WEDNESDAY JUNE 30, 2021 VOL. 186 No. 124 AMERICANBANKER.COM Follow us on Twitter @AmerBanker The fintechs stepping into the 5 void left by Simple The now-defunct neobank was famous for Smaller cushions its ability to help customers ensure their The estimated stress capital buffers at Citigroup and Wells balances were adequate to cover upcoming Fargo grew slightly between June 2020 and June 2021, while bills or savings plans. Digit and others have started offering their own variations on this Capital One's shrank by more than any other big bank feature. Page 6 See story on page 2 Small bank takes stake in robo advisor to reach 1% 6 the mass affluent Amerant Bank has invested $2.5 million in 0% Marstone to provide a digital alternative to personal wealth advisors for new and -1% existing clients. The technology “gets planning capabilities into the hands of any -2% customer that wants them,” says Jerry Plush, the Florida bank’s new CEO. Page 7 -3% Bill pay—even when digital— -4% 7 proves bumpy, survey finds CiǎgroupGoldman JPMorgan Morgan Wells Regions Truist Capital Banks and creditors have spent years trying Sachs Chase Stanley Fargo One to remove obstacles to presentment and payment, but some consumers say they would Source: Keefe, Bruyette & Woods still rather step on a Lego brick than pay a bill, according to PayNearMe research. Page 8

Vanishing teller jobs threaten dailybriefing Student loan servicers 8 women’s entry point to banking 3 fear 1-2 punch from CFPB, For years, women have gotten a foot in the Education Dept. door to the finance industry by becoming bank What to expect when Rohit Chopra, who was the Consumer tellers. Now that path is disappearing. Page 9 1 big banks start announcing Financial Protection Bureau’s first student capital payouts loan ombudsman, is expected to crack down Ginnie Mae creates 40-year Some of the 23 large banks that participated on unfair debt collection and other practices 9 mortgage securitizations in last week’s stress tests will be better once he is confirmed by the Senate to lead Ginnie Mae is allowing lenders to securitize positioned to reward shareholders than the bureau. Observers predict he’ll work modified home loans with this extended others, since they padded their capital closely with former CFPB Director Richard term as the Biden administration works to amid the pandemic. Still, all are expected Cordray, who now oversees the Education make more housing options available for to tread cautiously amid ongoing economic Department’s $1.7 trillion portfolio of federal struggling borrowers. Page 10 uncertainty. (See chart above.) Page 2 student loans. Page 4 Colonial Pipeline shows Fed’s Quarles throws cold CFPB lets foreclosures 10 how not to handle a 2 water on central bank-backed 4 resume — but with caveats ransomware attack digital dollar The Consumer Financial Protection Bureau The government helped the gas pipeline Fed Vice Chairman for Supervision Randal issued a temporary final rule that allows operator recoup some of the funds it paid to Quarles says the benefits of a central bank mortgage servicers to initiate foreclosures cyberthieves, but that’s unlikely to happen digital currency are “unclear,” and that a on abandoned properties and certain often. Banks should shore up password digital dollar could actually “pose significant delinquent borrowers, but it also outlined security to minimize risk and be willing to and concrete risks.” Page 3 additional measures that shield distressed reject hackers’ demands in the event of a homeowners. Page 5 breach, Mike Wilson of Enzoic writes. Page 11 WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 2

the minimum 2.5%, according to an estimate participate. The apparent goal was to score STRESS TESTS by Keefe, Bruyette & Woods. well enough to earn a lower stress capital This was likely in part because this year’s buffer. Analysts estimated that Regions’ scenario was less punitive on consumer cushion will likely be lowered to the 2.5% What to expect loans, which make up the bulk of Capital floor from the 3% the company was required One’s business. The $425 billion-asset to meet last year. Regions, of Birmingham, when big company likely benefited from having lower Alabama, is among the banks that Barclays credit card balances, as consumers used Capital analysts predicted will begin a share stimulus checks to pay down those accounts. repurchase program. banks start Capital One’s common equity Tier 1 Regions Chief Financial Officer David capital ratio — the main cushion meant to Turner said during an April earnings call announcing absorb losses during a downturn — declined that the bank intended to start repurchases by 2.2 percentage points to the trough in the second quarter pending the Fed’s projected during the stress tests’ most restrictions. capital payouts adverse scenario. This was an improvement Other large banks that fared better than from the 5.4-percentage-point decline last year included Goldman Sachs and By Jon Prior and Laura Alix during the test completed in June 2020. Morgan Stanley. Each is likely to see their June 28, 2021 The McLean, Virginia-based bank had an stress capital buffers lowered, according to While the stress tests broadly delivered actual common equity Tier 1 ratio of 14.6% analysts’ estimates, but their cushions will good news for the nation’s big banks, some at the end of the first quarter, and company remain higher than those of several of their companies fared better than others, with executives have affirmed a target of 11%. peers. varying implications for capital payout The board of directors has authorized a Trust and custody banks also fared well, announcements that are expected to begin share repurchase plan of up to $7.5 billion with KBW estimating a stress capital buffer this week. of common stock, although executives have of 2.5% for Northern Trust, State Street and The Federal Reserve gave all 23 said the company’s repurchase capacity in Bank of New York Mellon. Each has said they participating banks a green light to resume the fourth quarter is likely to top out at $1.7 are eyeing plans for higher dividends and dividend payments and share buybacks billion. share repurchases. after their aggregate common Tier 1 capital “How quickly we complete that $7.5 On the other end of the spectrum were ratios under the most severe downturn billion that the board has already authorized Citigroup and Wells Fargo. While both scenario stayed well above the minimum is going to tie back to any unforeseen megabanks held their capital ratios above required. At stake for each bank was how additional regulatory restrictions, but also the minimum required, they did not perform much their capital requirements could be trading volumes in our stock and then … as well as they did last year. lowered based on individual performances. looking holistically at our capital position,” Citi’s common equity Tier 1 ratio declined The Fed is allowing banks to adjust their Chief Financial Officer Andrew Young said by 2.7 percentage points under the most original capital distribution plans before on an April conference call. adverse scenario, which is more than the publicly disclosing them along with their Another winner last week was Regions 1.5- percentage-point decline in the June new stress capital buffer requirements — an Financial, which opted in to the stress tests 2020 results. Wells Fargo’s 2.8- percentage- extra layer of cushion required by regulators during a year when it was not required to point decline also eclipsed its 2-percentage- last year — as early as after the market closes Monday. Management teams at the participating Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 banks are likely debating how aggressive Phone 212-803-8200 AmericanBanker.com to be with their plans, analysts said. Some firms may be relatively restrained given the Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 U.S. economy’s uncertain footing and the Managing Editor Dean Anason 770.621.9935 high prices that banks would have to pay at Reporters/Producers the moment to repurchase their shares. Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 The days of “big bang” payouts following Washington Bureau Chief Joe Adler 571.403.3832 stress test results may give way to gradual Executive Editor, Technology Miriam Cross 571.403.3834 increases in a series of announcements in Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 the months ahead, said David Fanger, senior BankThink Editor Rachel Witkowski 571.403.3857 vice president at Moody’s Investors Service. John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 “You don’t want to shoot all your marbles Hannah Lang 571.403.3855 right away,” Fanger said. Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 One of the biggest winners Thursday was Digital Managing Editor Capital One, which will likely see its stress Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 capital buffer shrink from 5.6% last year to

