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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


Wirecard Scandal Exposed Chinks in UK Safeguarding Rules

But regulators must be cautious not to stifle innovation while mending them

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[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is part three of a four part series (here is part one and part two) he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe.]

The accounting scandal at German payments company Wirecard shook the global fintech sector this summer, but it also had a tangible impact on the customers of UK fintech companies that had relied on Wirecard’s services.

Years of dogged reporting by the Financial Times came to a head in June, when Wirecard admitted that €1.9bn in cash was missing from its balance sheet, prompting a collapse in its share price. In roughly a week the company went from being valued at $14bn to filing for the German equivalent of bankruptcy.

On 26 June, the Financial Conduct Authority froze Wirecard’s UK arm, Wirecard Card Solutions Limited. This meant the firm could not dispose of any assets or funds, could not carry out any regulated activities and had to issue a statement on its website clarifying that.

The FCA’s intervention temporarily prevented thousands if not millions of UK customers from accessing cash held in a number of financial apps, including current account providers Curve, Pockit and U Account.

“The primary objective of these requirements was to protect the electronic money funds of consumers in safeguarded accounts. It also had the effect of preventing consumers from withdrawing and making payments with those funds,” said the regulator in a statement.

[Read more…]

New White Paper Points to Where Small Business Lending is Headed

"Lending 3.0: Building a better world for lenders and borrowers" is the title of a new white paper out from Marqeta UK

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While small business lending has been turned upside down this year with the pandemic and all the government programs, innovation is still happening. We continue to move towards a world that relies on real time data and provides instant decisions for small business borrowers. This is the promise of Lending 3.0.

There is a new white paper out from Marqeta’s UK office titled, “Lending 3.0: Building a better world for lenders and borrowers”. It takes us through the different stages in the recent history of small business lending. Lending 1.0 was traditional bank lending where loan applications were complex, credit decisions took a long time and a great deal of effort was required from the small business owner. Lending 2.0 was about the arrival of fintech lenders that were digital-first and provided an online journey for loan applications with quicker lending decisions.

We are now entering Lending 3.0. This is all about real-time data and that doesn’t just include bank account information but also how funds are being spent. With new card technology lenders can provide funds on a virtual or physical card instead of a bank transfer. This will not only help the lender stay top of wallet for purchase choices but also provide key insights into how the loan proceeds are being spent. It bridges the gap between lending and payments and this data will help lenders make better credit decisions.

The white paper goes into some depth about how Lending 3.0 works, its seven key attributes and what it means for the different functions of a lending business. It also provides commentary from 10 industry leaders including yours truly.

LendIt Fintech is proud to partner with Marqeta on the distribution of this white paper. You can download your copy here.

LendIt Fintech Industry Awards 2020 Finalists Announced

The winners will be announced the day before the big LendIt Fintech USA 2020 event starts next week

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The finalists for the 2020 LendIt Fintech Industry Awards have been chosen. The Awards are in their fourth year and it is obviously very different this year, as there will be no formal Awards show. But the Awards will go on, albeit virtually, and we have sent our list of finalists to the judges who will then choose a winner.

Now in its fourth year, we are excited to announce the carefully selected finalists from the 500 or so submissions we received. From here industry veterans will decide on the winner of each of the 13 categories. Winners will be announced on the eve of the event next week.

Congratulations to all of the awards finalists!

Fintech Innovator of the Year

  • Stash
  • Marqeta
  • OakNorth
  • Neuro-ID
  • Affirm
  • Figure

Executive of the Year

  • Anthony Noto, SoFi
  • Steve Smith, Finicity
  • Jason Gardner, Marqeta
  • Brock Blake, Lendio
  • Colin Walsh, Varo
  • Jennifer Tescher, Financial Health Network

Fintech Woman of the Year

  • Luvleen Sidhu, BankMobile
  • Valerie Kay, LendingClub
  • Alpa Lally, Experian
  • Susan Ehrlich, Earnest
  • Nicky Goulimis, Nova Credit
  • Silvija Martincevic

Top Consumer Lending Platform

[Read more…]

Digital Banks Hit Bump in the Road, But Pandemic Has Silver Lining

The Covid-19 crisis has put unprecedented pressure on all manner of businesses; yet even against that backdrop, UK digital banks have been particularly hard hit.

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[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is part two of a four part series (part one is here) he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe.]

Lockdowns in the UK and overseas have put a significant dent in their revenues, external investment suddenly looks far harder to come by, and, to top it all off, recent financial results painted an ugly picture of their financial position even before the pandemic.

