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Fintech Lending Platform Secures Top 50 Spot on List of Fastest-Growing Companies in Financial Services

LenderClose Ranks No. 45 of Fastest-Growing Financial Services Companies on the 2022 Inc. 5000 List

August 17, 2022 – LenderClose, the fintech lending platform now used by more than 400 credit unions and banks, earned the No. 45 spot on the 2022 Inc. 5000 list of fastest-growing companies in the financial services category. The company was also ranked No. 2 in Iowa and No. 564 overall with a three-year revenue growth rate that soared to 1,117 percent.

Known as a hallmark of entrepreneurial success, the Inc. 5000 ranks privately held companies by overall revenue growth over a three-year period. The honor puts LenderClose in the top 0.007 percent of the more than 8 million companies that submitted applications.

LenderClose, which was recently awarded the prestigious Contemporary CUSO of the Year award by the National Association of Credit Union Service Organizations (NACUSO) and named to the 2022 Best Tech Startups in Iowa List by Tech Tribune, completed a $10 million series B funding round in 2021 and has seen significant growth in revenue, product offerings, employees and executive leadership.

Founder and CEO Omar Jordan credits the fintech’s rapid growth to the LenderClose team and its clients. “No founder builds alone,” he said. “We brought on the right people at the right time, for each stage of the company’s growth. And, we’ve had the great fortune of having clients who are willing to build alongside our product experts, developers and technologists to evolve borrower and lender experiences. Our job is not done. We’re paving a new standard for what the lending experience needs to be. Our mission is to enable and empower every progressive home equity and real estate lender to lend at the speed of the borrower.”

The proprietary LenderClose technology platform automates home equity lending processes at scale. With home equity levels at an all-time high, borrowers and lenders share the need for streamlined and faster experiences from application to closing. Speed, efficiency and customer experience are major competitive priorities for local lenders like credit unions and community banks that leverage LenderClose technology to advance lending capabilities.

About the Inc. 5000 Methodology

Companies on the 2022 Inc. 5000 are ranked according to percentage revenue growth from 2018 to 2021. To qualify, companies must have been founded and generating revenue by March 31, 2018. They must be U.S.-based, privately held, for-profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2021. (Since then, some on the list may have gone public or been acquired.) The minimum revenue required for 2018 is $100,000; the minimum for 2021 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons. Growth rates used to determine company rankings were calculated to four decimal places. The top 500 companies on the Inc. 5000 are featured in Inc. magazine’s September issue. The entire Inc. 5000 can be found at http://www.inc.com/inc5000.

About LenderClose

LenderClose is a proprietary, technology-focused lending platform that automates home equity lending processes at scale, delivering an exceptional experience for lenders and borrowers. Based in West Des Moines, Iowa, the rapidly growing company is focused on enabling credit unions and banks to automate much of their lending processes through configurable and out-of-the-box decisioning intelligence technology. To learn more, visit lenderclose.com.

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Media Contact

Kelly Moore (for LenderClose)

515-720-9670 (texts welcome)

kelly@kmprcollective.com

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P2P allows credit unions to be there for everyday member moments

Peer-to-peer (P2P) technology continues to be one of the hottest trends in payments. Services like Zelle®, Venmo and CashApp have taken the age-old, familiar practice of exchanging money with friends and family and turned it on its head.

As cash usage declined during the pandemic due to lockdown mandates and rising hygiene concerns, P2P  payments usage exploded. According to the Federal Reserve Bank of San Francisco, the share of person-to-person payments made with mobile apps nearly doubled between 2020 and 2021, from 15% to 29%. Meanwhile, cash usage for such transactions fell below 50% for the first time in five years. Although cash remains popular, consumers are getting increasingly comfortable with using their smartphone to initiate payments, and the end of the pandemic hasn’t slowed this trend down.

Payments by payment share
Source: Federal Reserve Bank of San Francisco 

Forecasters predict total U.S. P2P mobile payment transaction volume to reach nearly $1 trillion in 2022, a 23.5% increase over 2021. Much of this growth is being driven by Zelle®, a popular and easy-to-use P2P platform that is open to virtually anyone with a U.S. bank or credit union account. The Zelle Network®, operated by Early Warning Services, LLC, enables enrolled members to send or request payments using just an email address or U.S. mobile phone number. Members love the fast and easy Zelle® experience, a key reason why consumers and businesses sent 1.8 billion payments over the network in 2021, an increase of 49% over 2020. Total payments value of money sent with Zelle® is double that of its nearest P2P competitor, according to Aite-Novarica Group.

P2P platforms like Zelle® are a powerful way to meet members where they are today, helping to increase member engagement while ensuring they stay within the credit union’s digital banking ecosystem for all their payment needs.

