Randall Quarles, vice chairman for supervision at the Federal Reserve made recent comments about taking a fresh look at regulations; He stated, “History has shown us that, it’s not just a question of where has the risk that we knew moved, but what new risks are developing? I think that in the regulated area … we ought to be looking at what the implications of the growth of fintech ... I think we ought to be looking at cyber, obviously.” Source
Big banks like J.P. Morgan Chase and Wells Fargo have developed new mobile only banking apps in an effort to attract younger customers; “It’s about helping people start in banking and doing it in the way that fits their lifestyle,” said Steve Ellis, executive vice president and head of the Wells Fargo Innovation Group, to Business Insider; the banks are looking to get users at a younger age then keep them over the lifetime with additional product offerings; focusing on the consumer experience and new technology will help the banks to claw back some of the market that fintech companies have taken. Source.
Intuit has launched a new lending product called QuickBooks Capital; clients of the accounting software provider will be able to access up to $35,000 in credit with terms between three and six months. Rania Succar, head of QuickBooks Capital stated, “As the largest small business accounting platform with approximately 2.4 million customers, the QuickBooks platform provides the most complete set of small business data available in the market.” Source
In October SoFi launched an offering targeted at medical school graduates; American Banker shares how the move is just the latest example of how lenders use data to tap into new borrower niches; the average debt load of medical school graduates is $190,000 and during residency salaries are around $60,000; since their income is low traditional lenders often won’t refinance these loans; with the new product residents can consolidate their debt and make a $100 monthly payment until they finish training. Source
Yesterday LendingClub released their Q3 earnings; they originated $2.44 billion in loans, up 14% from the previous quarter; revenue was on the lower end of projections, but the company had a lower GAAP loss than expected; Lend Academy shares other highlights from the earnings call. Source
The cryptocurrency space is a space we believe in,” CBOE’s chief operating officer told analysts in a call on Tuesday according to the FT; they also noted that the CBOE is in talks with the CFTC to offer futures on bitcoin; this move follows what the CME said last week that it planned to add bitcoin as well. Source.
The largest non bank service provider, Mr. Cooper, led a series A round into Matic Insurance; Matic is a digital insurance agency that allows homebuyers to get homeowners insurance during the mortgage process; Coverager reports Aaron Schiff, CEO of Matic said, “Mr. Cooper’s customers will benefit from Matic’s ability to expedite loan closings and make it easier for Mr. Cooper to lower their borrower’s payments for improved payment performance. Source.
While banks might have been a bit slow to react to online lenders they are certainly taking notice today and changing how they operate; fintech companies originated about 30 percent of unsecured consumer loans in 2016 according to TransUnion, up from 1 percent in 2010; banks have started to take notice and compete with fintech companies head on and in some cases partner with them as well; banks hold significant advantages over online lenders in cost of capital and customer acquisition costs which could erode that 30 percent market share that fintechs have built. Source.
Bank of America Merrill Lynch has formed a partnership with quant hedge fund MANA Partners that will help the bank test algorithms to stay compliant with MiFID II in Europe; the testing environment allows for traders to see if algorithms are safe and how they affect other traders; the move is seen as part of a trend by banks to cut costs and get more efficient within their trading practices. Source.
LendingPoint is a near prime lender; in the interview the LendingPoint team discusses how their algorithms work to take thousands of attributes to determine which ones are most predictive; the company is now partnering with hospitals for patients to obtain credit on the spot; LendingPoint originated around $28 million in loans in October with about 60% of applications coming through mobile devices. Source