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Monthly Archives: June 2019

A Fintech CEO’s Reaction to Fed Holding Interest Rate

Chairman Jerome Powell and the Federal Reserve electing to hold steady on interest rates for now came as no surprise to WalletHub’s CEO Odysseas Papadimitriou. While he did not expect a rate change yesterday (June 19), “… future pricing indicates we’re almost certain to see a rate reduction this summer or early fall.”

Asked if the Fed should reduce its target rate, Papadimitriou responded, “The Fed has more economic data than anyone, so if they are simply reacting to market conditions, there’s no reason to question them at this point. However, the Fed must make it very clear that the move is not politically motivated.”

He feels that President Trump’s public statements have made it abundantly clear he and his administration would like rates to decrease as they believe it will lead to prolong the current period of economic expansion, at least, in Papadimitriou’s view, “through re-election.” However, he continued, “Fed Chair Jerome Powell has also made it clear that he fully understand the independent authority of his office. It is hard to say which of those two opposing forces is winning out right now.”

For what it’s worth, WalletHub’s recent Fed Rate Survey found that seven in 10 people feel that the Federal Reserve knows how to grow the economy better than the Trump administration. Yet, almost the same number of people, 76 percent, support a Fed rate cut, considering it good for the economy.

Papadimitriou believes a rate cut would benefit consumers with credit card debt. “WalletHub projects [they] will save roughly $1.6 billion on interest,” he said. “If reducing rates delays the next recession, it would help all of us by giving us some extra time to save up for leaner times. Plus, a drop in rates would put American businesses and consumers in a better position to withstand an escalation in the trade war with China.”

The signaling from the Federal Reserve that it may lower rates later this year has many Americans wondering why did the agency raise rates in September and December of last year only to reduce it during the same period of 2019?

“The Fed’s official position will be that market conditions have changed,”
Papadimitriou predicted. “The story you’ll see on cable TV will be that President Trump coerced the Fed into action. From my perspective, the Fed completely miscalculated how serious the Trump administration was about using tariffs as a negotiating tool with China and other countries.”

Small Business Loan Approvals Continue to Rise at Small Banks

The approval percentage for small business loan applications climbed yet again at small banks, reaching 49.9 percent, according to the Biz2Credit Small Business Lending Index. Approval rates at large banks (those totaling more than $10 billion+ in assets) also rose, reaching a record high of 27.5 percent.

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Decoys to Dye Packs: Facing Down Cybersecurity Threats

By Carolyn Crandall

The days of Jesse James’s train and bank robberies and John Dillinger kicking down doors with his trademark Tommy gun may be long gone, but bank heists are alive and well in the 21st century — albeit with a new flair. Instead of dramatic physical robberies, today’s criminals have shifted the battleground to cybersecurity, infiltrating the networks of financial institutions globally to steal money and personal information. The attacks remain staggering. Back in 2012, individuals and businesses are believed to have lost approximately $78 million during Operation High Roller. Fast forward to today, and the hacking group known as Bandidos Revolution Team is reported to have stolen hundreds of millions of pesos by infiltrating interbank payment systems and hacking into ATMs. Notably, this group is not believed to be connected to another, separate 300-million-peso heist from five banks last year.

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Online Applications Can Increase Loan Volume, Decrease Overhead

Minneapolis, Minn. // www.wolterskluwer.com

Online Applications can empower community banks and credit unions to provide a new digital sales channel to reach new customers and grow loan volume, all without the overhead of additional branches. OLA enables lenders to accept applications without requiring customers to physically enter a branch, and completion of applications online vastly reduces lenders’ manual data entry, cuts overhead and streamlines lending processes.

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Your Girl Is Lovely, Hubbell

Why are so many chatbots female?

By Alaina Webster, Managing Editor

Chatbots and digital assistants are everywhere. Start typing questions in a chatbox on a website, and there’s a good chance you’re not conversing with a living, breathing human. And whom did you consult about the weather this morning? Did you tune into your local news station, or did you simply ask Alexa while standing in your closet, trying to decide how many layers you’d need?

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