Fintech bridges, disposable cards and terrorist financing – Read here

Bondora-industry-news

Finextra covered the recent “FinTech Co-operation Agreement” signed between Singapore and Lithuania. The Money Authority of Singapore (MAS) and the Bank of Lithuania initiated the agreement to improve regulatory collaboration and access to resources for Fintech’s in both countries.

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The Independent discussed the Fintech Revolut, initially known for their foreign currency transfers, have now introduced a ‘Disposable virtual card’. Which can be created in seconds and have their details automatically regenerated after every transaction. The Co-founder & CTO, Vlad Yatsenko, had this to say:

It will take approximately 800 years before we begin to run out of 16-digit card numbers, so we view disposable virtual cards as a sustainable, long-term solution to tackling online card fraud“.

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Let’s face it, it’s no secret that banks are under pressure to catch up with Fintech’s ability to innovate and iterate at lightning speed. Finextra explored the factors that are holding the banks back:

With an acute skills shortage for support and maintenance of legacy system, and inability to adapt these systems to counter the threat of FinTech challengers, failure to modernise now is a decision with existential ramifications. Kicking the can down the road is now the riskiest option.

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Similar to the agreement discussed between Singapore and Lithuania, ZDNet covered the UK – Australia FinTech Bridge agreement signed in London recently. The Australian Treasurer, Scott Morrison, had this to say:

We will work to identify emerging trends, share policy developments, and position firms for the challenges of entering a foreign market,”, “It will provide exciting new opportunities for trade and investment into the future, in an ever-increasingly digital world where innovation and competitive edge are paramount.

We’re interested to see what difference (if any) these agreements will make over the coming years.

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CNBC reports Latvia’s vow to improve the regulatory climate of its banking sector. This has arisen amid concerns that Latvian banks have not complied with sanctions imposed on North Korea, not to mention accusations of money laundering and terrorist financing. They continue:

The problems for Latvia’s financial sector have been amplified by an anti-corruption investigation into the country’s central bank governor, who is barred from his duties both at home and at the European Central Bank.

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Business Insider wrote of the recent comments made by Deutsche Bank’s co-head of corporate and investment banking, Marcus Schenck. Schenck continues:

There’s a thesis that at some stage in 5, 10, 15, 20 years — who knows — accounts will disappear, and be replaced“. He also states that in the near future, it will be just as important for people to know how to code as it is to be able to speak English when working in banking.

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Institutional Investor produced a piece on how the broad industry of finance has a significant impact on other global industries, and sometimes this can result in a decrease in productivity in different sectors. More specifically:

Researchers at the Bank for International Settlements have even shown that rapid growth in the financial sector comes at the expense of productivity growth in other sectors. Using a sample of 20 developed countries, they demonstrated a negative correlation between finance as a percentage of GDP and per capita GDP growth. In other words, at higher levels, finance increasingly crowds out real economic growth”.

Therefore, it’s important for the financial industry develop in a way that encourages growth, innovation and non-restrictive regulation across different sectors.

Is P2P a Ponzi scheme? Industry news and an interview with Bondora inside

Bondora in the news

Aktien mit Kopf recently visited Bondora’s offices in Tallinn and conducted an interview with our CEO and Founder, Pärtel Tomberg. They discuss a number of topics raised by their enthusiastic P2P subscribers, ranging from Ponzi schemes in P2P lending to buy-back guarantees and Bondora’s future plans. Make sure to watch it if you haven’t already. P.S. The main interview is in English.

Bondora monthly news and mentions

Industry news

The Belfast Telegraph talks of the restraints on small business owners to find quick and suitable funding options. This issue is being addressed in Northern Ireland with several options emerging in Peer-to-Peer lending, independent lenders and finance providers.

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Verdict celebrates the 13th birthday of the Peer-to-Peer lending industry, covering its origins and developments over the years. They quote Robert Pettigrew, director of the P2PFA, saying “P2P is actually providing a disruptive force in that it is good for the consumer, good for investors”.

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Business Wire discusses Capegemini’s World FinTech Report 2018, which has a high focus on the customer experience and specifically how innovative Fintech’s are challenging the traditional customer journey. They continue to note that collaboration between traditional firms and the Fintech’s is key to delivering in line with customer’s increasing expectations.

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Reuters published a piece on the shift in focus by the large banks since the financial crisis of 2008. After this period, the banks have been mainly focusing on repairing the financial impacts felt on their business and managing the significant changes in regulation. Now, with the start of open-banking, they are ploughing all of their resources in to trying to catch up with the latest technology used by Fintech’s.

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Disrupt Africa elaborates on the struggles experienced by regulators to keep up with the innovative services being offered by Fintech Start-ups. While the article focuses on a need for further regulation in the African markets, they encourage competition between Fintech companies and hope to avoid a monopolization.

