Consumers Report Once Again They Prefer to Do Banking Via Mobile Apps, ABA Study Finds

WASHINGTON — For the fourth year in a row, U.S. consumers are conducting their banking via mobile apps more often than any other method, according to a new survey conducted by Morning Consult on behalf of the American Bankers Association.

The national survey found consumers continue to “embrace digital banking channels,” with 48% of bank customers using apps on phones or other mobile devices as their top option for managing their bank account and 23% using online banking via laptop or PC the most in the past 12 months.

The next most popular banking methods include visiting a branch (9%), ATMs (8%) and telephone calls (5%), the ABA reported.

Demographic Breakdown 

A breakdown of age demographic in the ABA’s study shows preferences vary among different generations. More than half of Generation Z (57%), Millennials (60%) and Generation X (52%) use mobile banking apps most often, while a plurality of Baby Boomers most often utilize online banking (39%).

One in six Baby Boomers (16%) visit bank branches the most often, while only 4% of Gen Z and Millennials prefer to visit a branch.

Citing Fewer Headaches, Farmway Credit Union Selects Dolphin Debit to Manage ATMs

BELOIT, Kan.–Farmway Credit Union has selected Dolphin Debit to oversee its ATMs. The credit union said it made the move after giving Dolphin Debit a try with a single ATM three years ago, and now it has quadrupled the number of machines under Dolphin’s management.

The $97.4-million credit union, with four branches, serves 17 counties in heavily rural north central Kansas. It now has three operating Dolphin ATMs, with a fourth currently being deployed.

According to FCU President and CEO Joe Deneke, Farmway’s first ATM was installed at the credit union’s Osborne branch, with the initial decision to go with Dolphin primarily being economic, as the CU looked for opportunities to reduce the costs associated with managing their own ATMs.

‘Fewer Headaches’

“ADA requirements, annual upkeep and maintenance, and compliance were big factors as well,” Deneke said. “Along with that, we anticipated fewer headaches by going with Dolphin.”

After that turned out to be the case, Farmway CU said it felt comfortable working with Dolphin to replace two other ATMs that were nearing their end of life and adding a fourth. Two of the three machines are at branches, one is in a heavily trafficked convenience store site, and the newest one is going into the Jewell County Courthouse at Mankato, the company said.

‘Really Got Us Interested’

“It was that first branch that really got us interested,” added Cindy Wiles, director of Operations for Farmway. “It was a two- or three-employee branch, and it really helped that everything was taken care of by Dolphin, although we do load our own cash.”

According to the company, Farmway ATMs are a key part of their member service strategy. “It is convenient for members not only to be able to do business without having to go into a brick and mortar building, but to have 24-7 access to their money,” Deneke said. Wiles added that ATMs “allow us access to our members and to our community.”

‘Seeing the Advantages’

Added Joe Woods, SVP-marketing and partnerships with Dolphin Debit, “For so many credit unions such as Farmway, starting small with Dolphin has led to a broader and stronger relationship once they see all the cost, convenience, and reliability advantages.

For info: www.dolphindebit.com

Existing Home Sales Fall in August, Down 15% from One Year Earlier

ARLINGTON, Va.—Existing home sales fell 2% in September to a seasonally-adjusted annual rate of 3.96 million units, representing a 15.4% decrease in sales versus a year ago, new data show.

“In September, existing home sales struggled, dipping below four million units sold for the first time since 2010,” said NAFCU Research Analyst John Hay. “Mortgage rates continue to climb despite growing evidence that the Fed has raised rates for the last time in this cycle. Thus far, rising rates have had a larger impact on supply as existing homeowners cling to pre-2022 mortgage rates. With rates now exceeding 8%, demand is likely to suffer more, which could impact prices. The median sales price fell in September, and year-over-year prices are up only 2.8%.”

In September, sales fell in the West (-5.3%), followed by the Midwest (-4.1%) and the South (-1.1%). Sales rose 4.2% in the Northeast.

‘Rough Balance’

Based on current sales, there were nearly 3.4 months of supply at the end of September. Analysts consider six months of inventory a rough balance between supply and demand.

The median existing home price, not seasonally adjusted, fell 2.4% in September to $394,300, a 2.8% increase versus a year ago, Hay said.

“The Case-Shiller index—a more accurate price gauge—remained positive but did decelerate in June and July, which are the two most recent months available. NAFCU expects home sales to continue to slide modestly until rates stabilize,” concluded Hay.

How Total OD Revenue Can be Misleading Indicator

LAKE FOREST, Ill.–The controversy accompanying a new report showing the income earned by certain CUs in California from overdraft and NSF fees—as the CFPB renews attention to ODs and NSFs—is largely misplaced, according to one expert, who says the institutions that make the most money from overdrafts are those with the lowest prices.

A new Moebs $ervices Study of more than 455 million checking accounts found the average price for an overdraft charge fell to $20 per transaction, a 6.7% reduction from year end 2022.

