The need is real for affordable short-term, small-dollar loans

first_imgDespite a record-low 3.8 percent unemployment rate, American consumers still have difficulty meeting immediate and emergency living expenses. The demand for short-term liquidity is, in fact, staggering with 78 percent of consumers living paycheck to paycheck1 and 40 percent unable to cover a $400 emergency.2For some, overdraft is a reasonable option that most financial institutions offer. According to the Consumer Financial Protection Bureau (CFPB), 8–12 percent of account holders pay about 80 percent of all overdraft fees.3 Of these, the majority make an informed choice to do so —”trading off the cost of short-term overdraft funding against benefits such as payment timing and certainty,” according to Novantas research.4Consumers who opt to use overdraft protection as a safety net want to swipe their debit cards and have the assurance that their financial institution will cover their transactions even if they do not have the available funds at the time. However, other consumers in need of short-term liquidity prefer to have the money in their accounts prior to needing the funds. These consumers tend to manage their money proactively and balance their checkbooks regularly. So, when funds fall short for them, what are their options?Traditionally, these consumers have relied on alternatives outside the banking system, including check cashing, pawn shops and payday lenders, which often charge 400 percent APRs or more. Many of them struggle to pay their household bills on time, resulting in exorbitant late fees and negative hits to their credit score, impairing their ability to acquire more affordable sources of liquidity. As a result, each year 12 million Americans (including about 15–20 percent of a financial institution’s account holders) take out payday loans, spending $9 billion on loan fees5 to cover their income gaps. The Case for Loan Automation While many credit unions may see the value in serving this overlooked consumer market, it has not made sense due to cost-prohibitive manual small-dollar loan processes that require resources that most community institutions cannot justify. Luckily, meeting the challenge of providing affordable liquidity is now obtainable through the use of digital lending technology that automates the entire lending process from origination to underwriting to documentation. In fact, there are already a growing number of market challengers using this technology today, including LendingClub, Prosper and RocketLoans. And once they get a foothold into your member, your relationship is at risk. Further, the CFPB and other regulatory bodies such as the OCC and NCUA have encouraged community financial institutions to offer better loan options to their consumers.6 The OCC, in a May 2018 statement, urged banks to offer products with reasonable pricing and repayment terms to help meet the credit needs of their customers, while also imparting benefits from other bank services, such as financial education and credit reporting.7Additionally, in October 2017, the Consumer Financial Protection Bureau (CFPB) issued a new rule that would dramatically restrict lenders’ ability to profit from high-interest, short-term loans. While the CFPB may extend the date, payday lenders currently are required to comply with the rule by August 19 of this year. As currently written, the regulation could severely limit revenues of payday lenders by as much as 70 to 90 percent.8 This opens new opportunities for community banks and credit unions to step in and provide low-risk and affordable small-dollar loans.Buy or Build the Technology?As with any strategic initiative that relies on new technology, community financial institutions must assess their expertise and resources to determine whether they buy or build10 the solution. To build their own, institutions must be able to keep the technology updated and compliant, while also delivering a consistent and exceptional digital experience. The answer for most institutions is that building the technology is cost-prohibitive—not only operationally, but also from a staffing standpoint—and could take more time than the competitive market allows.The alternative is to partner with a digital lending technology provider that offers a proven, cost-effective platform built with an emphasis on consumer protection, compliance and safety. The Pew Charitable Trusts has led the charge on protecting consumers who need short-term, small dollar funding by putting forth a list of recommended safe loan standards.6  When assessing a technology solution, ensure your provider is open to adopting these guidelines on your behalf to ensure the loans are safe and affordable, including:Installment payments of no more than 5 percent of each paycheck or 6 percent of deposits into a checking account.Double-digit (not triple-digit) APRs that decline as loan sizes increase.Total costs that are no more than half of loan principal.Loan payments that cannot trigger overdraft or nonsufficient funds fees.Online or mobile application, with automated loan approval, so that loan funds can be quickly deposited into a borrower’s checking account.Credit bureau reporting of loan terms and repayment.In addition to following Pew’s standards above, ensure your technology provider’s program offers:A fully-automated platform that requires no loan officer involvement. The entire digital loan application and approval process should be completed online in just a couple of minutes (think about a borrower in a checkout line), with borrowed funds deposited directly into the consumer’s account. Low charge-offs—the result of proven underwriting technology that assesses a customer’s ability to repay (no traditional credit check required), analyzes internal and external data sources, including deposit activity, and sets a maximum loan amount Compliance with all existing federal lending regulations including the Military Lending Act, and continuous monitoring of the regulatory landscape for any adjustments that may be necessaryLoans automatically booked and funded to the institution’s core banking platformWhite label website and mobile app branded to the institution and integrated with the core and mobile banking via Single Sign On (SSO)Automatic deposit of loaned funds into the account holder’s account and scheduled repayment processWhen surveyed, 81 percent of payday loan customers said they would prefer to borrow from their financial institutions if small-dollar installment loans were available there.9 Currently, however, very few financial institutions do so. With the introduction of affordable and compliant loan automation software, community financial institutions can now offer these Americans low-risk, easy access to cash at affordable interest rates. Credit unions can enjoy efficiencies of automating the entire loan process and avoid the high cost of individually underwriting and documenting short-term, small dollar loans, while providing their members a much-needed valuable service. 1 https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich2 https://www.forbes.com/sites/zackfriedman/2018/05/24/money-retirement-student-loans/#67d92f0010593 https://files.consumerfinance.gov/f/documents/201708_cfpb_data-point_frequent-overdrafters.pdf4 https://www.novantas.com/news/a-novantas-study-reveals-most-overdrafts-are-the-result-of-informed-consumer-choice/5 https://www.pewtrusts.org/en/about/news-room/press-releases-and-statements/2016/06/01/pew-cfpbs-proposed-payday-loan-rule-misses-historic-opportunity6   https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2018/02/standards-needed-for-safe-small-installment-loans-from-banks-credit-unions7 https://www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-51.html8 https://www.americanbanker.com/news/cfpb-makes-it-official-changes-to-payday-rule-coming-in-new-year9 https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/04/payday-loan-customers-want-more-protections-access-to-lower-cost-credit-from-banks10 https://www.bankdirector.com/index.php/issues/strategy/breaking-down-three-options-fintech/ 8SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Chris Rentner Chris is the Director of Digital Lending at Velocity Solutions where he has responsibility over the Akouba™ and CashPlease™ solutions.  He is a successful serial entrepreneur, and prior to joining … Web: https://myvelocity.com Detailslast_img read more

