6 Headlines in Alternative Finance | November First Week 2023
6 Important News in 1 Reading
Bite sized AltFin Updates
Kentucky-based credit union Park Community Appoints Industry Veteran Jana Erny as New CEO. Jana Erny, an industry veteran with over 34 years of experience, had been the Senior Vice President for over six years, and her experience in the institution brings inherent value. She is replacing the outgoing president David Shadburne who has served the credit union for 31 years.
MPower Financing Raises Lending Capacity to Over $300M for International, Emerging Market Students. Community Investment Management (CIM) led the most recent investment round, and it also included participation from other lenders. MPower provides financial assistance to students in the United States and Canada, specifically those from emerging markets and international students.
Record $1.08 Trillion U.S. Credit Card Balances: Economic Confidence or Financial Hardship? The significant hike in U.S. credit card balances, attributing this to the end of pandemic-related relief programs, inflation, and increased consumer spending. Credit card balances rose by $17 billion in the third quarter of 2023, reaching a fresh peak of $1.08 trillion.
Decentralizing Buy-Now-Pay-Later: AtPay Taps Pismo for Innovative Credit Card Issuance. Pismo, a fintech platform will issue a Visa branded credit card for AtPay, a decentralised finance buy now, pay later start-up. AtPay's approach is different as it applies blockchain technology and smart contracts to the BNPL model, offering more flexibility and potential for scalability than traditional providers.
Gone with the Mint: The Fall of Personal Financial Management and the Rise of Financial Performance Tools. Mint's downfall was primarily because of certain shortcomings in its product and service delivery, along with failed attempts at innovation. Understanding these trends can help you adapt your products, services, and customer engagement strategies in order to attract and retain customers in the long run.
Our news this month reflects that adaptation and innovation drive the financial sector, from leadership changes to new lending paradigms, reflecting the dynamic interplay of growth, risk, and opportunity. We must embrace change.
Our Featured Story:
The American FinTech Council (AFC) has publicly supported the Veterans and Consumers Fair Credit Act, which aims to cap consumer loan interest rates at 36%.
The AFC believes this proposed legislation would offer a necessary level of protection to consumers across the US, especially those from vulnerable communities.
The Council indicates the importance of transparency, accountability, and responsible lending in the FinTech industry. The proposed legislation could result in a reduction of predatory lending practices but might also limit access to credit for consumers with poor credit scores.
Every business aims for profitability, and alternative lenders are no different. A cap on interest rates might affect the overall profitability of lenders as it curtails their ability to earn interest, which may limit their ability to provide more loans and expand their services in future. If individuals are unable to gain access to regulated loans due to the rate cap, they may be forced to resort to black-market lending. According to research from the World Bank, in countries with stringent caps on interest rates, individuals and businesses are more likely to turn to unregulated and often illegal lenders.
A rate cap can strike a balance between allowing alternative finance providers to earn a reasonable return on their risk while at the same time ensuring that borrowers are not excessively burdened. This can create a level playing field wherein all lenders must operate within the same guidelines, enhancing competitiveness and ensuring a more fair experience for consumers.
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