- Today’s main news: Prosper has new CEO.
- Today’s main analysis : 7 critical changes of the maturing FinTech sector.
- Today’s thought-provoking articles: UK’s FinTech sector is nervously waiting for the final Brexit outcome. Will EU regulate FinTech? Bank of Indonesia sets up a FinTech office.
- Prosper has new CEO GP:” This is a huge change for Prosper Marketplace. We have covered over the last few months the difficulties Prosper has been having ( EBITDA losses vs cash reserves). This change doesn’t surprise me at all. I think it was needed and I look forward to the changes that will be put in place. I was expecting the investors and board to take this action some time ago.”
- Bracing for seven critical changes in FinTech. AT: “McKinsey is one of the few global consulting firms with a strong interest in FinTech. Anyone interested in getting involved in this sector should listen to what they have to say.”
- StreetShares partners with JPMorgan Chase to honor veterans with $ 10K monthly awards. AT: “StreetShares is itself a veteran-owned business.” GP: ” It looks like a really small PR play, no real meat on the bones.”
- SEC should take the lead on regulating FinTech. GP: ” I expect that until the new administration is in place next year no new regulations will happen. And the tone of the admintration is to prevent and dismantle existing regulation. So I expect that no new regulations will show up for Fintechs, being SEC or OCC”
- Roofstock raises $ 20 million in Series B funding round. AT: “This is not a huge round at all, but Roofstock has a unique take on real estate crowdfunding.” GP: ” A very intruiging company and value offered. I will look into it more.”
- Robo-advisors respond to SEC rule changes.
- iCapital Network hits two-year landmark.
- 1031 Crowdfunding, LLC ranks among top 10 RECF sites. AT: “The real estate crowdfunding sector just keeps doing interesting things.”
- UK’s FinTech sector waits nervously for final Brexit outcome. AT: “Not much new here, but Newsweek’s take is a little different than what you hear from industry insider publications. It’s important to note that Brexit isn’t finalized until the British parliament takes action according to Article 50 of the Treaty on European Union.”
- FinTech revenues projected to exceed $ 10 billion by 2020. AT: “We keep hearing that the FinTech sector is still small. Compared to the banking industry, which has a head start of a few hundred years, it truly is. But growing industries have a way of sneaking up on the legacy sectors trying to hold onto power. With this kind of growth, we may soon have to stop saying it’s a small sector.”
- OFF3R relaunches alt asset app.
- Nutmeg raises 30 million BP.
- OFF3R says alternative investment picking up pace.
- Banks says Sharia-compliant P2P lenders could join the fray.
- Finstar appoints CEO of FinTech investment unit.
- EU Commission to review FinTech regulation. AT: “I suspect the EU will go the route of every other nation and regulate the FinTech sector. If that happens, and when Brexit is finalized, how will that impact competition between EU and UK for attracting FinTech companies? It will be interesting to find out.”
- Vattenfall appoints Anna Borg senior VP for business area markets.
- Housers allows investors a way to manage portfolio.
- Will P2P lending disrupt banking? AT: “This is an interview with the CEO and chairman of Lu.com.”
- Lenders are beginning to be friendlier to startups.
