News Briefing - Crowdfunding, SME And Alternative Finance

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Today's Briefing

1. UK – P2P

AltFi on the search for borrowers and its ramifications.


“Peer-to-peer lenders are becoming more and more bank-like. But who are they going to lend to? The race to find new borrowers is on.

Last week, David Stevenson, the Financial Times’ Adventurous Investor, wrote: “any altfi or fintech platform engaged in consumer lending will, by my estimation, probably be forced to turn into a bank at some stage in the not too distant future”. He sees lower cost of capital as one of the key factors in forcing the conversion.


But there’s a problem. Zopa is the world’s original peer-to-peer lending platform and the biggest consumer-focused platform in the UK. It has also been closed to new investors for the better part of eight months. The reason is explicitly that it cannot find enough new borrowers. Demand for its loans among existing investors is more than sufficient to match demand on the other side of the marketplace. For this reason, Zopa's Innovative Finance ISA has largely been an exercise in tax efficiently wrapping money that it already had on the platform. The platform told the Financial Times last week that it hoped to reopen to new investors in early 2018.


In the meantime, the company is careering towards getting a banking licence – which will allow it to accept retail deposits. This money will be used to fund loans through its marketplace lending platform, which will operate adjacent to the bank. The hope is that this will lower the company’s cost of capital. But hold the phone: if Zopa can’t currently find enough borrowers to satisfy the demands of marketplace investors, where on earth does it intend to find willing recipients for its deposit capital?”  

2. UK – P2P

P2P Finance News reports on the repayment of a major P2P loan:

“LENDY has announced the repayment of its largest peer-to-peer loan to date, which is one of the biggest seen in the UK’s P2P sector.

The property platform said on Wednesday that the £7.92m loan was secured against a property valued at £12.5m in Kentish Town. It has been repaid in full 21 days ahead of schedule and has returned 12 per cent annual interest to lenders.

The loan, which was made by almost 3,500 lenders through the Lendy platform, was drawn down in late October 2016, on a 12-month term. The final payment of interest will be made to lenders at the end of October.
The building, JML House, was formerly home of the Kentish Town Film Studios. With the help of the P2P loan, it has been refurbished to a higher standard which is expected to boost its market value.”

3. US – FinTech


Crowdfundinsider reports:


StartEngine has announced it has started to accept applications to list an Initial Coin Offering (ICO) on its crowdfunding platform. The full stack crowdfunding platform publicly announced in August its intent to incorporate tokenized security offerings alongside more traditional types of securities. StartEngine enables companies to raise capital under the three different crowdfunding exemptions: Reg CF, Reg A+ and Reg D (506c). StartEngine was one of the first FINRA approved Reg CF portals.”

4. US – FinTech


Coin Idol reports the latest on P2P and alternative currencies:

“LoanBit blockchain driven platform offers a new level of safety and verification and utilises its own exchange.
A P2P Lending & Investment platform offers the future of crowd based lending, LoanBit is launching its own token sale and has just announced the dates. The crowdsale for the platforms ‘LoanBit Token (LBT)’ is scheduled to go live in November, with a presale beginning on 4th October 2017, and ending on 15th October 2017. The ICO offers a variety of incentives for early adopters. The sale of these tokens will assist the company in raising funds to aid the project's development.

Currently, the lending industry has seen a trend away from traditional, inhibitive methods, and are moving towards a model more in tune with the digital age, shifting focus toward an online and P2P lending archetype. P2P lending is a way of borrowing money without the involvement of a traditional financial intermediary, and relies on an online platform to pair participants together utilising objective data around reliability amongst other information.
LoanBit is one of the more unique projects in both the blockchain and lending ecosystems, as it offers a modern solution to an age old problem.”

5. International – FinTech

Christine Lagarde, International Monetary Fund Managing Director, delivered a speech in the UK envisioning a future without banks, reports Crowdfundinsider.

"Now Lagarde did not say banks will no longer exist but she stepped up to the precipice of the death of banking stating there is a possibility of the “the break-up, or unbundling, of banking services.” And why not?

So how will Fintech change central banking over the next generation? That was the topic of her conversation but she imagined a world “without imposing [bank] branch offices.”

In her review, Largarde considered the impacts of digital money, new models of financial intermediation (or perhaps disintermediation is more accurate term) and artificial intelligence."


And there’s also this from the EBA…


“The European Banking Authority (EBA) has a mission of working towards a single regulatory and supervisory framework for the European Union member states. The goal is to make things simpler for consumers and businesses to operate across the EU. As the digitization of banking and other financial services heat up globally, it would be pretty difficult to ignore the Fintech revolution occurring across all financial services. As part of a mandated comprehensive review of the EBA’s objectives for the coming year, the Agency has just published their 2018 “Work Programme” and hidden within is a section on Fintech.”

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The Daily News Briefing is sponsored by Money&Co. and edited by Martin Baker, Director of Content and Communications at Money&Co and Editorial Director of Another Crowd.

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