November 7, 2018
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ICBA is partnering with The Venture Center in Little Rock, Ark., to launch the ICBA ThinkTech Accelerator, a community bank-focused fintech accelerator program. This first-of-its-kind fintech accelerator provides an outlet for community banks to directly engage and partner with early-stage fintech companies focusing exclusively on community bank product development.
 
How It Works
A selection committee made up of ICBA staff and member bank executives will actively participate in the program, serving as mentors to early-stage companies vying for top spots in the selection process. The first step is a "proof of concept" phase, in which ICBA and community bankers provide feedback as part of the mentoring process for companies looking to partner with community banks. ICBA selection committee members will also serve a key role in selecting up to 10 candidates for the ICBA ThinkTech Accelerator program. ICBA will invest in each accelerator participant. Finalists will present their solutions to community banks at the ThinkTech showcase at the 2019 ICBA LIVEĀ® convention, March 18-22 in Nashville.
 
With the viability of the London Interbank Offered Rate uncertain beyond the end of 2021 , the Small Business Administration is changing the base rate for fixed-rate loans in its popular 7(a) program to the prime rate. In a Federal Register filing on November 6, 2018, the SBA announced that it will set the maximum allowable spread on 7(a) fixed-rate loans at prime plus 6 percent for loans of $250,000 or less (plus an additional spread permitted for loans of less than $50,000) and at prime plus 5 percent for loans over $250,000.
 
The revised calculation - last adjusted in 2009 - addresses the roughly 300-basis-point difference between the prime rate and the Libor-based fixed base rate. The new maximum allowable spread will no longer depend on the loan term, the SBA said. The revision covers all 7(a) fixed-rate loans, except for those in the SBA's Export Working Capital and Community Advantage programs. The agency will address a Libor replacement for variable-rate loans in a future rulemaking. The new rule took effect upon publication.
 
The Bank Policy Institute (BPI) , released a new report, Getting to Effectiveness - Report on U.S. Financial Institution Resources Devoted to BSA/AML & Sanctions Compliance , which provides results from an empirical study undertaken to better understand the effectiveness of the current Bank Secrecy Act, anti-money laundering and sanctions regime. The report measures the resources U.S. financial institutions are devoting to compliance, and whether these resources are efficiently and effectively supporting law enforcement and national security efforts. The data shows that, presently, there are very few instances in which banks' required regulatory compliance efforts yield results, such as law enforcement follow-up.
 
"Financial institutions are required to devote thousands of employees and billions of dollars to BSA/AML and sanctions compliance, but this report shows that these efforts aren't producing the intended results," said Angelena Bradfield, Vice President, AML/BSA, Sanctions & Privacy at BPI. "The data makes it clear that the current US compliance regime is broken and failing at its core mission of catching criminals. The banking industry is committed to helping law enforcement detect and catch criminals, but the current regime is limiting banks' ability to effectively deploy resources to this end. Both the public and private sector must work together to modernize the AML/CFT regime."
 
The most notable results were:
  • Survey participants are employing over 14,000 individuals, investing approximately $2.4 billion and utilizing as many as over 20 different I.T. systems per institution to assist them with BSA/AML compliance;
  • In 2017, survey participants reviewed approximately 16 million alerts, filed over 640,000 suspicious activity reports (SAR) and more than 5.2 million currency transaction reports (CTR), and institutions that record data regarding law enforcement inquiries reported that a median of 4% of SARs and an average of 0.44% of CTRs warranted follow-up inquiries from law enforcement; (there is no data on how many prompted an arrest or conviction, or whether SAR data proved important when sought, as the industry does not have such data.)
  • In 2017, survey participants that recorded alerts by activity type reported that 18% of their alerts related to structuring, but few structuring SARs warranted follow-up inquiries from law enforcement;
  • In 2017, survey participants reported that of approximately 2.36 million customers designated "high risk" pursuant to agency guidance, a median of roughly 6% were subject to SAR filings while 0.3% of these SAR filings warranted follow-up inquiries from law enforcement; and
  • Survey participants are employing over 915 individuals, investing roughly $173 million, and utilizing 3 to 6 I.T. systems at each institution to assist them with U.S.-based sanctions compliance, yet when screening wires and customer and related party accounts for potential OFAC matches, institutions reported true matches with an overall median of 0.00004%, with some institutions reporting no true customer matches at all.
The Study  >> 
The number of ACH payments totaled more than 5.6 billion in the third quarter of 2018, a 6.7 percent increase over Q3 2017, according to NACHA. The ACH Network's strong performance is driven in large part by online and business-to-business (B2B) payments.
 
More than 3.3 billion ACH debit and nearly 2.3 billion ACH credit payments were made in the third quarter of 2018. During this same period, B2B payments increased nearly 10 percent with over 896 million payments completed.  Healthcare EFT payments, a healthcare industry standard for claim payments from insurers to providers, also increased by 10 percent to 77 million payments. In addition to B2B growth, online ACH payments increased by 14 percent and totaled 1.5 billion.
 
NACHA Report  >> 
Just 28 percent of Americans - approximately 70 million people - are financially healthy, according to the Center for Financial Services Innovation's inaugural U.S. Financial Health Pulse report released today. Fifty-five percent of Americans were classified as "financially coping," struggling with some but not all aspects of their financial lives - such as spending less than they earn, saving, paying bills on time, and managing existing debt - while 17 percent were considered "financially vulnerable," struggling in all or nearly all areas.
 
Almost half of the survey respondents - 47 percent - said their spending equaled or exceeded their income over the past 12 months, and one in four said that they turned to credit to make ends meet. Forty-five percent said they did not have enough money saved to cover at least three months of living expenses, and 37 percent said they did not feel they were on track to meet their long-term financial goals. However, many said they were making an effort to plan ahead for expenses; almost half used a budget to track spending, and 41 percent reported having an emergency savings account.
 
When it came to debt, the survey found those that were considered financially vulnerable had the highest median debt load at $25,000. Thirty percent of all respondents said that they have more debt than they can manage, and 38 percent of all respondents with non-mortgage debt believe they will still have this debt in five years.  
 
   
   
 
 

November 15, 2018
 
 
 
    
 
 
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