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 3 point drop a year earlier. questioning whether the benefits of a Fed- Committee, warned at a hearing this month Both companies still have high enough backed digital currency would outweigh that the creation of the central bank digital capital levels to dole out returns to the costs. currency would turn the Fed into a direct shareholders, analysts say. Fed Vice Chairman for Supervision competitor of private banks. Citi CEO Jane Fraser said at an industry Randal Quarles called the benefits of a “We don’t need a state-sponsored conference earlier in the month that the New central bank digital currency “unclear,” bank interfering with this successful free- York-based company was trying to find the and said that a digital dollar could actually enterprise system,” he said. right mix between payouts to shareholders “pose significant and concrete risks,” Quarles appeared to sympathize with and investments into the bank. potentially undermining the U.S. banking Toomey in Monday’s speech. Wells Fargo CEO Charlie Scharf said system. “Among other potential problems, a during the same conference that his bank “An arrangement where the Federal dominant CBDC could undermine the was prioritizing returning its dividend rate, Reserve replaces commercial banks consumer and other economic benefits that which is now unusually low, to a normal as the dominant provider of money to accrue when commercial banks compete to level before considering stock buybacks. the general public could constrict the attract customers,” he said. Overall, the 23 participating banks have availability of credit, fundamentally alter Quarles also knocked the idea that a an estimated $230 billion in excess common the economy and expose the public to a Fed-issued digital dollar could potentially equity Tier 1 capital above what they’re host of unanticipated, and undesirable, enable users to take advantage of certain required to hold, some of which could be consequences,” Quarles said in a speech innovations now available with private delivered to investors, Barclays analysts said at the Utah Bankers Association Annual cryptocurrencies, such as programming in a note to clients. Convention. payments related to smart contracts. Moody’s said in a report Friday that In the speech, in which he noted that he “I am puzzled, however, as to how a allowing banks to restart payments to was speaking only for himself and not the Federal Reserve CBDC could promote shareholders is a “credit negative” for the Fed’s board of governors, Quarles also cast innovation in a way that a private- firms, as their bond holders, unlike their doubt on whether a digital dollar could sector stablecoin or other new payment shareholders, would prefer they preserve effectively expand financial inclusion as mechanism could not,” he said. “It seems their capital. Fanger said he expects banks many of its proponents have argued. to me that there has been considerable will move cautiously in order to avoid Instead, he proposed that the solutions private-sector innovation in the payments decreasing their dividend payments or share to financial inclusion lie within the existing industry without a CBDC, and it is repurchases if the stress tests next year prove banking system. conceivable that a Fed CBDC, or even difficult. “I believe we can promote financial plans for one, might deter private-sector “They don’t want to be caught short next inclusion more efficiently by taking steps innovation by effectively ‘occupying the year,” Fanger said. “It is quite possible that to make cheap, basic commercial bank field.’” you will see a gradualist approach to this.” accounts more available to people for He also expressed concern about how whom the current cost is burdensome,” he much a central bank digital currency could said. cost the Fed. There are no estimates for DIGITAL CURRENCIES The Fed has been considering the idea of how much it would cost the U.S. to set up a a central bank digital currency for years, but digital dollar, but the total would likely vary its focus has intensified as cryptocurrencies widely depending on how the Fed would Fed’s Quarles like bitcoin have experienced a surge in decide to create and use a central bank popularity. Fed Chair Jerome Powell said digital currency. throws cold in May that the central bank would publish “We will need to consider whether the a discussion paper this summer detailing potential use cases for a CBDC justify such its current thinking on central bank digital costs and expansion of the Federal Reserve’s water on currency and digital payments. responsibilities into unfamiliar activities, Many expect that paper to be a precursor together with the risk of politicization of central bank- to a decision from the Fed on whether to the Fed’s mandate that would come with move forward with developing a central such an expansion,” Quarles said. bank digital currency. However, Powell and backed digital other Fed officials have said that the Fed would not issue a digital dollar — or even dollar test the concept through a pilot program — without support from Congress. By Hannah Lang That could prove to be challenging, June 28, 2021 especially if Capitol Hill Republicans WASHINGTON— A top Federal Reserve adopt stances similar to that of Quarles. official dealt a blow to the central bank’s Sen. Pat Toomey of Pennsylvania, the consideration of a digital dollar Monday, ranking Republican on the Senate Banking

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 4

and the CFPB across a number of different When Cordray led the CFPB, he launched ENFORCEMENT avenues on federal loans,” said Allyson Baker, a public inquiry into student loan practices a partner at the law firm Venable who chairs and released a report in 2015 on “widespread its financial services practice and was a CFPB servicing failures” that the agencies may use Student loan enforcement attorney. as a blueprint for reforms going forward, In the near term, Democratic lawmakers some experts said. servicers fear raised concerns in a letter to President Biden Within the backdrop of the larger debate on Wednesday that federal student loan about federal student loan debt, banks are servicers will be overwhelmed once millions advocating for changes to federal student loan 1-2 punch of borrowers whose payments were paused applications such as streamlined disclosures by the Coronavirus Aid, Relief and Economic that would more clearly explain the costs and from CFPB, Security Act are scheduled to resume terms of federal student loans. A primary payments on Oct. 1. issue with federal loans is that borrowers take Restarting payments “will present a out too much money in comparison to what Education significant challenge for borrowers, loan they make, some experts said. servicers, and the Department of Education, The CFPB currently oversees student loan Dept. and we urge you not to let the payment pause servicing at nonbank servicers that handle lapse when borrowers are still depending on more than 1 million borrower accounts, By Kate Berry this financial relief,” the letter said. whether they service federal or private loans, June 29, 2021 Past emergency suspensions of student and at the largest banks. Student loan servicers are bracing loans during natural disasters were followed Private student loans totaled $138.6 billion for tougher supervision and more by increased numbers of borrowers who as of the third quarter of 2020 — or just 8% monetary penalties from the Consumer went delinquent or defaulted on their of all outstanding student loan balances, Financial Protection Bureau as the Biden loans. Before the pandemic, nearly one in according to estimates from the education administration tackles the thorny issue of five federal student loans was in danger of data provider MeasureOne. Still, the private massive student loan debt. default, though performance data is hard to student loan market is larger than both Rohit Chopra, the CFPB’s first student come by, experts said. payday loans and medical debt in collections, loan ombudsman, will likely crack down on “Tens of millions of people have had with private student loans producing roughly servicers once he is confirmed by the Senate their student loans turned off. Turning them $10 billion in fees a year, which is on par to lead the bureau, observers say. Chopra is on in one fell swoop without a clear plan is with bank overdraft fees, Frotman said. The widely expected to tag-team servicers with a recipe for disaster,” said Seth Frotman, CFPB also is expected to take a closer look at his old boss, former CFPB Director Richard executive director of the Student Borrower fintechs that are offering student loans and Cordray, who is now the chief operating Protection Center and a former CFPB student other refinancing options. officer of federal student aid in charge of loan ombudsman. “Restarting payments Bank trade groups are lobbying for the Education Department’s $1.7 trillion without first addressing failures across the servicers of federal loans to have the same portfolio of loans. student loan system would be a huge error. plain-language disclosure requirements as “Chopra’s primary issue has been student The process will also require coordination those of private loans by the Truth in Lending loans,” said Nate Viebrock, an attorney between the Department of Education Act. with Viebrock & DeNittis. “He could use and regulators. There was widespread “Clearly any student loan crisis that exists rulemaking like debt collection that is broad mismanagement and abuse in this market sits squarely on the federal government’s enough to address certain practices of even before the pandemic. Now there is egregious overlending practices that in student loan servicers.” going to have to be significant oversight when any other context would be considered Chopra is closely aligned with Sen. they turn back on payments.” predatory,” Richard Hunt, president and Elizabeth Warren, D-Mass., who joined Many expect the CFPB and Education CEO of the Consumer Bankers Association, Senate Majority Leader Chuck Schumer, Department will work together to ensure said in a letter Thursday to lawmakers before D-N.Y., and other lawmakers last week in more oversight and accountability. There is a hearing with Education Secretary Miguel calling for Biden to extend a pause on federal a push underway to require more consistent Cardona. student loan payments until March 2022. standards, disclosure requirements and Private student lenders are vastly more Warren also wants Biden to cancel federal improved borrower contact similar to successful in underwriting and getting student debt. requirements enacted for mortgage servicers repaid than the federal government, Hunt Chopra and Cordray are expected to work after the financial crisis. said, largely because the government has with the Treasury Department on a road map The CFPB currently has two supervisory no underwriting requirements or ability-to- for student-loan-servicing reforms as part examiners on loan to the department to help repay assessment of student borrowers. of an effort to reduce defaults and improve it set up audit programs for federal student “There are a lot of loans that people take borrower outcomes. loan servicers, sources said. The bureau did out to finance education that don’t fall in the “There’s going to be a lot of coordinated not comment when asked about any such bucket of student loans, from credit cards work between the Education Department efforts. to home equity lines of credit to specialty

