Crowdfunding (aka P2P Lending): The First Pure Internet-Induced Disruption in Financial Services

image I am an unabashed fan of peer-to-peer (P2P) finance (see notes 1, 2). In theory, it makes so much sense to tap Internet efficiencies to match the buyers and sellers of money. On the other hand, there are good reasons to have highly regulated intermediaries, although that system is far from perfect as well.  So, I’m looking forward to the hybrids we’ll be seeing in the next few decades.

Back to the present day. In the last 12 years of writing Online Banking Report, only two product launches have made me stop what I was doing and immediately start writing a new report:

  • PayPal’s launch of P2P payments in 1999 (OBR 54)
  • Prosper’s launch of P2P lending in 2006 (OBR 127; note 3)

And I believe P2P lending is way more disruptive than what PayPal has done. PayPal introduced a vastly improved front-end to bank checking accounts and credit cards. The company created an extremely valuable franchise (note 4), but the banking system is still intimately involved in most transactions. PayPal stole revenues from acquirers and held a few deposits, but for the most part, had little impact on card issuers.

That’s competition.

However, Prosper, Zopa, Lending Club and the other P2P lending pioneers created virtual banks (taking in deposits and lending the money out) completely separate from existing financial institutions.

That’s disruption.

And it’s about to get way more interesting as the concept takes off in the business financing/investing arena via what’s been called “crowdfunding” (note 5).

Bottom line: If you are a bank, learn to love crowdfunding and P2P. It’s disruptive, yes, but you can harness it to both help those who don’t qualify under your existing underwriting and increase your bottom line (note 6).

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Notes:
Graphic: One of more than 50 books for sale at Amazon about Crowdfunding and  Kickstarter.
1. Unfortunately, I’ve backed only one loan so far, earning a nice return on my $100 loan in 2006.
2. We have published three reports in this area (OBR 127 in 2006, 148/149 in 2007, and SR-5 in 2009). We are working on our fourth. It will focus more on equity and debt crowdfunding for small and mid-sized businesses.
3. Zopa 2005 launch in the United Kingdom beat Prosper to market by almost a year.
4. eBay’s market cap is $60 billion, of which a significant chunk is attributed to PayPal.
5. There are hundreds of companies entering this space. We are most familiar with two Finovate alums involved in debt-based crowdfunding (SoMoLend and Rebirth Financial). And we’ve written about equity-crowdfunder CircleUp, which was also featured in the NY Times along with SoMoLend this week.     
6. Our latest P2P lending market forecast is contained in the current Online Banking Report here (Jan 2013, subscription).

Planwise and ReadyForZero Partner to Promote Debt Management as Part of Personal Finances

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PFM platform, planwise and debt management solution, ReadyForZero announced a partnership today.

As a part of the partnership, planwise is featuring ReadyForZero in its Products section (see screenshot below).

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ReadyForZero’s services are advertised to planwise users who indicate they hold debt. When I tested the product this morning, the ReadyForZero product option was offered only when I indicated I owed a balance on a loan or credit card.

pwiseRFZAlert.jpgplanwiseRFZ.jpg

The two San Francisco-based startups have not disclosed the terms of the partnership.

To learn more about planwise and ReadyForZero, watch planwise’s FinovateFall 2011 demo and ReadyForZero’s FinovateFall 2011 demo.

Cachet Financial Solutions to Power Tyfone’s Remote Deposit Capture Offering

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Remote deposit capture solutions company, Cachet Financial Solutions announced today that it has partnered with mobile banking expert, Tyfone.

Through this partnership, Cachet’s remote deposit capture (RDC) solution, which uses Mitek’s technology to format check images, willThumbnail image for tyfone.jpg enable Tyfone to provide RDC services for its FI customers.

Midwest-based CoVantage Credit Union is the first to implement this solution, allowing its members to remotely deposit funds into their accounts.

