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CURRENT Newsletter | 21 June 2013

Jun 21, 2013 by Lewis Wood

News For and About Virginia's Credit Union System

June 21, 2013
  • Your comments and submissions are always welcomed. E-mail pr@vacul.org
Headline News News About Credit Unions Compliance/Regulatory Affairs News Governmental Affairs News Financial Services/Marketplace News Education & Networking Opportunities News From Credit Unions Chapter News Financial Education News Community Involvement Technology News

Headline News

Credit Unions Meet with Cantor Staff with the Message: Don’t Tax Our Credit Unions!

Representatives from Richmond-based credit unions and your League, as well as the chairman of the League’s Governmental Affairs Committee, met with two staffers from Rep. Eric Cantor’s district office in Glen Allen on Thursday to present the case for continuing credit unions' tax exemption.

Jane Watkins and Glenn Birch, of Virginia Credit Union, Lisa Lambrecht of Entrust, Chris Miller of Chesterfield, and Mike Flanary, GAC chair and director emeritus of 1st Advantage, made the case that credit unions earn the tax exemption daily because of their structure, the benefits returned to their members, their ability to offer needed products such as microloans despite the lack of profit in the product, and their investment in educating members on how to handle their finances.

League Governmental Affairs Director Karin Sherbin noted that Congress also granted the tax exemption in recognition of credit unions serving as counter-cyclical sources of capital during bad economic times, such as the recent Great Recession. [read more

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Tax Options Paper Evidence of Threat to CU Tax Exemption

Last Friday, the Senate Finance Committee released its tax options paper on exempt organizations and charitable giving, which included two options of particular interest to credit unions. (A copy of the report can be found here.)  First, the paper mentions that one option for tax reform could be to “disallow tax-exempt status for certain organizations engaged in business activities, such as credit unions, nonprofit hospitals or certain types of insurance.”

The paper cites a 2012 report produced by the Tax Foundation titled, “Raising Revenue:  The Least Worst Options.” As you know, CUNA and your League had expected credit unions to be mentioned in this report in this regard, and this paper represents confirmation that credit union taxation is an option that some in Congress are considering. The report also includes a discussion of options to expand UBIT. 

While it does not list expanding UBIT to include federally chartered credit unions, the report does include as an option: “Revise the UBIT rules for organizations engaged in commercial activity.” As Congress proceeds to consider comprehensive tax reform, rest assured that we are also monitoring proposals that may alter or impact the application of UBIT on credit unions. The paper released last week is the ninth such paper considered by the Finance Committee as part of its comprehensive tax reform process; and, we expect an additional report to be released next week. 

After that final paper is released, Chairman Max Baucus has indicated that the Committee will begin the process of putting together a comprehensive tax reform bill. In fact, Chairman Baucus is quoted in the Politico Pro last week as saying that he would like to distribute a draft of the tax reform bill prior to the Senate’s August recess. On the House side, Chairman Dave Camp remains committed to comprehensive tax reform as well. 

He has indicated that he would like for the Ways and Means Committee to put together their bill before the end of the summer so that it could be considered by the House before the end of the year.
[related: Tax Reform Group Backs CU Tax Status]
[related: New 'Tax Options' Paper Is Wake Up Call For CUs]

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CUs Embrace Don’t Tax My Credit Union Campaign

Fort Lee FCU reports: "We will be putting in our newsletter for June a CEO message asking for our members to email their legislators and also putting something on our website. Martinsville DuPont has posted the link to the Don’t Tax My Credit Union website front and center on its own home page.

Virginia Credit Union today is emailing  members asking that they contact Congress with our Don’t Tax My Credit Union message. NRV FCU reports that it has added a link to both its website and Facebook page to enable members to participate in the Don’t Tax My Credit Union campaign. Thanks for reaching out NRV!

> The Credit Union National Association has launched a mobile app for Apple and Android devices, called CUNA Advocacy. The apps are available at Apple and Google Play stores. With the apps, users can review talking points, submit feedback, and take action.

> You can also direct members to the Don't Tax My Credit Union website, where they can quickly and easily email lawmakers in support of their CU! www.donttaxmycreditunion.org.

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NCUA Approves Loan Participation Rule

The National Credit Union Administration's final rule on loan participations implemented a number of changes sought by the Credit Union National Association and is now a much more workable framework for credit unions to utilize loan participations, said CUNA President/CEO Bill Cheney.

The NCUA on Thursday approved a final rule on loan participations with a limit on loans from one originator of 100% of a credit union's net worth. This is up from the proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower. 

