What We’re Seeing
As we noted last week, we are monitoring trends in the consumer and small business lending segment in light of the...
Four Things We’re Hearing
- 64% of consumers are using digital banking services more than pre-pandemic
- Two-thirds of colleges are currently planning to welcome students to campus in the fall, but uncertainty lingers
- Online deposit rates have fallen an average of 20bp since January
- Personal loan interest rates remain in flux
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Consumer Digital Servicing Adoption
- Epic fielded research this week on consumer preferences regarding the use of digital servicing in their banking relationships, surveying 1,119 adults with incomes of $50,000 or greater
- Unsurprisingly, consumers are using online portals and mobile apps at a greater rate than pre-pandemic, with almost two-thirds of respondents indicating greater usage of digital banking services since the onset of the quarantine
- Click here for the full study
- Banks have responded by increasing their focus on development of digital capabilities
- Visa has reported a 150% increase in “tap payments” for March year-over-year, and a has reported a PayPal reported their largest ever single day of transactions was on May 1st
Back to School Uncertainty
- Whether or not campuses open this fall remains an open question at most colleges, with most planning to re-open but reserving the right to adjust as appropriate
- Epic recently repeated a March 2020 survey of incoming college freshmen and their parents, which showed continued uncertainty regarding the pandemic’s impact on campuses opening in the fall
- 57% of parents have heard from their child’s college regarding fall plans, up from only 30% in March
- 66% of parents currently believe students will be allowed on campus in the fall, which is down 7% from March
- 17% of parents are considering delaying their child’s entry to college
- Federal student loan rates for the 2020/2021 school year were released this week, with fixed rates down 1.78% from last year. Despite the decrease, many variable private student loans are processed below the federal student loan rate of 2.75%.
Online Deposit Rates
- Online deposit rates have fallen by ~20bp since January 2020
- Ally recently cut rates 25bp to 1.25%, leading the way down among the top Bankrate “high interest savings” players
Alternative Lenders
- Alternative lenders continue to be either absent from or at higher rates on the personal loan aggregator sites
- Marcus is at 8.99% vs. a pre-shutdown rate of 6.99%
- SoFi currently shows a low rate of 11.62% vs. an early March rate of 4.74%
- Best Egg and Upstart reappeared on Credit Karma on 5/15 after being absent from the aggregator since March. While both remain absent from LendingTree as of this publication, we expect them to reappear after LendingTree’s weekly update this Sunday
- After a number of weeks of volatility, education refinance rates have converged across most lenders to rates close to where they were in January 2020
Going Forward
- Loan and rate volatility have lessened over the past few weeks compared to March and April
- Digital servicing appears to have had a transitional moment
Thank you for reading.
Let us know what you think.
Jim Stewart
www.epicresearch.net
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