Yes, and for only pennies on the dollar.

You’ve all heard about debt buyers purchasing large portfolios of charged-off consumer debt. Whether it’s unpaid credit card debt, auto loans, medical bills, utilities, rent, mortgages, etc., buyers will grab them for pennies on the dollar. This means your outstanding credit card debt of $1000 will be bought for less than $100. However, you’ll still owe the $1000 to the new owner of your charged-off account.

You might be able to negotiate a reduced settlement amount, yet there will be weeks or months of collection calls to deal with. And, at the close of your debt, you’ll be left with nothing.

What if you could be the one who purchases the same account before it’s sold to the debt buyer? There would be no collection activity or judgments against you, with wage garnishments or seizure of assets. You’re not going to take collection or legal action against yourself. You will surely stop all reporting to the credit bureaus about the debt. Plus, you won’t have to pay hundreds of dollars to settle the debt; you’ll buy it for pennies on the dollar.

How can you buy your own debt? Simply through an online platform like BuyYourDebts.com All that’s required is a bit of info and a purchase offer. Your offer will be pooled with other offers to the same creditor and will be accepted or denied by them. If accepted, then you pay the offer amount and take ownership of your account. As a bonus, you now own a debt-based asset that can be leveraged as collateral.

The struggle with old debt that won’t go away is over. Buy your own debt for pennies on the dollar.

Consumer debt sales are regulated by federal/state agencies and protected under laws enacted for commerce. One such agency is the Federal Trade Commission (FTC) which protects consumers from unfair or deceptive acts or practices (UDAP).

UDAP not only applies to all products and services offered by banks, but to every stage and activity, from product development to the creation and rollout of marketing campaigns, and to servicing and collections. Therefore, particular focus should be paid to new or modified systems or products and third-party arrangements. Federal Trade Commission Act Section 5 pg. 2

Now, with the launch of new online platforms, like BuyYourDebts, consumers are posting offers to purchase their own charged-off accounts prior to the debts being sold to institutional debt buyers. Until recently, consumers were not considered as potential buyers, of their own debt, in the sales process. It will now be incumbent upon any entity selling consumer debt to review those offers to avoid being non-compliant.

Why is your current process not in compliance? There is a history and thousands of case studies referencing issues arising before, during and after a sale. The act/practice of debt sales has been shown to be unfair, and directly violates section 5, by causing or likely to cause substantial injury to consumers, the process cannot be reasonably avoided by consumers, and is not outweighed by countervailing benefits to consumers. FTC Act pg. 1

The remedy: Include a review of consumer purchase offers during your debt portfolio sales process, along with the acknowledgement to consumers that a review took place are the only requirements to satisfy the law and remain in compliance. Why isn’t “accepting” the consumer’s purchase offer mandated? The reach of the FTC is limited if the burden of following its regulations will cause the seller greater financial harm.

Entities that purchase debt portfolios could also be found liable and named in a class-action lawsuit related to debt they purchased in the past. By applying the law retroactively, it could be shown that injury to the consumer was caused or will likely be caused due to the sale and purchase of their accounts by a third-party. Debt buyers can use the same remedy that sellers use to ensure they remain compliant, in respect to the FTC.

There is a silver lining to reviewing purchase offers from consumers. You might be surprised to find that the $ amounts of aggregated offers from consumers are 2 times to 3 times higher than portfolio sales to debt buyers. And, in some cases surpass settlement percentages. Plus, by selling your charged-off accounts directly to the consumer, you will avoid the compliance risks associated with sales to third-parties.

Now you know, as a debt seller or buyer, how to be proactive and avoid potential violations and lawsuits in the future. You will also be able to steer clear of the FTC’s Division of Enforcement and their Criminal Liaison Unit.

Being digital is not enough.

So you finally acknowledged and accepted the fact that digital banking is required for survival. Simply reaching this conclusion and convincing your fellow executives and board members at the bank to accept it does not guarantee success in this new era. You must also be willing to accept shedding the banking dogma, in relation to the customer, which led to the disruption you’re now dealing with. More specifically: you must be willing to redefine what determines a successful bank-customer relationship. You’ll be surprised to learn that this change is free, as well as being the easiest and fastest change to implement compared with the other challenges to becoming digital.

