- Today’s main news: U.S. justice dept. seeks to restructure CFPB. LC increases borrower rates on riskiest loans. Goldman building robo-advisor. Funding Circle closes funding round, valued at $1B.
- Today’s main analysis: Southeast Asia Fintech deals hit new record.
- Today’s thought-provoking articles: Happy 1st birthday, Zopa Plus. First Lithuanian P2P lender. WeiyengX Fintech Review.
- U.S. justice department seeks to restructure CFPB. AT: “I saw this one coming, but who didn’t? This is one of those cases where it seems like the right thing to do legally, but not quite so politically. Being structured the way it is takes politics out of the mix as the CFPB is not subject to presidential whim as other executive branches are. On the other hand, the Trump Administration has a good argument that there is no Constitutional provision for independent overseers. It will be interesting to see how the courts decide. Either way, there will continue to be a fight over regulatory oversight of the industry–whether it’s necessary and who has the authority.”
- Lending Club increases borrower rates on riskiest loans. AT: “More evidence that the industry is changing. This isn’t really revolutionary as other platforms have gone this route. It’s evident, however, that the problem of defaults has to be addressed. On the other hand, doesn’t this move make online lenders more like traditional lenders?”
- Goldman building a robo-advisor to give investment advice to the masses. AT: “Why not? When other banks and online platforms are moving toward a hybrid model, leave it to Goldman to be different. I like this.”
- Citi FinTech CEO says they’re not too big to change. AT: “I like the optimism, and frankly, if banks are to survive the 21st century, they’ll have to be more agile.”
- Former Morgan Stanley COO joins OnDeck board.
- Lend Academy podcast with Congressman Patrick McHenry.
- Fintech banks and the rise in authentication.
- Funding Circle closes funding round, valued at $1B. AT: “We have us another unicorn.”
- Happy Birthday, Zopa Plus.
- FCA gives invstors in HNW Lending tax-free status.
- National IFA moves 253M GBP to DFM.
- Lack of education hampering efforts to deliver more homes.
- Southeast Asia Fintech deals hit new record. AT: “Singapore is flying high and will soon be a force to reckon with.”
- Bank Negara to seek fintech ideas from the public.
- United States
- Justice Department Fires Salvo at Consumer Watchdog (WSJ), Rated: AAA
- Lending Club increases borrowing rates on riskiest loans (P2P Finance News), Rated: AAA
- Goldman building robo-adviser to give investment advice to the masses (Reuters), Rated: AAA
- Citi FinTech CEO Yolande Piazza: We’re not too big to change (Tearsheet), Rated: A
- Former Morgan Stanley COO Jim Rosenthal Joining OnDeck Board of Directors (PR Newswire), Rated: A
- Podcast 94: Congressman Patrick McHenry (R-NC) (Lend Academy), Rated: A
- Fintech banks and a rise in consumer authentication: Wepay’s Week in Payments (Wepay), Rated: B
- United Kingdom
- Funding Circle close further funding round, valued at $1 billion (the investment observer), Rated: AAA
- Happy 1st birthday Plus! (Zopa), Rated: AAA
- Classic cars, booze and planes: FCA gives investors in HNW Lending tax-free status (City A.M.), Rated: A
- National IFA moves £253m to DFM after suitability review (Citywire), Rated: A
- Lack of education hampering efforts to deliver more homes (Development Finance Today), Rated: A
- European Union
- First P2P Business Lender launches in Lithuania on Madiston’s Peer to Peer Lending software platform (PRWeb), Rated: AAA
- Fintech And France’s Post-Brexit Allure (Forbes), Rated: A
- New deal brings more technology to financial planners (Money Management), Rated: A
- WeiyengX Fintech Review (Crowdfund Insider), Rated: AAA
- Southeast Asia Fintech Deals Hit A New Record (CB Insights), Rated: AAA
- Bank Negara to seek fintech ideas from the public (The Star), Rated: A
- CiTi, FinTech Circle to launch ‘FinTech Academy Africa’ in SA (Ventureburn), Rated: A
Justice Department Fires Salvo at Consumer Watchdog (WSJ), Rated: AAA
The Trump administration took aim at a consumer finance regulator created after the 2008 financial crisis, backing a legal effort to have the structure of the Obama-era agency declared unconstitutional.
The Justice Department, now under Trump administration leadership, filed court papers on Friday opposing the Consumer Financial Protection Bureau, an independent regulator, asking a federal appeals court to order the restructuring of the agency.
The CFPB is fighting to keep its current setup, which gives its director protection from political interference from the White House. The administration in February said that President Donald Trump believes the bureau as currently organized is unaccountable to the public.
The Justice Department said the CFPB’s structure creates separation-of-powers problems under the Constitution because the bureau director isn’t sufficiently answerable to the president.
