1.UK – P2P
Orca Money looks at the major “factors which contribute to “why” a retail investor will introduce peer to peer lending (P2P) into their portfolio. For institutions, which emerged and contributed to capital inflows in recent years, the promise of yield was a strong proposition. While this primary benefit similarly holds true for self-directed retail investors, we are seeing a shift towards investors seeking stable yield and diversifying away from asset classes exposed to volatility. Aside from these core benefits, we explore other motivations and investment behaviours exhibited by retail investors in P2P.”
2. UK – P2P
P2P Finance News reports on a move to automated lending.
‘AN INCREASING number of peer-to-peer lending platforms are turning their attention to automated lending as investor demand for simpler and more diversified offerings increases.
Last September, Funding Circle stopped offering manual lending and shifted to an entirely auto-lending model, meaning investors can no longer choose which businesses they lend to.
Ablrate, meanwhile, which has traditionally operated a self-select business model, launched a range of products at the start of this year which mirror the functionality of auto-lending.
Neil Faulkner, co-founder and managing director of 4th Way, the peer-to-peer analysis firm, said auto-lending is much easier for platforms to manage once they achieve serious scale, largely because less customer service is required.
But he said a more important reason for switching exclusively to auto-lending is concentration risk.
“Funding Circle, for example, has learned that even investors who have a lot of experience in other asset classes are simply not diversifying enough, which puts them in significant danger of earning unsatisfactory returns or even making losses,” he explained. “Automated lending is a tool for enforcing more sensible levels of diversification.”
A spokesperson for Funding Circle claimed the changes introduced last year have made lending simpler, better and fairer. “These changes have created a level playing field for all investors and ensured everyone has the same opportunity to lend to UK businesses.”
The spokesperson added that investors can choose a portfolio that suits their risk appetite, “making it even easier for them to earn stable, attractive returns”.
3. UK – P2P
“Since November 2016, as part of the Small Business Enterprise and Employment Act 2015, the UK’s nine major banks are legally required to refer those SMEs they refuse to finance to an alternative provider. The last figures published in August 2017 for the first nine months of the scheme were quite unimpressive: less than 3% of small businesses referred to alternative lenders via the bank referral scheme  were funded, that is some £4m in completed funding deals for the first nine months of the scheme. However, despite a sluggish start, we are now seeing an increase in conversion rates. Recent months have showed a significant pick-up in referrals, partly due to promotion of the scheme by the banks themselves. Of course, full effectiveness of the scheme will take time to achieve but if recent trends are something to go by, the trend looks encouraging.”
4. UK – AltFi/SMEs
CityA.M. runs a. blog that sings the praises of altfi funding for SMEs.
‘Most scaling companies will look to the banks first when they need financing, and the number of these companies that walk away with the advice or capital they need is dwindling. Many are asking why the banks aren’t lending to SMEs. But is this asking the right question?”
5. International – FinTech
‘Blockchain startup Swarm announced Wednesday that it was launching new "equity tokens" that would represent equity in notable blockchain startups like Coinbase and Ripple – but those companies have pushed back swiftly against the idea.
The "blockchain for private equity" company published a blog post describing its new token project, with chief executive Philipp Pieper explaining in a statement that the tokens "democratize investing" and allow "any Swarm investor [to] hold equity in some of today's most prominent tech startups."
In a statement, a spokesperson for Swarm told CoinDesk that the "tokens are company equity either from vested options or from venture capitalists," explaining that the equity comes from "approved secondary market transactions to acquire vested employee shares, or from venture capitalists who have directly acquired equity from these companies."
Yet when reached for comment, representatives for Coinbase and Ripple struck sharply critical tones – and in the case of Coinbase, a cease-and-desist has already been sent, according to Swarm, resulting in an updated announcement that removed all references to Coinbase.
"As a private company, Coinbase does not allow trading of stock on secondary markets for a variety of reasons, including the fact that there is not full and equal information available to the market. We will take appropriate action if we find people have sold Coinbase shares in violation of our agreements not to do so," Coinbase told CoinDesk in a statement.
Though there's no indication that a cease-and-desist letter was sent by them, a representative for Ripple issued a similar rebuke.
"We have never spoken to Swarm, don't have a record of them purchasing Ripple equity and would not have approved a purchase for this purpose," the rep said.”