The world is ready for real-time payments and CheckAlt is ready to lead this transition. The acquisition of U.S. Dataworks in September 2020 sets CheckAlt apart with a technology platform proven to accept any of the existing real-time payments options or the ones soon to be announced.
It is always in a credit union and a member’s best interest to reduce loan delinquencies. This has become especially important during the pandemic due to the high unemployment rates of the last 12 months. Presently, there is an interesting trend in delinquencies. What are financial institutions doing to keep their delinquency rates low? And, is it working?
Spanish philosopher George Santayana is credited with the aphorism, “Those who cannot remember the past are condemned to repeat it.” As we navigate our current economic challenges, looking back at our most recent economic downturn, the Great Recession in the late 2000s, might provide some helpful lessons.
In early 2009, I attended an economic forum with guest speakers from the banking, real estate, stock brokerage, and economic industries. I was actively looking into investing in real estate. The stock market was in a free fall, interest rates were anemic, and the real estate market bubble had burst. In a stroke of impeccable timing, my partners and I had just sold our company. We had money and weren’t sure where to put it.
At that time, there were many real estate properties in foreclosure, but the banks didn’t seem very interested in selling them. We would make offers at the reduced market value and nothing happened. My favorite part of the forum is when the banking executive told me why. Banks had such an excess of properties in foreclosure on their books, that to sell them at their market value (about 40% less), and write-off the losses, would render the financial institutions insolvent. So they were playing a waiting game by taking offers, not accepting them and waiting until the housing market recovered. Their risk was juggling a huge portfolio of homes that were in foreclosure, not to mention other loan delinquencies. They foreclosed and sat on their loans and took a big hit on the loss of revenue. In addition, many of the foreclosed assets fell into disrepair.
Today, the latest unemployment rate from the Bureau of Labor Statistics shows both the unemployment rate at 6.2 percent, and the number of unemployed persons at 10 million. Although it is much lower than their April 2020 highs, they remain well above their pre-pandemic levels in February 2020 (3.5 percent and 5.7 million, respectively).
However, loan delinquencies are down—even with the high unemployment rate and the strong historical association between the unemployment rate and loan defaults.
A recent article in Fortune Magazine, based on a study by business schools of Columbia University, Northwestern University, Stanford University, and the University of Southern California, found that in the Great Recession, mortgage delinquencies jumped from 2% to 8%. But in the pandemic’s first seven months they fell from 3% to 1.8%. “This is especially striking,” the researchers note, “given an unprecedented increase in the unemployment rate that reached almost 15% in the second quarter of 2020." And, they found that the explanation went beyond just stimulus checks.
Here are six strategies financial institutions, including credit unions, are now deploying with positive outcomes that you can consider as well:
1. Utilize forbearance. Instead of cracking down on delinquent borrowers, offer forbearance. That way, borrowers can delay loan payments without you declaring the borrower delinquent. It also improves your borrower relations by not diminishing the borrower’s credit rating. You will still take a hit on revenue, but only temporarily, and you don’t have to worry about a portfolio of foreclosed assets to liquidate.
CheckAlt is the engine that powers payment processing for thousands of financial institutions and businesses across the United States. As such, you may be curious to know what’s actually running "Under the Hood." In this new series, we detail CheckAlt's products and services that are accelerating digital transformation for our clients today, as well as the payments solution innovation our Product Team is building in the race toward a faster-payments future.
The death of the branch has been talked about for decades. Bank and credit union branches have been closing at an accelerating rate, now made worse by public health, social, and economic challenges. At its core, however, there are deep-seated emotions attached to money which require trust—and trust is more easily established through human interaction.
In this fourth and final installment in our series covering the capabilities of Payment Case Manager (PCM)—the only end-to-end tool for secure communication of payment disputes (read Part 1, Part 2, and Part 3)—the focus shifts from the features of PCM and its advantages to FIs of all sizes and types to how PCM can interact with other systems. The more PCM interconnects with third-party systems, the more positively impactful PCM’s level of automation and subsequent cost savings becomes.
This is the third in a series of articles on how Payment Case Manager (PCM) securely automates payments disputes. If you have not already read the first two articles, you can read them here and here. Let’s turn our attention to how PCM positively affects small banks and credit unions.
Now that we have identified the root cause of the $96 million problem affecting financial institutions across the U.S., as noted in my previous article, let’s explore how Payment Case Manager (PCM) provides financial institutions with the ability to safely automate payment disputes.
Imagine a scenario in which there are thousands of individual businesses that are in the same industry, some of which are small mom and pop shops; others are giant Fortune 500 members. Periodic disputes ensue within this industry involving a client of one business having an issue with the client of another business, and the only way for these disputes to be resolved is for the two businesses to exchange non-public information about their clients. However, there is no secure system to which all of these businesses are connected so faxes become the only secure method that these thousands of businesses can communicate. The manual effort needed on either end to create, transmit, process, and remediate disputes seems nearly impossible to eliminate, plus there are operating rules governing the process with increasing fines for substantial non-compliance.
The postal delays and security concerns heightened in 2020 have further driven tens of millions of consumers across the U.S. to choose to pay homeowner’s association dues, tuition fees, trash bills, and other one-time or recurring payments to billers electronically instead of by check.
Automation of paper claims-related business payments among U.S. healthcare providers—combined with adoption of electronic payment methods including online portals—has the potential to save providers at least $9.9 billion annually, as predicted by the 2019 CAQH Index report, which has identified increasing industry cost savings opportunities for three years in a row. To help healthcare providers realize this significant savings opportunity, CheckAlt recently enhanced its healthcare lockbox processing service by forming a strategic partnership with RMS to deliver leading revenue cycle management that uses automation to accelerate cash flow.
CheckAlt is delighted to announce the release of CaptureNet Management 3.0, the latest version of CheckAlt’s hub for all capture channels from ATM to branch to mobile device. Our IT Team has improved the overall performance and functionality of this product including single sign-on and private-label capabilities, multi-factor authentication, and customizable permissions—all presented within a fresh, streamlined web interface.
At CheckAlt, I have the privilege of working as the relationship manager for banks of all sizes. Our goal is to make sure their payment processing and treasury management needs are met. One of the mid-sized financial institutions we serve recently told me that their business is booming—a sentiment I’ve heard from several of our clients.
People are not visiting bank branches like they did before the pandemic, leading financial institutions of all sizes to consider speeding up plans for shutting branches down and scaling digital solutions.
As CheckAlt expands its online and card payments services in response to payments convergence, we remain known in the industry as a leading independent provider of lockbox services in the United States. Our network of 13 lockbox processing centers allows our customers to do business nationwide. In order to operate such a vast network, CheckAlt has attracted and retained a talented lockbox and treasury management team made up of individuals who know the ins and outs of this industry. In this article, we explore one of the lesser known lockbox payment types and how CheckAlt’s solution addresses its complexity.
While some ATM users associate the equipment as a relic of a past generation such as pay phones, ATM technology has evolved in exciting ways to support the needs of financial institution customers through lower costs and increased security.
