High Growth Installment Lending Solution

For the past 40 years banks have made it difficult for their customers to get a small dollar installment loan due to the unprofitable nature of doing so. Credit card company business has flourished since the late 1970’s and bankers have been left on the sidelines.

The old (and current) way of making consumer loans is expensive and tedious and bank core processors have been slow to develop lending solutions that make these small dollar loans easy to book and profitable at the same time. Some banks allow consumers to apply online but many still require their customers to fill out an application in person.

Historically, bankers confirm the information on the application, pull a credit bureau report, and underwrite the loan. If the customer still wants to borrow, loan documents are produced and signed, repayment source and schedule is prepared, and the new loan is funded on the bank’s lending platform.

For loans of less than $1,000 most bankers cringe at the thought of doing all of this work for the amount of interest they will earn. Some banks turn these customers away. Furthermore, the cost to put the installment loan on their core processor’s lending platform eats up most of the interest the bank would receive.

Quilo takes all of the hassle out of making these loans and it allows the consumer to have instant access to credit based on their borrowing capacity. The new way of lending is digital (smart phone) and it provides easy access to loans based on the bank’s underwriting criteria. Digital banking has been around on the deposit side for several years. Now you can offer digital banking on the lending side as well.

To see what you are missing out on contact Mike Sobba, President of Strunk at msobba@strunklp.com or 816-225-8793 for a 45 minute demo.

Is your Financial Institution Ready for Digital Lending?

Digital banking has been around for about a decade as community banks and credit unions scrambled to offer consumers something big banks started in 2007. Mobile banking really started in Europe in the late 1990s and it took over ten years for it to become popular in the United States.

Mobile banking gives consumers 24/7 access to their deposit account. Most mobile apps allow for bill payments, remote deposits, fund transfers and some even allow person to person payments. Mobile apps have not provided any type of service on the lending side of the house until now.

The buy now pay over time solutions that many consumers are using started in Europe several years ago and in the past year they have become popular in the U.S. Just like mobile banking, the financial institutions here have lagged behind the rest of the world when it comes to digital technology solutions for consumers.

The Quilo mobile app provides instant access to small dollar (over $250) consumer loans that can be used at 1) POS or for online purchases; 2) to pay down or pay off credit card debt; or 3) to replenish a checking account for recent debit card transactions. The loans follow strict credit underwriting by each institution. Funding, collections and reporting is handled by the Quilo app.

Strunk has partnered with Quilo to provide a turn-key solution that will meet consumer demands by providing small dollar lending profitably. Quilo will substantially increase loans, net interest margin and interest income.

For a quick demo of Quilo contact Strunk at info@strunkaccess.com or 800.728.3116.

Banks Must Meet Consumer Demand. Don’t Let Fintechs Steal Away your Account Holders!

Consumer purchasing behavior changed in 2020 with the pandemic and retail shops closed in an attempt to stop the spread of the virus. Credit card transactions were up in 2020 compared to 2019 but credit card receivables were down substantially during the same time period. What happened?

People of all ages have aligned themselves with the buy now pay over time business that has finally come to the United States. Many younger consumers like the idea of buying a major item and paying it off rather than putting the purchase on an evergreen credit card that never seems to go away. Now people of all ages are using the service and the proliferation of this business is something bankers need to pay attention to.

In 2010 Square began offering bank’s small businesses a solution to run their payments solution without a banking relationship. Mobile card readers allow small business to receive payments for goods purchased. Why didn’t banks offer this to their customers? Why did a Fintech steal this business from banks?

Just six years ago a company called Quicken Loans started a mobile app for mortgage loans called Rocket Mortgage. They were the first Fintech to underwrite, fund and close mortgage loans in all 50 states. Now they are the largest home lender in the US. Why did a Fintech take this business away from banks?

Now companies like Venmo, PayPal, Sezzle, Affirm, Klarna, SoFi, Open Pay and Quad Pay are once again taking customers away from banks. They offer buy now pay over time for purchases made through merchants. Your bank’s customers are making their monthly payments from their checking account at your bank. Now, many of these companies are offering high interest checking accounts as well. Why did the Fintechs take this business away from banks?

Strunk has a turn-key technology solution that will meet customer demands by providing small dollar lending profitably. For a quick demo of Quilo, contact Strunk at info@strunkaccess.com or 800.728.3116.

Putting the CFI’s Low Cost of Funds to Work

Financial institutions across the country are enjoying a low cost of funds and many CFIs are looking for ways to deploy deposits profitably. As the Federal Reserve continues a pattern of low interest rates and with the high level of liquidity on the bank’s balance sheets – what can you do to increase net interest margin?

Community banks and credit unions have been sitting on the sidelines as financial technology firms have taken over the buy now pay over time business that proliferated during the COVID-19 pandemic. Consumer online purchases increased dramatically in 2020 since many retail businesses encouraged them or consumers stayed home.

Large retailers have adapted their payment processes for millennials and Gen Z’s who aren’t keen on using credit cards by allowing their customers to make fixed monthly payments over a 3-24 month period. Transparency, no hidden fees and the ability to make predictable monthly payments are reasons consumers like these new programs. Until now banks have had no way to compete for these profitable relationships.

