Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: P2P, Lending, Digital Bonds, BNPL, Private Credit
Scott Galloway: Red Friday
Scott Galloway | Nov 26, 2021
BNPL is one of the hottest trends in finance: 1 in 5 Americans used one of these services in the past year, with U.S. spending on BNPL increasing 230% since 2020. By 2025 global BNPL spending is projected to double to $680 billion. In August, Square acquired BNPL pioneer Afterpay for $29 billion in the largest-ever acquisition of an Australian firm. (We had the Founder/CEO of Afterpay on the Prof G Pod, and he’s an impressive young man.) Swedish BNPL giant Klarna is getting ready for a $50-billion-plus IPO, with a current valuation on par with ING or Lloyds Banking Group.
The target market is young people. Klarna’s frontman is rapper A$AP Rocky (who was paid in equity, not debt) — many BNPL brands rely on social media influencer campaigns. In the U.S., three-quarters of users are Gen Zers or millennials; it’s projected that nearly half of Gen Z will be using BNPL services by 2022. Their attraction to BNPL coincides with an aversion to banks and the credit they offer. This is a generation that came of age just before or in the wake of the Great Recession, a global economic crisis precipitated by … way too much credit. Young people love BNPL because, according to the former director of Afterpay, the vast majority of them “don’t want to be on credit.”
He’s not wrong. As Klarna reported in an investor factsheet, 1 in 3 millennials’ biggest fear is credit card debt. That’s more than name death or war. Deployment to Afghanistan is bad, but an unpaid balance on your Discover Card is (apparently) worse.
There’s one problem: Buy Now Pay Later is (wait for it) credit.
Hiding in Plain Sight
By most measures, BNPL services aren’t even good credit offerings. With a traditional credit card, you pay nothing up front, then you’ve got, on average, five weeks to pay without incurring any fees or interest. Closer to two months if you manage your billing cycles carefully. Carrying a balance will cost you, though, 1%-2% in interest per month. Miss a payment, and you get a late fee, about $30 — on which you’ll also pay interest.
See: Financial Consumer Agency of Canada publishes BNPL pilot study
In the short term at least, BNPL terms are worse. Take Afterpay. When you buy your new jeans, you have to come up with 25% of the money at purchase, then the lender gives you six weeks to pay off the remainder, in three installments. Miss an installment, and Afterpay hits you with a late fee. Continue in arrears, and the late fees increase, up to a cap of 25% of the purchase price. Also, you need a debit or credit card to make payments to Afterpay. Other providers have different fee and interest structures, but the basic model is the same. It’s credit.
Money Machine yet Vulnerable
So what’s the harm? Why not have a credit card with training wheels to ease young people into their journey toward a lifetime of debt? Especially as some of the costs are borne by the retailer in exchange for the consumer buying more sooner. Might Buy Now Pay Later even be training consumers to develop better purchase habits? Here’s a good reason to be skeptical.
See: Take home now, pay later with no interest fees
Buy Now Pay Later firms are quick to tell you that this is where they make most of their money — off merchants, not millennials. That’s true. But the business model only works by capitalizing on the instinct for immediate gratification. And younger neurons are more vulnerable to this marketing than older ones.
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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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Financial Consumer Agency of Canada publishes BNPL pilot study
FCAC | Nov 19, 2021
The Financial Consumer Agency of Canada (FCAC) has published a pilot study on the use and understanding of Buy Now Pay Later (BNPL) services in Canada as part of the Agency’s research on emerging consumers trends.
Similar to instalment loans, BNPL services allow consumers to purchase goods and services and pay for them over time, either by spreading their payments out into equal, smaller instalments, or by delaying their payments.
Among those surveyed, 34% indicated that they were familiar with these services, and 8% indicated that they had used at least one such service between September 2019 to March 2021. The most common items purchased this way included furniture or appliances (39%), electronics (32%), and clothing and fashion (23%); however, some consumers used the services for household essentials (8%) and groceries (5%). As these findings are based on a small sample, additional research is needed to establish a more comprehensive picture of how Canadians use and understand BNPL services.
