- Today’s main news: Podcast: The state of marketplace lending. FOS publishes cases studies on P2P lending.
- Today’s main analysis : Why financial firms’ FinTech strategies are failing.
- Today’s thought-provoking articles: Why lenders are upset over new P2P regulations in Korea. An angel investor’s thoughts on the Future of FinTech.
- The current state of MPL. AT: “As marketplace lending grows and more companies see success in this arena, we’ll see more talk of regulation and talk of legal implications. This podcast features a few of the top voices in MPL with a discussion of Madden v. Midland Funding, the FDIC, and the CFPB complaint portal.”
- Bank regulator says he won’t be lenient with FinTech companies. AT: “The push has begun. Washington is talking about regulation on several fronts.”
- The future of FinTech from an angel investor’s POV. AT: “An interesting discussion that goes beyond FinTech, but who better to speak to how to get funding for your startup than from an investor who funds such projects?”
- The traditional real estate company opens crowd funding division. AT: “My worry is that at some point there will be a glut of RECF platforms, which could lead to a point of diminishing returns for the marketplace. On the other hand, there is a lot of room for growth at the local level.”
- Why financial firms’ FinTech strategies are on the fritz. GP: ” This is a teaser for a paid report. Nonetheless, the interesting part here is the data from Capgemini. And it seems that the right leadership is what it takes to overcome the barriers to innovation.”
- FinTech companies must earn trust, not rely on tech. GP: ” In finance, trust is the most valuable asset, hard to earn, easy to lose. At the end of the day , no matter the audits, rules, processes, trust is what enables somebody to trust a 3rd person with their money.”
- Patch of Land executive Ada d’Errico leaves the company.
- FOS publishes P2P case studies. AT: “P2P lenders can use this information to improve services. Interestingly, P2P lending receives more complaints than investment-based crowdfunding. Some consumers weren’t even aware they were borrowing under a P2P arrangement, which might mean that lenders need to do a better job of disclosing the nature of the loans on offer.”
- Bud wants to re-bundle your FinTech apps into one. AT: “This could be of real value on a global scale, especially for consumers who do cross-border transfers, and international loans or investments.”
- United States
- The Current State of Marketplace Lending and Investing (JDSupra Business Advisor), Rated: AAA
- Top National Bank Regulator Says He Won’t Be Lenient With Fintech Firms (The Wall Street Journal), Rated: AAA
- Ep: 79 The Exciting Future of FinTech from an Angel Investor and Trader (Futures Radio Show), Rated: A
- ArborCrowd to Bring Real Estate Investment Opportunities to New Audiences Through Technology (PRNewswire), Rated: A
- Here’s why financial firms’ fintech strategies are failing (Business Insider), Rated: A
- World Fintech Report 2017: The battle is about ‘Trust’ not ‘Tech’ (LinkedIn), Rated: A
- Long Time Patch of Land Executive Departs Company (Crowdfund Insider), Rated: B
- United Kingdom
- FOS releases P2P case studies as early warning signal (Mortgage Solutions), Rated: AAA
- Bud is a UK startup that wants to re-bundle all of your fintech apps into one fintech app (TechCrunch), Rated: A
- Peer-to-Peer Lenders’ Fortunes Diverge As New Rules Take Effect (CaixinOnline), Rated: A
- Why online peer-to-peer (P2P) lending should not be regulated (Medianama), Rated: A
- This emerging fintech valley is on top of the India stack (Economic Times, India Times), Rated: A
- New peer-to-peer regulations draw the ire of lenders (Korea JoongAng Daily), Rated: AAA
- Fundedbyme is now a recognized p2p lending operator in Malaysia (P2P-Banking), Rated: B
The Current State of Marketplace Lending and Investing (JDSupra Business Advisor), Rated: AAA
Topics covered include Madden v. Midland Funding; the CashCall case and the true lender analysis; a discussion on the recent FDIC guidance; and the CFPB complaint portal among other issues.
Top National Bank Regulator Says He Won’t Be Lenient With Fintech Firms (The Wall Street Journal), Rated: AAA
The top regulator for national banks took a hard line on financial technology regulation, saying Thursday the agency would apply the full sweep of financial laws to fintech firms that want to test new services and would take current regulations into account as it proceeds with a new fintech charter.