- United States
- Prosper Marketplace Names David Kimball Chief Executive Officer (BusinessWire), Rated: AAA
- Bracing for seven critical changes as fintech matures (McKinsey&Company), Rated: AAA
- StreetShares Foundation and JPMorgan Chase Partner to Give Veterans $ 10,000 in Monthly Business Awards (PR Newswire), Rated: AAA
- SEC Should Take Lead on Regulating Fintech, GOP Commissioner Says (Morning Consult), Rated: A
- Real Estate Marketplace Roofstock Raises $ 20m Series B (Biz Journals), Rated: A
- Robo-advisers sound off to SEC about rule changes for automated advice (Investment News), Rated: A
- iCapital Network Marks Two Year Anniversary of Platform Launch (Yahoo! Sports), Rated: B
- 1031 Crowdfunding, LLC Ranked Among Top 10 Real Estate Crowdfunding Sites (PR Newswire), Rated: B
- United Kingdom
- THE U.K.’S FINTECH SECTOR IS WAITING NERVOUSLY FOR THE BREXIT OUTCOME (Newsweek), Rated: AAA
- Fintech Platform Revenues for Lending & Financing to Exceed $ 10bn by 2020 (PR Newswire), Rated: A
- OFF3R Relaunches Alternative Asset Investment App with Majority of UK Platforms (Crowdfund Insider), Rated: A
- Lossmaking online wealth manager Nutmeg raises £30m (Financial Times), Rated: A
- Alternative investment ops gaining pace, OFF3R (IBS Intelligence), Rated: A
- Sharia-compliant P2P lenders could enter market, banker reveals (Bridging & Commercial), Rated: A
- Finstar appoints CEO to oversee new fintech investment unit (Finextra), Rated: B
- European Union
- EU Commission Puts Fintech Review on Agenda for 2017 (Fortune), Rated: AAA
- Vattenfall: Anna Borg Appointed Senior Vice President for Business Area Markets (BusinessWire), Rated: A
- Manage your own property portfolio with Housers (The Olive Press), Rated: A
- The Fintech Files: Will P2P Disrupt the Banks? (CFA Institute), Rated: A
- Fintech advances prompt lenders to become start up friendly (South China Morning Post), Rated: A
- Here’s why India’s fintech sector could boom (Business Insider), Rated: A
- BI’s new ‘fintech office’ to ensure both innovation, security (The Jakarta Post), Rated: AAA
- B2B FinTech Startup MC Payment Grabs Funding (PYMNTS), Rated: B
Prosper Marketplace Names David Kimball Chief Executive Officer (BusinessWire), Rated: AAA
Prosper Marketplace, a leading online marketplace for consumer credit, today announced that the company’s board of directors has named David Kimball Chief Executive Officer. Kimball succeeds Aaron Vermut and the appointment is effective December 1, 2016. Vermut has served as the CEO of Prosper Marketplace since March 2014 and will retain his seat on the company’s board of directors.
Bracing for seven critical changes as fintech matures (McKinsey&Company), Rated: AAA
For the past decade, fintech companies—technology firms that focus on financial products and services—have moved quickly, forcing incumbents to rethink their core business models and embrace digital innovations. But now, the fintech industry is itself maturing and entering a period of rapid change. Companies wondering how they will fit into this new era must first understand the forces that are pushing the changes.
While the industry will undoubtedly continue to expand as its customer base grows and investor appetite remains unsated, changes are imminent. Indeed, the very concept of what comprises fintech will shift. As the industry evolves, it will play a role well beyond financial products and services, individual companies will vie to become undisputed leaders by size and breadth, and ecosystems will develop that have a tight grip on customer loyalty.
This new fintech era is being shaped by changes in market conditions, new regulations, and shifts in consumer demands and behaviors.
The scope of products and services offered by fintechs is expanding rapidly. The shift brings fintechs away from a focus on frontline activities to a broad engagement throughout the value chain.
The fintech industry is also becoming more diversified, with a wide variety of business models seen across geographies, segments, and technologies.
Collaborative partnerships will become increasingly important as fintechs seek scale and traditional financial institutions seek digital expertise.
As the industry continues to mature, fintechs will likely enter a period of consolidation, with larger players turning to mergers and acquisitions to satisfy their expansion goals.
Valuations of fintechs are also normalizing as investors become more cautious and start favoring companies with proven track records.
Not surprising for a new industry, the regulatory regimes affecting fintechs are also evolving swiftly and will significantly influence how the industry develops. In many markets, regulators are playing a more proactive role in overseeing the industry, often encouraging its development, for instance by following a sandbox—or test and learn—approach that allows fintechs to experiment without impacting the entire financial system.
As digital offerings become more mature and interconnected, vast ecosystems will develop that span multiple industries. In many instances, fintechs will become submerged in these ecosystems, representing, like many others, a component of a much broader digital network.
StreetShares Foundation and JPMorgan Chase Partner to Give Veterans $ 10,000 in Monthly Business Awards (PR Newswire), Rated: AAA
StreetShares, the lending and investing community for veterans and their supporters and creators of the Veteran Business Bond, recently announced the formation of the StreetShares Foundation. The goal of the StreetShares Foundation is to inspire, educate, and support veteran small business owners. JPMorgan Chase & Co. is partnering with the StreetShares Foundation to provide up to $10,000 each month in Veteran Small Business Awards.
