- Today’s main news: Modi’s plan to turn India into a fintech powerhouse. Georgia Supreme Court rejects narrowing Payday Lending Act. New York state rules MCAs are loans.
- Today’s main analysis : India’s PM Modi’s strategy for making his country a FinTech superpower.
- Today’s thought-provoking articles: India’s decision on rupee notes. How Aussie government can spur FinTech. WeiyangX FinTech Review.
- Georgia says “No” to narrowing state Payday Lending Act. AT: “I think we’re seeing a growing trend of states taking action on payday lenders. This particular act makes it difficult for out-of-state lenders to compete with in-state lenders in Georgia.”
- New York State rules that Merchant Cash Advance is a loan under the state’s usury laws. GP :”This is very important for the merchant cash advance industry. New York continues to make ripples in MCA, after Madden vs Midland in unsecured personal lending. The attorneys here suggest ways in which MCA companies can still try to consider their product a different non-loan product. The problem with the usury law is that it caps interest to 25% and nearly all MCA products are above 25% APR”.
- Executive briefing to explore regulatory environment for FinTech innovation. AT: “More of these kinds of events need to take place as Washington and states take aim at FinTechs.”
- Future Stars 2016. A Fintech event in Atlanta,Georgia.
- The perks and limitations of digital advice. GP: “Research firm believes digital-advice growth will continue”
- VC shares expectations for start-ups on Trump presidency. AT: “Not a repeat of yesterday’s commentary. Bradley Tusk’s view is a bit more balanced.”
- Endeavor hosts FinTech tour of NYC.
- Modi’s master plan to make India a FinTech superpower. AT: “The best reading today is about India, which seems to be moving toward the cashless society and FinTech firms in that country are eating it up. Here’s how the Prime Minister has positioned the company since 2014. There’s a lot going on in Asia right now with India and Singapore taking great strides to compete with China.”
- India’s decision on rupee makes FinTech happy. GP:”The fact that Modi actually took a real , swift action by discontinuing the large banknotes in India and forcing people to go to electronic money is a token to his commitment for action on fintech. Very impressive. ” AT: “Forbes talks to FinTechs in India to get their views of Modi’s recent decision to nix certain rupee notes.”
- LendInvest introduces exit opportunity for developers. GP:” As I was writing previously, online crowd real estate companies need to find more products beyond short term property flipper loans. LendInvest added a medium expensive medium duration loan at 0.7% per month interest rate loan. Easier to sell a new product to existing customers then finding new customers for new product.”
- Zorin Finance rises above the radar. GP: ” Zorin funded 100m GBP in development loans, with money from Eaglewood and Pacific Investments.”
- LendInvest completes a series of bridging and development cases in Scotland. GP:”I am not sure why this is news worthy”.
- Does the debate on robo-advice hamper innovation? GP: ” I doubt a debate hampers innovation. If there is a real business case, a pain point ,a solution, and an ROI , people will buy them, and therefore people will make them. If the RoboAdvisors are not doing well, it’s because of other reasons and not because we are talking about them.”
- EToro uses machine learning to deliver algorithmic funds. AT: “I think we’ll see a lot more of this globally. Interest in machine learning and AI for FinTech applications is growing.”
- Business funding options increase with FinTechs competing with traditional lenders. AT: “In many ways, the growth of FinTech has been spurred by traditional banks shutting out smaller businesses from funding options.”
- Bitbond includes EUR as base currency. AT: “Yesterday, we reported on Bitbond’s acceptance by BaFin in Germany. Now, the digital currency P2P lender is moving into real world cash.”
- FinTech superstars to appear at upcoming FinTech/Insuretech congress.
Australia / New Zealand
- New Zealand to launch first FinTech umbrella.
- How ASIC can boost FinTech. AT: “This industry insider thinks Australia should copy what’s working in other countries. Isn’t that a novel concept?”
- Trade Me invests in Harmoney. GP:” Note worthy, especially given the regulatory issues Harmoney has had over the last few months.”
- Kiwis ready to embrace robo-advisors. GP: “I find that New Zealand is often on the edge of financial and fintech innovation. This may explain why.”
- Excerpts from Paul Goldsmith’s speech to SavvyKiwi Finnotech Conference.
