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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
June 21, 2016
   
   

Milken Institute Releases Overview of 70-plus U.S. Online, Non-Bank Finance Platforms

Welcome back FinTech in Focus! My apologies for being unable to release a new edition last week due to the arrival of my new daughter and the subsequent realization that I now have two children to care for. It’s organized chaos in the Mueller household these days. 

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In return for waiting patiently, I present you with a report that profiles more than 70 online, non-bank finance platforms based predominantly in the U.S. The short paper and 100+ page landscape is meant to increase understanding among policymakers and regulators by exploring the history behind each platform, the products offered, and how they became recognized credit resources. The release is timely given the heightened interest in “marketplace lending” in Washington. This interest was highlighted by  two recent events hosted by the Federal Trade Commission and the White House covering online, non-bank finance platforms and other FinTech issues.

The industry is going through profound changes. Among the developments this week: Concerns were raised about “stacking” loans from multiple lenders to the same borrower; Vouch Financial announced that it is shutting its doors; Lending Club postponed its annual shareholder meeting and announced that it will raise interest rates; and Prosper announced that it put its relationships with loan-referral websites LendingTree and Credit Karma on hold. News also came to light that: Lending Club’s former CEO Renaud Laplanche is currently in talks with various firms about taking the company private; OnDeck and Intuit’s $100 million partnership is backed by a fund jointly owned by both companies; Biz2Credit entered India to expand the platform’s reach to the nearly 30 million small businesses in the country; RateSetter announced a move into small business lending in the UK; and Funding Circle and the European Investment Bank announced “a £100 million investment in loans to UK small businesses originated through Funding Circle.”

Singapore Pushes Further into FinTech; Bank of England Launches FinTech Accelerator

Three developments out of Singapore over the past week or so. First, the Monetary Authority of Singapore (MAS) and the Australian Securities and Investments Commission signed an agreement to enable FinTech companies to grow and expand in each other's markets while receiving advice on required licenses to reduce regulatory uncertainty and time to market. Second, Singapore Fintech Consortium and the Fintech Center of Korea signed a memorandum of understanding that they will work more closely to support FinTech firms. And finally, two days after MAS proposed a regulatory sandbox for FinTech firms, the central bank released proposals for securities-based crowdfunding.

Meanwhile, the Bank of England released Governor Mark Carney’s planned remarks on FinTech. Carney was scheduled to deliver the remarks publicly, but the speech was cancelled due to the tragic death of Labour MP Jo Cox. Carney discussed the benefits of FinTech innovations and the steps the central bank is taking to enable FinTech transformation, including the launch of a FinTech Accelerator.

Bitcoin Hits Two-Year High; DAO Hacked & the Price of Ether Plummets

Roughly a week ago, the price of Bitcoin surpassed highs last seen more than two years ago, while the price of Ether surpassed $20 for the first time. Both currencies have faltered however, with Bitcoin collapsing from roughly $760 to $650 due to one of the largest bitcoin exchanges suspending trading twice within the past day. Meanwhile, Ether’s price fell dramatically and currently resides around $12 due to a hack to the Decentralized Autonomous Organization — which I’ve profiled a few times — that drained more than $50 million worth of the digital currency. Vitalik Buterin provided an update on the attack and sought to calm the debate over whether the Ethereum code requires additional rules.

In other headlines, the New York Department of Financial Services approved Ripple Lab’s application for a virtual currency license; Sweden's government is conducting tests to use blockchain technology for land registry; and Deutsche Bank anticipates that its blockchain project will be ready to launch in two years, even if the regulatory and legal framework for it could take five to 10 years.

Payments Developments

Samsung Pay went live in Australia and Singapore last week, around the same time that Stripe launched in France after a year-long trial. Meanwhile, JPMorgan Chase has joined with Bank of America and U.S. Bancorp to allow customers to transfer money between each lender in real time. They expect other banks to join the agreement in the near future. (The figure below provides additional evidence that bank payment apps are a preferred method used for peer-to-peer payments in the U.S.). The effort marks another challenge for PayPal, which just watched Apple introduce an Apple Pay button to website checkouts, though the payment function only works in Safari at the moment. 

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 jmueller@milkeninstitute.org.


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