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SRM Perspectives on Key Industry Trends

OCC Order Serves as Blueprint for Banks, Credit Unions Working with Fintech

Posted by Paul Davis on Sep 9, 2022 11:32:00 AM

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Banks and credit unions have a new roadmap for handling fintech partnerships.

The Office of the Comptroller of the Currency (OCC) just issued a written agreement to Blue Ridge Bankshares instructing the Charlottesville, Va., company to improve how it pursues and monitors fintech relationships.

The agreement comes months after the OCC raised issues with Blue Ridge’s ($2.8 billion-asset) proposed merger with FVCBankcorp (the deal was ultimately terminated). While the specific issue was never disclosed, there was speculation it had to do with Blue Ridge’s fintech dealings.

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Topics: Payments, Fintech, Vendor Contract, BaaS, Regulators, BSA

Reflections on Our First 30 Years & the Evolution of Financial Services

Posted by Brad Downs on Aug 16, 2022 11:14:00 AM

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Sometimes it’s hard to believe 30 years have passed since our founder Curtis Downs took the concept of developing contract benchmarks and applying them to help banks, credit unions, and others achieve critical savings – the underlying value proposition behind SRM. That foundation has allowed our clients to add more than $5 billion to their bottom line over the years.

It's fascinating to look back three decades and see the rate of change that has taken place in the financial services industry. As we acknowledge our company’s 30th anniversary this year, I want to highlight some significant changes in financial services that have also challenged and motivated SRM to evolve.

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Topics: Payments, Digital Banking, Vendor Contract, Interchange, Regulation

Crypto, BNPL, and Regulation: Key Trends to Watch in the Coming Months

Posted by Ben Mrva on Jul 28, 2022 11:14:00 AM

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The first half of 2022 was eventful for banks and credit unions, and there’s no reason to expect the pace to slow. Financial institutions must monitor changes to the payments ecosystem while simultaneously dealing with rising interest rates, eroding consumer confidence, and potential cracks in credit quality.

Here’s a quick summary of what the team at SRM sees as the key trends in financial services and how these trends might play out over the balance of the year.

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Topics: Payments, Cryptocurrency, Digital Assets, Overdraft, BNPL, CFPB

Inflation, Rate Hikes & Falling Consumer Confidence: Brace for Uncertainty

Posted by Paul Davis on Jul 26, 2022 11:19:00 AM

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Banks and credit unions must prepare for some consumer payments and credit quality turbulence.

Consumer prices rose by an astounding 9.1% by June from a year earlier – a 41-year high – causing the average American to spend roughly $460 more per month than they did a year ago, according to Moody’s Analytics Senior Economist Ryan Sweet.

Inflation has led the Federal Reserve to get aggressive with interest rates, including a 75-basis-point hike earlier this month. There is talk the Fed could opt for an unprecedented 100-basis-point increase in light of the June data.

Rising rates could deal another blow to consumers already facing higher costs for goods.

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Topics: Payments, Consumer Spending, Credit Cards, Mortgages

Could PayPal Reset the Stablecoin Market?

Posted by Patti Wubbels on Jul 12, 2022 10:00:00 AM

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Given recent headlines, stablecoin supporters may disagree with the saying, “there’s no such thing as bad publicity.”

TerraUSA, an algorithmic stablecoin, imploded in May. This hurt the valuation of numerous cryptocurrencies and cast doubt on Tether’s ability to sustain its own $1 peg. Thus far, Tether has defied the skeptics.

Amid this tense environment, it’s interesting to revisit the January headlines speculating that PayPal was mulling introducing a stablecoin. According to company officials, the rumor was based on source code embedded in PayPal’s iPhone app, which was inadvertently left behind after an internal hackathon.

It’s difficult to envision PayPal taking on this challenge soon. Meta’s ill-fated stablecoin foray via Diem/Libra illustrates the hurdles facing such an endeavor, especially one undertaken by a tech giant.