- United States
- Georgia Supreme Court Rejects Attempts to Narrow State Payday Lending Act (JD Supra Business Advisor), Rated: AAA
- Court Rules MCA Arrangement Is a Loan Under NEW YORK’S Usury Laws, (Pepper Hamilton), Rated: AAA
- November 16 Executive Briefing To Explore Regulatory And Legal Environment For FinTech Innovation (PR Newswire), Rated: AAA
- Don’t Miss Future Stars 2016: The Premiere Networking and Career Event for Fintech in Atlanta (Kabbage), Rated: A
- Digital Advice Delivery Has Both Perks and Limitations (Plan Adviser), Rated: A
- Big VC says what start-ups can expect from a Trump presidency (CNBC), Rated: B
- Endeavor Hosts Inaugural Fintech Tour in New York City (Endeavor), Rated: B
- Here’s Modi’s master plan to make India a fintech superpower (Your Story), Rated: AAA
- India’s Decision On Rupee Notes Has Made Local Fintech Very Happy (Forbes), Rated: A
- United Kingdom
- LendInvest offers development exit opportunity (Mortgage Solutions), Rated: AAA
- MW Eaglewood-backed Zorin Finance breaks cover (altfi), Rated: AAA
- LendInvest continues Scottish offensive (Mortgage Solutions), Rated: A
- Yvonne Dunn: Robo-advice debate risks hampering innovation (Professional Adviser), Rated: A
- EToro taps machine learning to offer ‘algo-funds’ (Finextra), Rated: A
- As fintech companies compete with established lenders, options for business funding has increased (SME Web), Rated: A
- European Union
- Bitcoin P2P lender Bitbond gets BaFin license, will add EUR as base currency (SMN Weekly), Rated: AAA
- Siemiątkowski, Knox, Graubner-Mueller – the great minds coming to impact’16 fintech/insurtech (WBJ), Rated: A
- NZ’s first fintech umbrella organisation to be launched (Voxy), Rated: AAA
- How ASIC and the Australian government can kindle the fintech boom (The Australian), Rated: A
- Trade Me Invests $ 670,000 in P2P Lender Harmoney (Crowdfund Insider), Rated: A
- Many Kiwis ready to embrace ‘Money Robots’, Kiwi Wealth report says (Stuff), Rated: A
- Paul Goldsmith: Speech to SavvyKiwi Finnotech Conference (Scoop), Rated: A
- China: WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA
- China Rapid Finance Marketplace Lending Platform Hits One Million Borrowers (BusinessWire), Rated: A
Georgia Supreme Court Rejects Attempts to Narrow State Payday Lending Act (JD Supra Business Advisor), Rated: AAA
Last week, in Western Sky Financial v. State of Georgia, the Georgia Supreme Court issued a decision rejecting challenges to the state’s Payday Lending Act (the “Act“) and affirming the denial of a motion to dismiss claims alleging violations. The decision confers sweeping authority on the state’s Attorney General to regulate out‑of‑state lenders who extend small, high-interest-rate loans to Georgia residents.
Georgia’s Payday Lending Act imposes civil and criminal liability on lenders extending loans in the amounts of $3,000 or less, unless the loans are permissible under applicable state usury law or subject to certain exemptions.
Court Rules MCA Arrangement Is a Loan Under NEW YORK’S Usury Laws, (Pepper Hamilton), Rated: AAA
On October 25, 2016, the New York Supreme Court of Westchester County issued a decision in Pearl Capital Rivis Ventures, LLC v. RDN Construction, Inc. that helps clarify the circumstances under which the provision of a merchant cash advance in exchange for the assignment of future receivables may be deemed a loan subject to usury restrictions, versus a non-loan purchase and sale agreement.
In Pearl Capital, the New York Supreme Court, which is the trial-level court in that state’s court system, considered whether the merchant cash advance arrangement between plaintiff Pearl Capital and defendant RDN Construction was either a loan subject to New York’s criminal usury restrictions or a non-loan contract for the purchase and sale of future accounts receivables. Athough New York’s civil usury laws do not apply to commercial loans, such loans are subject to the state criminal usury statute (N.Y. CLS Penal § 190.40), which imposes a 25 percent maximum interest rate. Under the terms of the parties’ agreement, the court deemed the arrangement to constitute a loan.
