News Briefing - Crowdfunding, SME And Alternative Finance

woman with a silicon chip inside her head

1. UK – FinTech  

 

AltFi reports a call for a change to what Fintech lenders call themselves: 


“So far 2020 has been a rollercoaster ride for fintech lenders owing to the uncertain and looming economic fallout from the global pandemic.   

This new era will soon prompt a ‘separation’ among lending businesses, according to Nucleus Commerical Finance’s CEO Chirag Shah, who says the firm has been able to embrace a number of new innovations during the period but that many firms may struggle.  

Shah, who founded the company in 2011 as an alternative to bank finance, says the Covid-19 response from fintech has proved that alternative lenders (also called non-bank lenders) have moved into the financial mainstream.   

The likes of Nucleus, as well as Funding Circle, Market Finance and many others, have been large conduits for government-backed loans to SMEs including the Coronavirus Business Interruption Lending Scheme (CBILS).  

“COVID-19 is going to prompt a separation between lenders. Only the ones with strong systems, strong tech, controls, strong market outreach, are going to be the ones who step out of the other side and are still the kind of lenders people want to work with,” he said.  

“One of my bugbears has been being called an alternative lender. I think we are doing ourselves a big injustice by calling ourselves alternative and I think CBILS has proven that we are not alternative, we are mainstream. We are now quicker [than banks]. We should be the first point of call.”  

 

2. UK – FinTech 

Finextra on an interesting deal – P2P crypto transactions on mobiles apps: 

“Ziglu, the payments app from former Starling Bank co-founder and CTO Mark Hipperson, has added P2P support for cryptocurrencies, enabling the transfer of virtual cash between two parties. 

Ziglu says the new functionality can be used for anything from splitting a dinner bill between friends to paying rent, bypassing the need for direct debits or cash.

Says Hipperson: "Paying people should be instant, free and easy regardless of their location or the currency, whether that is splitting the cost of your Airbnb or sending a Bitcoin birthday present."

Launched in June with £5.2 million in seed funding, Ziglu has ambitions to process up to $1 billion in transactions in its first year and to eventually expand from the UK to the US.” 

 

3. UK – AltFi 

The scandal continues. Bond Review muses on reports that the LCF administrators are to sue to recover £168 million. 

"Thirteen people are to be sued, including: 

  • Four directors of London Capital and Finance or connected companies to whom LCF on-lent money, who were arrested by the Serious Fraud Office and shortly thereafter released without any charge: Simon-Hume Kendall, CEO Andy Thomson, Elten Barker and Spencer Golding. 
  • Hume-Kendall’s wife Helen. 
  • Paul Careless, CEO of Surge Group which received a total of £60 million in commission for promoting London Capital & Finance. 
  • Former Tory Energy Minister Charles Hendry, who is one of five defendants accused of not doing enough to identify the fraud while serving on the board of LCF-linked companies. 
  • The other six defendants have not been named by the FT. 

 

The lawsuit alleges that LCF’s purpose was to defaud bondholders.  

According to the lawsuit, 

nearly 60 per cent of all of the investors’ cash — about £136m — was channelled to its executives either directly or via loans to companies they controlled or were connected to. 

Add the £60m paid to Surge, and you only have at most £1 in every £5 invested by investors going into assets which might pay them a return, according to the administrators.” 

4. International – FinTech 


Finextra reports: 


“The European Commission has opened a preliminary investigation into Visa's rules regarding staged digital wallets. 

Initiated in June, the probe was briefly referenced in Visa's most recent regulatory filing.

Referencing "industry insiders", the Times newspaper points to concerns among regulators that some financial technology start-ups are pushing the rules too far through a desire to offer ultra-speedy payments to customers, making it difficult for Visa to check for money laundering and fraud.

The filing also reveals a lawsuit lodged in the UK by Euronet, alleging that certain rules affecting ATM access fees in Poland, the Czech Republic and Greece breach various competition laws.

Euronet is seeking damages, costs, and injunctive relief to prevent Visa and Mastercard from enforcing the rules.” 

 

5. International – FinTech 

AltFi reports moves from Holland: 

“Cloud banking fintech Ohpen has acquired Software as a Service (SaaS) provider Davinci to bolster its product offering and turn its attention to international expansion.   

Davinci provides cross-border loans and mortgages through using AI and machine learning to provide customers with more suitable loans, saving users up to 80 per cent in some cases.   

The acquisition means that Ohpen will soon be able to provide its customers a comprehensive service, offering products across savings, investments, loans, mortgages and current accounts.    

Matthijs Aler, CEO of Ohpen, said: “Together, we intend to lead the charge indirectly challenging incumbent providers with outdated technology. Our mission is – and always has been – to set financial institutions free from legacy software.”   

“Now we can help a broader range of financial institutions deliver tangible change to meet the needs of tomorrow’s customers.”   

Ohpen already counts more than 20 top financial institutions as a customer and its hoped with the acquisition of Davinci and being able to offer a more rounded product, Ohpen can expand internationally.”