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To learn more about Cachet Financial Solutions, watch its FinovateFall 2012 demo. Tyfone demoed at Finovate Startup 2008 and Mitek demoed at FinovateSpring 2012.

Thomson Reuters Helps FFIs with FATCA Compliance

Thumbnail image for Thumbnail image for ThomsonReutersLogo.jpgAre you a FFI (foreign financial institution) worried about the new FATCA regulations that went into effect on the first day of January 2013?

If so, Thomson Reuters has an app for that.

The company has unveiled a FATCA compliance kit to help financial institutions comply with the US Foreign Account Tax Compliance Act, or FATCA. This legislation mandates that FFIs identify individual US tax liability among their customers, and report it to the Internal Revenue Service.

According to the European Banking Federation, FATCA will cost those FFIs with more than 25 million accounts $250 million or more to implement. The Thomson Reuters for FATCA Solution allows banks to take advantage of established regulatory and tax problem-solving technologies to ensure compliance, proper reporting, and documentation.

See Thomson Reuters in their most recent Finovate demo here.

Finovate Alumni News– January 10, 2013

  • Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgIBM developerWorks features Rich Killmar from Keynote DeviceAnywhere.
  • Thomson Reuters unveils FATCA compliance toolkit.
  • Temenos is one of the most significant global banking platform vendors according to Forrester Research.
  • Check out Toshl Finance’s cool infographic on how people around the world earn and spend their money.
  • Money Smart Life blog reviews Personal Capital.
  • TIBCO Software announces partnership with University of Chicago Medicine.
  • Credit Union Journal reports: Congressional FCU Chooses Geezeo.
  • PlayMoolah launches Moolah It, a new iOS App.
  • Central Bank of Myanmar grants license to Standard Chartered Bank.
  • EZBOB to partner with ChannelGrabber.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Last Chance for FinovateEurope 2013 Early-Bird Tickets — Register Before Friday to Reserve Your Seat and Save!

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FinovateEurope 2013 is only 4 weeks away and it is already clear that the conference is going to be our biggest and best European event yet.

With the expansion to two days this year, we’ve been able to select a ton of new fintech innovations (check out the presenter list) to debut live on stage. The latest ideas in security, marketing, mobile, online banking, PFM, payments, FX, investing, UX and much more will be showcased via our signature 7-minute demo format.

In addition to the great roster of presenters, the room is filling up fast with senior leaders from companies like:

  • ABN Amro
  • Accel Partners
  • AEGON
  • AIB
  • Aktif Investment Bank
  • Alfa-Bank
  • Alior Bank
  • Balderton Capital
  • Bank Hapoalim
  • Barclays Bank
  • BNP Paribas
  • BRE BANK
  • Capital One Europe
  • Celent
  • Cortal Consors
  • Datamonitor
  • Efma
  • Ernst & Young
  • Fidelity Investments
  • Gartner
  • IBM
  • IDC Financial Insights
  • ING
  • Jack Henry
  • KPMG
  • Liberty Bank
  • Lloyds Banking Group
  • MasterCard
  • Microsoft
  • Old Mutual
  • Ovum
  • PayPal
  • PostFinance
  • Rabobank
  • RBS
  • SKAGEN
  • Skandiabanken
  • Standard Life
  • Toyota Financial Svcs
  • UBS
  • Unicredit
  • Volksbank Bühl

If you’d like to join this group of leading executives and watch the cutting-edge of European fintech
debut, early-bird tickets are still available at
the discounted price of £1,095.00 (£100 off) through this Friday, January 11.

Tickets are limited (and we’re projecting a sell out at this point) so please lock in your seat today to guarantee your ability to attend (and these savings). We’ll see you in London in February!

FinovateEurope 2013 is sponsored by: Bluerock Consulting, Financial Technology Partners The Bancorp & Yodlee

FinovateEurope 2013 is partners with: BankersHub, Celent, Finance On Windows, Financial Services Innovation Centre, The Financial Services Club, and Hotwire PR 

Last Chance for FinovateEurope 2013 Early-Bird Tickets — Register Before Friday to Reserve Your Seat and Save £100!

btn1_ov.png

FinovateEurope 2013 is only 4 weeks away and it is already clear that the conference is going to be our biggest and best European event yet.