Although the defendant’s witness testified that by purchasing future receivables RDN Construction accepted business risks besides the normal risks of repayment common to a loan, the court discounted this testimony on the basis that “[m]erely telling the Court that risk is contemplated under the terms of the Agreement is inadequate…”
The Pearl Capital case highlights the critical importance of paying close attention to the terms and conditions of any merchant capital advance agreement. In considering a judicial challenge to the parties’ agreement, a court is likely to look beyond the general nature of the relationship and probe the precise terms of the governing contract.
For a sale of receivables to be treated as a purchase and sale agreement versus a loan, the sale must be without recourse to the seller. In the case of a sale without recourse, the purchaser accepts the business risk that the seller may not perform as expected, and that the planned-for future receivables may not materialize.
A violation of certain representations and warranties in the merchant cash advance agreement may allow the purchaser of the receivables to proceed directly against the seller for breach of contract, such the seller’s opening other bank accounts, filing bankruptcy, or engaging in fraud or other misconduct.
November 16 Executive Briefing To Explore Regulatory And Legal Environment For FinTech Innovation (PR Newswire), Rated: AAA
Helping FinTechs prepare for the regulations of tomorrow is the focus of an afternoon briefing, Growing a FinTech Enterprise: Legal and Business Frameworks, which is part of the Bloomberg Next series. The event takes place at the Washington, D.C. offices of Bloomberg Government the afternoon of Wednesday, November 16 and is underwritten by Sullivan & Cromwell. For additional event and registration information, visit
Don’t Miss Future Stars 2016: The Premiere Networking and Career Event for Fintech in Atlanta (Kabbage), Rated: A
Fintech companies in Georgia generate about $72 billion in annual revenues. Only New York and California produce more income from financial technology, making Georgia third in the entire country. Atlanta and its surrounding areas have grown into one of the country’s fintech capitals. Because of this, the state can also claim global leadership in this emerging industry. This makes Atlanta the perfect location for a networking and career event called Future Stars 2016.
- When: Rising Stars 2016 will be held on Tuesday, November, 15 from 8 AM until 11 AM.
- Where: The Research Institute Conference Center at Georgia Tech will house the event.
- Host: FinTech Atlanta will host this event in order to fulfill its mission of supporting the rise of the financial technology industry in the Atlanta Metro Area.
- How to attend: You may register online for free.
- Event cost: The event is free for registered attendees and includes a continental breakfast.
Digital Advice Delivery Has Both Perks and Limitations (Plan Adviser), Rated: A
A new analysis from Cerulli Associates projects the digital advice market will exceed $83 billion by the end of the year, with no sign of slowing growth through the end of the decade.
The Cerulli research observes that growth for robo-advisers is strong now and will likely remain strong for some years to come, but at the same time, it is becoming increasingly apparent that robo-advisers “are not necessarily the fundamental disruption that the traditional financial industry has been concerned about.”
Big VC says what start-ups can expect from a Trump presidency (CNBC), Rated: B
As the dust settles on the reality of a Donald Trump presidency, Bradley Tusk, a prominent venture capital investor, said start-ups should prepare for a less intrusive regulatory regime, but warned that the new administration might also be more willing than his predecessor to protect legacy industries.
Endeavor Hosts Inaugural Fintech Tour in New York City (Endeavor), Rated: B
Endeavor hosted its first ever New York City Fintech Tour on November 8-9, connecting ten entrepreneurs from eight different countries with leading Fintech innovators in the city.
Day one began with advisory board-style sessions at Barclays, in which the bank’s senior executives and managing directors strategized with participating entrepreneurs on their growth challenges. The group then toured Bloomberg, the original Fintech innovator, and discussed the company’s historical focus on building Fintech products and services with the core B2B customer in mind with with Global Head of Platform Technologies Cory Albert.
Day two kicked off with an entrepreneur-to-entrepreneur lunch for members of the fintech community in Endeavor’s own network to share their own challenges, best practices, and solutions with each other.
Here’s Modi’s master plan to make India a fintech superpower (Your Story), Rated: AAA
In all this flurry of the government scrapping Rs 500 and Rs 1,000 notes with immediate effect, what most have failed to see is the series of moves that had been leading up to this moment.
