• Fasanara Capital

Fasanara Economist, Alternative Administration and Chinese Private Plans



Happy Monday!


In This Article:


  • Trade Finance is Nearing a Much-Needed Shakeup

  • Regulating Alternative Finance

  • Funding Secure Goes into Administration

  • China Has a New Plan for its P2P Industry

  • US Investors Look to Specialty Finance as Interest Drops in Private Credit

  • Taking Stock of FinTech Startups: Major Disruptors or Mere Distractions?




Trade Finance is Nearing a Much-Needed Shakeup



The Economist quoted Fasanara Capital in a recent article on how innovation is changing trade finance distribution.

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Regulating Alternative Finance


This report by the World Bank and the University of Cambridge Judge Business School  details the key findings from a global regulatory survey based on responses from regulators in more than one hundred and ten jurisdictions across the world. Some key findings include: alternative finance is still typically unregulated but bespoke regulation is catching on; alternative finance regulation isn't 'light touch'; as supervision stretches their resources, regulators are turning to innovation; and after a slow start, most regulatory changes in alternative finance are now taking place in lower-income jurisdictions and emerging markets.


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Funding Secure Goes into Administration


Peer-to-peer lender Funding Secure has collapsed, leaving thousands of investors at risk of major losses. The UK company ran into trouble after an increased number of borrowers struggled to pay back their loans. Funding Secure also became embroiled in a fraud lawsuit involving the art dealer Matthew Green, who the lender claimed owed it about £3m. About 3,500 Funding Secure investors are now waiting to hear how much of their money will be recovered, after providing 486 loans worth £80m in total through the website. Most were high-interest rates loans secured against UK properties and other assets including jewellery, cars and boats.


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China Has a New Plan for its P2P Industry




After years of fraud, defaults and few investor safeguards, China’s regulators are embarking on a plan to radically transform its peer-to-peer lenders. Authorities in Beijing are working with local officials on guidelines that would convert qualified online lenders into small-loan companies, and the firms that don’t fulfill current requirements will be pushed to exit the industry. Converting P2P platforms into small-loan providers would force them to comply with rules on capital requirements and leverage that traditional lenders have to follow. The changes are the latest moves to rein in, and perhaps kill off, China’s P2P sector.

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US Investors Look to Specialty Finance as Interest Drops in Private Credit




Investors who have binged on the US private credit market in the last few years are now turning to the growing specialty finance space where competition is less intense and spreads are more attractive. Because of the complexity of the lending structures, the specialty finance market is only a fraction of the size of cash flow lending, but investors are attracted to the potential for double-digit returns and the enhanced protection from asset collateralization.

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Taking Stock of FinTech Startups: Major Disruptors or Mere Distractions?




The modern FinTech revolution that began circa 2010 hasn’t resulted in massive disruption of incumbent financial institutions. All the claims in 2013-2015 that FinTech startups would “disrupt” incumbent financial institutions have been debunked. Instead, FinTech entrepreneurs have changed their tune, talking much more about partnering with incumbent institutions instead of disrupting them. FinTechs may not have ‘taken out’ financial incumbents, but they are fundamentally altering the industry in other important ways. Here are some major ones: startups have shaken up incumbents by setting the pace of innovation and new standards of service;  fintechs are disrupting the incumbent’s cross-subsidy model; unconventional partnerships between incumbents and fintechs are emerging as business goes digital; there is now a talent challenge as grads no longer long for Goldman.


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Thank you for the attention!




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2019

 

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