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Biometrics is Going to Eat the Finance World

A look into the world of biometrics and how new technology is going to impact identity verification in finance

October 23, 2017 By Peter Renton 2 Comments

With apologies to Marc Andreesson who famously said several years ago that software is eating the world, I think that same sentiment is going to be applied to biometrics and finance. And that is a good thing.

In a world full of cyber-hacks and data breaches most people would agree that the current system of text passwords is broken. In a recent survey it was revealed that 81% of people use the same password for multiple accounts with that number being even higher, at 92%, for millennials. Talk about a broken system. While the more sophisticated users will rely on a password manager like 1Password or Lastpass clearly the general population wants things to be simple even at the expense of security.

Enter biometrics. Biometrics is simply defined as the biological identification of a person. It has been in use for centuries and has been commonplace ever since the introduction of the photo-id driver’s license a few decades ago. But it has only been in recent years that its use has exploded.

The introduction of Touch ID on the Apple iPhone in 2013 was a seminal moment in the history of biometrics. People could suddenly use their thumb or finger print as an identity verification tool and forgo using a password. Today, on my phone I can login to my bank account, buy music or apps, buy a plane ticket, even check my Lending Club account all with the press of my thumb. No passwords needed. This saves the hassle of not only having to remember passwords but also having to type on these small devices.

Thumb prints were just one step. Voice interaction is now becoming widespread with millions of people asking questions of Alexa, Siri or Google every day. Alexa now has dozens of banking “skills” where you can check your account balance, make a payment or track your spending at several major banks such as CapitalOne, American Express or US Bank. Also, TD Ameritrade has their VoicePrint technology where you can phone in to customer service and verify your identity with just your voice.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, biometrics, future technology

This Summer LendIt is Offering Two Ways to Learn About China

LendIt is headed to China again this summer with our annual Lang Di Fintech Conference and LendIt China Executive Tour

April 26, 2017 By Todd Anderson Leave a Comment

The LendIt team is excited to return to China for our second annual Lang Di Fintech conference on July 15 -16 in Shanghai and our fourth annual China Executive Tour from July 8-17. The tour will start with some fun in Macau, move to Hong Kong for our Investor Summit with AMTD, then onto Beijing for three days of meetings, and finally end in Shanghai for the conference itself.

The Second Annual Lang Di Fintech Conference in Shanghai

In China, the LendIt Conference is called Lang Di Fintech and it is the largest fintech event in the country. Similar to other LendIt events in the USA and Europe, Lang Di Fintech will be a key forum for the leading global fintech companies to meet, learn, share experiences, and build partnerships. We expect over 2,000 attendees comprised of entrepreneurs, investors, regulators, service providers, researchers and media from the US, Europe and China.

Lang Di Fintech will cover a broad spectrum of fintech topics with a special emphasis on technology and financial inclusion. We will have six broad categories, which include fintech technology, blockchain, lending, banking & technology, financial inclusion, and Asia Pacific Fintech outside of China. We will have specific panels on technology like artificial intelligence, biometrics and cybersecurity.

Lang Di Fintech will feature more than 50 Western speakers including government leaders and executives from leading financial services firms. As always, simultaneous translation is provided for all guests at our event.

The Fourth Annual LendIt China Executive Tour

[Read more…]

Filed Under: Announcements Tagged With: artificial intelligence, banking, biometrics, Blockchain, China, Lang Di Fintech

Marketplace Lending Predictions for 2017

My annual gaze into the crystal ball brings you seven predictions for 2017 as well as a review of my last year's predictions.

January 2, 2017 By Peter Renton 7 Comments

Crystal ball - 2016 predictions

Happy New Year everyone. As I do every year at this time I make a few predictions for the year ahead as well as review my previous years predictions.

Review of my 2016 Predictions

As we know 2016 turned out in a way that was completely unexpected. Regardless, I will go through what I thought would happen in 2016 – some things I got right and with others I was way off.

