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Asset-based loans (ABLs) have become a mainstream financing tool for retailers, providing flexible working capital and funding turnarounds. However, for distressed retailers, ABLs can create perverse incentives to keep buying inventory to maintain borrowing capacity, potentially leading to deeper financial trouble and harming suppliers. While lenders are protected by collateral, the aggressive competition in the ABL market may be eroding underwriting standards, raising concerns about future risks.
Despite frequent retail bankruptcies, lenders remain keen to provide asset-based lending (ABL). This financing method, secured by inventory valuations, offers lenders a nearly risk-free investment channel but may trap struggling retailers in a vicious cycle of 'borrowing new to repay old.' Using cases such as Barneys, Bob's, and Forever 21, this article reveals the double-edged sword effect of ABL.
Community banks are facing the challenge of the concept of 'community' shifting from geographical boundaries to interests and a sense of belonging. This article proposes three strategies: building a micro financial services ecosystem, deeply cultivating interest-based communities, and transforming physical branches into extensions of virtual experiences, to win the long-term loyalty of digital-native customers.
Many community banks face a sink-or-swim moment as the definition of community shifts beyond physical locations to shared interests and affiliations. This article outlines three strategies for community banks to reimagine their strategic vision: creating mini financial services ecosystems, catering to affinity groups, and making the physical branch an extension of the virtual experience. Examples include partnerships like First Horizon and SunTrust with Operation HOPE, Pinnacle Bank's collaboration with the Memphis Grizzlies, and Capital One cafés. By harnessing affinities and digital transformation, community banks can build organic loyalty and sustain long-term growth.
When a community's only bank branch closes, residents and small businesses lose access to credit and cash deposit options, creating banking deserts. The Federal Reserve reports 6,764 branch closures from 2012 to 2017, with 44 counties deeply affected, 39 of them rural. The NCRC found 86 new rural banking deserts from 2008 to 2016. Banks close branches for profitability, leaving rural areas vulnerable. Small business lending drops 13% after branch closures, and relationship-based 'soft information' is lost. Credit unions like Hope Credit Union have taken over branches, but controversy surrounds credit union acquisitions. Digital banks like N26, Monzo, Chime, and Varo see opportunities in underserved areas, but experts say they can't fully replace physical branches. Branch costs run $600,000 to $800,000 annually, prompting banks to rethink brick-and-mortar strategies.
When the only bank branch in a community withdraws, local residents and small businesses may fall into a predicament lacking credit and cash deposit services. A Federal Reserve report shows that from 2012 to 2017, the United States closed 6,764 branches, with 44 counties severely affected, 39 of which were rural counties. This article explores the economic drivers behind bank withdrawals, the disruption of credit relationships for small businesses, the takeover model of credit unions, and whether digital banks can fill this vacuum.
The era of open banking has arrived. Although private-sector working groups in the U.S. have developed voluntary standards, these alone cannot achieve full openness. Policymakers need to update federal regulations, establish rules for consumer data access, liability, and accountability, and ensure that working groups include diverse stakeholders to promote innovation and fairness.
The era of open banking may finally be arriving in the U.S., with private-sector working groups beginning to design voluntary standards. However, these groups alone cannot deliver open banking. Lawmakers and regulators must treat them as a starting point and work to update federal regulations, assert consumers' rights to permission access to all their financial data, and create rules for accountability and liability. Industry-led groups must include all stakeholders and address key areas such as scope, permissioning, accountability, legal structure, technology, and governance. Without legal rights and comprehensive standards, the U.S. risks an uneven playing field and limited consumer choice.
Over the past decade, fintech innovation has driven global commercial transformation, with local payment methods such as mobile wallets rapidly gaining traction in emerging markets like Latin America and Asia, helping the unbanked access e-commerce and achieve leapfrog development.
An explosion in fintech has closed the technology gap and connected consumers worldwide, even those without bank accounts. In Latin America, where 38.3% of the population is unbanked and 17% of online transactions are cash-based, solutions like RapiPago, BoletoBancario, and Oxxo have driven a 22.9% increase in B2C e-commerce growth. In China, consumers leapfrogged credit cards, with mobile e-wallets accounting for 55.7% of online transactions versus 22% for cards. Across Asia-Pacific, 57.5% of e-commerce transactions are completed on mobile devices. These local payment methods, which now comprise 77% of global e-commerce spend, offer a viable alternative to card-based payments by leapfrogging traditional banking infrastructure.