Category Archives: Marketplace Lending/P2P, Online Lending

The Solution To The Fintech IPO Shortage

Forbes | Ron Shevlin | July 1, 2019

fintech IPO shortage - The Solution To The Fintech IPO ShortageOBSERVATIONS FROM THE FINTECH SNARK TANK

A Seeking Alpha article titled Why Fintech May Not Be Fit For Public Consumption states:

The year 2019 seems set to be a record-setting one for venture capitalist exit value capture by means of tech IPOs. But fintech doesn't seem to be a part of this picture. VCs are certainly putting money into fintech startups. There were 170 financings in the US in the first quarter of 2019. But, as Pitchbook says, 'not one of the most valuable fintech companies in the world seems particularly close to an offering.' "

The article chalks this up to three primary causes:

1. Poor IPO performance in 2018. According to the article, "One reason nobody is in a hurry to go public is that the results of the last crop of fintech concerns that did go public have been unimpressive. Adyen and IntegraFin are prospering, but neither GreenSky nor EverQuote is "lighting up the heavens" according to Seeking Alpha.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

2. Mega-round financing. Seeking Alpha postulates that investor interest in mega-rounds--e.g., Qatar Investment Authority's investment of $500 million in SoFi and Tiger Capital leading a round that raised $300 million for Coinbase--is another factor dampening interest in IPOs. According to Jim Marous, publisher of the Digital Banking Report:

With all of the mega-round investment in fintech firms, you would think more fintech players would cash out and go the IPO route. But why would successful fintechs, who appear to have a bottomless pit of funding at their disposal, subject themselves to the massive scrutiny that comes from going public? Fintech firms don't see a slowdown of the funding fire hose and have no desire to lose control of their vision."

3. Lack of scale. Seeking Alpha asserts that fintech "doesn't scale as easily as other sorts of tech," making fintech startups less likely to be IPO candidates. According to one veteran of the fintech startup scene (a founder and angel investor who now heads up technology innovation at a large bank, which is why he prefers to remain anonymous):

People underestimate the scale dynamics of financial services. You need a lot more maturity across all measurable KPIs before you can be successful in the long-term. In an ecosystem with these scale dynamics, if a fintech startup can use private capital at favorable costs to grow operations and monetize employee equity, and avoid the distracting microscope of quarterly filings, it's going to do so."

Pascal Bouvier, Managing Partner of Middlegame Ventures echoes this sentiment, but points out that there are startups who have achieved scale and still not gone public:

Stripe is an example of a fintech that should already be public--they've achieved scale. But for others, operational readiness at massive scale is key in order to go public. If you do not achieve repeatability in your core business you end up suffering post-IPO.”

 

The Business Model Factor

Scale is certainly a big part of the equation--but why aren't many fintech startups able to achieve scale? The answer may be their lack of a sustainable, viable business model. According to Brad Leimer, co-founder of Unconventional Ventures:

It's much easier for companies like Ayden and Klarna to go public because they have a profitable model out of the gate--they only need to achieve market share to achieve escape velocity. Fintechs have to figure out that there are alternative business models to the ones banks leverage today. The path toward more IPOs in fintech is to think differently about where the industry derives value in exchange for what they create for the consumer of business."

Interestingly, Leimer's two examples are B2B--not B2C--companies, and that might hold a clue to the dearth of fintech IPOs.

See: 

Many Fintech Startups Aren't Meeting The Criteria For Sustainable Growth

What must a fintech (or any) startup do to succeed for the long-term? To oversimplify matters, it must first either offer a new product or service to fulfill unmet needs or provide an existing product or service with innovations to marketing, distribution, service, and/or product and service features that enable it to compete with incumbents. And then second, it must either expand the market size and/or its set of offerings to sustain growth.

Too many B2C-focused fintech startups have come to market with existing products or services whose "innovation" is digital distribution and service. That's not enough of an innovation to thrive. The world of B2C fintech in the US is characterized by:

  • Digital tunnel vision. Too many fintech startups suffer from Bank Displacement Syndrome--the belief that traditional banks can be displaced with nothing more than a digital product offering. Consumers who opened accounts with digital banks have done so because they want rewards, better interest rates, and/or better PFM tools--not because they want a "branchless" bank.
  • Featurization. A number of fintech startups have hung their point of differentiation on capabilities like providing a "safe to spend" feature or getting one's paycheck a day early. Savings tools like Digit and Qapital do a great job of helping people save, but the service is tied to some larger solution (i.e., checking account) that they don't provide. This "featurization" of fintech is creating firms with business models that won't provide sustainable growth--and the market is not ready to believe that these firms can expand product-wise.
  • High-risk lending strategies. After hitting a high of $25 per share in December 2014, Lending Club's stock price has been trading for less than $10 since the beginning of 2016. It shouldn't be a surprise. According to Pascal Bouvier, "Lending Club is an example of a fintech that should not have gone public--its credit portfolio wasn't mature enough." That's being generous. The firm's portfolio has been heavily weighted to credit card consolidation from sub-prime borrowers, and it hasn't successfully expanded market size or its offerings to create and sustain growth. The same can be said for some digital-only small business lenders.

Is there hope for the fintech IPO shortage?

Continue to the full article --> here


NCFA Jan 2018 resize - The Solution To The Fintech IPO Shortage 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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Fintech Fridays EP35: Autonomous Alternative Lending with Vit Arnautov of Turnkey Lender

NCFA Canada | Aug 9, 2019

JOIN US ON A STORYTELLING JOURNEY EVERY FRIDAY.

FF EP35 Vit Arnautov Turnkey Lender - The Solution To The Fintech IPO Shortage

Aug 9: Autonomous Alternative Lending with Vit Arnautov of Turnkey Lender EP35

HOST: Manseeb Khan, Fintech Friday's show host

GUEST: VIT ARNAUTOV, Chief Product Officer of Turnkey Lender, (Linkedin)

BIO: Vit is a skilled business executive with more than 10 years of experience in managing and delivering innovative fintech solutions. Since its foundation, Vit has been a part of the TurnKey Lender, a company creating intelligent AI-driven solutions for alternative lenders. Over the years he’s become its Chief Product Officer which gives him an incredibly deep insight into fintech in general and lending industry in particular. His areas of expertise include FinTech, digital lending, AI, and big data. Vit is happy to share his expertise with striving entrepreneurs and anyone else it can be helpful for.