The biggest challenge you face is replacing your bank’s core systems, which are beyond outdated. This is no small task. Luckily, you can leverage much of what fintech and the IoT has to offer: blockchain/distributed ledgers, the cloud, robust and scalable banking platforms, faster payment systems, mobile and smart devices, chatbots, AI, big data, etc. are readily available.

Some of the secondary challenges you might have to confront are costs associated with collection and usage of a vast amount of data, regulatory compliance, and IT. However, regtech is catching up to fintech and will provide more cost-effective ways to remain compliant. Your IT costs will be reduced by using cloud services and partnering with third-party platforms. Big data startups will be competing for your business, which should equate to competitive pricing.

Keep in mind that you should govern the bank’s ROI expectations during the initial phase after going digital. Be patient on the bigger projects: especially since some of the new solutions you choose may have just graduated from beta-testing and are unproven.

Now that the hard stuff is out of the way let’s get back to the most important and less risky challenge you need to overcome; changing your ideology and becoming a “team player” for each customer. This is not the same as being customer-centric, which is basically just adjusting your marketing and sales to be more tailored to individual customers’ needs. The difference: focusing on improving a customer’s financial health, with the onus on the team.

Yes, you read that right. Being on the customer’s financial health team makes you responsible for keeping the customer financially healthy; unlike a customer-centric approach, which tries to match a customer’s needs to products and services your bank offers. Customer-centric might sound good, but leads to biased advice and upselling at the expense of the customer’s financial health. Customer-team sounds better.

Begin by making this paradigm shift in your ideology to one that states: “the customer’s overall financial health is paramount and supersedes bank fees and upselling.” Always thinking “go team” will build a stronger customer relationship and help maintain a higher level of trust. And, when you have happy customers, that are financially secure, your sales numbers will increase and recidivism rate decrease.

You have a historical opportunity to make the most fundamental and positive change your bank will experience. It will mark a definitive turning-point and lay the foundation for the bank’s future success.

So, before you take the leap to becoming a digital bank, first decide whether you’re willing to make an easy ideological change, from customer-centric to customer-team player. Then, you can take full advantage of everything a digital transformation will offer you and your bank.

“Please check your bags at the door.”

Many banks have been, or soon will be, busy mapping out a new customer journey based on shifts towards the digital experience and increased competition. At the same time, banks are being asked by fintechs to allow mutual customers/users to grant full real-time access of their bank account information to third-parties, for the benefit of the fintechs. So in lies the rub, which leaves banks at a disadvantage; why many bankers are not proponents of open banking.

Fintechs have been crying “foul” and proclaiming an unfair advantage against them unless banks start allowing third-party access. They are right and the banks should unlock the vaults; most fintechs’ business models require a certain level of access to succeed. But what about reciprocity?

Will fintechs be “open” to a reciprocal relationship with the banks? A data-sharing open agreement could be written by banks stating, “we will grant you access to our mutual customers’ banking data if you allow us access to their data that you are gathering.” The point being, if banks give up control of the playing field they at least want it to be even. Otherwise, they could lose too many customers or not be competitive on selling additional services if others are looking at real-time data.

A key factor; customers have many financial relationships and the baggage, i.e. accrued account data and activity that comes along with those relationships. Whether it’s a lender, creditor, vendor, or new fintech app they all affect and influence the customers’ finances. In banking’s current state, the customer journey does not allow for their financial baggage. This is the main reason their banking experience is mediocre at best.

How can banks improve the journey if customers have to leave their bags at the door? Open banking with a mandated level of reciprocity from third-party providers would benefit everyone involved.

Can jobs and companies be saved with an AI optimized and assisted workforce?

If any department in any company has the most to lose and potentially the most to gain, from workplace automation and deep learning technology, it is Human Resources. Oh, the irony! Humans directing machines to machines directing humans.