At the same time, it’s important to speculate on how such an offering might impact the broader market over the long term. After starting its life as the first true digital financial services disruptor, PayPal could, ironically, find itself cast as an enabler of traditional market stability due to recent crypto market turmoil.

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Topics: Payments, Cryptocurrency, Digital Assets, Stablecoins, PayPal

How to Firewall Risk in a Buy Now, Pay Later Product

Posted by Paul Davis on Jul 6, 2022 11:14:00 AM

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 In our recent report, we made the case that banks and credit unions consider Buy Now, Pay Later (BNPL) as part of a holistic suite of payments products.

While a study from IntraFi Network found that four out of five small banks and credit unions are reluctant to get into BNPL, SRM believes that traditional FIs have the infrastructure to handle compliance requirements from agencies such as the Consumer Financial Protection Bureau.

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Topics: Payments, Buy Now Pay Later, BNPL, Credit Union Vendor Contracts, Bank Vendor Contracts, Point-of-Sale

CFPB Poised to Shake Up Competition for Consumers

Posted by Paul Davis on Jun 8, 2022 10:01:00 AM

CFPB Poised to Shake Up Competition for Consumers

Several initiatives by the Consumer Financial Protection Bureau (CFPB) seem poised to increase competition between traditional financial services providers and fintechs.

An effort to regulate nonbanks has gained support from banks and credit unions. Still, the CFPB’s plan to make it easier for consumers to move accounts will pressure traditional financial institutions to offer more products and better services.

These initiatives are coming when the agency is scrutinizing overdraft and nonsufficient funds (NSF) fees, the CARD Act, and the terms and disclosures of Buy Now, Pay Later (BNPL) offerings – the latter a topic SRM recently wrote a report on.

All signs point to the need for banks and credit unions to buckle up in coming months. These expected changes will likely bring fintech even more into the mainstream and raise the stakes when it comes to recruiting and retaining clients.

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Topics: Payments, Fintech, Regulations, Credit Union Vendor Contracts, Bank Vendor Contracts, CFPB

How Financial Institutions Are Trying to Appeal to Younger Consumers

Posted by Paul Davis on Jan 18, 2022 9:30:00 AM

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Financial institutions (FIs) of all sizes struggle to recruit and retain younger employees and customers – a challenge exacerbated by the rise of neobanks that offer enhanced experiences, streamlined processes, and faster decisions.

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Topics: Payments, Vendor Contract Negotiation, Bank Vendor Management, Credit Union Vendor Management, Rewards Programs, Gen Z

The Banking Trends That Will Define 2022, Part Two

Posted by Ben Mrva on Dec 28, 2021 9:30:00 AM

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In a recent post, we discussed two trends we anticipate driving strategy discussions for bank and credit union leadership teams in 2022. Our first trend breakdown focused on operational items – including back-office automation, loan originations, branch footprints, and artificial intelligence.

This blog will look at evolving customer trends that financial institutions (FIs) should address to maintain their valuable status as financial services providers of choice.

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Topics: Payments, Vendor Contract Negotiation, Credit Card, Cryptocurrency, Bank Vendor Management, Credit Union Vendor Management, Buy Now Pay Later

Durbin 2.0 Part II: Who Weighed In and What They Said

Posted by Keith Ash on Oct 18, 2021 9:30:00 AM

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As discussed in a previous blog, the Federal Reserve began seeking comments on proposed changes to Reg II of the Durbin Amendment in May. At that time, the Fed said that it felt the changes would be non-substantial and would not include more compliance obligations. Currently, the Fed bars issuers from restricting the number of unaffiliated networks for debit card transactions to fewer than two, including one signature network and one PIN network. The new proposal would make issuers responsible for ensuring that all transactions with US merchants can be routed across two unaffiliated networks.

While the Fed characterized this change as a simple clarification, it is anything but, as evidenced by the over 2,600 comments received. It is clear this issue is complex, substantial, and would increase compliance obligations.

We have sorted through the comments posted on the Fed's website and various government sites to summarize the key points for both sides of this argument.

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Topics: Payments, Credit Union Vendor Management, Durbin Amendment, Regulations

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