How Long Will Inflation Linger? CUNA Mutual Economist Steve Rick Offers Some Thoughts

MADISON, Wis.– Look for inflation to continue to linger around, according to one CU economist. 

In the October Trends Report from CUNA Mutual, which is based on data through August, the company’s chief economist, Steve Rick, quotes the 1962 observation from Nobel prize-winning economist Milton Freidman in which he said, “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

The Federal Reserve, said Rick, “is currently putting his hypothesis to the test.”

Rick noted the nation’s money supply has experienced the fastest growth rate in modern history.

“The money supply (called M2) consists of currency, checking deposits, savings deposits, money market deposit accounts and certificates of deposit,” wrote Rick. “M2 closely resembles the deposit products offered by many credit unions to their members. We can therefore see the close correlation between credit unions’ deposit growth rate and the M2 growth rate in the figure below.

During the last 18 months, the nation’s money supply and credit union deposits grew over 20%, but output increased less than 3%. In other words, credit union members and Americans, in general, are flush with cash but don’t have additional goods and services to spend it on.”

Members Have High Balances

Rick noted the data show the average credit union member was sitting on $13,490 in deposits this past June, up from $10,860 in June 2019, before the COVID-19 pandemic and the three resulting stimulus checks.

“This $2,630 in additional liquidity has provided members with significant additional spending power,” stated Rick. “Economists also define inflation as, ‘Too many dollars chasing too few goods.’ So, we could be looking at inflation staying around longer than some, as the Federal Reserve believes will be the case.

Fiserv Partnership Will Allow Consumers to Buy, Sell, Send & Spend Digital Assets

BROOKFIELD, Wis.–Fiserv said it has entered into a strategic relationship with Bakkt, a digital asset platform that enables consumers to buy, sell, send and spend a range of digital assets.

“The combination of expansive capabilities from Fiserv, including the ability to move funds into and out of mobile wallets, with Bakkt’s digital asset platform will enable practical uses of crypto and emerging asset classes,” the company said.

According to the company, a future integration of Bakkt into the Carat omnichannel ecosystem from Fiserv will allow businesses to pursue new options for B2B and B2C payouts, loyalty programs, and transactions, all with crypto assets accessible via a digital asset wallet.

“Merchants will be able to deliver innovative consumer experiences through a simple integration to Carat and roll out new digital asset offerings that are right for their brand and customers,” Fiserv said.

“Carat is a trusted solution for businesses, including fintechs, that want to access a broad range of commerce-enabling capabilities, such as the ability to accept and disburse funds, from a single provider,” said Nandan Sheth, head of Carat and Digital Commerce at Fiserv. “Bakkt will be leveraging these capabilities while also working with us to build emerging merchant experiences that help bring crypto assets into the mainstream.”

‘An Important Moment’

Added Sheela Zemlin, chief revenue officer at Bakkt, “This partnership with Fiserv marks an important moment as we together create opportunities for consumers to seamlessly and at their own pace introduce digital assets into their daily habits. Whether it be buying bitcoin from within a financial institution’s app, redeeming loyalty points from their favorite restaurant for merchandise, using a digital asset wallet, or getting paid in bitcoin for their side gig grocery delivery runs, consumers will have new opportunities to participate in the digital economy.”

In addition to the new digital capabilities for merchants, Fiserv and Bakkt said they plan to introduce Bakkt technology that supports consumers’ ability to buy, sell, and hold crypto assets to Fiserv financial institution clients.

CEO Compensation-Approach and Impact by DeeDee Myers

Numerous CEO shifts this year directly impact potentially outdated compensation philosophies related to creating a rewards package to retain and reward a newly hired or promoted CEO. Unfortunately, CEOs are often unsure of their performance metrics, short-term incentives, long-term incentives, and retirement package a year or more after they assume a CEO role. The impact is a lack of clarity on success factors between the Board and CEO, which inevitably transfers and translates to a less-than-adequate clarity of priorities and actions within the executive and management ranks.

