p2p weekly

on the rebuildingsociety.com blog

14th Mar, 2016

P2P Weekly: Growing Innovation

“UK Government Report: Innovation Growing as Officials Push to Make UK Best Country in Europe to Start a Company,” via Crowdfund Insider

According to UK government data, 53 percent of small businesses are pursing new products and services. Business Secetary Sajid Javid said: “From new disruptive business models to driverless cars, innovation can not only revolutionise the way we live our lives, it can bring real opportunities for businesses to tap into and grow. That is why we are determined to make the UK the best place in Europe to innovate and start a company…these figures show that businesses throughout the UK are already leading the way, delivering exciting opportunities across the nation. The number of companies innovating and coming up with new, dynamic ideas is on the rise – up 8 percentage points between 2012 and 2014, with over half of businesses now developing new products and services, some with the potential to revolutionise their industries.”

“CFPB Now Accepting Complaints on Consumer Loans from Online Marketplace Lender,” via the Consumer Financial Protection Bureau

After months of mostly quiet talk about further regulating the alternative lending market in the U.S., the Consumer Financial Protection Bureau is officially accepting complaints from consumers who encounter problems with online marketplace lenders. You can read the bureau’s statement above.

“Real-Time P2P Payment Platform Early Warning Live on BoA,” via Crowdfund Insider

Bank of America, one of the largest financial institutions in the U.S., will now process real-time P2P transactions through Early Warning’s clearXchange network. BoA joins numerous other banks, including JP Morgan Chase and Capital One, that use the network.


07th Mar, 2016

P2P Weekly: The latest on China, and other news

“China jails 24 after 230,000 investors defrauded,” via Financial Times

Perpetrators of a massive scam that robbed primarily retail investors of $1.5 billion have received jail time. The Guangdong Bangjia Leasing Co. has spurred concerns about the limited regulation of China’s online lending industry — recently, P2P lender Ezubao was embroiled in scandal when 21 of its officials were arrested for fraud.

“Chinese Peer to Peer Lending Industry Does Not Need More Rules,” via Crowdfund Insider

Enforcing existing laws is more likely to solve China’s fraud problem than adding new ones, says one expert. Spencer Li says: “There are sufficient laws and policies currently in place that allow the government to investigate and prosecute fraud cases such as Ezubao, but the lack of vigilant enforcement is the reason similar schemes continue to operate.”

“‘I’m happy to accept a higher risk for a higher return’: How peer-to-peer Isas lend edge to investing,” via This Is Money

A comprehensive look at the forthcoming Innovative Finance ISA and how it will benefit lenders plugged into the P2P market.

Dynamic Pricing in Alternative and P2P Lending” via The Financial Brand

“Our prediction is that alt lenders will start to offer new, non-lending products. If so, then the door to dynamic pricing swings ever wider and we will see bundled offerings that can be relationship priced.”


22nd Feb, 2016

P2P Weekly: Mainstream Move

“P2P sheds ‘alternative’ label and moves into mainstream,” Financial Times

“This is not just finance ‘by the people, to the people’ any more. Increasingly it’s about big business now,” said Warren Mead, a head of financial technology at advisory firm KPMG.

“Africa’s big banks are betting on fintech startups and bitcoin to beat disruption,” Quartz

Financial technology has been crucial to many Africans for years, as telcos gave many people access to finance for the first time. Now, more banks are working to popularize international fintech solutions like bitcoin and blockchain throughout the continent.

“Peer-to-peer lending: everything you need to know about the leading websites,” The Telegraph

Thorough analysis of Britain’s four biggest lenders from The Telegraph.

“Online P2P lenders eye high street move,” Financial Times

More online lenders are pursuing brick-and-mortar opportunities. For example, mortgage lender LendInvest hopes purchase an existing “offline” lender.


15th Feb, 2016

P2P Weekly: Industry Responds

The biggest news in the UK P2P lending world this week was negative comments from Adair Turner about the P2P industry.

Turner is the former chairman of the Financial Services Authority, the predecessor of the FCA. Turner told the BBC, “The losses which will emerge from peer-to-peer lending over the next five to 10 years will make the bankers look like lending geniuses.” Of course, P2P experts were quick to set him straight. Christine Farnish published her thoughts, writing “All members of the P2PFA operate to high standards of transparency and business conduct…All members of the P2PFA operate to high standards of transparency and business conduct…I challenge anyone to find this level of transparency in any other part of the financial services market.”