To recap: in 2019 Starling lost £52m, Revolut lost £107.4m and Monzo lost £113.8m.

Yet optimism remains within the sector, with many hoping for a silver lining in the longer-term impact of the crisis on digitisation.

Take Zopa, for example. The UK’s oldest peer-to-peer lender officially became its newest bank in June, after finally being granted a full banking licence by regulators.

During times of uncertainty, the company tightens its lending criteria to focus only on borrowers with “a very high likelihood of being able to manage the debt and not suffer financial detriment”, and thus expects lower revenues, according to chief executive Jaidev Janardana.

“However, in the longer term we expect the events of 2020 to be an accelerator for Zopa as more customers embrace digital channels and providers,” he added.

This is typical of attitudes within the digital banking sector at present.

The long-term impact of the pandemic, however, is unclear; what is clear is that in the short-term it has wrought havoc on fintech firms.

[Read more…]

Was SoFi Stadium Worth the Money?

The new SoFi Stadium in Los Angeles opened this past weekend and it is a big deal for SoFi

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SoFi Stadium in LA

Last Sunday night the world saw SoFi Stadium in all its glory for the first time. Well, that’s not exactly right because there were no fans in the stadium, but the TV coverage showed off the new stadium brilliantly.

When we first learned that SoFi had acquired the naming rights for the new NFL stadium I was somewhat dubious that this was good value for money. It was initially reported that SoFi would pay $30 million per year and it now appears that the terms are $20 million per year over 20 years, still a huge amount of money for a young company.

But as Anthony Noto, CEO of SoFi, said on CNBC last week that he wants to make SoFi a household name and that this stadium sponsorship will go a long way towards achieving that goal.

As I watched the Rams-Cowboys match last Sunday night I heard veteran sports commentator Al Michaels wax poetic about the SoFi Stadium calling it the most impressive stadium in the world. The SoFi brand was everywhere and the overhead pictures of the stadium with a massive SoFi logo on the roof, were spectacular. Any true football fan (of which there are many millions) now knows the SoFi name. And there will be tens of millions more when the stadium hosts the Superbowl at the end of the 2021 season. Not to mention the 2023 College Football National Championship AND the 2028 Olympics.

So, while I was initially doubtful about this move for SoFi I have come around to being fully on board. When you think about it, naming rights for a stadium makes more sense for a company like SoFi than it does for an already well-established brand. I would argue that the exposure they received last Sunday night alone was worth many millions of dollars as their name and logo was on display for a good chunk of the evening with 19 million people watching.  And to be associated with such a modern, cutting edge stadium aligns well with the SoFi brand.

I know SoFi had big plans in place for the fans attending games this season but that will have to wait. But given the serious exposure their brand will get every week during the football season (the LA Rams share the stadium with the LA Chargers) you might even argue they are getting decent value for the $20 million they will spend this year.

It will be interesting to see how long it takes SoFi to truly become a household name. And if they do indeed make this happen and become a mainstream finance brand this stadium will have likely played a significant role.

You can hear the SoFi CEO on the virtual keynote stage at LendIt Fintech USA 2020 in two weeks where he will likely be asked questions about the stadium deal.

Should the UK’s Loan Guarantee Scheme, a Lifeline to Fintech, Be Extended?

Innovate Finance chief says there is “nervousness that we’re not ready” for guarantees to end

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[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is part one of a four part series he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe.]

Soon after the UK went into lockdown in March, chancellor Rishi Sunak unveiled his £350bn emergency rescue package for British businesses.

This unprecedented intervention laid the foundation for a handful of government guaranteed lending schemes that have completely changed the fintech lending landscape over the past six months.

The three marquee schemes are the Coronavirus Business Interruption Loan Scheme (CBILS), which offers an 80% guarantee for loans of up to £5m; the Coronavirus Large Business Interruption Loan Scheme (CLBILS), for bigger businesses wanting to borrow up to £200m, again with an 80% guarantee; and the Bounce Back Loan Scheme (BBLS), which offers a 100% guarantee for loans of up to £50,000 for micro-businesses.

The usage of these initiatives alone shows how valuable they have been to UK businesses. As of 16 August, £13.68bn had been distributed under CBILS, and another £3.5bn through CLBILS.

BBLS, despite launching later, became an overnight sensation; more than £8bn had been approved by the time the government issued its first update on the scheme on 10 May. The latest figures show that a grand total of £35.47bn has been lent out through BBLS.