First, there was the Pradhan Mantri Jan-Dhan Yojana launched on August 28, 2014. The move was essentially to set the foundation of creating bank accounts for the unbanked and bringing them under the gamut of financial inclusion.
Then came the much awaited Unified Payment Interface (UPI), which allowed individuals to make payments through a single identifier like Aadhaar number or virtual address. This, along with the Bharat Bill Payment System (BBPS) launched in September 2016, was an effort to institutionalise digital payments in the country.
This almost seems like the Indian economy has started the curve of becoming a credit economy like the US.
Anurag Jain, co-founder and COO of peer-to-peer online invoice discounting platform KredX believes that the elimination of black money will lead to more compliance from businesses.
Speaking to YourStory, Govind Rajan, Freecharge CEO, claimed that post the announcement, there was a 12x surge in their customer’s wallet balances overnight.According to Govind, the average transaction size on a wallet ranges from Rs 500– 700. With individuals using wallets for higher value transactions, this is expected to double in the coming year.
Amrish also believes that digital payments will explode in offline, which includes toll booths with a different check out experience. And we saw this as a part of Paytm partnering with the country’s toll booth authority to facilitate digital transactions.
India’s Decision On Rupee Notes Has Made Local Fintech Very Happy (Forbes), Rated: A
In a move that surprised many, Indian Prime Minister Narendra Modi in a speech on Tuesday evening announced that Rs 500 ($7.5) and Rs 1000 ($15) notes were abolished as of midnight. The move is aimed at reducing black money and busting the counterfeit currency racket in the country since moving unaccounted cash transactions to online will ensure monetary dealings to fall under the purview of scrutiny by the income tax department. This is expected to give a push to the PM’s Digital India vision — a move to increase cashless transaction and empower India, a largely cash-driven economy, as a digital nation. Fintech companies, not surprisingly, are rejoicing.
Paytm, the country’s top mobile wallet company, is already seeing a surge in its user base.
Capital Float, one of the most funded startups in the fintech lending space in the country, said the move will help startups target more customers.
Other fintech companies like ftcash and PayPal see this as a watershed moment for the industry.
LendInvest offers development exit opportunity (Mortgage Solutions), Rated: AAA
The product, available on loans between £250,000 and £5m, is for developers who have completed projects but not yet sold all the units.
It is priced at 0.7% interest per calendar month, allowing developers to switch to short-term, lower-cost funding. A maximum loan-to-value of 75% applies but there are no early repayment charges and borrowers may be able to retain part of the proceeds from every unit sale.
MW Eaglewood-backed Zorin Finance breaks cover (altfi), Rated: AAA
Zorin Finance, a residential development finance specialist, has broken cover after having funded more than £100m in development loans (with a gross development value of over £150m) in just 12 months. The platform is backed by funds managed by MW Eaglewood and Sir John Beckwith’s Pacific Investments, and has been flying almost entirely under the radar up until now.
Zorin, which was founded in 2011, set out to plug the financing gap for small-to-medium sized house builders that had emerged in the wake of big banks pulling back from real estate developments. The technology oriented firm claims to lend faster and more flexibly than its counterparts in the world of banking.
LendInvest continues Scottish offensive (Mortgage Solutions), Rated: A
Online mortgage lender LendInvest has completed a series of bridging and development finance cases in Scotland.
Deals already agreed include a £480,000 bridging loan to an investor buying in Edinburgh’s Quartermile area and a £200,000 bridging loan on a property in the West End of Glasgow, which is to be refurbished into a house in multiple occupation (HMO).
LendInvest entered the Scottish market in June with the recruitment of Peter McDermid as business development manager for Scotland. He joined from Shawbrook Bank and his appointment was LendInvest’s first official presence outside of London.
Yvonne Dunn: Robo-advice debate risks hampering innovation (Professional Adviser), Rated: A
Robo-advice tools have the potential to help address the UK’s ‘advice gap’, which was highlighted in the Financial Advice Market Review (FAMR) published earlier this year.
Figures in 2015 showed there was appetite in the UK market for greater regulatory clarity on the use of robo-advice solutions. From autumn 2014 up until 19 August 2015, the Financial Conduct Authority (FCA) received 39 requests from companies for assistance on how to implement robo-advice systems, technology or services, under its Project Innovate initiative.