FCAC supports Canadians in making informed financial decisions by providing unbiased and fact-based information, including information about Buy Now, Pay Later services.
For more information visit Canada.ca:
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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5 Things Any Client Would Want in a Financial Institution
Guest Post | Sep 20, 2021
Loan facilities are the ultimate solution to many problems, especially those involving accidents and natural disaster. Nevertheless, one could hesitate a little before deciding to opt for loans and financial support, unless, of course, they find the below facilities offered by an institution.
Low Interest Rates
Interest rates are the first thing that might pop in a potential client’s mind at once when they want to consider getting a loan of any type. Clients would truly wish for the lowest possible interest rates because it surely is no fun paying a lot, is it?
See: John Ruffalo Interview: Resiliency in Uncertain Times
The interest rate offered by a financial institution is usually what will determine a client’s decision, that is, whether or not they should go ahead with the specific institution for their loan requirements. Thus, the lower the rates are, the happier the client, and the higher chance that they’d choose the specific service.
Simple Application Procedure
Let’s not deny it, complex application procedures do not appeal to any client, especially to those in need of urgent financial support. There is a high chance of financial services losing their clients owing to this reason alone. Clients usually seek urgent financial assistance when they are in some kind of trouble. In such situations, dealing with other complexities is the last thing they’d want to, or be able to do. Thus, the simpler the application procedure is, the likelier the client will choose the service.
Quick Approvals
As mentioned previously, clients do not wish to waste time. In fact, they cannot afford to. The reason they look simple procedure is obviously, because the whole process becomes quicker. When a client has applied for a loan, they want to receive approvals at the earliest. Thus, any financial company that offers the facility is always going to be a client’s first preference. There might be so much that a client may have got to do with the money he has borrowed, and so, the sooner things work out for him, the better for sure! Look up litigation funding Canada has many such services. You can find the best and fastest ones available.
No Hidden Fee
It is true that clients fear being charged with hidden fee when it comes to loans and financial dealings with institutions. Such things are serious matters to clients, and ideally, shouldn’t be happening with them when they’ve placed their complete trust in an institution for support. Any fee being charged, whether in connection to your auto accident loans or something else, needs to be communicated to the client. So do the rest of the terms and conditions.
Multiple Services
The availability of multiple services is always seen as a great benefit by clients. In other words, nothing can be more relieving and fulfilling to a client if solutions can be offered by a single organization to their multiple problems. There are many financial institutions who offer wholesome services that clients benefit from hugely. In fact, some may look for such institutions more particularly. Therefore, Companies offering a range of quality services are likelier to draw more customers, naturally.
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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What are construction loans and how do they work?
Guest Post | Sep 16, 2021
Image: Pixabay
A construction loan is a kind of short-term financing provided by a bank that is used to finance the purchase of a new house or other real estate projects. A conventional mortgage, also known as a permanent loan, can assist you in purchasing an existing home. A construction loan, on the other hand, may be useful if you need to build a new home from the ground up, particularly if you also need to buy the raw land. Check out pomwaterproofing.ca for more information on construction loans.
How Do Home Improvement Loans Work?
If you are thinking of constructing a house, you are probably thinking about a piece of land or a newly built community. As a result, most construction loans cover both the cost of the land and the cost of the building.
Because of this additional complexity, building loans need greater lender participation than conventional house loans. Lenders will want to examine your construction plans, including an anticipated timeline and budget. These strategies will assist you in determining how much money you need for the loan.
Once you have obtained a loan, the lender will pay the builder at regular intervals following each step of development. The payment frequency is arranged into a drawn plan that you, the lender, and the builder agree on. Before releasing further funds, the lender typically checks on the progress of construction at each planned stage.
You only make interest payments until the construction is finished. Repayment of the initial loan amount does not commence until the house is finished. These loan payments are handled in the same way as regular mortgage installments, with monthly installments based on an amortization schedule.
Home Construction Loans Come in a Number of Varieties
Construction loans are classified into two types
Stand-alone construction loans and construction-to-permanent loans. While the cost of the land is often included in both kinds of construction loans, this is not always the case. Make sure you understand what expenditures a lender is prepared to fund and how the origination process would function if you worked with them.
