Category Archives: P2P, Lending, Digital Bonds, BNPL, Private Credit
UK Publishes Draft Legislation to Regulate BNPL Credit
Reuters | Huw Jones | Feb 1, 2023
Image: Pixabay/Mediamodifier
Britain on Tuesday set out draft legislation to regulate "buy now pay later" (BNPL) credit, saying the sector posed potential harm to consumers without thorough affordability checks.
- BNPL companies are largely unregulated (UK) and typically offer on-the-spot interest-free short-term loans that spread payments for retail goods like clothing. The sector nearly quadrupled during the pandemic in 2020 to 2.7 billion pounds ($3.28 billion).
- The finance ministry launched a public consultation on Tuesday on legislation to regulate BNPL, giving the Financial Conduct Authority (FCA) powers to authorise operators and their activities.
See: Walmart-backed Fintech Startup to Launch BNPL Loans
- Cause for concern:
- With Britain facing a cost of living crisis, consumer groups worry cash-strapped people are getting into debt by using BNPL to buy food or pay energy bills.The move had already been flagged for late 2022.
- BNPL agreements currently rely on minimal credit checks, with lenders not required to give key information to borrowers, and some people may end up borrowing more than they can afford to repay, the ministry said.
- "Buy Now Pay Later borrowing can be like quicksand - easy to slip into and very difficult to get out of," said Matthew Upton, director of policy at consumer group Citizens Advice.
Apple Finally Unveils its BNPL Offering. 4 Things to Know Before Signing Up
Walmart-backed Fintech Startup to Launch BNPL Loans
- Changes coming: Last February, the FCA told BNPL operators Clearpay, Klarna, Laybuy and Openpay to change their contracts after identifying potential harm to customers. It had to use consumer rights law pending the new legislation.
- The ministry said consumers will also be given the new right to take complaints to the Financial Ombudsman Service
- Once the FCA has been given its new powers, it will consult on detailed rules for the sector, such as mandatory affordability checks, licensing of operators, and fair marketing.
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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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Reverse Mortgage Debt Skyrockets 31% YoY Among Canadian Seniors
Better Dwelling | Daniel Wong | Feb 6, 2023
Reverse mortgage debt has recently surged in growth, with the debt rising at an unusual fast rate for any credit segment.
- Canadian homeowners aren’t shy about cashing in on their windfall, especially seniors. Regulatory filings with OSFI, Canada’s bank regulator, show reverse mortgage debt surged in November.
- The outstanding balance rose 5.9% (+$370 million) to $6.7 billion in November.
- The balance is now 31.0% (+$1.6 billion) higher than a year before.
See: Saddled with Rising Rates and Debt, Canadian Borrowers Seek Mortgage Alternatives
- Reverse mortgages are loans disbursed as lump sum or regular payments, secured by your home equity. It’s similar to a home equity line of credit (HELOC), but the big difference is in repayment—you don’t have to make regular payments or prove you have the debt service capacity.
- The catch is interest accumulates in the background, eroding the home equity you’ve built up. These loans generally have higher interest rates than traditional HELOCs or mortgage refinancing.
- The sudden boom for reverse mortgage debt is due to a combination of monetary and demographic factors. Since repayment isn’t required, rising rates are likely allowing the debt to accumulate faster for those without fixed terms.
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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 to Maximize Debt Collection Efficiency in 2023?
Guest Post | Jan 31, 2023
Image: Pexels/Nicola Barts
The global pandemic has left many people in dire financial straits. Therefore, most of the leading companies put themselves in the shoes of their customers and suspended debt collections, reduced or canceled interest rates, and lowered prices. However, they also need to restore and stabilize their income. Therefore, debt collection is resumed. According to what strategies to implement them and how to effectively work with debtors - read on.
The best ways to collect the debt in 2023
According to the statistic, the average US household has $15,000 in credit card debt. This is a colossal amount and loads of work for financial companies.
Create an information hub for customers
Having complete information about each client makes it easier for company employees to work with them. These are data on payables and receivables, balances, etc. However, this data must be verified, accurate, and constantly updated.