Rising P2P Fraud a Growing Challenge

As the popularity of P2P payments has grown, fraud and scams targeting these newer payment methods have increased as well. According to a recent survey, 29% of respondents say they have been a victim of a P2P payment service scam, or know someone who has.

Credit unions need to remain vigilant for scammers and criminal rings. As with all types of fraud, a multi-pronged approach is essential to mitigating losses for members and the credit union.

EMV® 3-D Secure (EMV 3DS) is a powerful way to prevent fraudulent activity before it occurs, whether through P2P or other methods like BIN attacks and account takeover. EMV 3DS is a globally deployed technology supported by all major payment networks that helps reduce fraud for digital card-based transactions, including online and e-commerce payments. EMV 3DS offers secure one-time passcode (OTP) as an optional additional layer of protection that helps verify a member’s identity at the point of purchase.

When it comes to P2P scams, member education represents a credit union’s best first line of defense. Open and regular communication with members about the latest fraud trends and social engineering scams can help. Warn them about “friendly fraud” schemes where fraudsters request an unwitting victim to deposit a check in their account and then send the funds back to the criminal through a P2P app. In these scams, the check turns out to be illegitimate, and the victim (or the credit union) ends up on the hook for the missing funds.

Credit unions should also remind members to protect their account information and passwords, never give out authorization codes or information to someone who they think is calling from their credit union and to only use P2P services with people they know and trust.

Getting Started with Zelle® P2P with Co-op

Zelle® is a fast, safe and easy way for members to securely send, request, receive and split expenses between friends, family members and others they know and trust, right from their smartphone (and typically in minutes between enrolled users). Zelle® provides consumers with the simple day-to-day features they prefer, including direct account-to-account payments and a fast way to send and receive money.

For credit unions, Zelle® is more than a mobile payment solution. It’s a powerful branding and engagement tool that allows you to be there for members during common everyday moments – from splitting the cost of a lunch tab with friends to paying the sitter or paying their rent.  Zelle® transactions also represent an all-new source of member data for the Co-op community, insights we are leveraging to secure and enrich future member experiences.

It’s easy to get started with Zelle®. Co-op has already invested time and resources on your behalf, working closely with our technology partners and Early Warning Services, LLC, the owner and operator of the Zelle Network®. As a result, we’ve laid the technological foundation for you, delivering a platform that makes Zelle® efficient, easy and affordable for credit unions to implement.

To request more information on Zelle®, please contact your Co-op Client Business Executive, call 800.782.9042 or email solutions@coop.org.

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Outsourcing as a solution for labor shortage amidst rising delinquencies

By: Wendy Elieff, SVP, Client Service and Marketing, TriVerity & The Loan Service Center

The “Great Resignation” is one of the pandemic’s unforeseen outcomes. Demand for workers remains high, despite the best attempts of many employers to attract and retain talent. Financial institutions are not immune and are trying to survive the current labor shortage while maintaining the experience their accountholders are used to.

The pandemic has also had a long-term impact on credit card delinquencies. At the start of the pandemic, there was a notable decline in delinquencies due to federal stimulus payments. But now that the government assistance has ended and consumers are returning to more normal spending patterns, delinquency rates are climbing back up to pre-pandemic levels. The June 2022 credit card delinquency rate finished at 1.54%, only a 20 basis-point gap away from the June 2019 rate. While higher wages might be helping to offset delinquencies, the ongoing effects of inflation, rising interest rates and the volatile geopolitical environment make it challenging to predict the sustainability of consumer spending habits and their ability to pay down their debt.

Given the current employee-favored market, credit unions might have to re-examine their approach to attracting and maintaining workers. How can credit unions develop member-centric strategies to collect on outstanding debts without alienating accountholders and possibly jeopardizing future business with them? Outsourcing could be the answer, especially if it provides access to skillsets and experience needed, such as portions of jobs that deliver delinquency management solutions.

Benefits of Outsourcing Collections
Delinquency management is an area that carries risk and requires staff with a specific set of skills and training that is increasingly difficult to find. This is an especially critical need right now, with the amount of delinquencies showing no signs of slowing down. Outsourcing portions of delinquency management jobs that are typically kept in-house can help credit unions keep high standards of client experience, as well as save money and reduce expenses.