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Finews discusses the new Fintech partnership announced between Switzerland and Hong Kong. “The agreement between the two wealth hubs will see SFC and Finma cooperate to share information on financial technology trends, developments and related regulatory issues as well as on organizations which promote innovation in financial services.”

What is everyone talking about in Alternative Finance? Catch up with the latest news here

Bondora monthly news and mentions

Forbes published a piece on the rapid acceleration happening in the Alternative Finance market. While the UK still accounts for the largest share, they state:

“France, Germany and the Netherlands are now the three largest alternative finance markets outside the UK, followed by Finland, Spain, Italy and Georgia. The UK’s share of the European alternative finance market fell to 73 per cent in 2016 from 81 per cent a year earlier as other markets grew faster.”

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AltFi wrote an interesting article on the meteoric rise in the popularity of cryptocurrencies and the drivers behind the ordinary investor’s growing appeal in the asset class.

“The sudden mass appeal of bitcoin and its brethren currencies (Ethereum, Litecoin, Ripple, etc.) is nothing short of staggering. What is perhaps most amazing is that the craze seems so shamelessly driven by dreams of overnight riches. Let’s be honest, the vast majority of people who hold cryptocurrency are not doing so because they believe in the long-term utility of whatever coin they’ve got. They’re clinging on like gamblers at the races, with dollar signs in their eyes.”

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CrowdFundInsider reviewed the “Expanding Horizons” report published by the Cambridge Centre for Alternative Finance. The visual map shows a market that is heavily influenced by Western and also Northern Europe, with Bondora’s native Estonia ranked first for the Alternative Finance volume per capita for the second year running. They continue:

“Peer-to-peer consumer lending is the largest alternative finance segment in Europe for the third year in a row, at 34 per cent, followed by peer-to-peer business lending (17 per cent), invoice trading (12 per cent), equity-based crowdfunding (11 per cent) and reward-based crowdfunding (9 per cent).”

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GrowthBusiness talks about SME’s and despite the rise of the Alternative Finance market in the past decade, 8 out of 10 still prefer traditional bank loans.

“Tindall Perry’s ‘View from the Top’ survey collated responses from over 200 SMEs to explore attitudes towards business funding. According to the firm’s MD, Leyla Tindall, the results underscore the fact that the awareness may be there, but financiers now need to instil confidence in SMEs that there are viable funding options outside bank loans and overdrafts.”

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GTR discussed the introduction of the new EU Payment Services Direct and how this creates increased competition in the market, leading to more options and improved levels of service for consumers.

“Specifically, the new regulation means that customers can now allow third parties to access their financial data – data that banks have historically kept under lock and key. For non-bank business lenders, this opens up a whole new world of opportunities.”

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Finextra discussed the UK comparison site GoCompare opening up its API to Fintech firms, with the goal of collecting masses of transactional data for their own analysis.

“The APIs produce a summary of the transactions and provide predictions on future spending, giving fintech startups customer insights without having to build up their own teams.

GoCompare says that it will also use the anonymised data to train and build robust machine learning models for the fintech community, which it says will ultimately benefit consumers.”

New Zealand’s P2P market and what the future holds for Bondora

Bondora in the news:

Ärileht interviewed our CEO and founder, Pärtel Tomberg, and discussed Bondora’s history, current operations and future plans. Pärtel explains “Our business is in all respects without borders – investment is transnational, and nothing restricts us from growing wherever we can see the potential”. He continues, “Bondora is not and will not become a traditional bank. Obviously, at one point we need to apply for a banking license to extend the loan business, but this is merely a technical detail for me, because we are now more transparent than banks at all times”.

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Basic thinking wrote a piece that dives in to the peer-to-peer lending business model and how it essentially removes the banks from being the middle man in consumer lending. They then proceed to talk about using Bondora’s automated Portfolio Manager investing option. As with any investment, they state “Bondora is not for the fast money, but a platform that is designed for long-term asset accumulation. The loans run partly for up to five years”.

In other Alternative Finance news:

The Economic Times reviewed the performance of P2P lending as an asset class in India. They express “It was not easy to draw lenders to the model, but once they realized the potential, it was clear to them that P2P was a good alternate source of investment”.

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NDTV discussed five things that you should know about P2P lending platforms. In short, they cover how it works, customer verification, the legal stuff, interest rates and fees.

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Equities published an interesting piece which looks like a great starting point for someone new to the P2P lending ecosystem. While they relate heavily towards the two biggest P2P lending platforms in the US, the same concepts can be applied to platforms in Europe, like Bondora.

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The Spinoff talks specifically of the growth of the peer to peer lending market in New Zealand. They say “Peer to peer lending offers such a different model and has delivered in New Zealand faster and with deeper penetration of the marketplace than the UK or the USA. We’re still tiny in the [global] market, but more advanced than the larger markets that have had years of advantage. Fintech starts small and niche – it’s the growth and rate of consumer adoption that is the exciting part of the story.”