Comptroller of the Currency Thomas Curry said for the first time that the Office of the Comptroller of the Currency would apply banking regulations to companies in the nascent fintech field that have been pushing the agency to develop a specialized national charter.
The OCC announced Oct. 26 that it would launch a stand-alone innovation office early next year to be the “clearinghouse” for fintech pilots and would handle general fintech questions regardless of whether the company is regulated by the OCC.
Mr. Curry said Thursday the OCC would “not support” shielding a bank or firm from enforcement when the company is in a pilot program to test a product.
Ep: 79 The Exciting Future of FinTech from an Angel Investor and Trader (Futures Radio Show), Rated: A
We have an awesome guest on the show today his name is Jeff Carter, manager at West Loop Ventures. He’s a successful angel investor, ex pit-trader, and someone who is very good when it comes to economics and trading the markets.
- His process of Angel Investing in FinTech.
- Game changing technology that focuses on bitcoin and block chain.
- The demand for mobile tech. is growing, and how it has transitioned over the years.
- Discussion about why options on futures will continue to see growth.
- How Millennials look at the markets and why he believes the markets are not rigged.
- The avg. marriage lasts 7.1 yrs and the avg. FinTech startup is 10 yrs.
ArborCrowd to Bring Real Estate Investment Opportunities to New Audiences Through Technology (PRNewswire), Rated: A
Arbor Commercial Mortgage (“Arbor”), an established leader involved in many facets of the real estate industry, today announced the public launch of its new company, ArborCrowd. ArborCrowd is a real estate crowdfunding platform that brings exclusive and highly coveted commercial real estate investment opportunities, vetted by ArborCrowd’s experienced professionals, to millions of new potential investors. ArborCrowd targets accredited investors and opens up quality equity investment opportunities previously available only to institutions and high net worth individuals.
ArborCrowd leverages recent legislative changes and a desire to implement new technologies into its business with the thirty-year long track record of Arbor’s family of companies. The first public opportunity to participate in the ArborCrowd platform comes with the repositioning of a three-building, 79-unit multifamily portfolio in the Clinton Hill neighborhood of Brooklyn.
Here’s why financial firms’ fintech strategies are failing (Business Insider), Rated: A
Around 80% of financial services executives say their firms have some form of structured fintech strategy in place, but only 10% say their strategy is very effective, according to data from Capgemini’s World Fintech Report.
Getting the right leadership is key to overcoming barriers to successful innovation. In order to ensure fintech strategies achieve results, firms should focus on making sure they have the right leaders in place. If top execs are supportive of a firm’s fintech strategy, it is much more likely to succeed. That’s because they can instigate cultural change from the top and have the power to prioritize budget for innovation where necessary. Implementing these two changes will likely help create a more attractive environment for innovators, and give firms an edge in the ongoing battle for talent.
If you work in any of these sectors, it’s important for you to understand how the fintech revolution will change your business and possibly even your career. And if you’re employed in any part of the digital economy, you’ll want to know how you can exploit these new technologies to make your employer more efficient, flexible and profitable.
Among the big picture insights you’ll get from The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry:
- Why financial technology is so disruptive to financial services—it will soon change the nature of almost every financial activity, from banking to payments to wealth management.
- The basic conflict will be between old firms and new—startups are re-imagining financial services processes from top to bottom, while incumbent financial services firms are trying to keep up with new products of their own.
- Both sides face serious obstacles—traditional banks and financial services firms are investing heavily in innovation, but leveraging their investments is difficult with so much invested in legacy systems and profit centers.
- Meanwhile, startups are struggling to navigate a rapidly-changing regulatory landscape and must scale up quickly with limited resources.
- The blockchain is a wild card that could completely overhaul financial services. Both major banks and startups around the world are exploring the technology behind the blockchain, which stores and records Bitcoin transactions. This technology could lower the cost of many financial activities to near-zero and could wipe away many traditional banking activities completely.
