Seth Brickman, President of QCash Financial, Jack Antonini, President/CEO of NACUSO, and Mary Beth Spuck, President/CEO of Resource One Credit Union joined us on the show to share their different perspectives on the value CUSOs bring to credit unions — especially in today’s fast-pace, financial services marketplace.
To have NACUSO, a CUSO, and a credit union’s perspective on the significance of CUSOs provided a well-rounded discussion on why credit unions should either partner, invest, or start a CUSO — a sector of the industry that is pretty unique compared to most other verticals.
Lastly, the trio talked about the value of NACUSO and the organization’s upcoming NACUSO Network in Las Vegas, March 27-30, 2023.
Check it out and let us know your thoughts. And be sure to watch the entire episode below for all the details.
CO-OP Solutions Payments Trends Report (Spending Data from January 1-31)
With a strong holiday shopping season in the rear-view mirror, January spending results were muted as consumer confidence dipped in response to mixed economic signals.
January’s surprisingly resilient jobs report bucked expectations of a coming recession, with employers adding 517,000 new jobs to the payroll, pushing unemployment down to just 3.4%. Inflation has been slowly trending downward in recent months, to a rate of 6.2% in January, but investors fear the combination of strong job growth and stubbornly resistant inflation figures will persuade the Federal Reserve to continue its year-long strategy of raising interest rates well into 2023.
Indeed, the Fed raised its benchmark lending rate by another 25 basis points at its February 1 meeting, while signaling more hikes to come, noting that inflation “has eased somewhat but remains elevated.”
Another major area of focus for the industry continues to be credit risk. According to NCUA’s Q3 2022 data, loss rates were historically low at 1.93%. However, in light of the Fed’s continued interest rate hikes and escalating economic stressors, charge-off rates are once again rising from the historic lows of the past few years – with predicted loss rates on par with those seen before the pandemic.
When combined with rising credit balances, stubborn inflation and higher interest rates, these rising loss rates are leading industry professionals to speculate that economic disruptions are ahead, although they are likely to be relatively mild as the economy resets from the widespread impacts of a worldwide pandemic.
Overall, spending patterns remain robust, compared to the same time last year.
Co-op’s SmartGrowth team members are closely watching the following key spending trends this month:
1. Retail, Amazon post-holiday volumes up over prior year: Following strong holiday sales season numbers, retailers posted big declines in January, as is typical for this time of year. However, debit cardholders spent at much higher rates as compared with January 2022, increasing their Amazon transactions by over 50%. In comparison, credit cardholders increased their spend by 25% over the same period.
Other retail merchants, including department stores, did not fare as well – posting moderate declines on purchase transactions.
Amazon transactions declined by 29.3% in credit and 27.5% in debit from December 2022 to January 2023. These results, while expected after the holidays, come as Amazon warns of slower growth ahead in both its eCommerce and web services businesses, citing the challenging economic outlook
2.Travel ticks up: Travel purchases increased year-over-year by 16% on debit and 32% on credit. While some consumers prefer the travel protection of a credit card, the steady growth in both portfolios since January 2022 provides a continued positive outlook for the travel segment as we move into 2023.
“Travel has been one of the strongest categories over the past couple of years, particularly on credit,” said Beth Phillips, Director of Strategic Portfolio Growth, Co-op Solutions. “Travel is up by 28% in transaction count since January 2021, and by 8% since January 2022. This trend indicates the travel industry is poised for continued strong growth.
3. Economic worries spur shift to debit: Although we have seen higher rates of credit spending – and ballooning credit card balances – as economic uncertainty grows, consumers have indicated they are focused on their own household budgets and may start shifting their spending behavior to debit.
Co-op’s January 2023 data showed an increase in debit transactions of 3% over January 2022, a rate of growth only 2% lower than credit. This represents a significant jump from January 2021, when transaction volumes fell by 8% on debit and 7% on credit.
According to The Conference Board’s Consumer Confidence Index, consumer confidence fell from 109.0 in December to 107.1 in January, with greater pessimism among lower-income and younger households. Consumers are concerned about the direction of the economy over the next six months, as many have already exhausted much of their savings reserves since the pandemic.
This economic uncertainty led to declines in January month-over-month credit transaction volume of -10.2%, while debit spending fell over the same period by a comparatively smaller -8.7%.
“Higher income households – including those professionals that receive a regular salary – are still faring better than lower-income, paycheck to paycheck households,” said John Patton, Senior Payments Advisor, Co-op Solutions. “But the latest surge in job growth has skewed toward lower-wage jobs in the leisure, hospitality and healthcare sectors, indicating that the professional ranks may begin feeling the pain soon as consumer confidence continues to decline.”