Lending Club increases borrowing rates on riskiest loans (P2P Finance News), Rated: AAA
LENDING Club has made its largest borrowing rate increases on its riskiest loans, with further hikes expected in line with the US Federal Reserve.
The US peer-to-peer lender – the world’s largest with over £20bn of funds channelled to date – has increased the cost of borrowing most significantly for loans in the E, F and G grades, following interest rate hikes by the central bank.
Rival platform Prosper has increased borrowing rates at a “mild” pace in comparison and more evenly across risk grades, according US alternative lending research firm PeerIQ’s latest quarterly performance monitor.
Goldman building robo-adviser to give investment advice to the masses (Reuters), Rated: AAA
Goldman Sachs Group Inc (GS.N), known for advising the world’s richest and most powerful, is building a so-called robo-adviser geared to mass affluent customers, according to a job listing posted Monday on the bank’s website.
The robo platform would sit within the bank’s rapidly growing investment management division, according to the ad. The unit, which Goldman has been trying to build out in recent years to diversify its revenue, posted a record $1.38 trillion in assets under supervision at the end of 2016.
Goldman has for years grappled with how to tap into the mass affluent segment, broadly defined as those with less than $1 million in investable assets, without diluting the brand of its private wealth business which is considered a jewel within the bank, according to people familiar with the matter. Goldman’s U.S. private wealth business typically advises clients with an account size of around $50 million.
Citi FinTech CEO Yolande Piazza: We’re not too big to change (Tearsheet), Rated: A
You’ve been at Citi almost 30 years and now you’re leading Citi FinTech. How has “fintech” evolved?
There’s a common misconception that large banking organizations aren’t able to operate like a startup, that they don’t have that mentality, that they’re too big too change. The word fintech without a doubt applies to startups in the space but a lot of that is how you pull in these startup-type organizations with the big banks to create a set of financial services that are orientated to the customer.
What has that blend of different talent and experience done for your work culture?
We’ve spent a lot of time creating a nontraditional banking culture. We operate in a very agile manner with the product, development, design teams so they work together and are completely integrated. They do their work through stand-up meetings on a daily basis, we don’t have offices – I do not have an office, I sit on the floor. We celebrate failure – if someone makes a mistake they actually win prizes for sharing that, all they have to do is demonstrate they learned something from it – to really create an environment of creativity and ambition for the product and how we serve our product.
The Developer Hub also sort of brings those different talents together.
[The Developer Hub] actually covers 85 percent of the core services a customer performs. We wanted to expose many of our APIs to a much larger community, to be exposed to the services they’re working on and give them the opportunity to come to Citi to uncover and unveil where those hidden gems are, those additional opportunities.
Former Morgan Stanley COO Jim Rosenthal Joining OnDeck Board of Directors (PR Newswire), Rated: A
OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today that it will be adding Jim Rosenthal, the former chief operating officer of Morgan Stanley, to its board of directors, effective April 3, 2017.
During his tenure at Morgan Stanley, Rosenthal served in a variety of roles, including as COO of the company from 2011 to 2016 and as chairman and chief executive officer of Morgan Stanley’s approximately $130 billion national bank. In his role as COO, Mr. Rosenthal was responsible for overseeing firm-wide technology and operations, Morgan Stanley’s wealth management digital business, corporate strategy, re-engineering and expense management, technology company relations, and cybersecurity. He remains a senior advisor to Morgan Stanley.
Rosenthal has more than two decades of experience across a wide spectrum of financial services. He joined Morgan Stanley in March 2008 from the global real estate company, Tishman Speyer, where he served as chief financial officer. Prior to that, he worked at Lehman Brothers, serving as head of corporate strategy and execution and as a member of the firm’s management committee. Rosenthal began his career with McKinsey & Company, where he was a senior partner, specializing in financial institutions.
Podcast 94: Congressman Patrick McHenry (R-NC) (Lend Academy), Rated: A
In this podcast you will learn:
- Why Congressman McHenry decided to enter politics.
- The responsibilities of the House Financial Services Committee.
- Why he is focused on fintech as part of his work in Congress.
- Why entrepreneurship has been declining in small towns.
- How fintech can help reverse this trend.
- The legislation he is working on today to promote fintech innovation.
- Details of his proposed Financial Services Innovation Act and why it is important.
- Why fintech innovation has a decidedly British accent today.
- Why regulators need to be pushed to adapt and change.
- His thoughts on the OCC Fintech Charter and why he feels legislation will also be needed.
- Where Congressman McHenry stands on the use of alternative data in lending.
- What he thinks will be able to actually get done in the next four years regarding financial innovation.