Definition of the communication channel
Properly configured communication with the client allows you to create effective cooperation. You can communicate with a person using messages, calls, and e-mail. However, it is better to discuss these communication pitfalls in advance, because, with the appearance of a large number of scammers, people are afraid of messages and calls from unknown numbers.
Support for vulnerable customers
In order for cooperation with a person to be as effective as possible, you can offer flexible conditions, for example, suitable payment options or time. To do this, you need to set up a dialogue with the client and find out how it will be convenient for him to pay the funds.
Payment methods
The client should be offered several options and payment methods. Then there will be more chances that a person will pay on time and avoid debts. After all, she will be able to do it conveniently from the phone or terminal.
The only strategy for debt collection
It is best to work with all clients according to a single strategy. This is not only a systematic coverage of the entire base but also constant monitoring of the situation, and the ability to regulate payment methods and methods.
Causes of debt collections
Debts can arise for various reasons and not only because of the pandemic that has gripped the world in the last few years. Here are some reasons that lead to debt:
- Objective reasons (loss of income, liquidation of a business, etc.)
- Lack of a communication channel with the client and a reminder about the need to pay the debt
- The company did not offer convenient payment methods
- A high loan amount became unaffordable for the client
Each of these reasons can lead to deep debt. The company can choose the method of debt collection by debt collectors or internal employees. But apply various methods, most of which later turn out to be ineffective. And the company has to spend more time than it's worth on refunds. Persistence shown in relation to the client is perceived by him as pressure and intrusiveness, and a misunderstanding arises.
Therefore, you need to choose a solution that will create interaction between the company and the client. And it should be automated digital software that will speed up time and effort. For example, sending messages to the client at a time that is optimal for him.
Should I use outdated collection methods?
Chaotic calls are considered such methods, which only annoy a person, and eventually, he will stop answering. And also hundreds of letters to e-mail and regular mail that no one reads. Undoubtedly, they are ineffective and ineffective. In today's world, methods that bring the most interaction and reduce the operating costs of companies have long been used.
In order to have a reliable client base, you need to keep in constant contact with it. It should be a large-scale automated communication, where it is easy to track the state of the client's affairs, the nuances of payment, and, if necessary, change the conditions or methods of payment. For their part, clients appreciate such an attitude, so they will stick to their commitments.
See: What You Need to Know About Employee Loans in Down Round Times
As for the software, it is worth choosing comprehensive tools that will help track all the necessary behavioral data of different customer segments and help track the profitability of the company's internal activities and development. And all this can be monitored by one manager, which significantly reduces human resource costs.
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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Payment Trends: Opportunities and Risks Shaping 2023
Capgemini | Nilesh Vaidya | Jan 30, 2023
Image: Capgemini
Top Trends in Payments 2023 contains Capgemini’s perspectives on the top 10 trends for the months ahead
We anticipate widespread opportunity for innovation and growth. Trends include payment providers’ customer-centricity strategies such as buy-now/pay-later and embedded finance, data-safeguarding tokenization, and sustainability protocols focused on eco-friendly payment modes. Also on the radar screen are changing industry dynamics brought on by composable architecture and payment hub modernization, among other actions.
See: Payments Canada Report: Rebound & Grow – Payment Methods and Trends in 2021
Included Trends
- BNPL momentum continues despite post-pandemic macroeconomics
- Embedded finance is leveraging customer data to find new use cases
- Global adoption of ISO 20022 opens doors to data modernization
- Central banks gearing up to pilot and implement CBDCs
- Composable architecture leads to competitive efficiencies
- Real time cross border payments will improve speed and volume of regional trade
- End-to-end ecosystems are simplifying payment moderatization
- Paytech innovation and partnerships seeking to revamp SMB payments
- Tokenization for scalable and secure payment infrastructure
- Eco-friendly cards, digital payments, and cloud-based payment hubs will boost sustainability
Image: Capgemini
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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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First-Time Homebuyer Assistance Programs That Will Survive the Upcoming Recession
Jan 26, 2023
Image: Unsplash/Joshua Mayo
Thinking of buying a home for the first time but worried about the upcoming recession?
