What’s New This Week in FinTech

There's lots of news in FinTech so let's look at some of the bigger stories from the last week.

Is there trouble with funding for p2p loans?

A Bloomberg article from earlier this week discusses how investor service Moody's is downgrading a portion of a group of bonds issued backed by loans on the Prosper platform.

Impact: For you and me this seems like it would not be that impactful as this is very large institutional high finance stuff. However, the velocity of money, how fast money moves, is very important for us and the industry as a whole.

An institution buys $100 million in p2p loans, packages and sells off $50 million and uses that $50 million a 2nd time (and 3rd and 4th) to fund more marketplace loans. This is what high velocity looks like. If that same institution has trouble selling off that $50 million and instead has to hold for the entire term that is less money available to fund other loans on the platform.

Could this translate into a reduction in supply of funds to fund these loans? Maybe. Right now, its just a blip but more of these stories could lead to a supply issue. It's something we should all be watching.

Is American regulation stifling Bitcoin innovation and product use?

Bitcoin lending platform BTCJam announced it is no longer offering loans to US borrowers or opening accounts for Americans. Jam says it is due to regulatory questions and its long held desire to be an emerging market lending platform.

Impact: Jam is not my favorite lending platform but it is one of the biggest and I use it. This is a very direct impact for me and my investments. I included them in my AutoInvest experiment, which I will now have to readjust. Bitcoin cannot be tied down by any one country and countries that try to make it illegal to use like Russia and China have the biggest non-US activity on a daily basis by its citizens.

Is Reg A+ going to open more investment options to the rest of us?

One of my favorite platforms, Fundrise was approved for their 'eREIT' a few months ago. This week, Streetshares, a small business lending platform, is approved to use Reg A+ to offering lending to small businesses. Now pieces of these business loans will be available for anyone to buy.

Impact: These are 2 of the first examples of platforms previously closed to retail investors now opened up due to Reg A+. I am not investing yet but I am watching very closely and like what I see so far. It excites me that I can have more platforms to invest in and more to cover as investment options for all of you.

 

Things are on the move in FinTech. What are the trends you are noticing?

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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