Category Archives: Research

How Will Things Be Different When It’s All Over?

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BCG Henderson Institute | Martin Reeves, Lars Faeste, Kevin Whitaker, and Mark Abraham | March 15, 2020

light and forest trees - How Will Things Be Different When It’s All Over?A rebound of demand is inevitable, and using high-frequency data proxies for the movement of goods and people, production and confidence, we can see that it is already beginning to happen in China. (See Exhibit 2.) Given the complexity of rebooting companies and supply chains at different speeds in different places, the time to begin preparing a rebound strategy is now.

Over the past 100 years, epidemics have only temporarily deflected the economic cycle with short, sharp shocks. Of course, this time could be different. A bear market (technically a 20% decline) does not guarantee a recession but indicates a high probability of one.
Prudent companies will prepare for this possibility. Our analysis shows that 14% of companies across all sectors actually grow top and bottom lines during recessions and downturns. Those who flourish share the common traits of preparation, preemption, growth orientation and long term transformation. They take a long term view and place growth bets when competitors are retrenching.

And even after the epidemic recedes, and even in the case of recession, there will be opportunities and needs to reimagine business and operating models and also the portfolio of offerings.

In anticipating this new post-crisis world and seizing opportunity in adversity, we need to think consider several shaping forces: new learnings, new attitudes, new habits and new needs.

See:  Podcast: Stronger for longer: How top performers thrive through downturns

A crisis is like a receding tide — it reveals the rocks beneath the surface that were there all along. While some organizations will likely resume operations after the crisis without looking back, others will be carefully examining lessons learned and regarding them as opportunities to improve their organizational effectiveness. They will find opportunities to improve foresight, agility and resilience through improvements in market intelligence, risk assessment, scenario planning, crisis management, communications, remote working, workforce redeployment, supply chain resilience, cross company collaboration, IT infrastructure and many other areas. And each of these will in turn generate opportunities for the suppliers of software, hardware and services to enable these enhanced capabilities.

The crisis will also shift consumer attitudes, creating elevated awareness of altered beliefs about personal and environmental hygiene, health, social relations, travel and crisis preparedness. This is already driving up demand for sanitizers, antibacterial cleaning products, healthcare advice, healthcare insurance, disaster preparation products, O2O (online to offline) delivery and other many other categories.

Some new behaviors forced by the crisis will likely stick as new habits after the epidemic has receded. These may include remote working and home shopping, which will drive opportunities for connectivity, distance learning, video conferencing, home office equipment, e-commerce, delivery services and the like. Corporations and employees too may see opportunities to reduce travel and physical colocation on an ongoing basis, having been forced to master the art of effective remote collaboration.

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And some unmet needs will be revealed, which can become targets for innovation. Already we see Chinese companies, who have had more time to adapt to the crisis, creating new types of health insurance, and new types of online to offline business models. We will likely see innovations sprouting in home shopping, collaboration, health information, health and hygiene products and cleaning products, and hygiene benefits being created for all manner of services and products.

How can companies grow into and shape these emerging opportunities? We suggest 6 key success factors:

1. An “opportunity in adversity” mindset

Macroeconomics is not fate. Economics deals with aggregates and averages, whereas strategy is about creating deviations from these averages. Companies which will flourish during and beyond the crisis believe in and seek out advantage in adversity. And the evidence is that such opportunities exist in every sector.

2. Looking ahead

While the average company will likely be focused on the crisis itself, some are looking ahead at the inevitable rebound in demand, at the possibility of recession and at the opportunities to innovate and rethink their business models. They are prepared for different scenarios, but are actively shaping their own fate.

3. Picking up weak signals

Many companies, experiencing a shock to demand and chaos in their supply chains will be mainly preoccupied with managing immediate challenges. Those who look at at a more granular level, will see that the demand for some categories is increasing, that customers are asking for things that are not currently available or that companies in their own or other sectors are innovating how they do business. In fact, within your own organization, there are likely multiple groups which are departing from standard procedures in order to manage new circumstances. Learning organizations are asking, what those innovations are and how they can be codified and amplified. Picking up weak signals means first and foremost, having access to signals, through access to high frequency (daily), granular data on shifting patterns of beliefs, behaviors and demand and by listening very closely to customers.