Some benefits of outsourcing collections include:

  • Governance, risk management and compliance (GRC): Keeping up with changes in regulations is a critical responsibility for collection management. Partner with an outsourcing organization with established management capabilities and a proven history of performance, risk management and compliance results.
  • New hire risk and consequence: Avoid having an inexperienced staff member making mistakes. This will also save on recruitment and training costs, as well as on the time it takes for a collector to become competent.
  • Outsource specialized, regulation-based tasks: A certain skill set is required for collections professionals. If a credit union’s collections department loses employees or has been unable to hire staff with the right qualifications, developing a partnership with a company proficient in those areas is a win.
  • Reduce upfront costs of automation: Turning to an outsourcing partner can help reduce the upfront costs of acquiring automation by connecting to the technology they already have in place.
  • Relieve temporary or long-term job functions: By eliminating the need to hire and train for certain positions, credit unions can focus on the existing staff and what they do best.
  • Economies of scale: Your credit union will gain broader expertise, experience and access to innovation that might be otherwise unaffordable.

Outsourcing even part of your delinquency process can help your credit union thrive – and provide the exceptional service and experience your members expect. Download the “Navigating the Labor Shortage and Rising Delinquencies with Outsourcing” white paper today to learn more about how outsourcing your collections can help you overcome the current economic climate.

Wendy Elieff oversees the success of the Client Service and Marketing teams for TriVerity and The Loan Service Center, a PSCU subsidiary. Wendy has worked for CU TriVerity for the past 23 years. She is responsible for developing, implementing and monitoring cohesive marketing strategies to increase brand awareness, as well as building and maintaining client relationships by staying abreast of and responding to changes in the credit union marketplace.

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Stopping cybercrime by copying it

By Gamze Yurttutan, Vice President for product management

The story goes that when President Nixon’s team fed military data into a computer to find out when they would win the Vietnam War, they were informed that they had already won five years earlier.

Although it’s a tale of dubious authenticity from a time when automated data analysis was in its infancy, reliable simulations are an important part of strategy. And that pertains as much to armed combat as to cybersecurity. But, unlike its military counterpart, cybersecurity simulations have largely been left languishing in the Nixon era. That’s to say, they’re still nonexistent for most businesses.

Now, that situation’s finally starting to change. And, to the chagrin of cybercriminals worldwide, technology is simulating possible cyberattacks before the actual perpetrators even get a chance.

Catching heat

It’s not a matter of ignorance that things are only changing now. The cost of building and coding replicas of business systems exclusively to host simulated breaches and attacks has been unaffordable for most businesses until recently.

The upside is that the availability of simulations to assist in cybersecurity testing coincides with recent improvements in cybersecurity risk assessment and management.

Our earlier article “Catching heat” discusses how to evolve to beat cybercrime by flexibly adjusting to changing threats and quantifying the risks. To avoid leaving such an approach out in the cold to fend for itself, businesses traditionally apply various kinds of testing:

  • Vulnerability scanning relies on databases of known vulnerabilities to automatically detect system flaws
  • Penetration testing, or “pentesting,” relies on individuals to identify known vulnerabilities and then exploit them
  • Red teaming, borrowing Cold War terminology, relies on “red teams” to conduct scenario-based attacks on specific targets to assess mitigative responses by “blue teams”

But all these tests have shortcomings that can lead a cybersecurity solution that appears solid in theory to flail in reality. The automated nature of vulnerability scanning restricts it to a predefined repertoire of threats. The human involvement in pentesting and red teaming leaves them constrained by human biases and capabilities. As a result, none of the three approaches are able to stay fully on top of imminent threats. The tests are also conducted on live systems that need to be interrupted, so continuous analysis is not possible—even in the case of vulnerability scanning, which has limited human involvement.

It’s in the ability to better predict the nature of future attacks and remain permanently vigilant where simulations can help.

Simulating heat

A breach & attack simulation, such as Mastercard’s Cyber Front, relies on replicas of business systems to simulate the actual threat landscape. Since it’s not conducted on actual systems, it can be run continuously without the need to wait for vulnerability scanning windows.

It also uses real threat samples and techniques culled from the live cybersecurity environment to keep up with imminent threats. The simulation can then test existing detection and response capabilities and provide precise mitigation guidance to address shortcomings.

When synched with one of the contextual and quantitative cybersecurity solutions discussed under “catching heat,” breach & attack simulations create a virtuous loop. The simulations provide enhanced data inputs to the cybersecurity solution, and the solution provides data inputs to the simulations to allow for better threat scoring. The main benefits of breach & attack simulations may be compared with the three traditional approaches to testing accordingly:

Mastercard Data & Services

The position of breach & attack simulations in the top right corner shows it to be an improvement from traditional testing on both axes. And for many businesses, the entirely automated solution will be convenient, non-intrusive and affordable.

Nevertheless, for prominent businesses handling highly sensitive data, complete automation could theoretically bring some additional risk. In that regard, a cautionary tale remains from the Nixon story.

