A report from the Beijing Bureau of Financial Work says 90% of P2P platforms will struggle to stay in business in 2017; if their predictions are correct that would reduce the total number of P2P companies from 4,856 to approximately 500; companies will begin to undergo a review by regulators and it is expected that a run on deposits is likely to occur; regulators will be checking for a number of variables including two new requirements: the appointment of a custodian bank and full disclosure of the use of deposits; other factors under review will include risk management, business scale, IT infrastructure, investment sources and shareholders' credibility; firms will either be granted a P2P lending license or be required to liquidate; in 2016 the industry accounted for 800 billion yuan and according to the Beijing Bureau of Financial Work it is likely that 2017 will end drastically different for the industry overall. Source
News Roundup
This page contains an archive of the Global Newsletter summaries and the weekly fintech news roundups.
Every day the Fintech Nexus news team scours the globe for the most important stories of the day to include in our daily newsletter.
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The Lendit Forum will feature Aaron Peck from Monroe Capital and Tim Ranney from Clarity Services; the speakers will discuss the profile of non-prime borrowers and where the best investments are in the non-prime space; other topics will include how alternative data can be used to better assess the borrower's risk, interest rates for non-prime borrowers and the types of return investors can get when making this investment. Source
Technology and financial services innovation continue to create new market opportunities in a number of different ways; leading US tech companies Google, Amazon, Facebook and Apple (GAFA) have already begun to introduce financial services and some believe they could significantly disrupt the traditional financial system; the Financial Times outlines current activities from GAFA and also notes similarities to Ant Financial's plans in China; as services from these tech companies continue to expand into payments and other forms of financial services, market speculators believe one of the GAFA companies could even potentially buy a bank; while regulatory constraints and low ROE make this option unlikely, customers have expressed their increasing loyalty and trust in the GAFA companies; a report from Accenture says one in three global banking and insurance customers would switch their accounts to Google, Amazon or Facebook; while buying a bank could potentially be the extreme, given PSD2 changes in the UK and consumers interest overall it is likely that these companies will expand further into new types of payment technologies and fintech services in the near future. Source
A quarterly report from the New York Federal Reserve says household debt has reached its highest level since 2008 at $12.58 trillion; household debt increased $226 billion in the fourth quarter of 2016; home and auto loans represent the majority of the debt; despite the increase, bankruptcies and foreclosures for the fourth quarter reached an 18-year low indicating consumers are capable of managing the added debt. Source
A 2015 McKinsey report says today's technology is ready to replace approximately 45% of US jobs across a wide range of industries; federal and state governments have been receiving numerous inquiries about the effects of robot automation on the labor market however little has been done by legislators on the topic; Bill Gates has one suggestion for the economy; he suggests a tax for robot automation; a number of scenarios have come from Gates' robot tax suggestions, including: a company tax for robot automation that would contribute to social programs, designating government funds for salaried workers affected by robots, using taxes to provide a universal income for all citizens and a negative income tax. Source
The current market perspective is that banks aren't lending because of regulatory constraints; President Donald Trump even says that many of his friends in the business world would like to borrow money but can't because of regulatory restrictions; while market statistics show that banks are lending and have been doing so at an increasingly higher rate, it is true that there are constraints; however insight from the New York Times suggests that efforts to deregulate could be futile and that with lower capital requirements banks would instead prefer to use capital for increasing dividends and stock buybacks. Source
Student loan trader Nate Huebscher reports on the simplicity and benefits of marketplace loans versus the traditional lending sources: Sallie Mae, Discover, and the US Government; interviews Jason Jones of LendIt and Karan Mehta of Marlette Funding; Huebscher discusses the wide variation in marketplace lending models; also reports on some of the market challenges ahead that could dramatically affect the next cycle of platform results. Source
Jason talks about this year's LendIt USA event which will take place on March 6-7; while initially focusing just on online lending at its first event, LendIt USA has evolved to include a much broader agenda of fintech topics; IBM Watson will be giving a keynote on artificial intelligence this year and beyond just lending other featured topics will include blockchain, financial inclusion, wealth management and biometrics; PitchIt@LendIt has gained increased interest across the industry and this year had over 250 entries; attendees will also hear from asset allocators and learn about bank partnerships; LendIt has expanded networking within the LendIt mobile app to include 1-1 meeting functionality. Source
Keogh founded Finova Financial to offer a more affordable alternative for borrowers seeking title loans; Finova offers car equity lines of credit with 12 months to pay versus the 30 days currently required by most title lenders; managed through a cloud-based system it offers easy payments and its payment terms also include early payment incentives and no late fees; the firm has now raised $52.5 million. Source
UK digital bank Monzo is nearing completion of a new funding round that will add 20 to 30 million British pounds in capital for the firm; the investment round is being led by Thrive Capital; sources also report that the firm is planning an equity crowdfunding campaign later in the year; Monzo is led by CEO Tom Blomfield and the firm was granted a UK banking license in August 2016; it currently has 100,000 users with activity driven by pre-paid Mastercards and mobile applications; the firm recently declined an acquisition offer from an incumbent bank and says it still has a lot it plans to accomplish. Source