Two developments, one in the US and one in the UK, signaled a potential shift in the banking world and Fintech.
Chris Skinner wrote about a new national bank charter in the US issued by the Office of the Comptroller of the Currency which opens the way for all kinds of organizations to try to set up banks, including big consumer brands like Walmart and Apple. Essentially they have just shown the way for these kinds of organizations (as well as payments companies like Square, WePay or Stripe) to apply for a banking license.
Meanwhile in the UK, Forbes writes about the launch of ClearBank, the first new clearing bank in the UK in over 250 years.
PYMNTS.com also has a research report out about how mobile technology may be able to help financial institutions with their AML (anti-money laundering) solutions.
Funding Circle close further funding round, valued at billion (the investment observer), Rated: AAA
Investor interest in the peer-to-peer lending industry shows no sign of slowing; British site Funding Circle have just closed another round of funding, taking their total raise to $300 million.
Funding Circle recently closed another round of venture capital funding to the tune of $150 million, valuing the company at $1 billion. The new round was led by DST Global, BlackRock, and Temasek, a fund backed by the Singaporean government.
Happy 1st birthday Plus! (Zopa), Rated: AAA
A year to the month after we launched Plus, our higher return and higher risk investment offering, investors have lent out more than £100 million. That’s nearly 9,000 people investing on average £12,000.
Plus is performing in line with expectations. Individual investors will have different individual experiences, however, 73% of investors invested for an average of at least 6 months, with no loan sales, have achieved actual returns of at least 6% to date.
Classic cars, booze and planes: FCA gives investors in HNW Lending tax-free status (City A.M.), Rated: A
A peer-to-peer lender offering a high-net-worth pawnbroking service has been given the green light by regulators to market a specialist type of Isa to investors.
National IFA moves £253m to DFM after suitability review (Citywire), Rated: A
AIM-listed IFA Frenkel Topping has completed a suitability review which has seen £253 million of client assets transferred to its own in-house discretionary fund management (DFM) offering.
In May last year the national advice firm received discretionary permission from the Financial Conduct Authority (FCA), meaning it could transfer clients to its new investment company which acts as a DFM.
This review has seen £253 million of clients assets transferred to its in-house offering. The firm had £745 million of assets under advice at the end of 2016.
Lack of education hampering efforts to deliver more homes (Development Finance Today), Rated: A
It’s no secret that we aren’t building enough homes in this country.
There are a host of reasons for this, from an over reliance on large builders to a paucity of funding. The second-class status of property SMEs – compared to SMEs in other industries – is also a huge rod for housebuilders’ backs, and it’s an issue LendInvest has been keen to highlight.
But there is also a fundamental issue – often overlooked – which is serving to hamper efforts to deliver more homes. To quote Tony Blair: education, education, education.
That’s why last year LendInvest launched the Developer Academy, a two-day course for those with some property experience allowing them to hear from – and build contacts with – experts across everything from planning permission to marketing the finished properties. We have now held two separate academies in London, with further sessions planned this year: four in London and four across the regions. So far 50 prospective developers have benefitted from these courses.
First P2P Business Lender launches in Lithuania on Madiston’s Peer to Peer Lending software platform (PRWeb), Rated: AAA
With limited access to funding, small businesses in Lithuania have struggled to expand, limiting the growth of the economy. Recognising this, the Lithuanian government recently established the legislation needed to allow Peer to Peer Lenders to provide business finance loans and FinBee played an active role in its development.
Laimonas Noreika, CEO of FinBee, explained: “We were delighted to be the first P2P platform to receive our licence to help small businesses borrow to finance their growth. Our technology helped us to achieve this. When we first launched consumer lending, we chose Madiston’s software because it was ready to go with what we needed but also gave us the ability to add functionality as we grow. The first step in our expansion plan was to add business lending and the technology was there for us, Madiston has been a supportive partner throughout.”
Fintech And France’s Post-Brexit Allure (Forbes), Rated: A
It was announced today that Article 50 will be triggered on March 29th. I recently wrote about Berlin’s potential to become fintech capital of the world after Brexit, but with French officials in London scouting finance and technology companies, Paris could become the hotspot for startups.
Without passporting rights, many businesses may have to set up subsidiaries in other European countries, which is why last month, French senior lobbyists and politicians started to woo companies in the same way Nasrou is, according to Business Insider.
At the start of this year, French digital minister Axelle Lemaire did the same and in a recent interview with Business Insider, she highlighted how although British startup investment fell, investment in French technology has soared by 71% from January to September in 2016. “In the third quarter of 2016 alone, funding obtained by French startups reached €857 million ($921 million), double the amount invested in Germany and almost equaling the €919 million ($988 million) invested in the UK,” Lemaire said.