Deedee Myers, Ph.D., MSC, PCC 
Direct office: 602-840-1053 
Cell: 602-821-9300
https://ddjmyers.com/

 

Save The Date 10/5-8/2022 

 

Members to be Paid 2 Days Early

JACKSONVILLE, Fla.— VyStar Credit Union is the latest to offer a service that allows members to be paid up to two days sooner when they link their VyStar checking or savings account with a direct deposit payment.

“In an effort to provide members with additional benefits, VyStar is advancing access to direct deposit payments when they are posted to a member’s account, up to two days earlier than most traditional banks,” the credit union said.

In most cases, payers post their payment files in advance of the payment date, VyStar stated, adding that when this happens it will go ahead and advance the payment amount to the member’s account right away — resulting in members getting access to their payment up to two days before the actual payment date.

“We’re always looking for ways to help our members maximize their financial power, and this unique benefit is a prime example of that,” said VyStar EVP/Chief operations Officer Chad Meadows. “By providing our members with even earlier access to their money, we are creating flexibility, alleviating stress and hopefully improving their day-to-day financial lives.”

Other Benefits

In addition to two-day early direct deposit payments, VyStar said it also offers a wide variety of benefits to its members. Those include:

• Free Checking
• Interest on daily balance
• No monthly minimums
• Access to more than 20,000 no-fee ATMs nationwide
• Online & Mobile Banking
• Pay in-app with digital wallets

A new analysis has found the average ATM surcharge was unchanged from last year at $3.08.

CAMBRIDGE, Mass.–A new analysis has found the average ATM surcharge was unchanged from last year at $3.08.

“This marks a rare feat, as this surcharge has increased in 20 of the past 23 years, with 2004, 2020, and 2021 being the exceptions,” reported Bankrate.com, which conducted the survey and performed the analysis. “However, every ATM owning bank surveyed will charge non-customers.”

The average fee charged by banks when their own customer goes outside the network fell for the fourth consecutive year, to $1.51, a 10-year low and down 12% from the previous record in 2017 of $1.72. The decrease can be linked to continued increases in the number of accounts permitting free out-of-network withdrawals, now 40%, up from 35% last year and 32% in 2019, according to Bankrate.com.

The company’s analysis said that in combining the two fees, the average total cost of an out-of-network ATM withdrawal is $4.59, down for the second year in a row, and about 3% below the record high of $4.72 set in 2019.
ATM fees vary by metro area, with Atlanta having the highest average out-of-network ATM fee of the 25 major metro areas in the study ($5.23), while Los Angeles has the lowest ($3.90), the company said.

The same Bankrate.com analysis found NSF fees in 2021 have hit a new high.


Methodology
The survey group consisted of 245 banks and thrifts in 25 large U.S. markets. A total of 236 interest and 236 non-interest checking accounts as well as their associated ATM and debit card fee policies were included in the survey, which was conducted July 19 to Aug. 9, 2021.

The Beginning of the End for Overdraft Fees — What’s Next?

Due to digitization, growing consumer awareness, competitive forces and political pressure the days of $35 overdraft fees are fading for many financial institutions. As more banks and credit unions drop or reduce fees and provide alternatives to help consumers bridge short-term cash flow issues, they also need new revenues. Building trust through fee transparency and advice can not only make up the shortfall but put institutions in a better long-term position.

In a time of rising consumer awareness, increasing competition and political and regulatory scrutiny, overdraft charges are casting some financial institutions as villains, even if they complying with Reg E or other applicable regulations. A growing number of banks and credit unions are extending grace periods or offering short-term accommodations to bridge gaps in consumer liquidity.

As the industry slowly moves away from overdraft fees, banks and credit unions will have to seek new channels to replace the revenues.

Read the complete article as to "Whats Next" HERE https://thefinancialbrand.com/123887/overdraft-fee-debit-card-pnc-chime-ally-regions-low-cash-mode-walmart-walgreen/?edigest1 

SAVE THE DATE 10/5-8/2022

 

 

Now members can leverage the equity in their automobiles.