This sounds like a familiar story to the P2P market in Bondora’s native Estonia.

Tallinn startups, 5 years of investing with Bondora and interview with our CEO

Bondora in the news

Silicon Republic wrote a great piece on the 12 terrific Tallinn start-ups to watch in 2018. They say ‘In many ways, Tallinn is one of Europe’s foremost digital cities and a natural home for tech entrepreneurs with flare and ambition’.

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P2P-Banking.com covered their experience with Bondora after 5 years of investing, including the current distribution of investments by country loan rating and some stats on performance.

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Crowdfunding interviewed Bondora’s CEO & Founder Pärtel Tomberg, covering how peer to peer lending works and why it is especially appealing to the Italian market.

November 2017 industry news recap

The Telegraph published a heavily UK-focused article on peer to peer lending, quoting the status of Zopa & Ratesetter.

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The Financial Times discussed the launch of the new peer-to-peer ISA in the UK, which is a type of tax free savings account approved by the government. This will allow UK customers to invest a certain amount of savings per annum through innovative p2p platforms.

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Business Insider reported a 43% year-over-year growth in the UK’s alternative finance market, changing from £3.2B in 2016 to £4.58B in 2017.

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Forbes reported that Nordea, one of the largest banks in Scandinavia, is setting up its own Fintech Startup Fund. Nordea’s Chief Digital Office states “We’re recognizing that we don’t have the monopoly on good ideas, and sometimes others do”.

Monthly finance industry news from October 2017

Bondora in the news

The Independent reported a record number of trade marks were registered in 2016 by financial services firms. They say “The use of trade marks in financial services is popular because it is relatively easy for competitors to copy financial products, meaning that they can become commoditized”.

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Gründerszene interviewed Bondora’s CEO & Founder, Pärtel Tomberg, who discussed our German investor based and future plans. When discussing our goals, Pärtel said “We want to offer a product where anyone in Europe can borrow and lend”.

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Les Échos also interviewed our CEO & Founder, discussing Bondora’s history, passing the €100M mark and cross-border ambitions for the future.

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AltFI News asked a number of industry experts about the potential for Amsterdam to cement its position as European Fintech hub, or if there will be multiple European hubs in the aftermath of Brexit.

October 2017 industry news recap

P2P-Banking covered the highly anticipated annual Lendit Europe conference in October which is known as an ‘Event for Innovation in Financial Services’. 3 predictions put forward for online lending by Renaud Laplanche, CEO of Upgrade, were:

  1. The growth of online lending will accelerate in the next 15 months
  2. An organized secondary market for online loans will emerge in the next 15 months
  3. Continued re-bundling will give birth to at least one major consumer product innovation in the next 15 months

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CityAM published an interesting piece comparing Lego with P2P lending. One of the most interesting comparisons put forward is that Lego has survived and thrived in the past decade due to its ability to embrace change and technology, diversifying from its traditional product. Similarly, the P2P has done exactly the same by embracing the world of borrowing and investing to create a product that benefits even more people.

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Business Standard discusses the important topic of trust and transparency in the global P2P markets. As the P2P industry expands in India, the Reserve Bank of India (RBI) is following the UK, US and China in implementing a macro regulatory framework. This shows that they are not only embracing the industry, but they are helping to boost confidence in investors and borrowers.

Monthly finance industry news from September 2017

News from around the world

Banking Exchange published a piece asking if marketplace lending nearing maturity. Keith Noreika, acting Comptroller of the Currency in the U.S., stated “Startup funding fades and shareholders begin to demand performance, or at least progress toward profitability.” However, it’s worth noting that Noreika was previously a lawyer working to protect banks and now “many of his former clients are regulated by the Office of the Comptroller of the Currency,” according to the NYT.

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American Banker discussed the growing debate concerning the appropriate level of regulation required for P2P businesses. Arthur Levitt, the former Securities Exchange Commision Chairman, remarked that “Fintechs tend to march to their own rules.” However, those opposing Levitt have cited that even established, traditional institutions have experienced plenty of scandals.

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Forbes looked at ways in which consumers can use P2P loans to pay off high interest debt. One of the major benefits discussed is the fact that P2P loans are unsecured, meaning the borrower is not obligated to tie the amount back to an asset. Additionally, many people who rely on P2P funding can repay their loan at a lower interest rate than what they experience with regular card payments.

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The Economic Times looked at ways people can supplement their retirement income with P2P lending. The author looks at the rising cost of living and how many retirees are faced with a shortfall in savings. The cited benefits to investing in P2P lending are, diversification, returns uncorrelated to the stock market, and compounding. While the author discuss these benefits in the context of India, the concepts apply to all nationalities.

