Philadelphia Federal Reserve Bank President Patrick Harker explained in remarks at the Global Interdependence Center's Payment Systems in the Internet Age conference that increased regulatory oversight of the growing fintech sector is necessary; "Regulation is not just a question of protecting consumers; it's a question of protecting the innovators as well," Harker said. "It's in their best interest to have an established framework in which to operate."; he believes getting ahead of the curve with regulation is the way to go, instead of waiting to respond to the next possible crisis. 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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A new global survey report titled, "Blockchain Technology: From Hype to Reality," shows 80% of banks surveyed expect to utilize some type of blockchain technology by 2020; 50% of banks say they have already invested or are planning to invest in blockchain technology in 2017; these financial institutions are reporting an average blockchain investment of $1 million in 2017; according to the report, the top five use cases for blockchain are cross border payments, digital identity management, clearing and settlement, letter of credit processing and syndication of loans. Source
SoFi has partnered with Promontory Interfinancial Network to help facilitate community bank investments in SoFi loans; Promontory Interfinancial Network will provide due diligence support for community banks; the Promontory Interfinancial Network includes a network of thousands of banks; for the partnership Promontory Interfinancial Network commissioned Promontory Financial Group (recently acquired by IBM) to provide a review and report on SoFi's underwriting, operations and systems to Promontory Interfinancial Network's banks for deal support; according to SoFi, the program will provide a gateway for small to mid-sized banks' participation in marketplace lending investment; Promontory Interfinancial Network will make SoFi's loan program information available for its bank network on its loan marketplace, Bank Assetpoint; network banks will not incur any additional charges for loan investment through the network and SoFi will pay Promontory Interfinancial Network a fee for each transaction. Source
SoFi bought online bank Zenbanx for approximately $100 million and will now be the first online lender to offer deposit accounts; Lend Academy provides more details on the acquisition in their article; the acquisition will help SoFi become a more central source for financial services to their clients; Zenbanx currently offers mobile accounts in the US and Canada; the current business will become integrated with SoFi's operations and Zenbanx's founder and CEO will be joining SoFi to run banking services; the acquisition gives SoFi significant latitude to launch additional banking products and the deposit accounts will add to the company's current products which now include student loan refinancing, consumer loans, mortgages, wealth management services and insurance. Source
The UK government has told P2P lenders that wholesale lending does not count under the current regulations and the practice is too risky for retail investors; wholesale lending is when you lend money to a business who then lends that money out; the FCA said, "this would mimic banking – but without the same protection for individuals or regulations for the firms involved"; P2P lender RateSetter started to wind down their wholesale loan book after getting more clarity from the FCA in December; the FCA still hasn't provided full clarity on the subject, but they are at least beginning to give more insight so lenders know where the boundaries are. Source
Wealthfront, a robo advisor, has launched Path, a new offering to aid in retirement planning; by connecting financial accounts, Path will analyze past behavior to ensure users are on the right track for retirement savings while also taking into consideration social security, inflation and investment returns; users can also modify settings such as savings to project changes to their financial situation; Path also helps users prioritize contributions and allocations to both Wealthfront and non-Wealthfront accounts taking into consideration tax advantaged accounts. Source
The Biz2Credit Small Business Lending Index shows another increase in small business approval rates at traditional banks in January with big banks approving a new high of 24% of small business loans; Biz2Credit CEO Rohit Arora attributes the increase to optimism over the Trump administration's regulatory initiatives for financial services; loan approval rates at small banks were basically unchanged at 48.9%; the loan approval rate for institutional lenders remained at 63.4%; loan approval rates at credit unions decreased to 40.8%; loan approval rates decreased for alternative lenders, with the average approval rate at 58.5%. Source
Lending Works has launched its innovative finance ISA; company offers unsecured loans to consumers; investors can invest over three or five years earning approximately 4% to 4.7% respectively; platforms RateSetter, Zopa and Funding Circle are still awaiting full authorization; on the subject of the major players still awaiting authorization Matthew Powell, director at Lending Works commented: "Among peer-to-peer firms there is some frustration over why it's taken so long. The regulator might have uncovered some things that they're not entirely happy about. I think the FCA has been surprised in the variation over the types of platforms they have had to examine. We're an easier prospect than some to understand - we're literally just the middleman, we don't take a balance sheet risk, and we don't lend our own money." Source
Infinity Lending Systems offers a range of platform software services for online lenders; in their featured blog post J Washburn provides three tips for improving network security; suggests using clever passwords, regulating external devices and avoiding phishing attempts. Sponsored Blog Post
Germany's GLS Bank has launched an equity crowdfunding platform through collaboration with CrowdDesk; GLS Bank will do the due diligence for the platform's investments and CrowdDesk will primarily focus on the technical infrastructure and business services; the deal sets a precedent for bank crowdfunding partnerships in the equity crowdfunding space and will provide company financing for up to 2.5 million euros ($2.67 million). Source