  1. Lending Club will launch an auto lending operation this year
    Despite the challenges at Lending Club in 2016 I did get this one right. They launched a new auto lending operation in October in their first new product expansion in more than two years.
  2. Consolidation will begin
    I was not really right with this one. While consolidation did begin somewhat in 2016 my suggestion of three platforms buying acquired by larger competitors did not really come true. We saw several platforms go out of business but only one or two minor acquisitions.
  3. There will be five IPOs in our industry in 2016
    I was embarrassingly wrong on this one. I expected the IPO market to rebound in 2016 and several of the large platforms to take advantage of the public markets. I was completely wrong with zero IPOs in our industry in 2016.
  4. Three large banks will build platforms
    I was pretty much right on this one. We had Goldman Sachs launch their Marcus platform in 2016 and we also saw Wells Fargo launch their Fastflex product for online small business lending. While outside the US, German banking giant Commerzbank launched their own online lending platform.
  5. A Chinese company will buy a U.S. marketplace lending platform
    This did not happen in 2016 although interest in the US marketplace lending industry in China has never been stronger. I think I was probably a couple of years early on this prediction.
  6. The retail investor will become more in favor in 2016
    The retail investor certainly became more in favor this past year. There were some new Reg A+ deals announced and Lending Club made several moves aimed at increasing retail investor volume including the one just last month providing bonuses for new IRA investment.
  7. A new trade association will finally launch
    This was an easy one to predict as many of the leading companies have been talking about it for some time. The Marketplace Lending Association launched in April and we had several other initiatives launch as well.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: artificial intelligence, banking, China, fintech charter, IPO, OCC, predictions

Marketplace Lending Predictions for 2016

I stare into my crystal ball and provide predictions for the year ahead as well as review my predictions from one year ago.

January 4, 2016 By Peter Renton 15 Comments

Crystal ball - 2016 predictions

Happy New Year everyone. Here is my annual predictions post where I review my previous years predictions and make some new ones for the new year.

Review of my 2015 Predictions

  1. Lending Club will issue $10 billion in new loans and Prosper $4.1 billion
    I was a bit optimistic on my loan volume predictions. While both companies had a great 2015 Prosper came in at $3.7 billion for the year, below my $4.1 billion projection. We won’t know Lending Club‘s final numbers until their next earnings call in a few weeks but we do know that they did $5.8 billion through Q3. So, if they keep a similar growth rate to previous quarters I would expect around $2.5 billion in Q4 for $8.3 billion in total loans for the year. Still a great year but below the aggressive numbers I projected.
  2. Prosper will remain a private company
    I got this one right. Prosper remained a private company with not even a whisper of an IPO for them in 2015.
  3. There will be two new marketplace lenders completing an IPO
    This one I got completely wrong. Given the state of the IPO market today compared with 12 months ago it is not surprising that no other U.S. based marketplace lending went public in 2015.
  4. A new platform will launch targeting non-accredited investors
    I was only partially right on this one. While several new platforms contacted me throughout the year with their intention to launch for retail investors the only offerings that actually launched in 2015 were from existing real estate platforms Groundfloor and Fundrise.
  5. A midsize bank starts their own marketplace lending platform
    This was an interesting one. While I also did not get this one right there was more talk about the banks role and response to our industry in 2015 than ever before. We did see news break in June about the intention of Goldman Sachs to create their own platform but nothing has materialized on that front yet. I think I was just a year early on this (see prediction #4 below).

I also predicted that Lending Club would make two acquisitions and I was dead wrong on that as well. Lending Club is biding their time on acquisitions but clearly they will grow their borrower base at some point through acquisitions. I am confident that the predictions I got wrong will all come true in the near future, some in 2016 as you can see below.

My 2016 P2P Lending Predictions

Now on to this year. I am going to see if I can improve on my somewhat dismal performance from 2015. Here are several predictions I feel confident making for 2016. [Read more…]

Filed Under: Peer to Peer Lending Tagged With: acquisition, banking, China, IPO, predictions

An In Depth Look at the OnDeck/JPMorgan Chase Deal

We speak with Noah Breslow, CEO of OnDeck, to get details of their new partnership with JPMorgan Chase.

