News Briefing - Crowdfunding, SME And Alternative Finance

crowd walking

1. UK – FinTech 

What Investment runs an opinion piece that argues “P2P’ (aka direct lending) is now a properly recognised asset class. 

 

“Having emerged only a decade ago as a so-called ‘alternative investment product’, it would be fair to say that peer to peer (P2P) lending has now emerged as a fully fledged asset class in its own right, with a loyal investor base who over the past few years have been slowly but steadily wooed not only by the returns but also by the flexibility that this product offers. 

The concept of this form of lending in itself is not new, yet its potential and reach has risen dramatically in the past few years thanks to a digital disruption that allows lenders to browse and invest in pre-vetted loans with just a click and manage their portfolio through an easy-to-use online dashboard. Indeed, the uniqueness of peer to peer lending as an asset class is that it blends personal finance and technology in a way hitherto unimaginable and takes the idea of ‘democratization of personal finance’ to new levels by allowing a wide range of different investors to co-invest together. 

Already before covid-19, P2P lending had come of age as an alternative asset class as a tightly regulated and increasingly popular source of yield in a world of record-low interest rates. However, covid-19 provided an opportunity for P2P lending to show its worth and indeed be part of the solution by ‘sitting at the main table’ along with traditional and challenger banks and help the Government deploy capital to SMEs. But in addition to that, P2P lending also played another key role during the market volatility witnessed since the start of the year when the S&P500 lost a third of its value in a month and many investors wanted to be in cash; P2P lending was used by investors to access fixed returns that were higher than returns on cash. Many P2P lending platforms saw a sharp increase in lending appetite on property-secured, fixed-return loans. Yet what is more interesting is that it wasn’t only high-net-worth investors and family offices looking to private property lending, it was also retail investors attracted not only by higher returns than returns on cash but also by the social responsibility angle of being able to participate in projects with a significant positive impact. 

However, P2P lending is a different asset class to traditional asset classes because effectively P2P lending is just a powerful tool that enables investors access loans or investment products. Thus it may be argued that the success of a P2P lending strategy is formed of two components. The first component is the quality of the tool itself; in other words, how good the platform is in performing an appropriate loan due diligence, in offering a user-friendly customer journey through the investment process and in having strong processes and policies in place to deal with potential default and ecovery. The second component is the quality of the underlying loans; in other words, P2P lending is like a sandwich, what matters is what’s inside. There are different types of P2P loans, consumer loans, SME loans, property loans; each comes with different levels of security, risk and reward.” 

 

2. UK – FinTech 

 

Finextra reports: 

“Hungarian startup PeasyPay is preparing to expand its biometrics-based point-of-sale payments technology to Spain and the UK. 

To sign up for the system, shoppers download the PeasyPay Android or iOS app and then take a selfie and a picture of their palm with their mobile’s camera before registering their bank card.

To make instore purchases, special POS terminals equipped with cameras and facial recognition software scan customers’ faces and palms and compares them to the biometric template created in advance. If the scans match, the payment is authorised and charged to the linked card.

Launched by EIT Digital, PeasyPay has been operating in Budapest since December thanks to partnerships with E-Group and OTP Bank.

Now, a pilot involving up to 25 retailers is underway in Guadalajara, Spain, with partners Ci3 and Liberbank.” 

 

3. US – FinTech 

 

Crowdfundinsider reports a gold-backed stablecoin launch: 

 

“NGRAVE, a digital asset security company that claims it has developed the world’s most secure cryptocurrency hardware wallet, has teamed up with VeraOne in order to help investors protect their gold with “maximum security.” 

VeraOne’s VRO token is reportedly “a 100% gold-backed” stablecoin and it’s also supported by the NGRAVE ZERO hardware wallet. These types of wallets allow users to securely store their crypto-assets in offline storage, which makes it very difficult (but not necessarily impossible) for hackers to gain access to users’ private keys and their valuable digital assets. 

The NGRAVE team confirms that they’ve partnered with VeraOne in order to “enable holding VRO — the 100% gold-backed token created by VeraOne — as cold as it gets.” The announcement states that NGRAVE ZERO will begin shipping in Q4 2020 and will have built-in support for the VRO stablecoin.” 

4. International – FinTech 

 

Credit Suisse looks set to throw its hat into the challenger banking ring, launching its own digital bank CSX at the end of October, according to AltFi.  

“CSX will only be available in its native Switzerland to people over the age of 26 and will allow users to open a bank account and order a Mastercard-backed debit card all from the app.  

Users of the new bank will be able to do everything from within the app, just like all other digital banks, but, interestingly, CSX customers will also be able to access services in Credit Suisse branches too.  

Alongside CSX, Credit Suisse is also launching CSX Young, a digital account aimed at people aged between 12 and 25.” 

 

5. International – FinTech 

 

AltFi reports: 

“Santander is rebranding its venture capital arm Santander InnoVentures as Mouro Capital, and doubling its allocated funds from $200m to $400m as fintech investment hots up.  

Mouro Capital will manage Santander InnoVentures’ existing investments in 36 startups across Europe and the Americas as well as further deepening Santander’s fintech involvement.  

The decision to expand Santander’s VC commitments comes as part of the Spanish bank’s $20bn four-year digital and technology investment plan.  

Manuel Silva Martínez, general partner of Mouro Capital, said: “By becoming more autonomous, we will gain in agility, attract entrepreneurial talent to the investment team, and further align to our entrepreneurs’ success.”  

“We are eager to keep on delivering strategic value to Santander, enhancing our partnership and working with our portfolio companies to support the bank in shaping fintech innovation.”  

The fund will dish out initial investments of up to $15m to startups across the US, South America and Europe.