There remains, however, an unexpressed debate about the way robo-advice tools should be treated for regulatory purposes. The debate – and the uncertainty that results – threatens to hamper innovation in the UK.
EToro taps machine learning to offer ‘algo-funds’ (Finextra), Rated: A
eToro, the world’s leading social trading network, is entering the world of thematic investing with the launch of CopyFunds.
CopyFunds will be divided into Top Trader CopyFunds™; comprising the best performing and most sustainable traders on the network and Market CopyFunds™ made up of specially-selected instruments such as stocks, commodities or ETFs allowing investors to track a wide array of sectors around a defined market strategy.
Top Trader CopyFunds™ is built using machine learning technology that selects the best performing traders on the eToro network.
As fintech companies compete with established lenders, options for business funding has increased (SME Web), Rated: A
One of the hottest topics in the banking world this year is lending solutions for SMEs. A sudden increase in alternative lenders targeting SMEs, and a surge of innovation from traditional lenders in SME propositions – such as commercial cards and working capital loans – have highlighted the extent to which SMEs have been, and continue to be, under-served since the financial crisis.
Product innovation in SME lending has also required fundamental changes in business models. The ideal SME proposition should incorporate the following key factors:
- Speed – Fast decision making and short waiting times for receipt of funding
- Simplicity – Easy to understand processes
- Flexibility – Flexibility with use of funds and repayment processes
Bitcoin P2P lender Bitbond gets BaFin license, will add EUR as base currency (SMN Weekly), Rated: AAA
In a more recent interview for the site Crowdfund Insider, Albrecht said that after obtaining the BaFin license – a process that took three years – Bitbond will introduce the Euro as a base currency and will turn its attention to creating a secondary market for investors to buy and sell notes on the platform.
Furthermore, Albrecht added, Bitbond is planning to bring larger institutional investors onto the platform in 2017 in order to scale more efficiently.
Siemiątkowski, Knox, Graubner-Mueller – the great minds coming to impact’16 fintech/insurtech (WBJ), Rated: A
Sebastian Siemiątkowski, founder of Klarna, Ricky Knox, CEO of Tandem Bank and Alexander Graubner-Mueller from Kreditech will come to Wroclaw to attend impact’16 fintech/insurtech – a congress devoted to the technological trends in financial sector.
Another guest coming to impact’16 fintech/insurtech is Ricky Knox, founder of Tandem Bank, a financial institution available only through mobile application. Tandem Bank was built thanks to a crowdfunding campaign.
Alexander Graubner-Mueller, CEO of Kreditech will be also present in Wroclaw. Kreditech by using non-traditional data sources and machine learning provides access to better credit and higher convenience for digital banking services. As a result Kreditech can provide us with the information about borrower within less than a minute.
Congress that will take place from 7-8th of December in Wrocław will be focused on the most important problems from fintech and insurtech areas. Among topics covered, we will find such as finacial education, new regulations, blockchain, cryptocurriencies, cybersecurity, information management and new payment methods.
NZ’s first fintech umbrella organisation to be launched (Voxy), Rated: AAA
Augen Software Group director and NZTech chair Mitchell Pham made the announcement to set up FinTechNZ at the inaugural Finnotec 2016 conference in Auckland today. The event was organised by fintech company SavvyKiwi, whose founder is passionate about providing a place for the NZ fintech community to learn and grow together each year.
“We have seen the power of collectives in other sectors and countries, and so are 100 percent behind the bringing together of the NZ fintech community.
FinTechNZ will give New Zealand participants a better chance to collaborate, engage and grow, both domestically and internationally.”
Pham says FinTechNZ can leverage on NZTech as a platform to get up and going quickly and efficiently.
How ASIC and the Australian government can kindle the fintech boom (The Australian), Rated: A
Australia is beginning to enjoy the benefits of a fintech boom, but for this emerging industry to grow properly it needs infrastructure support. Without it, we’re at risk of seeing Aussie fintechs left behind as overseas players dominate the Australian and Asian landscape.
There have been some welcome initiatives recently, like ASIC introducing a regulatory sandbox for start-ups to trial new ideas. But compared to other governments around the world, Australia doesn’t have the political support to turn this industry into a powerhouse.