The NCUA also approved a "grandfather provision" so that credit unions pushed over the limit by the new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance. [read more]

> The new "loan participations" rule adopted by the National Credit Union Administration yesterday is the topic of discussion in the latest episode of "Inside Exchange," the Credit Union National Association's regular video feature. [read more]

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CU PolicyPro to Your Credit Union's Rescue; Get FREE Two-Month Trial

Your League is offering a free, two-month trial of the popular CU PolicyPro Service for a limited time! What is CU PolicyPro? It is a secure web-based platform providing you a one-stop shop for more than 200 policies - including human resources, third party due diligence, accounting issues, Bank Secrecy Act, Red Flags and more.

This makes it easier for your credit union to manage today's ongoing compliance and operational challenges. CU PolicyPro is completely customizable to the specific needs of each credit union and your existing credit union policies can be easily imported into CU PolicyPro. To sign up contact your League's Michael Read at 800.768.3344, ext. 612 or mread@vacul.org.

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SNL Financial Reports Continuing CU Membership Growth

America’s credit unions added 676,583 members in the first quarter of 2013, the third-highest quarterly increase since 2006, according to SNL Financial. The industry now has reported a quarterly increase of more than 600,000 members in four of the past five quarters, said the financial information analysis firm based in Charlottesville, Va., during which time 2.7 million members have been added, more than in the previous 11 quarters.

Total membership as of March 31 was 95.7 million, SNL Financial said, up 2.11% from 93.8 million a year ago. The full report and analysis is online, the company said. [read more]

> Virginia-based credit unions are quickly approaching a milestone, with the National Credit Union Administration's 1Q2103 data showing total membership at 7.9 million!

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CUNA Tells Lawmakers CUs Merit Full QM Exemption

Credit Union National Association witness Jerry Reed testified this week that credit unions worry that the Consumer Financial Protection Bureau's Qualified Mortgage (QM) rule will make it all but impossible for credit unions to write non-QM loans. Reed, who is chief lending officer at Alaska USA Federal Credit Union, said that the QM standard "designed to be an instrument of consumer protection, may serve as an instrument of prudential regulation, effectively setting a bureaucratic standard for loan quality."

Reed was representing credit unions at a House Financial Services subcommittee on financial institutions and consumer credit hearing. Reed told lawmakers that credit unions commend the CFPB for listening to their concerns and for addressing many of those concerns into amendments to the mortgage rules.

However, he underscored that credit unions continue to have serious apprehensions about how the QM rule will be implemented and believe that it could have the unintended effect of reducing credit union members' access to credit. [read more]
[related: Rep. Capito Questions 'Rigid' CFPB Mortgage Rule]
[related: CUNA Warns FHFA QM Proposal Could Harm Credit Access]

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NCUA Issues Guidance On Credit Rating Rule

Supervisory guidance on a National Credit Union Administration rule regarding the use of credit ratings by natural-person credit unions has been sent to federal examiners and credit unions by the agency. The credit ratings rule, required by the Dodd-Frank Act, was approved December 2012 by the NCUA and goes into effect this month.

Dodd-Frank required all federal financial agencies to review their regulations for any use of credit ratings to assess the creditworthiness of a security or money-market instrument, to remove those references, and replace them with appropriate substitute standards. The Letter to Credit Unions (13-CU-05) is intended to help credit unions understand examiners' focus on specific elements of a sound due diligence process. [learn more]

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News About Credit Unions

NCUA Reports that One-Third of Small CUs Are Under Water

The National Credit Union Administration continues to express concerns over the declining viability of small credit unions, with NCUA Chairman Debbie Matz saying more than one-third of all credit unions with less than $50 million in assets are unprofitable.

“That means they are losing capital, and if they are losing capital, they are in danger of falling below the Prompt Corrective Action threshold,” said Matz during remarks to the National Federation of Community Credit Unions.

Once that happens, Matz said, a credit union faces long odds against recovering while remaining independent. She pointed out that after 42 small credit unions fell below the PCA threshold in 2007, two-thirds were gone by 2012, either through merger, purchase and assumption, or liquidation. (Credit Union Journal, June 10)

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Report Concludes CUs Don’t Have Unfair Advantage

All of the major claims made by critics of credit unions in terms of uneven playing field are unsubstantiated, says an economic analysis released Friday. What's more, there is "no evidence that state and federal tax policies give credit unions unfair competitive advantages over banks."

