LendingClub Must Pass a High Bar for Regulatory Approval

LendingClub made big headlines with their acquisition announcement of Radius Bank and now the hard work begins as the company gears up for a 12 to 15 month scrutiny process; “This is, essentially, a guinea pig,” said Jacob Thompson, a Managing Director of investment banking at SAMCO Capital Markets, to American Banker. “This will be a test case of sorts for the regulators and likely there will be special obstacles to get over.”; there are three core areas that industry analysts believe regulators will want to examine closely; compliance shortcomings, is LendingClub complying with the Community Reinvestment Act; risk management review, are the correct staff in place to ensure the new bank will be able to manage potential risks; expect the unexpected, with this being the first deal of its kind in the U.S. regulators will be extra careful as they will be laying the groundwork for more deals in the future. American Banker

How One Entrepreneur Aims to Upend Latin American Banks

Thiago Piau runs StoneCo Ltd. a company which has been successful in the payments space dominated by Brazil’s largest banks; the success of the company subsequently led to investments from Warren Buffer, Jack Ma and others; now Piau is setting is ambitions higher, looking to offer all bank services to their clients to allow customers to move away from the big banks; services will include everything from insurance to payroll management; last year the company offered merchants loans and digital accounts as they expanded into new areas; Stone doesn’t have plans to become a bank and plans to lean on their existing licenses to offer their products; Stone is currently valued at $12.4 billion and is also a public company. Bloomberg

World Health Organization Urges Increases in Contactless Payments

As fears continue over the coronavirus the World Health Organization said they would encourage the increased usage of contactless payments; according to Crowdfund Insider a spokesperson for the WHO said, “We know that money changes hands frequently and can pick up all sorts of bacteria and viruses. We would advise people to wash their hands after handling banknotes, and avoid touching their face.”; the use of contactless payments would cut down on the potential transmission of bacteria and keep people safer, especially in higher risk areas. Crowdfund Insider

Three Traditional Banks Leading in Digital Transformation

A new study from Juniper Research notes that digital banking users will increase to 3.6 billion by 2024, a 54% increase in just four users; the growth will be driven by the digital only banks and traditional banks who are currently undergoing digital transformations; According to the Juniper study, Bank of America, BBVA and JP Morgan Chase are the traditional banks who are in the lead having success in both preparing and enacting ‘digital innovation roadmaps’; they have all invested heavily and brought new offerings to the market in 2019; Bank of America’s success includes their digital chatbot and more digital users; JP Morgan Chase has been working on how they can leverage blockchain and are also rumored to be working on a new digital offering in the UK. Banking Exchange

What Makes a Good Fintech Founder?

Wired interviews partner at Propel, Jay Reinemann about what makes a good fintech founder; coming out of the financial crisis many consumers lost trust in financial institutions; this has been a major catalyst to the current boom we’ve seen in fintech; according to Reinemann, a good fintech founder creates a business to solve a problem, not to make money; usually the creation of a company in financial services comes from a point of passion; good startups should incentivize users to make the right decisions which is a win-win for both the consumer and the fintech company; this could be helping users save money or save interest on a current loan; Reinemann also shares qualities he looks for in startup founders, how the startup ecosystem has changed since 2010 and the deal he regrets missing out on. Wired

SEC Proposes Rule Changes to Crowdfunding and Reg A+

The Securities and Exchange Commission proposed significant changes to crowdfunding and Reg A+ in a big to boost the use of the capital raising methods; the new rules would allow companies to raise up to $5mn via crowdfunding and up to $75mn via Reg A+; from 2016 to 2018 there were more than 500 crowdfunded deals with a median amount raised of $107,367 and a median investor contribution of $260; limiting the amount a company can raise or an investor can put into a deal was something lawmakers thought in 2012 was necessary since these deals were thought to be on the lower end of the quality spectrum; “These proposals are intended to create a more rational framework that better allows entrepreneurs to access capital while preserving and enhancing important investor protections,” said SEC Chairman Jay Clayton to the WSJ; the proposal will now go through a 60 day public comment period. The Wall Street Journal

Revolut Continues to Bring in Former Bankers

On the heels of their most recent fundraising digital only bank Revolut has added former Goldman Sachs Executive Michael Sherwood and risk specialist Ian Wilson to their board; Sherwood was the former European co-head of Goldman Sachs; Wilson worked in risk management roles for RBS and Abbey National before leaving to set up his own risk management consulting business; Revolut has spent the better part of two years beefing up their board with former bankers as they aim to shops regulators that they are leaning on the right people for compliance and risk management; Nik Storonsky, Revolut CEO, said to the FT: “As we continue to grow our offer and expand into new territories, having Michael and Ian’s vast experience and knowledge will be invaluable. Both are major assets to Revolut and our customers as we work to become the world’s first truly global bank.” The Financial Times

Innovate Finance Shares Women in Fintech Powerlist

Innovative Finance has published their annual Women in Fintech Powerlist; it includes 200 women who are leading the way in fintech; they received over 650 applications for this year’s list and the list incorporates 7 different categories spanning different types of roles; this year Innovate Finance also highlighted select women through their “Stand Out 35” list;  Innovate Finance is working to help female-led organizations receive funding; Charlotte Crosswell, CEO of Innovate Finance noted, “Our recent Investment Landscape report showed that 90% of funding is still going to firms with no female representation at the senior leader or founder level.” Crowdfund Insider

London is Open

CEO of LendIt Fintech Bo Brustkern recently traveled to London to meet with fintechs, regulators and investors; in this post and accompanying video he discusses the state of fintech in the UK given Brexit; he discusses immigration and the labor market, goes in depth on regulation with the FCA and reflects on discussions he had with investors; despite Brexit, there is evidence of continued growth in the region with innovation continuing in digital banking, alternative credit, regtech, compliance, insurtech and more. Lendit Blog

More News for March 5th, 2020
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