News Comments Today’s main news: LendingHome surpasses $100M in monthly loan volume, secures $57M in Series C-2. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2017-3. RateSetter says FCA authorization merely a milestone. Qudian raises $900M in biggest listing by Chinese fintech firm. BBVA focuses on U.S.-Mexico remittances with money-transfer app. New Zealand paves path for robos. SoftBank considering second […]
Goldman puts Lending Club, Prosper on its radar. AT: “Goldman Sachs is the legacy player to watch. With their financial might, they will likely be the digital banking force to beat in a few short years. If the Big 4 tech companies go fintech, Goldman could make the fifth giant in a land of global digital tidal forces. This is a must-read analysis from CB Insights.”
Less than a week after announcing its new office in Pittsburgh, real estate marketplace lending platform LendingHome announced it has surpassed $100 million in monthly loan volume and secured $57 million during its Series C-2 funding round, which included participation from Sberbank and Noah Holdings Limited.
The online lender also revealed the closing of the LendingHome Opportunity Fund II, which was managed by LH Capital Management, with $100 million in commitments from more than 40 investors including asset managers, international funds, family offices, and high net worth individuals. An additional credit facility of up to $300 million brings the fund’s total potential assets to $400 million.
Georgia companies scored the most venture dollars in the third quarter, since first quarter 2000. Fintech Kabbage and access management technology firm Core Security raised a combined $450 million, or about 60 percent of total venture capital invested in Atlanta companies in the third quarter.
As its bond trading revenue plummets, Goldman has undergone a major strategic shift, looking to grow the revenue opportunity from its consumer digital finance operation.
Goldman Sachs has changed a lot through its 148-year history. But as technology continues to roll through the financial services industry, Goldman is one of the few bulge bracket banks today that is staking its reputation and future on new strategic bets in digital finance.
When Goldman announced it would be entering the online lending business in 2015, Lending Club‘s then-COO Scott Sanborn quipped, “We are looking forward to competing with Goldman Sachs on customer experience.” More recently, when Goldman bought $2.8B worth of bonds held by Venezuela’s struggling central bank at a 70% discount to market price, Ribbit Capital founder Micky Malka tweeted, “This is why @GoldmanSachs won’t become a consumer first brand.”
46% of Goldman Sachs job postings are in technology.
Goldman Sachs’ online lending arm Marcus lent $1 billion in the first 8 months of operation. Now it is taking its digital finance brands global.
Goldman Sachs is one of the top two most active US bulge bracket banks investing in fintech startups.
Goldman has pushed investments into Brazil.
Goldman made its first fintech acquisition in 2016 and is looking for more.
Goldman’s cryptocurrency patent made headlines, but most of its patents have focused on improving its systems.
BACKGROUND ON CORE GOLDMAN SACHS
Goldman Sachs makes money in five primary areas: investment banking, equities, investment management, investing & lending, and FICC client execution.
Digital finance initiatives
Notably, Goldman seems to believe that its digital consumer lending and deposit platform has as large of a net revenue growth opportunity as its FICC trading unit. This is a remarkable shift in strategy that only materialized in the last three years, and the strategy is still in the extremely early innings of its growth potential for Goldman.
Another advantage Marcus has over other bank incumbents looking to launch a competing initiative is its non-legacy IT architecture and the fact that Goldman does not have an existing consumer credit card business for Marcus to cannibalize.
Marcus reportedly passed $1B in loan origination in its first 8 months and is expected to originate $2B by the end of 2017. While data on number of loans doled out is hard to find, Goldman reached its first billion in consumer loans significantly faster than competing online personal loan companies (Lending Club launched in 2007). At the CB Insights Future of Fintech conference, Talwar noted that Marcus’s average loan size was “around $14,000.”
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-3 (“PMIT 2017-3”). This is a $501.05 million consumer loan ABS transaction.
This transaction represents the eighth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).
Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2017-3
eOriginal, Inc. and Quicken Loans today announced a partnership to complete the final steps of the online mortgage process – to digitally create an electronic note, and securely store it as an authoritative copy with delivery to both custodians and the secondary market. This advancement accelerates the time between origination and replenishment of capital.
Quicken Loans, the country’s largest online mortgage lender, closed more than $7 billion in mortgage volume through Rocket Mortgage, the nation’s first fully online mortgage process, in 2016 – its first full year in market. The rapid growth of Rocket Mortgage comes from its appeal to a new generation of homebuyers. In fact, two-thirds of Rocket Mortgage clients used the online process to finance a home purchase, and 80 percent of those consumers were first-time home buyers.
eOriginal’s platform delivers a fully digital mortgage and supports every type of digital closing strategy.
