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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


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Is 2020 the Year Consumers Get Their Wish of Bank Account from a Big 4 Tech Company?

A recent survey showed just how willing consumers are to consider banking with Google, Amazon, Apple or Facebook.

February 26, 2020 By Ryan Lichtenwald Leave a Comment

Views: 269

The idea of Apple, Google, Amazon or Facebook getting into banking is not new. The possibility has been discussed for years with little to no information coming from the actual tech companies on when or if an offering would ever come to fruition. So far we’ve only seen ancillary products like the Apple Card, Google Pay or Amazon lending to their merchants.

American Banker recently reported that 64% of American adults would consider buying or applying for financial products from a tech company as opposed to a traditional bank or credit union. The Harris Poll, which surveyed 2,100 people found that users are willing to make the move despite reservations about information sharing at the companies. It is interesting that Americans have less trust for the tech companies and are concerned that they are not up front about how they use personal information, but potentially want to feed them with more data. In addition, 69% believe that tech companies are more likely to have a data breach than a traditional financial institution. It seems incredible the trade-offs some are willing to make, but points to just how unhappy some might be with their current providers.

What people are most interested in is a convenient product embedded with technology, something we would expect from any of the big tech companies today. The data skews as you would expect, with younger generations more likely to be interested in banking with a tech company, but still in the age range of 55-64, 52% said they would move to a tech company.  Six of ten people noted that they’d be willing to allow tech companies to use their spending data if it meant they would get better service like better security, protection against fraud or other rewards.

The data included in the survey brings up the question of whether most consumers are simply tired of their traditional bank or if they are just accustomed to big tech serving them well in so many other aspects of their lives.  As a millennial and someone familiar with all of the fintech offerings in the market today, I’d argue there is also a big gap of awareness of existing providers. Many would be better served by exploring some of the new offerings in the market today. I am less bullish on any initial offering from big tech being more compelling than what some other fintechs offer today.

A handful of fintechs have had massive success attracting users to their product, but banking relationships tend to be very sticky. I have experienced this firsthand. Having opened both accounts at Ally and Marcus, I still have multiple traditional bank accounts, one of which I first opened in high school. These old accounts are temporary storage for paychecks until I allocate funds elsewhere. Ron Shevlin recently called checking accounts “paycheck motels”. Shevlin argues that the checking account needs to be reimagined and from my perspective a simple checking account from any of the names in big tech simply isn’t compelling enough. Still, the mass marketing that would come from a launch may still benefit many since it is likely to be a better user experience than what many traditional banks offer.

So where do we stand today? Amazon was reportedly in talks back in 2018 with JP Morgan Chase on offering a checking account, but we have yet to see any further news. Late last year the Wall Street Journal reported that Google will soon offer checking accounts with their project with the code-name “Cache”. The partnership was rumored to be with Citi and a credit union at Stanford University. It will be interesting to see if the Google checking account reaches the market in 2020 as originally reported. With so many users already in the ecosystem of big tech firms I have no doubt that massive amounts of people will sign up for the first account offered. The digital banking space is already extremely competitive with big names continuing to launch in the US so it will be fascinating to see how it all plays out.

Filed Under: Fintech Tagged With: Amazon, Apple, banking, checking account, digital banking, Facebook, google

Views: 269

Goldman Sachs May Power Future of Lending at Amazon

Amazon merchants may soon be able to get loans with help from Goldman Sachs.

February 4, 2020 By Ryan Lichtenwald Leave a Comment

Views: 548

Lending is not a new business for Amazon, but it is not a burgeoning business…yet. Last year the Financial Times shared details on their offering and how growth had stalled. Amazon has been lending to small businesses since 2011. Outstanding loans nearly doubled between the end of 2015 and end of 2016 to $661 million but growth was just 4.7% the following year. Growth in 2018 was a mere 2.6% which is at least partially attributable to the company taking a careful approach to lending. Loans were offered at interest rates from 6% to 17% to small businesses selling on the platform.