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 5 lenders offering lousy products or high-risk, the department and the CFPB last year. August, CFPB officials said. high-cost products,” Frotman said. Another area that Cordray is focused Still, Uejio has been warning servicers to Servicers and fintechs are concerned about on is the Education Department’s public prepare for a high volume of borrowers — increased supervision and enforcement by loan forgiveness program that gives public estimated at 900,000 — who will be exiting the CFPB. servants a chance to have the balance of debt forbearance plans from September through Experts also are closely watching the erased after 10 years of on-time payments. year-end. The CFPB recognizes that servicers’ ongoing litigation against Navient, the Reports from both the Education Department capacity to respond to borrowers exiting Wilkes-Barre, Pennsylvania-based servicer and Government Accountability Office have forebearance will be constrained this fall is that has been the target of the CFPB and found that up to 98% of applicants were seeking to reduce the impact on the housing numerous state lawsuits alleging various rejected for the plans. market. consumer abuses. Though a trial date has not “Cleaning up these programs that exist is “A measured return to foreclosures will yet been set, a recent report by Fitch Ratings part of the critical work,” Frotman said. allow mortgage companies and foreclosure noted that a resolution of the CFPB litigation lawyers to staff back up gradually,” Uejio said “could occur,” though “the exact timing of a on the conference call. “A measured return decision and potential financial impact of an SERVICING to foreclosures will prevent vacant houses adverse judgment are impossible to predict.” from being caught in a jammed foreclosure “The enforcement action against Navient pipeline and lingering for years.” creates an additional layer of uncertainty, CFPB lets Uejio stressed the urgency of the situation. including not only the potential monetary The CFPB said that more than 3% of all restitution to borrowers and fines, but foreclosures borrowers are four months or more behind the potential reputational risk an adverse on their mortgages, which is the point when judgment could have on current and future a foreclosure may be initiated. client relationships, particularly government resume — but The new 208-page rule includes five key contracts,” Fitch said. amendments to Regulation X. The rule Last year, Navient had the most complaints with caveats first creates “temporary special COVID-19 to the CFPB of any private student loan procedural safeguards” that must be met servicer, with 646 out of a total of 1,936 By Kate Berry for certain mortgages before a servicer complaints for the year ended August 2020, June 28, 2021 can issue a foreclosure notice because of according to the annual report of the CFPB’s Mortgage servicers can resume a delinquency. Second, the rule permits ombudsman. Of the 6,950 complaints foreclosures on some borrowers under a set servicers to offer certain streamlined loan received, more than 5,014 were about federal of rule changes by the Consumer Financial modification options to borrowers with student loan servicers. Protection Bureau designed to help millions COVID-19-related hardships. Third, loan Though Chopra is still a commissioner at of struggling homeowners exiting mortgage mods must be made available to borrowers the FTC, other changes on students loans are forbearance plans. experiencing a COVID-19-related hardship. in the offing. The CFPB may elevate the role The CFPB issued a temporary final rule Fourth, the borrower’s acceptance of a loan of the student loan ombudsman, a position Monday that provides added borrower modification offer must end any preexisting appointed by the Treasury Secretary. Many protections such as required outreach and delinquency if the borrower satisfies certain experts have speculated that Robert G. loss mitigation reviews by servicers. But the servicer’s requirements. Finally, the servicer Cameron, a former student loan servicing agency essentially abandoned a proposal may not charge any fee in connection with a executive who was named the private from April that would have required a pre- loan modification and must waive all existing education ombudsman by former CFPB foreclosure review period, which some said late charges, penalties, stop-payment fees or Director Kathy Kraninger, will be replaced imposed a foreclosure moratorium until similar charges that were incurred on or after once Chopra is confirmed to lead the agency. 2022. March 1, 2020. During the Trump administration, former “Let me be clear: Our final rule does Requirements about extra outreach to Education Secretary Betsy DeVos rolled back not impose a foreclosure moratorium,” borrowers and streamlined loan modification state regulatory and disclosure requirements acting CFPB Director Dave Uejio said on a protections will stay in place at least until for student loan servicers claiming they were conference call with reporters. September 2022. preempted by federal law. Frotman said he The amendments, which go into effect Aug. Diane Thompson, a senior advisor to expects a concerted effort to overturn the 31, allow servicers to resume foreclosures Uejio, said feedback from housing counselors preemption. on abandoned properties and on borrowers and servicers led the CFPB to abandon the Complaints from student loan borrowers who were more than 120 days behind on their tougher restrictions on foreclosures proposed were not shared with the Education mortgage before March 1, 2020. Servicers in April out of concern that there would be a Department for three years. In 2017, DeVos also can start forclosing on borrowers more massive ramp-up of foreclosures next year instructed student loan servicers not to submit than 120 days behind on their mortgage who that could have a big impact on the booming data or documents directly to agencies other have not responded to specific outreach from housing market. than her department regarding investigations their servicer for 90 days. Foreclosures for “We spent a lot of time trying to think about or oversight. Data sharing resumed between some borrowers are likely to begin as early as how we framed the intervention, because