Strunk is thrilled that we partnered with Quilo to bring to market the ability for banks to make these loans that their customers are currently getting elsewhere. Our turnkey, smart phone application is easy to use for online or in store purchases. Likewise, consumers can pay off high interest rate credit cards with the Quilo program.

If your financial institution has a low net interest margin, low cost of funds, and a desire to see what your customers are already using in the digital lending space give us a call to let us show you how our program works. The low touch, high yield lending platform is innovative and easy to manage.

Spotlight On: FINSYNC

FINSYNC is the only all-in-one payments platform that helps businesses get all their finances in sync, centralize control of cash flow, and get in sync with the right financial professional at the right time.

Grow in new and empowering ways when you combine innovative software with unmatched services.

FINSYNC’s payments platform helps businesses centralize control of payments, automate accounting, process payroll, and manage cash flow, and connect with members of the FINSYNC Network for banking, financing, accounting and insurance needs.

In his most recent annual shareholder letter, Jamie Dimon, JP Morgan Chase’s Chairman and CEO, called out the fact that software companies becoming banks themselves is an enormous competitive threat to our industry.

The threat is not new or news. The bold terms, however, coming from the largest bank with presumably the largest software development budget, make it worth every other community financial institution taking notice and action.

At Strunk, we want to help you to act and within your own budget. This is why we are calling out a special vendor we have been following. FINSYNC is helping financial institutions of all sizes compete for commercial/business relationships and win. Their program is not only unique on that basis alone, but it requires no upfront investment or integration and can deliver a quick return on time.

  • No cost to you
  • Acquire more customers
  • Increase revenue
  • Improve retention

FINSYNC helps financial institutions counter the threat that is now Intuit’s QuickBooks becoming a bank, which is by itself an enormous competitive threat to the all-so-important relationships you have with your business customers.

According to Dan Roderick, Strunk CEO, “The FinTech threat facing our industry is all too real. In my 40 years in banking I’ve never seen anything that has created a risk of this magnitude. Strunk is in the unique position of being able to bring solutions to our clients that will help community FIs combat the FinTech challenge.”

If you have not already partnered with FINSYNC or considered their program, please be our guest. We see this as a huge value to all of our clients and so we’re sponsoring a series of webinars so that you can learn more. Simply click here to sign up for a session that suits your schedule.

For more detail on the FINSYNC product please click here or email us at info@strunkaccess.com.

Residual Risk Explained

Having a well maintained vendor management program will allow you to build relationships with your vendors, while also strengthening your business. Understanding your vendors’ residual risk is a key piece of your vendor management program and it will let you know the amount of risk or danger associated with a vendor’s action after controls are accounted for.

To understand Residual Risk we need to first understand Inherent Risk.  Inherent Risk is typically defined as the amount of risk that the vendor has in the absences of controls.  Any time a financial institution uses a third party to provide a service or product, the financial institution needs to complete a risk assessment so they can understand the criticality of the risk that vendor will have.  Inherent risk is established only after the vendor’s key objectives have been defined, and steps have been taken to identify what could go wrong to prevent the vendor from achieving those objectives.  In addition to impact and likelihood, management must consider the nature of the risk also.

Once the Inherent Risk of the vendor is established and the financial institution recognizes the criticality of the risk, then the financial institution must realize what controls the vendor has in place to help mitigate or reduce the risk that the vendor has.  Once the controls have been assessed they should also be tested to ensure that they are operating efficiently.  Testing the controls provides confidence that they actually reduce risk to a tolerable level.

Finally, we are able to take a look at residual risk.  Residual risk is the amount of risk associated with each vendor remaining after inherent risks have been reduced by controls that the vendor has in place.  When controls are weak, not in place, or not functioning properly then residual risk will be high.  If vendor residual risk is high then a corrective action plan needs to be put in place on how the vendor is going to strengthen those controls or management should seek out other vendors who can provide the product or service to the financial institution.

How does a CFI Compete with the BNPL Providers?

The number of consumers who use a BNPL (Buy Now Pay Later) service has skyrocketed in the past 12 months. Consumers like these programs since they want simple monthly payments to give them the satisfaction of paying off a purchase rather than credit cards that can become “evergreen”. Unfortunately community financial institutions (CFIs) have missed out on this opportunity but it is not too late.

Millennials and Gen Z’s are an age group that is sought after by most financial institutions. Many of these people are scared of credit cards since they never seem to get them paid off. There are late payment penalties, high interest rates, and the minimum payment allows borrowers to pay off the balance in 15 years or more. Now there is a service you can provide.

Quilo is a turnkey service for financial institutions to provide small dollar consumer loans for purchases over $250. The high yield low touch loan program is not designed to cover everyday expenses like overdraft privilege programs do.

Your customer needs a new water heater or new tires. They have savings at your financial institution that they can use or they can use a credit card to pay for the expense. They don’t want to zap their savings for this unexpected expense and they don’t want to use their credit card with a high interest rate. Quilo provides a better alternative to either of these options.