Modo, the payments fintech working with Bank of America Merrill Lynch, Alliance Data, FIS, Verifone, and Klarna, today announced they’re ready to break their self-imposed silence and discuss the work they have been doing to deliver innovative payment solutions for their clients in Q4 2017.
Modo has already announced support for three payment event types, in diverse areas of payments with Klarna, Verifone and FIS, and Bank of America Merrill Lynch (respectively):
Payout Events: Enable your corporate and commercial customers to send money globally using the ever growing number of digital wallets to accelerate the last mile of disbursements.
Checkout Events: Checkout anywhere, using any method of payment. Whether you are a merchant or a payment provider, offer consumers any way to pay.
Loyalty Events: Earn and burn loyalty in entirely new ways in entirely new experiences. Combine multiple rewards and loyalty programs to make a purchase or send a gift.
J.P. Morgan Chase & Co. (JPM) said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup.
The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.
The two companies didn’t disclose terms of the deal. But a person familiar with the matter said the price was above the roughly $220 million valuation that Redwood City, Calif.-based WePay achieved in a 2015 fundraising.
Bank of America processed $4 billion in Zelle transactions in the third quarter of 2017 alone, CEO Brian Moynihan reported on the bank’s earnings call Friday morning. Digital payments volume increased nine percent to $324 million. Within that, person-to-person payments growth was about 67 percent with the addition of Zelle this summer, reporting 13.6 million transactions and $4 billion in volume. The bank recently processed half a billion dollars in a single week, Moynihan said.
The bank’s digital users grew 5.2 percent to 34.5 million on a year-over-year basis. Mobile banking users grew 10.8 percent to 23.6 million.
Over at Wells Fargo, CEO Tim Sloan said during that earning call that third-quarter peer-to-peer payments increased 46 percent, but didn’t provide a Zelle-specific number.
At many times in history there have been finance companies that made loans that banks chose not to make. Such finance companies have thrived in good economic times and tended to fail in major recessions. I predict the same will be true of the newer editions.
But second, let us ask why are the banks not making these loans? The answer is simple. The combination of the costs of marketing and administration and the credit risk is too great to make money on a consistent basis. Therefore the banks are funding a large part of the loans by lending to the lenders and taking a senior position, cushioned by the equity of other investors and shielded from the marketing and loan acquisition costs (as well, perhaps, as some of the consumer regulatory risks). Smart banking, it seems to me. The banks have a lower cost of funds than the new lenders, so they can make money at a lower effective interest rate on the money they lend, so long as it is safer.
I have been shocked at the levels of expenses being incurred by some of the new lenders.
Not finding a mortgage lender you like? Try borrowing from a friend – or several of them – instead. According to reports, a new platform called Celsius could make P2P mortgage lending a viable option.
Using blockchain technology, Celsius is in the process of building a peer-to-peer lending network specifically aimed at the Millennial market. According to Alex Mashinsky, founder of the company, the platform will allow younger buyers to secure funding using their social circle, rather than big banks and financial institutions.
So how will it work? To start, each user creates a digital profile. They’ll need to upload FICO scores, online transaction histories and other non-traditional financial data. Then, Celsius will assign each profile a credit score that’s unique to the site.
To protect lenders, Celsius will offer insurance that covers a percentage of the principal loan amount in case of default.
Digital Asset Holdings LLC has raised $40 million in a Series B round, bringing the enterprise blockchain startup’s total funding so far to $110 million.
AlphaPoint Utilizes Intel Security Technology to Deliver Enterprise-Ready Blockchain Platform (AlphaPoint Email), Rated: A
Today, AlphaPoint announces the AlphaPoint Asset Digitization solution making illiquid assets liquid by facilitating the digitization of assets and launching new markets. AlphaPoint also announces the release of the AlphaPoint TrustedVM, a trusted virtual machine enabled by Intel Software Guard Extensions (Intel SGX) technology which allows smart contracts and blockchain services to run securely.
The latest release of the AlphaPoint Asset Digitization solution with AlphaPoint TrustedVM adds additional enterprise-class capabilities by securing access to information from intermediaries and network participants, thereby enhancing privacy and security to the AlphaPoint Distributed Ledger Platform. AlphaPoint has been working with some of the largest Fortune 100 financial institutions since 2013 to launch markets on blockchain technologies.