World Fintech Report 2017: The battle is about ‘Trust’ not ‘Tech’ (LinkedIn), Rated: A
To determine how customers view financial institutions and FinTech startups, LinkedIn, Capgemini and Efma surveyed over 8,000 customers across 15 countries. We discovered tech-savvy customers adopt FinTech at twice the rate of non tech-savvy customers (67% versus 34%). Millennials have greater adoption (61% versus 44%) as do affluent customers (61% versus 49%).
Despite FinTech’s steady adoption among tech-savvy banking customers (67%), millennials (61%), and affluent consumers (61%), our survey revealed a significant trust gap between financial brands and FinTech companies. Incumbent financial brands maintained a trust rating 13 percentage points higher than that of FinTech challengers (37% to 24%).
“Trust” has many meanings, so we surveyed banking customers about specific attributes they valued in financial brands. When we questioned more deeply, incumbent brands scored particularly well against FinTechs when it came to:
- Fraud protection (45% vs. 15%)
- Quality of service (37% vs. 24%)
- Transparency (36% vs. 25%)
Despite their trust advantage over FinTech companies, incumbents can’t afford to take consumer confidence for granted. Our survey revealed a spike in customer trust once they have a positive experience with a FinTech brand. 56% of respondents said they trusted FinTech companies they had a positive experience with, compared to 53% for financial institutions.
Long Time Patch of Land Executive Departs Company (Crowdfund Insider), Rated: B
AdaPia d”Errico, a long-time Patch of Land executive, has departed the real estate crowdfunding platform.
Patch of Land has undergone a period of transition as the platform struggled with rapid growth and a more challenging real estate market. Deitch, previously with OakTree Capital Management – a large global alternative investment management firm, was brought in to help reorganize and manage the company. d’Errico is not the first senior employee to depart the platform but she may be the most visible as she emerged as a prominent proponent of the company and the real estate crowdfunding sector overall.
d’Errico will be replaced as Chief Marketing Office by Robert Greenberg, who joined the platform several months back. Greenberg was previously with B2R Finance, which was founded by Blackstone Tactical Opportunities Funds. B2R provides residential buy-to-rent mortgages focused on the financing needs of residential real estate investors.
Asked about what she intends to focus on going forward, d’Errico said she is interested in staying in alternative finance or the real estate sector, given the right opportunity.
FOS releases P2P case studies as early warning signal (Mortgage Solutions), Rated: AAA
The Financial Ombudsman Service (FOS) has published a series of peer-to-peer lending complaint case studies to prevent problems arising and highlight themes of concern.
From July to September PPI remained the most complained about financial product, with 42,907 new cases (54%). Packaged bank accounts were second on the list, with 5,317 new cases.
FOS said there have been more complaints about loan-based crowdfunding – or peer-to-peer lending – than about investment-based crowdfunding.
In a number of cases, consumers said they weren’t aware they’d borrowed money under a peer-to-peer arrangement. There have also been complaints about goods and services bought with peer-to-peer loans – with some borrowers unsure about the recourse they have to the lender, compared with different types of credit they’ve used in the past.
FOS added that there have been a small number of complaints about charges arising on peer-to-peer loans when borrowers repay early.
In one example, an investor used a crowdfunding platform to invest £50,000 in mortgage loans but a year later the platform decided not to deal with ‘retail’ investors for longer-term investments such as mortgages. The platform said it would return the money with interest but as they were still working to remortgage a number of the loans they would initially return 80%, with the remaining 20% to be repaid within a year. The investor complained that he wanted his money back immediately, but FOS found the platform was reasonable in its actions.
To read further case studies relating to peer-to-peer lending visit the FOS website.
Bud is a UK startup that wants to re-bundle all of your fintech apps into one fintech app (TechCrunch), Rated: A
A multitude of startups, from new challenger banks, payments companies to chatbots, are betting on the premise that whenever there’s disruption — in this case, following technological and regulatory changes, a plethora of new fintech companies are unbundling various parts of the banking sector — it inevitably leads to fragmentation. And then what eventually follows is convergence.
Enter: just-launched Bud, a web and mobile app that aims to make a ton of different financial services accessible from a single interface.
Part personal finance dashboard, part fintech marketplace, you log in via the app to various supported current accounts, savings accounts and other financial products you currently subscribe to, such as money transfer, from which you are able to get a consolidated view of all of your spending and budgeting trends.There’s also a directory of supported fintech services that you are encouraged to sign up to, which, in the short term, is also how Bud plans to make money. It will get an affiliate kick-back for any customer it sends their way.