"Credit Unions vs. Banks: The Myth of the Uneven Playing Field" is authored by ECONorthwest's Randall Pozdena, managing director and senior economist, and Michael Wilkerson, senior economist. The report was commissioned by the Northwest Credit Union Association. [read more]

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CUs Rock Consumer Satisfaction With Online Sites

Credit union sites scored the highest in user satisfaction with average scores of 82--or "highly satisfied," in Foresee's Financial Services Benchmark released last week. The Foresee survey reports on online and mobile customer satisfaction trends for several industry segments, including credit unions, banks, investment and lending companies and miscellaneous financially focused organizations. [read more]
[related: Survey Shows CUs Best In All Satisfaction Drivers]

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Prepare for the ‘Tidal Shift’ Shaping Financial Services

Brett King, best-selling author and founder of the mobile money service Moven, envisions a future where all banking is done via a smartphone. During his keynote address at the Center for Financial Services Innovation’s (CFSI) 8th Annual Underbanked Financial Services Forum, King cites plummeting visits to brick-and-mortar financial institutions, the rising market penetration of smartphones, and the popularity of prepaid debit cards among Generation Y as evidence that a tidal shift -- similar to what’s transforming traditional media -- is also shaping financial services.

The future of financial services, King says, belongs to anyone who can provide consumers with mobile banking that includes real-time information about their spending and saving in a way that stimulates good behavior and discourages bad. “It doesn’t matter if it’s a bank or Walmart or Moven that provides this,” King says, adding that consumers will choose whatever banking product offers the most utility. [read more]

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Compliance/Regulatory Affairs News

CUs Concerned About Call Report Changes

Credit unions are expressing concern about the change to the way NCUA’s call report will define delinquent loans starting June 30, and the Credit Union National Association has brought the matter to the attention of senior NCUA staff. Under the change announced last October, the definition of a delinquent loan will be based on the number of days delinquent (60) rather than months (two).

The change is intended to bring NCUA’s definition into line with bank regulators’. The effect, however, is that a seemingly nominal change is driving up the number of reportable loans for some CUs. This is a particular problem for real estate loans, which are typically due on the first of the month. Using days instead of months can significantly affect the timing of when and if these loan must be reported as delinquent.

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NCUA Vows To Ensure Short-Term Loan Compliance

The National Credit Union Administration will "aggressively pursue" institutions offering payday loans that do not meet agency-set standards, and will "continue to encourage credit unions to offer products that result in lower costs to credit union members," NCUA Chairman Debbie Matz wrote in a Thursday letter.

Matz's comments are in response to a National Consumer Law Center (NCLC)/Center for Responsible Lending (CRL) letter on federal credit union payday loan practices. [read more]

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CFPB Overdraft Report Out: Study Will Continue

Consumer Financial Protection Bureau Director Richard Cordray states clearly in the bureau's report on financial institutions' overdraft programs that the bureau does not intend to impede the offering of this service. The Credit Union National Association was among stakeholders included in an early briefing on Monday and CUNA President/CEO Bill Cheney had a personal call from Cordray.

CUNA clarified with the agency this morning that the report focuses on large bank practices and that no credit unions were directly studied by the CFPB. However, the report does include information voluntarily submitted by credit unions or their vendors in response to the bureau's request for information preceding the report. Although no policy recommendations were forthcoming, the bureau will, however, continue to dig and sift for more information about the variety of programs offered and how they affect consumers' ability to anticipate and control their costs for financial services. [read more]

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Governmental Affairs News

Warren Supports Simpler Regulatory System for Small Banks

Sen. Elizabeth Warren voiced concerns Thursday about the regulatory burden facing community banks, asking whether the industry needs a two-tiered system of rules to keep the smallest institutions from being wiped out. The Massachusetts Democrat raised the issue at a Senate Banking hearing on the struggles facing community banks, saying she feared that the Dodd-Frank Act was being misapplied to hurt smaller institutions.

The idea of a two-tiered system has long been championed by small bank advocates, who say the current setup subjects community banks to many rules that shouldn't apply to them. If Warren were to take up the cause, it could significantly boost momentum for the idea. (American Banker Online, June 13)

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Financial Services/Marketplace News

June Auto Sales on Pace for Best Showing Since December '07: Study

June auto sales are on track for their best month since before the 2008-2009 sales plunge that helped lead to bankruptcies for two of the three top U.S. automakers, two leading forecasters said on Friday. J.D. Power and LMC Automotive said June sales will show a seasonally adjusted annualized rate of 15.7 million vehicles sold, up 7.6 percent from a year ago and the best showing since December 2007. [read more]

[related: Auto Leasing At Record High, Says Experian Automotive]

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Fed Action On Monetary Policy Stays Steady

The monetary policymakers for the Federal Reserve this week held steady on any action, keeping intact their schedule for bond-buying and their near-zero targeted federal funds interest rate, saying that "economic activity has been expanding at a moderate pace."