1. Stand-alone construction loan
If you accept a stand-alone loan, you will ultimately require a separate mortgage loan after the work is finished. The lender provides the initial loan as a construction advance, and you only pay interest during this period. After the home is completed, you will repay the construction loan with a conventional mortgage.
See: Fintech Fridays EP43: Taking the Mortgage Process From 40 Days to Minutes
If you can only afford a modest down payment, or if you already own a house and want to sell it later, a stand-alone loan enables you to put additional money down when you sell. However, since you do not have the opportunity to lock in a mortgage rate while you have the stand-alone loan, you may wind up with higher rates when the time comes to obtain a mortgage.
2. Construction-to-permanent loan
This is a loan that combines the construction loan with a regular mortgage, so you do not have to refinance or go through another closing procedure after construction. Following construction, the lender turns the construction loan into a mortgage.
You may get a fixed-rate or adjustable-rate loan with a duration of 15 or 30 years, just as with any other mortgage. You may also lock in a cheaper interest rate from the start with construction-to-permanent financing. Construction-to-permanent loans are more convenient than stand-alone loans, although they typically demand a 20% or higher down payment.
How do you apply for a construction loan?
Is it more difficult to get a construction loan? Yes, building loans are more difficult to get than traditional mortgages. Most lenders consider construction loans risky (since there is no asset to back the loan), so if you decide to apply, you will face some stringent criteria. Many lenders demand the following for a construction loan.
Down payment
To get a construction loan, you must make a down payment of 20% or more of the entire project cost. This implies you will have to be ready to start the project with your own money or assets before a lender would agree to give you more. If you already own the land, for example, you may be allowed to use it toward the down payment amount.
Discuss this with your lender
The size of your down payment will be determined by the cost of your project, the land, and what you want to do with the money. Lenders need large down payments to ensure that you are invested in the project and will not disappear if anything goes wrong during development.
Strong personal credit
When applying for a construction loan, you will be required to furnish the lender with your personal credit history, even if you are applying as a small company. The lender will almost certainly request your personal FICO score as well as your company credit history.
Financial documents
A potential lender will often examine your current and previous debt and payment history, as well as any other loans or liens on your property. You will be required to submit financial statements, tax records, and evidence of other assets whether the loan is for your personal house or a small company building project.
Good reputation
Whether you are the builder or dealing with one, be aware that the lender will look at the builder's reputation. Any publicly available information may be used to make this decision, including vendor and subcontractor reviews, internet reviews, and prior work history.
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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Take home now, pay later with no interest fees
McKinsey & Company | Aug 17, 2021
Financing at the point of sale may be a small share of unsecured lending in the United States today, but it’s growing fast. Banks seeking long-term growth should explore market entry, and merchants should reassess their financing offers.
See: Digital Payments in America – Scaling the Peak
Point-of-sale (POS) financing services in the United States have grown significantly over the past 24 months, especially since the onset of COVID-19. Trends fueling growth include digitization, rising merchant adoption, increasing repeat usage among younger consumers, and an expanding set of players targeting lending at point of sale, a service also known as “buy now, pay later.”
Thus far, fintechs have taken the lead, to the point of diverting $8 billion to $10 billion in annual revenues away from banks, according to McKinsey’s Consumer Lending Pools data. In our view, only a few banks are responding fast enough and boldly enough to compete. Banks that underestimate the threat may see continued loss in share and could lose out on participating in a growing value pool and gaining share among younger and new-to-credit customers, as banks in Australia and China did when facing a similar situation. To avoid that outcome, US banks need to understand the landscape for POS financing and choose from among the emerging models.
See: 3 Ways Fintech Is Changing Homebuying
Our annual POS Financing Survey shows that US consumers are getting used to seeking merchant-subsidized credit at point of sale: about 60 percent of consumers say they are likely to use POS financing over the next six to 12 months.
about 60 percent of consumers say they are likely to use POS financing over the next six to 12 months.
