Blockchain, AI & Financial Inclusion: LendIt 2018

Lendit is one of my favorite events of the year. More of my fintech writing clients come to Lendit than any other show and it’s the only show I go to every year where I don’t speak and still go anyway. It’s that good and it’s worth it. If you're interested in my writing work, click on the Stu Writes For You tab. Like last year, I am lucky enough to have clients among the nominees for the LendIt Fintech awards, whose winners were announced on Tuesday night.

Every year Lendit changes things up. Let’s see what’s new…..

Changes at LendIt

First change this year is that they are now Lendit Fintech. Bo, Jason, and Peter want to encompass all things fintech, not just online lending. This means more on payments, compliance and regulations, financial inclusion, and blockchain.

The second change is the size of the impact of blockchain on the conference and in fintech. Blockchain is one of the areas that gets people the most excited and a full 25% of the conference covered it with its own show within the show, called BlockFin, the Blockchain Financial Summit.

Blockchain was the star this year and after the huge runup and associated new publicity in Bitcoin in 2017, this is not that big a surprise. In 2017, the stars with all the buzz were the online real estate platforms like PeerStreet or Fundrise and robo-investors like WealthFront and Motif. In 2016, the stars were consumer lending and peer to peer lending/marketplace lending. Every year it’s interesting to see which area of fintech generates the most buzz and interest and this is one of the things I like most about Lendit, the variety and ability to stay current.

The third change is 16 tracks this year, the most ever, and that does not include BlockFin. Now before you say, how can I go to panel discussions and speeches on 16 tracks, the answer is I can’t and neither can you. LendIt films and records the sessions so you can view some of what you missed later. However, many of these tracks, like Banking & Fintech Partnerships, Asset Based Financing (which incorporates my beloved equipment leasing industry), and Digital Real Estate were ½ day tracks covering only one morning or afternoon of the 2-day conference.

The full tracks going on for an entire day are likely the topics that people want to hear the most about, or topics believed to be most important. The full track topics, besides BlockFin, were

  • Cybersecurity
  • Small Business Lending
  • Credit and Underwriting
  • International Fintech
  • Financial AI (Artificial Intelligence)
  • Consumer Lending
  • Policy and Regulation
  • Financial Inclusion

Financial Health and Financial Inclusion

I heard lots of talk and buzz about Financial Inclusion this year. Part of it was that I am looking for it more often now that I’m more interested in the topic. While most financial inclusion talk is for the unbanked, underbanked or those in other countries, an essential goal of financial inclusion is improving people’s financial health and access to financial services.  Scott Sanborn, CEO of Lending Club, gave his keynote address on Americans’ failing financial health and how we in fintech can improve this very precarious position many people are in. Here are some of the stats from his talk

  • Since 2000, the cost of medicine is up 1%, new homes 31%, college 69%, healthcare 102% while ⅓ of the population experiences volatility in their income of more than 25% during the same time period.
  • 40% of people in a huge survey reported that their financial condition causes them stress.
  • Household debt is $13 trillion, while the savings rate is only 2.4%.

If Americans’ financial health was a patient, that patient would be dying.

Ripio was one of the speakers on the BlockFin stage and they are a blockchain firm serving numerous Latin American countries. Ripio provides wallets, an exchange, and payments services to LatAm as well as a p2p lending platform called RCN Global Lending, funded with an ERC-721 (the non-fungible) token. Their markets in Latin America (primarily Mexico, Peru, Brazil, Argentina and coming to Colombia this year)  still contain many unbanked and underbanked where Blockchain can make a huge impact. Their CEO, Sebastian Serrano, offered some enlightening stats on the extent of the financial inclusion problem.

  • 70% have no credit access
  • 80% do not have a credit card, the primary entry point of entry into credit in our financial system
  • 50% are unbanked
  • 60% do not have a debit card

Blockchain Economic Activity Growing

Blockchain lending is moving ahead in full force. BlockFi, SALT Lending and my old friends at Bitbond were all at Lendit this year and all had speaking roles at BlockFin. I have more info on SALT specifically coming up in my next post.

AI and machine learning were very big topics this year. Growth in AI and partnerships for fintech companies are happening in a slower, steadier, more healthy way than the last few years, firms from old-line banks to enterprise firms to conventional and online lenders are making big investments in artificial intelligence and machine learning. As far as lending goes, the trend is moving towards an entirely automated, digitized, machine to machine application, approval and funding process. Blockchain is heavily involved in this automation of lending as well. Whether this is a smart thing to do of approving someone for a loan without ever talking to a person or having human eyes look at it is a question yet to be answered.

One of the keynotes was Chris Larsen, co-founder of Ripple, which is the most talked about and most controversial non-Bitcoin cryptocurrency out there. If you aren’t sure of why Ripple’s crypto XRP is so controversial, it has to do with how centralized XRP may or may not be, how much of it Ripple owns and controls and whether XRP is really needed to use the RippleNet system for cross-border settlement. Ripple is working to become a direct competitor to the out of date and terrible SWIFT network for moving money/value across borders.

FWIW, I like Ripple and think it provides a valuable service to the crypto-economy. Just like we had to have PayPal as the first real fintech company to lead us to online lending and peer to peer lending that we have now, Ripple can be a great first step and introduction to how powerful cryptocurrencies can be. Here are a couple of interesting things he said or that I noticed on his talk on the Internet of Value

  • I thought XRP would be a dominating part of the discussion, yet he mentioned the Ripple Interledger Protocol (ILP) 3x as often as he mentioned XRP in his talk
  • He believes in multiple blockchains including his and wants to build the layer that lets competing blockchains communicate with each other
  • His vision of the Internet of Value would have value (money) move as fast as data. That’s his goal for the Interledger Protocol and the RippleNet

Conclusion

With a whole floor to itself, Blockchain was one of the huge themes for Lendit 2018. There is much more activity and less ‘lots of talk but no action’ of the last couple years. As a broader fintech conference, Lendit is showcasing more firms and discussion sessions in payments, POS lending/finance, AI, and bank and enterprise partnerships and lending is one of 4 or 5 essential categories rather than the dominant category of the last few years of conferences. I like how the themes vary each year within the industry to stay current with what’s going on behind the scenes.

Next year, it’s back to San Francisco again in April. Hope to see you there.

About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

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