About this episode: On this episode of NCFA's Fintech Fridays Podcast, our host Manseeb Khan sits down with Vit Arnautov from Turnkey Lender. They chat about how AI will help the lending space, underbanked countries and why cloud lending is a trillion dollar industry. Enjoy!

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Subscribe and tune in each Friday to check out the latest movers and shakers in fintech.

Listen to more podcasts here: Season 1 | Season 2

 


Transcription of Interview

Intro: Welcome fintech Friday's a weekly podcast brought to you by the National Crowdfunding and Fintech Association of Canada and partners.Covering all things fintech block chain be AI and alternative finance.

Manseeb Khan : Hi, everybody Manseeb Khan here and thank you for tuning in to another fantastical episode of the FinTech Friday podcast. This week I'm super excited to have Vit from Turkey lender. Vit Thank you so much for sitting down with me today.

Vit Arnautov: Hello. Happy to be here. Thanks for having me.

Manseeb Khan : Yeah, for sure. So, could you. For the I guess five or six audience members may not know who you are and what your company does. Could you just give us a rundown of a little bit of your background and what turnkey lender is?

Vit Arnautov: Okay, sure. So, I am a chief product officer, at Turnkey Lender. I mean, this business for about 10 years now, I've been in this company since the very beginning. So, this gives me a good understanding of all the processes in fintech and digital lending. Turnkey lender is the provider of intelligent lending automation. We were the first company to offer great software for the businesses of any kind. And we're focusing on digitalization processes automation and a loan decision making. But we're pretty much covering all the long lifecycle from the origination of the collection and through, of course, the decision. So, we have a line of products. The books version that can be delivered within a day. And with all the required functionalities to start lending and the enterprise solution for more sophisticated clients, this is a tool that allows you to build business processes, solve any complexity without coding. So, you can put it as a kind of Lego construct, a way you can build and automate your processes with blocks. We're Singapore based company we have offices in the U.S., in Ukraine, Indonesia, Malaysia.

Manseeb Khan : That's incredible. I like the Lego analogy you use. I think that's going to make it a lot easier for the audience members , especially to really understand the really amazing work that you guys are doing. So, could you just talk a little bit more of the approval process, right, and how kind of differs from the other alternative lenders?

Vit Arnautov: Yes, sure. So, the decision making, and approval process is still the biggest challenge for the lenders. We understand that this is also the main brisk source in their business. So, we provide several layers of the decision-making process using both traditional and alternative approaches. So, it goes like this first you have the fraud prevention to where you analyze information from internal and external sources like terrorists and other fraud lists. Then you have alternative scoring with more information from client’s house to fill in the application for how fast he's typing, how the application details. If there were copy paste that if there are too many replacements of attachments and understanding if this is a bot filling the application of these real plan. Now that we analyze also the mobile data, which is like mobile usage, number of contacts and so on, because for the entire statistics, about 80 percent of applications can come in from mobile platforms. Right? After that, we have the bank account statements, analysis, and after that goes the internal scorecard, which is the decision engine that we provide out of the box. It's powered by artificial intelligence. It learns about the borrowers and during the lifecycle of the loans. Right. And adjust in time by having more accurate and precise decisions later on. We don't have enough data to analyze. So, with more like advanced package, you can also have the champion challenge scorecards where, for example, if you want to have 10 or 15 percent of more riskier applicants and this is how you apply this on. And also, we provide, of course, the scoring reports for us or our class to analyze and track the performance and to fine tune in future the score.

Manseeb Khan : That's incredible, I'm glad that you have multiple like contingency plans when it comes time, actually like vetting and approving the process. Right. Like even under you, even though the process, I mean, as you know, has turned 200 does claim that it is. It is very fast. It is incredible that like even though it is fast, you still have multiple layers of channels you have to kind of go through.

Vit Arnautov: Yeah. Yeah. Absolutely. And this is like it has all those layers. And actually, can combine several of those. So, we also have like artificial intelligence with image forgery detector, for example, to analyze it attachments that are being in placed this is like an additional module that can be included. And all of this is combined all together. Or you can just use partially to use one block or use another one cause for different markets. It's different. And for different auditors, it's also different. Right. And so, you just can choose which of those you want to use.

Manseeb Khan : So, you do have the option to pick and choose the blocks that are appropriate for you and your business and your auditors. Could you talk about like the biggest technological challenges that alternative lenders face and how does Turnkey lenders solve them?

Vit Arnautov: Sure. So, from my point of view, the biggest ones are, first of all, of course, the regulations that we're having from our governments. There are literally a lot of them right now. And it's getting even worse because governments very strict in those regulations. And we, of course, understand that someone a good purpose. But so, we need to comply with that. And so, in case of Turnkey Lender, it's for example, we have signed an agreement with Thompson Reuters to streamline those military compliance for the clients in different countries because each country has their own compliance. And also, you want to buy a solution that is flexible enough to fit the regulations that are not there yet, but yet to come the fall of the governments. So, the second thing is you the need of one day fund transfer for the organizations and for borrowers. So, solution for that is in turnkey lender. That is fast decision making where you can provide a decision within seconds and you can transfer funds with some kind of automation of payment provider, comparing it to taking days or even weeks. In the past. So, this is a huge change right now. I say that is the growing competition among lenders due to a significant lowering of the entry barrier to the market. And this is also we provide the faster decision making which allows your business to grow faster and provide better decision and lowering risk, of course. And it's the intuitive user interface for the borrowers scores. Each of those question or another step in the application process and know your customer process. It lowers your sales funnel.

Manseeb Khan : Right that makes total sense. How do you see the role of A.I. in digital lending now and in the near future? Because you have mentioned a couple times, you know. How what differentiates you guys from other lenders? And what kind of makes you guys a little bit more pulling ahead is the fact that you guys actually use AI the most the fullest advantage currently to make sure your loaning process, your vetting process and security. And just to make sure the whole like you can optimize every single block to the fullest potential.

Vit Arnautov: Yes, absolutely. So, the first usage of the A.I. is obviously for chat bots that we can see this support that automates their first level and second level usually. And like using bots to kind of answer the questions faster. But what's the biggest application for me, as I see, is the risk evaluation and of course, the decision and process. So, the AI usage helps us to provide more accurate analysis in predicting the expected future behavior for a client and therefore to provide more precise decision making. So, the learning curve for the AI is exponential and in the nearest couple of years we are going to get a huge leap in this.

