Corserv Solutions Inc. earlier this month went live with an operating platform designed to enable U.S. community banks wanting to re-enter the credit card industry to own and control the business, the Atlanta-based consumer and small-business credit card loan servicing company announced.
The program, EnCor Lending, enables originating banks to become the lender and beneficiary of the card relationship instead of turning over control to a third party, according to Corserv. Participating banks also control customer relationships and own all of the loan balances, and the profit and loss.
The program includes Visa and MasterCard credit card issuance, risk management, collections, processing and settlement, reporting, analytics, accounting, and marketing. Banks that use the platform also avoid administrative issues, regulatory liability and the majority of overhead costs associated with running a credit card program, according to Corserv.
“The account owner (issuer) has owner responsibilities–legal, regulatory and compliance, Jerry Craft, Corserv CEO and co-founder, tells PaymentsSource. Moreover, if Corserv is sold or experiences a change in control, participating banks still maintain the control over the account relationships, he says.
“One ‘issuer’ (bank, thrift or credit union) owns the account and a small interest in the balances. The bottom line and 95% or more of the balances are owned by the originating financial institution, which has a contractual right to obtain the account ownership and balances it does not already own in certain instances,” Craft explains. Overall, Corserv believes “banks should not give up control to their competitors. They are customer-based, and it should stay that way,” he adds.
The server-based system “puts sales and service back at the branch level for financial institutions,” Craft says. “We are looking to help small community banks grow organically.”
The company does not yet have an issuer client, he says.