Other P2P leaders sounded off too: “The peer-to-peer industry is both broad and diverse, and to paint it with a single brush stroke as dangerous is ultimately unhelpful for consumers,” said Landbay CEO John Goodall.

In other news:

“Credit unions beginning to embrace fintech: ‘The way Canadians use financial services is rapidly changing,” via Financial Post

British Columbia’s First West Credit Union and Vancouver-based Grow have formed a new alliance designed to serve B.C. residents. And an Ontario credit union has announced plans to offer unsecured lines of credit through its own online platform. Financial leaders agree that the way Canadians use credit is changing, and companies are working hard to adapt.

“P2P lending: Four predictions for 2016,” via City A.M.

One P2P lending executive offers some insight into the coming year. As entrants to the industry rise, so may defaults, he writes, and the Innovative Finance ISA will continue to be front and center of the industry’s development.


01st Feb, 2016

P2P Weekly: Peer-To-Peer Lending Spurs Green Energy

“Peer-to-peer power? Finance tech comes to solar energy,” Business Green
P2P companies like Mosaic and Open Energy seek environmentally-motivated investors specifically to support projects like solar panels. Leaders in both industries are excited about the opportunities for potential partnerships.

“Estonia Based Investly Launches P2P Lending in the UK,” Crowdfund Insider
Investly has launched operations in the UK following a €600,000 investment. The Estonia-based company is an invoice finance platform targeting SMEs.

“London Is The European King Of Fintech, For Now,” Forbes
Responsive regulatory structures, strong tech infrastructure, and plenty of capital are among the chief reasons that London maintains relative dominance in the fintech sector, according to Forbes.

“The State Of P2P Lending,” TechCrunch
A nice breakdown of the history of P2P lending and some predictions for the future.


25th Jan, 2016

P2P Weekly: A Look at the Evolving Lending Market, and Other News

“The Evolving Nature Of P2P Lending Marketplaces,” TechCrunch

The world of P2P lending continues to adapt and grow, with bigger investors and even banks getting in on the action. This article from TechCrunch takes a broad look and offers feasible predictions for the future.

“The sharing economy probably means much less inequality, not more,” The Telegraph

Fintech and crowdsharing markets could lead to a new economic structure — and perhaps a much more horizontally distributed one.

“Taking flight: The allure and the peril of Chinese fintech companies,” The Economist

The Economist breaks down the Chinese P2P market, which is one of the fastest growing and most fraught in the world. Nearly 1/3 of companies have had major problems, so the Chinese government is rolling out new regulations. Despite high risk, the market appeals to investors around the world who want to get in on the ground floor of an exploding market that is quickly expanding its reach internationally.

“Regulations Galore Part II: Peer to Peer Lending in China,” Crowdfund Insider

A careful look at the aforementioned regulations on Chinese lending.

“FCA Publishes Consultation on Loan Based Crowdfunding. Agency Seeks to Simplify Client Money Requirements,” Crowdfund Insider

“According to the FCA, presently an investors money held in relation to peer to peer loans must be segregated from the firms own money and any other assets. The regulator agency understands that some debt based platforms find this process burdensome as many P2P lenders have not developed systems to easily segregate funds between P2P or B2B lending agreements. The FCA is proposing to allow firms to elect to to hold both kinds under CASS 7, if they wish to do so. Firms may then segregate P2P and B2B monies together, but separately from the firms’ money, without breaching CASS 7.”


18th Jan, 2016

P2P Weekly: FinTech Gains Traction as 2016 Kicks Off, and Other News

“Why smart businesses are turning to crowdfunding,” The Telegraph

A look at what makes crowdfunding and peer-to-peer lenders promising markets in this new year.

The Telegraph notes: “from next year, hundreds of thousands of investors are expected to pour money into crowdfunding and peer-to-peer when qualifying investments become eligible for Isa status. From April 2016, individuals will be able to keep many crowdfunding and peer-to-peer returns tax-free as part of their ISA allowance.”

“Kickstarter Reports 64 Percent Increase In Pledged Donations,” Tech Times

Campaigns for tabletop and video games received the bulk of Kickstarter pledges in 2015. Across categories, people are donating less money to smaller projects, opting instead to go with campaigns by individuals and companies they already trust. This is a response in part to more and more Kickstarter projects failing to follow through with promised rewards.