Manseeb Khan : Because you can totally mitigate a lot more risk. Right being able to map out certain behaviors of who you're lending out to, you get to know, you know, aside from who they are, from the financial statements and from the history and aside from all the documents that they already require having an additional layer of A.I. to learn their behavior patterns and to send it to kind of trend to see what they're going to do in the next five years. I believe that's very important for sure.

Vit Arnautov: Yes, absolutely. If I may add. So please, you've got the operational costs because you don't need to have like 20, 30 people in the office for decision making. You can automate it at all and provide the system within seconds. So, this also eliminates today human error and it helps you to cut costs. Right.

Manseeb Khan : Yeah, for sure. Absolutely. And like you can even start again adding more. And actually, this opens up the door to add more blocks in the future of having even more criteria as of getting approved for loans or what it or the case may be. You guys do something really interesting called Cloud lending. Could you explain a little bit more of what cloud lending is and why it's going to become a trillion-dollar year over year industry?

Vit Arnautov: Yeah, sure. So, cloud lending is really exploding and so we host all our solutions in the cloud, of course. And for each like if it’s a retailer or even a dentist wanted to stand their business and to go online. Or is it a fintech startups. A lot of new players coming into the market. And of course, they have our own challenges and many businesses struggle with the entry barrier. But with a bot platform that we provide, it can be deployed within a day. So, it's ready to use and compare it to the like millions of dollars that banks were investing in R&D to have the same functionality in the past. So, the way we see it is launching now a web platform. A cloud platform for lending is as easy as a WordPress site, which was a really heavy 10 years ago. And now it's a matter of hours. And so, we're even hosting it for you. So, you don't need to pay for hosting separately on your domain name. So, we have a goal in one place. You just buy a subscription and you go with your lending platform.

Manseeb Khan : That's incredible. That makes it a lot more easier to use. I like the WordPress analogy. How do you how do you see technology changing in the lending space in the next five years?

Vit Arnautov: Yeah. First of all, the one that we just discussed, the way AI use each, of course. Now, the second thing I would mention is the whole lifecycle of the loan automation. And it's not only the A.I. usage, but all these flaws that are being now automated with lending solutions. So, it's also eliminating the human error and speeding up the process. It's all about processes. Automation is all things like servicing and collection, reporting, underwriting, and even notifications are all automated now. And you don't need once again 20 people to manage the software and be one engineer who's sitting in the office and fine tuning the software. And it works just as it is. No additional features required. Everything's in place already. Now, the one more thing worth mentioning is an expansion to under banked or unbanked regions and new demographics. Cause as far as I remember, it is two and a half billion people who cannot get access to banks right now in the world. Right. So, it's half of the entire population of the planet. And in really developed countries, the customer acquisition cost is already high. And it continues to grow. This why is many financial institutions having branches of them of their software to go with under banked regions and demographics. This is what's going to change in the near years, of course, because, for example, we're providing an international version of our solution that also you can just choose the country you're operating with and change it automatically change the unique identifier system, for example, and the date format, the currency, the language and stage, and it's ready to go and you can work with it. So, in an example within Asia, they have a lot of rural banks and fintech’s trying to reach out offline lenders outside of the big cities and provide loans to them. So, we can see that interest industry is growing faster.

Manseeb Khan : Yeah. I mean, you did bring up a good point of the fact that there are two billion people that are getting under serviced. And I think the future of that is very bright. I think there's a ton of opportunity there for helping, you know, very under underdeveloped countries. And just like infrastructure in and of itself and being able to service these kinds of people and help them develop, help them, you know, like foster new growing economies. That in and of itself is very exciting because like so many like so many new innovations and just ideas and just like so amazing things are to come out of that. And that to me is. That's can be very, very exciting.

Vit Arnautov: Yes, absolutely. I totally agree with you. And hopefully Elon Musk will cover the earth with the Internet connection very soon and all those people will be able to reach the Internet with loans to be able to grow their businesses. Because right now they just cannot access their banks, right? Yeah. Yeah. In the next few years, they will be able to get loans or their business and start to get in profit.

Manseeb Khan : Right? For sure. And this and this now start to become like an actual player. Right. In whatever space they may be in. Right. That's very, very exciting.

Vit Arnautov: Yeah, absolutely right. Yeah.

Manseeb Khan : So, I guess, how does alternative lending impact industries, I guess, such as telecom and like medicine then?

Vit Arnautov: Ok, let's start with medicine first, right? Cause medical is they say that 21st century is going to be a century of medicine and biotech and the industry's going to be bigger every year. I believe that in 10 or 15 years you will be able to replace your arm with a bionic we are if you want. But the costs for these such kind of surgeries are really high. And so that's where the lending comes in. And you have to get sometimes the service is very fast and you get money and not get a loan from this organization. And so, the second one is telecom and the previous logic goes there. When a user doesn't have money on their balance, they should be instantly offered with the with a credit line to continue communicating so they could repay it later on. And the second use case for telecoms is that they should be able to get a new tablet or new phone right from the office of the telecom. So, they are starting to finance their retails. And you don't have to go to bank anymore. You can get it right in place. So that's why I think it's going to be big in next couple of years.

Manseeb Khan : Mm hmm. The medicine that I never thought of it in the medicine field of like, hey, you know, you want a new bionic arm. Awesome well there is costs for that. I was like, oh, that now. I mean, it's a lot more sense, especially now with the new I guess now like we have robotics and medicine and like, you know, we can actually like sooner or later we able to replace any single body part we can.

Vit Arnautov: Absolutely agree with you Looking forward into this into that future.

Manseeb Khan : Yeah. One hundred percent. So, my I can't wait for that too. Um, are there any other spaces that turnkey lender or are looking into?

Vit Arnautov: Yes, sure. So, we think that retail will be big also. For example, the in-house retail, if you're producing anything you can just provide also services like lending services for that and you will be able to get to competitors with that. You just provide an installment program. Increase in your sales. And then it's very simple, but it's very effective because the sales rises.

Manseeb Khan : Yeah, for sure. because now you have one advantage compared to competitors of, hey, you know what? Sure. We sell. I don't know. Artisanal couches, whatever, whatever, whatever. I don't know whatever you might be selling if you know how to feel, if you do have the full amount. That's OK. We actually offer financing terms, and these are the actual financing terms. So, yeah, no, I agree.

Vit Arnautov: And the business gets their interest and the customer gets the reality. And then there are more clients and there is no downside in this in this approach for sure.

Manseeb Khan : Absolutely. So aside from, I guess, a telecom retail. Are there any other industries that you think alternative lending is going to impact next? And why?

