On Friday, July 22, 2016, the Consumer Financial Protection Bureau (CFPB) published proposed rules and a request for public comment to establish a new consumer regulation that would regulate payday loans, vehicle title loans, and certain high-cost installment loans (“Covered Loans”).
The Bureau is particularly concerned that some lenders of Covered Loans fail to assess the consumer’s ability to repay the loan; it is also concerned with the practice of withdrawing loan payments directly from the consumer’s accounts.
For financial institutions seeking reliable and safe sources of additional fee income, this news is welcome indeed.
Now, financial institutions can confidently offer digital, short-term lines of credit—by way of our MinuteLenderLender® digital lending technology or similar—to consumers and small businesses without coming under the same scrutiny as pay day lenders or some non-bank lenders. In fact, while these type lenders struggle, bank digital lending continues to soar.
Banks like $4 Billion Lake City Bank in Indiana, $1B Kentucky Bank, $700 Million Pinnacle Bank in Georgia, and $400 Million Sutton Bank in Ohio, are finding success with the MinuteLender® digital lending platforms.
What is Bank Digital Lending? An end-to-end digital lending technology system that automates origination, underwriting, document delivery and set-up of short-term loans in minutes for consumers (up to $35,000) and small businesses (up to $50,000). The platform creates efficiencies by eliminating paper work and loan officer direct involvement, allowing your financial institution to profitably fund and manage these installment loans at a fraction of the cost of manual and paper processes. The technology is one your institution can call its own, as you control the branding, the risk tolerance and the underwriting, all while remaining completely compliant.
So while payday and other covered loans may have an uncertain future, digital lending does not. With the right digital lending partner, financial institutions can safely and quickly underwrite short-term loans and lines of credit.