October 28, 2021
Which is the true nightmare, the horrific dream that you have in your sleep or the dissatisfied reality that awaits you when you awake ~ Justin Alcala
Like many life-altering issues in our country, we are keen on understanding, but unfortunately, laissez-faire on action. How many times has our country raised the debt ceiling avoiding a government shut-down rather than resolving the debt problem? The Federal Reserve Bank of New York’s Center for Microeconomic Data reports that in August 2021, the U.S. Public Debt was 28.23 trillion dollars, 1.7 trillion higher than last year, more than quadrupling since 2000. Yikes!
The Report also revealed that household debt (consumer debt) increased by $313 billion, an uptick to almost $15 trillion in 2021. Mortgage balances, credit card balances, auto loans, all components of household debt significantly increased excluding student loans which actually dropped. Installment credit hit new highs for mortgages and auto loans, and the hole keeps getting deeper.
A scary fact for Halloween in Kim Porter’s article, Average American Debt, “as of September 2021, the average American debt among consumers is $92,727. The overall debt figure includes credit card balances, student loans, mortgages and more.” Sadly, that’s not going away after Halloween, and most assuredly will frighten next year’s revelers with an even bigger number.
The Buy Now Pay Later model (BNPL) may be another conduit for raising consumer debt unless an effective credit approval model is utilized at the point-of-sale. This is a no-holds-bar “must” for all merchants and lenders. Ron Shevlin’s article, BNPL:The New Payment Trend Generating $100 Billion in Sales, reports that “the Gen Zers have raised their BNPL usage from 6% in 2019 to an astounding 36% this year. Millennials are up to 41%, more than doubling since 2019”, and the beat goes on. And now for the big Halloween scare by Shevlin – “Among BNPL users, 31% consider their financial health to be “dire” or “struggling” (versus “managing” and “thriving”). In contrast, of consumers who don’t use BNPL services, just 20% rate their financial health as dire or struggling.” BOO!
RIBBIT.ai, a ground breaking predictive analytics company, is keenly aware of the relentless growth of consumer debt in the U.S., and believes that the upfront, approval process must be managed with the most advanced financial analytics in the industry, one that measures relevant consumer behavior. RIBBIT’s BankINSIGHTS suite of services provides bank analytics for instant credit decisioning, account onboarding, and payments from a single API connection. The company’s combined products are designed to simplify financial decisioning without the need for multiple providers, an easy solution for lenders
The myopic examination of a consumer’s financial footprint is no longer acceptable. Refusing and approving loans using inaccurate data is not fair to either group of borrowers. Let’s reform America’s consumer debt problem through a transformative approval process developed by RIBBIT’s superior data scientists and their powerful, deep-dive analytics. Guaranteed to spook all competitors!
Stay tuned . . .
When you know a thing, to hold that you know it and when you do not know a thing, to allow that you do not know it: this is knowledge ~ Confucius
Maneuvering through a maze often reflects the highs and lows of daily life, sometimes ending with a treat, other times a blocked pathway. Borrowing money or making purchases on credit may feel like crawling through a maze, but the good news is the barriers are coming down. The lending industry is reinventing itself in the aftermath of Covid, where mobile shopping surged, credit scores became unreliable, and creative opportunities for new lending entrants emerged.
A man should first direct himself in the way he should go. Only then should he instruct others ~ Buddha
Old fashioned lay-a-way made so much sense, a way to reserve your product, and pay for it when you actually had money, thus taking possession. It gave consumers time to rationally think about the necessity of the purchase and time to budget the appropriate money. Lay-a-way was a safeguard against impulse buying and going into debt, a fear today that doesn’t resonate as much with consumers or merchants. As a result of Covid, online shopping grew-up, and the Buy Now Pay Later (BNPL) market arrived or rather exploded on the POS scene giving credit cards a run for their money.
Whoever acquires knowledge and does not practice it remembers him who plows his land and leaves it unknown ~ Sa’di Gulistan
What could possibly entice Rick Fiorito, a just-retired, financially secure, new Floridian, and renowned payments-guru to even consider leaving the beach for an opportunity to disrupt the financial services landscape? Rick, at least, let the dust settle from your recent industry-wide retirement announcement from Mastercard. “Joining RIBBIT.ai as their COO is an opportunity I simply couldn’t miss,” Rick knowingly smiles.