“Overdraft prices haven’t been this low since 1999,” stated Michael Moebs, economist and chair of Moebs $ervices. “Yet those depositories that do the best are the ones with the lowest price. The survey found those FIs that charge less than Walmart ($15 per OD) make more money than those like Chase Bank ($34 per OD).”

The report shows, for example, institutions charging $14 for ODs generate income of $160 on a checking account annually. Meanwhile, those charging $21 lose an average of $177 each year on each checking account.

“It’s clear. Overdraft transactions rose to 1.4 billion from 1.3 billion at year-end 2022. Consumers use overdrafts more with lower OD prices,” Moebs said.

Unprofitable checking accounts typically have a 50% higher overdraft price than profitable checking, the study shows.

An Important Note

“It is important to note the higher price actually results in a loss due to far lower volume,” explained Moebs. “The price difference lies in how to measure profitability. The bottom line comes from volume, risk, revenue—in this case fee revenue—cost to do and speed. Leave out any factor and the proper price will not be achieved.” 

Moebs said examples and experience provide a roadmap to profitability.

“If volume is very low, don’t charge for overdrafts, since the FI is probably not into consumer checking,” Moebs explained. “Risk can be measured by FICO scores and historical credit usage. Net OD revenue less losses is reported weekly or daily to control risk. Costs are mainly compensation to provide and collect the credit, yet overhead cannot be forgotten. Unsecured lending is unique from secured lending since transactions require 24-hour review—not weekly or monthly—as secured is managed. The result is a lower price, which increases usage and higher volume, producing more revenue and profitable checking.”

What California Report Reveals

As CUToday.info reported, a strongly worded opinion piece published in Politico stated, “There’s a new predator making money off overdraft fees: credit unions.”

https://www.cutoday.info/Fresh-Today/In-Publication-With-National-Reach-Credit-Unions-Called-Predators-for-Their-Alarming-OD-NSF-Practices

The piece, published by Politico under the headline, “Credit Unions Are Making Money Off People Living Paycheck to Paycheck,” was authored by Aaron Klein, the Miriam K Carliner chair and senior fellow in economic studies at the Brookings Institution. Klein served as deputy assistant secretary of the Treasury from 2009 to2012 and as chief economist of the Senate Banking, Housing and Urban Affairs Committee from 2004 to 2009. 

The article follows the release of the first annual report from California’s financial regulator following a law requiring data be published showing how much institutions are making from overdraft fees and NSFs, as CUToday.info reported here.

https://www.cutoday.info/Fresh-Today/First-Ever-Report-Offers-Details-on-OD-NSF-Income-Among-California-s-State-Chartered-CUs

The article states a number of CUs would not have been profitable without OD fees.

Michael Moebs

Not Something New

Moebs said this situation, among all Fis, is not new.

“This is very common for most banks, credit unions and thrifts, especially since the Great Recession years of 2008-2014,” explained Moebs. “In 1983, the FI agenda then was to pay as little as possible on deposits and charge the most on loans and invest in high interest Treasuries. The net interest margin agenda is now much more market driven for both deposit rates and loan rates driving down the net interest margin. Fees then become very important to the bottom line.”

Moebs stressed credit unions across the nation that have had falling net interest margins have had to rely more on fees.

“Ultimately the real problem for CUs is too many employees and too high non-interest expense,” Moebs asserted, adding that those who contend CUs are ignoring their mission of serving members with the high prices are wrong. “Credit unions are just trying to adjust to the new reality of financial services following the pandemic. Again, their inefficient operating model is forcing most of them to charge higher fees.”

Checking as a Strategic Initiative

Moebs stressed the importance of making checking profitable, saying it must be a “strategic initiative.”

“Citibank has purged two-million unprofitable checking accounts. Walmart has taken the pole position in national checking market share with over 115 million checking accounts because it has a profitable checking portfolio,” said Moebs. “Yet, all 8,286 banks, credit unions, fintechs, and thrifts can be winners by making checking profitable and it starts with reducing the overdraft fee to $15 or less making the consumer win too.”

NCUA Board Nominee Tanya Otsuka Shares Personal, Professional Connection to Credit Unions

WASHINGTON–Testifying before the very committee that employs her, NCUA board nominee Tanya Otsuka said during her nomination hearing that NCUA’s mission of ensuring a strong system of cooperative credit is one that “resonates with me both personally and professionally.”

Otsuka is currently senior counsel for the majority staff of the U.S. Senate Banking, Housing, and Urban Affairs Committee under Chairman Sherrod Brown (D-OH), where she has handled the committee’s work on banking and credit union issues since March 2020.  She has been nominated to replace NCUA Board Member Rodney Hood, whose term has expired.

Tanya Otsuka testifies before Senate committee.

Family Members on Hand

Otsuka, who was accompanied at the hearing by her husband, Matt, her son, Adrian, and her sister, Natalie, credited her parents, Cary and Sima Otsuka, who were also on hand, for their work and sacrifice “so that my sister and I would have everything we needed to succeed. They instilled in me a strong work ethic, sense of purpose, and respect for others. I would not be sitting here today without their love and support.”

