FinTech in Focus
Welcome to FinTech in Focus, a compilation of must-read stories about the role technology plays in the delivery of financial products and services. As part of the Center for Financial Markets FinTech program, FinTech in Focus offers a sampling of the week’s top domestic and international headlines and stories about this innovative, fast-growing sector.
As we continue to build-out the service and grow our readership, we will begin to release the weekly headlines over e-mail. Subscribe to FinTech in Focus to receive these updates in your inbox.
Tech Groups Launch Finance Technology Lobby
Amazon, Apple, Google, Intuit and PayPal launched Financial Innovation Now, an industry-led coalition to advance and promote policies that foster innovation in financial services. Led by Brian Peters, a partner at Franklin Square Group and a former director of government relations for the Information Technology Industry Council, the coalition will focus on mobile payments, real-time payment systems, online lending regulation, and other emerging issues. What prompted the coalition to form is anyone’s guess, but a recent Clearing House white paper, the Consumer Financial Protection Bureau’s inquiry into mobile financial services, and, particularly, the Treasury Department’s recent request for information (RFI) on marketplace lending, may have pushed the tech companies to join forces.
Accelerators and Economic Development Arms Making Moves
Prominent European accelerator Startupbootcamp selected Miami as its first U.S. location, making it Startupbootcamp’s 11th accelerator, which will bring together investors and thinkers to drive the creation and marketing of innovative products and services focused on digital health. Hong Kong Exchanges and Clearing recently partnered with SuperCharger, a Hong Kong FinTech accelerator, adding itself to a long list of supporters that includes Baidu, Standard Chartered, Microsoft, EY, and FinTech HK. Separately, Invest Atlanta, the city’s economic development arm, will attend Finovate Europe 2016 in London to generate closer ties with the UK FinTech industry. Innovate Finance, which markets the UK as the global hub for FinTech, joined a UK Trade and Investment mission to Switzerland focused on that country’s FinTech sector.
Bitcoin and/or the Blockchain
The Wall Street Blockchain Alliance recently announced the formation of four working committees focused on the blockchain, a digital public ledger capable of recording transactions. The committees are blockchain and financial markets, research and innovation, tax and accounting, and technology and product. The news comes as UK-based Magister Advisors predicted bitcoin would be the sixth largest reserve currency by 2030, with financial institutions spending $1 billion over the next two years on blockchain technology. Bitcoin also surpassed the $500 mark—the first time since last year and double its price back in September.
The University of Toronto Innovation Lab released a report on Toronto’s FinTech ecosystem. The report, commissioned by the Toronto Financial Services Alliance, is similar to prior reports detailing New York, London, and Hong Kong’s suitability for FinTech development. The report finds, however, that there are weak links in the ecosystem that prevent Toronto’s rise as a FinTech hub, even as it has the ingredients to become one. These shortcomings include the lack of strong partnerships between Canadian financial institutions and FinTech firms and a “growing disconnect” between regulatory authorities and technological advancements. Separately, the Toronto Stock Exchange saw its first successful blockchain listing with Canadian Blockchain Tech Ltd added to the VentureBoard. Similarly, Canada’s largest bitcoin exchange, Quadriga, will launch the country’s first blockchain research and development lab. In other news, Canadian securities regulatory authorities published a final crowdfunding exemption and registration framework for funding portals under the Multilateral Instrument 45-108.
Treasury, FDIC Sound Off On Marketplace Lending
Roughly a week after Antonio Weiss, Counselor to the U.S. Treasury Secretary, commented on Treasury’s RFI on online marketplace lenders—non-bank lending platforms that connect consumers and small business borrowers with faster, more efficient capital access through enhanced underwriting metrics—Anjan Mukherjee, Counselor to the Secretary and Deputy Assistant Secretary for Financial Institutions at the U.S. Treasury, shared additional insight on the more than 100 comments received that emerged through the RFI. Apart from the U.S. Treasury, the Federal Deposit Insurance Corporation (FDIC) is also looking into marketplace lending. FDIC Chairman Martin Gruenberg said the regulatory agency is closely monitoring marketplace lenders during a meeting of the FDIC Advisory Committee on Community Banking. And let’s not forget the 22 regulatory officials who discussed marketplace lending at the American Banker Marketplace Lending and Investing Conference last week. The attention comes as Sam Hodges of Funding Circle discussed industry regulation on Bloomberg TV. Lending Club has facilitated more than $13 billion in personal loans since inception. Small-business lender OnDeck swung to a profit, and Goldman Sachs continues to lay the groundwork for its entrance in the space.
Source: Allen and Overy LLP, Funding European business: Harnessing alternatives. November 2015.
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