The advent of lockdown in the UK was, to quote one executive at a corporate advisory firm who wished to remain anonymous, “close to disastrous” for fintech lenders. He said that fee income for the big platform lenders in the months of April, May and June was “close to zero”.

[Read more…]

What to Expect at LendIt Fintech USA Virtual

LendIt Fintech will host the biggest virtual fintech show of 2020 at the end of this month

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LendIt Fintech USA is coming up fast and I wanted to share what we have in store for you this year. We embraced the move to digital early on and have completely reimagined the event experience for the virtual world. This will not just be a bunch of boring Zoom presentations. We have hired an Emmy Award-winning production crew to help us bring you a first-class experience on top of the A-Grade content and networking opportunities you’ve come to expect.

The world of financial services has been turned upside down by the pandemic. Fintech has been front and center as the financial services industry has responded quickly to these changes. But the changes have only just begun and we all need to gather at this critical juncture to learn, collaborate and do business. This is why I believe that this will likely be our most important event ever.

So, what can you expect at LendIt Fintech USA 2020? Here is a run down of the different components of the show.

Networking

We know that many of you attend LendIt Fintech to meet with the people who matter to your business. This is where we have put in the most effort, making this virtual event better than any in-person event we’ve ever produced. 

  • One-on-One meetings. Pre-schedule one-on-one meetings and view the complete attendee list using Brella’s world-class networking technology.
  • Overtime. Participate in lively discussions with your peers during Overtime at the conclusion of each track. Originally pioneered at LendIt Fintech Digital, Overtime has been a real hit for our community because of its authentic interface. 
  • Networking Roulette. Let our algorithm match you for a series of spontaneous one-on-one meetings to close the day. This is serious fun for novice and expert networkers alike.
  • Women in Fintech Power Hour. Connect with impressive and interesting women during the lunch break on Day One. One of our most anticipated networking events of the year, just for you. 

Solutions

Find the answers to your latest challenges in our Solutions Showcase featuring over 150 sponsors and exhibitors with great ideas to propel your business. At each virtual booth you can gather product information, chat with company reps, engage in in-depth discussions, view videos and more. 

We also have a fun competition for attendees where you can become a LendIt Fintech All-Star. The most engaged attendees can win a new iPhone 12 Pro, Airpods and free memberships to LendIt Fintech Digital.

Content

We have completely retooled our agenda in the last three months and I can confidently say it is our best and most relevant ever. Learn what some of the biggest names in the industry are thinking about today and how they are taking their companies forward. While I think every session is going to be great, here are some of the highlights I am most looking forward to:

  • Stephanie Cohen – Chief Strategy Officer at Goldman Sachs
    A leader at one of the biggest names in finance, Stephanie will share the Goldman philosophy of when to buy, build or invest when it comes to new initiatives. She will talk about their approach to diversity and their takeaways from dealing with the pandemic.
  • Anthony Noto – CEO of SoFi
    With competition heating up from banks and other fintechs, the CEO of SoFi will share his vision for where fintech is going and how SoFi will maintain its leadership position in the industry.
  • Zach Perret – CEO of Plaid
    Plaid has been at the epicenter of fintech for years and has been an enabling force for banks and fintechs this year as the world has shifted dramatically to digital. But we are just seeing the tip of the iceberg and Plaid has a vision of moving fintech beyond financial services.
  • Angela Strange – General Partner at Andreessen Horowitz
    The world’s three billion underbanked people have been largely ignored during the first phase of fintech but there are many companies getting traction today with creative products addressing this population. Angela will be talking with fellow VC luminary Matt Harris of Bain Capital Ventures about real solutions for the underbanked.
  • Steve McLaughlin – CEO of FT Partners
    Many of the most important fundraising and acquisition deals in fintech go through the doors of FT Partners. Steve will share how to position your company for M&A today, what has changed and what steps entrepreneurs can take to maximize their chances for financial success.

Discounted Pricing Ends Friday

Discounted pricing for LendIt Fintech USA 2020 ends at midnight on Friday. After that the full retail price will be in force. But don’t forget that Lend Academy readers always receive special treatment, so you can use the code LENDACADEMYVIP to receive 15% off the already discounted price. So register now.

See you online

The reality is that there are many advantages to attending a virtual event, not the least of which is cost. You can experience the best of what has made LendIt events so popular, all from the comfort of your home office. Want to learn more? Here’s a quick tour of what we have in store for you at the largest virtual fintech event of 2020.

I look forward to seeing you online at the end of this month.

