Overdraft fees are big business for most financial institutions and it’s estimated that 20% of credit union members, one in five, have an NSF annually.
The worse news is that the credit union’s NSF fee is just the start of the consumer’s pain. Joel Schwartz, founder and co-CEO of DoubleCheck, a Los Angeles company with an innovative spin on how to best handle NSFs, estimates that the NSF can lead to perhaps $175 in ripple charges such as a returned item fee imposed by the payee of the bounced check.
Ouch.
DoubleCheck has an alternative – and, hold on you protest, your institution wants to maintain its NSF income, especially in today’s economy where loan interest rates are anemic.
Schwartz gets that. He describes DoubleCheck as the financial equivalent of traffic school in the context of a speeding ticket. Go to traffic school and, usually, that wipes out the pain of an increase in insurance premiums.
What DoubleCheck’s tool does is offer the consumer realtime options for dealing with the consequences of an NSF such as offering the opportunity to use a credit card to make good on the check or ACH, therefore it doesn’t look like a bounced item to the payee. Whoosh, that $175 in ripple charges may vanish.
DoubleCheck charges $20, an amount it typically splits with the credit union – so in fact the credit union income goes up.
Sounds good? It gets better. The DoubleCheck tools – which make the NSF process transparent to the consumer – may help a credit union duck class action suits that claim discriminatory processing of NSFs.
There’s a link in the show notes to a recent Navy Federal $16 million settlement involving NSF charges.
There’s also a class action suit in progress. Link in the show notes.
Meantime, Schwartz predicts there will be Congressional action to limit NSF charges, a topic of much interest to Senator Cory Booker. See the link in the show notes.
DoubleCheck tools may help a credit union recoup some income that may be capped by federal action.
Mentioned in the show is SECU’s NSF policies. The charge is $12 but the member gets a two day window without charge to clear up the issue. (Here’s a link to a podcast with Jim Blaine, the retired SECU CEO.)
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The recent Harris Poll numbers are a splash of icy water on our faces: three in five Americans believe identity theft will likely cause them financial loss in the next year.
That is a finding of a poll done for the American Institute of CPAs.
That number is up from the 50% who in 2018 said they feared a likely loss due to identity theft.
Partly, the jump seems to be pandemic related—there just are a lot more online scams in the internet ether—and partly, too, it’s because all of us are shopping online much more than we had, also because of the pandemic.
Immediately, too, blaming fingers are pointed at consumers. How dumb are we? How do we let this happen?
Just maybe the best bank for your startup is not a bank at all but a credit union. That’s the advice of Rob Stephens, founder of CFO Perspective in Spokane, Washington, where he provides financial consulting for small businesses. “You will get all the benefits of a community bank but better rates,” he explained.
Stephens knows. He has worked as a CFO at several community banks and also put in a 6+ year stint as a senior vice president of finance at a credit union. And he is adamant that, in many cases, a credit union is the better place for a small business to bank.
The rethink I never saw coming continues to unfold in my wallet. And new cards have joined the party.
Of course, for years, I have thought Amex – Platinum in particular – had the starring role in my pocket. Regular readers will recall that as I bemoaned the lack of travel related perks in the Covid era – and they have been the main attraction for Platinum – I found myself making dramatically more use of the Amazon Prime card, which delivers 5% rewards on purchases at Amazon and Whole Foods, and also Discover, which offers a rotating cast of 5% cashback rewards. Presently it is on groceries and chain drug stores.
Amex meantime has rolled out new Plat rewards, notably a $30/monthly refund of PayPal purchases funded with the card, and there is a continuing $15/monthly credit on Uber and Uber Eats. Of course I shifted Netflix and the NY Times to PayPal and that’s a quick $30 in my pocket.
But as I feasted on different rewards I got hungry for more and new in my wallet is the Venmo Credit Card. What’s Venmo? A cool person to person payment service owned by PayPal, Venmo moved $100 billion in 2019 and it is fantastically popular with Gen Z (people ages 6 to 24). I signed up a few years ago because it works to send gifts to young relatives (some of whom don’t know what a paper check is).
It’s a good thing I did because I have a multi-year track record with Venmo. And when I heard about the new Venmo credit card, I wanted one.
Right now it is open only to a limited audience, and only via the Venmo mobile app, and when I checked, I discovered I was eligible to apply. So I did.
Why? It’s fee free and it pays cashback – 3% on your largest purchase category, 2% on the next largest, 1% on everything else. I see no caps on spending amounts. (Discover, by contrast, caps a 5% category spend at $1500, meaning $75 back.)
