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How Financial Institutions Can Focus on Financial Literacy This School Year

from the SHAZAM blog

Financial literacy is the ability to understand and effectively use various financial skills, such as savings, budgeting and paying off debts. People who are financially literate have a strong understanding of how money works and set themselves up for a lifetime of success. 

The knowledge and experiences bank or credit union staff have gives your financial institution an opportunity to set kids up for financial success. Teaching kids how to manage money can directly benefit a bank or credit union through increased customer engagement and brand loyalty from kids and their parents.

Financial Literacy for Kids 

Start saving. Savings is the most important financial habit to teach early on. One way your financial institution can get kids excited about saving is by using a good old-fashioned piggy bank. Personalized piggy banks with your financial institution’s logo are a fun way to get them excited about saving money. 

Kid-friendly accounts. A piggy bank is a savings vehicle for younger children, but when they hit elementary school, encourage parents to set their children up for a healthy financial future by opening a kid-friendly savings account. It’s a way to instill the importance of gradually building up their balance and an introduction to the banking industry.  

|1 Keep reading....1 |

CBI Endorsed Member ICBA Securities and its exclusively endorsed broker-dealer Stifel opened registration for the 2023 Balance Sheet Academy.

Scheduled for Oct. 16-17 in Memphis, the live event will focus on managing balance sheets, liquidity and capital, loan and investment portfolios, and more.1 |1 View Agenda.

|1 Register here.

Office of Credit Risk Management (OCRM) to Survey Lenders on Use of Lender Service Providers



District Offices were notified that SBA’s Office of Credit Risk Management will soon begin a survey of ALL SBA 7(a) lenders on their use of Lender Service Providers (LPSs) to assist with origination and/or servicing and liquidation of SBA loans. 

An example of the introductory paragraph of the email letter provided to the Iowa District Office is below--though it may change between now and when it is sent:

A Lender Service Provider (LSP) is an Agent who carries out Lender functions in originating, disbursing, servicing, or liquidating a specific SBA business loan or a loan portfolio for compensation from the Lender. These functions are performed under an agreement (LSPA) that must be accepted by SBA. To help ensure that all applicable agreements have been accepted by SBA, the Office of Credit Risk Management (OCRM) requires that your entity provide the information requested below within five (5) business days of this email.

This email is expected to be sent to all 7(a) lenders withing the next week or so--and exact date is unknown at this time. Please note that this request is a legitimate one from OCRM and should be responded to accordingly once you receive it.

CFPB’s 1033 proposal coming next month

The CFPB next month will propose standards for sharing consumer financial data, CFPB Director Rohit Chopra said.

In remarks on the impact of Big Tech on the payments system, Chopra said the proposal to implement Section 1033 of the Dodd-Frank Act will intensify competition across financial products by allowing consumers to securely permission their transaction data. In a blog post in June, Chopra said the CFPB will finalize the rule next year.

The CFPB in April released a report on the pending rulemaking under the Small Business Regulatory Enforcement Fairness Act (SBREFA), under which the bureau must convene panels to consider the impact of its proposals on small entities. The SBREFA report provides an overview of the outline of proposals released last October, including plans to allow consumers to transfer their account history to a new company and impose limits on third parties reselling authorized data.

CFPB: Big Tech policies dictate mobile payments

The CFPB has announced its publication of a new Issue Spotlight report, "Big Tech's Role in Contactless Payments: Analysis of Mobile Device Operating Systems and Tap-to-Pay Practices", which highlights the impacts of Big Tech companies’ policies and practices that govern tap-to-pay on mobile devices like smartphones and watches. The report says:

1 • 1Apple forbids banks and payment apps

1 • 1from accessing the tap-to-pay functionality

1 • 1on Apple iOS devices and imposes fees

1 • 1through Apple Pay.

1 • 1Google’s Android operating system does

1 • 1not have such a policy.

1 • 1Regulations imposed by mobile operating

1 • 1systems can have a significant impact on

1 • 1innovation, consumer choice, and the

1 • 1growth of open and decentralized banking

1 • 1and payments.

As of the second quarter of 2023, Apple’s iOS operating system was on 55% of smartphones shipped in the U.S., and Google’s Android operating system was on 45%. Apple and Google set regulations governing developers’ ability to integrate near field communication (NFC) technology into their apps, which is needed to execute tap-to-pay transactions.

Q2 Community bank net income rises 3.4%

Community banks reported a 3.4% second-quarter increase in net income from the previous quarter and a 0.7% increase from the same period a year ago, according to the FDIC’s latest Quarterly Banking Profile.

For the second quarter, community banks also reported:

1 • 1Total assets increased 0.9% from the first

1 • 1quarter and 4.8% from the previous year.