Enterprise-ready Blockchain Platform
In collaboration with Intel, the AlphaPoint Asset Digitization solution as designed at its core to help enterprises efficiently deploy blockchain solutions that implement business initiatives with world-class privacy and security. This solution was architected to create Trusted Virtual Machine, or TrustedVM, that leverages the trusted execution environment (TEE) that Intel SGX enables. AlphaPoint’s solution utilizes the security and privacy capabilities of Intel SGX, thereby allowing customers to benefit from several key technology and business advantages:
Faster time to market – Quickly develop and deploy blockchain applications with proven technology.
Hardware–enforced privacyand secure consensus – Execution and validation inside the TrustedVM, ensuring data is not visible to any unwanted parties.
Lower and predictable costs – With linear scalability, this technology improves total cost of ownership (TCO) and operational efficiencies.
IBM is using the technology behind bitcoin to help farmers and other small businesses in underdeveloped countries participate in global trade.
The companies will use IBM’s blockchain technology to process financial transactions across borders and currencies — a process which is often prohibitively slow and costly for small business owners, especially when they are in developing regions with smaller banking infrastructures.
The project is focused on what Stellar calls “underdeveloped payment corridors” — countries like Samoa and Fiji, where monetary policies, currencies, and economic instability make it difficult for businesses to move money internationally.
Minorities are more likely to turn to a financial technology firm when seeking a business loan, but they may pay higher interest rates, according to the preliminary results of a congressional investigation released Monday.
A fintech startup with no mobile app does a fundraising round. It secures $8 million. How is that even possible?
True Link, a retiree-focused hybrid advice platform, had a simple pitch to investors: elderly clients like the convenience of digital advice, but want to talk on the phone. The firm claims it received 1.6 million client calls last year.
Now they are actually doing something about it, by launching a new framework for corporate governance, investing and trading called the Long-Term Stock Exchange. Backed by top Valley figures such as venture capitalist Marc Andreessen and LinkedIn co-founder Reid Hoffman, the LTSE says it plans to seek regulatory approval by the end of this year to become the newest U.S. stock exchange.
Its key feature: a system in which the voting power of shares increases the longer investors own them.
A year ago Lending Club launched a deal for new investors with United Airlines. New investors could earn 1 MileagePlus frequent flier mile for every $2 invested in a new Lending Club account.
Well last week Lending Club sweetened the deal. They basically doubled the amount of miles you can receive. So, instead of 1 mile for every $2 invested it is now 1 mile for every $1 invested. This deal is only valid until January 9, 2018 whereas the last deal had a three year expiration date.
whoa: blockchain, blockchain, blockchain (CB Insights Email), Rated: B
First, we’ve teamed up with Fortune Magazine for a joint review of Blockchain Trends & Opportunities. Robert Hackett of Fortune will be joined by CBI Intelligence Analyst, Arieh Levi.
RateSetter applied for full authorisation in October 2015 and cofounder and CEO Rhydian Lewis said in a statement the process has been “a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent.”
According to data gathered by AltFi lending volumes through P2P platforms achieved a staggering compounded annual growth rate of 110% between 2011 and 2016 and shows little sign of letting up this year.
However, there are some indications this honeymoon period for the industry may be over as the UK’s inflation rate hit 3.0% last month piling pressure on the Bank of England to raise interest rates. This is an understandable worry for the industry, as much of the lending it facilitates is higher risk than that of the traditional banking sector.
Furthermore, there are several emerging industry trends, which are likely to boost its resilience to deteriorating economic circumstances.
Consolidation- While nearly 100 platforms are operating in the UK a resilient oligopoly is emerging. This is made up of the markets four largest lenders: Zopa; Funding Circle; LendInvest and Rate Setter who cumulatively facilitate over 70% of lending volume.
Securitisation – Previously, P2P platforms lacked the scale to make securitisation economic and this new trend will likely provide a further edge to the industries established participants.
Zopa, the world’s oldest “peer-to-peer” lender, has long focused on low-risk borrowers. The weighted average interest rate the 12-year-old company charges its British customers has never gone higher than 10 per cent and was as low as 5.6 per cent in 2013. While startups like Wonga focussed on the high returns available from borrowers who are under-served by financial institutions, Zopa has largely competed at the “prime” end of the spectrum with high street banks. The returns are lower, but so too are the risks, including to its reputation.
In recent years, Zopa has added riskier borrowers to help drive growth. (It’s worth saying that it is still miles from Wonga territory.) The weighted average interest rate across its portfolio has grown from 5.8 per cent in 2014 to almost 8.8 per cent in 2017:
Zopa has been taking on more risk to achieve pretty much the same returns as when it made fewer risky loans.
