FINTECH ARTICLES OF THE WEEK 06/25/16
As the dust settles from the LendingClub scandal, rival alternative lending firms attempt to distance themselves from the fallen firm while other FinTech startups enjoy newfound attention from investors. But it remains up for debate whether FinTech is the place into which investors should be stashing their cash. As the United States and Canada take a closer look at how these companies will impact financial markets and consumers, the U.K.’s central bank is setting up an accelerator, inviting FinTech firms with open arms to bring their problem solving and technological abilities to traditional banking.
FinTech companies emerge triumphant, with little sympathy for LendingClub
Firms like PeerStreet and Circle are enjoying the growing interest and investment in their companies as other firms like Avant, OnDeck, and Prosper are trying to avoid the stigma stemming from the downfall of LendingClub. The harsh spotlight on alternative lending has driven venture capitalists to seek other companies for potential investment, CNBC reports.
FinTech firm Plaid raises $44 million
The company’s software lets various FinTech start access their customers’ bank account information, and has recently received a round of funding at Goldman Sachs Group Inc. Many up-and-coming FinTech firms such as Betterment tap into Plaid software to access or review customers’ account data to provide mobile and web services for budgeting, investing or lending. The upstart already competes with Envestnet’s Yodlee and Morningstar, but the influx of cash will help the firm as it works to strengthen access to consumer data, The Wall Street Journal reported.
One in five European banks would buy FinTech startups
As much of the conversation surrounding FinTech firms centers on whether they are a threat or asset to banks, some financial institutions have considered them to be potential acquisitions. Survey data of more than 250 banking institutions show one in five see FinTech firms as plausible acquisition targets, but that view varies by country, according to Business Insider.
FinTech bright future marred by hype
The excitement over FinTech has left many missing the point, David Evans and Richard Schmalensee argue in a piece for PYMTS.com. Yes, the sector is “ripe for innovation,” but that doesn’t mean that entrepreneurs and investors should flood the market now with hopes of easy money. Beware the hype and know that in order to be successful they must find the balance between a need in the financial services and a feasible business model.
Bank of Canada says regulation needed to check FinTech risks
As U.S. regulators turn their attention to FinTech firms, our northern neighbor is doing the same. Why? To make sure that financial markets and consumers are protected as well as prevent money laundering and terrorist financing, according to Bank of Canada’s Senior Deputy Governor Carolyn Wilkins. Bloomberg has the full story.
Insurers ignore FinTech revolution at their long-term peril: PwC
Majority of insurers fear losing clientele to a FinTech firm, but less than half say they have implemented a FinTech strategy at the core of their operations, according to a PwC report. It would behoove insurance companies to adopt a “creative culture” in order to attract and maintain more digitally-savvy customers who demand personalized insurance products and seek to cut costs, L.S. Howard asserts in a piece for the Insurance Journal.