- Today’s main news: Nyca Partners raises $125M for second FinTech VC fund
- Today’s main analysis: P2P lenders lead increase in personal loans. Corporate bond ratings.
- Today’s thought-provoking articles: Will the UK retain the FinTech crown?
- Nyca Partners raises $125M for second FinTech VC fund. GP:” We are curious to see in which area of FinTech they plan to invest.” AT: “I’m anxious to see where this leads next.”
- Most consumers open to robo-only retirement advice. AT: “This was a global survey. Be sure to click the link labeled ‘a new survey’ and read a more detailed breakdown of the survey results. As I’d suspect, younger persons are more open to robo-only advice of any kind and older persons are more interested in the best price on services, which often includes robo-advice.”
- Morningstar’s corporate credit research highlight. GP: “Most interesting part: The levels in the corporate bond markets are the tightest that credit spreads have registered since the fall of 2014 and are significantly tighter than their long-term averages.”
- Currency Capital funded by Lovell Minnick Partners.
- Will the UK retain the FinTech crown? AT: “This question is asked more and more, since Brexit. But I see no evidence that the UK is losing its ground. However, this interview with Gillian Roche-Saunders is a must-read for its insights in the UK FinTech sector. One interesting comment she made is that the government itself ‘has taken their foot off the Fintech pedal.”
- Crowd2Fund to offer P2P white label product. AT: “I wonder why we don’t see more of these. Perhaps we will.”
- Orca raises 280K BP in seed funding round.
- United States
- Most Consumers Open to Robo-Only Retirement Advice (Financial Advisor IQ), Rated: AAA
- Morningstar Corporate Credit Research Highlights (Morningstar), Rated: AAA
- Currency Capital grabs funding from Lovell Minnick Partners (PE Hub), Rated: A
- Nyca Partners Raises $ 125M For Second FinTech VC Fund (PYMNTS.com), Rated: B
- United Kingdom
- Will the UK Retain the Fintech Crown? (Crowdfund Insider), Rated: AAA
- Crowd2Fund to offer P2P white label product (P2P Finance News), Rated: A
- Financial technology firm Orca in £280,000 seed funding boost (The Irish News), Rated: A
- Peer-to-peer lenders lead increase in personal loans (The Sydney Morning Herald), Rated: AAA
- Middle East
- Treasury plans law on peer-to-peer lending (Haaretz), Rated: A
Will the UK Retain the Fintech Crown? (Crowdfund Insider), Rated: AAA
The change in government, and the ramifications of the Brexit decision, has clearly stressed the UK’s prominence in innovative finance. Continental Europe is attempting to take advantage of the decision to depart Europe and Asian business centers, like Singapore and Hong Kong, are seeking to claim the Fintech crown.
Crowdfund Insider: 2016 was a choppy year for some Fintech/Crowdfunding platforms.
Gillian Roche-Saunders: 2016 was a year of highs and lows, and I think it’s fair to say the lows have received more press.
One of my key takeaways from the year is how crowdfunding now feels established as an alternative source of capital.
Crowdfund Insider: What about Peer to Peer lending platforms? You predicted last year there would be more robust rules for online lenders like the handling of client money, vetting, and wind downs. Is that still going to occur?
Gillian Roche-Saunders: What I didn’t predict was that there could be such a disconnect over the definition of peer-to-peer lending activity. The Treasury drafted article 36H specifically to capture the peer-to-peer lending industry’s activities, yet we’ve spent much of the year debating with the FCA whether the industry is actually undertaking that same activity. It could sound like quite a dull and technical debate until you realise that only article 36H loan agreements can go into the Innovative Finance ISA. The knock-on effects of the FCA and Treasury not being joined up on this point are significant for consumers and platforms.
Crowdfund Insider: How is the current political environment for Fintech? Does the government embrace the strategic importance of Fintech for the UK innovation economy?
Gillian Roche-Saunders: If you’d asked me a year ago I would have said that political support was beyond dispute. We had the best ecosystem for Fintech with a regulator and government behind it 100%. I still think we’re heading in the right direction, and let’s not forget it’s been quite a year for the UK, but it does seem as if the government has taken their foot off the Fintech pedal.
