't afford these risks. It's time for a new approach - one that includes comprehensive risk identification, assessment, and mitigation from day one. 2Oaks can help you do risk mitigation right and in a way that won’t cost you extra time, money, or reputation in the future. We want to hear from others in the industry - have you encountered similar challenges? How are you adapting your risk practices for core transformation programs? Share your thoughts in the comments. 👇 #CoreBanking #RiskManagement #FinTech #BankingTransformation

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Heads up, bank board members and risk managers! The FDIC is proposing new guidelines on risk management for large banks. This could impact your institution if it has over $10 billion in assets. The guidelines cover areas like board oversight, committee structure, and communication. Guidelines - similar to these - previously issued by the US Department of the Treasury and the Federal Reserve Board have found there way into many industries beyond banking and financial services. Get a head start on compliance by reviewing (or starting!) your ERM Program https://bit.ly/3CSCwXM #riskmanagement #banking #FDIC #ERM

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CDFI Fund Update: FY 2024 BEA Program Application Demand The Community Development Financial Institutions Fund (CDFI Fund) released application data for the FY 2024 round of its Bank Enterprise Award Program (BEA Program). Key Highlights: ➡️Over $101 Million Requested The BEA Program saw 176 applications requesting over $101 million, more than 2.5 times the available $40 million. These applicants are from 24 states and the District of Columbia. ➡️Significant Increases in Qualified Activities From January 1 to December 31, 2023, applicants reported nearly $1.1 billion in qualified activities, marking a $390 million increase from the baseline period: - $257 million in loans and investments - $78 million in equity investments and support to CDFIs - $56 million in financial services ➡️Commitments to Persistent Poverty Counties (PPCs) Out of the 176 applicants, 98 committed to deploying a portion of their award in Persistent Poverty Counties, including areas in Puerto Rico and other U.S. territories. Applications are under review, and the CDFI Fund expects to announce awards in fall 2024. #CDFIFund #BEAProgram #EconomicDevelopment #CommunityFinance #CDBA #InvestInCommunities #PersistentPovertyCounties #FinancialInclusion

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Buy now, pay later. Is it a credit card? Is it a consumer loan? CFPB is weighing in. "The Consumer Financial Protection Bureau Tuesday announced buy now/pay later lenders will be classified as credit card providers for consumer protection purposes under a new interpretive agency rule." "Under the 1968 Truth in Lending Act, credit card providers are required to adhere to certain standards, including disclosing lending terms and offering consumers the right to dispute charges and receive refund credits to their balances. CFPB director Rohit Chopra said the proposal would require buy now/pay later, or BNPL, offerings to adhere to those same standards" "The agency indicated that BNPL customers should receive clear disclosures detailing fees, pricing structures, and their rights when issuing billing disputes and requesting refunds on purchases. When facing a billing dispute, CFPB said consumers should also be able to escalate the issue to the buy now/pay later lender, who must then investigate and issue a credit if necessary" "The agency indicated that BNPL customers should receive clear disclosures detailing fees, pricing structures, and their rights when issuing billing disputes and requesting refunds on purchases. When facing a billing dispute, CFPB said consumers should also be able to escalate the issue to the buy now/pay later lender, who must then investigate and issue a credit if necessary." "The agency is taking comments through August 1." #fintech #lending #credit #consumer