“P2P ISA Challenge: “We Recognize that We as an Industry Need to Work to Persuade Advisers to Embrace P2P Lending,” Crowdfund Insider

“The introduction of the new ISA also highlights an ongoing issue for P2P platforms: The profound need to inform and educate potential investors and advisors of their services.”

“CIBC CEO Victor Dodig on banking’s tech revolution,” Canadian Business

Canadian banking leader Victor Dodig commented on the potential threat that peer-to-peer lending poses to traditional banking, saying: “With the small-business segment, speed matters more than price. In the consumer segment, speed matters, but price matters as well. That’s where the peer-to-peer lenders can actually drive a wedge, but we won’t let them do that.”


04th Jan, 2016

P2P Weekly: Lending Future is Bright in China, and Other Stories

“China Lays Out Rules for Peer-to-Peer Lending Platforms,”
Wall Street Journal

The China Banking Regulatory Commission has released rules for the P2P lending industry and is seeking public comment. Clearer regulations for the more than 2,500 P2P lending operations in China have been in the works for a while, and 2016 should be a big year for the industry in that country.

“Report: China P2P Lending Topped $150 Billion in 2015,” Crowdfund Insider

The P2P lending industry in China generated more than £100 billion in 2015, according to Chinese news reports. This indicates a high level of interest from the public in this industry, since P2P lending gets almost no institutional money in the country.

“Peer to peer lending is set to explode,” Business Insider

Writes John Mauldin: “I’ve been a fan of private credit for a long time. Recently, I have once again been exploring the private-credit world, and it seems this market is growing faster than I had thought.”

“RBI plans guidelines for peer-to-peer lending,”
The Economic Times

The Reserve Bank Of India plans to develop guidelines to regulate the burgeoning P2P industry.

“They should be regulated under the State Money Lenders Act,” said Raman Agarwal, chairman of Finance Industry Development Council. “On these platforms, lenders are individuals and State Money Lenders Act applies to individuals, and not entities. In this case, individual is not an individual lender but a camouflaged lender.”

“Funding Circle passes £1bn lending milestone,”
The Guardian

Funding Circle surpassed £1 billion lent in 2015 and is on track to lend a further £1 billion in 2016.


21st Dec, 2015

P2P Weekly: Lending Totals Doubled in 2015, and Other News

“BondMason Reports P2P Lending Doubled to £2.3bn in 2015; Offers Up 3 Predictions for 2016,” Crowdfund Insider

According to BondMason, UK P2P lending totals doubled in 2015 to about 2.3 billion. The savings and investments platform estimates another £1-1.5 billion in growth in 2016.

“Spotify and Apple Music Should Let Us Tip Musicians We Love,” Wired

Eric Steuer argues that streaming platforms like Spotify and Netflix, which deliberately don’t give much money to creators, should make it easier for users to throw a few bucks in the artists’ direction.

“China overtakes UK in global fintech race,” Financial Times

China is home to seven of the world’s 50 most successful fintech firms, according to a list compiled by accountancy group KPMG. The list included six British firms, with Funding Circle ranking 5th.

“For Large Investment Banks The Rise Of FinTech May Help Alleviate Cost Pressures,” Forbes

Writes Antoine Gara: “Now, FinTech is increasingly seen as a way cut through this technological muck, saving far more money than a next round of layoffs, or re-locations from New York City to Salt Lake City. These investments are seen as the next frontier of cost cutting on Wall Street. And it appears firms that once used to compete fiercely against each other are willing to join forces in the FinTech arms race.”


14th Dec, 2015

P2P Weekly: A Closer Look at the Innovative Finance ISA

“Will the Innovative Finance ISA Allow Only a Few P2P Lenders to Participate?,” Crowdfund Insider

Deeper analysis of the Innovative Finance ISA indicates that only fully regulated P2P lenders can participate in the innovative ISAs. You can see the draft documents at the link.

“More closures seen among Chinese peer-to-peer lenders as new rules loom,” Reuters

Ezubao, the largest P2P lender in China based on lending figures, is being investigated for potentially illegal activity. So far this year, 824 lenders have shuttered.

“The Evolution Of Fintech,” Forbes

Forbes offers a useful summary of the fintech industry’s history. This is the first of two pieces.


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