This level of integration is also something only made possible now that banks in Europe are being forced by legislation to open up their APIs — some faster than others, notes Maslaveckas — and is also a concept built in to many fintech startups’ business model, which sees their wares compliment rather than compete with Bud’s proposition.
To that end, so far Bud has partnered with a number of fintech startups, such as Nutmeg (savings), Azimo (currency exchange) and PensionBee (pensions), in addition to some of the larger players including Western Union.
Peer-to-Peer Lenders’ Fortunes Diverge As New Rules Take Effect (CaixinOnline), Rated: A
The number of P2P lending companies in China has fallen steadily this year, figures from data provider Wind Information show. After peaking at 2,612 in November 2015, the number stood at 2,202 as of September this year. Many firms shut down voluntarily; some closed due to management failure; while others, built on fraud, imploded.
Analysts expect the decline to continue, as more companies fail to meet tough new requirements laid down by the government on Aug. 24 in an effort to bring to heel an industry that until then was lightly regulated and had mushroomed since P2P emerged on the mainland a decade ago.
Why online peer-to-peer (P2P) lending should not be regulated (Medianama), Rated: A
Whether the lending marketplace system in India would want to emulate the Chinese diffusion model or carve out its own unique model of growth and viability is anyone’s guess. But regulation will play a big part on how this pans out in India.
Generally, one finds that in markets that are in early stages of their development, regulation is a burden for both the emerging sector and the regulator alike.
While regulators are quick to scan and spot new innovations, whether it is marketplace lending, crowdfunding, blockchain, robo advisors, virtual stock games, algorithmic trading, drones, driverless cars or anything else. They then inadvertently end up slowing down these innovative processes through poorly thought out, though well-intentioned, oversight.
The explosion of mobile banking (expected to be $100 billion in value terms by March 2017) is a proof of how private banks (and later PSU ones) got their act together and worked with start-up fintech companies to rejig their apps, sites and in-house wallets to keep up with customer expectations, rather than trying and do everything by themselves, or waiting for the regulator to dictate or goad them. My point is that the days of supply-side/industry-based regulation is now obsolete.
This emerging fintech valley is on top of the India stack (Economic Times, India Times), Rated: A
There has been a pretty profound transition in the entrepreneurial mindset here. Three to four years ago, there was a gold rush like mentality in which the easiest way to raise money was to represent yourself as an analogue of an American success story. I think we have finally made the transition where that isn’t necessary.
As a result, there is less capital flowing in. So the velocity has slowed but the quality of capital is higher. The reason is because the capital is more patient.
What do you think of the fintech opportunity in India?
I think that is the most obvious, important and near-term business opportunity. The reason is because all boundary conditions exists in fintech that are not present in other places. You don’t have to deal with physical infrastructural vagaries.
You also have an elegant abstracted set of technologies that you can use to build your product that we now know the government supports in its entirety.
New peer-to-peer regulations draw the ire of lenders (Korea JoongAng Daily), Rated: AAA
The market size of Korea’s peer-to-peer (P2P) lending industry, which directly connects borrowers with investors, has grown six-fold in just two years, but financial regulators and industry players have barely reached a consensus on how to regulate this nascent business.
The Financial Services Commission issued a guideline on Wednesday that bans individual investors from investing more than 10 million won ($8,750) a year in a P2P lender. The regulatory agency has come under fire for being too draconian and hampering the industry’s growth.
For its part, the Financial Services Commission said the move was intended to protect investors following cases of unauthorized use of funds and illicit fund-raising by market pioneers like Lending Club in the United States.
The Korea P2P Finance Association, a group that represents the country’s P2P business, immediately objected to the guideline, arguing it was too restrictive.
Fundedbyme is now a recognized p2p lending operator in Malaysia (P2P-Banking), Rated: B
Scandinavia’s equity crowdfunding platform, Fundedbyme, today received recognition as one of six operators for Peer-to-Peer crowdfunding by the Malaysian Securities Commission in the Asian region. This announcement positions Fundedbyme as the only European operator in the Asian region.