Rohit Arora of Biz2Credit outlines three fintech trends affecting small business lending; highlights artificial intelligence, convergence in marketplace lending and bank partnerships and financial inclusion initiatives for underserved banking consumers; Arora also says market conditions are positive for small business lenders with new job creation measures and technological advances broadly across the financial industry. Source
News Roundup
This page contains an archive of the Global Newsletter summaries and the weekly fintech news roundups.
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This year's top financial professionals are from a broad range of businesses; Matt Humphrey, CEO of LendingHome which provides real estate loans for homebuyers and fix and flip investors made the list; LendingHome has originated $1 billion in real estate loans; also on the list is Eugene Marinelli, chief technology officer of mortgage tech company, Blend. Source
Denise Thomas was named one of the tech industry's top female founders in 2016 by TechCrunch; Denise Thomas and Stephen Pelletier formed ApplePie Capital in 2013 after previously working together at online investment platform OffRoad Capital; Denise Thomas is currently the CEO of ApplePie Capital which specializes in providing online loans to franchise businesses. Source
Increased home prices combined with available capital are supporting renewed interest in house flipping; the number of investors buying and selling a house within a few months has increased to the highest level since 2007; current investors are reporting an average profit of approximately $61,000; big banks are now more interested in financing real estate lending for house flipping deals and more online lending platforms are facilitating these investments; real estate crowdfunding companies seeing increased activity from house flipping customers include 5 Arch Funding, LendingHome Corp., Asset Avenue, Groundfloor Finance and Anchor Loans. Source
Cross River Bank is leveraging its fintech customers to grow its payment transaction services; the firm has digital lending partnerships with 17 companies and is the issuing lender for some of the industry's top marketplace platforms; the firm's business relationships have helped to expand its payments system customers with many of its customers naturally migrating to Cross River Bank's payments system; the firm's CEO Gilles Gades says its payments activity could double next year with help from existing relationships with Stripe and Google Wallet providing access to Mastercard Send; in payments, Cross River currently manages approximately 2 million transactions per month and it sees a substantial opportunity for gaining more market share; industry participants are also watching Cross River Bank's plans for developing a newly branded bank called Almond Bank, which it has recently been investing in. Source
Bitcoin reported substantial gains in 2016, increasing 120% and 57% in the last three months of the year; on January 1 the cryptocurrency exchange rate versus the dollar increased to over $1,000; equity strategist, Christopher Wood of CLSA notes that trading in China has concurrently been high with trading on the China BTC Bitcoin Exchange increasing from Rmb 1 billion ($140 million) in September to Rmb 27.8 billion ($4 billion) in December; in an article from Asia Times, the source also reported that China accounted for 42% of Bitcoin's trading in the first six months of 2016; one factor significantly affecting the increased trading volume has been the weakening of China's currency causing increased interest in foreign investments. Source
The Plug and Play Tech Center in Silicon Valley has created a program to connect 30 of the largest insurance companies with insurtech startups; these insurance companies are seeking insurtech innovation for improving user experience, risk assessment and underwriting, prevention of loss and cost reduction; additionally, large insurance companies are reporting that they seek access to a range of innovative solutions across all industries. Source
Japanese insurer Fukoku Mutual Life Insurance Co. has announced plans to replace 30% of its payment assessment department with an artificial intelligence system; the insurance company has partnered with IBM for use of IBM's Watson; the system will analyze and interpret medical documents for insurance payments; the company estimates it will save approximately 140 million yen ($1.19 million) per year by utilizing the new system; other insurance companies also exploring artificial intelligence for similar types of work include Dai-ichi Life Insurance Co., Japan Post Insurance Co. and Nippon Life Insurance Co. Source
Lend Academy provides 2017 predictions for the industry and analyzes last year's predictions in their article; predictions for 2016 that did occur included a new auto lending product at Lending Club, online lending platform launches from banks, an increased focus on retail investors and a new industry trade association; in 2017 predictions include at least a dozen new bank partnerships, positive reception for the Office of the Comptroller of the Currency's fintech charter, lending platforms offering banking products, increased use of artificial intelligence and significant foreign investment from China in US platforms. Source
The Securities and Exchange Commission's 2016 Annual Report on Nationally Recognized Statistical Rating Organizations (NRSROs) notes increased rating activity for marketplace lending; says smaller NRSROs have increased market share by rating marketplace lending securitizations; rating agencies issuing ratings for marketplace lending transactions included KBRA, Fitch, S&P, Moody's and DBRS; of the 28 rated marketplace lending transactions in 2016, DBRS rated 28.6%, KBRA rated 25.0%, Moody's rated 25.0%, Fitch rated 7.1% and S&P rated 3.6%. Source