Vit Arnautov: Actually, I think lending will be huge in years future That's to what you mentioned. Like 1 trillion dollars. And it can be anything. It can be e-commerce. It can be a medicine, retail, anything. It can be just installment loans, consumer loans, just anything. And the under banked regions, so that you are discussing. Right. So how about what the population will be getting loans?

Manseeb Khan : So, a little insight into the trends of the lending industry. I mean, such as P2P lending and house financing, which we talked about, debt financing, you know, factoring, invoicing. Could you discuss the areas a little bit more in detail and how do you see them developing more in recent years?

Vit Arnautov: Yeah, sure. So once again, the other bank regions, for example, are not just crowd lending and like crowd funding, it can be peer to peer for businesses in Africa, for example. They want to extend their business. They, for example, produce some great goods, but they don't have this capital to yet grow in. So, with the peer to peer, they can access funds from UK and US for from developed countries. Right. And they're just getting those money to expand their business. And this is very efficient loans with low risks, actually, because they have collateral on their businesses. I'm pretty sure that they will be able to give it back the loan within like short terms for business. It's two years, three years. And this is very effective. And for those lenders, for those businesses in Africa, that they just cannot get funding without it. So, this is the only source and the fastest source of funds that they can access. So, the effort to bear is great also.

Manseeb Khan : Right. And this kind of goes in the conversation of like open banking right now. You're going to have let's stick with the Africa example. Right. I'll let you have a business in Africa. They need money to actually start the business up or pay off whatever they need to pay off. And, you know, they could they can actually start getting more competitive rates. You know, hey, let's look at the banks and UK and let's look at the banks and like Germany or like the bank or the banks like Sri Lanka. Let's see. Look what all the rates are. What do we get? And it's kind of creating a more of a of a really creative, not creative, creative, and competitive marketplace for businesses to kind of have a lot more options and not be as and not have such a high bar of entry.

Vit Arnautov: Yeah, Exactly. And also, worth mentioning that for developed countries, the percentage for loans will get 3 percent. Right. And for Africa, the usual percentage might be like 12 percent or 14 percent. And it's OK for them because they just don't have access to money. So, for developed countries, they have the high interest for not developed or developing countries. It's to get money faster. So, the economy of the world is growing because of that, because money is distribution from one region to another. And are like the money is in the place in Africa producing goods and selling goods. So, the economy rises all over the world because of it.

Manseeb Khan : Right. No, absolutely not. You know, it's really helping fuel the flame of having of more of a globalized economy. Right. Exactly. Yeah. So Vit is there. Before we wrap up, is there anything else you want to add on? I guess a couple of things that you definitely want to keep. You want to make sure the audience kind of keeps in mind.

Vit Arnautov: If you're starting a business, just consider having a platform that is really user friendly and to its flexible enough to fit your business needs and flexible enough to fit your future business needs. So, there are platforms right now that allow you to start business with one day and start operations. So, yeah, it's good. It's great. It's like good for your business.

Manseeb Khan : Awesome. Yeah. So, make sure you make sure everyone or all the entrepreneurs that we have in the audience, make sure that you stay flexible as much as you can. So. Exactly. Yeah, that's awesome. So Vit Thank you so much for sitting down with me today.

Vit Arnautov: Thank you very much for having me Manseeb. Once again. Yeah.

Manseeb Khan : For sure. So, I guess we'll I guess we'll be the best way for audience members to either reach out to you personally and or to Turnkey Lender or if they have any more questions about anything.

Vit Arnautov: Absolutely. You have my contacts. If anything, you can contact me directly or with from our site on Turnkey Lender dot com where we'll be happy to help you. And we'll be happy to answer all of your questions.

Manseeb Khan : Ok. Awesome. Thank you very much. Yeah, for sure.

Outro : you've been listening to fintech Fridays brought to you by NCFA and partners. Tune in weekly for the latest fintech Friday podcast by subscribing to this channel. The National crowdfunding and FinTech Association of Canada is a non-profit actively engaged with social and investment fintech sectors around the globe and provide education research industry stewardship services and networking opportunities to thousands of members and subscribers. For more information please visit and see if a Canada dot org. Oh yea.

 

End of Podcast

 

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NCFA Jan 2018 resize - The Solution To The Fintech IPO Shortage 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