With so much economic uncertainty, it's understandable that you might be a bit hesitant to make those big purchases.
But don’t worry because There are many first-time homebuyer assistance programs available that will help you make your dreams of homeownership a reality - even in the most uncertain of times.
Advantages Of Homeownership During a Recession
It’s no secret that recessions can be tough, but did you know that homeownership during a recession can actually work in your favor?
According to the US Census Bureau, the median net worth of homeowners is $195,400 higher than that of renters. This allows homeowners to weather the storm when the economy falters better than renters who rely on fluctuating rental rates for their monthly income.
Additionally, homeownership offers a number of tax benefits for homeowners, including:
- Tax-free interest
- Tax deductions for mortgage interest
- Tax deductions for property taxes
- Tax deductions for mortgage insurance premiums
- Tax deductions for energy-efficient home improvements
But one of the most important advantages of homeownership during a recession is the potential for long-term growth. Property values may decline slightly during recessions, but they tend to bounce back quickly once the economy recovers – leaving homeowners with higher equity than they had before.
Federal Programs To Help First-Time Homebuyers
When it comes to buying a home for the first time, there are plenty of federal programs that can help you get started – even if the economy takes a downturn.
These programs are designed to make homeownership more accessible and affordable. They also provide an important safety net during tough economic times. So if you’re a first-time homebuyer, these programs may be just what you need to get on the path toward owning your own home – no matter what happens with the economy.
Understanding FHA Loans
FHA loans are a great option for those looking to purchase a home, offering low down payments and flexible qualification requirements. Think of it like an umbrella in the rain; it's there to protect you when you need it most.
To qualify for an FHA loan, you'll typically need a credit score of at least 580, which during a potential economic decline can be easier to achieve than a traditional loan that requires a minimum credit score of 620 or more.
FHA loans also feature low down payment requirements – typically just 3.5% - which makes homeownership much more attainable for first-time buyers who don't have a lot of money saved for a down payment.
Another big advantage of an FHA loan is that it allows borrowers to finance their closing costs and fees into the loan, which can make homeownership more affordable – especially if you're already struggling to make ends meet with a smaller budget.
Benefits Of USDA Loans
While FHA loans can be a great option for many first-time homebuyers, USDA loans offer a number of advantages that may make homeownership even more affordable for eligible borrowers.
As if stepping into a fairytale, USDA loans offer a wide range of advantages that make them stand out from other loan options. For starters, they don't require any down payment or private mortgage insurance (PMI). This allows you to focus on saving your money while still being able to purchase a home of your own.
To add to that, since USDA loans are backed by the US Department of Agriculture (USDA), they have lower interest rates than most other types of loans. As an added bonus, you may be eligible for grants and special programs designed specifically for first-time homebuyers.
Shopping For a Mortgage During a Recession
As the world faces an economic downturn, the truth is that homebuying never stops. To illustrate this point, let's look back in time at how homebuying changed during the Great Depression in the 1930s.
During the Great Depression, homebuying was very different from what it is today.
Homebuyers were more likely to purchase a home sight-unseen...meaning they had no way of truly knowing what they were getting themselves into until they had already purchased it. This made it harder for homebuyers to avoid purchasing a home that needed major repairs or renovations.
But thanks to the Internet, homebuying today is different. With online tools like Zillow, homebuyers can search for homes based on criteria like location, price, and number of bedrooms - making it easier to narrow down their search and find a home that meets their needs and budget.
Just like you can shop for homes, you can shop for mortgage rates online by filling out a simple form with your basic information and the type of loan you're interested in. Within minutes, you'll receive quotes from multiple lenders right in your inbox - making it easier than ever to find the best mortgage rates available.
By shopping around for a mortgage, you can ensure that you find a lender that offers competitive interest rates and the best terms available - even during a recession.
Will the Recession Stop You From Becoming a Homeowner?
Recessions can be difficult times, but they don't always have to mean financial ruin. Instead, they can be opportunities to take advantage of unique opportunities. With the right guidance and understanding of available programs, first-time homebuyers can remain resilient in their pursuit of homeownership despite economic hardship.