Crowdfund Insider: Are you seeing additional Brexit driven concern for Fintech firms? Anyone moving to Paris or Berlin?
Gillian Roche-Saunders: There continues to be a lot of chatter about the Brexit risk, and comments that we will see our talent and companies move abroad. Anecdotally, we have seen the opposite.
As for UK companies, the impact of Brexit will vary depending on the client base. Institutionally focused players, like enterprise tech and Regtech firms, may find their client base moving overseas and need to follow. The challenges in operating in a truly cross-border way have meant that crowdfunding hasn’t been reliant on Europe and that is likely to insulate the industry now.
Crowdfund Insider: What are your predictions for 2017 regarding alternative finance? Another year of growth & innovation or consolidation?
Gillian Roche-Saunders: It’s stating the obvious but 2017 will be the year of the Innovative Finance ISA. Many firms have been laying the groundwork on that for quite some time but we’ve seen a real spike in activity since autumn.
We can certainly expect more innovation generally. As platforms continue to compete for profile and customers, new opportunities to differentiate will be taken up. It will be interesting to see if there is more cross fertilisation between the lending and investment models. We’ve advised clients to focus on one route or another initially – the FCA may treat both sectors under the broad church of crowdfunding but the models are very different – but this year may be the first time when bringing together both under one roof makes sense.
I would expect moves towards consolidation too.
Crowd2Fund to offer P2P white label product (P2P Finance News), Rated: A
CROWD2FUND is rolling out a white label solution for institutions wishing to expand into peer-to-peer lending.
The platform, which is one of only four P2P lenders to offer the Innovative Finance ISA, is already in talks with potential partners.
Institutions – such as investment firms – will be able to use Crowd2Fund’s “Powered by” feature to operate as a P2P platform under their own brand. Crowd2Fund says it has already seen “significant demand” from institutions looking to leverage their customer base, although it declined to name which ones.
Financial technology firm Orca in £280,000 seed funding boost (The Irish News), Rated: A
BELAST-based fintech company Orca Money has raised £280,000 seed capital which it will use to build on it peer-to-peer lending focused financial media site Orca Retail, launched a year ago.
The alternative finance market has continued to flourish in the UK, with the peer-to-peer lending market growing to £3.13 billion last year and featuring more than 177,000 investors.
A third product, Orca Investments, will be launched early 2018 allowing retail investors and IFAs to invest in a diversified fund, comprised of peer-to-peer investments.
Peer-to-peer lenders lead increase in personal loans (The Sydney Morning Herald), Rated: AAA
The latest Quarterly Consumer Credit Demand Index from credit agency Veda shows the number of personal loan applications for the December 2016 quarter was 12.4 per cent higher than the December 2015 quarter.
There was a significant pick-up in the growth of personal loan applications in all states and territories, led by NSW and the Northern Territory with an increase of 14.5 per cent, Queensland with 13.1 per cent and Victoria with 12.5 per cent.
Overall consumer credit applications are up 7.7 per cent, with credit card applications rising 3 per cent and mortgage applications up 6.6 per cent.
However, the Veda figures reveal wide geographic variations with mortgage applications.
They were 14.9 per cent higher in the Australian Capital Territory, 11.2 per cent higher in Tasmania, 10.6 per cent higher in Victoria and 9.6 per cent higher in NSW.
However, in Western Australia, applications were 10.6 per cent lower and 10.8 per cent lower in the Northern Territory.
Treasury plans law on peer-to-peer lending (Haaretz), Rated: A
Israel’s Finance Ministry released a draft version of a proposed law Monday that would encourage online peer-to-peer lending by creating a regulatory framework for it. The new law will also create protections for the people lending money through P2P websites, as well as for the borrowers – a move the treasury hopes will give the nascent industry more legitimacy and enable it to become a more serious competitor to the banks and credit card companies.
The Capital Markets Authority will be responsible for enforcing the proposed regulations.