Business Insider has released a report on US regulation and fintech; says US regulation is a hindrance to the growth of the industry and is slowing its potential; the report titled, "The US Fintech Regulation Report," provides details on regulatory agencies' involvement with fintech and outlines their initiatives; explains the negative effects of regulation on the industry. Source
The Federal Open Market Committee (FOMC) announced on Wednesday that it would leave its federal funds rate unchanged; the Fed increased the rate to 0.50% to 0.75% at its last meeting in December and predictions have called for more aggressive increases in 2017 however it seems they may be later in the year; Janet Yellen speaks before Congress in February and the market is currently reporting an 18% probability of an increase in March at the FOMC's next meeting. Source
Pepper Hamilton provides details on their recent podcast and webinar in their featured blog post; the firm's January 5 podcast provided insight on what the Donald Trump presidency means for the financial services industry; on January 24 the firm provided a webinar on factors for considering the Office of the Comptroller of the Currency's new fintech charter. Sponsored Blog Post
Last year at PitchIt@LendIt, AutoFi took home the top prize; in his pitch (34:00) Jonathan Palan, president and co-founder of AutoFi discusses AutoFi and the auto finance market; Jonathan previously spent six years at Lending Club and LendingHome; he shares that the auto market is a massive opportunity and is also a fragmented marketplace; consumers are beginning to go online to buy cars; 84% of new car purchases have financing and 68% of used cars have financing; AutoFi's thesis is that if car buying is going online then auto lending has to go online; they are a B2B software platform to help do just that; in a big vote of confidence for the company, they recently inked a deal with Ford to provide digital financing options to consumers; applications for PitchIt@LendIt 2017 close today.
Dan Loeb of Third Point is the latest hedge fund to invest in marketplace lending; the hedge fund manager has reported a 10% allocation to marketplace loans and says that he will be reducing his investment in structured credit and specifically residential mortgage backed securities to allocate to the fixed income alternative; Loeb says he is working with marketplace lenders on securitized portfolios and is excited about the investment opportunities available in the marketplace lending market; the firm also has a venture capital business, Third Point Ventures, which is invested in SoFi, Upstart and Swift Capital. Source
President Trump is set to sign two executive actions on Friday that take aim at reversing the new financial regulations that were put in place as a result of the 2008 financial crisis; the executive actions will give the labor secretary power to rescind the fiduciary rule and ask the Treasury secretary and regulators to come up with a plan to replace Dodd-Frank; the fiduciary rule was set to go into effect in April and was meant to ensure advisors had their client's best interests at heart; Dodd-Frank was passed in 2010 and began implementation in 2012; the law was meant to limit the chance of another financial crisis like we saw in 2008; uncertainty exists with what will end up happening, but signals show that the fiduciary rule will be struck down and Dodd-Frank will be replaced. Source
OnDeck Capital's chief operating officer, James Hobson will be leaving OnDeck; according to Reuters, Hobson will be taking a new role as chief executive at online insurance company Attune; Hobson will remain in the role until March 15. Source
The focus of the weekly update centered around how the Trump administration will try to ease the regulatory environment for banks and an explanation of the risk retention rule that recently went into effect; banks welcomed the executive orders signed by Trump, the regulatory burden has been high and cost of capital has continued to rise to meet the demands of Dodd-Frank; as of December 24, 2016 all asset types are required to adhere to a 5% risk retention requirement or skin in the game; this is meant to align investor interests with sponsor interests and make the securitization deal safer; PeerIQ goes into a detailed explanation and helps to provide answers to some of the questions surrounding the rule's implementation. Source
SoFi was among Super Bowl advertisers with another commercial this year; this year's commercial reflected their expanding services by advertising the firm's support for owning a home, starting a family and seeing the world; with the firm's recent acquisition of online bank, Zenbanx, customers will now be able to use SoFi for a comprehensive suite of banking services, expanding beyond just the firm's core student loan offering. Source
Sofi has been leading the US fintech market with new products and record originations from its core student loan business; they recently acquired Zenbanx to offer deposit products; they are also expanding into nearly all aspects of financial services; Lend Academy talks with Mike Cagney in their podcast; Mike talks about their business model and how they are different from other top US lenders; also provides insight on their securitization funding and strategy. Source