Quilo selected by the ICBA’s ThinkTECH Accelerator Program

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Strunk is thrilled to announce that Quilo has been selected by the ICBA’s ThinkTECH Accelerator program as one of only 11 fintech companies to be part of the 2022 ThinkTECH cohort.  Additionally, ICBA has made an investment in Quilo.

ThinkTECH is a community bank-focused fintech accelerator run in partnership with The Venture Center, and was designed to identify and foster community bank-enabled fintech partnerships. Through an intensive 12-week program, these promising fintechs will meet with community bank leaders, policymakers, and subject-matter experts to collaborate on fintech solutions tailored to the unique needs of community bankers.

Starting in 2019, ICBA ThinkTECH Accelerator was launched to connect community bankers and fintech visionaries to develop solutions specifically for the industry.

Quilo is an all-digital, unsecured personal installment loan solution that can be used three ways:

  1. Replenish checking account for debit card purchases
  2. Pay down credit card balances
  3. Make new purchases online or in store

The platform requires no integration with a banking core and because it’s all digital allows your staff to stay in control of the loan portfolio with minimal effort.  Additionally, it comes with a turn-key fully managed digital marketing campaign that is designed to attract your existing customers and promotes your brand to new customers locally.

To learn more about Quilo, contact Strunk at info@strunkaccess.com or 800.728.3116.

Overdraft Protection In a New Light

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Over the past year, there has been a great deal of scrutiny surrounding overdraft privilege programs. Many news articles focus on the potential negative aspects of overdraft privilege programs. They make the generalization that users of these programs are not sufficiently educated on what usage truly means and that users are typically lower-income.

A 2019 survey from Fiserv shows that 91% of consumers report that they are familiar with their financial institution’s overdraft policy. Strunk has historically stated that clear communication with consumers regarding key elements of the financial institution’s overdraft privilege program is not only important from a compliance perspective, it will also improve program performance. This allows consumers to be more familiar with the program features and limits.

A research paper published by The American Bankers Association provides statistics that show the inconsistencies in data that most articles use characterizing heavy overdraft users as lower-income consumers. The paper states that lower-income households (<$24,000 annual deposits) averaged 10 items paid into overdraft annually vs 18 items for consumers in the highest income level (>$60,000 annual deposits). Lower-income account holders receive more fee waivers and refunds than higher-income consumers and paid lower effective average overdraft charges. Either way, this study shows that consumers of all income categories utilize overdraft programs.

Another argument commonly made in regards to overdraft programs is that consumers find the fees unfair. A common example given that usually describes an overdraft activity is a consumer might buy a $2 cup of coffee and get hit with a $35 fee. In reality, the average size of a purchase that triggers an overdraft fee has nearly quadrupled from $50 to almost $200 in recent years. It is simply not accurate that consumers are getting charged for small purchases. Additionally, a Morning Consult study found that about half of Americans think overdraft fees are fair.

A study by Curinos research found that more than 60% of overdrafts come from consumers who intend to use the service. Likewise, more than 80% of overdraft transactions come from consumers who opted-in to debit card overdraft transactions (Regulation E) with the clear intention of using it to cover their payments. Furthermore, two-thirds of consumers indicate that, while overdraft can be expensive, they don’t want to see reductions in their access to the service or limits. This indicates that consumers understand that if they overdraw their account, having the financial institution pay the overdraft item for them and charge them a fee is a greater benefit to them than returning that item and still charging the consumer a fee. This prevents the consumer from having to pay additional fees to the retailer and potential re-presentment fees.

Less than .15% of complaints to the CFPB were related to overdraft privilege in 2020. Overdraft privilege programs give consumers services that they need and want while also giving them options, which is best for all consumers.

Inform Your Customers About Their Regulation E Opt-In Options

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The Consent Form for Overdraft Services (A-9 form) provides your customer with the information they need to know about overdrafts and overdraft fees. In addition to serving as a disclosure of the appropriate information, it also facilitates a customer’s opt-in election by mail. Customers are also able to opt in over the phone, in person, or electronically.