DALLAS—First there were home equity loans, now consumers can leverage the equity in their automobiles. https://www.otto.xyz/




Otto, a fintech startup that aims to allow people to tap into their vehicle’s equity for access to credit, has raised $4.5 million in a seed round of funding, TechCrunch reported. Among Otto’s financial backers is Mark Cuban, along with several other venture capital firms.

The company is building a mobile platform that will essentially let people borrow against their vehicles at the same interest rate as standard credit cards.

But unlike other cards, Otto said it will not charge fees or overdraft charges, and will not require applicants to supply their FICO credit scores.

Users will be able to remotely verify and collateralize their cars through Otto’s mobile platform, which is set to launch in early 2022, TechCrunch reported.

‘“Predatory” title loan agreements absolutely Crush People"

According to TechCrunch, friends and former colleagues George Utkov, Jordan Miller and Daniel Ashy came up with the idea for the company after Utkov’s friend became the victim of a “predatory” title loan agreement.

“Millions of people every year take out what are called title loans — and it’s when you own your car outright, and basically go pledge the title of your car as collateral against the loan,” Miller told TechCrunch. “These loans are 30 days long. They are 500%+ APR, and they absolutely crush people.”

 

Home Sales Rise "BUT" This represents a 2.3% decrease in sales versus a year ago.

ARLINGTON, Va.—Existing home sales rose 7% in September to a seasonally adjusted annual rate of 6.29 million units.

This represents a 2.3% decrease in sales versus a year ago.

NAFCU's Curt Long noted “existing home sales rose on the month to the highest level since January."

"Housing starts fell 1.6% on the month while permits are down 7.7%, but the pipeline of construction is still full with backlogs near a 15-year high," said Long, NAFCU's chief economist and vice president of research. "Until they can catch up, home-builders will limit their sales as they battle labor and material shortages."

Sales rose in all four regions this month. The South saw the largest rise, gaining 8.6% on the month, followed by the West (+6.5%), Northeast (+5.5%), and Midwest (+5.1%). Versus a year ago, sales were down in all regions.

The median existing home price declined from $356,700 in August to $352,800 in September (not seasonally adjusted). That is a 13.3% increase from a year ago.

‘The Main Headwinds’

Based on current sales, there was 2.4 months of supply at the end of September, down 0.2 months from August. Analysts consider six months of inventory a rough balance between supply and demand.

"Rates have begun to rise, but too late to be captured in the September figures," added Long. "Demand is still outstripping supply, so it would take a large move in rates to dent sales.

"For now, low supply and elevated prices remain the main headwinds," concluded Long. "NAFCU expects sales to remain steady until supply bottlenecks are cleared."

UNIFY Financial CU First to Offer Members Ability to Buy, Sell, Hold Bitcoin

TORRANCE, Calif.–UNIFY Financial Credit Union and Five Star Bank are reporting they have become the first financial institutions in the U.S. to enable their members/customers and members to buy, sell and hold bitcoin.

UNIFY Financial and Five Star are offering the bitcoin availability through the integration of solutions provided by NYDIG and the Q2 digital banking platform, according to a statement from Q2Holdings. NYDIG is a financial services firm focused on bitcoin.

According to NYDIG’s research, more than 20% of American adults own bitcoin and more than 80% of those individuals would store it with their primary bank or credit union if the service was offered. Additionally, more than 71% of bitcoin holders say they would switch to a bank or credit union that supports Bitcoin, according to the company.

“This is an exciting partnership with Q2 and NYDIG and a huge opportunity for UNIFY and our members. We are thrilled to be the first credit union on the Q2 platform to enable members to trade Bitcoin,” said Greg Glawson, EVP, chief information officer, UNIFY Financial Credit Union, in a statement. “By offering a streamlined and simple process to begin trading in this new asset class, we are continuing to meet our member needs, especially as many have awareness about the convenience and benefit cryptocurrency may provide. Having a trusted provider in their credit union will hopefully add to their confidence as they engage in this new opportunity. By offering the ability to trade in bitcoin, UNIFY brings substantial new product value to our members that can help differentiate us from other financial institutions.”