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The Consumer Financial Protection Bureau's $8 cap on late fees will cause a reverse Robinhood-Effect, compelling card issuers to redistribute the cost from the 20% of consumers using them repeatedly as a cash management tool across all cardholders by raising interest rates.   The average late fee of $36 represents only about 32.7 basis points (0.327%) for the average household outstanding balance of $11,000. Can the #CFPB cite any short-term credit rate this low?   An $8 cap (4.5 times lower at 7.27 basis points or 0.0727%) will double credit card issuers’ average days outstanding #DTO & cost of capital for bill payment receivables because it will motivate repeat AND new users to exploit the system, all courtesy of the 80% of consumers that pay their bills on time.   All estimates are independently derived from Crone Consulting LLC’s Best Practices Benchmark Database®, no public disclosure.   The CFPB cap treats the ‘symptom’ not the root ‘cause,’ with unintended consequences.   The CFPB ruling should be a wake-up call for all #billers, not just credit card issuers, to promote #financialliteracy with transparency with better online account management functions for recurring bill payments, using mobile payments & smartphone app functionality to make it easier to pay on-time.   Here’s a ‘refresh’ punch list for recurring billers relying on the biller-direct Electronic Bill Presentment & Payment #EBPP systems they have failed to upgrade for the last 30-years:   🔄 Add new Earned Wage Access #EWA options to further encourage the use of automatic debits for bill payments. 🔍 Provide ‘review & release’ features with EWA to give consumers more control over the ‘automatic’ trigger of bill payments. 🌐 Include all channels: web, mobile, email, text, phone, branch & in-store third-party remittance services. 💳 Accept all debit-based tenders: Zelle®, Venmo, PayPal, Square Cash, #ACH, #paybybank as well as outlets for accepting cash through third parties in-store & branches. 👥 Add shared, group & social payment options among those collectively remitting in a shared household to easily split payments. ⏱️ Assure immediate posting of biller-direct payments backed by Real-Time Payments #RTP. ⏳ Introducing consumer-controlled remittance windows with sliding fee scales based on how close the payment is to the due date, both before and after & expanding the window of acceptance with EWA. 🤖 Using large language models #LLM & #AI-driven dialogs for tailored payment window extensions & customized repayment options required to mitigate the micro-credit window of EWA.   Please read Steve Cocheo’s story in The Financial Brand below, no paywall👇 & please share your reaction with a Comment🗨️ & Like👍.   #innovation #technology #ecommerce #bankingindustry #shoppingandtheretailindustry #marketing #selfservice #retailers #mobiletechnology #mobilepayment #fintech #digitaltransformation #bank #banks #banking #digitalstrategy #payments #digitalinnovation #socialcommerce

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The number of community FIs continues to shrink as megabanks and big regionals continue to expand their footprints into smaller markets. If you're a #communitybank or #creditunion looking to differentiate and compete against the big players and your peers, while also boosting primacy and organic growth, maybe it's time to find out more about BaZing. #banks #banking #noninterestincome #creditunions #communitybanking

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🔍 The Fed Board of Governors, FDIC & OCC published a new guide to support community #banks in navigating the complexities of third-party relationships. 📌 The guide emphasizes the importance of identifying, assessing, monitoring, and controlling risks to ensure activities are conducted safely, soundly, and in #compliance with pertinent laws and regulations, including those safeguarding consumers and addressing #financialcrimes. 💼 Designed to offer potential considerations, resources, and examples across various stages of the third-party relationship, this guide serves as a valuable resource for #communitybanks. 🌟 Explore the full guide here: https://lnkd.in/gs7BNMhn #fintech #riskmanagement #thirdpartyrisk #banking #payments #financialservices

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#Wisconsin lawmakers recently debated reforms for payday loans. Efforts to protect consumers come amid new research about financial pain associated with cash advances offered through smartphone apps. The Center for Responsible Lending is out with findings that detail how "earned wage advances" from digital platforms come with extra costs disguised as things like tips. Traditional payday lenders are often criticized for charging excessive interest rates on loans that are usually around $500. Lucia Constantine, a researcher with the Center for Responsible Lending, said customers are usually seeking smaller amounts from the apps, but she warns they can be just as costly. "They are trapping consumers in a cycle of borrowing that is similar to that of a payday loan, " she said. The report said after using these financial products, customers are seeing overdrafts on their checking accounts increase by 56% on average. Industry leaders deny they're barraging consumers with hidden fees, stressing that features such as suggested tips are optional. More broadly, a bipartisan payday loan reform bill in the Wisconsin Legislature failed to advance this month. Constantine said like longstanding payday lenders, these cash advance apps can be hard to regulate. Meanwhile, she urged those in a bind to explore other options. "[They should] try talking to their friends and family as a first source. The other option which I would recommend is reaching out to their credit union or banking institution to see if they can get some sort of small-dollar loan," she said. She noted places such as credit unions typically provide more transparency on loan costs. According to the report, three-quarters of consumers took out at least one advance on the same day or day after a re-payment was posted.

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