The basic elements of HR can be easily augmented by AI. Utilizing predictive analysis the scheduling of hours can be streamlined and guarantee all shifts are covered, while limiting overtime or over-staffing. Hiring and onboarding can become extremely efficient. Eddie Shleyner writes, in his Workforce Software’ blog post, on how artificial intelligence will change HR departments. Removing them from stuffy basement level rooms at the business location to remote offices at home. AI will automate connecting new hires with related personnel without fumbling the introductions, ensure all training requirements are exceeded and the new employees are already successful. All this happens with AI doing the hand-holding.

Using blockchain for smart contracts to maintain consistency and meet all regulations could secure the processes even more. As Mihaela Ulieru
Research Professor, Carleton University wrote in Scientific American, Perhaps the most encouraging benefit of blockchain technology is the incentive it creates for participants to work honestly where rules apply equally to all.

A poignant piece written by Susan M. Heathfield reminds us that an HR department has many functions outside the mere scope of acting as a liaison between the company and employee. A few things she listed that are incorporated and upheld by HR: company mission, guiding principals, company metrics, and keeping the company guided towards success. Another factor Susan brings up is organization.

A company organizes itself based on its mission. Unfortunately, the needs of the customer don’t always align with the company’s current organization. For a bigger company to make sweeping adjustments is time-consuming and cumbersome; usually with lackluster results. By the time changes are completed it is possible the customer base has new needs.

The big banks are a prime example of the “too big to change” company. The fintech movement has been castigating the banks for being behind the times. Some claim the executives are not forward-thinkers and are happy with the status quo. The reality is that the bank execs understand that change does not simply entail a new digital banking platform, it also includes the workforce; hiring, firing, raises, promotions, department changes, rescheduling, restructuring and retraining hundred if not thousands of employees. The communication and scheduling involved in such an undertaking are practically insurmountable. Usher in AI.

With an AI driven HR department, changes in the workforce can be nimble and effective. Employees can be realigned and retrained without delaying strategic adjustments the company is making. AI will help maintain a workforce fluidity that allows the company to make swift changes when needed. And, the workforce will benefit too.

Employees will have access to the company’s AI platform. Artificial intelligence will analyze and learn everything work-related about an employee. Training would be scheduled if needed. Relocation to another department or office, to get better results, would be fast tracked. Increases in performance could be met with timely raises. Employees would have assistance 24/7 to ensure the highest level of productivity. The result is a highly optimized, AI augmented workforce that will allow employees to keep their jobs.

Sometimes employees will have to be let go. The HR department could play an integral part to ensure the terminated employee will not be unemployed for an unreasonable amount of time. In a recent article by Liam Tung on artificial intelligence, Bill Gates talks about jobs that require human empathy. Essentially, factory workers could be retrained to provide services for the elderly and others with special needs. This can happen within the transition period between jobs.

It’s ironic that a company like Uber, who has been at the forefront of AI, failed to leverage AI in its HR department; as recent news shed light on internal problems with their internal workforce. Much of what is transpiring would have been prevented with artificial intelligence driving human resources. Pun not intended.

John and Mary had been struggling financially for many years. As their expenses grew and number of financial products increased, so did the complexity of managing their finances. Not having any extra money to pay an advisor; they continued to struggle.

One day Mary heard about different mobile apps that could connect to your bank account (Open Banking) and other accounts. She found many apps to choose from, but most did the same things: combined your savings and expenses, correlated and scheduled payments, while promoting budgeting and monthly savings’ goals.

John did more research and discovered new mobile banks that did the same things the other apps did, but also let you open a bank account with them. This seemed like the best option for John and Mary. Finally a way they could deal with their finances and maybe have a healthy savings.

It wasn’t the way. At least not for John and Mary. Being able to see all their finances in one place was nice. Being able to set and track budget and saving goals was even better. However, just because John and Mary could see all their financial data in one place didn’t mean that those they were financially obligated to, could see the same combined info. It wasn’t a two-way street. Basically, John and Mary were left with zero net change. They still had the same bills to pay with same amount of monthly income.

