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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
January 05, 2016
   
   

FinTech in Focus will be available via e-mail beginning Tuesday, Jan. 19. If you would prefer to receive our weekly highlights in your inbox rather than wait for us to tweet out the post, please sign up today by selecting the “FinTech in Focus Weekly E-Newsletter”. As always, please contact Jackson Mueller with any questions.

Headlines

Milestones to Mark the New Year
As you were carving the holiday turkey or strapping on skis to take advantage of El Niño-induced weather, there were some notable FinTech developments that are worth mentioning. On the payments front, PayPal registered more than 1 million PayPal.Me links since its launch in early September 2015. The peer-to-peer service, which allows users to send money through a personal and secure link, is available in 18 countries. Separately, the company’s One Touch service, which allows consumers to pay for goods and services without having to log in and enter billing information across multiple mobile applications and websites, has been “enabled” by 10 million consumers with more than 1 million merchants participating worldwide.

In the UK, Funding Circle passed the £1 billion mark (~$1.5 billion) in lending to small businesses which has resulted in the creation of 46,000 jobs across the country. Meanwhile, Uber recorded its 1 billionth ride from a Londoner named Marvin. And Bitcoin proponents popped champagne to toast the digital currency surpassing 100 million transactions50 million of which came in 2015 alone, while Nasdaq Linq blockchain ledger technology successfully completed the first-ever private securities transaction.

The Problem with Financing
While we all toasted to a prosperous and healthy 2016, the future appears bleak for up-and-coming startups. Early stage financing and money received through sale of the company or an initial public offering fell dramatically in 2015. For instance, blockchain-focused firms, such as ItBit and Digital Asset Holdings, are finding it difficult to raise capital.

Some stakeholders at privately held companies are finding it difficult to cash out. Palantir Technologies Inc., a provider of technology that allows firms and government agencies to visualize and map large amounts of data, has no intention of going public, a decision that reportedly is creating a rift among the company’s investors, employees, and even its co-founders.

Chinese Regulations Target Online Payments, Peer-to-Peer Industry
In late December, the People’s Bank of China issued final rules covering online payments, while draft regulations were issued by the China Banking Regulatory Commission covering online lending. Fincera’s Spencer Ang Li provided his perspective on the final rules covering online payments. And, as was anticipated for months, Chinese officials published proposed rules to reign in the peer-to-peer lending industry. There are roughly 2,500 P2P platforms operating across China, yet nearly 900 platforms reported operational problems in 2015 alone. Despite this, peer-to-peer lending is the third most popular investment in China for those investing less than $77,150, putting it just ahead of bank deposits and stocks.

A Deeper Dive into R3CEV
For those looking to further understand just what the R3CEV blockchain consortium is up to and how it has grown, there is an interesting Q&A with Charley Cooper, who joined R3CEV back in August, on R3’s operations and aspirations.

Of course, not everyone has joined the R3CEV bandwagon. Tone Vays, head of research at BraveNewCoin.com, and Patrick Byrne, Overstock CEO and co-founder of blockchain trading platform tØ.com, voiced their opinions of the consortium at a recent conference in San Diego.

New Year, New Reports
The International Organization of Securities Commissions published a white paper surveying the various regulatory regimes put in place by member countries to monitor online finance platforms and activities. The paper focuses on commonalities and divergences in the various jurisdictions covered, as well as major risks, without proposing, at this time, oversight at the international level. Also, EY’s FinTech Adoption Index lists Hong Kong as the most FinTech-friendly region, followed by the U.S., Singapore, the UK, Australia, and Canada. Not surprisingly, the report finds that early FinTech adopters tend to be younger, higher-income customers who live in urban areas.

FinF photo

Source: EY FinTech Adoption Index

 

Please contact Jackson Mueller with suggestions or recommendations for improving FinTech in Focus.


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