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 6 framing it as a foreclosure moratorium is upcoming bills and money to be set aside for healthy?” said Ethan Bloch, Digit’s CEO. actively harmful to the goal we were trying savings goals, and calculated how much the “We’re trying to help you budget for your to achieve, which is an orderly transition to customer could safely spend. bills. And on the flip side of that coin, we’re a more normal housing market,” Thompson Simple trademarked the name Safe to trying to help make it really easy to control said. Spend and aggressively protected it. In 2015, your spending.” More than 2.1 million homeowners it sent a cease-and-desist letter to Mondo, the When customers use Digit’s safe-to-spend currently are in mortgage forbearance U.K. neobank that was using the name on its feature, each time a deposit hits the Digit plans that allow them to temporarily pause app at the time. That may be one reason why account, some of that money is automatically mortgage payments for up to 18 months. this feature, the loss of which many Simple transferred to an account allocated to paying Borrowers with federally backed loans can users lamented on Reddit and Twitter, is hard bills. Another portion is shifted to a savings still qualify to enter forbearance through to find. But a few fintechs, such as Digit, are account. Sept. 30, including multifamily apartment emulating that service. Digit displays the amount that’s left over, landlords whose tenants are protected by More banks and fintechs might want to do or “what you could be spending right now eviction moratoriums that expire soon. Still, the same. without putting your bills in jeopardy,” Bloch many servicers have offered forbearance “It does behoove others to pay attention” said. plans to a range of borrowers, not just those to what Simple did with Safe to Spend, said Digit recalibrates this safe-to-spend with federal loans. Mark Schwanhausser, director of digital amount each night while the user is sleeping. The servicing requirements would give banking at Javelin Strategy & Research. “It will auto-tune and make little borrowers time to pursue loss mitigation “Savings has turned into one of the hot adjustments, giving somebody a little more options and allow servicers to help borrowers topics of 2021,” Schwanhausser said. “That’s money for bills or a little more for savings,” faster, the CFPB said. partly because there’s a growing importance Bloch said. “It’s not going to make huge “We want servicers to be actively engaged in trying to provide better financial wellness money movements, but it will make some in loss mitigation in the summer and fall,” and financial fitness. The banks and fintechs smaller adjustments and at 9 a.m., you’ll get Thompson said. “If you haven’t been making are all trying different approaches to that. a notification that tells you how much is in payments on your mortgage since March Some are focused on saving. Some are your spending and how much Digit has set 2020, it’s important to understand that you focused on spending, some on credit scores.” aside for bills. So you’re starting each day need to figure out a plan to address that in the The main difference between fintechs’ and with some sense of the ground truth of your near future.” banks’ approach, in Schwanhausser’s view, money.” Uejio urged borrowers to contact their is fintechs are trying to turn this kind of help The new feature stemmed from customers mortgage servicers and to reach out to into an automated service. asking Digit to help them budget better for housing counselors. The rule changes are The fintechs say “we’re going to be their bills, as well as save more and control part of the Biden administration’s response to proactive and guide you to save money,” he their own spending. the pandemic, with several agencies working said. “Banks are struggling to make the leap It took Digit 18 months to build this out, together to ensure a smooth transition to from providing do-it-yourself tools for self- Bloch said. The hardest part was creating its normalcy. aware customers to addressing the majority own bank account and choosing Metabank of consumers who care about their money as its bank partner and Galileo (now part of but may not know where to begin.” SoFi) as its processor. FINTECH To make the new feature work, Digit What Digit is doing sets up three bank accounts for every Digit San Francisco-based Digit, the fintech that Direct account: a checking account, a The fintechs pioneered the use of artificial intelligence savings account and a spending account. to help consumers frequently save small The spending account is attached to the Digit stepping into amounts of money without hindering their debit card. ability to pay bills and handle living expenses, “We weren’t just building the vanilla recently introduced its own version of Safe to neobank with a debit card,” Bloch said. the void left Spend. At the same time, Digit debuted a full- “Direct has technically three accounts that fledged bank account called Direct with the underpin it and money moves between all of by Simple $9.8 billion-asset MetaBank, which is based them instantly.” in Sioux Falls, South Dakota. This way, Digit saves customers from By Penny Crosman In recent years Digit has launched themselves: They can’t accidentally spend June 28, 2021 other related features like the ability to money that they didn’t intend to. One of the most beloved features of automatically pay off credit card and student “We’re adding just a tiny bit of friction, Simple, the neobank that Madrid-based loan debt in safe increments. It has also because I might want to spend the money,” BBVA bought in 2014 and then shut down increased its monthly fee to $9.99. Bloch said. “But if I have to go into the app and recently before selling its U.S. unit to PNC “We really think about how do you make transfer $30 out of the Bills account into the Financial Services Group, was Safe to Spend. managing your money easier day-to-day, and Spend account, that little bit of friction makes It analyzed a customer’s income, subtracted how do you make it easier to be financially me realize, by doing this, I’m going to be less

