The European Central Bank (ECB) is considering additional capital buffers to banks looking to incorporate fintech; the regulator says adding fintech to the bank will increase the potential for a volatile client base and the untested products will need a lot of capital; this is part of the recent draft licensing guidelines released by the ECB. Source.
The People's Bank of China (PBoC) requires all third-party payment institutions to channel transactions through a newly established central clearing platform called Nets Union Clearing Corp. (Wanglian); the trial operations started in April and will be put to formal use on July 1, 2018; by that time, all third-party payment firms (including Alipay and TenPay), will not be able to conduct transactions, such as bank transfers, outside of regulator's supervision. Source
Banks have been trying to understand what they will need to change to stay competitive as finance becomes more digital; the key question they try to answer is buy, build or partner; at LendIt USA 2017 we hosted a keynote fireside chat that focused on how a global cooperative bank stays innovative; digitizing their lending process to become more like a platform, understanding that fintech is more of an evolution and not a revolution, better understanding the customer's needs and offering hybrid solutions is key to staying ahead of the innovation curve. Source
A blog post from MonJa provides details on the "Liquidity Outlook: Establishing a Secondary Loan Market" panel discussion which took place on December 1 at the 2nd Annual Investors' Conference on Marketplace Lending; Orchard Platform has made building a comprehensive secondary market for marketplace loans a firm priority and has the lead on an industry wide trading platform; interactive data technology and advanced market pricing technology are some of the barriers; until broader secondary market trading becomes available, innovative industry funds and securitization portfolios are the leading secondary market options available for investors. Source
LendIt will be hosting a forum today on risk retention in securitization at 2:00 PM EST; the forum will be held in conjunction with Cadwalader and Lending Times; speakers will provide insight on key factors to consider in choosing the optimal risk retention structure, commercial considerations related to sponsors including brand and investor relationships, requirements necessary to establish a majority owned-affiliate including the amount of equity that must be retained by the sponsor versus an investor and other related topics; register here and join the webinar today.
Monzo and Revolut alerted customers of an outage due to a processing migration from a third party processor which caused customers to be unable to use cards for transactions; other digital banks affected by the third party processor migration included Starling Bank, Loot, Curve, Pockit and Uaccount; Monzo and Revolut have both reported they will reimburse customers for foreign exchange costs incurred as a result of the outage; Monzo says it has plans to move its processing to an internal unit with transactions processed on the firm's technology. Source
In an article from American Banker, the pros and cons of AI-based credit scores are outlined; pros include more precise scores through more nuanced evaluations of data and the ability to consider consumers that linear models would reject; the cons are the risk that regulators will consider an AI-based score a "black box" and being able to provide one clear reason for credit denial; perspectives from Elevate, ID Analytics, Experian and FICO on AI credit scoring are presented in the article. Source
UK consumer lending platforms reported originations of 154 million British pounds ($191.81 million) in January which topped a previous high in September 2016; Zopa led UK consumer lenders in January with originations of 80 million British pounds ($99.64 million); other consumer lenders contributing to the January record included RateSetter, Lending Works, Funding Secure and Lendable. Source
The company has raised its Series B round in an effort to expand the number of retail partners; Menlo Ventures led the equity portion of the investment with participation from Bessemer Venture Partners, and RRE Ventures, among others; Victory Park Capital is providing the debt facility; founded in 2014 the company provides a white label solution for retailers to offer financing to their customers; they compete directly with firms such as Affirm, PayPal Credit and Klarna. Source
The recent regulatory crackdown on cryptocurrency markets, specifically in China, has dropped the worldwide market cap to $98.95bn; as recently as two weeks ago the market cap was up around $180bn; while the size of the market continues to fluctuate, it remains to be seen where prices will head when regulatory crackdowns pass. Source.