Fintech Update, 10/8 - 10/14
October 8-14, 2016
Leading Off
Global central bankers praise blockchain’s potential use in monitoring real-time financial transactions; Goldman Sachs launches an online lending platform designed to compete with fintech lenders like LendingClub and Prosper; ComplyAdvantage, a London-based regtech startup using AI and machine-learning to help clients meet regulatory requirements, raises $8.2 million; and The New Yorker offers a look into the steps Sweden has taken toward becoming a cash-free society.
Policy & Regulation
Fed governor discusses blockchain. Last Friday, Lael Brainard, one of the the governors of the Federal Reserve Board, delivered a speech on blockchain [full text], calling it one of the “most significant developments in many years” for payments, clearing, and settlement. Brainard said the Fed is "paying close attention" to distributed ledger technology and plans to publish a blockchain-focused research paper later this year.
SEC delays decision on proposed bitcoin ETF. The Securities and Exchange Commission (SEC) decided to seek additional information before deciding on the proposed launch of Gemini, the bitcoin exchange traded fund (ETF) backed by Tyler and Cameron Winklevoss, on the BATS Global Exchange. The SEC wants to know more about bitcoin’s stability, how the holdings will be valued, and “any potential conflicts of interest between the custodian and [Gemini].”
Regtech market is booming for large banks and startups. In a special report on “The Future of Fintech,” The Financial Times delves into the new artificial intelligence systems used by startups, investment firms, and global banks to monitor traders, internal controls, and risk “to help the financial services industry meet the tsunami of regulation unleashed” post-financial crisis.
Banking & Markets
Goldman Sachs launches online lending platform. On Thursday, Goldman Sachs launched its new online lending platform, Marcus. Created to compete with fintech lenders like LendingClub and Prosper, Marcus will allow customers with credit scores above 660 to apply for unsecured loans of up to $30,000 with repayment terms of two to six years at 6-23% interest.
Digital Currency & Blockchain
Blockchain for loyalty programs. A Deloitte report [full text] argues that distributed ledgers could transform loyalty/rewards programs by eliminating the need for intermediaries, without “compromising privacy or competitiveness.” U.S. enrollment in loyalty programs is high, though transaction and system management costs often prevent them from “realizing their potential.”
Central bankers show interest in blockchain’s potential. Central bankers in the U.S., China, U.K., Russia, and Canada have encouraged the use of decentralized ledger technology in efforts aimed at executing and monitoring real-time financial transactions. As the New York Times points out, central bank support of blockchain initiatives is an “unexpected twist” for a technology created in part to “[dethrone] central banks.”
International News
Sweden: A case study on a cashless future? The New Yorker profiles the steps Sweden has taken toward becoming a cash-free society. In particular, the feature explores the rise of Swish, Sweden’s most popular digital payment app (similar to Venmo), which is used by half of the overall Swedish population and by 90% of adults under 30.
Fundraising & Deals
Regtech startup raises $8.2 million. ComplyAdvantage, a London-based regulatory technology (“regtech”) startup that uses AI and machine learning to help clients meet AML and regulatory requirements, raised $8.2 million in a Series A financing. The company, founded in 2014, claims to serve over 200 clients with its proprietary AML/KYC/transaction monitoring platform.
Product-refund startup raises $3.2 million. San Francisco-based Returnly, which aims to eliminate the delay between a customer return and its associated refund, closed a $3.2 million seed round. Returnly fronts users the value of the purchase being returned in the form of “an online wallet that can be used for repurchases from the same brand.” Upon the retailer’s receipt of the returned merchandise, the money is moved from the wallet to the customer’s account.
Company Spotlight
Affirm secures $100 million credit line from Morgan Stanley. Online lender Affirm, which provides alternatives to credit card financing, secured a $100 million credit line to expand its financial products. The average Affirm loan is around $300-400 and can be repaid in three to twelve months with a 10%-30% APR.
Events
Blockchain event at GWU on Tuesday 10/18. The MIT Enterprise Forum, GW Business School, and Women in Housing and Finance are co-sponsoring an event on the opportunities and challenges facing blockchain in the coming years. The event will run from 5:30-8:30pm on Tuesday, 10/18, at GWU’s Marvin Center.
RRE Ventures to co-host blockchain event in NYC. On Wednesday, 11/2, fintech VC firms RRE Ventures and Work-Bench, as well as the NY Enterprise Tech Meetup, will host a fireside chat on how blockchain stands to impact financial services. The event will feature Don Tapscott, author of the Blockchain Revolution. It will be held at Work-Bench’s offices in New York City.
Commentary & Miscellaneous
Sen. Wyden discusses cybersecurity. Senator Ron Wyden (D-OR), a member of the Senate Select Committee on Intelligence and a “leading voice on the side of encryption and against . . . more power to get consumer data from tech companies,” recently spoke with the New York Times about the increasingly competing interests of privacy and data security.
Sen. Warner discusses rapid growth of fintech. On Thursday, the Brookings Institution hosted Senator Mark Warner (D-VA) for a conversation on the rapid growth of the fintech industry and the potential for new regulation to “enhance or hinder . . . the ability to solve some of the more intractable problems facing middle-class Americans.”
Have a great weekend!
The Fintech Update Team