Latest news - The Solution To The Fintech IPO ShortageFF Logo 400 v3 - The Solution To The Fintech IPO Shortagecommunity social impact - The Solution To The Fintech IPO Shortage
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MIT Technology Review | Mike Orcutt | Aug 15, 2019 Complying with regulators could mean the difference between going mainstream and remaining forever on the margins of the global financial system. One of the biggest knocks against cryptocurrency has always been its status as a refuge for tech-savvy criminals. Even as some bigger players—particularly exchanges that handle many billions of dollars in crypto-wealth each day—have gone out of their way to play nice with regulators, the image persists, in part because some crypto firms have evaded regulators by moving to jurisdictions that are less strict.  But the end of the lawless era may be nigh. A new set of global anti-money-laundering rules aimed at cryptocurrency exchanges has been handed down by the Financial Action Task Force, an intergovernmental organization that sets standards for policing money laundering and terrorist financing. The rules, which call on exchanges to share personal information about their users with each other, are controversial. Many cryptocurrency enthusiasts think the privacy that drew them to the technology could evaporate. On the other hand, complying with the rules is likely to make the industry more attractive to mainstream financial institutions and users. In other words, cha-ching. See:  A Global ...
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Pryor Cashman | Jeffrey Alberts and Dustin N. Nofziger | Aug 13, 2019 The Federal Reserve Board has announced plans to develop a real-time payment service that should appeal to FinTech companies and community banks. The Board announced last Monday that it will develop a new round-the-clock real time payment and settlement service to support faster payments in the United States. This new real-time gross settlement (RTGS) service, which will be known as the "FedNow Service," is anticipated to be available in 2023 or 2024. The Board is currently soliciting comments on all aspects of the proposed service in order to finalize its design and features. The Board's intention to operate a RTGS service is a win for community banks and FinTech companies, although it may threaten those FinTechs with business models centered around providing real time payments. The Board's plans were not developed in a vacuum. The Clearing House (TCH), which is owned by 30 of the world's largest commercial banks, previously rolled out a RTGS system known as the "RTP network" in November 2017 – some six years before the Board anticipates that its FedNow Service may first become available. The RTP network reportedly cost over $1 billion ...
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Forbes | Ron Shevlin | July 1, 2019 OBSERVATIONS FROM THE FINTECH SNARK TANK A Seeking Alpha article titled Why Fintech May Not Be Fit For Public Consumption states: The year 2019 seems set to be a record-setting one for venture capitalist exit value capture by means of tech IPOs. But fintech doesn't seem to be a part of this picture. VCs are certainly putting money into fintech startups. There were 170 financings in the US in the first quarter of 2019. But, as Pitchbook says, 'not one of the most valuable fintech companies in the world seems particularly close to an offering.' " The article chalks this up to three primary causes: 1. Poor IPO performance in 2018. According to the article, "One reason nobody is in a hurry to go public is that the results of the last crop of fintech concerns that did go public have been unimpressive. Adyen and IntegraFin are prospering, but neither GreenSky nor EverQuote is "lighting up the heavens" according to Seeking Alpha. See:  OurCrowd Double IPO Success Provides Crowdfunding Validation 2. Mega-round financing. Seeking Alpha postulates that investor interest in mega-rounds--e.g., Qatar Investment Authority's investment of $500 million in SoFi and Tiger Capital leading a round that raised $300 ...
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CNBC | Kate Rooney | Aug 12, 2019 Money spent in venture capital and other alternative investments is surging as investors look for riskier, but higher-yielding investments. The trend coincides with relatively low returns from more conventional Wall Street investments such as stocks and bonds, and a drop in the number of publicly traded companies. “In a world where big institutional investors find themselves starved for returns, it’s not surprising that they have steadily increased allocations to private markets and you’ve seen capital continuing to flow into the asset class,” says McKinsey Partner Bryce Klempner. Many global investors are turning toward Silicon Valley instead of Wall Street in search of returns. The total invested in private markets hit all-time highs last year and continues to break multi-decade records this year. In the first half of the year, total investments in venture capital hit a 19-year high of $53.3 billion, according to data from Refinitiv published last week. That marked a 21% increase by total dollar amount compared to the first half of 2018. See:  $5 million Equity crowdfunding extended to private companies The steady stream of funding comes alongside a drop in the number of publicly listed companies, rock-bottom global ...
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TechRepublic | Mary Shacklett | July 23, 2019 Learn how artificial intelligence and analytics can be used to improve customer service in banking. When I was a CIO for a financial institution, I worked with executives on the operations side to see how we could improve relationships with customers at our branches. Our front-line tellers at these branches were more like order takers—they did what customers asked, but no more. These employees were in low-wage positions, and they often had limited skills. One of the skills we wanted was interpersonal engagement with customers that you would typically find in a salesperson. We decided to hire people with retail and/or people-facing experience, figuring that we could train them to be tellers. We implemented systems that would prompt a teller to ask a customer about new products the customer might be interested in, and we offered financial incentives for enrolling customers in new products. The experiment yielded mixed results and likely would have gone better if we'd had some of the analytics and artificial intelligence (AI) automation tools that are available today. See:  How Jack Ma’s $290b SME credit engine is changing Chinese banking "Most customers tend to keep their accounts with ...
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Guest Post | Aug 14, 2019 You see a need. You know that your new business can fill that need. The problem is that it takes an incredible amount of capital to start a business. Besides purchasing equipment, raw materials, and computer systems, you also have the expenses that no one ever thinks about when opening a shop. Did you figure in the cost of hiring an accountant, a lawyer, and paying for workers compensation insurance? Instead of heading to the bank with your business plan in hand, you may consider whether working with a crowdfunding site might be another feasible way to raise cash for your business expenses. Here’s how crowdfunding sites work. Cash in Exchange for Equity Have you seen Shark Tank? On this TV show, investors decide whether or not they would like to provide capital for startups in exchange for a piece of the company. Sometimes the hosts compete against each other for the opportunity to invest. Sometimes they pool resources and form investment partnerships for a portion of ownership in the company. Occasionally budding entrepreneurs are sent away empty-handed. See:  Regulation Crowdfunding Surpasses $250,000,000 in Commitments The Model is Working but its Potential is Much ...
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Forbes | Biser Dimitrov | Aug 13, 2019 2019 is the year when the blockchain ecosystem and the crypto industry as a whole had to get sober. After a wild 2017 and a bear 2018, the blockchain space is back on an upwards trajectory with new developments. There are no more Initial Coin Offerings (ICOs) to distract the crypto ecosystem and the building mentality is back on. This post-ICO and post-useless-PR-partnerships age urges the blockchain community to be less focused on the current price of bitcoin and more focused on producing meaningful services and advancements. Big projects from established enterprises like Facebook Libra are taking all the media space now and this is net positive for the enterprise blockchain space as well. The first half of this year was full of blockchain developments led by large enterprises in almost all important sectors, including insurance, financial services, supply chain, healthcare and trade finance. There is a huge benefit in joining a specialized industry-focused blockchain consortium because you sit at the same table with your main competitors but at the same time you work toward the same goal. You are not alone in figuring out the benefits, implementations and roll-out of distributed ...
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Wired UK Gov | Information Commissioner's Office | Aug 12, 2019 Reuben Binns, our Research Fellow in Artificial Intelligence (AI), and Valeria Gallo, Technology Policy Adviser, discuss some of the key safeguards organisations should implement when using solely automated AI systems to make decisions with significant impacts on data subjects. This post is part of our ongoing Call for Input on developing the ICO framework for auditing AI. We encourage you to share your views by leaving a comment below or by emailing us at AIAuditingFramework@ico.org.uk. The General Data Protection Regulation (GDPR) requires organisations to implement suitable safeguards when processing personal data to make solely automated decisions that have a legal or similarly significant impact on individuals. These safeguards include the right for data subjects: to obtain human intervention; to express their point of view; and to contest the decision made about them. See:  How Data-driven Strategies Can Improve Impact Investing Outcomes These safeguards cannot be token gestures. Guidance published by the European Data Protection Board (EDPB) states that human intervention involve a review of the decision, which “must be carried out by someone who has the appropriate authority and capability to change the decision”.  The review should include a “thorough assessment of all the relevant ...
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Peer to Peer Lending: The Future of Fintech is Now

Lending Loop | Reza Jafer | July 24, 2019

Peer to peer lending the future is now - The Solution To The Fintech IPO ShortagePeer-to-peer lending is on the rise. It is steadily growing and becoming an increasingly significant part of financial services in the UK, US and Australia, among other countries. With an emphasis on speed and transparency, these platforms are addressing the needs of investors and small businesses by reducing bureaucracy and administration costs to offer better interest rates to both groups.