REVEALED: 5 major stadia in Ghana have no maintenance manuals

first_imgIt has emerged that the country’s 5 major stadia in Accra, Cape Coast, Tamale, Kumasi and Essipong do not have any maintenance manuals to help keep those facilities in pristine condition for the nation’s benefits.This was the major revelation of a report released by the Auditor-General’s office on Thursday on the sustainability of national stadia.The report covered the period between 2012 and 2018 and it was done between August 2017 and December 2018 by the Audit Service.Per the document, the service focused on three main areas: oversight responsibilities,  maintenance of stadia and revenue generation.The report said that the service was troubled by several media reports of various stadia in poor conditions and thus, it took the pain to travel around the country to see things on a first-hand basis.On page 7 of the executive summary of the report, the audit service realised that the:.”..five major stadia did not have any operations and maintenance manuals from the contractors of the various stadia. Also, management had not put maintenance and action plans in place to maintain the facilities though they had Estate Units with Engineers and technical staff.”In addition, the audit service’s on-site visits to the stadia also revealed, in chapter 3 of the report which looked at findings, that the Ministry of Youth and Sports:“…had not put in place measures to monitor and evaluate the activities of NSA with regard to maintenance and operations of the stadia. MoYS did not also monitor and supervise NSA in the performance of its functions, neither had it developed strategies to evaluate NSA.”The report added that the Estate Managers at the various stadia in the country said, in interviews conducted with the audit service, that the NSA had not given them any Operational and Maintenance manuals.Way forwardThe audit service recommended that the National Sports Authority should work through the Ministry of Youth and Sports and get operational and maintenance manuals from the companies that built the stadia.The manuals should form the basis of annual maintenance plans for the various stadia.With the stadia in Accra, Kumasi and Essipong currently experiencing some renovation works, the general expectations are that those facilities will be managed better than in previous years.last_img read more