See: Pros And Cons Of Buying A House During A Recession
The key is to stay on top of things and be prepared. Don't let yourself get overwhelmed by all the information out there - take it one step at a time and you'll be able to find the perfect mortgage for your needs.
With some diligence and hard work, you can make that dream of owning a home become reality.
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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Clearco’s CEO, Michele Romanow, Stepping Down as Company Lays Off More Staff
FP | Stephanie Hughes | Jan 16, 2023
Dragons’ Den star and serial entrepreneur Michele Romanow is stepping down as chief executive of Toronto-based Clearco, nearly a year after she took on the position, but will stay on in a new role as co-executive chairman.
Dragons’ Den star and serial entrepreneur Michele Romanow is stepping down as chief executive of Toronto-based - The move is part of a series of changes at the e-commerce financing company that includes cutting its workforce by 25 per cent as it continues a restructuring strategy.
- Last summer, Clearco laid off roughly a quarter of its staff and scaled back its international operations, eliminating all of its staff in Ireland, the U.K. and Australia. Those moves reportedly affected about 60 employees.
- Andrew Curtis now CEO of the lender to e-commerce startups while Romanow will oversee external relations and lead fundraising efforts going forward during what she calls a “natural inflection point” for the company this year.
- Curtis has over 20 years of finance and capital markets experience in New York, including roles at major investment banks Merrill Lynch & Co. and Lazard Frères.
See: Clearco Hires Advisor to Evaluate Strategic Options and Exits Foreign Markets
Michelle Romanow:
As a founder, the most important thing to me is the long-term vision of Clearco. After running this company for the last eight years, it was obvious we needed new leadership to take the company to new heights.
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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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Ottawa Homeowners Need Relief
Guest Post | Jan 11, 2023
Image: Pexels/Ketut Subiyanto
You don’t need to be an avid newspaper reader to know that the cost of living is rising everywhere. Cities across North America are increasingly expensive, and Ottawa is no different.
With interest rates and inflation impacting the lives of Ontario residents, homeowners need a few ways to stabilize and strengthen their finances. Read on for a few helpful tips.
Home Equity Loans and HELOCs
Homeowners looking to consolidate loans or borrow money at low-interest rates should consider getting a HELOC or home equity loan in Ottawa from an industry-leading mortgage firm. Using your home as collateral is the surest way to get the lowest rate, and the funds get approved quickly, so you can use them when needed.
You can secure a lump sum payment to borrow in the form of a home equity loan, whereas a HELOC, or home equity line of credit, lets you borrow continually at a stable rate. Speak to your broker about which option is right for you and which specific type of loan or HELOC works best.
Legally, you’re free to use the borrowed money for whatever you want, but most experts recommend using it for things like home renovations or repairs. Try to avoid using these funds for frivolous indulgences since the failure to repay the loan can result in losing your home.
Drive Less
Most North American cities were designed to revolve around cars. Planners anticipated everybody owning their own private vehicle and assumed most trips would be by car.
Today, fuel is incredibly expensive, as is auto insurance, maintenance, parking, and all the various costs the city pays for road upkeep. The simpler and healthier solution is to use your car less.
Deciding to leave the car at home and go for a walk or take public transit lets you get some free exercise or take some time to read a book instead of worrying about navigation or directions. Private car ownership is a money pit — it’s the only form of transportation that costs money when you aren’t using it, as anybody who has ever paid for parking knows.
Save the wear and tear on your vehicle by only driving when it’s truly required, such as for long journeys or when you need to haul a lot of cargo.
Don’t Go Out on the Town
The price of food is rising quickly to the point where restaurants can’t afford to serve lettuce. With prices this high for ordinary groceries, you can imagine how much extra restaurants need to charge to break even, given the low margins in that industry.
It may be understandable for restaurant managers, but if you’re struggling to make ends meet, you’ll need to prioritize your own budget. You don’t need to remain homebound, but try to find tasty food at great prices in a lovely atmosphere — fancy restaurants don’t necessarily offer better food or service, even if the price is higher.
As prices keep rising, Ottawa homeowners should know about all the different ways they can get some financial relief.
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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