According to an article published on TechBullion, peer-to-peer lending is attracting more investors and borrowers with the volume of loans increasing drastically on a global scale and “is predicted to come close to $1 trillion by the year 2025.” There is an increase in the volume of investors who are already experienced with peer-to-peer platforms, and the number of new investors is continually growing.

Investors’ growing demand for peer-to-peer lending platforms raises some interesting questions, regarding what makes peer-to-peer lending so different and appealing on a global scale.

 

What sets peer-to-peer lending apart from other fixed-income investments in Canada?

Some of the key attributes that set peer-to-peer lending apart from traditional fixed-income are the low amounts of capital needed to build diversified portfolios, the potential for higher yields, and having a direct impact on the success of businesses across Canada.

Recognizing that Small & Medium-sized Enterprises (SMEs) employ approximately 90% of the Canadian workforce, the shift to supporting local businesses is here to stay. Peer-to-peer lending enables everyday Canadians to invest their money locally and support communities around them, in addition to supporting local businesses through other means, like purchasing their products or services. Peer-to-peer loans offer an opportunity to invest with a conscious and purpose, without compromising returns.

Is there a reason why peer-to-peer lending is gaining so much traction in Canada?

First and foremost, it provides everyday Canadians with a unique way to diversify their financial portfolios. If you are a Canadian investor, there is a very high probability that your net worth is significantly exposed to just a few industries like financial services, natural resources, telecom and real estate. Between your employer, pension and home ownership, it is prudent to diversify your concentration to these few industries. Peer-to-peer investments are offering unprecedented access to investments that were previously only available to financial institutions and high net worth individuals. Canadians are more financially-savvy than ever, and peer-to-peer investments provide an innovative way for everyone to take control of their wealth.

See:  Peer-to-peer lending will help small businesses stay afloat

Investors looking to diversify their portfolio and feel more connected with their investments should definitely consider including peer-to-peer investments in their portfolios. 

 

What role do you think peer-to-peer will play in financial services by 2030?

In the last decade, we’ve witnessed a ‘retail revolution’ of sorts, with E-commerce juggernauts like Amazon and Alibaba changing the way consumers purchase goods. By providing consumers access to products all across the world at ever-lowering prices, long gone are the days of costly, and often redundant, intermediaries of the sales cycle. The removal of costly intermediaries isn’t exclusive to the B2C space.

It was simply a matter of time before we turned our attention to financial service providers and our investments, to re-evaluate traditional offerings. Of late, we have witnessed the popularity in democratizing access to traditional investments, like stocks and bonds, through ETFs and self-directed trading. But much of the alternative investment space is still only accessible to high-net-worth individuals or are wrapped up in age-old fund structures with high-costs in place.

Peer-to-peer investments aim to provide access to an asset class that has been traditionally held by financial institutions and it has reinvented how fixed-income investments can help Canadians build their wealth. Today, peer-to-peer is still a nascent concept in the Canadian market, but by 2030, I believe this will be the normal way of investing or borrowing. Peer-to-peer is simply a reimagination of a process, whereby we are democratizing lending and connecting Canadians with capital directly to Canadian small businesses seeking it.

 See: 

Would an Open Banking framework accelerate some of these changes or alter the landscape altogether?

Absolutely. For the lending sector specifically, the potential of Open Banking is significant because we often work with an underserved segment of the market. At times, it can be difficult to quantify the potential of these groups, but if the UK serves as an indicator, the economic potential in both urban and rural areas could be significant. In the UK, we see reports that peer-to-peer platforms have had a tremendous impact on job creation. While the consumer experience is a key element, the impact goes far beyond that, to the point where our government should consider how Open Banking contributes to job creation and economic growth, especially when evaluating what it could mean for Canadian consumers and businesses.

We see a huge opportunity for all of the above, especially for Canadian business owners, who would be able to receive more tailored financial service products and develop a more thorough understanding of the financing options available to them. Shifting the ownership of data to the business owner rather than the institution opens up countless new opportunities for fintech providers to offer customized solutions and services. With a scarcity of available data, the full capabilities of artificial intelligence and machine learning are not being maximized. Open Banking has the power to change this paradigm significantly.

Similarly, Open Banking would increase choice for investors and result in more investor-focused products and processes. In the UK, we’re seeing an exciting evolution of financial services and increased integration as peer-to-peer platforms like Zopa are looking to launch digital banks. They are part of a growing number of emerging challenger banks in the UK. It’s exciting to see this space grow and more competition enter the market just one year after implementation. Open Banking is clearly enabling this kind of competition in the UK and an Open Banking framework in Canada might open up similar possibilities.

See:  Canada’s financial upstarts are lining up behind open banking, but bigger players may need convincing

We don’t have a history of challenger banks the way other jurisdictions do, but with the speed of innovation in FinTech, we might see the emergence of multiple challenger banks in a way we haven’t seen before. That’s just one piece of a much bigger picture. On a larger scale, an Open Banking framework could facilitate unprecedented innovation in Canada’s financial services sector which is essential to our prosperity and competitiveness.

Who wouldn’t want more of that?

 

Reza Jafer head of wealth management lending loop - The Solution To The Fintech IPO ShortageReza Jafer, Head of Wealth Management, Lending Loop (www.lendingloop.ca)

Reza Jafer has some insights into those very questions. As the Head of Wealth Management at Lending Loop, he oversees investor relationships and is dedicated to helping Canadians build successful, diversified portfolios. Before joining Lending Loop, Reza worked at two of the largest banks globally within their Corporate & Investment Banking divisions, focused on financing and advising some of Canada's largest companies.

 


NCFA Jan 2018 resize - The Solution To The Fintech IPO Shortage 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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Crowdfunding trends: Blockchain and video games most popular projects

Net Imperative | June 12, 2019

lending landscape - The Solution To The Fintech IPO ShortageBlockchain and video games are the most lucrative industries for crowdfunding projects, getting million of pounds in funding for popular projects, according to new research in Europe.

A new study by SmallBusinessPrices.co.uk uncovers the sectors and countries where the introduction of the alternative finance marketplace is being felt the most, and the current value of the industry.