The $3.59-billion UNIFY Financial has more than 265,000 members.

Overcoming Barriers

Q2 said its digital banking platform helps credit unions and their members to overcome barriers to holding bitcoin such as wallets and key management.

NYDIG said in a statement its full-stack bitcoin platform is “built to the highest security, regulatory, and operational standards to help traditional banks and credit unions enable their account holders to buy, sell, and hold bitcoin and to view their current bitcoin balance alongside their traditional banking accounts.”

“This is a game changer for financial institutions in the U.S,” said Jonathan Price, Q2’s executive vice president, Emerging Businesses, Corporate & Business Development, in a statement. “Built on the Q2 Innovation Studio, this new Q2-NYDIG offering gives financial institutions the choice to offer bitcoin to their end users, while taking into account the regulatory and security requirements needed to enable banks and credit unions to securely step into the bitcoin arena and meet growing consumer demand.”

Q2 reported it has more than 18 million end-users on its platform.

U.S. Eagle FCU Eliminates 'Painful Overdraft' Fees

The credit union joins only a handful of other CUs that have removed or reduced fees this year.

In a first for a credit union in New Mexico, U.S. Eagle Federal Credit Union said it will drop all overdraft fees for personal and business checking accounts beginning Thursday – which happens to be International Credit Union Day.

During a virtual press conference Wednesday, U.S. Eagle President/CEO Marsha Majors said, “We’re so proud to be among the first of a very small group of financial institutions that are stepping up to do this.”

According to Majors, the Albuquerque-based U.S. Eagle ($1.3 billion in assets, 83,029 members) sees roughly 10,000 to 20,000 of its members each year having to pay some kind of overdraft fee or non-sufficient funds (NSF) fee. Eliminating these fees, which range from $29 to $33 per incident, will result in the credit union losing somewhere between $1.5 million and $3 million each year. However, that does not worry Majors.

“Our focus here, along with our strategy, is really to provide value-added products and services and we believe with our continued focus in that area our other products and services [will] offset this,” she said.

Fee-elimination discussions, according to Majors, had been going on for a long time.

“I’ll say that for some time, it’s been one thing that I’ve considered over several years and as the economy fell into the pandemic, we’ve been there for our members with extensions and waivers of these fees for the last couple of years or the last 19 months. And as a result of that, we thought that, you know, maybe the timing is now right for us to make this change,” Majors said.

Earlier this month, the Pembroke Pines, Fla.-based Power Financial Credit Union eliminated all overdraft and non-sufficient funds fees for members with personal or business accounts. That policy went into effect on Oct. 1.

In August, the $14 billion Chicago-based Alliant Credit Union announced it stopped charging members for overdraft fees or NSFs on all checking and savings accounts. Alliant remains the largest credit union to eliminate those fees.

The Madison, Wis.-based UW Credit Union announced in July that it reduced its overdraft and NSFs from $30 per occurrence to $5. Just last month, the Oklahoma City-based WEOKIE Federal Credit Union reduced its fees from $27.50 per occurrence to $15 per occurrence.

During the virtual press conference, Majors was asked, “What do you think is holding back the industry as a whole from making this leap [to eliminate or reduce fees]?”

Majors responded, “It’s really hard to say, you know? Every credit union or financial institution for that matter, they have their unique strategy; and again, it’s about living your mission in it. And how far do you want to demonstrate that to your membership, and into your communities? So I would hate to speak on behalf of other credit unions or financial institutions, but it aligns with our mission and vision and our brand purpose; and if you focus on that, then I think that ultimately credit unions, in any case, will arrive at this place at some point.”

Michael Ogden
CUTimes