Britain has seen its population of small housebuilders shrink by 80% in a single generation as market dominance has passed to an entrenched group of major players – among the top 10 UK housebuilders, none was founded after 1990. The disappearance of small and medium-sized housebuilders from the UK – defined as companies that complete between one and 100 units a year – has seen their numbers fall from more than 12,000 in the mid-1980s to about 2,400 today, according to research by the non-bank mortgage lender LendInvest.
Chinese online micro-credit provider Qudian Inc said it raised about $900 million in an IPO that priced above expectations, underscoring robust U.S. investor demand for fast-growing Chinese companies.
The offering from Qudian represents the biggest-ever U.S. listing by a Chinese financial technology firm. It is also the most high-profile company to take part in a resurgence of U.S. listings by Asian firms this year.
Qudian , an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters.
It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.
China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs.
Backed by Alibaba’s Ant Financial, Qudian lends cash to young Chinese consumers such as white collar workers, and advances credit so they can buy goods online and pay for them in monthly installments. The company provided $5.6 billion to 7 million active borrowers in the first half of 2017.
The sale of 37.5 million shares in Qudian has already raised about $900 million, making it the biggest U.S.-listing by a Chinese company this year, the report said. The offering values Qudian at as much as $7.9 billion, the report added.
Online micro-lending company Qudian is about to go public at the New York Stock Exchange on Wednesday, and it’s set to be one of the largest U.S.-listed floats by a Chinese company this year.
In its prospectus, Qudian said it was offering 37.5 million American Depository Shares with a float price range of $19-$22 per share. The company said it could offer up to 43.1 million shares if underwriters exercised an option.
In recent years, raising funds through crowdfunding activities is becoming increasingly popular among enterprises worldwide, and the governments of quite a number of countries have introduced legislation to regulate raising funds through crowdfunding activities. On the other hand, the Financial Services Development Council (FSDC) released on March 18 last year a report entitled Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong, which explored options for establishing a framework and a regulatory regime to promote and, at the same time, regulate equity crowdfunding activities in Hong Kong. So far, however, the Government has not yet announced any specific measures to promote equity crowdfunding activities.
(1) We note that crowdfunding activities might come in different forms, including equity crowdfunding (ECF) and peer-to-peer (P2P) lending. The regulatory approaches towards these activities vary globally across jurisdictions in view of the nascent nature of the business. While some economies have developed dedicated new regimes, others leverage existing rules to regulate such activities.
(2) At present, parties engaging in crowdfunding activities in Hong Kong (e.g. where the activity involves an offer to the public to purchase securities, including shares, debentures or interests in collective investment schemes, or where the platform offers its own funds to borrowers) may be subject to the provisions of the Securities and Futures Ordinance (Cap. 571), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and the Money Lenders Ordinance (Cap. 163), depending on the specific structure and features of the relevant arrangement.
Israeli startup Innovative Assessments (IA) says financial lenders like banks are missing out on huge numbers of potential clients because their criteria for handing out credit are too stringent and do not take the full picture of the client into account.
As a result, banks are effectively cutting themselves off from lending out money to large segments of the population, and many borrowers are denied access to affordable credit.
IA wants to help solve this problem. Banks should not only look at financial information to assess creditworthiness, IA says, but also at personal character, which is a whole new dimension of data that is missing from today’s credit scores. So, IA has come up with an idea to help lenders do this.
IA has developed patent-pending software that uses advanced psychometrics for credit scoring.
“Our algorithms look at people’s preferences towards certain financial behaviors,” added Fine. “And while there are no right or wrong answers, we can also identify people who may be responding insincerely.”
SeerGate, a real-time payments firm, was acquired by MyCheck in May 2015 while Ramat Gan-based Sling, whose platform allows micro-merchants to accept electronic payments from consumers via smartphones, was snapped up by Avante in July last year.
NSKnox has created a Digital Notary based on cooperative software that allows a secure transaction approval for banks and organizations, the company says. The software, which uses algorithms, allows two or more blind witnesses — who are actually financial or other kind of organizations — to help independently authenticate, authorize and detect fraud while verifying business transactions.
A total of 68 startups, including nine in the latest brew, have taken part in Citi’s Israel Accelerator program since it was set up in November 2013 in Tel Aviv.