December 4, 2015 By Peter Renton 14 Comments

JPMorgan Chase Bank OnDeck Capital partnership

On Tuesday, OnDeck and JPMorgan Chase announced a partnership in what I think is the biggest news for the marketplace lending industry all year. The largest bank in the country, with $2.6 trillion in assets and close to $100 billion in revenue, decided that they needed help in providing loans for small businesses. So they turned to OnDeck.

I caught up with Noah Breslow, CEO of OnDeck, yesterday to discuss this historic deal. The roots of the deal began all the way back when OnDeck was choosing its bankers for their IPO in 2014. Noah met with Jaime Dimon and other senior executives at Chase and they were very intrigued with OnDeck’s business. Dimon himself seemed passionate about doing something with small-dollar business loans and the seeds of the partnership were sewn.

OnDeck ended up choosing JPMorgan as one of its bankers for their IPO and soon after they began serious discussions. Dealing with the nation’s largest bank meant that OnDeck had to ramp up much of its infrastructure to meet the stringent requirements for this partnership. This meant significant investments in IT, data security, compliance and more.

How the Deal Will Work

There has been a lot written about the JPMorgan Chase/OnDeck deal this week but I have not read anything that describes the details of how this deal will actually work. With the proviso that they are conducting a pilot and the final details may change, Noah explained how the partnership would operate.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, JPMorgan Chase, OnDeck Capital, Partnership, small business loans

Frank Rotman Releases White Paper on Small Business Lending

The white paper called The Brave 100: The Battle for Supremacy in Small Business Lending is a co-production of QED Investors and Oliver Wyman.

October 29, 2015 By Peter Renton Leave a Comment

The Brave 100 Frank Rotman

Earlier this year Frank Rotman, a partner at QED Investors, released the seminal white paper, The Hourglass Effect, focused on the personal loan market and why banks exited this business. Now, he has a second paper out, this one focused on small business lending.

This new white paper, The Brave 100, was written by Frank with the help of some research done by consulting firm Oliver Wyman. The Brave 100 refers to the at least 100 alternative lenders who are providing capital to small businesses often where banks will not. It compares the new alternative small business lenders with the banks, explores each others strengths and provides insight on where the chips may fall.

Here are some of the key points that Frank makes in this white paper: [Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, small business loans, white paper

Goldman Sachs Is Entering P2P Lending Becoming the 1st Bank to Launch a Platform

The 146 year old investment bank has hired a seasoned consumer finance veteran and is looking to launch an online lending platform next year.

June 16, 2015 By Ryan Lichtenwald 11 Comments

Goldman Entering Online Lending

Goldman Sachs is entering P2P lending.  This is a major milestone for our industry since it marks the 1st bank to enter.  The New York Times posted a lengthy article about Goldman’s plans to launch its online lending platform and compete with top platforms like Lending Club and Prosper. There are many details yet to be known but, according to the New York Times article, they plan to launch their own platform early next year. They are still in the early planning stages and it still isn’t clear how this new offering will be branded.

Goldman Sachs will offer unsecured personal loans and will also venture into lending to small businesses according to several articles about the new business unit. Joining the team at Goldman to run the new operation is Harit Talwar, a former executive at Discover, who they have brought on as a partner. From the Times article:

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, Goldman Sachs, online lending

Being Better is not Enough: The Way Forward for Marketplace Lending

March 30, 2015 By Peter Renton 1 Comment

Finance concept. Dollars and bank building.

[Editor’s note: This is a guest post from Jonathan McMillan, who has published the book The End of Banking: Money, Credit and the Digital Revolution. The book explains why a financial system without banking is both possible and desirable in the digital age. The article is part of a two-part series. The first article explained why marketplace lending is disadvantaged in the current regulatory framework. The opinions expressed in this article are the author’s own.]

To ensure their survival in the long run, marketplace lenders have to tackle the privileges of banking institutions – such as government guarantees and the access to Federal Reserve liquidity. We made this point in a previous article. But what specific changes should the industry propagate to create a sustainable and fair regulatory environment for the financial system?