The FT suggested that Amazon was slated to grow going forward, hiring both in Europe, Asia and in Seattle. Besides sharing data as part of their annual report, Amazon is secretive on future plans.

Now Amazon is reportedly going to be working with Goldman Sachs on their small business loans. According to sources as reported in a CNBC article, Goldman has been working on software which would allow them to simply plug into Amazon’s current loan platform. Last week Goldman was also in the news holding their first ever investor day which included their ambition to be a banking as a service provider and this might be the latest example of that. Many are aware that Goldman Sachs already powers the Apple Card which was released last year. Bank of America was also once involved in Amazon’s small business lending operation.

Not surprisingly representatives from both Amazon and Goldman declined to speak on the topic, but if the partnership comes to fruition it is going to be interesting to see how Amazon lending scales from here. Amazon has also been reportedly working on a checking account which we haven’t seen hit the market yet.

Filed Under: Peer to Peer Lending Tagged With: Amazon, Goldman Sachs, lending, Merchants, small business lending

Views: 548

The Ten Biggest News Stories of the Decade in Marketplace Lending

We take a look back at the news stories that shaped marketplace lending in the 2010s

December 30, 2019 By Peter Renton 1 Comment

Views: 619

I started writing about marketplace lending back in 2010, so I have spent almost the entire decade immersed in this space. While we have expanded our coverage on Lend Academy today beyond marketplace lending this remains a major focus.

We have certainly come a long way in the past ten years and the industry is almost unrecognizable from where it was in 2010. Back then there were just two notable companies in the space, LendingClub and Prosper, originating just a few million dollars a month in loans. No one could have predicted that by the end of the decade marketplace lending would have led to a resurgence in personal loans and changed expectations for customer experience across all lending verticals.

As I look back at the past decade here are, in my opinion, the top ten most important news stories in chronological order.

Prosper Recapitalizes and Brings in a New Management Team
(January 2013)

At the time this was a huge story. The number two marketplace lender had been struggling for some time and was in serious danger of running out of money. This new funding round was small by today’s standards at $20 million but it ensured that Prosper would remain a going concern. The deal was architected by, the now fintech legend, Ron Suber as he brought in a new management team and a new board to guide Prosper on to their future growth path. It helped set the industry up for success over the next several years.

LendingClub Becomes First Marketplace Lender to go Public
(December 2014)

This was a momentous day for marketplace lending as market leader LendingClub became the industry’s first company to go public. The IPO was a huge success by any measure. By the end of the first day of trading LendingClub was valued at $8.46 billion and they had raised $870 million in cash. Of course, at the time we had no idea what would happen to the stock but there was a sense a real optimism that this company was going to change the world.

Second Circuit Rules on The Madden Decision
(August 2015)

The biggest legal issue the industry dealt with this decade was the ramifications of the Madden v Midland decision. We have been following this case since the Second Circuit ruling in 2015 and it has had far reaching consequences for the industry. It has led to a reduction in lending activity in Second Circuit states (NY, CT and VT) but the bigger concern was that this kind of ruling would spread nationally. That has not happened and there have been multiple regulatory fixes proposed plus the OCC and FDIC have weighed in as well. But as of this writing nothing concrete has changed since the 2015 decision.

SoFi Raises $1 Billion Led by SoftBank
(September 2015) [Read more…]

Filed Under: Peer to Peer Lending Tagged With: Amazon, Funding Circle, Goldman Sachs, JPMorgan Chase, Lending Club, Madden v Midland, Marcus, news, OCC Fintech Charter, OnDeck, PayPal, Prosper, SoFi, Square

Views: 619

Is Loyalty the Key for Amazon Becoming a Successful Bank?

A new survey suggests that it is prime time for Amazon to enter banking.

September 19, 2018 By Ryan Lichtenwald Leave a Comment

Views: 183

65% of Amazon Prime respondents are willing to try a free online bank account offered by Amazon. This data is according to a new survey conducted by Bain & Company which found that Amazon has a huge advantage over the incumbent banks: loyalty. Part of this loyalty stems from Amazon’s excellent customer service and policies. Customers have a trust with Amazon that does not currently exist in banking.