The Federal Open Market Committee (FOMC) met Tuesday and Wednesday of this week. Its statement after the meeting indicated that the holding pattern on its quantitative easing policy--its $85 billion-a-month bond asset purchase plan and the targeted interest rate of 0% to 0.25%--would continue. (MarketWatch June. 19). [read more]

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Education & Networking Opportunities

Upcoming NCUA Webinars

> Matz to Host Town Hall Webinar - National Credit Union Administration Board Chairman Debbie Matz will host a free town hall webinar, open to the entire credit union industry and anyone interested, on Thursday, July 18, beginning at 3 p.m. Click here for information!

> NCUA Hosting Credit Union Collaboration Webinar - The National Credit Union Administration’s Office of Small Credit Union Initiatives (OSCUI) is hosting a free webinar, “Credit Union Collaboration,” on Tuesday, June 25, at 2 p.m. Click here for information!

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News From Credit Unions

Twenty Students Receive a Collective $100,000 in Scholarships From Northwest FCU Foundation

Northwest Federal Credit Union Foundation is helping 20 college students from several Virginia communities fund their higher education.  The Foundation’s 2013 scholarship winners – who received a collective $100,000 – were announced at its annual award ceremony June 2. [read more]

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Northwest FCU Foundation Hosts Event at Inova Children’s Hospital

On April 19, more than 100 patients and family members receiving care at Inova Children’s Hospital attended the Night of Magic Ball – an event that offers chronically ill patients and their families an evening away from the stresses of being in the hospital. The Night of Magic is one of many outreach events sponsored by Northwest Federal Credit Union Foundation, the charitable arm of Northwest Federal Credit Union. [read more]

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Blue Eagle Credit Union to Award $10,000 in Scholarships

Blue Eagle Credit Union is pleased to offer the Alexander Scholarship, awarding $1,000 each to 10 deserving members. The scholarship is named in honor of Alec and Doris Alexander, a husband and wife team who spent many years building their credit union with a sound foundation of quality member service and financial integrity that all members of Blue Eagle Credit Union still enjoy today. [read more]

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St. Mary's Home Receives $20,800 Grant for Summer Camp from Chartway FCU's We Promise Foundation

The We Promise Foundation, the charitable arm of the Chartway Federal Credit Union, donated $20,800 to St. Mary’s Home to send 16 children and young adults with severe disabilities to summer camp. The We Promise Foundation is the sole sponsor of St. Mary’s participation in Camp Horizon, a program The Up Center runs on the campus of Virginia Wesleyan College. [read more]

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New Vice President of Finance Joins Chartway FCU Leadership Team

Chartway Federal Credit Union, one of the top credit unions in the country, proudly announces that it has selected Joy Camacho to serve as its Vice President of Finance. Ms. Camacho was appointed to the position after more than 30 years of successful financial management experience. [read more]

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Martinsville DuPont CU, Local Schools Join Forces

Henry County Public Schools and Martinsville DuPont Credit Union have formed a financial awareness partnership with the long-term goal of having a student-run credit union at each high school. [read more]

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$4,000 in Annual Education Scholarships Awarded by Belvoir Federal

Belvoir Federal Credit Union and GEICO partnered together again in 2013 to award $4,000 in scholarships to one graduating high school senior and one student continuing their education. [read more]

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Belvoir Federal Supports Summer Reading Program on Fort Belvoir

June will kick start the Library Summer Reading Program on Fort Belvoir Army Installation offered to younger children through seniors in high school. Belvoir Federal Credit Union will support education and the military base by contributing two $100 gift certificates to the prizes. [read more]

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Belvoir Federal’s Annual Web Hunt Awards Members with High-Tech Prizes

Belvoir Federal Credit Union awarded seven members with high-tech prizes for participating in the 4th Annual interactive Web Hunt games, which asked viewers of the credit union’s website to search and collect 8 hidden iPads®. [read more]

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Belvoir Federal Credit Union Welcomes New Installation Liaison