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Survey finds Canadian small businesses seeing 50 percent revenue decline amid COVID-19

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Betakit | | March 20, 2020

small business survey lending loop covid19 - How Will Things Be Different When It’s All Over?A survey conducted by Toronto-based FinTech startup Lending Loop has found that Canadian small businesses have seen an average revenue decline of more than 63 percent amid the COVID-19 pandemic.

Lending Loop has been collecting data over the past few days from over 100 companies on the impact the COVID-19 outbreak is having on small businesses across Canada. In a Tweet on Thursday, Lending Loop CEO Cato Pastoll noted that the initial findings highlight the severity of the current situation.

See:  Covid-19: Resources and Guides for Businesses and Individuals

The small businesses surveyed have an average of 10 employees and according to the survey results have seen immediate impacts amid the current global situation. Those surveyed reported that their business has seen an average revenue loss of $1,141,310, leading to an average revenue decline of 63.3 percent.

More than 65 percent of small businesses surveyed reported a revenue decline of more than 50 percent. With 92 percent concerned about their monthly obligations.

The industries that have seen the largest hit are education services and restaurant and food services. Following closely behind are finance and insurance, as well as retail and wholesale trade.

“We’ve never seen a demand or employment shock as far-reaching as this,” Pastoll wrote. “Businesses are indicating that they have 30 days or less before running out of cash, time is running out to save our small businesses and our economy.”

However, according to the survey, small businesses across industries are seeing the effects, including construction, utilities, personal care, and manufacturing.

The major hits to revenue and concerns over monthly obligations are also leading to layoffs. The survey found that an average of six employees are being laid off across small Canadian businesses.

By far, the most affected industries according to the survey, are recreation and amusement as well as restaurant and food services, which have been forced to make an average of more than 30 and 20 employee cuts, respectively. The remaining industries have seen cuts closer to less than five employees.

See:  Lending Loop Surpasses $50 million Milestone and helps thousands of Canadian Businesses and Investors

Founded in 2014, Lending Loop is a Canadian peer-to-peer lending marketplace, which focuses on providing businesses with accessible capital at fair interest rates through an online process.

In his Tweet, Pastoll noted the need for immediate action to be taken to support Canada’s small business community at this time. He told BetaKit that his main concern is for “micro” businesses (firms with one to four employees), which are typically considered too small to get funding from banks or the BDC. According to government statistics, small businesses with less than 100 employees make up almost 98 percent of all Canadian companies.

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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How Regulation Crowdfunding Stood up to the First Weeks of Coronavirus – Almost Opposite of the Public Markets

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Crowdfund Capital Advisors | Sherwood Neiss | March 20, 2020

RegCF and Covid 19 - How Will Things Be Different When It’s All Over?

The Coronavirus is taking the financial markets by storm. It began its attack on the public markets around February 12th. Since then, the markets have dropped 30% off their highs and have made wide swings from one day to the next. It has been one of the most volatile periods in history. While we have yet to see how everything will play out, it is encouraging to see that this volatility has seemingly not had the same impact on private funding online. The data shows that people are still investing in their local businesses via online platforms. And their numbers are growing year over year. This will play an important role as we emerge out of this pandemic. We wanted to understand what is happening, so we dug into the data, reached out to a few platforms, and this is what we learned.

See:  US Reg CF Funding Portals: 50 in Total with Several Exits and Several Additions. Is Reg CF Ready to Scale?

Since February 12th, over $11.6 million has been invested into over 320 active companies, who are raising money on 13 online investment platforms. Over 21,000 investors have made individual investments into these companies. Comparing this to the same period last year, $9.8 million was invested into 227 active companies on 17 platforms by over 11,000 investors. There were 41% more active companies during the same period last year. The amount invested was up 16.3%, and the number of investors engaged was up 90%. All of these select private market indicators were up despite the public markets being in a free fall.

The image below shows period over period activity from February 12th to March 18th. What we see is that, despite the volatility in the public markets, this segment of the private capital markets appears to be withstanding the negative impacts … for now.

There have been several breakout companies during this period of public volatility. The list below shows the top 10, who they are, where they are based, where they are raising funds, and how much they’ve raised during this period.