The percentages are dynamic. They will shift as your spending shifts.
We’ll see how much I use the Venmo card but, in principle, I like it because as I spend I earn a few dollars in rewards. Sure, I know there may be cashback cards with richer rewards, but remember Venmo is on point for me, in part because I have written about it before and probably will again. It’s a company I follow.
You want one? Download the Venmo app, from the Apple or Google app store, sign up for a new account and keep checking the app. You may see an invitation to apply.
But now I am on a roll of new cards and also in my wallet is Lili, a new mobile bank card that bills itself as the ideal card for gig economy workers (meaning me). And one afternoon, in under three minutes, I opened the account and funded it.
Partly I did that because in my other life I talk and write a lot about credit unions in particular and financial services in general (remember my tracking Venmo) – and a continuing obstacle in the digital transformation of credit unions has been a slowness to embrace online and mobile account opening. Often a new account means a visit to a branch and that is just so 1950.
When I saw Lili’s promise that a new account could be mine in under three minutes I had to take the plunge – and, voila, it worked. Interested in signing up? Go here.
Lili is free and it provides a free checking account, a Visa business debit card, and expense reports that make tax filing easier.
And the Visa business debit card also is a boom to tax filing. Just use it only for tax deductible expenses and that saves time right there.
OK, by now you are probably guessing that because I no longer have any interest in counting my air miles (what miles?) I have time on my hands and I am putting it to use playing with new credit and debit cards.
I cannot dispute that. Nor can I dispute that I now occasionally read geeky credit card advice articles on the Points Guy that I never would have spent a second on a year ago.
But, you know, saving money by using the right credit card is proving to be fun – and it is a lot easier than I had thought. And yet I still goof with inattention. I picked up a $6 prescription at Walgreens this a.m and paid with the Amazon Prime card (1% rewards). But I should have paid with Discover and gotten this month’s 5% reward. That’s 30 cents versus 6 cents.
It adds up, my mother used to tell me, and, yes, I ignored her. But now she’d be proud of me.
Breach Clarity, a startup from onetime Javelin Strategy + Research co-founder Jim Van Dyke, is about to change how organizations talk about their data breaches – with a loud emphasis on increased transparency, reduced opacity.
Breaches are commonplace. There are four significant ones daily, says Van Dyke. But that does not mean the public knows much about them. Ask any cybersecurity journalist what they do not like about organizational breach press releases and the short answer is everything. That is because opacity – saying as little as possible and offering few details – is the operating philosophy.
One fact: confused and frightened consumers want more facts about breaches and how they are impacted.
Scoring the Severity of a Breach
Enter Breach Clarity which aims to do three things that are game changing: it scores a breach on its severity, from 1 to 10; it tells an individual what he/she needs to do to protect himself if caught up in a specific breach; and it will soon offer a score of an individual’s risk of being a fraud victim with scores ranging from 1 to 100.
As for the action items Breach Clarity suggests, they will be specific to a particular breach and to an individual. Some breaches set up some individuals for IRS fraud, for instance. Others set up some individuals for new account fraud. Still others often will lead to attempts at account takeovers. There is no cookie cutter advice. Customization and personalization are what Breach Clarity aims to deliver.
A fourth thing may be even more game changing: Van Dyke, whose Javelin claimed many mega banks as clients, is marketing Breach Clarity as a value add for credit unions to offer to their members. He already claims one customer – BCU (formerly Baxter Credit Union), the nation’s 56th largest with around $4 billion in assets.
According to Van Dyke, although BCU is offering Breach Clarity as a free tool to members, it nonetheless forecasts a 5X ROI. How? Reduced fraud losses – financial institutions, says Van Dyke, absorb the bulk of the losses due to data breaches and the hope is that an informed membership will be better able to take steps early to minimize fraud.
Van Dyke also says there will be a reduction in member calls for help to call centers – and financial institutions relate that after heavily reported breaches they are swamped with SOS calls. Fewer calls mean lower costs.
Phase 2 of Breach Clarity’s marketing plan is to expand the focus to national and large regional banks.
Consumers Want This Help
Van Dyke also says that consumer research done by Breach Clarity found a surprisingly robust appetite for such tools among Gen Z and Millennials. Interest is also high – and expected – among Baby Boomers.
Where does Breach Clarity get its breach data? Via the non profit Identity Theft Resource Center, says Van Dyke, who sits on the ITRC board.