Fintechs are capturing almost all the value being created in POS financing because banks have been slow to respond. Consequently, banks have lost about $8 billion to $10 billion in annual revenues to fintechs. Far worse for banks, they are losing access to an acquisition channel with potential to serve highly engaged younger consumers.
Five distinct offerings with integration across the purchase journey
The growth in POS financing for consumers involves five distinct sets of providers and models, each with varying strategies and value propositions (Exhibit 2). 1 Understanding these models gives a sense of the segments they target, the merchant and consumer needs they address, and business models banks and traditional lenders are competing with.
See: Swift launches ‘Go’ moves into low value cross-border payments
Integrated shopping apps
The most prevalent misconception across banks and traditional players is that shopping apps offering “buy now, pay later” (BNPL) solutions are pure financing offerings. While that may be true for the smaller players, the leading Pay in 4 providers are building integrated shopping platforms that engage consumers through the entire purchase journey, from prepurchase to post-purchase.
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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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Interac and many of Canada’s leading financial institutions enhance Interac e-Transfer to introduce instant digital payments for businesses
Interac Corp. | Release | Aug 4, 2021
Interac e-Transfer® for Business supports critical finance transformation as corporate Canada pursues recovery and growth
TORONTO, Aug. 4, 2021 /CNW/ - Today, Interac Corp., with the support of 13 leading Canadian financial institutions, is launching Interac e-Transfer for Business, an innovative solution that builds on the widespread adoption of the Interac e-Transfer service. The solution enables real-time digital payments to personal and commercial bank accounts with confirmation of funds received within seconds.
See:
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Revolut to roll out QR code payments for business customers in 25 countries
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‘Last year we saw about a 300% increase in transactions just using cryptocurrency’: Coinpayments CEO
With more than eight in 10 (83 per cent) business leaders calling for new commercial payment products as part of their post-pandemic digital transformation, according to recent research from Interac1, this allows Canadian businesses to send and receive payments faster and more efficiently than ever before from the safety and security of their financial institution. Businesses are still reliant on cheques, with over 389 million commercial cheques in market in 2019 representing an average value of $9,000 each2. With higher limits of up to $25,000, Interac e-Transfer for Business transactions have the potential to displace upwards of 200 million of these cheques3.
"The launch of Interac e-Transfer for Business in collaboration with Canada's banking and credit union community marks a milestone in the modernization of Canadian payments and provides a timely solution as businesses embrace financial transformation to aid their recovery and growth plans," said William Keliehor, Chief Commercial Officer at Interac. "It reflects an increasing focus from Interac on the commercial market as we respond to the accelerating need for secure, data-rich, real-time business payments, made especially evident during the pandemic."
Despite the challenges of COVID-19, the Interac commercial payments research shows that business respondents are optimistic about recovery with 8 in 10 (82 per cent) aspiring to grow over the next two years. Within this period, 83 per cent of finance professionals surveyed say applying digital transformation to their function is a priority. The majority (77 per cent) want their finance team to spend less time on transactional processes and more time on higher value-add functions.
Interac e-Transfer for Business makes this possible by alleviating the need to follow up with suppliers as payment confirmation is provided within seconds, while also reducing time consuming manual reconciliation processes through data-rich payments. With higher transactional limits of up to $25,000 and flexible payment routing options, this solution gives commercial users more choice, a higher level of efficiency and control in managing receivables and cash flow. Users will also have the added flexibility of sending funds directly to account numbers they have on record, in addition to traditional Interac e-Transfer payment routing options of an email address or mobile number.
See: Canada’s payment system needs more competition
The applications of Interac e-Transfer for Business also span multiple industries and business sizes. A small business owner can use the solution to pay employees while spending less time on administration, a franchise can facilitate just-in-time vendor payments, while an insurance company can leverage it to distribute claims with funds received and available for use within seconds.