Company City Listing URL Amount Raised 2/12/20 to 3/18/20
Mightly Quinn’s Passaic https://www.seedinvest.com/mightyquinns/series.b  $1,075,619
Lost Spirits Vernon https://wefunder.com/lost.spirits  $1,070,000
Black Sands Entertainment Brooklyn https://wefunder.com/black.sands.entertainment  $480,000
Ample Foods San Francisco https://republic.co/ample-foods  $295,836
McSquares Denver https://wefunder.com/mcSquares_The_Art_Of_Whiteboarding  $282,207
Neurohacker Carlsbad https://wefunder.com/neurohacker  $277,529
Called Higher Studios Franklin https://www.startengine.com/called-higher-studios  $274,730
GenesisAI Allston https://wefunder.com/genesis.ai  $263,725
Copperworks Distilling Seattle https://wefunder.com/copperworks.distilling  $259,637
Fisher Wallace New York https://www.startengine.com/fisherwallace  $249,693

We asked some of the platforms for their thoughts on why the private capital markets might be operating differently from the public ones. Ryan Feit, CEO of SeedInvest, shared an interesting perspective. As he put it:

“Sentiment is good. Venture will freeze up and entrepreneurs will need to utilize alternative sources of capital more than ever. On the investor front, the public markets will undoubtedly take a toll but given that the private markets have a low correlation to public and with interest rates at zero, hopefully people will continue to shift capital away from traditional assets.”

Jonny Price, Director of Fundraising at Wefunder felt

“It is too early to tell. While he could certainly see how this crisis would lower investment volume March 2020 has been is our best month ever already.” He also agreed with Pettid and Feit above by stating, “You can make a case that when the stock market is crashing, investors will seek alternative investment opportunities. And when conventional sources of capital dry up (e.g. VC), more founders might turn to their fans and customers for capital.” His last thought was most poignant, “High level — if there was ever a historical moment for a democratic and people-powered financial system, this would seem to be it.”

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Comparison of UK banking providers’ fraud controls

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FCA | March 9, 2020

Fraud protection - How Will Things Be Different When It’s All Over?Reducing fraud is a priority for the FCA. This page contains information about banks’ fraud controls.

It is intended to enable consumers and consumer groups to compare how banks protect their customers against fraud, and to help consumers to make better informed choices about their banking providers.

The information was provided by UK Finance in March 2020.

What is the firm's approach to fraud protection?

Barclays: 

  • We will protect our customers from fraud, to make it as easy as possible to use our services and when needed, to keep our customers fully informed. We have dedicated teams that are accessible 24/7 should customers need advice or help. We will get customers back up and running as quickly as possible.
  • Fraud PreventionWe will deliver flexible world-class fraud capabilities to prevent fraud. We will use the latest fraud technology to deliver the right outcomes.
  • OUR AMBITION - SHIELDING OUR CUSTOMERS & PROTECTING THEIR ASSETS FROM FRAUDSTERS.

See:  Did a family’s Desjardins data make it into the hands of this ‘prolific’ Toronto fraudster?

First Direct: 

  • Fraudsters are constantly becoming more intelligent with the ways they commit crimes. Therefore, protecting you and your money is an absolute priority for us.
  • To better defend you and the wider financial system from financial crime, we are making significant investments in technologies, processes and in our people.
  • We want to ensure that you feel secure and educated against one of the fastest growing types of crime in the UK. So, if you don’t feel sure when speaking to someone you don’t know, or you have received digital correspondence that you aren’t happy about, contact us.

What Fraud protection controls does the firm have in place?

Barclays:

  • Fraud detection systems which monitor transactions and payments on a real time basis. If something looks suspicious, we may try to get in contact and take action to protect the account while a review is carried out.
  • Biometric systems help us track your normal behaviour when you are viewing your account details online. This helps us to try to identify if a fraudster has accessed your account and is used strictly in compliance with our internet banking terms and conditions, to protect your privacy and information about you. We work with external vendors and companies to ensure the contact details you have provided have no unwanted interference before we check a transaction with you.
  • Industry Wide Support - Participation in industry schemes such as CIFAS and Hunter. Phone number checker via the Barclays website so you can check it’s us trying to contact you. Our Fraud teams are available to talk about your account 24/7. Whilst offering protection, we will always endeavour to eliminate interruptions to our genuine customers, enabling them to use their Barclays products freely.
  • Specialist vulnerable teams are in place to help if you have any specific needs or requirements that may affect you running your account and becoming a victim of fraud. We will notify you via SMS or letter when any changes are made to your account.* Warning messages when making online payments to confirm you are confident that you are sending money to the genuine payee.
  • Proactive Messaging which engage with you, notifying you of any changes and how we are actively protecting your account/card. Notification of data breaches from other organisations allows us to keep your data secure. If we are notified that your card details have been breached, we’ll be in touch to arrange a replacement but you’ll be able to use your card until the new one arrives. If any fraudulent activity occurs during this period, you’ll be covered by our fraud guarantee. *there are some exceptions please see the product terms and conditions.