With the expansion to two days this year we’ve been able to select a ton of new fintech innovations (check out the presenter list) to debut live on stage. The latest ideas in security, marketing, mobile, online banking, PFM, payments, FX, investing, UX and much more will be showcased via our signature 7-minute demo format.

In addition to the great roster of presenters, the room is filling up fast with senior leaders from companies like:

  • ABN Amro
  • Accel Partners
  • AEGON
  • AIB
  • Aktif Investment Bank
  • Alfa-Bank
  • Alior Bank
  • Balderton Capital
  • Bank Hapoalim
  • Barclays Bank
  • BNP Paribas
  • BRE BANK
  • Capital One Europe
  • Celent
  • Cortal Consors
  • Datamonitor
  • Efma
  • Ernst & Young
  • Fidelity Investments
  • Gartner
  • IBM
  • IDC Financial Insights
  • ING
  • Jack Henry
  • KPMG
  • Liberty Bank
  • Lloyds Banking Group
  • MasterCard
  • Microsoft
  • Old Mutual
  • Ovum
  • PayPal
  • PostFinance
  • Rabobank
  • RBS
  • SKAGEN
  • Skandiabanken
  • Standard Life
  • Toyota Financial Svcs
  • UBS
  • Unicredit
  • Volksbank Bühl

If you’d like to join this group of leading executives and watch the cutting-edge of European fintech
debut, early-bird tickets are still available at
the discounted price of £1,095.00 (£100 off) through this Friday January 11th.

Tickets are limited (and we’re projecting a sell out at this point) so please lock in your seat today to guarantee your ability to attend (and these savings). We’ll see you in London in February!

FinovateEurope 2013 is sponsored by: Bluerock Consulting, Financial Technology Partners The Bancorp & Yodlee

FinovateEurope 2013 is partners with: BankersHub, Celent, Finance On Windows, Financial Services Innovation Centre, The Financial Services Club, and Hotwire PR 

Suncorp Selects FIS for ATM and POS Switching

FISLogo.jpgThe ability to manage both POS and ATM networks on a single platform has won FIS a deal with Australia’s Suncorp bank. In addition to managing the bank’s POS and ATM networks, FIS’s CONNEX will also be used to help the bank’s ongoing EMV rollout efforts.<

CONNEX helps financial institutions facilitate terminal driving, transaction acquiring, switching and authorization. The migration of Suncorp’s ATM transactions is planned for the first half of 2013.

A few interesting facts about Suncorp:

  • The fifth largest bank in Australia with more than $60 billion in assets
  • One of the top 25 companies in the Australian Stock Exchange
  • Has 450 offices and branches in Australia and New Zealand, and 2200 ATM access points

FIS has relationships with more than 14,000 institutions in more than 100 countries. See FIS’s most recent Finovate demos here and here.

PlayMoolah Launches Moolah It, a New iOS App

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Children’s financial education platform, PlayMoolah announced on its blog today the launch of a new iOS app, Moolah It.

The free app is aimed at helping children budget and prioritize their wish list.

Here are some screenshots:

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PMApp1.jpg

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Screenshots from appshopper: <http://appshopper.com/lifestyle/moolah-it> Jan. 9, 2013

To learn more about PlayMoolah, watch its FinovateFall 2012 demo.