Month-Over-Month Category-Level Spending (Comparing January 2023 to December 2022)
Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year) – i.e., compares January 2023 with December 2022, rather than January 2023 to January 2022.
NYDIG Empowers Credit Union Members to Buy and Sell Digital Assets Through Trusted Source
February 21, 2023 – Co-op Solutions is partnering with NYDIG, the leading provider of digital asset solutions for the credit union industry, to empower members to access digital assets safely and securely via their credit union’s digital banking interface.
NYDIG joins Co-op’s newly launched Strategic Provider Program, giving credit unions access to pre-vetted, best-in-class products and services outside of Co-op’s core offerings and helping to streamline their procurement processes. Earlier this month, Co-op unveiled the program by announcing its first two partners, Origence (origence.com) and SavvyMoney (savvymoney.com). All three providers will be at Co-op’s CUNA GAC conference booth #741 to discuss the program on Tuesday, February 28, at 8:15 a.m. ET.
“Co-op’s partnership with NYDIG further reinforces our commitment to identifying best-in-class providers in markets that represent opportunity for credit unions,” said Dean Michaels, Chief Strategy Officer for Co-op. “NYDIG has built its reputation by meeting the highest compliance, audit and governance standards and has interacted with the NCUA on many digital asset issues. We are also impressed by NYDIG’s extensive pre-built digital banking integrations that allow for streamlined onboarding for thousands of credit unions and a white glove support model for every stage of the client lifecycle.”
NYDIG Joins Program as Leading Provider in Digital Assets for Credit Unions
NYDIG (nydig.com) offers solutions that unlock the power of digital assets through technology and institutional-grade finance for regulated financial institutions. Co-op is partnering with NYDIG to promote its digital asset platform, which is currently live and launching with more than 35 credit union clients.
NYDIG’s conservative posture on compliance and risk management makes it an ideal ally for credit unions who are new to the emerging digital asset space. NYDIG maintains appropriate licensing, including with the NYDFS (New York State Department of Financial Services), allowing it to operate in nearly every state. The company is registered with FinCEN and offers hands-on expert assistance and documentation to help clients with internal governance around digital assets.
In addition, digital assets acquired through NYDIG’s platform are held in a highly secure cold storage custody environment, developed and maintained by NYDIG and not connected to any routable network. NYDIG has settled more than $90 billion of digital asset flows in their custody system since inception in 2017 without interruption. Digital assets custodied by NYDIG through its credit union partnerships are held in trust, available for sale by members at any time and are never commingled with NYDIG’s own assets.
“We are proud to be a part of Co-op’s Strategic Provider Program and understand the tremendous opportunity the program provides to drive visibility and awareness for NYDIG among credit unions,” said Rahm McDaniel, Head of Business Development for NYDIG.
“Credit unions have experienced significant deposit outflows to external digital asset exchanges over the past few years – and, sadly, have seen members harmed by failures at some of those lightly-regulated exchanges,” McDaniel continued. “By embedding our platform into digital banking, credit unions can keep assets in their ecosystem and protect members by providing a well-vetted, highly-regulated, Big-4 audited digital asset solution within their existing member experience.”
How to Participate – As a Provider and as a Credit Union
Collaborating with best-in-class providers – particularly fintechs – and helping credit unions better compete in today’s demanding marketplace are at the heart of the Strategic Provider Program. Co-op plans to continually expand its roster of approved providers.
Potential participating providers can learn more about the Co-op Strategic Provider Program by visiting the webpage here.
Co-op clients interested in connecting with program providers can visit the webpage here. Clients can explore each provider’s profile page to learn more about their solutions and submit an inquiry to hear about preferred commercial terms to which they may be entitled.
About NYDIG NYDIG is a bitcoin company powering a more inclusive economic system. Delivering technology and financial services to businesses in a broad range of industries, its full-stack bitcoin platform is built to the highest security, regulatory and operational standards. NYDIG is the gateway to a new era of financial products that make bitcoin more accessible for all. Learn more at nydig.com or connect on LinkedIn and Twitter.
About Co-op Solutions Co-op Solutions is the market-leading financial technology platform whose mission is to connect credit unions to the technology, strategic partnership and scale they need to best serve their members now and into the future. Co-op partners with credit unions to unlock their potential so they can compete; does the hard work of innovation, creating a one-stop opportunity to help credit unions grow; and offers knowledge and expertise in a world where everything must be integrated. For more information, visit coop.org.
Contact: Bill Prichard, APR, Director, Public Relations Co-op Solutions (909) 532-9416 or Bill.Prichard@coop.org