See:

First Direct: 

  • 2 factor authentication for new payees – Our Secure Key gives you added protection against the threat of fraud. It generates a temporary code which you use to set up a new payee. You need your PIN or password, Touch ID, Face ID or Android Fingerprint. It means only you can setup new payees.
  • Real-time fraud detection system – As part of our digital security promise, we’ll safeguard your money by keeping a lookout 24/7 for unusual activity on your account. From time to time we may get in touch with you to check on anything suspicious.
  • One-time passwords – We use Verified by VISA or MasterCard Identity Check Service for online purchases. If we need to check that a purchase is genuine, we will send you a unique 6-digit SMS passcode. The passcode is only used as an identity check and you should never share it with anyone.
  • Transaction monitoring – We may send you a text message to confirm whether a card transaction has actually been made by you or to ask you to contact us regarding possible unusual activity on your account. If you are unsure, please contact the number on the back of your debit or credit card.
  • Helpful hints – Our fraud and security centre on our website outlines key information on what we do to keep you safe and secure online and how to protect yourself.
  • Free Security Software – We recommend you have security software (such as IMB Trusteer Rapport) as well as additional anti-virus software on your PC.

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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How Chinese Companies Have Responded to Coronavirus

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HBR | Martin R, Lars F, Cinthia C, Philipp C and Kevin W | March 10, 2020

Covid 19 - How Will Things Be Different When It’s All Over?As the Covid-19 crisis spreads to new epicenters in Europe and the U.S., companies are scrambling to mobilize responses. There are no easy answers, due to the unpredictability of disease dynamics, a lack of relevant prior experience, and the absence of plug-and-play instructions from government or international authorities.

Clearly each local situation is different, but we believe there are opportunities for companies to learn from others in regions that are weeks ahead in responding to the epidemic.  China appears to be in the early stages of an economic rebound, according to our analysis of high-frequency data on proxies for the movement of people and goods, production, and confidence. While this recovery could be vulnerable if a new wave of local infections were to emerge, many Chinese companies have already moved beyond crisis response to recovery and post-recovery planning.

Based on our experience supporting Chinese enterprises with their recovery plans, we have extracted 12 early lessons for leaders elsewhere. To be sure, China has its own distinct political and administrative systems, as well as social customs, but many of the lessons here seem broadly applicable.

1. Look ahead and constantly reframe your efforts

By definition, crises have a highly dynamic trajectory, which requires a constant reframing of mental models and plans. Initial ignorance gives way to discovery and sense-making, then crisis planning and response, recovery strategy, post-recovery strategy, and finally, reflection and learning. This process must be fast — and therefore CEO-led — to avoid getting stuck in complex internal coordination processes and being slow to react to changing circumstances.

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In China, some of the fastest-recovering companies proactively looked ahead and anticipated such shifts. For example, in the early stages of the outbreak, Master Kong, a leading instant noodle and beverage producer, reviewed dynamics on a daily basis and reprioritized efforts regularly. It anticipated hoarding and stock-outs, and it tilted its focus away from offline, large retail channels to O2O (online-to-offline), e-commerce, and smaller stores. By continuously tracking retail outlets’ re-opening plans it was also able to adapt its supply chain in a highly flexible manner. As a result, its supply chain had recovered by more than 50% just a few weeks after the outbreak, and it was able to supply 60% of the stores that were reopened during this period — three times as many as some competitors.

2. Use an adaptive, bottom-up approach to complement top-down efforts

Rapid, coordinated responses require top-down leadership. But adapting to unpredictable change, with distinct dynamics in different communities, also requires decentralized initiative-taking. Some Chinese companies effectively balanced the two approaches, setting a top-down framework within which employees innovated.