The StreetShares Foundation plans to give three Veteran Small Business Awardseach month to eligible veteran and military-spouse small business owners:
- First Place – $5,000
- Second Place – $3,000
- Third Place – $2,000
One unique feature of the new Veteran Small Business Award program is the focus on public participation. StreetShares Foundation encourages everyone who supports veterans and entrepreneurship to participate in voting for their favorite veteran business at StreetShares.com/Foundation. Finalists will be presented for public vote each month.
SEC Should Take Lead on Regulating Fintech, GOP Commissioner Says (Morning Consult), Rated: A
The Securities and Exchange Commission should play the leading role in regulating financial technology, said Commissioner Michael Piwowar, the lone Republican on the panel.
The statement, made at the agency’s fintech forum on Monday, could set the stage for a turf battle among agencies like the SEC, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau as they grapple with how to police the emerging industry. The OCC is weighing a national charter for fintech firms and said it will release a paper on the matter by the end of the year.
Real Estate Marketplace Roofstock Raises $ 20m Series B (Biz Journals), Rated: A
Roofstock (www.roofstock.com), the leading online marketplace and transaction platform in the $2 trillion single-family rental (SFR) sector, today announced $20 million in Series B financing led by Lightspeed Venture Partners, with substantial participation from existing investors including Khosla Ventures, Bain Capital Ventures, Nyca Partners, QED Investors and SV Angel. Roofstock has raised a total of $33.25 million in equity since the company’s formation in May of 2015.
The company has developed a proprietary marketplace for investors to find, evaluate and invest in single-family rentals online with tools and transparency never before available to either retail or institutional investors. Since its public launch in March of this year, the company has expanded to serve 10 markets, engaged thousands of registered users, grown its transaction volume by 400% from Q2 to Q3, and significantly expanded its inventory and seller network.
Robo-advisers sound off to SEC about rule changes for automated advice (Investment News), Rated: A
The SEC hosted a forum of financial technology experts Monday to discuss the impact of innovations in investment advice and other financial services. SEC staff is considering whether further guidance or even new rules are needed to protect investors.
Automated-advice providers, often called robo-advisers, register with the Securities and Exchange Commission as investment advisers and are subject to the Investment Advisers Act, which requires clients’ interests to come first when providing recommendations, among other standards.
Regulators have questions about how that happens when recommendations are generated by algorithms, and in May the SEC and the Financial Industry Regulatory Authority Inc. alerted investors to the risks associated with using a digital provider over a human.
iCapital Network Marks Two Year Anniversary of Platform Launch (Yahoo! Sports), Rated: B
iCapital Network today announced it has surpassed $2 billion in platform assets since the launch of its online alternative investment platform two years ago. The firm’s proprietary technology has helped to rapidly democratize private investments such as private equity and hedge funds by connecting individual investors and their advisors to asset managers through a streamlined and secure digital interface.
1031 Crowdfunding, LLC Ranked Among Top 10 Real Estate Crowdfunding Sites (PR Newswire), Rated: B
1031 Crowdfunding, LLC announced today that the Company moved up in the rankings for the 2016 Top 100+ Real Estate Crowdfunding Sites to #10 overall and maintained its position as #1 ranked Real Estate Crowdfunding site for 1031 Exchanges.
THE U.K.’S FINTECH SECTOR IS WAITING NERVOUSLY FOR THE BREXIT OUTCOME (Newsweek), Rated: AAA
This week, one arm of the British government’s post-Brexit outreach strategy extends to Singapore. A mission organized by the Department for International Trade, one of two new bodies set up by Theresa May to handle the U.K.’s post-Brexit future, is heading to the Asian city-state, bringing in tow nine companies from Britain’s booming FinTech (financial technology) sector, as well as Simon Kirby, a Treasury minister.