Nat Hoopes Leaving the Marketplace Lending Association

The first Executive Director of the Marketplace Lending Association is leaving to become Head of Public Policy at Upstart

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When LendingClub, Prosper and Funding Circle founded the Marketplace Lending Association (MLA) back in 2016 they knew they needed an ambitious and hard-working executive director to grow the organization. This was a total startup association and it had to scale to include a broad cross section of the industry if it was to be effective.

They chose Nat Hoopes, who was then executive director of the Financial Services Forum, to take the helm and he grabbed the bull by the horns. Keep in mind this was back in the summer of 2016 during the most tumultuous time in the industry’s history. He grew the association from its initial three members to 37 members today including nearly every major lending platform in the industry. Believe me, that was no easy task [Full disclosure: LendIt Fintech has been an active supporter and associate member of MLA since 2017].

Today, it was announced that Nat will be leaving the MLA to pursue a new position at Upstart as VP and Head of Public Policy and Regulatory Affairs. He is handing the reins to Trish Horowitz, who has been his indispensable co-worker and COO for the past two years. But no offense to Trish, who has done a fantastic job, this will leave a big hole in the work of the association.

I can understand the timing of the decision. The MLA has had some big wins recently and has checked off many of the goals it had. Here are some of the recent highlights: [Read more…]

Recent White Papers Covering Lending and Risk During the Crisis

We recently published two white papers to help lenders navigate the current crisis.

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Coming out of the crisis will be hard work for lenders of all stripes. We recently featured two white papers that will help act as a guide on how to prepare for the future and ensure your lending operation is on solid footing.

Operational Efficiency in a Growing and Uncertain digital world – sponsored by Urjanet

What is this paper about?

Financial institutions face unprecedented business challenges as a result of the COVID-19 pandemic. It is expected that profit before taxes in the banking industry will drop from 50-100% as a result of misalignment of short-term revenue and expenses resulting from the fallout. According to TransUnion, over 100 million accounts showed signs of financial distress as borrowers deferred debt payments from March to June.

Between an increase in delinquencies, the abrupt shift to digital transactions, and unexpected surges in demand for credit, it is critical for lenders to incorporate data sources beyond traditional credit data.

This paper will explore the process of incorporating and expanding the use of alternative data to promote growth, minimize risk, and improve operational efficiency as banks and lenders recover during and after the COVID-19 pandemic.

Download

A Banking and Lending Guide to Crisis Recovery – sponsored by Salesforce

What is this paper about?

Banks and lenders have had to quickly adapt to changing regulations, work environments, and market conditions during the COVID-19 pandemic. In this white paper, learn how to build resilience, adapt to new regulations, and accelerate your bank’s growth in changing times.

Key Points:

  • Pursue growth by responding strategically to opportunity
  • Adopt an agile decision-making process
  • Reimagine office life
  • Adapt to your customers’ changing needs
  • Create lasting impact through community service

Download

Ocrolus Maps the Fintech Lending Ecosystem

The 2020 Fintech Lending Market Map will become a great new resource for the industry

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Those of us who have been around the online lending space for a while will remember the “Lendscape” created by Orchard Platform (now part of Kabbage). It was a very useful infographic featuring all the major players in the online lending ecosystem. I used to refer to it on a regular basis whenever I wanted a complete picture of a segment of our ecosystem. It was last published in 2017 and I have missed having access to an up to date resource like this. We had even talked about internally at LendIt Fintech about recreating something like it. Now, we don’t have to.

Earlier this month Ocrolus released the 2020 Fintech Lending Market Map. While it is not an exact replica of the Orchard Lendscape it is a super useful resource. The big difference is that they ignore the investor side of the online lending space and bring in more of the technology and infrastructure companies. This makes sense given that Ocrolus is a technology company building the infrastructure to analyze documents and automate back office tasks and is used by many of the leading online lenders.

I caught up with David Snitkof, former co-founder at Orchard and now the Head of Analytics at Ocrolus, a position he has held since April. What was interesting to me is that this new market map of the fintech lending ecosystem was not actually his idea. He said there were many people at Ocrolus who were also big fans of the old Lendscape and were keen to resurrect it. Obviously, David would have been a great resource for Ocrolus and he did in fact have significant say in to how it was was produced.

When looking at the full infographic I am struck by how far our industry has come in the last decade. While we have certainly had our challenges, the innovations that were pioneered by a select group of companies a decade or more ago have led to loans now becoming a standard online offering. You will see several of the largest banks in the country on this infographic as they have integrated online lending into their business.

Now, not every company is listed and some companies maybe should not have made it in. But overall, Ocrolus has done the industry a great service by creating the most complete market map of fintech lending in several years.

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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