Key Findings:

• Blockchain and Video Games Named The Most Lucrative Industries For Crowdfunding – 31 Blockchain crowdfunding projects averaged funding of over $177 million, whilst the Video Game sector that has seen the most projects to exceed $1 million, with 38 in total.
• 3D Printing, Wearable Tech, and Software – All make the top 10 most successful crowdfunded industries and have a combined total funding of $17.1 million
• The UK Is Paving The Way – $20 billion of alternative finance funds has been raised, this is over double the volume of all other countries combined.

See:  Architecting a New World: Investment Crowdfunding and Digital Assets

In recent years, Alternative Finance funding channels that exist outside of the traditional finance system have revolutionised how small and medium enterprises are able to operate. The rapid growth of the Alternative Finance industry, in areas such as Crowdfunding, is making it increasingly less ‘alternative’, but where is this development seen the most?

Comparison service SmallBusinessPrices.co.uk has taken an in-depth look at the countries and sectors where the development of the alternative finance marketplace is being felt the most, and the current value of the industry.

Alternative Finance by Country

Peer-to-peer lending, online alternative finance, and crowdfunding are 3 of the most prominent forms of alternative finance which many countries have started to adopt. Below are some of the countries that have been quick to get involved:

UK Out in Front – In a study of just under 20 European nations, the United Kingdom ranks well ahead of its continental counterparts with an estimated volume of $20 billion raised through alternative finance according to recent figures. This figure is over double the volume of all other countries combined.

Germany and France Top Mainland Europe – While both nations have a long way to go to catch the figures showcased in the UK, impressive levels of P2P lending and Equity-Based Crowdfunding makes them the only other countries to exceed a $1 billion volume across the key alternative finance markets.
Crowdfunding by Sector

Arguably the most mainstream form of alternative finance in terms of awareness, Crowdfunding has provided normal people to impact the success of business enterprises of any size. We’ve analysed of the most successful industries and the level of funding they have been able to gather.

See:  European Parliament Adopts First Reading Position On Proposed Regulation And Directive On European Crowdfunding Service Providers

Blockchain Most Funded – Blockchain technology has seen its popularity and value increase hugely in recent years, particularly with the recent wave of interest in the Cryptocurrency world. In our research, we found 31 Blockchain crowdfunding projects which averaged funding of over $177 million.

Continue to the full article --> here


NCFA Jan 2018 resize - The Solution To The Fintech IPO Shortage 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 confirms new rules for P2P platforms

FCA | June 7, 2019

FCA - The Solution To The Fintech IPO ShortageFollowing consultation, the Financial Conduct Authority (FCA) is introducing rules designed to prevent harm to investors, without stifling innovation in the peer-to-peer (P2P) sector. When the FCA set its first rules for P2P, it committed to keep these under review as the sector evolved. These new rules are designed to help better protect investors and allow firms and fundraisers to operate in a long-term, sustainable manner.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:

'These changes are about enhancing protection for investors while allowing them to take up innovative investment opportunities. For P2P to continue to evolve sustainably, it is vital that investors receive the right level of protection.'

The FCA has refined its proposals to ensure the new rules protect consumers and support the P2P market. In particular, additional guidance has been provided to make it clear that platforms will not be prevented from including information about specific investments in their marketing materials.

As originally proposed, the FCA is placing a limit on investments in P2P agreements for retail customers new to the sector of 10 per cent of investable assets. This is an important means of ensuring that they do not over-expose themselves to risk. The investment restriction will not apply to new retail customers who have received regulated financial advice.

See:  FCA publishes update on wide-ranging review of retail banking sector

In addition to these restrictions, the new rules cover:

  • More explicit requirements to clarify what governance arrangements, systems and controls platforms need to have in place to support the outcomes they advertise, with a particular focus on credit risk assessment, risk management and fair valuation practices.
  • Strengthening rules on plans for the wind-down of P2P platforms if they fail.
  • Introducing a requirement that platforms assess investors’ knowledge and experience of P2P investments where no advice has been given to them.
  • Setting out the minimum information that P2P platforms need to provide to investors.
  • Applying the Mortgage and Home Finance Conduct of Business (MCOB) sourcebook and other Handbook requirements to P2P platforms that offer home finance products, where at least one of the investors is not an authorised home finance provider.

P2P platforms need to implement these changes by 9 December 2019, except for the application of MCOB, which applies with immediate effect.

The FCA will continue to closely monitor the P2P market as it develops further.

Continue to the full article --> here

Download the Loan-based Peer to Peer and Investment Crowdfunding Rules -> Now

 


NCFA Jan 2018 resize - The Solution To The Fintech IPO Shortage 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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10 FinTech Influencers to Follow if You’re Into Digital Lending

Guest Post | Vit Arnautov | June 5, 2019

lending influencers - The Solution To The Fintech IPO Shortage

Fintech as an industry got so big that following people who know things about it in general doesn’t cut it anymore. If you’re working in lending software niche, like I do, you need influencers, passionabos and opinion leaders with specific expertise to help you stay on top of all the trends and news of the field.  So I decided to put together a list of people who I regard as the ones being on the bleeding edge of the digital lending technology and who share their expertise with us, the community. Let’s dig right into it.

Chris Skinner

Starting with the big guns. Chris Skinner is widely known on the web as mr.Fintech. And rightfully so, since he’s been around and actively involved with the financial technology for as long as it exists. Now, Chris is on advisory boards of numerous startups and well-established fintech firms. He combines it with being an independent commentator of the financial markets and an author of the bestselling books. The best way to keep up with him is to follow his Twitter and check in on his website, The Finanser, which regularly publishes fresh fintech and lending news.

Dmitry Voronenko

A true opinion leader has to be hands-on, building revolutionary products and working with other top players in the field to build a crystalized vision of the industry's present and future. As the CEO of an all-in-one lending software company, TurnKey Lender, Dmitry Voronenko is exactly like this. At the same time he is often invited to participate at expert panels, speaks at conferences and gives interviews to the topical and mainstream media. The easiest way to stay updated about him is to follow him on LinkedIn.

Jim Marros

For the fintech world, Jim Marous is one of the most well-known and influential people. His enormous experience in everything related to banking led him to advising the White House on the banking policies and got him featured in publications like The Wall Street Journal, New York Times, The Financial Times and The Economist. He’s the co-publisher of The Financial Brand and owner of the Digital Banking Report. You want to follow him if you’re interested in banking innovation, customer experience, lending, payments and digital transformation.

