What is a FinTech really? Be one.

by The CAB Man Texas on October 7, 2019

Seems like over the last year that the industry buzzword has been “FinTech.”  According to BuiltIn.com “”Fintech” is a portmanteau (combination of two words to create a new one) of financial” and “technology.”  It is the application of new technological advancements to products and services in the financial industry.”

For those of us in business in Texas, “FinTech” is a term that is slowly evolving away from a vague Silcon Valley-esque concept to something that is becoming more clear and accessible by the week.  It seems like that with the conclusion of the Lend360 Conference last week in Dallas that the buzz around the term hit an all time high.  A few weeks ago I shared summary details about the upcoming event, talked about some of the topics, sessions, etc.  Turns out that it was heavily FinTech oriented for sure.  Many of my “google alerts” lit up with FinTech stories and articles after the Conference and it turns out that many friends of CAB Consulting and TOFSC attended as well.  

On September 26th one particular article on Banking Dive.com really hit home and painted a very clear picture of what FinTech is and how it is playing out in the personal loan marketplace.  The article was titled “FinTech leaders have doubled their market share in 4 years” that commented on a recent study done by Experian.  See below for some of the more interesting comments and findings:

  • Fintechs are providing 49.4% of unsecured personal loans as of March, according to a study released Tuesday by credit reporting agency Experian, more than twice the 22.4% share they held in 2015.
  • In 2019 there were 1.3 million new loan originations through March, compared with 656,000 through March in 2015.
  • The loans are getting smaller…the average fintech loan was $5,548 in 2019, less than half the average amount of a fintech loan in 2016, when it was nearly $12,000.
  • The loans are also smaller than the $7,383 traditional bank loan averaging.  (Comment: It is very possible that the average was driven down by smaller loan amounts in our CAB sector and in other payday loan State markets…for example we know that 26 out of State CABs (most of which are FinTechs) now own 50% of the entire Texas CAB installment loan market per the OCCC Q2 2019 reports, with an average loan amount of $740.  This is really astounding as it seemed like very recently this was 1/3).
  • Customers may be increasingly relying on fintechs because they’re able to approve and fund a loan more quickly than traditional lenders or perhaps because, with a digital lender, borrowers don’t have to leave their house.
  • Fintechs were quicker to recognize that consumer lending niche and improve the customer experience with pre-approvals and quicker funding of the loans.
  • We’re seeing fintechs create digitally streamlined, customer-focused experiences, which may be the key contributor to their substantial growth in the personal lending space,” “Fintechs may be gaining traction as they are eliminating potential barriers consumers may face and are creating a more convenient experience.”
  • Millennial consumers (age 20-37) accounted for 34.9% of fintech loans, compared with 24.9% for traditional lenders.
  • Baby boomers (AGE 55-73) accounted for 33.5% of traditional loans, compared with 21.9% for fintechs.”

Here is a link to the article: https://www.bankingdive.com/news/fintech-lenders-double-market-share-in-4-years-experian/563793/

There should be plenty of inspiration here for the forward thinking Texas CAB that is operating in the brick & mortar environment.  How can brick & mortar stores emulate a FinTech?  Of the techniques employed by FinTechs we can do much of the same see below for how you can take one step closer to being a FinTech too by “adding new technological advancements to your products and services.”

  • How can you fund loans remotely because borrowers don’t want to leave their house? Do ACH credits and also debit the customer payments from their bank account.
  • Do you have e-signature capability? Have customers sign their documents online without coming into your store (also opens up your market to borrowers who would not come in due to privacy concerns).  
  • How can you increase processing speed to fund loans quicker? Smart phone app! Send texting with links! Prompt calls from your team to guide the process. What barriers slow your process down?
  • What does your website look like? Have it designed professionally and use FinTechs as a creative example fr the look and feel.
  • Search Engine Optimization. Are you investing in this every month? Do it.
  • Utilize data from Credit Reporting Agencies that allow decision making within seconds.  If you are not with Factor Trust and Microbilt this is them, sign up!
  • Access banking activity with instant bank verification tools from Decision Logic and Microbilt.

So there you have it…a road map to becoming a small business FinTech without all that Silicon Valley capital raising and no high dollar public relations firm.  From my perspective we are really all just that close.  The numbers do not lie and as said earlier, the picture is very clear.  The lending market has evolved and if your business has got to evolve too.  

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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by The CAB Man Texas on September 26, 2019

On Tuesday 9/24 there was a webinar put on by Max Wood of Borrow Smart, Ed D’Alessio of Fisca, Elicia Brown of Speedy Cash, and Mike Hodges owner of a larger payday operation in Tennessee by the name of Advance Financial. 