Quilo loans are funded by your CFI and they offer a low rate, simple fixed payment, no prepayment penalty, and no late fees. Exactly what your customers want and need.

To learn more about Quilo please contact Strunk at info@strunkaccess.com or 800.728.3116 for quick demo of the Quilo Instant Installment Loan Program.

Why has your Financial Institution missed out on Small Dollar Installment Lending?

Community banks and credit unions have been shut out of the small dollar installment lending business due to the cost of taking an application, getting a credit bureau report, underwriting the loan, getting documents signed, funding and servicing the loan. Industry experts say that the cost to underwrite consumer loans typically runs $150 or more, with annual servicing cost running as high as $180 per year…doing it the ‘old school’ way.

Strunk has partnered with Quilo to provide a digital platform to make instant consumer loans for online or point of sale purchases. Large mega banks and FinTech companies have been offering these types of loans for several years and community financial institutions have been unable to keep pace. The Buy-Now-Pay-Later “BNPL” business is booming across the nation and Millennials, Gen X, and Gen Z’s are using the service…just not with your financial institution.  UNTIL NOW!

Quilo provides an opportunity for your institution to increase loans, net interest income, and offer an exciting service that consumers love, all from an app on their Smartphone. It allows consumers to make purchases and pay for them over a 3-24 month timeframe. It takes the stress out of lending…consumers don’t have to share their soul to borrow $500 and the financial institution doesn’t have to stress over telling them we don’t make small loans.

With tremendous growth potential in this segment of installment lending it doesn’t take long to show you how this would work for your financial institution. Take back the consumer lending business from the big banks and FinTech companies.

To learn more about Quilo contact Strunk at info@strunkaccess.com or 800.728.3116 for a quick demo of the Quilo Instant Installment Loan Program.

Strunk at the ABA’s Virtual Conference for Community Bankers 2021

For the first time, Strunk attended the ABA’s annual Conference for Community Bankers virtually. During the virtual event we hosted a virtual booth, met with many familiar and new faces via Zoom meetings and attended virtual sessions. While a bit different than being together, it remains one of the most anticipated events of the year and we made the most of the connections with bankers and enjoyed seeing everyone.

We welcomed the opportunity to discuss with attendees the latest features offered by our Governance, Risk Management and Compliance (GRC) software Risk Manager, which includes six GRC tools – Risk Assessor, Policy Manager, Controls Manager, Skills Manager, Issues Manager and Vendor Manager. Strunk’s Overdraft Program is always a hot topic of conversation and we were glad to discuss our approach with long-time clients and potential clients.

Attendees had the opportunity to hear from keynote speaker, former NBA star Earvin ‘Magic’ Johnson in his session ‘The Power of Magic’. On top of his athletic notoriety, Magic is a driven and successful entrepreneur who shared what it takes to truly make an impact.

Another interesting session was hosted by Ron Shevlin of Cornerstone Advisors on the five forces shaping the banking industry today. He detailed how challenger banks, big tech, embedded finance, artificial intelligence, and cryptocurrency are affecting our banks and provided areas of focus for community FIs.

Congratulations to the winner of Strunk’s giveaway, a $100 gift card to Amazon – Mayra Rinaldi of Columbia Bank!

We hope to see you all in person next year and to once again host the conference t-shirt station. Until then, stay well.

5 Things you should do to build an Effective Vendor Management Structure

Managing your vendor manager program can be troubling and time consuming. With the increase numbers of vendors that companies are depending on each year, companies need to make sure they are monitoring vendors and contracts more efficiency to help prevent problems before they start.

1. Identify your vendors and understand what services that they are providing you.
Creating a list of your existing vendors and understanding the nature of their service is key in your vendor manager structure. Being able to have access to your vendors list and their information will lead to both effectiveness and efficiency inside of your organization. Effective vendor management entails a detailed grouping of vendors based on criticality and service.

2. Contract Review
Storing your vendor contract in a central location will provide insights into the current stage of the vendor, for example, vendors with contract in place, vendors that require renewals, etc.. Having a centralized view of the current status of all contracts will help achieve better decision-making capabilities and save valuable time. Understanding and scoring what provisions should be in the contract will help provide the correct terms of the contract between you and the vendor.

3. Risk Assessment
Completing a risk assessment on your vendors to better understand the risks posed by its third-party relationship is critical to each vendor relationship. Identify any risks that the vendor poses with help your company evaluate whether the vendor can eliminate those risks or determine whether your company can accept those outstanding risks for that vendor.

4. Vendor Reviews
Not all vendors may perform as per your standards. It is important to choose the right vendor from multiple vendors, who meet your organizational standards and criteria while promising excellent performance. Performing periodic vendor reviews will give you a better understanding of the vendor’s performance and make sure they are providing quality product or service to your company.

5. Document Storage
As your company grows, it becomes essential to have a vendor data storage solution in place. In the absence of a vendor management system, storing and retrieving data might prove to be really tough, considering the fact that you may be dealing with multiple vendors for multiple projects at the same time. Having a centralized repository for your vendors data will help streamline and organize your vendor manager program.