Breach & attack simulations are only as intelligent as the actual threat landscapes that inform them. And that doesn’t preclude humans from coming up with entirely novel ways to conduct cybercrime. Happily, most businesses aren’t in Nixon’s position of having to evaluate a risk to human life. Yet, just as Nixon could never have relied on a computer simulation to guide his strategy in Vietnam, no president today would put all their faith in one either. The degree of reliance would admittedly be different between the two eras, but the necessity for human involvement wouldn’t change.

So, for the riskiest of situations, where a marginal gain may still be worth the additional cost, occasional red teaming may still have a role. For all other situations, a continuous simulation of the most sophisticated cyberattacks will allow business to do more than keep step with cybercrime. Rather, they’ll be one step ahead of it.

Click here for more information on Mastercard’s Cyber Quant and Cyber Front solutions, combining a contextual and quantitative approach to cybersecurity with breach & attack simulations and optional red teaming.

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NCUA is closer to unlimited third-party exam authority

By: Jack Antonini, NACUSO

The U.S. House of Representatives added hundreds of unrelated amendments to the National Defense Authorization Act (NDAA) in late July, including Section 5403 that would grant NCUA oversight and examination authority over any and all businesses that contract with or provide products/services to federally insured credit unions.

This significant agency authority expansion would increase the size of NCUA as an agency because they lack the expertise to examine every type of vendor that does business with a credit union, thus demanding more exam fees and share insurance fund dollars through the overhead transfer to hire the staff and provide the training for this dramatic increase in agency authority.

Likewise, we are concerned about the possibility that such unlimited authority to examine any credit union vendor could result in overreach far beyond the national core processors that have direct access to member data and extend those examinations to local vendors that provide services and products to a credit union on a day-to-day basis. We see considerable reputation risk to credit unions if the NCUA is authorized to show up and ask for financial statements from local companies simply because they do business with a credit union.

Lastly, we submit that NCUA can already obtain access to exams of the national core processing firms – which are the types of vendors with direct access to member data most often cited by NCUA in requesting this expanded agency authority in the name of cyber security – from other federal financial regulatory agencies that already conduct such exams.

As a member of the Federal Financial Institutions Examination Council (FFIEC), NCUA can request exam reports from other FFIEC agencies that already conduct exams of the larger core processors of which most serve banks and credit unions. It is duplicative and naïve to believe a separate NCUA examination is going to provide more data security than the exams already taking place with FDIC, the OCC and the Federal Reserve.

We feel that Section 5403 should be removed from the NDAA, as this unnecessary, costly and unrelated expansion of a federal agency authority should not be extended solely based upon an add-on amendment to a national defense bill.

In addition, last week three members of the Senate introduced S. 4698, the “Improving Cybersecurity of Credit Unions Act” at the request of the NCUA which would give the NCUA additional authority to examine credit unions’ third-party vendors.

When reading S. 4698, the Senate bill says “Until 2001, the NCUA maintained third-party examination authority over credit union organizations.” This statement is only partially true. It implies that NCUA had unlimited third-party examination authority prior to 2001, which is not accurate – NCUA only had limited third-party examination authority to look at critical IT vendors to ensure compliance with Y2K requirements, and once the Y2K crisis was averted, that limited third-party examination authority went away.

NACUSO, NAFCU and CUNA are leading the effort in the Senate to stop the unlimited vendor authority, or at least to restrict the vendor authority language to those third-party organizations that are directly involved in processing member data and therefore actually pose a potential cybersecurity risk. We further feel that NCUA should first look at third-party examinations conducted by the OCC, FDIC or Federal Reserve, pursuant to their membership in the FFIEC, prior to conducting an exam on a third-party vendor.

Some of our members have expressed concern that with the number of credit unions down below 5000, the NCUA is pursuing this additional examination authority to increase their regulatory and supervisory authority over businesses other than credit unions in order to keep building an agency that once regulated and examined 15,000 credit unions with a smaller staff than NCUA has today.  They point to the fact that as the number of banks has declined, so has the number of FDIC and OCC staff, while NCUA actually has more staff and a larger industry funded budget now than they did in 2000 when there were over 10,000 federally insured credit unions.

We encourage you to oppose Senate Bill 4698, for being overly broad, covering third-party vendors that are not engaged in handling credit union member data, and because NCUA has not been transparent on the costs and how they would use this new authority. Implementing such new authority for the NCUA would require significant expenditures by the agency, a direct cost to credit unions across the country who fund the NCUA’s ever growing budget. We believe the NCUA should focus on regulating credit unions and working with the FFIEC to gain information on vendors already vetted by federal regulators.

If you have concerns about the significant grant of additional NCUA examination authority, it is important to contact your Senators this month to let them know of your concerns. Either the NDAA amendment or S. 4698 will likely pass if there is no opposition from the industry and the only things Senators are hearing are from NCUA lobbyists.

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