The government is pitching it as a landmark event. But this is just the first round in a long fight. Brexit could well mean an end to the free movement of people from Europe—something highly prized by talent-hungry technology businesses—and could threaten the “passporting” rights that allow British financial services businesses to ply their trade throughout the bloc. It has some work to do to keep the sector strong.
But now, like everybody else, FinTech businesses are waiting to find out what Brexit means for Britain. They do so with some trepidation: of 12 leading FinTech companies that Newsweek surveyed for this piece, all but one were concerned about the referendum vote’s impact on their business, and 10 rated the continuation of passporting rights as either vital or important for their future success.
Fintech Platform Revenues for Lending & Financing to Exceed $ 10bn by 2020 (PR Newswire), Rated: A
Juniper Research has found that Fintech platform revenues to support lending and financing are set to reach $10.5 billion globally by 2020, doubling the $5.2 billionexpected this year. The analyst house claimed that growth would be driven by a combination of factors including:
- an acceleration in P2P (peer to peer) lending;
- crowdfunding becoming a viable alternative to traditional lending mechanisms;
- the deployment of next generation analytics platforms.
The new study, Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2016-2021, argued that, in the absence of credit checking bureaus in emerging markets, applicants’ social media activity will be a deciding factor for their loan applications, with suppliers developing equivalents to credit scores so that lenders can gauge their risk exposure.
OFF3R Relaunches Alternative Asset Investment App with Majority of UK Platforms (Crowdfund Insider), Rated: A
OFF3R has relaunched its updated site that allows investors to access peer to peer lending, property / equity crowdfunding and managed investment platforms in a single application. The multi-channel platform was said to have received a “total overhaul” for both its desktop and mobile version.
OFF3R was initially focussed on the equity crowdfunding sector. The new marketplace will allow investors to sign up for free and subsequently discover 100’s of investment opportunities from some of the leading alternative investment platforms in the UK and Europe.
Lossmaking online wealth manager Nutmeg raises £30m (Financial Times), Rated: A
Nutmeg, the lossmaking online wealth manager, has raised £30m from international investors in a deal that underscores the belief that low-cost “robo-advisers” will reshape financial advice even though firms have had limited success so far.
The London-based company, which posted pre-tax lossesof £9m this year, has attracted £24m from Convoy, Hong Kong’s largest listed financial advisory firm, as well as £6m from its existing backers. Nutmeg said it was considering using the funds to expand into Asia.
The funding round is the largest in a UK fintech company since the country voted to leave the EU. It doubles the total investment in Nutmeg, which offers low-cost automated online advice and was launched in 2011.
EU Commission Puts Fintech Review on Agenda for 2017 (Fortune), Rated: AAA
The European Commission aims to propose recommendations for financial technology firms early next year, taking a first step towards assessing the risks and rewards presented by a sector that is shaking up traditional banking.
Announcing an internal task force meant to propose recommendations for the sector in the first half of next year, EU financial services commissioner Valdis Dombrovskis said technological innovation in finance was a development to be encouraged.
The Commission did not clarify whether fully-fledged regulation is on the cards, but some regulatory changes appear likely.
Vattenfall: Anna Borg Appointed Senior Vice President for Business Area Markets (BusinessWire), Rated: A
Anna Borg, currently Senior Vice President and head of Klarna’s commercial operations in the Nordics, has been appointed Senior Vice President of Vattenfall’s Business Area Markets. Anna Borg will be a member of Vattenfall’s Executive Group Management and report directly to President and CEO Magnus Hall. She will take up her new position 1 April, 2017.
During the past two years Anna Borg has headed Klarna’s, a leading European fin tech player, online buying and payment solutions business in the Nordics. Before that she spent 18 years at Vattenfall, holding numerous management positions, including heading the business development of the market and trading operations.
Manage your own property portfolio with Housers (The Olive Press), Rated: A
3. In what way is real estate crowdfunding and Housers different?
In regular real-estate investment, your money is invested in either one or a very few properties and you need large amounts to be able to participate in this market. Via Housers, everybody can participate in the real estate market for a minimum investment of just €50, and in up to as many properties as they like.
5. Why should people choose this way to invest?
It allows them to diversify their investment, thus reducing the risks. Because Housers manages the whole process, from purchase to lease to sale, the customer doesn’t have to worry about paperwork, tenants etc.