The new mobile bank did analyze John and Mary’s spending habits and monthly bills. This enabled the bank to offer specifically targeted financial products that might help. Unfortunately, this just piled on to their struggles. John and Mary just weren’t mentally equipped to deal with banks, finances, and money.

John said to Mary, “ Why couldn’t this open banking thing be completely open?” “What if all our financial data could be shared amongst everyone we have accounts with or owe money to?”

Mary added, “Yes, the professionals would know how to handle our money and payments.” And, “They would be able to collaborate to ensure everyone gets paid while still helping us save a little each month.”

Both John and Mary liked the idea of relinquishing control of their money, transactional, and other financial data as long as they had a growing savings account. This type of two-way street open banking would improve their financial health and relieve the burden of maintaining it themselves. Someday, they thought.

Open banking is slowly evolving. Banks have been hesitant to allow any others, outside of the account holders, to access financial data. Older regulations, security, and privacy concerns have hindered the progression too.

We in the fintech space need to find more consumers like John & Mary to help spread the word and push for regulatory change and progress towards real open banking.

As technology speeds things up, so does our need to “get it now.” The IoT allows us to get faster deliveries than ever before; even to rural locations via drone. We can customize just about anything we want without breaking the bank. Our opinions can be voiced to thousands of people instantly, which can be leveraged to sway decisions or produce change.

This leverage has fostered a sense of entitlement among people from all walks of life. With some social media accounts and a smartphone in hand a person can attack someone or something if they don’t like it. A simple tweet or fb post can very quickly accrue support for “your cause” regardless if the supporters actually understand or believe in it. Armed with this larger voice of thousands you can effectively force changes to your liking.

We now have gone from the “I want it now” people to the “It has to be about me” crowd. And, in these waning days of political correctness, many are still pandering to the notion of “everyone’s a winner.” Well, not everyone is a winner, nor must everything be tailor-made.

Are banks and lenders really ready to give up easy money?

Not so long ago I took my daughter to a local state park. It was a rainy day and the park was empty. We didn’t plan on staying long, and actually our visit was cut even shorter due to some flooding on the trails.

We headed back to the car, now adorned with a ticket on the windshield; $63!? “How could this be?” I asked myself. There was no one in the booth at the entrance taking money. I didn’t see a sign regarding a fee to park. However, after walking around the parking lot I did find a sign (partially hidden behind tree branches) stating the $5 fee. You were required to place the money in an envelope and drop it in a lockbox.

I was not happy. We were at the park for less than 30 minutes and didn’t even have access to the all the trails due to the rain. And, I was looking at a hefty fine. This wasn’t acceptable and would be contested. So, I set out to do a little research into why the California state park system charges such a big fine. Low and behold, part of their operating budget comes from fines. To meet the yearly budget they were expected to generate a minimum of $70,000 from parking tickets. There were also notations about how to increase that dollar amount to ease budget constraints.

This is an example of the “free for a fee” mentality that many businesses, including banks and other finserv providers have. A very slippery slope which leads to an increased reliance on this type of easy revenue, that can have huge margins. It also causes an imbalance between the “free” services and actual fee-based services being provided. As we see with banks, they offer some free services, which have penalty based fees associated with them. You may ask, “How can something that starts out as free all of a sudden cost $35?” (NSF Fee)

The fact is, most “free” services have miniscule fixed costs. Banks and others offset this cost by establishing penalties and fines. The question for bankers went from, “How much do we need charge to cover the cost?” to, “How much can we get away with charging?” The answer turned out to be, too much!

Fees can be devastating to the customer. One reader’s experience paints a vivid picture:

I had been struggling financially for a few years. Medical bills and credit card interest rates basically handicapped my ability to find some solid ground with my finances. Without consistent money coming in every month I would occasionally miss an automatic electronic payment, which would allow the bank to hit me with a NSF fee. The bank knew I would eventually make a deposit within days of the overdraft, yet they still charged the fee. Sometimes the fee caused another overdraft.

