Mueller Jackson
Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Focus

By: Jackson Mueller
May 10, 2016

A Special Edition—and a Special Day

We’re back from the 2016 Global Conference and hope you followed our coverage through the Institute’s digital platforms. This week, we return with a special edition of FinTech in Focus. We’re celebrating a media milestone for FinTech—and, on a personal note, my 31st birthday today. With a house, a mortgage, one child (and another expected in mid-June) and being the opposite of tech-savvy, I’d like to think that I’m the most un-millennial of millennials. But as the self-centered millennial that I am, please send praises my way and enjoy this week’s edition!

Congrats, FinTech, You Made It

Recently, CBS’ “60 Minutes” program ran a 13-minute segment on FinTech. It was the first time I’d ever spent more than five minutes watching the show in the 31 years that I have been on his planet—well-played, CBS! The segment mainly looked at firms focused on innovations within the payments space, interviewing Stripe founders John and Patrick Collison throughout. Other companies and persons mentioned or interviewed: Wealthfront, Lending Club, PayPal, Venmo, Transferwise, Vikram Pandit and Max Levchin. Of course, just like this space here, a 13-minute segment can contain only so much, so PYMNTs has provided a breakdown of what was left out.

U.S. Treasury Releases Findings from Its Marketplace Lending RFI

Today, the U.S. Treasury released the findings from its request for information (RFI) on online marketplace lenders announced last July. The comment period closed in September with roughly 100 letters, including one from the Institute, submitted through the portal. (I’ve put together a document covering key takeaways from each letter—if anyone is interested, please let me know.) The report was highly anticipated, given the wide range of stakeholders that submitted comment letters and the possible areas it may address (currently looking through right now). These could include Treasury’s position on whether risk retention requirements should be applied to marketplace lenders, whether legal protections on the consumer lending side should also be applied to small-business lending (a concern among a bipartisan group of lawmakers), and whether the department will share its views on who should regulate the space and what a practical policy/regulatory framework should look like (see recent comments from the Office of the Comptroller of the Currency on a new charter for FinTech firms).

It’s not just the U.S. Treasury taking steps to better understand the marketplace lending industry. In late April, the Reserve Bank of India published a consultation paper covering the peer-to-peer lending industry in India with comments on the paper due by the end of May. Beyond education, the U.S. Consumer Financial Protection Bureau, in a proposal expected to be unveiled in the fall, could expand the definition of installment lending to include marketplace lenders.

Another Black Eye for the U.S. Marketplace Lending Industry

I was hoping to be able to write something more positive about the online lending industry in this edition, with the announcement by OnDeck, Kabbage and CAN Capital of the Innovative Lending Platform Association, for instance, but negative headlines got in the way. OnDeck reported less-than-stellar results for the first quarter, with the company’s net loss exceeding $13 million, more than double the net loss witnessed in the first quarter 2015. The drop-off in investor demand has also led Prosper Marketplace to announce that it will lay off nearly 30 percent of its workforce.

More dramatic was Monday’s stunning announcement from Lending Club that its CEO, Renaud Laplanche, resigned along with three other senior managers as a result of an internal review of the sale of $22 million in near-prime loans to an institutional investor. According to the release, certain personnel “apparently were aware that the sale did not meet the investor's criteria.” Unrelated to the sale, the review also found “a failure to inform the board's Risk Committee of personal interests held in a third-party fund while the company was contemplating an investment in the same fund.” According to a webcast of Lending Club’s first quarter 2016 results, the company said it remains committed to its marketplace lending model and that this was a “very isolated event.”

In Other News…

First-quarter results also showed problems for companies operating in the mobile payments space. Square saw its shares plunge nearly 20 percent after reporting a $98-million loss despite higher net revenue and gross payment volume, with Square Capital generating $153 million in loans and advances in the quarter. Adding to investor concerns were a $50-million settlement with Robert Morley and Square’s inability to turn Square Cash into a viable business. Meanwhile, even as PayPal’s CEO celebrated the company’s first-quarter results, the first-quarter filing showed that its money-transfer service Venmo is under investigation by the U.S. Federal Trade Commission (FTC) in relation to “unfair or deceptive” trade practices. And, to top this all off, the FTC and the Federal Communications Commission ordered major device manufacturers to provide information regarding mobile device security updates to address potential vulnerabilities to consumers.

Elsewhere, M-Pesa continues to struggle in countries where more individuals are “banked.” For instance, Vodacom announced that it would shut down its M-Pesa service in South Africa due to low adoption rates. The company had predicted 10 million users in South Africa by 2015, but only 1 million South Africans have registered for the service, with less than 80,000 identified as active users.

On the digital currency front, both Coinbase and Ripple are reportedly close to finalizing bitlicenses with the New York State Department of Financial Services—the same department that just approved the application of Tyler and Cameron Winklevoss’ Gemini Trust Co. to trade Ether. Separately, blockchain technology provider Chain Inc. was reportedly involved in a “secret meeting” with roughly 100 financial services executives that has led to the unveiling of an open source blockchain protocol called Chain Open Standard 1.

The EU and Crowdfunding: Let Member States Decide, for Now

Earlier this month, the European Commission released a working document called “Crowdfunding in the EU Capital Markets Union.” More than €4 billion was raised via debt or equity crowdfunding last year by European member states (see Table 1 below), with the UK the most active country involved in the development of its crowdfunding market. The commission notes that some member states are “tailoring their regulatory frameworks to the characteristics and needs of local markets and investors” and that the crowdfunding industry is still inherently local at this point. As such, “there is no strong case for EU level policy intervention at this juncture,” the report states, though the commission still intends to monitor the industry’s development going forward.

 crowdfunding chart


FinTech in Focus compiles all the must-read stories about the role technology plays in the delivery of financial products and services. Get a sampling of the week's top domestic and international stories about this innovative, fast-growing sector all right here. For questions or inquiries, contact Jackson Mueller at


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