When you include an account’s Reg E Opt-in election in the extract file imported into ODP Manager, ODP Manager can determine whether an account has already opted in or has not yet responded with a Reg E election. This means that your customers will receive the appropriate letter content based on their Regulation E Opt-in choice.

Strunk’s Welcome letter, Reinstatement letter, and Reg E Opt-In Followup letter templates make sure that your customers are aware of their options to opt in and that they know whether they already have the ATM and Everyday Debit Card transactions covered by their Overdraft Privilege limit.

The Welcome and Reinstatement letters sent when a limit is assigned or reinstated can include the Consent Form for Overdraft Services and can inform the customer of other options to opt in: by mail, online, in person, or by phone.

The ODP Manager software can identify which customers have not opted in and have an OD limit, in addition to other criteria. This allows you to communicate with these customers on an ongoing basis to send letters that explain the Reg E opt-in benefits and opt-in methods and that provide a consent form.

Strunk can also facilitate your customer’s online opt-in by creating a Reg E opt-in form and Reg E opt-out form that mirrors the content in your ODP Manager letters. You would then add links to these forms to your website.

Let ODP Manager expand your options to allow your customers to choose Overdraft Privilege coverage for ATM and everyday debit card transactions. Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Digital Lending to Attract Millennials and Gen Z’s

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For years community banks have tried to attract younger consumers to replace older customers whose deposits generally leave the bank when they pass away. Also, baby boomers and the silent generation born before 1959 tend to be deposit gatherers rather than borrowers.

During the pandemic in 2020 that continues on in 2022, consumer buying habits have changed as well. More purchases are being made online and companies like Amazon and Walmart have flourished. Paying for purchases when baby boomer bankers grew up were either on a lay-a-way plan at JC Penney or credit cards were used. Some merchants financed the sale so consumers in the 1970’s and 80’s could pay over time for their purchase.

As with many banking products providing a service that your customers want and need is imperative to survive. Evergreen credit cards that never seem to get paid off are somewhat out of favor with the younger generation. The Buy Now Pay Later business is expanding at warp speed and your customers love the simplicity of this relatively new service…unfortunately, banks are missing out on a big opportunity.

Bring in Digital Lending in 2022. Quilo has developed an easy to use yet sophisticated smartphone lending solution that enables your bank to participate in this prime lending business. Digital banking has been around for quite some time on the deposit side of the house but not lending…until now.

Take 45 minutes to see the demo of Quilo. You will be amazed what technology can do to attract younger consumers that are currently using Fintech companies for this service.

Simple and Efficient Management of the Fresh Start Loan Process using ODP Manager

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Fresh Start Loans can help customers resolve their overdrawn account status with up to four payments and can allow them to keep their checking account open. Fresh Start Loans are also a collection tool that can help financial institutions recover and collect on overdrawn accounts that might have otherwise charged off and been closed. Leveraging the tools included in ODP Manager can make managing the Fresh Start Loan process easier and more efficient.

A repayment schedule can be entered for each account with an approved Fresh Start Loan. It will include payment reminders that display when the FSL payment is due to remind your users to check if the payment has been made as agreed. Once verified, FSL payments can also be tracked in ODP Manager.

Instead of needing to create agreements outside of Strunk’s ODP Manager, the Fresh Start Loan Agreement document can be generated directly from the repayment schedule. In addition to generating the agreement from the repayment schedule, users also have an option to generate the agreement as an Ad Hoc letter.

If customers under a repayment schedule do not pay their Fresh Start Loan payments as agreed, the default close letter can be generated and tracked in ODP Manager as well. If any other Fresh Start Loan letters are needed for accounts in a repayment status, an Ad Hoc letter template can be created. By entering the deposit account number, ODP Manager will pre-fill the account information. After the letter is generated, it will be tracked and retained in ODP Manager just like the other Collection and Custom letters.

ODP Manager includes a report that lists all accounts currently under a Fresh Start Loan status. If details are needed about current repayment schedules, a Repayment Schedule summary report can also be exported to PDF or Excel.

Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Consumer Lending Opportunity for Banks

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Consumer lending has been a thing of the past for most community banks since credit cards took over unsecured small dollar lending in the 1980’s. Some banks try to compete with credit unions and auto companies for indirect car paper but that has diminished as well due to unprofitable low rates the competition is providing. Core processors have been slow to react to financial technology firms who are providing young consumers with products and services they want and use…digital lending.

Until now, community banks have been shut out of this market. Quilo is a digital lending tool that allows banks to make and underwrite the loans while allowing the smart phone app to fund, collect, and manage consumer loans profitably. Quilo provides instant access to loans of $250 or more through a virtual card on your customer’s phone. Consumers can also use Quilo to pay down or pay off high interest rate credit cards or replenish their checking account at your bank for recent debit card purchases.

Your bank has complete control over the credit risk. Maintaining minimum and average credit scores of the portfolio ensure that credit quality remains high. The Quilo scoring engine does a soft pull of the consumer’s credit bureau report to determine if a loan should be made and what amount. If the consumer qualifies and takes a “Quilo” the interest rate is calculated based on risk of loss, bank’s cost of funds and desired return, and processing costs. Typically the interest rate to the consumer will be between 8% and 12%. The term of each loan is determined by the consumer. The return to the bank is 5%-6%. A pretty good yield given today’s interest rate environment.

To set up a 45 minute demo of Quilo demo contact Strunk at info@strunkaccess.com or 800.728.3116.

Strunk at the WBA Lenders & Chief Credit Officers Conference

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Last week the Western Bankers Association hosted its Lenders & Chief Credit Officers Conference, their first in-person event since early 2020. Strunk was excited to attend and to introduce Quilo, an instant installment loan solution directed at consumers.

The four day event was hosted at The Ritz-Carlton, Laguna Niguel and was packed full of content for bankers. The agenda included sessions on “Making and Sustaining an ‘All-Weather’ Credit Culture”, “Issues in Commercial Lending”, “Grow Loans and Protect Income Through Hedging” and a Legislative Update from Keven Gould, SVP – Director of Government Relations for the California Bankers Association.

Strunk’s CEO Dan Roderick was pleased to demo Quilo prior to the Interactive Discussion with Bank Chief Appraisers. Quilo is a fully turn-key FinTech consumer installment loan program that will allow you to tap into the EXPLOSIVE ‘buy-now-pay-later’ instant installment loan market to increase loan volume and margin.

Technology has changed the market for installment loans and Quilo can put community banks on the path to high loan growth and increased profitability. Quilo is a game changer. Utilizing the latest in technology, Quilo creates the opportunity to give consumers what they prefer.

Bankers were enthusiastic about the solution and we look forward to continued conversations with many of the conference attendees. If your bank is interested in growing your loan portfolio and improving your margin, let us show you how Quilo can make that happen.

Finding the way through Regulatory Requirements

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Recently, there has been a lot of confusion in regards to what is required for non-FDIC regulated financial institutions regarding their overdraft privilege program. Strunk has received several questions from our non-FDIC regulated clients (financial institutions that are regulated by either OCC, Federal Reserve or NCUA) regarding findings from either auditors or examiners.  It seems there is some inconsistency surrounding the messages these clients are receiving regarding their regulatory responsibility regarding overdraft fees.

Overdraft privilege programs are overly scrutinized from financial institutions, auditors and examiners.  It is very important for financial institutions to understand and implement applicable regulations to ensure an effective, compliant approach to their overdraft privilege program. Part of that process is knowing what your regulatory agency requirements are for your overdraft privilege program.

In 2005, the OCC, Federal Reserve, FDIC and NCUA published interagency guidance ‘Joint Guidance on Overdraft Protection Programs’ describing expectations and best practices for overdraft privilege programs. In 2010, the FDIC issued a final rule that focused on requirements and recommendations for FDIC-regulated institutions that utilized an automated overdraft privilege program. In this ruling it states that FDIC-supervised institutions should monitor their program for excessive or chronic customer use, and if a customer overdraws his or her account on more than six occasions where a fee is charged in a rolling 12 month period, then the financial institution should undertake meaningful and effective follow-up action.  Also, in this ruling the FDIC is requiring their regulated institutions to use a de minimis threshold before an overdraft fee is charged and set daily limits on how many overdraft fees that the institution can charge a customer.