Eva Velasquez, CEO of ITRC, said: “The ITRC is honored to partner with Breach Clarity and provide more meaningful information to consumers and data breach victims. The biggest challenge breach victims face is understanding the risks associated with a particular breach, and what steps they should take next. Breach Clarity, powered by the ITRC’s data breach data, addresses this challenge by providing an intuitive risk score accompanied by essential action steps. We are proud to be a part of a no-cost solution that brings much needed clarity to the victims of data breaches.”
The analytics that score breaches on severity and generate custom corrective steps are results of Breach Clarity algorithms.
Three Steps That Must Be Taken
Here are three steps every organization that suffers a breach needs to take to prepare for demands for more transparency and clarity about breaches:
*Ditch the opacity in breach related press releases. Aim for more transparency, especially around what data was stolen, over what timeframe.
*Breached organizations need use cybersecurity writers to polish releases. By all means, involve lawyers and cybersecurity technicians. But writers specialize in the communication skills that will add much needed transparency.
*Be transparent about the cybersecurity steps that the organization has taken. Don’t give cyber crooks a road map but do disclose to the public information that will help restore confidence.
Every day there are four data breaches. And every year literally of billions of dollars are lost in various frauds that are fed by the data stolen in breaches. Who pays the bulk of that loss? Financial institutions, says Jim Van Dyke, founder of Breach Clarity, an innovative company that wants to shed a bright light on the breaches themselves but also what any given breach means for this consumer.
Generally there’s enormous opacity around breaches. Most organizations are slow to divulge details – and that makes it difficult for a consumer to decide on an appropriate action plan.
Breach Clarity aims to shine a spotlight on the breaches but also to tell consumers what steps they need to take to protect themselves.
Note: this is not a LifeLock type company. Breach Clarity is about research and personalized prescriptions that in many cases the consumer will take him- or herself, often in association with a participating financial institution.
Key to Breach Clarity is that its business plan involved signing up financial institutions who in turn will offer the service to their customers and members. It is not a direct to consumer play.
Another key: for now Breach Clarity’s focus is on signing up credit unions in particular. The member focus, says Van Dyke, makes Breach Clarity a tool that credit unions will want to offer members.
And a benefit is that Breach Clarity may well reduce a credit union’s fraud losses and also call center costs associated with breached members.
The first Breach Clarity customer is BCU (nee Baxter Credit Union). Check out a recent CUBroadcast show featuring Van Dyke and BCU’s Carey Price.
BCU forecasts its ROI on Breach Clarity will be 5x.
By the way, if Van Dyke’s name seems familiar it is because it should be. He was a co-founder of Javelin, a strategy and research firm focused on financial services. In a spot check, I found I cited Javelin research and opinions 61 times when I wrote for CUTimes. That’s a lot.
Check the Breach Clarity database for credit unions and there are 39 breaches. Is your FI on the list?
Don’ be lulled by that small number, Van Dyke warns. Few credit unions are breached – buy they still are where much fraud shows up, using data stolen in other breaches.
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The sub-head was the face slap: Lack of Funds Hamper Tech Improvements.
Here’s the problem: pre-Covid most hotels I stayed in desperately need significant tech upgrades.
In the Covid era that has not changed. In fact, hotels need more tech because of Covid such as touchless, keyless room entry, apps that permit self-check in and checkout without interacting with a front desk, and – ideally – I want just about everything in the room controllable by an Alexa or Google device and, yes, I have both apps on my phone and both kinds of devices around my home.
Just as I can turn on a light, or a TV, without touching the device at home I now want that same interface in shared spaces such as a hotel room.
Sure, the Covid crisis will pass and probably by mid 2022 just about all of us who will get vaccinated will have been. Business travel will substantially pick up, possibly in Q4 2021. It will never reach the heights it achieved in 2019 but pick up it will.
But we’ll be wanting all that touchless and remote interface tools in hotels even once Covid begins its slow vanishing act because we have gotten used to them.
There goes a good chunk of hotel tech monies.
The money pile will definitely not be tall because hotel analytics company STR has officially declared 2020 the “worst year on record.” How bad is it? So bad that already bottom feeders are circling, looking to pick up failing hotels for pennies on the dollar.
Here’s the problem: there already was a stack of critical hotel tech upgrades that had seemed to be on permanent pause, despite their being needed.
Such as?
In case it has been so long since you have been in a hotel that you have forgotten the tech miseries they inflicted on us, here are the three worst.
Dramatically better hotel WiFi is necessary. Zoom recommends a minimum speed of 1.5 MBPS – but personally I want many times that. I usually connect at around 350 MBPS – 346 this a.m. – via Google mesh and still I have recurring sound issues on Zoom.