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 7 likely to be able to pay my rent this month. Is spending,” Schwanhausser said. “And then tools for you to figure it out.” that OK? We’re hearing that that little tiny bit we looked through the sofa cushions, and we Banks are not helping people figure out of friction built into the experience is really found what was leftover. And that becomes how much money they will have after their helpful. We’re designing a car with seat belts your safe to spend.” scheduled bill payments have been made. and airbags because we know people get in It would be better to flip that around and “Help me do the mental math — we’re accidents.” save first: 10% goes into savings, and you live not even seeing banks do that stuff, You Need A Budget, a fintech based in on the other 90%, he said. which is completely within their realm,” Lehi, Utah, provides a budgeting app that Schwanhausser said. shows users how much money they have Banks stay savings-centric available to spend after upcoming bills, This is what some banks have done, savings allocations and living expenses are Schwanhausser said: Help people manage COMMUNITY BANKING accounted for. their cash flow by emphasizing savings. Some go for the roundup or Keep the Not everyone’s a fan Change approach that Bank of America Small bank Critics question the efficacy of safe-to- pioneered in 2005. As the name suggests, spend programs. when a customer makes a purchase, the takes stake in “Safe to Spend is a pretty common concept, amount is rounded up to the next dollar and and can be useful, but it is often not used by the leftover change is swept into a savings customers as much as it is in marketing,” account. Some let people set their own robo advisor said Brian Hamilton, founder and CEO of rules, for instance, by depositing a portion of the challenger bank One, which is based in each paycheck automatically into a savings to reach the Sacramento, California. “The algorithms are account. useful when they’re accurate and recurring U.S. Bank’s Pay Yourself First program, bills are reliable and all connected and which it created with Personetics and launched mass affluent everything works exactly right.” in March, uses AI to identify ways customers If there are any disconnects or inaccuracies, can save. It offers recommendations based By John Reosti people won’t trust the safe-to-spend number, on their personalized cash-flow patterns. June 28, 2021 rendering it useless, he said. Automatically saving a portion of each Digital wealth management has One offers “pockets” for budgeting for paycheck is far more effective than any keep- traditionally been the purview of high-tech specific expense categories that can be taken the-change program, in Schwanhausser’s startups and financial industry heavyweights out of each paycheck or directly debited by view. A person in a roundup program might like Merrill Lynch or JPMorgan Chase. each biller. save $13,000 over the course of 15 years, he Smaller institutions, by contrast, have favored Many fintechs and banks use this concept said. But if that same person saved 10% of a model that relies on personal relationships of pockets, envelopes or buckets to help income, the savings would be $130,000. between clients and financial advisors. people manage their money, Schwanhausser “You have fundamentally changed that Now, the $7.7 billion-asset Amerant pointed out. One envelope will be for rent, conversation in a way that’s going to lead to Bancorp in Coral Gables, Florida, is looking another for saving for vacation, and so on. that $130,000 savings after 15 years,” he said. to expand its share of the market through a “The human brain often feels more The fintechs’ what’s-left-in-the-sofa- $2.5 million investment in Marstone, a digital comfortable when it can compartmentalize,” cushions approach works best for a younger wealth management fintech, as part of a $5 Schwanhausser said. “So you’re seeing consumer who hasn’t yet gotten into million Series A financing round that pushed players like Chime, One, Stash, Varo and overspending habits, Schwanhausser said. Marstone’s total funding past $20 million. others playing with different variations of But the biggest difference between banks Marstone enables Amerant and other buckets.” and fintechs, he said, is in the types of tools banks to compete with larger wealth Hamilton isn’t completely opposed to the they offer. management providers by providing a digital idea of Safe to Spend. “The banks see it as a bunch of tools: alternative to a human advisor. “Safe to Spend, when done right, is a You figure it out,” he said. ”The fintechs are “Typically, wealth management valuable concept,” he said. “We will likely trying to say, we’re going to hold your hand relationships have been centered around employ some similar projections in our and guide you. And I highly commend that. dedicated sessions. Advisors answer product but in a slightly different form based That can lead into the use of personalization, questions and offer suggestions,” said Jerry on user feedback on what they find most notifications, gamifications, things that take Plush, Amerant’s CEO. With Marstone, useful.” a consumer deeper into what should I be “you’re looking at optionality. Clients can Schwanhausser is also skeptical about thinking about? What should I prioritize? access information without the meetings or safe-to-spend programs. What should I save for first? The fintechs interactions, if they choose.” “With safe to spend, it’s often about saying, are treating it almost like it’s an advice- Amerant’s investment in Marstone came we started with your paycheck, we took out driven relationship: We’re going to help you a month after it partnered with the firm to your bills, we took out the things you’ve move forward. Banks are in a transactional provide a suite of digital wealth management encumbered yourself with, we took out your relationship, and they’re saying here’s some tools to customers.

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Banks have shown increased interest in use on their own will make Amerant’s offering over time makes it worthwhile and are also wealth management over the past year. The more compelling, Plush said. … more digitally oriented with memberships extra attention has manifested primarily in The platform’s tool set can also be used by that are digitally savvy,” David Mooney, who acquisitions of wealth management firms advisors as part of a client session. retired in August as CEO of the $14 billion- that add assets under management and fee Amerant’s footprint covers two of the asset Alliant Credit Union in Chicago, said in income to the balance sheet. At least seven fastest-growing, most affluent banking an interview. such deals have been announced since markets in the country: South Florida and Plush said he thinks Amerant’s November. Houston. Both are seeing inflows of wealthy involvement with Marstone will prompt Additionally, JPMorgan Chase announced individuals and small businesses. some institutions to take a look. “I would this month that it had paid an undisclosed The regions share “some very similar expect others to be curious as to why we did sum for Nutmeg Savings and Investment, [positive] characteristics, a very friendly what we did,” he said. one of the U.K.’s leading digital wealth environment for business and a very friendly Personal financial management tools management platforms, in a move aimed at environment as it relates to taxation,” Plush like the ones Marstone provides can be a upgrading its digital banking capability there. said. “No surprise, we’re excited to be in powerful means of tying clients more tightly Marstone, of Providence, Rhode Island, both.” to their financial institutions, according to was founded in 2013 by Margaret Hartigan, a While community banks lack the scale of Mooney. veteran Merrill Lynch financial advisor who their larger rivals, they make up for it with Clients who use self-directed tools — serves as CEO, and Robert Stone, its chief customer loyalty, said Adam Green, CEO especially investment tools — become “larger, creative officer. of YieldX, a fintech that focuses on fixed- stickier and more profitable relationships,” Plush, who was hired as Amerant’s CEO in income investing. Mooney said. “You’ve got people who’ve March, had previously followed the fintech’s “Community banks are in a unique made an investment of time and effort. To progress as a private-equity investor but had position as they typically have long-term some extent that increases the switching cost not taken a stake in the company. Accelerating relationships with their customer base and if they feel they’re getting value.” the bank’s digital transformation has been a deliver personalized experiences,” Green Still, persuading clients to use the tools key objective, he said. said. “Bringing technology into wealth financial institutions put at their disposal has “When we reconnected after I got management in community banking proved challenging. here, I was impressed with the continued enhances the breadth of the customer “A lot of people offer self-directed progress Marstone had made developing experience, as it introduces more choices to budgeting and spending tools,” Mooney said. their solution,” Plush said. “We made this make personalization even more effective at “The reality is there’s very low uptake and [partnership] one of our top priorities in my a faster speed.” even lower active use. It takes some effort to first 100 days. Based on the demonstrations Amerant sees Marstone’s technology set up and maintain, it takes attention and we saw ... all of our team was very impressed as broadly applicable beyond its wealth self-discipline, kind of the difference between with the solution.” management client base. In addition to intentions and actions. As somebody put it, Amerant announced its decision to helping design portfolios, the fintech’s how many Fitbits are sitting in drawers?” adopt Marstone’s platform May 27. The two planning functions can also help less-affluent companies expect the partnership to go live customers organize their finances and reach this summer. According to Hartigan, Marstone savings goals. BILL PAY can set up a bank or wealth management firm “The end goal is to make this available to within 45 days of signing an agreement. That our full suite of customers,” Plush said. “It accessibility is a key selling point with smaller gets planning capabilities into the hands of Bill pay— financial institutions. any customer that wants them.” For Amerant, Marstone provided an Hartigan, too, wants to see Marstone in even when enhancement to the traditional wealth the hands of as many people as possible, management model. “Historically, wealth regardless of their financial profiles. management has been very high-touch, very “What we’re really leaning into is financial digital— personalized,” Plush said. wellness and enhancing financial inclusion,” Plush does not aim to depart from that Hartigan said. “One of the things we’re really proves bumpy, approach, but rather to supplement it. excited about with Amerant is helping them Wealth management is a major business line with their financial wellness strategy.” for Amerant, generating $4.6 million in fee Indeed, though banks make up the survey finds income for the three months ending March majority of Marstone’s business currently, 31, and $17 million for all of 2020. Hartigan said she is working to boost its By Kate Fitzgerald “A lot of customers in the private banking profile among credit unions. June 28, 2021 and wealth management space want to rely Marstone has an opportunity to do Fifteen percent of consumers would rather on the expertise and advice” of an advisor, that, though its appeal is likely strongest go to the dentist or step on a Lego piece than Plush said. At the same time, giving clients among larger credit unions “who have the pay their bills, and it’s not for a lack of funds, access to data and planning tools they can membership base where likely penetration according to a new survey from PayNearMe.