The Obvious Option: End the Unfair Advantage

The most obvious solution is to simply ban government guarantees and prohibit the Federal Reserve to provide emergency liquidity. Prominent libertarian politicians advocate this solution. Should the marketplace lending industry befriend the Tea-Party movement, demand to end the Fed, and pledge to throw the head of Treasury into jail if he bails out another banking institution?

In some cases, such as this one, the obvious solution is not the right one. The current financial system is vulnerable to unpredictable chain reactions. Just think about the repercussions of the bankruptcy of Lehman Brothers. Could you stick to a pledge not to bail out financial institutions if it means that the whole system goes bust, implying millions of people to lose their jobs and homes?

The government can only remove the unfair advantages for incumbent banking institutions if the financial system is immunized against these destructive chain reactions. Even the former chairman of the Fed, and the current chairwoman from the International Monetary Fund acknowledge that the too-big-to-fail problem has not been solved – despite many new banking regulations. We have to take another angle on enabling a modern and stable financial system.

The Intuitive Option: End Banks

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, digital finance, marketplace lending, regulation

Profits for Banks at Risk as Peer to Peer Lenders Achieve Scale

March 11, 2015 By Ryan Lichtenwald 4 Comments

The addressable market for marketplace lenders is massive. The one trillion dollar figure has been thrown out as the market for consumer loans alone. But one thing we don’t hear a lot about is the market share of marketplace lenders related to banks. Lenders like Prosper and Lending Club are beginning to achieve scale. But what kind of impact will marketplace lending really have on traditional banks? How much does the traditional banking sector stand to lose if they fail to adapt?

In a recent report from Goldman Sachs, titled “The Future of Finance – The rise of the new Shadow Bank”, analysts try to answer that question. Shadow banking is defined as any lending activities that take place outside of the traditional banking system which would include the marketplace lenders. The estimate is that around $11 billion out of $150 billion in annual profit is at risk to leave the banking system over the next 5+ years from marketplace lending. There are many verticals when it comes to lending, so looking at the breakdown can help us understand the opportunities that lie ahead for the industry.

Banking Profit at Risk from Marketplace Lenders

Click for larger view.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, Goldman Sachs, marketplace lending, Shadow Banks

Being Better is not Enough: The Strategic Mistake of Marketplace Lending

March 6, 2015 By Peter Renton 3 Comments

Marketplace lending putting the peices together

This is a guest post from Jonathan McMillan, who has published The End of Banking: Money, Credit and the Digital Revolution. The book explains why a financial system without banking is both possible and desirable in the digital age. The views expressed in this article are the author’s own and do not necessarily reflect the views of Lend Academy.]

Ten years ago, marketplace lending did not even exist. Today, the industry features a publicly traded company and has underwritten a loan volume of more than $10 billion. The low returns for investors and high rates for borrowers in traditional lending channels suggest that marketplace lending has not even started to tap on its full potential.

The growing loan volumes and attractive return prospects increasingly attract major financial intermediaries to invest in marketplace loans. This direction is not what Lending Club CEO Renaud Laplanche envisioned in an interview in January 2011, where he described his business model as “the shortest possible path between the source of capital, individual investors, and the use of capital to individual people and small businesses.”

The recent success in attracting funds from traditional financial institutions has pushed the vision of disintermediating the financial system to the background. Instead of understanding itself as the disruptive force of finance, marketplace lenders now see themselves as a complementary part of the existing financial system. Today, they mainly focus on being more cost-efficient and providing a better customer experience than banking.

But being better is not enough for marketplace lending to succeed, and losing sight of the greater picture will turn out to be a fatal mistake.

It’s the Regulation Stupid!

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: banking, digital finance, marketplace lending, regulation

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About Lend Academy

Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.

The Lend Academy team loves peer to peer lending and our staff have all invested their own personal money in one or more of the platforms. Lend Academy Media is part of Cardinal Rose Group which also owns LendIt, the leading industry conference, and has a majority interest in NSR Invest.

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