With this trust comes an incredible amount of data around purchasing decisions, credit cards on file and integration across all sorts of devices from smartphones to Alexa devices.  Amazon Prime boasts 90%+ renewal rates which connects to a majority of households in the United States. According to data, Amazon’s customers control 75% of US household wealth and account for about 75% of the wealthiest households’ assets making them valuable target banking customers.

It is expected that Amazon will partner with a bank to offer bank-like services which may initially be targeted at young adults. With the acquisition of Whole Foods, Amazon has the potential to reach customers where they would like to be served, even if that means offline. The full results from Bain & Company provide additional insights into Amazon’s customers and the willingness to embrace Amazon as a bank.

Filed Under: Peer to Peer Lending Tagged With: Amazon, banking

Views: 183

Five Things That Excite Me About Fintech Today

There is more change happening in fintech today than ever before but here are five themes that are particularly exciting

July 10, 2018 By Peter Renton Leave a Comment

Views: 1,716

When I started LendIt with my fellow co-founders back in 2013 I was most excited about how online lending could disrupt the banking system. I felt that we were at the beginning of a paradigm shift in banking and that the online lenders would soon rule the world. While it hasn’t turned out exactly like that I am actually more excited today about where finance is heading than ever before.

Today, there are many things that excite me about fintech, here are five themes that I find particularly exciting.

1. Advances in Data Analytics

I have said before that data science is becoming the most important skill in fintech. There is more data generated today than at any time in human history and we need new ways of analyzing this data. Advances in artificial intelligence and machine learning have meant we can now make sense of this vast amount of data.

There are so many benefits to finance of these advances but the most important one I think is what it means to the underserved consumers around the globe. Advanced data analytics combined with the increased use of mobile phones in the developing world means for the first time everyone has the potential to be connected to the financial system. This is going to have huge ramifications globally over the next decade.

2. Blockchain and Distributed Ledger Technology

[Read more…]

Filed Under: Future Trends Tagged With: Amazon, Blockchain, China, data analytics, digital banking, distributed ledger

Views: 1,716

Amazon and Their Push Into Fintech

A new report from CB Insights catalogs all the recent moves Amazon has made into financial services

June 26, 2018 By Peter Renton Leave a Comment

Views: 1,769

Last week CB Insights released this really interesting report titled, Everything You Need To Know About What Amazon Is Doing in Financial Services. While Amazon has already made some moves in fintech is a huge amount of speculation as to what they will do next. This report covers both what Amazon has done and also speculates as to where they might be going.

The report provides an in depth look at the moves Amazon has made in payments, lending, the new Amazon Cash program and also takes a look at how the company has been developing fintech programs internationally.

Amazon Cash For The Unbanked Consumer

While I was most interested in the lending section before I get to that I want to talk about Amazon Cash. I have paid little attention to this product since it launched in April 2017 but the more I think about it the more I see a product that could move the needle for the unbanked in this country and possibly around the world.

Simply put Amazon Cash bridges the offline and online worlds by allowing anyone to shop on Amazon with cash. The way they do this is through partners like Western Union, MoneyGram and Coinstar. Consumers can bring in cash and deposit it into an Amazon “account”. They can then shop on Amazon and use this balance on this account to pay for Amazon products.

It doesn’t take much imagination to see where Amazon could take this. By the simple addition of a debit card, Amazon could move the unbanked into a quasi bank account that could be used at places beyond Amazon. Many surveys have said how much the public trusts Amazon and they could really make a difference for financial inclusion by developing this product.

Amazon Lending: Lots of Potential But Not Much Activity So Far

[Read more…]

Filed Under: Future Trends Tagged With: Amazon, financial inclusion, India, small business lending

Views: 1,769

GAFA Will Have a Profound Impact on the Future of Finance

Google, Amazon, Facebook and Apple could well be the fintech leaders of tomorrow

November 1, 2017 By Peter Renton 3 Comments

Views: 499

One of the first posts I ever wrote on Lend Academy back in 2010 was about mulling the idea of Facebook becoming a bank. Of course, I didn’t mean a brick and mortar type of bank but a digital bank of some kind. Seven years later this has obviously not come to pass but tech behemoths like Facebook are showing more interest in financial services.