French fintech Lemon Way is going after Stripe in the e-commerce payments arena with the launch of the payments service across France, Germany, Spain, Italy and the Benelux region.
Real time electronic payments provider ACI Worldwide also announced at the end of last month that French company PSP would be targeting the SME market with the ACI PAY.ON Payments Gateway, with the goal of expanding internationally.
It is important to note how interesting all of this action is being taken so close to the time Brexit was in the process of being triggered.
New deal brings more technology to financial planners (Money Management), Rated: A
Financial compliance education and training programmes provider, Mentor Education has entered into an alliance with Suitebox in order to help financial planners become more ‘tech savvy’.
Stage 3 would provide an education portal available to students, the financial planning community and educators to promote and engage the development of new initiatives in financial services education.
WeiyengX Fintech Review (Crowdfund Insider), Rated: AAA
The highlights of the press conference included:
- The central bank highly encourages and supports the development of Fintech. At the press conference, Governor Zhou Xiaochuan stressed that China has made great achievements on financial technology, and the central bank was actively working on digital currency and new technologies such as blockchain, which would promote the development of the whole finance market.
In particular, he emphasized that the development of technology would boost the payment industry by providing more payment channels.
UnionPay Launches Blockchain-Based Credit Integration and Sharing System
On March 8, China UnionPay Data Services and Gingkoo jointly launched a blockchain based credit integration and sharing system.
The system uses blockchain technology to improve inter-bank credit card points management, and it enables clients to redeem points across banks.
The system is built on Gingkoo’s Xingchain, which replaces the original credit card points management system.
CBRC to Regulate Micro-Credit Companies
China Banking Regulatory Commission (CBRC) is formulating new regulations to strengthen the supervision towards micro-credit companies.
NEXTDATA raises $10 million in Series A Funding from multiple investors
Big data company NEXTDATA has raised $10 million in Series A funding from Shunwei Capital, Crystal Stream Capital, Baidu Ventures. Previous investor 360.com also invested in this round.
The founder of NEXTDATA Tang Huijun said the fund would be used for product development, technological innovation, market development and talent introduction.
Auto Fintech Platform Daikuan Raises 20 Billion Yuan from Zhongtai Securities
On March 8, Auto Fintech platform Daikuan.com and Zhongtai Securities reached a strategic partnership. The two sides signed a strategic framework agreement involving 20 billion yuan, and they would jointly develop a batch of financing projects as asset securitization, bond issues, and structural financing.
Southeast Asia Fintech Deals Hit A New Record (CB Insights), Rated: AAA
In 2016, 831 investments went to VC-backed fintech startups, only slightly down from 2015′s record of 848 investments. And while overall investment pace slowed last year, Southeast Asia saw the greatest number of fintech deals to the region to-date.
Deals to venture-backed fintech companies in Southeast Asia — specifically Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — rose 29% last year, from 55 in 2015 to 71 in 2016. Meanwhile, dollars fell 12%, from $177M in 2015 to $158M in 2016 as deal growth was largely driven by seed/angel stage investments.
In terms of funding dollars, 2016 averaged about $40M per quarter, down from $44M in 2015. The largest deal of 2016 went to Vietnam-based mobile payments platform MoMo, in a $28M Series B that included Goldman Sachs and Standard Chartered as investors. Other deals included a $17.5M investment to Thailand-based payments enabler Omise, a $2M investment to Singapore payments provide Coda Payments, and a $3M investment to Malaysia-based financial comparison startup Jirnexu.
Looking at deal share by country, over half of all Southeast Asian fintech deals went to Singapore-based companies, which is not especially surprising given the city-state’s position as a global financial hub.
Funding Societies, a P2P lending platform for small and medium enterprises, received one of the country’s larger 2016 rounds: a Q3’16 $7.5M Series A that included Sequoia Capital India and Alpha JWC Ventures as investors.
After Singapore, the Philippines took the next greatest share of deals at 14%.
Bank Negara to seek fintech ideas from the public (The Star), Rated: A
Bank Negara Malaysia plans to engage the public to get their ideas or wish list on what aspects of the financial services that can be improved using technology.
The bank’s Financial Technology Enabler Group (FTEG) chairman Aznan Abdul Aziz said it was initiating a call for participation known as “Fintech Hacks”.
Last year, Bank Negara issued the Financial Technology Regulatory Sandbox Framework for financial institutions and fintech players to experiment with new solutions in a live, contained environment within specified parameters and timeframes. The framework came into effect on Oct 18, 2016.
CiTi, FinTech Circle to launch ‘FinTech Academy Africa’ in SA (Ventureburn), Rated: A
The academy is geared toward CEOs and the like who have a limited amount of time on their hands, but who still would like a deeper understanding of best practices in fintech.