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While e-commerce payment methods are PayNearMe’s survey aimed to tap steadily improving via streamlined checkouts consumers’ feelings and expectations for bill WOMEN IN BANKING and digital wallets, bill payment remains payments technology, Hay said. a frustrating experience where consumers “Most bill-payment surveys measure the battle complexity and inconsistency, ways consumers pay bills, but there’s not a lot Vanishing according to PayNearMe’s online survey of of data on how consumers feel and what they 2,600 consumers conducted in April 2021. want from bill payment services,” she said. teller jobs More than half of consumers struggle to Asked by PayNearMe to choose among remember passwords and logins for various four uninviting activities, 47% picked paying bill payment websites, while 40% can’t keep their bills, while 38% opted to fold and put threaten the due dates of bills straight and 30% find it away laundry and the remaining 15% said challenging to navigate billers’ websites, the they would rather visit the dentist or step on a women’s data indicates. Lego brick than pay their bills. Overall, it was not a lack of money but Nearly 40% of respondents said they disorganization—including forgetting a bill paid a bill late in the last 12 months due to entry point to was due or never seeing it in the first place— procrastination or forgetting about the bill, that drove most late bill payments in the last while 34% said they never saw the bill in banking 12 months, according to the survey by the their pile of mail and 26% didn’t see an email Santa Clara, California-based bill payment notifying them of a bill that was due. By Bloomberg News technology firm. About 25% of consumers said they failed to June 28, 2021 “It’s becoming obvious that consumers pay a bill on time because they were confused For years, women have gotten a foot in the see how e-commerce is powered by a lot of about the due date or because they lacked door to the finance industry by becoming innovation, and they want the same thing funds. Only 7% said they were late paying a bank tellers. Now that path is disappearing. when they go to pay their bills,” said Anne bill in the last year because they lost their job The number of tellers — a job in which Hay, vice president of consumer research at in the pandemic. four out of five positions are held by PayNearMe. Among bill payment methods that don’t women — has dropped more than 20% in The data spotlights gaps in the fractured involve a bank website, more than half of the U.S. and Canada in the past decade as consumer bill payments landscape that respondents said they would be likely to pay transactions move from branches to mobile PayNearMe — along with fintechs like a bill through the biller’s mobile app, while phones. The figure, already projected before Doxo and BillGO and giants like Mastercard 33% said they would be likely to scan a QR the pandemic to fall further over the next 10 and Fiserv — is trying to bridge with new code printed on a paper bill to pay with a years, may decline even faster after COVID-19 technology. mobile device. lockdowns accelerated the adoption of digital Financial institutions see opportunities to “Because of the recent contactless banking. bring consumers back to paying bills through payments push, people are getting used to Technological advances are eliminating bank websites and apps by modernizing scanning QR codes at restaurants and when the need for bank tellers, threatening an entry the process, including integrating real-time shopping so it’s not surprising that they’re point for women into the male-dominated payments into online bill payment. open to the idea of scanning a QR code to pay industry, which has sought to promote more Doxo, launched in 2008, has more than 5 bills,” Hay said. females to leadership roles. While the climb million consumers using its hub where they Consumers pay an average of about five remains steep, some financial companies add their payment credentials to pay more bills a month, according to PayNearMe’s have managed to improve the gender balance than 100,000 billers in one location. research. in their executive ranks. PayNearMe’s primary strategy is to target “I wouldn’t have been a banker without billers by giving them a wide array of methods it,” former Wells Fargo Chair Betsy Duke, of accepting consumer payments. Launched who started as a teller, said in an interview. “I in 2009, PayNearMe created a national walk-in wouldn’t have had the career that I had.” cash bill-payment network with 7-Eleven and Women hold 51% of entry-level positions Family Dollar, and recently added Walmart. and 38% of senior-management jobs in the Three years ago the company expanded to banking and consumer-finance industry in a hybrid model enabling consumers to pay the U.S., according to a report last year from any bill via a mobile device or online using McKinsey & Co. Both figures are higher than any electronic payment method or cash. Last the average across industries, according to year it added Apple Pay and Google Pay as the study. The picture is similar in Canada, bill payment options. with women constituting about 57% of the “We think digital wallets are actually workforce at the country’s six largest banks becoming the universal bill-payment hub and holding 38% of senior-management and we are connecting billers to consumers positions, according to 2019 data from the that way,” Hays said. Canadian Bankers Association.