Working with Interac, over 90 per cent of Canada's financial institution market share is able to receive real-time, data-rich transactions. Leading Canadian financial institutions such as ATB Financial, BMO Financial Group, CIBC, Desjardins Group, HSBC Bank Canada, Manulife Bank of Canada, National Bank of Canada, Peoples Trust Company, Royal Bank of Canada, Scotiabank, TD Bank Group and Canada's Credit unions including Meridian, First West and Vancity, are enabling this functionality for their customers. Depending on the customer segment, BMO Financial Group, CIBC, Peoples Trust Company, Royal Bank of Canada and Scotiabank are enabling the ability to initiate these transactions. Many more financial institutions are anticipated to enable these capabilities for their customers over the coming months.
The launch of this solution by Interac builds on a track record of delivering made-in-Canada innovation at scale over many decades. The company connects nearly 300 financial institutions and collaborates within the payments ecosystem to deliver transformative products that meet the evolving needs of Canadians.
As recently announced, Interac is working with Payments Canada as the exchange solution provider for the country's new Real-Time Rail (RTR), a new real-time payments system. Once the RTR is live, Interac e-Transfer for Business payments will utilize the new RTR exchange for processing.
In August 2020, Interac e-Transfer was designated a prominent payment system under the Payment Clearing and Settlement Act. Interac e-Transfer for Business is the first significant change for the service following this designation.
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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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LendingClub Reports Strong 2nd Quarter Results, Shares Rise Dramatically
Crowdfund Insider | | Jul 28, 2021
LendingClub (NYSE:LC), a Fintech that started as a peer-to-peer lender and now operating as a digital bank, has posted strong 2nd quarter results that easily topped expectations. LendingClub finally turned the corner on profitability shredding guidance that had expected a loss. Shares moved considerably higher in after-hours trading during a crowded earnings announcement day.
At the start of 2021, LendingClub completed the acquisition of Radius Bank thus entering the red hot digital banking sector. This quarter is the first earnings round as a nationally chartered digital bank.
According to LendingClub sequential revenue increased by 93%, driven by growth in marketplace lending revenue and increased net interest income from the retained portfolio of consumer loans. Total revenue was $204.4 million, almost double the previous quarter, with net income jumping to $9.4 million – in stark contrast to the $47.1 million loss delivered in Q1.
See: Why LendingClub’s Acquisition Of Radius Bank Is A Smart Deal
The fact that LendingClub will now be able to hold deposits as a bank means a lower cost of funding for its online lending segment.
LendingClub CEO Scott Sanborn, issued the following statement:
“Our first full quarter operating a digital bank was the most profitable quarter in LendingClub’s history. This is the beginning of a dramatically enhanced earnings trajectory for the business. Our transformation is fueled by our competitive advantages, which include our 3.5 million-plus members, deep data capabilities, marketplace model as well as our more efficient operating platform. Our earnings are being bolstered by our bank, which is generating a new stream of recurring net interest income that is only beginning to contribute to our bottom-line results.”
LendingClub highlighted the following stats:
- Marketplace revenue grew 86% sequentially, primarily reflecting 105% growth in origination fees and a 132% increase in gains on loan sales as loans sold through the marketplace doubled.
- Net interest income grew 148% sequentially to $45.9 million, as the bank’s loan portfolio (excluding PPP loans) grew 27% sequentially, propelled by growth in the consumer loan portfolio of 145% to $795M.
- Deposits grew to $2.5 billion, helping fund growth in the bank’s loan portfolio.
Updates:
Shares in LendingClub have rocketed higher today jumping by over 55% (as of this moment).
The few analysts that participated in the earnings call congratulated LendingClub on its performance. Earlier today, Wedbush analyst Henry Coffey boosted his price target to $33.50 (from $25), reiterating an outperform call, after calling the results “amazing.”
See: Fintech Startups Broke Apart Financial Services. Now The Sector Is Rebundling
By becoming a nationally chartered bank, via its acquisition of Radius Bank, LendingClub is now financing its own loans, alongside a growing number of other institutions – including other banks (which now account for more than half of funding including LendingClub Bank).
Management also said there were some unanticipated benefits by becoming a bank as being regulated as a bank helped boost confidence for bank investors. There is a lot of confidence in credit quality.
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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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