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The Sydney Morning Herald reported on how “yield-hungry investors switch their cash to peer-to-peer lenders.” Much of this comes from historically low interest rates that make savings accounts less desirable. Moreover, P2P investing still provides a level of liquidity that’s agreeable to younger investors that want to maintain access to their cash.

Bondora mentions

Lending Times and Crowdfund Insider made note of our recent accomplishment, sharing that 28,639 users have invested 102 million through our platform.

Weekly industry news roundup – September 11, 2017

News from around the world

Forbes had a creative take on marketplace lending suggesting that it could be used to handle high interest debt. The author suggests that the “soft pull” on one’s credit report is less burdensome to a credit score. In many cases the interest rate will be less and therefore more amenable to those with heavy debts.

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Financial Express offered an overview of the basics behind P2P lending. Transparency, speed and paperless transactions were all cited as benefits to this new form of lending. Meanwhile lenders “in the past few years have seen an average return between 12% and 18% annually.”

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Small Business Trends examined “7 Things Things to Ask About an Online Funding Marketplace Before Taking Out an Application Online.” The author explains that those in need of capital can benefit most from the combination of reasonable interest rates and faster processing than what’s seen with traditional lending.

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Banking Exchange offered a detailed look at the consumer credit market. Their research tapped into data concerning millennials and how they’ve adapted technology to manage their finances. “fintechs show some of the best risk-based pricing that we’ve seen,” remarked the senior vice president at TransUnion.

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ETRetail looked at ways marketplace lenders are strategizing their expansion. Many marketplace lenders are finding growth among smaller borrowers. Major banks have traditionally eschewed this group due to shorter credit histories or smaller borrowing requests that prohibit large fees or heavy interest expense.

Weekly industry news roundup – September 4, 2017

News from around the world

AltFi published an article examining the question of whether or not the marketplace lending sector in the U.S. has recovered. The writer looks at recent upheavals in the industry exhibited by layoffs and a few bankruptcies. Despite these problems P2P lending remains on solid footing and has, in fact improved amid reports that “online lending equity investment was $2.3 billion in the USA in 2016. Through August 3rd of this year the total stood at $2.5 billion.”

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Forbes released an informative piece covering “Three keys to earning up to 7% with peer-to-peer lending.” The author explains that readers should (1) invest a minimum of $5,000 with diversified holdings, (2) use automated rebalancing tools and finally (3) use P2P investment in conjunction with Tax-deferred accounts.

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City A.M. addressed various myths surrounding P2P lending. The author helped readers understand that stock market downturns have a different impact on P2P investments and might not be as prone to declines in a poor equity market. She also looked at how interest rate changes influence marketplace lending offering that, “interest rates on P2P platforms are not set by the banks, but by the supply of and demand for money.”

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StockInvestor asked “Can investors profit from peer-to-peer lending?” They make a strong case for why it is, in fact, possible to profit from P2P investing because “As a result, P2P lenders are able to provide their services more cheaply than banks and other traditional financial institutions. P2P lenders therefore have the ability to achieve higher returns compared to what might be offered by banks. Borrowers can borrow at reduced interest rates even when a P2P lending company’s fee is included.”

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Inside Trade advocated for P2P investing due to factors like a lower correlation to equities and bonds. Additionally, they explained that diversification is easy with the categorization of borrowers and risk profiles. Finally, they remark on the security of platforms offering that “P2P lending companies use very effective algorithms to determine return rates.”

Weekly industry news roundup – August 14, 2017

News from around the world

Market Insider reported on the the second annual summit for Online Lending Policy Institute in Washington, DC. The author explains that the meeting is designed to be an “opportunity for industry participants to share insights, propose standards, and have an open dialogue with regulators and policymakers to build consensus viewpoints on the regulation of online lending.”

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Entrepreneur published an article exploring the four ways the online lenders are innovating with purchasing cards. For example, the use of a purchasing card allows the lending authority to measure if funds are being used for their intended purpose.

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The Financial Times discussed moves by some P2P lenders to safeguard borrowers by offering to “protect them from losses by paying out on a bad loan directly from its own coffers.” As more marketplace lenders enter the market competition is growing giving rise to more favorable terms to lenders.

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Forbes asked if “Technology firms are the next financial service providers.” The author explores the ways in which blockchain technology, necessary for most P2P firms, works “by reducing transaction costs and removing intermediaries, blockchain technology is poised to increase mass peer-to-peer collaboration, which could make existing financial organizations unnecessary. This ingenious tech is demystifying the existing layered financial systems and shifting the way financial institutions conduct transactions.”

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CNBC discussed how startups often source P2P firms as a way to access capital before reaching the stage of VC funding. The author explains that “small business loans and lines of credit are now available from many providers.”