Finovate Alumni News– January 9, 2013

  • Gartner highlights Comarch Commission & Incentive in recent report.
  • FIS announces expanded relationship with Modern Woodmen Bank.
  • TomTom uses Keynote DeviceAnywhere for real-time performance monitoring in Paris.
  • The New York Times features Simple’s approach to customer service.
  • Check Point Software Technologies introduces new ZoneAlarm 2013 security product line, integrates Facebook Privacy Scan.
  • MyBankTracker looks at Movenbank’s new site layout. Come see Movenbank’s live demo at FinovateEurope Feb 12 and 13.
  • Daily Tekk interviews Brendon McQueen, CEO of Tuition.io.
  • eToro launches new version of its WebTrader platform.
  • Dwolla introduces new look, allows users to apply for higher transaction limits.
  • Cardlytics opens office in San Fran, appoints new SVP of Marketing. Come see Cardlytics demo at FinovateEurope next month.
  • CNBC interviews Barry Silbert, SecondMarket CEO, to understand why entreprenuers avoid IPOs.
  • Bank Systems & Technology considers how NICE’s newest solution uses voice recognition to prevent fraud. Come see NICE demo its new tech live at FinovateEurope in London February 12 and 13.
  • Biometric Update highlights a year of new customers and pilot projects from VoiceTrust.
  • TechCrunch features a video interview with Betterment CEO and founder, Jon Stein.
  • Experian announces deal to provide address and mortality screening services to Guardian Financial Services.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

New Online Banking Report Published: Online & Mobile Forecast Through 2022

imageOur latest research is now available: Online Banking Report 2013 to 2022 Forecast. The report includes our latest 10-year online banking, mobile banking and bill-pay forecast for the U.S. market. Online banking remains relatively flat, growing less than 5%, while mobile expanded by 40% last year (see note 1).

Based on recent mobile growth, we now project that in 2019, mobile account access will equal online account access in the United States (based on household penetration of each service).

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After growing almost fifteen-fold in the past three years (2012 vs. 2009), we expect continued strong growth of nearly 30% compounded annually through 2022.

Finally, we took one last look at 2012 and documented the top-10 innovations or trends of the year (see below). We also updated our top-10 project priorities for 2013.

__________________________________________________________________

Top innovations & trends of 2012
__________________________________________________________

The report includes a summary of the top-10 innovations or trends during the past year (in alphabetic order):

  • Alt-biz lending disrupts commercial lending for the smaller business
  • Balance forecasting launched by Simple and Key Bank
  • Banking websites get “simple” makeovers
  • Digital (cloud) wallets find a value proposition, best-case routing
  • iPads appear at the POS and new accounts desk
  • Mobile deposit goes mainstream
  • P2P lending pops!
  • Pay As You Go auto insurance launched by MetroMile
  • Prepaid cards gain as “basic checking”
  • Virtual gift cards get a boost as Square launches 200,000 in a single day

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New entrants to the OBR Hall of Fame
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). A total of 48 achievements are listed from 50 companies:

  • 17 banks
  • 5 credit unions
  • 11 non-bank financial services companies
  • 17 fintech companies

The class of 2012 included two new entrants:

  • City Bank of Texas’s mobile on/off switch for debit cards (powered by Malauzai)
  • Simple and Key Bank both launched real-time balance forecast tools 

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About the report
__________________________________________________________________

Online & Mobile Banking Forecast (link)
The next 10 years: 2013 through 2022

Author: Jim Bruene, Editor & Founder

Published: 7 Jan 2013

Length: 32 pages, 26 tables, 12,000 words

Cost: No extra charge to OBR subscribers, US$495 for others here

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Report excerpt:

Lending Club is the biggest fintech startup success of 2012 
The company originated nearly three-quarter billion dollars in new loans in 2012 and surpassed $1 billion in cumulative originations in November.

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InComm Acquires Digital Gift Card Company, Giftango

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Today, prepaid product company InComm announced it has acquired digital gift solutions company, Giftango.

This is expected to expand InComm’s reach into the digital gift card industry, giving it access to Giftango’s relationships with more than 150 brands and network of more than 80 partners.

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Giftango, which was acquired for undisclosed terms, will become a subsidiary of InComm and will continue its operations in Portland, Oregon.

To learn more about InComm, watch its FinovateFall 2011 demo.