In one month this caused a snowball effect, which led to 5 NSF fees. I was basically left with no money for the next month’s scheduled payments. Luckily the bank did credit 2 of the fees and I was able to borrow money for the next month. Then, I was hit with a bank levy, which took the last $45 I had. This caused another overdraft, another fee, and a $100 service fee imposed by the bank for levies. Oh, did I mention that the bank also charged me a $10 service fee each month my average balance was less than two hundred. I would really like to know what the bank did to earn the hundreds of dollars they penalized me and what their actual cost was. The cost to me went beyond the money. -JB

These types of stories have played an integral role in the development and escalation of new fintech. And, as shown above, this isn’t isolated to banking and financial services. All industries that rely on penalties, fees and fines are currently or will be disrupted. Many startups are focused on minimizing or completely doing away with the business practice of generating revenue through penalty-driven methods.

How is fintech changing how companies generate revenue for the free services they offer? Traditionally, it has been by offering premium services or upselling customers on additional services. Others make money through advertising and referrals, which has become more efficient with big data. Then there are startups like Ubankly.com and their financial health team platform.

Ubankly will offer free services to consumers. Revenue will be generated from members of a consumer’s financial health team. It is a profit-sharing approach from those already making money off the consumer. The result is: no upselling or charging customers for premium services.

As we boldly go into this future disrupted by fintech, the IoT, big data, blockchain, and artificial intelligence, companies still need to make money and consumers will still need to pay for products and services. The methods are changing to ensure that consumers are not double-charged, penalized and fined to increase profits and make easy money.

Let me start by noting that I do not know or follow Jamie on LinkedIn. Another member I’m linked to had liked Jamie’s post. Obviously, this was not case for everyone who commented. So I have take this opportunity to take a closer look at the post and a particular negative comment.

Interpretation of an author’s writing is relative to the reader. Sometimes a readers perception is quite different than the author’s intent. Half of what you do in a literature class is to try and determine the “meaning behind the words” of a poem or story. This goes for both posts and comments.

I know that some posts and comments are simply trolling for clicks. The post and associated comment I’ve chosen have past the litmus test for not trolling. Both seem genuine; Jamie nor the commenter are trying to sell anything or make reference to unrelated information.

You can read my breakdown of the post and comment next to the picture of Jamie and his partner above. You can also read my previous article on negative LinkedIn comments here.

Not just contextual offers or financial advice.

Many, many years ago banks would get to know their customers; actually know them as well as, or better than “big data” does in today’s tech-driven market. (check out The Better Bank Was Already Built, Sans Fintech) The bank manager might have dinner at a customer’s home. Conversing with the family the banker might learn that the family is expecting a new child and also in the market for a new car, which they planned to purchase at the local dealership.

This banker would then take the newly learned information back to the bank, look over the customer’s current finances and say, “to ensure your savings account is sufficient to cover having a baby, you’ll need to purchase a cheaper car at the dealership in the next town over, which has a business loan here at the bank.” And, “when the time comes I will talk with your doctor and let him know you’re tight on money, so maybe he could lower the delivery costs.” Also, “we’ll see about getting you a discount card for groceries, since my uncle owns the grocery store, and lower your monthly mortgage payment a few dollars.”

Now of course this could not happen in today’s mass market; or could it? There aren’t enough bankers around to take an in depth personal interest in customers, nor proactively make decisions for the customer. However, we now have big data, the IoT, cognitive learning, and AI that can mimic that banker of the past while servicing millions of customers.

These customers don’t need more contextual offers and advice that they can’t relate to or are not able to act on. The typical banking customer is not financially savvy enough to timely take advantage of offers/advice with success. They need the banker, who is the expert, to be proactive in making decisions. Just like in the past, the bank manager (replaced by AI) can make real time decisions for their customer’s account to constantly maintain and improve the financial health of the customer.

Would you like your bank to ensure that you’re better off financially a year later, and so on? Do you feel confident and secure if your bank’s message is, “Your Financial Well-Being Leads to our Financial Success!”?

Fintech can make it happen. Banks have the ability to give the customers what they need: proactive, real time account adjustments to ensure ongoing financial improvement.