1 • 1Total loans and leases rose 2.6% from the

1 • 1previous quarter; 12.5% from a year ago.

1 • 1Balances in all major loan portfolios rose

1 • 1from the previous quarter, with residential

1 • 1and commercial real estate driving the

1 • 1quarterly increase.

1 • 1Net interest margins declined 10 basis

1 • 1points from the prior quarter but increased

1 • 15 basis points from a year ago to 3.39%.

1 • 1The yield on earning assets rose 27 basis

1 • 1points quarter-over-quarter and 136 basis

1 • 1points year-over-year, while the cost of

1 • 1funds increased 37 basis points on a

1 • 1quarterly basis and 131 basis points from a

1 • 1year ago.

1 • 1Net operating revenue increased 0.4%

1 • 1quarter-over-quarter on higher noninterest

1 • 1income, while higher interest expense

1 • 1mainly on domestic deposits—drove a

1 • 1quarterly decline in net interest income.

1 • 1Noninterest expense rose 1.5% from the

1 • 1previous quarter and 7.8% from a year ago.

1 • 1Deposits declined 0.1% from the previous

1 • 1quarter, remained up 1.0% from a year ago.

1 • 1The share of noncurrent loans and leases

1 • 1increased 2 basis points from the previous

1 • 1quarter, while the net charge-off rate was

1 • 1unchanged.

Overall Industry: The overall banking industry reported an 11.3% decrease in net income from the first quarter. Declines in noninterest income—reflecting the accounting treatment of the acquisition of three failed institutions—along with lower net interest income and higher provision expenses drove the decline.

Deposit Insurance Fund: The DIF balance increased $897 million from the end of the first quarter, largely reflecting increased assessment income. Combined with insured deposit growth of 0.8% over the quarter, the reserve ratio decreased 1 basis point to 1.10 percent.

Mergers and Closings: During the quarter, two banks opened, one bank failed, and 27 institutions merged.

Bureau posts HMDA FIG for data collected in 2024

The CFPB has added the HMDA Filing Instructions Guide (FIG) for data collected in 2024 and a Supplemental Guide for Quarterly Filers for 2024 to its FFIEC HMDA Resources webpage.

Senate confirms Fed nominations

The Senate this week voted to confirm three Federal Reserve nominations:

1 • 1Federal Reserve Governor Philip Jefferson

1 • 1for Fed vice chair.

1 • 1Fed Governor Lisa Cook for an additional

1 • 1full term as a Fed board member.

1 • 1World Bank economist Adriana Kugler to

1 • 1serve as a Fed governor for an unexpired

1 • 1term ending in 2026.

FS-ISAC Weekly Risk Summary:

August 28, 2023

Agencies issue cyber advisory on Zoho web server exploitation

Is ChatGPT Ready for Banking? Yes and No.

Law enforcement investigating fake check scheme at multiple Iowa banks

FBI confirms North Korea behind latest crypto theft

FSB, IMF report on crypto-asset activities

Q. A loan to purchase and renovate a dwelling to flip it for resale is not subject to HMDA reporting, correct?

A. If the loan is temporary and is designed to be replaced by permanent financing by the same or another borrower afterwards, it could potentially fall under the temporary financing exception below. That said, generally flipping a dwelling for resale will not be considered temporary financing as there are generally not plans to replace the loan with permanent financing at a later date.

AROUND IOWA

Critics say proposals to merge, purge state boards could put Iowans at risk

Mid-America Manufacturing Index Remains Below Growth Neutral

US labor officials confirm Iowa’s new child labor law 'inconsistent' with federal rules

OPERATIONS/MARKETING

Debit Cards Rule for Point-of-Sale Payments, So Market Them Better

Brand loyalty: Three reasons customer engagement programs are vital for financial institutions

Is Gen Z prepared for the workforce? Survey suggests maybe not

LENDING / INVESTMENTS

The Coming War for Credit as Gen Z Finally Embraces Plastic

Growth in Home Equity Lending Cools Off as Interest Rates Hit Pain Point

How the 2023 Banking Crisis Will Rock Mortgage & Credit Card Lending

DIRECTORS

The Big Debate: Should Bank Boards Approve Loans?

Need Fee Income? Add New Services for Small and Midsize Businesses

Embedded Finance Is the Biggest Growth Opportunity Banks Have

AGRIBUSINESS

David Kohl: What is the secret sauce for farm business?

USDA forecasts significant drop in farm sector income

Reimagine retirement: Build a custom farm succession plan

TECH & PAYMENTS

What do new PCI mandates mean for banks, ATMs?

Faster Payments Council names ICBA’s Anchin to advisory group

RTP network passes 1M daily payments