News Briefing - Crowdfunding, SME And Alternative Finance

1.UK – FinTech

Starling Bank has launched arranged overdraft interest holidays to its personal account holders who are struggling financially as a result of coronavirus, according to AltFi. 

“The Coronavirus Support Scheme will mean customers can apply for a three-month interest holiday starting today.

Under the scheme, the bank has said that all interest charged on overdrafts will be waived and it will not be collecting any accumulated interest at the end of the three months.

Customers eligible for the programme will need to prove they have lost income since 10 March 2020 because work has dried up or they are unable to work due to coronavirus.

Both customers currently with an arranged overdraft and those without are eligible to apply to the support programme.

For customers who don’t currently have an overdraft with Starling, it’s removing the interest rate and the maximum monthly charge, currently capped at £2 per month, meaning that customers facing hardship will not be charged for accidentally falling into an unarranged overdraft.

The digital bank has also said it will contact customers on the scheme after two months to remind them they have one month left of the interest holiday.”

 

2. UK - FinTech

 

Scottish Financial News reports:

“The Bank of England’s (BoE) decision to lower interest rates to an all-time low of 0.1% could see UK savers’ rate of return fall by as much as 62.5%, according to the latest research by peer-to-peer lending platform Sourced Capital. 

Sourced Capital looked at the average rate of return across a number of saving products in the 12 months prior to the coronavirus outbreak and what the changing economic climate could mean over the coming year.

The lender based their predictions for the year ahead on the average rates seen across each product following the last time the Bank of England lowered rates to a record low of 0.25% in April 2016. However, with interest rates now even lower, the reality could be an even bigger reduction in interest paid via these different savings options.

Instant Access Savings: -62.50%

The research shows that in the 12 months prior to the first reports of coronavirus in December of last year, the average Instant Access Savings Rate offered an average rate of 0.4%; meaning £1,000 invested would have returned just £4 over the course of the year.

However, based on historic rates offered the last time interest rates hit a low of 0.25% in April 2016, the next year could see this rate of interest reduce to just 0.15%, reducing its yearly return to just £1.50 - a 62.5% reduction.

Variable Rate ISA: - 48.2%

Last year the average Variable Rate ISA returned a healthier level of interest at 0.85% or £8.50 on a £1,000 investment. The coming year could see this drop to 0.44% reducing returns to £4.40, a drop of 48.24%.”

 

3. UK – FinTech

 

AltFi brings news of two delayed launches:

Number 1

“Yes, markets are down and very volatile but fintech firms offering cheap entry into the stock market are looking like beneficiaries of the recent turmoil, especially compared to other digital disruptors. Robinhood, one of the most eagerly anticipated new launches in the space in the UK, with plans to take on the likes of Freetrade and Hargreaves Lansdown, is delaying its launch. 

Robinhood, which was founded in 2013 and sitting on a $7.6bn valuation, is one of the most well-known US fintech firms but had kept to its home market until annoucing last November that it would be taking on the UK’s competitive self-directed investor market.”

Number 2

“Six months after scrapping its subscription service Monzo Plus and replacing the entire team, digital bank Monzo has announced a further delay to the relaunch of the service which was planned to go live yesterday.

In a message to Monzo’s forum, Tom Davies, the product marketing manager for Monzo Plus, wrote: “with the world going through a really difficult period, and with most of us staying safe inside, we made the tough call to delay the launch of our two new accounts”.

The reason, according to Davies, is that of the two paid accounts the more premium account was due to include “benefits to make traveling easier and more enjoyable”, which obviously aren’t much use while working from home.”

 

4. US – FinTech

 

Draper Goren Holm, a young venture group that includes prominent VC Tim Draper, announced on Tuesday that its portfolio company Totle has been focused on developing an advanced order routing system that will find the “absolute best” combination of orders to get the most value of cryptocurrency tokens, according to Crowdfundinsider.

“The company noted that the product that enables anyone to buy and sell tokens at the best price guaranteed across the Decentralized Finance (DeFi) space and allows any company or individual to easily integrate this product into their website or app. Through the product, Totle will show users how its prices compare to the rest of the market…

The launch of Totle’s product comes just a couple of weeks after Draper Goren Holm announced it has invested in DeFi Money Market (DMM) a platform that enables digital asset holders to Earn 6.25% backed by real-world assets. Draper, a noted crypto enthusiast and longtime Bitcoin “bull,” has backed multiple tech names, including Coinbase and Baidu.

Draper Goren Holm reported at the time there was about $274 billion in crypto, $17 trillion of negative-yielding debt globally (more than 25% of global investment grade debt) and $90.4 trillion of physical money in the world earning little, zero, or even negative interest.”

5. International – Equity

Crowdfundinsider runs an overview of how platforms (mainly equity raisers) are reacting to the impact of Covid-19.