How fast is hotel WiFi? A website hotelwifitest says it has the data and, in a glance at Phoenix, the fastest wifi I saw was 26.9 at Aloft Airport. The slowest was 4.6 at Pointe Hilton Tapatio Cliffs Resort.
I cannot vouch for the recency of these data but it doesn’t matter. Those who have used a lot of hotel wifi don’t need a website to tell us the obvious: hotel wifi sucks.
Wifi at events and meetings is if anything worse than in-room wifi.
Remember, use VPN and your speed loss may be 10 to 30%, sometimes more.
These speeds are abysmal. Why so slow? Hoteliers have simply been reluctant to invest in the gear needed to up the speed – even as guests stumble with connections to everything from Netflix to Zoom to corporate servers.
We live online, in the cloud, and yet hoteliers are foisting antiquated and slow Internet at us.
It has to stop and, very probably, as travelers return to hotels one of the first things they notice is the lack of Internet speed. Complaints will be loud, angry and possibly online (if the users can get online). Get in line and be ready to yell.
Improved cellular access is a must. When my home WiFi goes out, I shrug, pick up a T-Mobile phone and create a hotspot (and the cellular data is free on that account). How easy is that?
Often, too, the voice connections also falter. How often have you had dropped calls at a hotel?
There are fixes, they are known – but hoteliers haven’t wanted to spend the money and that was before the pandemic. Their willingness to part with the cash for reliable cellular is no higher now.
Maybe they still hope we will pick up their inroom phone and use it (although I cannot remember the last time I did).
So shall we must and will yell about bad cellular when we are back on the road.
Porous hotel cyber security. I have written about this so often I have little left to say except that our personal data – everything from credit card numbers to loyalty account log ins – has been leaking out of hotels for decades.
We need to yell, loudly and often, to remind hotels they are compromising our Internet security by not taking their own security seriously.
That’s three big tech steps forward, on top of the Covid related steps. Will hoteliers heed any of our demands? What I can say with certainty is that if we don’t lift our voices they will do the same exact nothing about these three tech frailties for a decade.
Sit back and listen. Over the next 45 minutes what you will hear is how a data geek thinks because Karan Bhalla, CEO of CU Rise, will show you.
I did not ask Bhalla to do a demo. This just is what he does.
Show him a pile of data – it could be anything: from your Safeway grocery receipts for last year through a credit union’s auto loan portfolio – and Bhalla will begin sifting, searching for the meaning in the data.
Think like a quant, he says, and quant is Wall Street slang for a math maestro. Quants gave us securitized mortgages – “we had no idea how much people would lie,” a quant who played a role in developing that instrument told me some years back.
But a quant like Bhalla can help a credit union figure out how to make more and better car loans and, get this, a quant can even help a credit union figure out which borrowers who are veering into default are most likely to pay up if contacted by the credit union.
Don’t miss Bhalla’s CU Compare which lets a credit union compare its performance metrics to a competitors or a group of competitors. At what price? Free for the basic service (add-ons with fees are available but Bhalla says the basic version is very rich).
Bhalla has been in data analytics for many years and, he says, the biggest change is that nowadays credit unions of just about all sizes want to make data analytics work for them. Used to be only the big institutions had an interest. Now institutions of all sizes recognize that data is what paves the path to prosperity.
In this podcast Bhalla offers tips on how to get started but he also talks about how to go ever deeper.
Quants rule – you will be a believer before the podcast ends.
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Just when you thought ATMs had to be going down for the count—and, honestly, who didn’t think that as the pandemic took hold?—the rumbling is loud that ATMs are emerging as a low cost branch replacement option.
Understand, too, that closure of bank branches is on a fast track. Pymnts forecasts that some 20,000 bank branches will close by year-end, mainly because many of us have shifted our banking to digital channels and correspondingly have cut back on branch visits. Personally, I cannot remember the last time I was in a branch. Recently, when I walked by the branch I had very occasionally visited, it had plywood on the windows and doors and a notice that it was closed.
Michael Perito, regional bank analyst for Keefe Bruyette & Woods, a New York investment bank, is on record saying that there needs to be closures of perhaps 20 to 30% of branches—“and that’s a conservative estimate.”
Sure, credit unions are unlikely to close as many branches as banks will because the industry is not over-branched the way money center banks in particular are. There will, however, be closures of credit union branches in neighborhoods where they are not demonstrating there is a need. And other branches will close as institutions “right size” branches from yesteryear’s 3,000+ sf to under 1,000sf (and often just a single teller line, down from the four to eight of yesteryear).