There are four main ways we can support Australian fintech now, in the medium term, and into the future:
- Copy the initiatives that are working overseas
- Require banks to refer to alternative lenders
- Encourage fintech investors by enforcing minimum standard on the quality of advice
- Standardise presentation of interest rates to SME borrowers
Trade Me Invests $ 670,000 in P2P Lender Harmoney (Crowdfund Insider), Rated: A
Trade Me (ASX:TME) has purchased $670,000 woth of shares in New Zealand based P2P lender Harmoney. The investment was said to be designed to hold its stake at 14.4%.
According to a report in NBR, Trade Me purchased 1.3 million Series B shares at $0.51 each.
Many Kiwis ready to embrace ‘Money Robots’, Kiwi Wealth report says (Stuff), Rated: A
Kiwis are open to the idea of a robo-adviser helping them manage their finances, but still want real people available to help them with some decisions, research by KiwiSaver provider Kiwi Wealth shows.
The Rise of the Money Robots: Kiwis’ attitudes to roboadvice report has been released to coincide with New Zealand’s first ever “fintech” conference being held today in Auckland.
Few people seek financial advice, and roboadvisors could play a role in providing it easily and cheaply, once New Zealand laws have been changed to legalise roboadvice. Currently financial advice can only be given by a person, not a well-programmed machine.
Paul Goldsmith: Speech to SavvyKiwi Finnotech Conference (Scoop), Rated: A
One of the great things about a country with the size and innovative culture of New Zealand is that when technology shakes up a sector we can get the key people together in one room to share intelligence, identify opportunities and build relationships.
I’m almost certain there will be at least one fintech business of the future that will begin its life as a discussion at the morning tea break of this conference.
I’d like to start by acknowledging the impressive performance of our fintech sector.
Xero has shown now just New Zealand but the world just how far you can go, but it is by no means the only exciting kiwi fintech business.
From our smart-payments start-ups, to our crowdfunders, to our peer-to-peer lending platforms, to some of the work our big banks are doing, we already have a varied fintech ecosystem.
We provide a good test-bed for fintech products, as our population is digitally literate with an appetite for new technology.
We also have a proven history of nimbleness when it comes to regulation and licensing that enables innovation.
This is what allowed us to be ahead of the curve with innovations such as equity crowd-funding and peer-to-peer lending.
I know many of you attended the launch of the new Kiwibank Fintech Accelerator last week. I hear it was a great, and well attended event.
This accelerator is one of three new accelerators supported with money the Government allocated in this year’s budget.
It will be run through Wellington’s Creative HQ and will help ten fintech teams develop their products and pitch to investors.
The teams will work directly with Kiwibank, Xero and other financial industry partners.
China: WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA
It has been reported that Bank of China and HSBC will launch a blockchain-based housing mortgage service in Hong Kong.
On November 3rd, the China Insurance Regulatory Commission (CIRC) announced it would strengthen regulations towards online mutual insurance platforms.
Last week, R3 announced the addition of China Foreign Exchange Trade System(CFETS) to its innovative blockchain consortium, the third member from China after Ping An Bank and China Merchants Bank.
It has been reported that the PBOC is planning to set strict control on Bitcoin-FX exchange in order to prevent excessive capital outflow. However, none of the major bitcoin trading platforms in China have confirmed reciving such regulations.
According to the Interim Provisions issued in August, in order to protect the investors from illegal fund-raising, P2P platforms in China should isolate with the capital of lenders and borrowers, and pool the money in a third-party escrow account in banking financial institutions. On October 13th, the General Office of State Council also urged the establishment of a third-party deposit system in a regulation document about the risk of internet finance.
China Rapid Finance Marketplace Lending Platform Hits One Million Borrowers (BusinessWire), Rated: A
China Rapid Finance Limited (“CRF”), China’s largest consumer lending marketplace in terms of number of loans facilitated, today announced the cumulative number of borrowers on its platform had exceeded one million as of October 31,2016.
The platform had facilitated 8.8 million loans in total as of the same date, the Company reported.
The EMMA population –who have no credit histories and can’t borrow money from traditional financial organizations– is estimated at around 500 million people in China. This represents the world’s largest untapped consumer credit market. This typically young, urban, educated and internet-savvy group is expected to become the consumer mainstream in China in coming years.