GAFA is an acronym for Google, Amazon, Facebook and Apple, the largest tech companies in the world. Historically, these companies had stayed out of finance for the most part but in recent years that has changed.

Google and Apple both have payments products that have gained some traction in this country. Google and Amazon have small business lending arms that are providing financing to their existing small business clients. Facebook has their popular Messenger program that is starting to attract new initiatives from both fintech startups and big banks.

I would add PayPal into the mix here as well. They are on a fantastic run lately and their core payments business continues to expand. They also have a successful small business lending operation but like Amazon and Google this is focused on extending credit to their existing customers. What would happen if these companies decided to expand their focus beyond their own customers and take on banks directly?

McKinsey Report on Banking

Last week McKinsey released their annual banking report and it has created quite a stir in banking circles. McKinsey argued that platform companies like Amazon are well positioned to challenge big banks: [Read more…]

Filed Under: Peer to Peer Lending Tagged With: Amazon, Ant Financial, Apple, Facebook, Financial Innovation Now, future technology, GAFA, google, Tencent

Views: 499

The New Breed of Small Business Lenders: Amazon, Paypal and Square

We explore the small business lenders of tomorrow who have significant advantages in customer acquisition and data.

July 25, 2017 By Ryan Lichtenwald 1 Comment

Views: 303

If asked where to get a small business loan most people would state their local banks or even some of the bigger traditional banks. Those aware of the online lending space may mention the likes of Kabbage, OnDeck, Funding Circle or maybe even some of the new online initiatives of big banks like Wells Fargo’s FastFlex product. However there is another, often overlooked segment of small business lenders and they are names you have heard of: Amazon, Paypal and Square.

Until recently I hadn’t paid much attention to these companies. Amazon in particular flies under the radar and little is known about their lending business. Recently it came out that they are doing a considerable amount of lending to small businesses. Amazon lent $1 billion in the last year and has lent $3 billion to more than 20,000 small businesses since launching their lending product in 2011.

Most alternative small business lenders aim to innovate on pricing, speed, transparency or underwriting. Many also claim the use of data for underwriting purposes as a main differentiator. I’d argue that Amazon has more of an advantage when it comes to data since most other lenders rely on third parties or the small business to provide access to their data. Since Amazon is a marketplace for sellers they have an incredible amount of data on the cash flow of businesses that operate on the platform. They also have a significant pool of borrowers, resulting in virtually no customer acquisition costs.

The best way to understand how Amazon lends money to small businesses is hearing about it directly from a borrower. The podcast called Marketplace recently interviewed an Amazon seller and it was fascinating to hear how it works. [Read more…]

Filed Under: Peer to Peer Lending Tagged With: Amazon, PayPal, small business lending, Square

Views: 303

The Lending Club Story Now Available in Paperback

December 17, 2012 By Peter Renton 2 Comments

Views: 3

The Lending Club Story paperback editionIf you are looking for the perfect gift for that p2p lending enthusiast on your list this Holiday Season then look no further. The Lending Club Story is now available from Amazon in paperback.

I even updated the book with all the latest numbers from November so it is completely up to date. Being  a paper book, it is more expensive than the digital edition, but it will look better under the Christmas tree than the e-book.

The book covers Lending Club, past, present and future. There are sections on both the investor side and the borrower side of Lending Club as well as a short foreword by CEO Renaud Laplanche. It is a quick read at just 74 pages long.

Of course, if you prefer the Kindle edition that is still available as well. It has been very well received by readers so far achieving 4.9 out of a possible 5 stars from reviewers.

Thanks to everyone who has already downloaded The Lending Club Story, I certainly appreciate it.

End of shameless plug.

Filed Under: Peer to Peer Lending Tagged With: Amazon, ebook, paperback, The Lending Club Story

Views: 3

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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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