For example, Huazhu, which operates 6,000 hotels in 400 cities across China, set up a crisis task force that met daily to review procedures and issued top-down guidance for the whole chain. In addition, it leveraged its internal information platform, an app called Huatong, to make sure employees and franchisees were armed with timely information. This allowed franchisees to adapt central guidance to their own local situations, in terms of disease conditions and local public health measures.

3. Proactively create clarity and security for employees

In a crisis, it’s hard to find clarity, when the situation and the available information are constantly changing, driven by the exponential logic of contagion. Official advice may be absent, contradictory, out of date, or not granular enough for practical purposes. Furthermore, confusion is compounded by a plethora of media reports with differing perspectives and advice. Employees will need to adopt new ways of working, but they won’t be able to do so unless they have clear, consistent information and overall direction.

See:  ESG Risk Comes Into Focus Companies focus on their ESG risks to build profitability for the long term.

Some Chinese companies created very proactive guidance and support for employees. For example, China’s largest kitchenware manufacturer Supor instituted very specific operational guidelines and procedures for its employees, such as instructions for limiting exposure while dining in canteens and emergency plans for abnormal situations. In addition, the company instituted health checks for employees and their families from the early stages of the outbreak and procured preventative equipment. It was well prepared for a timely resumption of work, reopening some production lines in the second week of February.

4. Reallocate labor flexibly to different activities

In hard-hit businesses, such as restaurants, employees were unable to carry on their regular activities. Rather than furloughs or layoffs, some creative Chinese enterprises actively reallocated employees to new and valuable activities, like recovery planning, or even loaned them to other companies.

For example, in response to a severe decline in revenue, more than 40 restaurants, hotels, and cinema chains optimized their staffing to free up a large share of their workforces. They then shared those employees with Hema, a “new retail” supermarket chain owned by Alibaba, which was in urgent need of labor for delivery services due to the sudden increase in online purchases. O2O players, including Ele, Meituan, and JD’s 7Fresh followed this lead by also borrowing labor from restaurants.

5. Shift your sales channel mix

Person-to-person and bricks-and-mortar retail were severely restricted in affected regions. Agile Chinese enterprises rapidly redeployed sales efforts to new channels both in B2C and B2B enterprises.

For example, cosmetics company Lin Qingxuan was forced to close 40% of its stores during the crisis, including all of its locations in Wuhan. However, the company redeployed its 100+ beauty advisors from those stores to become online influencers who leveraged digital tools, such as WeChat, to engage customers virtually and drive online sales. As a result, its sales in Wuhan achieved 200% growth compared to the prior year’s sales.

6. Use social media to coordinate employees and partners

With remote working and a new set of complex coordination challenges, many Chinese companies took to social media platforms, such as WeChat, to coordinate employees and partners.

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For example, Cosmo Lady, the largest underwear and lingerie company in China, initiated a program aimed at increasing its sales through WeChat, enlisting employees to promote to their social circles. The company created a sales ranking among all employees (including both the chairman and CEO), helping motivate the rest of the staff to participate in the initiative.

7. Prepare for a faster recovery than you expect

Only six weeks after the initial outbreak, China appears to be in the early stages of recovery. Congestion delays currently stand at 73% of 2019 levels, up from 62% at the worst part of the epidemic, indicating that the movement of people and goods is resuming. Similarly, coal consumption appears to be recovering from a trough of 43% to currently 75% of 2019 levels, indicating that some production is resuming. And confidence appears to be coming back as seen in real estate transactions, which had fallen to 1% of 2019 levels but have since bounced back to 47%.

While the depth and duration of the economic impact in other countries is impossible to forecast, China’s experience points to a scenario that companies should prepare for. Considering the time it takes to formulate, disseminate, and apply new policies in large companies, recovery planning needs to start while you’re still reacting to the crisis.

For example, a premium Chinese travel agency, facing a collapse in its short-term business, refocused around longer-term preparations. Instead of reducing headcount, it encouraged employees to use their time to upgrade internal systems, improve skills, and design new products and services to be better prepared for the eventual recovery.

