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 24, 2016

The Rise and Fall — or Just Fall — of CurrentC

A retail consortium’s effort to launch a mobile payment system in a bid to outdo Apple Pay and other mobile payment systems, as well as bypass processing fees charged by Visa and MasterCard has come to an abrupt halt. Merchant Customer Exchange, the developer behind the CurrentC payment application, announced that it would layoff 30 employees and postpone the nationwide rollout of its service. We’ve been following the consortium’s difficulty in moving forward with its own payment system, especially given recent efforts by some retailers within the group to create their own payment services and/or allow Apple Pay and Samsung Pay to be used in their stores. One of those retailers, Walmart, has announced that it will launch Walmart Pay in Texas and Arkansas with a nationwide rollout expected in the near future.

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Keep an Eye Out For

A few reports to watch for in the coming months:

First, the U.S. Government Accountability Office is expected to publish reports covering the financial regulatory landscape in the U.S., an issue we’ve touched on in the past as it relates to FinTech. The GAO is also taking a look at whether the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency "have fallen victim to 'regulatory capture,'" and "whether the Federal Reserve's role in payments systems presents a conflict of interest." Adding to the GAO's to-do list, a request from three Democratic senators "seeking to better understand regulations and ongoing efforts at the state and federal levels related to mobile payments" and, according to Politico Pro, a request from House Republican Chief Deputy Whip Patrick McHenry, nine other House Republicans and one House Democrat, to understand the challenges and opportunities financial firms and FinTech companies face with the existing regulatory structure and in what ways regulators can “better streamline the process” for fintech and financial firms to collaborate.

Second, while I still haven’t recovered from Canada beating Team USA this weekend at the Ice Hockey World Championship in Russia, our northern neighbors are launching a FinTech market study which will explore how innovation "is affecting the way consumers and businesses use financial products and services," and, among other things, "whether there is a need for regulatory reform to promote greater competition while maintaining consumer confidence" in the financial services sector, according to a press release from the Competition Bureau.

Lastly, the Australian Securities and Investment Commission is expected to release its “regulatory sandbox” proposal in June. According to Commissioner Cathie Armour, "We are going to issue a public consultation on some potential adjustments to the regulatory framework which might be of particular help to fintech businesses. They'll obviously have regulations imposed on them but, potentially, for a limited period of time, some aspects of regulation will not be imposed just to allow experimentation."

Even in Turbulent Times, Marketplace Lenders Can Shine

In possibly the most turbulent time for online lenders, beyond the U.S. Securities and Exchange Commission’s crackdown on Lending Club and Prosper nearly a decade ago, Avant announced that it would let go of roughly 7 percent of its workforce, ditch plans to expand its product offerings, and put the brakes on efforts to expand its business to Australia, all in an effort to continue to achieve profitability. The cull comes nearly two weeks after Prosper announced layoffs totaling nearly 30 percent of its workforce. Meanwhile, Lending Club has sought help from investment banking firm Jefferies to find investors interested in purchasing loans.

And while headlines may indicate waning investor interest and confidence in U.S. marketplace lending asset-backed securities, it’s important to note that it’s not all doom and gloom for the industry. Beyond the industry’s benefits and overall importance in the provision of credit to both consumers and small businesses, some companies are performing well financially. Bizfi and Lendio, for instance, have announced record-breaking first quarters with year-over-year increases in origination of 49 percent and 200 percent, respectively. Meanwhile, OnDeck reported the successful close of its second securitization totaling $250 million, while SoFi became the first online lender to receive a triple-A rating from Moody's on its recent $380 million offering backed by student loans. Tough times, yes, but it’s not the end of the world for online marketplace lenders.

A Big Week for Ethereum and Other Headlines

What a week it was for Ethereum. First, Coinbase announced that it will support ether trading. The company will also rebrand its exchange used by professional traders to Global Digital Asset Exchange, while leaving its consumer product brand unchanged. Around the time of the announcement, news began to circulate about fundraising for a virtual company called Decentralized Autonomous Organization (DAO) that runs on the Ethereum network which is expected to surpass $200 million in fundraising. This would be largest amount raised by crowdfunding and may become the largest investment raised for a start-up in the virtual-currency space. According to CoinDesk, the DAO “allows market participants to provide both startup businesses and projects with funding — in the form of ether — in exchange for voting rights.”

Turning to distributed ledger technology, the Linux Foundation’s Hyperledger Project added another eight members to its group and named Brian Behlendorf executive director. The project is described as “a collaborative effort created to advance blockchain technology by identifying and addressing important features for a cross-industry open standard for distributed ledgers that can transform the way business transactions are conducted globally.”

On the online finance front, investment bank UBS announced a partnership with robo-advisor SigFig, while the U.S. Small Business Administration released a report on "the effect of crowdfunding success on the ability of entrepreneurs to obtain additional financing after the campaign ended." The report found that "crowdfunding as proof-of-concept benefits entrepreneurs with smaller campaigns ($75,000 or less). For larger campaigns of greater than $75,000, additional funds do not appear to offer the same degree of proof-of-concept benefits in attracting additional capital.”

Transformation vs. Disruption

According to a recent report by Moody’s Investors Service,* banks will continue to play a central role in the financial system despite the “head start” FinTech firms have generally had over traditional incumbents in moving towards digital financial services and products. Banks still have significant financial resources and "retain the ability to continue to build out their digital platforms," and/or acquire FinTech firms, the report notes. However, a shift “toward open data, for instance, could unglue one of banks’ strongest defenses by making it easier to switch financial services providers.” Additionally, “a more defined regulatory stance would crystalize, and perhaps change, the rules of engagement. And a killer app or the entrance of one or more Big Tech players, with large customer bases and deep pockets, could quickly shift the financial services landscape.” 

*This report is available to you on a complimentary basis: A login, which is required to access this report, is available for free through a one-time only registration process.

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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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