Citi provides the entrepreneurs access to experts within the company globally to bounce ideas off of and the opportunity to use the bank’s huge infrastructure as beta sites. The banking giant does its mentoring and fostering pro bono, without taking any stakes in the companies it fosters.
The graduates of Citi’s program, which include startups like Paykey, Paybox and Vatbox, have raised a total of $300 million to date, according to data provided by Citi, and there have been two exits, with Sling and SeerGate having been acquired.
BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S.
However, the service is initially launching with money transfers from the U.S. to Mexico, where the average amount sent by U.S. workers is about $1,900 per year, says BBVA. It also notes that the U.S. to Mexico corridor sees over $27 billion flowing between the countries annually, making it one of the world’s largest.
Many of the world’s poor in developing countries — nearly 2 billion, according to the World Bank — struggle to lift themselves out of poverty simply because they don’t have a bank account or financial services.
Leveraging the power of the Interledger Protocol (ILP), Mojaloop offers a way for financial providers, governments and mobile network operators to simplify and reduce the cost of developing inclusive payments platforms.
Financial technology has the potential to radically transform the securities industry. The fast pace of change could lead to disintermediation, according to an Iosco study.
Key trends identified in the report include:
Greater availability of data
Exponential growth in computing power allowing the analysis of ever larger data sets
Broader access to and the decreasing cost of goods and services
Increasing disintermediation and re-intermediation
Demographic and generational changes
Innovative fintech business models are disintermediating and re-intermediating certain regulated activities. For example, online equity crowdfunding platforms intermediate share placements and disintermediate stock exchanges and underwriters; peer to peer lending platforms intermediate or sell loans and disintermediate banks and lenders, and robo-advisers provide automated investment advice and thereby disintermediate traditional advisors.
Beginning with bitcoin in 2009, cryptocurrencies have also seen their prominence rise due to some of the qualities that they share with gold, the most prominent of which is their scarcity.
With the emergence of today’s digital age, a startup called GoldMint is seeking to alter this trend with a new means of exchange for physical gold, with transactions occurring over a blockchain-based platform.
GoldMint’s platform will leverage the private and individual gold trading market, including potentially the management of larger physical stocks such as those in central banks. It will also deliver an electronic payment solution tethered to physical gold, as well as a gold-backed peer-to-peer lending system.
There are two options for trading GOLD for fiat or cryptocurrencies. First, there is a method for seeking a GoldMint-guaranteed buyback. And second, a loan can be requested. For either option, the process is as follows:
Through the use of a special app which is not yet available, GOLD can be transferred as collateral to a designated GoldMint account.
GoldMint utilizes the current price of gold, as set by the LBMA, to fix the rate of a loan.
GoldMint requires the customer to undergo its know-your-customer (KYC) process as well as consent to GoldMint’s loan terms to receive the loan. Various repayment options for the loan amount and the means of repaying it are then offered.
If a customer defaults on repayment, their GOLD cryptoassets are transferred to GoldMint.
GoldMint also has a process for converting gold into GOLD tokens and reconverting these tokens into gold for cross-border passages.
The Financial Markets Authority has decided to allow financial services companies to provide so-called “robo-advice” to individuals.
Such methods are widespread around the world, but New Zealand law requires any financial advice to be given by a human adviser, and law changes to allow advice to be given by a computer programmes are not expected to be passed until 2019.
Companies wanting to offer robo-advice will have to apply to the FMA for an exemption.
The Financial Markets Authority will let Kiwis access personalised automated financial advice, known as robo-advice, with an exemption kicking in before a legislative overhaul of the sector.
The market watchdog sought feedback on the proposal in June and today decided to expand the range of products robo-advice can cover to include mortgages and personal insurance, it said in a statement. Providers wanting to offer the service will need FMA approval on the good character of directors and officers and satisfy the regulator of their capability and competence. Another round of consultation is needed to finalise the exemption and the FMA is aiming to start the process early next year.
Big banks are planning roboadvice services, but only BNZ has revealed how far advanced it is.
Westpac and BNZ have both told the Financial Markets Authority (FMA) they expect to launch roboadvice services, which could close the “advice gap” by using artificial intelligence (AI) systems to give customers advice on things like KiwiSaver, insurance and mortgages.
The banks’ intentions were revealed in submissions on whether the FMA should use its “exemption” powers to allow roboadvice services to operate despite current law only allowing personalised advice to be given by a human being.
ANZ and Kiwibank’s intentions were blacked out in their submissions, released by the FMA.
Submissions to the consultation focused on a number of themes:
Strong support for an exemption from the current laws preventing personalised robo-advice.