8. Expect different recovery speeds for different sectors

Unsurprisingly, sectors and product groups recover at different speeds, thus requiring distinct approaches. Stock prices fell across all sectors in the first two weeks that China’s epidemic accelerated, but leading sectors, such as software and services, and healthcare equipment and services, recovered within a few days and have since increased by an average of 12%. The bulk of sectors recovered more slowly but reached prior levels within a few weeks. And the hardest-hit sectors — such as transportation, retail and energy, representing 28% of market capitalization for China’s largest stocks — are still down by at least 5% and showing only minimal signs of recovery.

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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FCA Publishes TechSprint Report

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The National Law Review | March 6, 2020

FCA TechSpring evolution report - How Will Things Be Different When It’s All Over?On March 3, the UK’s Financial Conduct Authority (FCA) published a report entitled, “Fostering innovation through collaboration: The evolution of the FCA TechSprint Approach” (the Report).

In the Report, the FCA explained that since April 2016 they have been holding TechSprints, which are also known as “Hackathons,” which involve bringing together computer programmers, interface designers and other experts to collaborate intensively over a short period of time on a software project. The purpose of this is to take advantage of the FCA’s “convening powers,” both as a regulator and RegTech thought leader.

See: 

 

The seven TechSprints held so far ranged in size (from 40 to 200 participants), location (the most recent TechSprint was held in London and Washington DC, in parallel) and subject matter but were consistent in their application of the following “working principles”:

  • The solution or approach should enhance a firm’s regulatory compliance outcomes or promote enhanced outcomes for consumers;
  • The initiative is led by industry and characterized by multi-firm collaboration and participation;
  • The solution is developed in an open and transparent manner;
  • The initiative is made public, ensuring that other participants with genuine interest and contributions to make can be involved;
  • The FCA can participate in the discussion but are not being asked to endorse the solutions developed; and
  • Experimentation and the learnings this provides are of value and should be facilitated where possible.

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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European fintech lending industry to hit USD 9.6 billion in 2020

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LLB | Staff Reporter | March 3, 2020

Europe lending - How Will Things Be Different When It’s All Over?Innovative lending services, such as crowd and P2P marketplace loans, are becoming increasingly popular in many European countries. With the development of financial technology, recent years have witnessed a growing number of business customers and private borrowers using these digital financial services.

According to data gathered by Finanso.se, the European fintech, or the alternative loans industry, is expected to hit a $9.6bn transaction value this year, growing by 10% year-on-year.

Crowdlending generates nearly 70% of total market transaction value

After the financial crisis, many traditional banks became very restrictive in approving loans, especially in some European countries, leaving businesses and individual consumers with no access to much-needed cash. This created space for lending platforms, which connected borrowers directly to lenders, and removed the banks from the equation.

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Lending platforms use sophisticated computer algorithms to make lending decisions, provide fast loans, and lower rates to borrowers. Investors, on the other hand, are given the ability to easily invest in loans outside of their countries at attractive returns.

In 2017, the European fintech lending market hit $6.3bn value, revealed the Statista Alternative Lending Market Outlook. By the end of 2018, the market value increased by 20% and reached $7.5bn worth. The rising trend continued in the next twelve months with the entire market reaching $8.7bn value. The statistics indicate the European fintech lending industry is expected to show an annual growth rate of 3.0% between 2020 and 2023, resulting in a $10.5bn transaction value in the next three years.

The market’s largest segment is crowdlending or peer-to-peer business lending. In 2017, European peer-to-peer loans in the business sector reached $3.6bn worth. Over the last three years, the market value of the crowdlending loans increased by more than 75% and hit $6.5bn transaction value in 2020. Statistics show this amount will grow to nearly $7.2bn in the next three years.

Consumer peer-to-peer loans are forecast to edge up to $3.1bn value in 2020, twice less than business lending.

Number of European FinTech loans to reach 1.3m by 2023

Although peer-to-peer business loans represent the leading market segment, the statistics indicate a much higher number of consumer peer-to-peer loans in Europe. In 2017, there were more than 911,000 successfully funded alternative loans in the consumer segment.

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Business peer-to-peer loans reached over 63,000, or 14 times less compared to consumer loans. In the last three years, consumer and business alternative loans rose to 1m and 75,900, respectively. The average funding per loan in the crowdlending segment is expected to reach $86,185 this year. Statista survey indicates the total number of European fintech loans will amount to over 1.3m by 2023.

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NCFA Jan 2018 resize - How Will Things Be Different When It’s All Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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