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The figures are far less encouraging at the number of customer-service representatives “It was clear that there is and continues to highest levels. Only one of the 18 banks in the at financial institutions has fallen 27% from be lots of opportunity at the bank to grow a S&P 500 Index has a female chief executive 2010 through last year, according to Statistics career,” she said. “I’m a great example of that officer. In Canada, just one of the country’s Canada. good fortune.” eight largest publicly traded banks has a Bakhshi, chief executive of BNP Paribas woman at the helm. Advice centers SA’s Bank of the West, said in an interview “When you already have a workforce In moves fairly common for the industry, that a “huge focus” for her is getting women that has a lot of women, there are more Canadian Imperial Bank of Commerce has into roles in which they’re accountable for a opportunities for women’s leadership,” said trimmed its branch network by 9.2% over business’s bottom line. Sarah Kaplan, a professor at the University of the past five years, and has converted about She started in banking as a part-time teller Toronto and the director of the Institute for 20% of its locations into “advice centers” that at a Northeast Savings Bank branch in upstate Gender and the Economy. don’t have tellers at all. The tellers at locations Latham, New York, after immigrating to the The picture has improved somewhat over that still have them also have new duties, like U.S. from India more than three decades the past year, with Jane Fraser being named helping customers find the right credit card, ago. While she already had a master’s head of Citigroup in September, and Rania said Peter Lee, the bank’s executive vice degree in international relations, the job was Llewellyn taking the top job at Laurentian president for banking centers. conveniently located at a nearby mall while Bank of Canada a month later, making her “Those roles evolve from being very she looked for other opportunities. She ended the first female CEO of a publicly traded focused on transactions, to being able to do up staying in the industry, moving through Canadian bank. transactions, but at the same time acquiring roles at Bank of America Corp., Toronto- The teller position has been the different skills,” Lee said in an interview. Dominion and other firms, before becoming springboard for some of the highest- In the U.S., the number of teller jobs is Bank of the West’s CEO in 2016. ranking women in North American banking. projected to slip 15% from 2019 to 2029, “What we need is a very strong pipeline Llewellyn of Laurentian Bank, Bank of the according to the Bureau of Labor Statistics, and a very strong talent-management West Chief Executive Nandita Bakhshi, and in Canada the government is forecasting process, where you seek out women not only Toronto-Dominion Canadian personal- an 8.4% drop from 2018 to 2028. when they arrive, but when they are going banking head Teri Currie and Duke all started As teller jobs dwindle, and as those that through the process — as tellers. remain include higher-value responsibilities, when they are taking on new challenges,” Duke said the movement of women into there’s a risk that banks will raise the Bakhshi said in an interview. “You’ve got to banking’s highest ranks is happening much educational requirements for those jobs, said support them. You’ve got to mentor them and slower than she expected, but she’s optimistic Kaplan of the University of Toronto. bring them along.” about the industry’s future, in part because banks have diversified their boards. Pathway threatened With about 80% of tellers lacking a LOAN MODIFICATIONS ‘Bench strength’ bachelor’s degree, that threatens a pathway “When you look at the bench strength in into the corporate world for women from all of the banking world, the next generation less-privileged backgrounds. Teller jobs are Ginnie Mae of CEOs will include a number of outstanding relatively high-paying and have regular hours women,” she said. that allow workers to attend classes on the creates After graduating from the University of side. North Carolina at Chapel Hill with a degree in “It’s an on-ramp to a middle-class lifestyle dramatic arts, Duke took a position as a part- for people who don’t have more than a high- 40-year mort- time teller at First & Merchants National Bank school education, and this is going to take in her hometown of Virginia Beach, Virginia away one of those on-ramps,” Kaplan said. gage securiti- — not because of any interest in the industry, Currie, who leads Toronto-Dominion’s but because she needed a job. That started a Canadian personal-banking operations, career that would include stints as CEO, chief started with the lender as a teller in Calgary zations operating officer and chief financial officer at after her first year of university. She stuck a variety of firms, as well as time as a Federal with the job throughout college because of By Kate Berry Reserve governor. the engaging work and the steady hours that June 25, 2021 But the path she took into the industry is allowed her to continue her education, she Ginnie Mae is allowing lenders to securitize narrowing as transactions went increasingly said in an interview. modified home loans with terms of up to 40 digital. That’s allowed banks to cut down Before taking the position, she’d years as the Biden administration works to branch networks, further shrinking teller originally planned to be a math teacher, make more housing options available for ranks. but after graduating she decided to stay. struggling borrowers. In the U.S., the number of tellers has slid Many colleagues with similar decades-long The new pool type will allow Ginnie issuers 24% in the 10 years through May, according to banking careers started out in much the same to offer loan modifications that carry a lower the Bureau of Labor Statistics. In Canada, the way, Currie said. monthly payment than a 30-year mortgage,

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 11 while retaining the ability to securitize the securities backed by these loans,” Getchis said Data decryption: If your organization loans for sale into the secondary market. in the press release. “We wanted to provide a acquiesces to hackers’ payment demands, Ginnie expects the new pools to be ready pooling structure that would enable issuers you’re essentially relying on the criminals’ for use by October, but their extended to capture that value, thereby enhancing promise that they will decrypt your data term modifications would still have to their ability to provide the strongest possible after the ransom has been paid. But it’s be authorized by the Federal Housing options to the homeowners while remaining very possible that the hackers will not hold Administration and other agencies whose respectful of investors’ capital.” up their end of the bargain. In 2019, 30% of programs are the basis for the loans in Ginnie organizations that paid the initial ransom Mae pools. demand did not get access to their data. “It’s important that Ginnie Mae issuers BANKTHINK Some received access after paying a second have secondary market liquidity for options ransom, while others never got their data that our agency partners determine are back at all. appropriate for supporting homeowners in Colonial Malware: Another concern is that hackers distress,” Michael Drayne, Ginnie’s acting may leave malware behind for future attacks. executive vice president, said in a press Pipeline Even though Colonial resumed service on release. May 12, the company is still in the process Ginnie Mae has been part of a number of of examining the network and installing interagency actions to prevent foreclosure shows how detection tools to alert it to future attacks. for homeowners experiencing financial Legal ramifications: Depending upon the hardship as a result of COVID-19. not to handle nature of the criminal organization launching The announcement comes a day after the ransomware attack, paying may be illegal Presiden Biden nominated Julia Gordon to under U.S. law. serve as the FHA commissioner. The FHA is a ransomware Of course, in Colonial’s case, the the agency within the Department of Housing government was able to recover more than and Urban Development that traditionally attack $2 million of the initial $4.4 million payment supports first-time homebuyers as well as due to the hackers’ use of a weak password on minorities and low-income borrowers. By Mike Wilson their cryptocurrency wallet. This is not likely “The challenges of the last year require June 28, 2021 something that will happen often, and banks meaningful solutions to help keep people in The recent cyberattacks on the Colonial also shouldn’t expect the government to go their homes,” said Alanna McCargo, senior Pipeline and JBS, the global food supplier, to great lengths to help them recoup ransom advisor to HUD Secretary Marcia Fudge, underscore the damages that can occur payments. Given the volume of attacks, the said in the release. “Today’s step by Ginnie from ransomware — a form of malware government is unlikely to have high recovery Mae demonstrates a commitment to a more that appeared in 10% of the cybersecurity rates and, particularly for smaller institutions balanced and equitable housing finance breaches studied in the recently released with less significant ransom demands, system and demonstrates the critical role 2021 Verizon Data Breach Investigations tracking down payments would not be a high the agency plays in supporting government Report. priority. mortgage programs in the secondary market.” The rise of cryptocurrency has helped So, what should financial services firms do Other HUD agencies that may offer the new fuel the growth of ransomware as a business if they fall victim to a ransomware attack? pools include the Office of Public and Indian model. To put the problem into context, the Unless you can guarantee that the attack is Housing, the Department of Veterans Affairs value of ransomware payments made in isolated to a single system, the best thing to do and the U.S. Department of Agriculture Rural cryptocurrency rose 337% from 2019 to 2020, is immediately shut down the network. Even Development. to more than $400 million. In response to this if some systems appear unaffected, there’s a Ginnie said there will be no restrictions growing threat vector, the federal government good chance that the ransomware could still on loan amounts in the pools as long as the has now elevated ransomware to a critical be propagating around your network. eligible collateral meets the requirements priority, with the FBI director likening the This would be particularly disruptive for set forth in guidance by each participating recent wave of attacks to what the country banks and their customers, which is all the agency. The modified loans must have faced after 9/11. more reason to listen to the old adage that terms greater than 30 years, and less than It’s clear that no sector is immune and, reminds us that an ounce of prevention is or equal to 40 years. Ginnie also said that all when hit with a ransomware attack, banks worth a pound of cure. Ideally, the primary modifications of the pooled loans “must have are often tempted to follow the example focus should be on what companies can do been occasioned by default or [a] reasonably of Colonial and JBS and pay up. After all, to avoid falling victim to a ransomware attack foreseeable default.” failure to do so will prolong the negative in the first place. There are numerous security The 40-year pool design gives Ginnie customer impact, brand reputation, logistical strategies banks should review as part of this, issuers more control and the ability to headaches and all the other challenges including password hygiene. maximize market pricing, said John Getchis, that accompany this nightmare scenario. Investigators have now determined that a senior vice president for capital markets. However, banks must ignore hackers’ the Colonial Pipeline attack originated when “We think the market will find value in ransomware demands for several reasons. hackers used a compromised password to