The purpose of the webinar was two-fold. First, there is a scenario out there where the Democrats could potentially interfere with the progress of rescinding the CFPB payday rule.  The idea would be that they might do this via a Congressional Review Act or “CRA.”.  It would essentially be a bill that is started by Maxine Water’s House Financial Services Committee, is passed in the House (definite), then goes to Senate for a vote (hope it would not pass there but it is possible it could), then goes to the President’s desk to be signed or not signed.  This could be an issue for us and just like with many legislative scenarios we have seen at the State level, experienced leaders are pointing to this pathway as a possibility. So, we need a platform to communicate our concerns with decision makers at The White House should that bill make it to the President’s desk.

Secondly, and on that note, it was discussed that Mike Hodges of Advance Financial and other associates of his have led significant support of the Trump Campaign in Tennessee.  And, in being connected though the webinar we now have an opportunity to directly support the Trump Campaign…it is a good idea to do it under Mike Hodge’s umbrella.  

It is important for our industry to support the Trump Campaign financially and with votes.  Although Biden may be leading in many polls the race is a tossup right now between him and Warren.  If Warren wins you can bet on day 1 of her Presidency she will be focused on her baby, the CFPB.  That is a doomsday scenario for the payday industry.  

So, get involved!  You have an opportunity to do so at the “Dinner with Mike Pence” event on October 7th in Nashville.    

Link to Trump Pence Fundraiser Information: http://tggtest.com/cfl/compliance/images/TRUMP%20SUPPORT.pdf 

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

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The “Lend 360” Conference is coming up in Dallas on the 25th here are the summary details.

September 24, 2019

The “Lend 360” Conference is coming up in Dallas, September 25-27.  Since it is in our back yard versus Florida or California wanted to discuss it a bit and give you some information for you to better decide on whether you will or will not attend.  Many of our vendor and TOFSC sponsor companies will be […]

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Silicon Valley FinTech “Earnin” may need to buckle up for a bumpy ride.

September 11, 2019

The New York Times ran a bit of an “expose” on “Earnin,” an online lending FinTech that may need to buckle up for a bumpy ride… It seems like each week there is a new Silicon Valley FinTech anti-payday loan venture that is launched with millions in funding and all the slick PR you can […]

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Back to School is here is your small business ready?

August 13, 2019

Did you know that for many the Back to School season each August is the second highest seasonal demand period for the payday industry?  Only the Christmas and New Year Holiday time frame beats Back to School in terms of seasonal demand. For Texas Credit Access Businesses offering cash advances, payday loans, or title loans, […]

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A new tool for payday borrowers that may or may not be a good thing for loan defaults.

August 6, 2019

Recently another new dynamic in our industry has surfaced and this is reminder that as a small business owner in the payday loan-cash advance-installment loan industry, everyone on your team needs to continually study and learn customer behaviors.  What is this new dynamic? It is the borrower habit of switching their debit card “on” “off” […]

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Retail “brick and mortar” businesses across many industries continue to shutter. Why?

July 29, 2019

In today’s world of the smart phone, apps, and Amazon, every retail “brick and mortar” business needs to evolve around the newer consumer behaviors in the virtual marketplace.  As surprising as it is, many companies like Toys R’ Us and Sears with decades of brand loyalty just could not make their model compete and evolve in […]

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Strong job market could mean small employers are getting “ghosted” how can you prevent it?

July 24, 2019

This week an interesting article came out in Fox Business (written in Motley Fool) titled “4 reasons hourly workers reject jobs – and what to do about them.”   Many of small business owners in Texas could be seeing a rise in the so-called millennial generation phenomenon of “ghosting.” According to the Urban Dictionary “Ghosting” means the shutdown/ceasing […]

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Texas Debt Buyer Bill is set to be signed by Governor Abbott

June 19, 2019

House Bill 996 a “Debt Buyer Bill” is set to be signed by Governor Abbott.  This particular bill limits when a debt buyer can initiate legal action or arbitration to collect consumer debt. It also requires specific notices to be provided to the consumer with respect to out-of-statute debt.  The new provisions are effective Sept. 1, […]

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AOC and Bernie get slam dunked over their anti-payday loan act.

May 24, 2019

Chris Talgo, a columnist at Townhall.com did a phenomenal job on his recent column regarding Bernie Sanders and AOC’s Loan Shark Prevention Act.  I would say he slam dunked the pair’s “Act” quite nicely.  Within the piece, several hard-hitting facts & statistics were used to counter many assertions made by the two in their recent […]

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