Opposition to financial limits and product exclusions.
Robo-advice should meet the same standards as those that apply to authorised financial advisers (AFAs).
Exemption applicants should be pre-approved or licensed.
Exemption conditions should be aligned with new advice regime requirements.
The FMA has decided not to impose financial limits on personalised robo-advice and the eligible product list has been expanded to include mortgages and personal insurance products.
Companies seeking to offer personalised robo-advice will have to provide the FMA with good character declarations for directors and senior managers as well as information showing they have the capability and competence to provide the robo-advice service. The exemption conditions will also be designed so that the robo-advice service is provided in a manner that is consistent with AFA requirements.
A summary of the submissions can be found here. 49 submissions were received by the FMA. 47 are being published.
Mumbai-based peer-to-peer lending platform Lenden Club has raised $500,000 almost Rs 3.5 crore in equity investment from three major investors Venture Catalyst, Anirudh Damani and an Indian venture capital fund. Venture Catalyst and Anirudh Damani had put in seed investment of Rs 1.5 crore in the company as well in May last year.
The Reserve Bank of India’s notification on peer to peer (P2P) lending issued on October 4 this year (“Regulations”) seems to have only added an element of ambiguity in the minds of stakeholders. Eighteen months since the RBI issued the consultation paper and it is not certain how and whether stakeholder comments have been internalised in the paper.
The definition of a “peer to peer lending platform” as an intermediary providing the services of loan facilitation, may unintentionally bring into the purview, a wide variety of operators. As a literal construct, this does not seem to take into cognizance the various types of business operations in the industry simply because it doesn’t clarify whether this excludes a model that doesn’t provide syndication. Theoretically even an internet search engine, business correspondents and lead generators could fall under this definition.
This must be the first category of Non-Banking Financial Company (NBFC) to not function in the manner in which it has been typically designed. The new Regulations set a precedent to regulate entities as NBFC’s that undertake neither lending nor credit enhancement.
The new Regulations also seem to bring into its ambit, an “off-line” P2P: the very essence for P2P start-ups has been low transaction costs thereby resorting to the online medium for such lending.
Japanese Internet conglomerate SoftBank is in early discussions to launch another fund that can possibly be larger than its existing $100 billion Vision Fund, Recode reported, citing anonymous sources.
The Information, in its report, noted that SoftBank got the right to prevent online lender Kabbage, in which it led a $250-million investment in August, from selling parts of itself, buying other companies, selling stock below a certain price or borrowing money beyond a certain level.
The fintech revolution sweeping finance will lessen the profitability of banks in the GCC when it comes to parts of consumer banking – such as money transfers and foreign exchange – but overall it is unlikely to hurt the ability of regional lenders to make money.
The rating agency noted that the GCC banks that it assigns ratings to get about a quarter of their revenues from fees and commissions and foreign exchange gains and, while a big portion that is generated from lending and advisory activities, some of that money comes from transfers and currency exchange.
Investments in technology and digitisation are also timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash. Lenders are fortunate that this country has one of the highest smartphone penetration rates in the world.
The rising influence of financial technology (fintech) firms in the Gulf could eventually threaten jobs and profitability at the region’s banks, warned ratings agency S&P Global.
“This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization,” said Mohamed Damak, S&P Global Ratings credit analyst in the report.
Already, the region’s banks are starting to rethink their business model.
In early October, Mashreq launched one of the region’s first full service digital branchless bank — Mashreq Neo — as well as a new new digital mobile wallet service called Mashreq Pay — that can be used to make purchases around the world.
The Dubai-based bank has also started to use robotics in the third quarter to manage open account trade payments, according to the bank’s Q3 statement.
Snakes & Lattes has entered into an EXCLUSIVE partnership with Lending Loop, Canada’s first fully regulated peer-to-peer lending platform focused on small businesses. This partnership will fuel and facilitate the mass expansion of the Snakes and Lattes brand across North America, while simultaneously preserving shareholder value. This is the first time in history that Lending Loop has made a direct partnership to finance a growing company, and they will be conducting a mass marketing/advertising campaign to promote both Lending Loop and Snakes & Lattes.
In contrast, Amfil is collaborating with financial innovator, Lending Loop, to fuel the subsidiary’s growth at a fair market rate with flexible cash repayment terms.
Internet pioneer Sir Tim Berners-Lee looks at the fintech landscape today and sees something familiar — a creative ferment that reminds him of the early web. He also sees some mistakes in danger of being repeated.