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Total U.S. household debt levels increased in the first quarter as already stressed credit card borrowers faced rising challenges, a report from the Federal Reserve Bank of New York said on Tuesday. 
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ING Ventures is investing an additional $3 million into Flowcast, a fintech startup that applies AI to the credit and collection process for non-performing loans.
Vineet Anand's insight:
Flowcast gets another $3MM from ING as pilots expand.
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Basiq, a NAB, Westpac, Salesforce and Plaid-backed open banking platform, is introdocuing a new feature for lenders to aggregate outstanding consumer loans, including buy now, pay later debt, to get more visibility into customer liabilities.
Vineet Anand's insight:
BNPL while harnessing growth in US & Europe has seen 1 in 5 customers missing payments and interest fee debt that requires a new debt structure offering by Basiq. Credit card debt moving to BNPL to now customers taking debt to make good on payments.
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SeedFi, a startup promising to help Americans build their credit and savings, has raised $15 million in equity and $50 million in debt.
Vineet Anand's insight:
SeedFi raises equity and debt with Andreesen leading the round. Business model serving the much unattended sector of under / un-banked population that are unable to participate in the main-stream financial products due to limited credit scores.
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When Leondra Garrett wanted to stock up on three new pairs of shoes early last year, the North Carolina resident split a $161 online purchase into four installments through a "buy now, pay later" service, in what seemed like a convenient deal.
Vineet Anand's insight:
BNPL has taken roots in a big way post the pandemic driven by the rise in digital commerce. And while this survey lends to 40% users having missed payments, it needs more persona driven insights with a much larger base. Today the US market is estimated at around $25 billion in transactions - a larger number of users are millennials that are debit conscious that like the choice of deferred debit with prudence to manage their debt effectively. The article interviews could be credit users that leveraged BNPL - fiscal conscious millennials very likely do not fall in that category. I believe this survey understates the growing BNPL choice for consumers and does not differentiate between fiscal conscious personas that are large users of BNPL. The article does warrant the growing demand for regulation in US in BNPL from a CSFB perspective to preserve consumers that are impacted with lack of transparency by some providers and build awareness on the different BNPL monetization models.
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Aire, a fintech startup bidding to make credit "fairer" for consumers, has raised $11 million in a Series B funding round led by Crane Venture Partners and joined by Orange Digital Ventures and the venture arm of Experian.
Vineet Anand's insight:
Aire planning a US launch; recent funding of $11million supported by Experian venture.
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Finextra: Credit and financial management service Credit Karma has raised $175 million in a Series D funding round joined by Tiger Global Management, Valinor Management and Viking Global Investors.
Vineet Anand's insight:
Credit Karma has raised $368.5 million including the recent $175 million round of Series D investment valuing the company at $3.5 billion!
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Curated by Vineet Anand
Payment Industry leader passionate about Fintech, Innovation in Banking, Product Management & Strategy, driving revenue growth through client management, business development and P&L focus.
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The Payments ecosystem is evolving at an unprecedented pace driven by mobile, cloud computing, start-up's challenging the behemoths, and new technologies. My personal collection of curated stories and blogs.
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US Household Debt Hits Record High: A Detailed Analysis
US household debt reached a record high with an increase of $184 billion, or 1.1%, from the last quarter, according to the Federal Reserve's latest quarterly report. Here are some key takeaways and insights from the data:
Debt Overview:
Delinquency Rates:
Economic Concerns: While the stock market has reacted positively to signs of slowing inflation in the CPI report this week, underlying economic activity remains a concern. Higher interest rates are expected to persist until at least November, with a potential reduction in September only if CPI continues to show a decline for the next three months.
Banking Sector Implications: Banks are likely to see increased activity in several areas:
Consumer Struggles: Inflation, particularly in food and rent, coupled with high interest rates, is creating significant financial strain for consumers. This is leading to increased reliance on credit cards and home equity loans for those who own homes. Buy Now, Pay Later (BNPL) services are also contributing to the debt burden, with 43% of BNPL users behind on payments.
Bank Fees and Bankruptcies: Despite consumer struggles, banks continue to benefit from non-interest income through late fees, with 121,000 bankruptcy notations recorded this quarter and 4.8% of consumer debt in third-party collections.
Looking Ahead: The past three months' data highlights the economic challenges consumers face. Banks will need to reassess risk management and policy measures to protect against rising credit lines with fewer delinquencies. Additionally, they must consider the broader picture of their commercial real estate (CRE) exposure, with close to $1 trillion in loans maturing this year.
This report underscores the need for vigilant financial strategies as both consumers and financial institutions navigate these challenging economic times.