Belvoir Federal introduces Sharon Leake as the credit union’s new Installation Liaison and Membership Development Officer. For more than 35 years, Sharon has specialized in membership support and sales. Sharon’s expertise will be fundamental in her new role at Belvoir Federal Credit Union as she assists with membership development on Fort Belvoir Army Installation and surrounding communities. [read more]

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Langley Federal Credit Union Introduces New Card Options Featuring Innovative Security Protection

Langley Federal Credit Union has introduced three new VISA Credit Card options for members. In addition to no annual fee, low rates, cash back and rewards, the three cards will offer the EMV (Europay MasterCard VISA) Security Chip, the latest in fraud prevention technology. This unique security feature is currently offered by only a few financial institutions -- making LFCU one of the first in Hampton Roads. The chip works by preventing a criminal’s ability to use stolen payment card data by introducing a unique code for each transaction. [read more]

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Beach Municipal FCU Announces 2013 Scholarship Winners

Beach Municipal Federal Credit Union is pleased to announce that Sydney Greer and Seamas Back are the recipients of this year’s Beach Municipal Federal Credit Union Education Scholarships. [read more]

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Fort Lee Federal Credit Union Announces 2013 Scholarship Winners

Each year Fort Lee FCU proudly sponsors its Scholarship Program, which awards scholarships to four graduating seniors within its membership. Qualified students submitted applications and were anonymously judged on academic merit, personal achievements, demonstrated leadership experience, extra-curricular involvement and/or work experience. The credit union awarded $2,500 in funds this year. [read more]

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Sheetz ATMs Now Free for VACU Members

Virginia Credit Union members now have more free, convenient options for ATM access. Beginning June 1, cash withdrawals at ATMs at all 55 Sheetz locations in Virginia are free of any ATM fees for members of Virginia Credit Union. [read more]

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Chapter News

Tidewater Chapter to Host July 26 Charity Golf Tournament

Join the Tidewater Chapter July 26 for its Inaugural Golf Challenge at Sewells Point Golf Course in Norfolk! Format will be four-man captain’s choice, with an entry fee of $125 per player. Fee includes a hot dog lunch, cart, range balls, green fees and cookout dinner. Shotgun start at 1 p.m. Proceeds will benefit Children’s Miracle Network Hospitals. Sponsorships are also available, ranging from $250 to $1,000, and your support is greatly appreciated! [learn more] (Word document, 930kb)

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Richmond Chapter to Host 19th Annual Susan J. Adams Memorial Golf Tournament to Benefit CMN Hospitals

The 19th Annual Susan J. Adams Memorial Golf Tournament tees off July 29 to benefit Children’s Miracle Network Hospitals. The Chapter has renamed this event to honor the hard work and dedication of the late Susan Adams, who coordinated this event for 18 years. She made this tournament a huge success, raising more than $200,000 during those 18 years! [learn more]

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Financial Education News

FDIC, CFPB Offer Financial Ed Training Program to Reach Older Adults

The Federal Deposit Insurance Corp. and Consumer Financial Protection Bureau released a training guide Wednesday to help financial institutions, law enforcement and advocates of senior citizens deliver tips to older adults on preventing financial exploitation. The new tool, "Money Smart for Older Adults," is one of several financial literacy guides the FDIC has produced for different demographics since 2001. The curriculum can be downloaded, or ordered in hard copy form, both free of charge. [learn more]

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Community Involvement

Save the Date for Miracle Jeans Day 2013! 

Join us again this year to Wear Jeans and Help Kids on Sept. 18! Over the past several years, Miracle Jeans Day has raised more than $2.2 million dollars, because companies and people--like you--wore jeans to support the Children's Miracle Network Hospital serving their community. This year, there are some exciting changes to make Miracle Jeans Day even easier for you and your group to participate. [learn more]

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Technology News

Credit Union Pioneers Browser-Based Mobile Check Deposit

Mobile check deposit is no longer exclusive to native banking apps. Advances in browser technology have enabled a Wisconsin credit union to build mobile check deposit into its mobile browser. [read more]

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Survey: Rising Willingness to Pay for Enhanced Mobile Banking

New research from Boston-based financial services consulting firm ath Power underlines the immense popularity with consumers of mobile remote deposit capture (“the most sought after mobile banking feature,” said ath Power executive Michael McEvoy) and it also claims that there is rising consumer readiness to pay fees for mobile banking. In last year’s ath Power survey, 81% of respondents said they would not pay for mobile banking. This year, said McEvoy, that number dropped to 68%. That means about one in three say they might pay for the service, stressed McEvoy. [read more]

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