David M. Brear

David Brear is one of those people who believe that “digitalization of banking is about one percent finished”. And as the CEO of 11:FS, he’s doing his best to digitalize the remaining 99 percent. The best way to keep track of David’s activities is to tune into his popular fintech podcast, FinTechInsider and to follow his Twitter where he shares the significant fintech news and his insights.

Chris Gledhill

Chris Gledhill is also representing the new wave of entrepreneurs and leaders in the fintech industry. He’s well-known for his popular LinkedIn articles devoted to everything fintech. He often speaks and writes about fintech in general and the future of financial services. His expertise in the matter comes from years of both technical work and business development. Other than sharing his knowledge with the community, he’s a founder and a CEO of a fintech startup Secco Aura which aims at converting one’s skills and services into monetary value.

Duena Blomstrom

Duena Blomstrom is an extremely active member of the global fintech community. She’s an entrepreneur, an investor, a mentor to startups, as well as the founder of FinWinners. Over the years Duena helped multiple tier-1 banks go through digital transformation. At the same time she promotes all the spheres of alternative banking, be it lending or payments. Duena is one of the voices definitely worth listening to if you want to stay in tune with the constantly changing world of fintech. Follow her on Twitter or as a top voice on LinkedIn.

Brock Blake

Brock Blake is a frequent contributor to resources like Forbes and Entrepreneur. He’s a huge proponent of lending digitalization. And not just in theory but in practice, as the’s the CEO of Lendio, the largest business lending marketplace in the U.S. The platform works with over 25 lenders and makes the lending process a bliss for its customers. So we can truly trust Brock’s expertise. To stay up to date with news from him, make sure to follow him on Twitter.

Spiros Margaris

Next up we have Spiros Margaris, Onalytica’s #1 fintech influencer. Other than speaking at conferences and expert panels, he’s published a substantial AI white paper, “Machine learning in financial services: Changing the rules of the game”. This white paper is a good place to start  learning about the present and future of AI in fintech from an expert. The paper has been widely acclaimed in the field and you can check it out here. Also, Spiros stays active on Twitter sharing insights and knowledge nuggets every day.

Oliver Bussmann

Oliver Bussmann is another great example of a public fintech executive. As an entrepreneur and an adviser to business, Oliver knows the industry from within. He’s known to be among the first to spot new trends and distinguish the ones that have potential. Oliver is the founder and CEO of Bussman Advisory. In the past he has worked as a CXO in high profile companies like UBS, SAP, Allianz, Deutsche Bank and IBM. Oliver is active on social media sharing his insights into the industry with the community on Twitter and during his keynote addresses.

Christian Faes

Christian Faes is a co-founder and CEO of LendInvest. It’s UK’s largest marketplace platform for property finance and one of the country’s biggest non-bank mortgage lenders. His experience and expertise in fintech are combined with his background as a lawyer giving his balanced comments extreme value. Christian has a unique insider view of the lending niche and shares his vision of the lending and fintech spheres with the audiences on Twitter and on Forbes.

Final thoughts

Fintech as a whole and lending in particular grow and evolve staggeringly fast. The people I listed above are the proven influencers with relevant experience and knowledge sufficient to keep you on top of the news.

Do you think any other lending thought leaders should be on the list? Let us know in the comments below!

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NCFA Jan 2018 resize - The Solution To The Fintech IPO Shortage 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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EY Global FinTech Adoption Index finds over half (64%) of global consumers use FinTech

EY Canada | John La Place | June 4, 2019

global fintech index EY - The Solution To The Fintech IPO Shortage

  • US consumer adoption has grown 29.5% in the last four years

  • 96% of global consumers are aware of at least one money transfer and payment FinTech service

  • One-quarter of small and medium-sized enterprises use FinTech, with a 23% adoption rate in the US

Financial technology (FinTech) adoption among consumers has nearly doubled over the past 18 months, according to the latest EY Global FinTech Adoption Index, and the adoption rate is growing faster than anticipated. Globally, 64% of digitally-active consumers across 27 markets use FinTech, and awareness is even higher.

This year, the EY organization added the first-ever Small and Medium-Sized Enterprise (SME) FinTech Adoption Index given FinTech’s expansion beyond consumers. EY member firms surveyed more than 1,000 organizations in five countries and found that one-quarter of organizations have used at least one FinTech across the following four categories in the past six months: banking and payments, financial management, financing and insurance.

See:

“FinTech organizations are no longer fringe disruptors and have grown into sophisticated competitors,” said Matt Hatch, Partner, Ernst & Young LLP and the EY Americas FinTech Leader.

“Now, financial incumbents are taking note and offering FinTech solutions, forming ecosystems that are replacing traditional partnerships. We fully expect this trend to accelerate as nonfinancial companies enter the space and leverage technology and innovation to provide frictionless, transparent and highly-personalized services.”

What’s driving adoption?

EY firms interviewed more than 27,000 people to better understand how consumers are interacting with FinTech, and the results are promising. Based on the survey results, money transfer and payments services continue to be the most popular in both awareness and adoption, as only 4% of global consumers are unaware of at least one money transfer and payment FinTech service. Adoption rates continue to lag in the US, while Europe’s investments in open banking have contributed to higher adoption rates in that region.

SMEs are further behind in their adoption journey compared to consumers. When an SME uses FinTech services, they have essentially selected this company as an approved vendor, so 25% is considered high, and the adoption rate is expected to climb. Over one-fifth (22%) of non-adopters already use FinTech services in three of the four categories defined in the survey methodology, which means they are on the verge of becoming FinTech adopters. By this measure, the global adoption rate could surge from 25% to 64%.

The impact of trust on FinTech adoption

The survey indicates that trust plays a large role in FinTech adoption, as non-adopters choose to remain with traditional financial services because they trust them more than FinTech challengers. Many FinTech propositions rely on data sharing, which can present a barrier for adoption.

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Nearly half (46%) of adopters are comfortable with their primary banking institution sharing their financial data with other organizations if it means better offers on products or services, but less than a quarter (23%) would share data with nonfinancial services companies.

This trust gap creates a huge opportunity for financial institutions and FinTech challengers, as 31% of adopters say they are willing to share data with FinTech challengers. Although nonfinancial services companies might lead innovation, they don’t have full confidence when it comes to providing financial services.

Still, 68% of surveyed consumers are willing to consider a financial services product offered by a nonfinancial services company.

The SME FinTech Adoption Index found similar trends. SME FinTech adopters are also more open to sharing data with FinTech companies (89%) and other financial services companies (70%) over nonfinancial services companies (63%).

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