News Briefing - Crowdfunding, SME And Alternative Finance

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1.UK – P2P

P2PFN reports concerns over a broad-brush approach to P2P regulation.

“LEGAL experts have expressed concerns that the Financial Conduct Authority (FCA) may lump peer-to-peer lending in with riskier investment products as part of its crackdown on promotions.

The City watchdog sent a ‘Dear CEO’ letter to all regulated firms last month warning that their promotions should be clear and not misleading, which was followed up by a sector review document that warned against “headline grabbing returns” in financial products.

Its sector review appeared to categorise the P2P sector alongside contracts for difference (CFDs), structured products and spread betting – typically seen as risky and opaque investment sectors.

“Unsuitable investments in complex and risky products are an area of focus,” said the FCA.

“These products include CFDs, spread betting, structured products and investment-based crowdfunding. Loanbased (‘peer-to-peer’) crowdfunding is covered in the retail lending chapter [of the sector review].

 “The complexity of these products means that consumers may find it difficult to assess the risks involved in investing in them,” the regulator added.

“This means they frequently overestimate potential returns and underestimate the potential for capital loss. Inappropriate sales tactics, such as the use of headline grabbing return figures or miscategorisation of retail investors as professional investors, can result in consumers investing in unsuitable products.”

 

 

2. US – FinTech

 

Crunchbase News explains its approach to data and financial reporting.

 

“Crunchbase News examines the intersection of money and startups, often through the lens of data. Especially in our more analysis-heavy work, we do our best to explain how we arrived at a certain set of numbers and why we chose that approach.”

3. US – FinTech

Crowdfund Insider looks at the potential impact on FinTech of new political leadership.

“The House Financial Services Committee is one of the most powerful Congressional committees on the Hill. The Committee oversees not only the entire financial services industry but its policy portfolio also includes other overlapping responsibilities such as Housing, entrepreneurship and international financial organizations.

Last election cycle, the House of Representatives saw the Democrat Party take control. This meant every Committee experienced a change in leadership. For the House Financial Services Committee, veteran Representative Maxine Waters took control.

Waters has been in the house since 1991 so she has experienced quite a bit. She has risen the ranks of Congressional leadership to become the ranking member of the Financial Services Committee – previously serving as the ranking member. Areas of priority for Representative Waters are expected to include consumer protection regulation and the controversial Consumer Financial Protection Bureau which became embroiled in a political spat when the first Director, Richard Cordray, left to run for Governor in Ohio (he lost).

As the first African American Chair of the Committee, Waters issued a statement explaining her priorities:

“As Chairwoman, I will continue to prioritize protecting consumers and investors from abusive financial practices, making sure there are strong safeguards in place to prevent another financial crisis, expanding and supporting affordable housing opportunities, tackling the homelessness crisis, encouraging responsible innovation in financial technology, promoting diversity and inclusion in the financial services sector, conducting appropriate oversight and ensuring that hardworking Americans and small businesses have fair access to the financial system and opportunities to thrive. I consider it a privilege to hold the Chairwoman’s gavel and look forward to working with my fellow Democrats, Ranking Member McHenry and my colleagues across the aisle on commonsense solutions that benefit hardworking Americans and strengthen our economy.”

The House Financial Services Committee: What Should Fintech Expect from Chair Maxine Waters? | Crowdfund Insider

 

4. International – FinTech

 

Blokt.com runs an opinion piece on the future of Cryptos, STOs, Blockchain and P2P in what the author describes as a new era of disintermediation.

 

“Here’s why alternative lending/funding platforms are an attractive proposition:

They can become Incubator of seed stage companies especially when VCs are reluctant to invest in fledgling businesses when overall macro-economic outlooks seem bleak.

  • P2P platforms can be used to attract investors with goals beyond financial return. For e.g. sustainability and social businesses
  • Larger companies with already existing customer base can raise funding from the very customers, which is also known as an “implicit marketing” tactic.
  • The main advantage of Alternative finance is that they don’t have any “physical distribution costs” unlike Brick-and-Mortar financial institutions.
  • AFs’ management team tend to have Faster decision-making style since their processes are lean and efficient. The Organisational structure hinders banks from taking fast decisions. These new-age firms have lean, automated processes that help in getting things done.
  • Boost growth in Emerging Economies.

The New-age of Financial Dis-Intermediation – P2P, STOs, Blockchain, & Cryptocurrencies - blokt.com

5. International – FinTech

Crowdfund Insider reports on a Swedish innovation.Tink, a Sweden-based fintech that provides APIs to create next-generation banking services, announced on Thursday it secured €56 million through its investment round, which was led by Insight Venture Partners. Founded in 2012, Tink stated its mission is to make banking “better” by creating technology to improve customer experience and bring more financial clarity.”

Swedish Fintech Tink Secures €56 Million Through Latest Investment Round Led By Insight Venture Partners | Crowdfund Insider