Why Consumers Are So Glum About An Economy Where Inflation is Down and Jobs Are Plentiful

Official Readings on Inflation Omit a Huge Cost

KEY TAKEAWAYS

• A group of economists has proposed an answer to the puzzle of why consumers are down on the economy even though official measures show that inflation is falling and the job market is hot.
• Measures of inflation such as the Consumer Price Index do not include interest rates, which are at their highest level in decades because of the Federal Reserve's efforts to fight inflation.
• When inflation is recalculated to show interest rates, price increases are much higher, reflecting the actual pressures on household budgets and explaining much of the pessimism.

Official measures of inflation are missing a major part of the cost of living—and its absence may explain why people feel so glum about the economy at a time of plentiful jobs and cooling inflation.

Read more at Investopedia 

Retirement Account Balances Hit Their Highest Levels in Nearly Two Years

KEY TAKEAWAYS

• 37% of workers increased their retirement savings contribution in 2023, boosting average account balances to their highest levels in nearly two years.
• Fidelity recommends that individuals save at least ten times their income by age 67, or 15% of their annual pre-tax income each year, to retire comfortably.
• As of year-end 2023, the average 401(k) balance of Gen X workers had reached more than half a million dollars ($501,000).

Improved market conditions and consistent contributions boosted average retirement account balances to their highest levels in nearly two years at the end of last year, with 37% of workers increasing their retirement savings contribution in 2023, according to new data from Fidelity Investments.

Fidelity Investments. “Fidelity® 2023 Retirement Analysis: Despite Uncertain Market Conditions, Retirement Savers Have Highest Account Balances in Nearly Two Years”

Read more at Investopedia 

Elevating the Loan Management Process for Underbanked Consumers

A consumer-facing app that allows you to self-service your loan payments. Instead, they rely on phone-based or in-person services.

Imagine it’s ten o’clock on a Thursday night. A loan payment is due and you’ve just learned that won’t have the funds to pay the full amount on time. You call your lender—hoping to either make a smaller payment or delay it—but instead of speaking with someone to discuss the situation, you hear a recorded message: “Our business hours are 9 AM to 5 PM. Please call back during standard business hours.”

Imagine it’s ten o’clock on a Thursday night. A loan payment is due and you’ve just learned that won’t have the funds to pay the full amount on time. You call your lender—hoping to either make a smaller payment or delay it—but instead of speaking with someone to discuss the situation, you hear a recorded message: “Our business hours are 9 AM to 5 PM. Please call back during standard business hours.”

This scenario is all too common among underbanked consumers who, perhaps due to a lower credit score, find it difficult to procure loans from traditional financial institutions. Instead, they turn to third-party lenders. But many of these third-party lenders are small- to medium-sized businesses (SMBs) that don’t have the resources to build a solution, such as a consumer-facing app that allows you to self-service your loan payments. Instead, they rely on phone-based or in-person services.

Read more at PAYLIANCE

How Fintech Is Disrupting Traditional Banks in 2024

In sectors like mobile banking and commission-free trading, fintech companies have had a profound on financial incumbents. In other areas, the future of banking and fintech is still being developed.

Fintech is growing up.

Over the last few decades, a generation of startups have surfed a wave of new technology spanning digital payments, roboadvisors, blockchain, and more, staking out a share in new and existing financial markets. Meanwhile, many incumbent financial service providers have sunk or swum based on their ability to anticipate, react to, or adopt new technology.

For the last three years, we at F-Prime Capital have produced our annual State of Fintech report to track the sector’s road into adolescence. 2024 marks a decade since fintech started to attract meaningful venture investment (that is, more than $10B annually), so in this year’s report we looked back on fintech’s impact on the broader finance industry.

Read more at The Financial Brand

Rent-A-Center announces new flexible national leasing program

Rent-A-Center is launching a new national program to offer costumes a more flexible way to rent-to-own.

The furniture, appliance and electronic retail’s new RAC Exchange program allows eligible Rent-A-Center customers to exchange their current product on rent for another qualifying product within the first six months following the initial agreement or any subsequent agreement entered into pursuant to an exchange.

RAC Exchange applies the rent paid on the previous agreement toward the total rent-to-own cost of the swapped item and a designated percentage of any same as cash purchase option exercised for the swapped item. Customers can apply with Rent-A-Center for an exchange of their rented item and always track the value of their current agreement in MyAccount when they sign up on rentacenter.com or on the mobile app.

Read more at ChainStoreAge

Maya Labs Announces New Interactive Video Teller on the Smart ATM Which Offers Real Time Face to Face Video Interaction For Consumers

Maya Labs, a social initiative technology company that provides self-serve financial services infrastructure for under-served communities in the U.S and abroad, announced a new product, the Interactive Video Teller on its Smart ATMs.

This new product allows Maya Smart ATMs to become a virtual teller by using innovative video technology. The consumer can now see a live person on the screen to assist them with their banking needs. For consumers who are ESL or struggle to understand the requirements of conducting cash based transactions in the US, this real time enhancement demolishes those barriers and overall increases customer experience and loyalty. 

"Our new interactive video teller technology allows licensed MSB providers to offer a high-touch experience without the high-touch costs that usually comes with it," said Chief Business Officer, Peter Kelly, Maya Labs. "

Read more at MAYA Labs

Bank Customers are Happy, But Their Loyalty is Fragile

Globally, customers are highly satisfied with their primary bank. However, security is a growing concern — and some say they would leave for better rates or lower fees.

Executive Summary

Now in its fourth year, EPAM’s Consumer Banking Report offers insight into the satisfaction of global banking customers. EPAM, a digital transformation services and product engineering company, surveyed 9,000 retail banking consumers across nine countries to learn more about the customer experience. It found that globally, consumers are largely happy with their primary bank.

Additionally, many consumers still like visiting branches and half do so weekly. However, satisfaction doesn’t necessarily equate to unconditional loyalty. Consumers are increasingly concerned about security — and half say they would leave their primary bank for higher yields or lower fees.

Read more at The Financial Brand

Banks Must Ramp Up Protections as Mobile Fraud Grows

Cheat sheet: As banking customers – and younger customers in particular – embrace mobile banking as their channel of choice, the security of that channel is of paramount importance. Yet vulnerabilities are widespread, users can be lax, and the bad actors are swarming.

Why we picked it: The proliferation of mobile banking apps creates new and complex vulnerabilities in the nexus between mobile technology and its users. Effective defense will require that banks keep pace both with the increasing sophistication of actors and the evolving, sometimes reckless behavior of mobile banking customers.

Executive Summary

Fueled by consumer preference and personalized experiences, the mobile banking market is outpacing online banking across all age groups and is projected to reach $7 billion by 2023.

At the same time, mobile accounts for an ever-greater portion of fraud: one in 20 fraud attacks can now be traced back to a rogue mobile application.

Read more at The Financial Brand