Lessons from Grandparents

“Growing up, I spent many summers with my paternal grandparents, listening to my grandmother tell me stories about her childhood. During World War II, she and her family were sent to an internment camp in Arkansas, forced to leave behind most of their possessions, including their family farm in California,” Otsuka said. “For the rest of the war, my grandmother and her family were incarcerated in a prison-like compound, surrounded by barbed wire, because they were Americans of Japanese descent.”

At the same time, her brother fought overseas in the 442nd regiment of the United States Army.

“My grandfather and his family shared a similar fate, forcibly incarcerated in Arizona,” she said.

Taking ‘Matters into Own Hands’

Otsuka said her grandmother recounted how difficult it was after the war to make ends meet when she and her family had lost everything, a challenge faced by many Japanese-Americans, some of whom took “matters into their own hands by forming a credit union so that Japanese Americans could access financial services and help each other rebuild their lives. Today, that credit union is still active and insured by the NCUA.”

According to Otsuka, such experiences embody the cooperative spirit and exemplify the important role that credit unions play, and she noted it was “fitting” that she was testifying on the 75th anniversary of International Credit Union Day.

‘Deep Appreciation’

Otsuka further testified that as a career public servant with more a decade of experience in financial services law and policy, she has a “deep appreciation” for the role that independent agencies like the NCUA play in maintaining stability and public confidence in our financial system.

“I began my career as an attorney at the Federal Deposit Insurance Corporation in the wake of the 2008 financial crisis,” Otsuka said. “During my 10 years at the FDIC, I gained experience in supervision, enforcement, resolution, assessments, and deposit insurance — all of which are also critical functions of the NCUA. I worked on the implementation of a number of FDIC policy actions, including many related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act.”

She also recounted her experiences on the staff of the very committee she was testifying before, the Senate Banking, Housing, and Urban Affairs Committee, where she said she managed a wide range of financial services issues, including credit union policy and oversight.

‘Positive Impact’

“I have seen the positive impact of government working for the American people to maintain a safe and sound financial system — especially in times of uncertainty,” said Otsuka. “I hope to continue my public service in support of the NCUA’s critical mission and to ensure a fair, competitive, and resilient credit union system. If confirmed, I will remain committed to the millions of Americans who rely on the NCUA to safeguard their hard-earned money.”

NCUA Director Rodney Hoods Chief of Staff Lenwood Brooks to Join FHLB-Dallas

 Former Chief of Staff to Join FHLB-Dallas

H. Lenwood Brooks, the chief of staff to NCUA Board Member Rodney Hood, is exiting the agency to join the Federal Home Loan Bank of Dallas, where he will spearhead the bank’s government and industry relations functions.

Hood’s term has expired and he is awaiting confirmation of board nominee Tanya Otsuka prior to exiting the board.

‘Pivotal Moment’

“Lenwood joined the NCUA at a pivotal moment in May 2019 and quickly became a linchpin of my leadership team,” said Hood. “His expertise in executive leadership, management, and public affairs, paired with his unparalleled ability to lead our dedicated NCUA career staff, proved crucial, especially at the onset of the pandemic. Lenwood’s role as my chief of staff during that challenging period was pivotal in navigating the unprecedented challenges we faced.

NCUA Board Member Rodney Hood (L) with Lenwood Brooks.

“Throughout my tenure as NCUA’s eleventh chairman and currently as a board member, Lenwood has been a driving force,” Hood continued. “Due to the constraints that prevent direct negotiation with my fellow NCUA Board colleagues outside of official agency board meetings, the onus largely falls on our board advisors to find consensus and advance the agency’s agenda. Lenwood’s exceptional tenacity was particularly evident in the progress of many initiatives, including the financial innovation final rule, which the NCUA Board unanimously approved last month.

‘Testament to Dedication’

“Many of my accomplishments are a testament to Lenwood’s dedication, strategic approach, and tireless work. Whether fostering dialogues, building consensus, or ensuring our initiatives align with NCUA’s broader mission, Lenwood consistently delivered. As Lenwood transitions into his next role, I am confident that he will continue to champion the values and work ethic that made him such a valued member of my team.”

Senate Sets Date to Hear Nomination for NCUA Boad Member Tanya Otsuka

WASHINGTON—The Senate Banking Committee plans to hold a nomination hearing Oct. 19 that will include NCUA board nominee Tanya Otsuka.

As CUToday.info reported, Otsuka was nominated in September by President Joe Biden to replace current Board Member Rodney Hood, whose term expired in August.

Tanya Otsuka

Otsuka is currently the senior counsel for staff of the Senate Banking Committee, led by Chairman Sherrod Brown (D-OH). Otsuka previously worked with the FDIC as a staff attorney and counsel.

Hood has indicated he will serve until President Biden’s nominee to replace him is confirmed. 

The hearing is scheduled to begin at 10 a.m. ET on Oct. 19.