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Rate Hike Looms & Banks Ponder Charging For Mobile Apps: Essential Fintech Reading Aug 20-26


Could Your Bank Charge For Its Mobile App?

According to an S&P Global Market Intelligence Survey of 4,000 U.S. bank app users, 21% would pay as much as $3 a month for their banking app and 40% would be willing to pay $1 a month. Telis Demos of the Wall Street Journal reports that banks could generate as much as $500 million more in revenue, with the bulk going to Bank of America, Wells Fargo and J.P. Morgan Chase. 26% of Bank of America's users indicated they would be willing to pay $3 a month. Demos writes that banks may still hesitate because younger consumers often cite fees as a reason they switch banks.

Mobile Malware Becomes Preferred Avenue Of Thieves

Building on a Wall Street Journal report, Kate Cox of the Consumerist notes that the presence of mobile malware designed to steal banking credentials is on the rise. As wide-scale retail breaches have flooded the market with stolen credit cards, criminals have moved onto more profitable ventures. Mobile malware spreads when a phone user opens a loaded text or advertisement and then sits on their phone until the user opens one of the targeted apps. When a user opens the app the software creates a fake overlay that allows it to grab the credentials as you enter them. According to the Wall Street Journal, Acecard has overlays ready for 50 of the biggest banking apps. Consumers are overwhelmingly vulnerable given that few use mobile antivirus or anti-malware software on their phones; a study conducted by SAS and Javelin Strategy & Research found that fewer than one-third of smartphone owners utilize these tools. 

Simple Highlights Safe To Spend Function

Simple, the digital banking start-up acquired by BBVA in 2014, "uses machine learning to tell individuals how much is safe to spend before their next payment arrives." Writing for Forbes, Tom Groenfeldt notes that, "Instead of just showing a balance and leaving the customer to calculate rent, utilities and other expenses coming up before the next payment period, Safe to Spend uses machine learning to understand a person’s salary, expenses and the amount she is setting aside in online envelopes for various goals." Simple has also designed an "overspent" banner that notifies users when they exceed their Safe to Spend figure.

Yellen Makes Case For Interest Rate Hikes

Federal Reserve chairwoman Janet Yellen sees a stronger case for raising the Fed's benchmark interest rate“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,” Ms. Yellen said.

It's possible that the Fed could raise rates at its next meeting in mid-September but most analysts think the Fed is more likely to move in December, writes Binyamin Applebaum for the New York Times. The government's next jobs report, due September 2, should loom large in determining Fed action. Most banks, including JPMorgan Chase, Bank of America and Citigroup, saw their shares rise after Yellen's remarks. "The largest banks should benefit right away from any language about increasing rates in 2016," Erik Oja, U.S. banks analyst with S&P Global Market Intelligence, told CNBC. 

Oil's Plummet Has Lenders Fleeing

While oil has bounced back more than 80% from its February low, banks are still wary of lending to the beleaguered industry, reports Rachel Louise Ensign of the Wall Street Journal. Barclays analysts report that big banks cut loans to the energy sector by 3% in the second quarter and some lenders are pulling back even more. "Lenders are getting rid of energy borrowers in a variety of ways. Some are cutting the amount of credit they are willing to extend. Others, like CIT Group Inc. and Green Bancorp, are also selling some loans off entirely," writes Louise Ensign.





Topics: fintech