AFF Championship team profile: Thailand

first_imgFive-time champions and current holders of the AFF Suzuki Cup Thailand will be looking to retain their crown when the tournament commences, though they may have to do it without some of their stars.OverviewThe title holders will enter the showdown without Kawin Thammasatchanan (OHL), Teerasil Dangda (Sanfrecce Hiroshima), Teerathon Bunmathan (Vissel Kobe) and Chanathip Songkrasin (Consadole Sapporo), as their club won’t allow them to join this non FIFA day competition. Then it’s all down to coach Milovan Rajevac to find alternatives. Rajevac has decided to give those who performed well in the Thai League a chance, be it young hot prospects or veterans. Now the Serbian has a solid squad that may not as flashy as 2 years ago, but definitely hard to beat. Editors’ Picks Man Utd ready to spend big on Sancho and Haaland in January Who is Marcus Thuram? Lilian’s son who is top of the Bundesliga with Borussia Monchengladbach Brazil, beware! Messi and Argentina out for revenge after Copa controversy Best player in MLS? Zlatan wasn’t even the best player in LA! SquadGK: Siwarak Tedsungnoen, Chatchai Budprom, Saranon AnuinDF: Pansa Hemviboon, Chalermpong Kerdkaew, Philip Roller, Korrakot Wiriyaudomsiri, Manuel Bihr, Mika Chunuonsee, Suphan Thongsong, Kevin DeeromramMF: Pokklaw Anan, Tanaboon Kesarat, Sanrawat Dechmitr, Thitipan Puangchan, Sumanya Purisai, Nurul Sriyankem, Pakorn Prempak, Sasalak HaiprakhonFW: Mongkol Tossakrai, Adisak Kraisorn, Chananan Pombuppha, Supachai JaidedCoach profileMilovan Rajevac is a coach with plenty of experience, as he has coached in Europe, Africa, and also Asia. He led Ghana through an unbeaten qualification campaign allowing the African side to qualify for the 2010 World Cup.For a year and a half with Thailand, he moulded them into a team with solid defending and better discipline while making sure the War Elephants were fast and sharp on the counter attack. It’s safe to say that the current AFF Suzuki Cup champions have become a much more mature side under him.For Rajevac his true test awaits in the Asian Cup 2019, but this AFF Cup can also be a test for the Serbian since the expectation will be nothing less but to retain the title, with or without top stars.Milovan RajevacPlaying styleThailand’s chief problem under Kiatisuk Senamuang’s was a leaky defence. The first priority for Rajevac was to fix that and he seems to have sorted it out.’Chang Seuk’ became way more disciplined under a 4-2-3-1 defensive system that made them hard to beat, hitting hard with their fast breaks. But in their last 2 friendlies, they were surprisingly good in a 4-3-3 formation and that could be their modus operand in the AFF Championships.Also the midfield area for Thailand is now filled with creative minds like Sumanya Purisay, Sanrawat Dechmitr, Pokklao Anan. Arguably the best defensive midfielder Tanaboon Kesarat has also now return from injury and is ready to be deployed.On the front, Rajevac will have veteran Adisak Kraisorn and also young guns like Supachai Jaided to choose from.last_img read more