Fintech Update, 10/22 - 10/28
October 22-28, 2016
Leading Off
The OCC released its framework on responsible innovation and announced the creation of a dedicated office of innovation; the CFPB released a report on its Project Catalyst, following Director Cordray’s appearance at the annual Money20/20 fintech conference; LendingClub will begin offering auto loan refinancing to certain customers; and the Wall Street Journal profiles Y Combinator-backed Instavest, a Twitter-like social media platform allowing investors to crowdsource co-investments.
Policy & Regulation
OCC releases innovation framework... As teased in several speeches by Comptroller Thomas Curry during the spring and summer, the Office of the Comptroller of the Currency (OCC) released its anticipated framework on “responsible innovation.” The framework is explained as part of a paper [full text] that contains “a summary of the financial services landscape and the OCC’s innovation initiatives, followed by a discussion of the [framework] recommendations.”
...and creates an innovation office. As part of the OCC’s Framework for Responsible Innovation, the agency also announced the creation of an internal office of innovation, which will be responsible for conducting research on and communicating with the fintech industry. The office will be headed by a Chief Innovation Officer “with a small staff located in Washington, New York, and San Francisco.”
CFPB releases report on Project Catalyst. The Consumer Financial Protection Bureau (CFPB) released a report [full text] on the progress of Project Catalyst, the Bureau’s effort to engage financial services innovators and “exchange information about how they are developing new products and services” with the goal of “advanc[ing] consumer-friendly innovation.” The report followed CFPB Director Richard Cordray’s remarks on innovation at the Money20/20 conference.
Marketplace Lending & Credit
LendingClub to offer car loan refinancing. As part of an effort to drive new sources of revenue and rebuild its brand reputation, LendingClub will begin offering car loan refinancing. For the time being, LendingClub will limit its auto loan refinancings to California residents with FICO scores above 640 who own cars less than seven years old with fewer than 80,000 miles.
Payments
PayPay CEO discusses strategy. Speaking at the Wall Street Journal’s WSJDLive conference, Dan Schulman discussed his rationale for recently partnering with erstwhile competitors MasterCard and Visa. The alliances gave PayPay a “foothold in the 90% of retail transactions that still take place in physical stores,” said Schulman, helping “advance the cause of digital payments.”
Personal Finance
Instavest uses social media to crowdsource co-investments. Instavest, a Y Combinator-backed online trading startup, allows its investors to share information about their trades on its Twitter-like social media platform. Instavest users can follow each other to curate “custom feeds” and pool their funds under the management of the “lead investor” who posted the tip.
Fundraising & Deals
International student lender raises $6 million. Washington, D.C.-based MPOWER Financing announced a $6 million equity funding round led by private equity fund Zephyr Peacock India. The startup seeks “to fill a void in the $1.3 trillion student loan market” by catering to international students who are ineligible for government loans.
Company Spotlight
Watson and the future of financial regulation. The Economist discusses IBM’s recent acquisition of Promontory, and what it signals about the opportunity for and future of AI-based financial regulatory services. Per the article, “Watson is getting better at categorising the various regulations and matching them with the appropriate enforcement mechanisms. Its conclusions are vetted . . . [and] Promontory’s experts are expected to help Watson learn.”
Events
Smart contracts symposium, 12/5. The D.C.-based Chamber of Digital Commerce (CDC) will host a symposium on smart contracts in New York City on Monday, December 5. The CDC recently launched the Smart Contracts Alliance to promote the benefits of smart contract technology to a range of financial services firms and government and legal entities.
Commentary & Miscellaneous
Recap of the Money 20/20 Conference. VentureBeat recaps this year’s Money20/20 conference, one of the world’s largest annual fintech events. There were several panels on fintech-related regulatory issues, but the conference was largely dominated by discussions about blockchain technology and its applications.
Venture capitalists look for “the next big thing.” In the years since the iPhone and other mobile internet devices “sparked a startup gold rush,” venture capitalists “have yet to identify the next product that will spawn a similar wave of . . . lucrative returns.” However, many are placing bets on self-driving cars, drones, robotics, artificial intelligence, and virtual reality.
Have a great weekend!
The Fintech Update Team