8. How do people make money?
Housers make money every month when dividends are paid, based on the rental income of each property; or, when the projected sales price is reached, they also share in the capital gains that the property has generated.
The Fintech Files: Will P2P Disrupt the Banks? (CFA Institute), Rated: A
Lu.com (陆金所) is one of the world’s largest players in the P2P market. Recently, I sat down with Gregory Gibb, CEO and chairman of Lu.com, in his office in Shanghai to discuss how the industry will evolve.
Is P2P a big enough market for financial institutions to enter?
They differ a lot by location. In the United States, the consumer market’s already been dominated by the banks. Lending Club and the like are eight or nine years into the business but still not very big.
If you go to places like India, Indonesia, or China, where . . . there’s a huge amount of consumer-borrowing need, there’s also a huge amount of retail investing need — and in the case of China, where the banks are 80%–90% non-retail because there are easier places to make money and it’s more socially rewarding to be a corporate banker than a retail banker — the market’s going to be big because the traditional players aren’t going to grab the consumer lending as fast. So the answer differs a lot in terms of scale in different countries.
Sounds like P2P can grow to be quite big in markets like China if it simply captures a slice of the pie.
The peer-to-peer market in China today is just north of USD$100 billion in loans outstanding. To say that the market will be a trillion US dollars within the next seven to 10 years is not a crazy number.
So why aren’t the banks going into P2P?
There is absolutely nothing stopping a bank from doing this. But why would a bank do P2P?
The funding cost is 1%, 2%, 3% on the deposit side and the credit card APR is 18%. Then they are making 15–16 points in gross margin. And if they went into a peer-to-peer model, they may have to give the investors 5% or 6%. So they’ve lost a couple hundred basis points of profit.
Fintech advances prompt lenders to become start up friendly (South China Morning Post), Rated: A
Finding the right partners with which to work and fostering an environment for fintech collaboration are posing challenges for lenders, as the relationship between big global banks and emerging financial technology companies shifts away from competition to more of collaboration.
Many large global banks in their current form are not easily compatible with agile and innovative financial technology start ups, due to their complex existing systems and legacy issues. Some managers responsible for working with fintech companies at financial institutions, speaking privately, bewailed their more senior colleagues’ inability to make the necessary changes to the way in which they operate.
“Most of the fintech companies are trying to sell their services to or partner with existing institutions,” said James Lloyd, fintech leader at EY. “But that does not mean that banks can forget the 5 per cent that are trying to compete with them,” he said.
It is for both this reason, and doubts about what their rivals might be doing, that banks are still concerned about fintech.
Here’s why India’s fintech sector could boom (Business Insider), Rated: A
The government made the surprise move in a bid to combat “black money,” or currency that is unaccounted for, and counterfeit currency. Consumers have until December 30 to exchange their R500 notes for new editions with enhanced security features, while limited numbers of new R2,000 ($39.70) notes have been issued. A replacement R1,000 note will be introduced in “due course,”
BI’s new ‘fintech office’ to ensure both innovation, security (The Jakarta Post), Rated: AAA
Bank Indonesia (BI) on Monday officially launched a financial technology (fintech) office to monitor the services offered by the young and thriving industry so as to ensure innovation continues and consumers simultaneously enjoy security.
BI governor Agus Martowardojo described the new office as an advisory hub for all fintech companies operating in Indonesia and as a facilitator to help the industry expand further and ensure greater financial inclusion in a country where half the population does not have access to banks.
As part of its office, BI plans to monitor the development of fintech companies through its regulatory sandbox, a sort of laboratory where ideas on innovation are shared between regulators and fintech players so they can be tested and evaluated with the central bank’s supervision before they go commercial.
B2B FinTech Startup MC Payment Grabs Funding (PYMNTS), Rated: B
Singapore-based B2B FinTech firm MC Payment announced a new funding round, as well as global expansion, late last week.
Reports Friday (Nov. 11) said MC Payment raised $3.5 million from an investment firm in Thailand, as well as participation from Aura Funds Management, tryb Capital and Perle Ventures. The funds have also allowed the company to enter the Thailand market, reports said.