Two reports share that the federal government may not profit or break even on their $1.4 trillion student loan portfolio; there has been an increase in borrowing in recent years and some graduate students are opting for income-driven repayment plans; these students are expected to pay back less than they took to pay for tuition; there are concerns that the interest payments of those paying the full amount on their loans may not be enough to offset those that are entering these plans. Source
News Roundup
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SoFi’s lending goal in 2017 was to lend more than they had in the previous 5 years combined; the online lender fell 26 percent short of the goal and instead lent out $12.9bn in 2017; the company had seen their share of issues in the last year with sexual misconduct claims and their CEO being forced out; SoFi spokesman Jim Prosser said the true goal for 2017 was closer to $13bn and the higher amount was a stretch goal. Source.
- German digital business bank Penta raises €2.2m in seed funding
- Challenger Bank Tandem Partners with Cognitive Banking Company Personetics
- Equifax launches data sharing solution to support SME lending
- Revolut ditches Wirecard for in-house card issuing
- LendingTree Mortgage Offers Report – January 2018
- Podcast Open banking role models: Fidor, Rabobank and BBVA
- Lloyds Bank cutting 930 jobs
- China is moving to eliminate all cryptocurrency trading with a ban on foreign exchanges
The only online lender focused on veteran-owned businesses has found a recipe for success. Source
When Digital launched in 2015 the company used chatbots to help users save money; Ethan Bloch, founder and CEO of Digit tells American Banker “We think chatbots haven’t lived up to their promise,” he said. “So we are done believing they will.”; the company has started using graphical interfaces that users tap for information instead of having them type in queries; this is the second change to the app recently, following the recent decision to charge users. Source.
According to new data bank branches in the US decreased by 1,700 over the last 12 months; this is the biggest decline on record; closings are concentrated in big cities and surrounding suburbs and is attributed to less foot traffic; other closures occurring in rural areas are due to some regional lenders leaving the area; the decrease in regional bank branches is something that has accelerated more recently compared to big banks beginning to close branches years ago; Capital One, SunTrust and Regions have closed 32%, 22% and 12% of their branches respectively from mid-2012 to mid-2017. Source
Citizens Bank of Edmond Oklahoma is a one branch bank who has begun turning their extra space into a co working space for business clients; the space is now called Vault 405 and includes wireless charging stations, conference rooms and a podcast studio; CEO Jill Castilla tells Tearsheet, “The office space will be just as beneficial to the bank beyond loans and deposits, it’ll make us a better small business.”; this isn’t the banks first foray into innovation as they were ahead of their time on social media, video teller machines and mobile payments. Source.
Lloyd’s Banking Group and Virgin Money recently banned customers from using their credit cards to buy cryptocurrencies; customers will still be able to use their debit cards to buy cryptocurrencies but for fear they could go into debt they do not want credit cards being used; other card issuers like Barclays and Mastercard say they are reviewing the crypto space but no decisions have been made. Source.
Aspiration has taken their marketing aim directly at some of the biggest banks by offering what they see is a better product and experience; “We’re not going after these banks for the sake of it, we’re talking about their actions and their approaches versus ours,” said CEO Andrei Cherny to TearSheet; the company does not charge ATM fees or monthly service fees and investments are done on pay what is fair basis; Aspiration is going beyond just the user experience by donating 10 percent of revenue to charity and focuses on whether customers spend at companies that are ethical and sustainable. Source.
There are differing beliefs on payday loans and how far regulation should go to protect consumers; to better answer the effects of payday lending on consumers many people turn to research; results of a study done in 2014 are now in doubt after a watchdog group found that $30,000 of grant funding came from a payday-industry-backed organization; since these types of studies help shape policy it has brought into question how deep these types of studies should be evaluated. Source