To understand this, it means that financial institutions that are not regulated by the FDIC (OCC, Federal Reserve and NCUA) are not required to monitor for excessive use because these agencies have never defined what excessive use or high numbers of overdrafts are. Also, non-FDIC institutions are not required to impose a daily cap on overdraft fees, and they are also not required to set a de minimis. For non-FDIC institutions, auditors and examiners can recommend that an institution implement these items but they should never make it a requirement because there is no regulatory requirement for your institution.

Reg E Opt-In Options Presented in ODP Manager

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How are you offering your customers the chance to opt in for Regulation E to choose ATM and everyday debit card coverage for Overdraft Privilege? There are four options for a customer to consent: in person, by mail, over the phone, or electronically.

Strunk’s hosted ODP Manager software can help you provide your customers with the information they need to choose to have their ATM and everyday debit card transactions covered by ODP.

When you include the Reg E Opt-in Flag in the extract file, ODP Manager can determine if an account has already opted in or has not yet responded with a Reg E election. This allows financial institutions to provide the Consent Form to Overdraft Services to accounts that have not yet opted in. When a Welcome, Reinstatement, or Followup letter is mailed to these accounts, these letters include the A-9 Consent Form and the information about opting in by contacting you by mail, in person or over the phone, or electronically.

If a customer has already opted in for Reg E coverage, the Welcome and Reinstatement letters will remind them that their Overdraft Privilege service includes coverage of ATM and everyday debit card transactions.

If you would like to use ODP Manager to offer your customers the option to opt in on your website, Strunk can create a Reg E opt-in form that mirrors the content in your ODP Manager letters. When your customer submits the Consent Form electronically, the opt-in consent is tracked in ODP Manager, and a confirmation of the Reg E election is emailed. The ODP Manager software will also provide the Confirmation of Opt-in letter to be mailed.

Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Profitable Consumer Lending for Banks

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Lay-a-way programs started in the 1930’s and became very popular with consumers in the 1970’s where a merchant would reserve an item for a consumer until a consumer completed payments for the item. This was a prevalent way to make purchases for Christmas presents. Then in the early 80’s, lay-a-way programs were replaced with credit cards. Community banks didn’t have a profitable way to compete. Now credit cards are being replaced with Buy Now Pay Later programs that flourished during the pandemic in 2020.

Except for the largest banks who offer credit cards, financial institutions have been left out of the installment lending business again just like 40 years ago. Bank’s core processors have been slow to adapt to the changing consumer purchasing landscape as millennials and Gen Z’s head to Fintech companies for financing.

Over ten years ago, Square produced a digital payments solution for small businesses that far exceeded any banking offer. Six years ago Quicken Loans became the first lender to perform electronic closings for home mortgages. Now Affirm, Klarna, Sezzle, Zip, Openpay and others have developed products that have kept the banks on the sidelines once again. When will banks have an opportunity to compete for consumer loans?

Strunk’s Quilo program provides instant access to consumer loans via mobile device that enables banks to compete in the changing world of consumer lending. Underwriting, funding, collections and reporting are all done through the Quilo solution and there is no hassle for the consumer or the bank. Controls are set up to meet the bank’s credit risk standards as well as the desired return. When was the last time your bank made a $600 loan profitably? Best guess is was at least four decades ago.

To see what you are missing out on contact Strunk at info@strunkaccess.com or 800.728.3116 for a 45 minute demo.

An independent certified public accountant has examined Strunk’s operations and found them to be in compliance with the AICPA’s Trust Service Principles. It was determined that Strunk meets the Security, Availability, Processing Integrity, Confidentiality, and Privacy criteria for SOC 2 established by the AICPA.