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MonJa’s Digital Banking and Lending Monthly Roundup – Why Subscribe?
Digital banking and lending is evolving rapidly. Recent fintech-banking partnerships and innovation in technology with the introduction of AI, ML and blockchain herald a new era in lending. Fintech’s are changing the competitive ecosystem, empowering lenders to process loans faster and smarter. In a world full of noise, understanding how the technologies and developments may impact your financial institution’s credit decisions and credit portfolio is of critical importance. With MonJa’s Digital Banking and Lending Monthly Roundup, it’s easy to stay up to date on what’s happening in the space. Get the latest updates, analysis and commentary on digital banking and lending segment!
1. 02/07/2020 Marcus: A Digital Bank That Should Keep Rivals Up At Night (The Financial Brand)
Goldman Sachs introduced Marcus, their first consumer banking offering that included an online savings account and no-fee personal loans for retail consumers. The Marcus platform provided highly competitive rates and delivered without the branch and back-office infrastructure, hampering legacy financial institutions. Since its launch, it has grown into a formidable banking platform with a consumer business with $60 billion in US and
UK deposits, $7 billion in consumer loan balances and more than 4 million customers in the US and UK. With the introduction of the Marcus mobile banking application in early 2020, the company further expanded its consumer business. Goldman Sachs has further announced its plans to offer retail consumer checking accounts in 2021. The bank also plans to offer zero-fee wealth management services accessed through the mobile application by the end of 2020. According to Goldman Sachs, they have plans to more than double consumer deposits to at least $125 billion over the next five years and to grow loans and credit card balances fourfold, to over $20 billion during the same period.
2. 02/10/2020 Varo Moves Closer to Becoming a Bank (The Wall Street Journal)
The financial technology start-up Varo Money Inc. moved one step closer to becoming a full-scale bank. After three years and multiple applications, the Federal Deposit Insurance Corporation (FDIC) approved the company’s national bank charter application, allowing it to take customer deposits. Varo is now the first consumer-focused fintech company to get approval from the FDIC.
3. 02/11/2020 Deutsche Bank taps U.S. tech companies for makeover (Reuters)
Deutsche Bank has planned technology investments of $14.20 billion up to 2022 as a part of restructuring in order to recover from years of losses. In this regard, the bank has invited bids from Microsoft, Google and Amazon to overhaul its outdated and fragmented technology networks. Bernd Leukert, who recently joined Deutsche Bank as the Chief Technology Officer from software group SAP, is overseeing the technology overhaul initiative. If a mega bank like Deutsche is looking for an overhaul, smaller financial institutions should (re)evaluate their tech plans.
4. 02/12/2020 Fintech investors: Enthusiastic yet strategically picking their spots (Deloitte)
Deloitte has reported that fintech start-ups have received over $69 billion in funding in 2019, an increase of 17% from the $59 billion invested in 2018. While the investments in fintech companies were high in 2019, the number of new fintech formations declined. In the US, New York City was the epicenter of most fintech funding with, 25% of the 2019 funding. London plus San Francisco combined garnered a share of 25%. New hubs are developing for fintech formations in Singapore, Toronto, Chicago, Austin, Berlin, Los Angeles, Boston, Mumbai, Seattle, and Palo Alto.
5. 02/12/2020 Account aggregation fintech Curve is expanding to the US with a Brooklyn office (Business Insider)
The UK based fintech, Curve which lets users aggregate all their cards within one application that is linked to a Mastercard debit card is planning to open an office in Brooklyn in the US. Curve is joining a slew of European fintech companies looking to expand to the US. This highlights the continuing attraction of the US as a banking and lending market.
6. 02/12/2020 The 10 Biggest Fintech Companies In America 2020 (Forbes)
An interesting article in Forbes showcases the top 10 most valuable private, venture-backed fintech companies in the US. Among the companies on the top 10 list for 2020, the average valuation is $9 billion. Stripe ($35 billion), Ripple ($10 billion) and Coinbase ($8.1 billion) are in the top three, followed by Robinhood ($7.6 billion), Chime ($5.8 billion), Plaid ($5.3 billion), SoFi ($4.8 billion), Credit Karma ($4 billion), Opendoor ($3.8 billion) and Root ($3.7 billion). Fintech in general and fintech lenders in particular are garnering major market size and valuations by disrupting the existing market order.
LendingClub, a leading US fintech company that pioneered online personal loans is buying Radius Bancorp, a Boston-based online bank. LendingClub is paying $185 million in cash and stock for Radius. It is the first time a US fintech company has acquired a bank. The deal will enable LendingClub to offer new products to its clients, diversify its earnings and reduce (or eliminate!) the use of institutional funding sources.
8. 02/24/2020 Fintech Personal Finance Market to Top 2.7trn by 2023 (LearnBonds)
As per data gathered by LearnBonds.com, the global fintech personal finance industry is expected to be worth $1.5 trillion in 2020, increasing by 45.1% year-on-year. The number of users in this industry is forecasted to reach 79 million in 2020 and is expected to double in the next three years. Investing through online platforms, is the largest part of this sector and is expected to reach $2.5 trillion, giving it a 94% share of the fintech personal finance market by 2023. Digital remittances is the second-largest segment of the fintech personal finance market. The number of people using digital remittances is expected to rise to 13.2 million over the next three years. US is the leading market for fintech personal finance services in the world, with more than $1 trillion worth transaction value and 75% market share in 2020.
9. 02/25/2020 Intuit agrees $7.1bn deal to buy Credit Karma (Financial Times)
The Fintech industry is witnessing consolidation and a growing appetite for data with various providers seeking to bolster their tech prowess by taking over fast-growing start-ups. Intuit, the owner of TurboTax and QuickBooks agreed to buy the credit report provider, Credit Karma for $7.1 billion. Credit Karma, founded in 2007 by Ken Lin has more than 100 million users in the US and Canada and generated nearly $1 billion in revenue in 2019. The shareholders of Credit Karma will receive cash and stock in Intuit. Intuit is also planning a lending play and Credit Karma fits perfectly in the portfolio.
10. 02/25/2020 Digital bank Revolut becomes UK’s most valuable fintech startup (The Guardian)
The digital bank – Revolut, headquartered in London has become the UK’s most valuable financial technology start-up. It raised $500 million from a group of investors led by the US fund Technology Crossover Ventures that more than tripled its value to $5.5 billion. Revolut Credit is expected to become a central function and revenue generator with the new funding infusion.
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