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 30, 2021 AMERICANBANKER.COM PAGE 12 access an employee’s virtual private network phase of growth,” Betsy Cohen, chairman of account and, from there, the organization’s PAYMENT PROCESSING the board of directors of FTAC, said in the network. Compromised credentials are a release. common attack vector because people are “Payoneer has a strong balance sheet notoriously bad at password management — Payoneer with ample capital to expand its already for example, 65% of respondents in a Google broad suite of services, both organically, by study reuse the same password across some begins trading deepening existing merchant relationships or all of their accounts. If these credentials and continuing to build new ones, and were leaked in a previous breach, hackers can through strategic acquisitions,” Cohen said. easily obtain them via the dark web and use on Nasdaq Financial Technology Partners served them to launch successful attacks. as exclusive financial and capital markets In light of this, banks would be wise to By David Heun advisor, Davis Polk & Wardwell LLP served investigate avenues for shoring up credential June 28, 2021 as legal counsel and Paul Hastings served as security. It’s important that multifactor The payments and digital commerce regulatory counsel to Payoneer. PwC served authentication or another secondary form provider Payoneer and the special-purpose as Payoneer’s auditors while EY served as tax of authentication be enabled for all critical acquisition company FTAC Olympus and public markets advisors. accounts — a cybersecurity best practice Acquisition Corp. have completed their Citigroup and Goldman Sachs & Co. LLC that was not in place for the VPN account merger, allowing Payoneer to begin trading served as financial and capital markets breached by the Colonial attackers. Monday on the Nasdaq stock market. advisors to FTAC. Cantor Fitzgerald also Multifactor authentication is not a magic The business combination, in the works served as capital markets advisor to FTAC, bullet however, and the reality is there will since the estimated $3.3 billion merger of and Morgan, Lewis & Bockius LLP served as likely be systems where it is either not possible, Payoneer with FTAC, was announced four legal counsel. not practical or simply not cost effective to months ago, results in a new public entity FTAC Olympus Acquisition Corp. is a implement. That’s why it’s also important under the name of Payoneer Global Inc., to blank-check company led by the board to deploy solutions that prevent employees trade under the ticker symbols PAYO and chairman, Cohen, and Ryan M. Gilbert, from using known compromised credentials PAYOW. the president and CEO. The company was or weak, commonly used passwords. It’s “We are thrilled to be a public company formed to acquire or merge with one or more unrealistic to expect employees to change and join forces with the entire FTOC team,” technology and financial services technology their approach to password management Scott Galit, Payoneer’s chief executive, said companies. on their own, but password managers and in a press release. “Through our 15 years, we credential screening solutions can close have built a global platform that is trusted some of the holes left exposed by poor by millions of customers worldwide, from CREDIT UNIONS password hygiene. aspiring entrepreneurs to the world’s leading The fact that the federal government has digital brands and are now the go-to partner been so vocal in its ransomware concern for digital commerce, everywhere.” CUNA, NAFCU is a testament to how grave the threat is for Galit will remain CEO. Chief Financial companies today. It’s critical that banks Officer Michael Levine and Chief Operating to resume in- mirror this apprehension and take steps now Officer Keren Levy will continue to lead the to improve their security posture and limit company. the success of these attacks. Ultimately this Payoneer is “just scratching the surface person events will prove a much more effective strategy of the enormous opportunity ahead to help than agreeing to hackers’ terms and paying businesses grow and scale in the new global By Ken McCarthy up. economy,” Galit said. “This move into the June 24, 2021 public markets is an important step on our Dan Berger is on the road again. Mike Wilson is the founder and chief journey to provide any business, in any Berger, the president and CEO of the technology officer of Enzoic. market, the technology, connections and National Association of Federally-Insured confidence to realize their potential.” Credit Unions, has returned to a regular In anticipation of the public listing, schedule of visiting credit unions across Payoneer last week unveiled a rebranding to the country as social distancing restrictions shed its image of the past 15 years as simply have lessened, the economy has reopened a payments provider and emphasize the and vaccines have become widely available, company’s expansion into digital commerce the trade group announced Tuesday. as an area of expertise. Berger had been meeting virtually with “The Payoneer team has positioned the members in the last few months. Like many company incredibly well to capitalize on the employees at NAFCU, he is fully vaccinated expansion of global commerce, and we are and decided to resume face-to-face proud to be their partner during this next meetings.

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“At the onset of the coronavirus pandemic, and services officer, said the group will be NAFCU quickly pivoted its methods of reintroducing several in-person events in advocacy, compliance assistance, and the fourth quarter of 2021. The programs educational opportunities to ensure no include CUNA’s ERM Certification School, lapse in quality or support was felt by CUNA’s Lending Council Forum, CUNA’s members. NAFCU’s mission remained the Supervisory and Audit Committee same: providing extreme member service,” Conference and CUNA’s Board Roundtable. the group said in a statement. All four events will be held in Las Vegas. And a return to in-person events is not far CUNA said it will be releasing more detailed behind. event and registration information in the NAFCU canceled its largest event — its coming weeks. annual conference — that was scheduled Some state-level credit union trade for July, but held an in-person option for its groups have already resumed in-person CEOs and Senior Executives Conference in conferences. For instance, the CrossState May. Credit Union Association, which serves “Many of our members have told us that 519 credit unions across New Jersey and they are ready to get back out on the road, Pennsylvania, held its annual convention in while some will still lean on virtual training person last month in Hershey, Pennsylvania. and conferences through the rest of 2021. And the Northwest Credit Union We answer to them, so we’re committed Association recently announced that its to offering the best in-person and virtual annual convention, MAXX, will be held in education and training opportunities person this year in Boise, Idaho, from Oct. possible throughout 2021, while ensuring 5-7. The group represents credit unions in the health and safety of all those involved,” Idaho, Washington and Oregon. q said Anthony Demangone, executive vice president and chief operating officerat © 2021 Arizent and American Banker. NAFCU. All rights reserved. The move to bring back conferences comes more than a year after most industry events moved online as a result of the coronavirus pandemic. Demangone said the group has seen strong support for both its virtual and in- person conferences so far, and it has a host of hybrid events that credit union attendees will be able to choose from that fit their health and comfort levels for the remainder of the year. On the other side of Washington, Credit Union National Association President and CEO Jim Nussle resumed face-to-face credit union meetings in May. Nussle has met with several credit unions and leagues, including the Wisconsin Credit Union League, Patent and Trademark Federal Credit Union and Pentagon Federal Credit Union. “We have closely followed and adhered to CDC guidelines since the start of the pandemic,” he said. “When social distancing restrictions began to lift, I was eager to get back on the road and interact with our members. Quite frankly, I’m Zoomed out. I value the relationships we have built over the years and was pleased to know that our members also shared the desire to meet in person.” Todd Spiczenski, CUNA’s chief products

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