Call this a big branch rethink where what will emerge is the branch of tomorrow. Few believe credit union branches are disappearing. But many think that tomorrow’s branches will make much more use of self-service tools and technologies.
Already I am getting hopeful emails from business traveler buddies, all of whom want me to tell them that the revival is right around the corner. Get jabbed with the vaccine and you are good to go, they believe, and therefore some have started concocting wish lists of business travel destinations they plan to visit in 2021.
Word of advice: unpack. There is every sign that the revival of business travel will be slow.
Count me in the Bill Gates camp where the Microsoft co-founder predicted 50% of business travel will not return. The key reason: organizations have realized they can keep the business going without travel. And it is a whole lot cheaper to close a deal via Microsoft Teams than in person. Amazon alone has pegged its 2020 savings at $1 billion.
Lots of travelers hope Gates is right because a sizable chunk of frequent fliers have always complained about the grind and there also are the many medical studies that correlate frequent travel with impaired health.
Of course there are optimists. Delta for instance predicts a vigorous rebound in the second half of this year
At least some experts predict 70% or more of us will be vaccinated by June.
Dr. Anthony Fauci is more cautious, predicting we may reach “herd immunity” by fall and something like “normalcy” by year end.
The Rebound in Leisure Travel
I believe the vaccine will stimulate a rebound in leisure travel in 2021, probably by early summer. Business travel will lag, and usually that is what happens. Leisure travel gets strong sooner, says consulting firm McKinsey.
Drive vacations will come back first – and already are in some parts of the country. I am hearing about booms in holidays in the Berkshires of western Massachusetts and the Hudson River Valley in New York and in Phoenix, where I live, there already are strong signs of much travel to Sedona and Flagstaff.
As more of us get vaccinated, more will also climb on airplanes for leisure trips – at least domestically – before year end.
As for international leisure travel, I am more gloomy. A UN panel has predicted it will come back in Q3 2021 but at least as regards longhaul trips across oceans I don’t see an international leisure travel rebound until 2022. Mainly because many of us just don’t feel safe flying, even though the evidence for Covid spread on planes is not bountiful.
Those reasons are why many believe international travel just isn’t on for 2021, not even for leisure.
Casting Gloom on 2021 Business Travel
As for business travel, I do see it rebounding in 2021 but I see this as a fractionalized recovery. Some kinds of travel will rebound much faster. Some may never come back (remember Gates!).
As for what won’t come back, I see instructional events – where employees are briefed on the how to of using a new software tool, for instance. Pretty much all of that travel will be nixed because it is easier and much cheaper to learn at one’s desk.
I see many sales calls no longer happening in person – preliminary calls can just as well be done over Zoom. Instead of spending a day traveling to Pittsburgh, and home, and in a 30 minute meeting, a salesperson can do a quick Zoom call – and maybe five more in the time that day trip would have consumed. It just has not been a good use of time.
I see many “getting to know each other” trips stopped. We have all done these – where an employer or client packs us on a plane to Midland, Texas and we have a day of meetings with local executives and, yes, we can now associate a face with a name. But so what? I have done too many of these trips and, in retrospect, think just about all could have been done as effectively (and cheaper and more time efficiently) via Zoom.
You are right – low cost, easy to use video calling did not exist when I made most of those trips. But that’s what has changed. Technology has enabled behavior changes.
Business Travel That Is Coming Back in 2021
Some business travel will pick up, certainly by Q3 when many employees will have been vaccinated and employers can put them on the road again with some confidence they will stay healthy.
And with some kinds of travel, employees will see the reason to be on the road.
Like what?
*Service calls. When a customer needs help – the damn widget just isn’t working! – and online troubleshooting hasn’t worked, a body will be put on a plane to fix it.
*Buzzy, big events. We like them, we meet useful people, we build personal neworks, we may even meet possible new clients. Send me to a meeting of 1000 in Las Vegas and count me as happy to go. The big shows are energizing. I see good years ahead for everything from CES to Money2020 and Finovate. Maybe not 2021, but definitely 2022.
*Sales closings. The preliminary work will shift to video calls but when a signature is wanted on the line that is dotted, an in-person call will happen.
Are there other kinds of business trips that will rebound later in 2021? Sure. The year will not be a wipe out, as the last nine months of 2020 were for many of us. But we – companies and workers alike – learned much in that forced break from business travel. We will return to what is needed.
But what can be eliminated will be. Just remember, historically business trips got approved if they complied with organizational travel policies (class of air, grade of hotel, etc). In 2021 there now is a wholly new question: Is the trip necessary – can the goal be achieved with zero travel? That changes the equation. And we all will travel a lot less.
