• Fasanara Capital

Indonesian Fintech, Europe's Tech Impeachment, Hurting P2P, White Points of Lending & Other News



Happy Monday!



In this edition:


  • Bank For International Settlements Highlights The Rise Of Lending By Big Tech Companies

  • New White Paper Points To Where Small Business Lending Is Headed

  • Europe’s Tech Sector Pulls Away From Banks

  • CBILS Extension Could Hurt Authorised P2Ps

  • Fintech Lenders In Indonesia To Support Government With Disbursing Loans To SMES As Part Of Covid Relief Effort.



Bank For International Settlements Highlights The Rise Of Lending By Big Tech Companies.



Big technology companies may have peddled as much as US$572 billion of credit/debt globally last year which could be at least twice as much as fintechs, a Bank for International Settlements (BIS) working paper suggests.


The paper entitled "Fintech and big tech credit: a new database", assembles and updates data on fintech and big tech credit volumes. The database is then used to address questions about how large the global fintech and big tech credit markets are, both in absolute terms and relative to overall credit markets. It also addresses the economic and institutional factors driving their growth and adoption, and probes how large and important they could become in the future.


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New White Paper Points To Where Small Business Lending Is Headed.



While small business lending has been turned upside down this year with the pandemic and all the government programs, innovation is still happening. Marqeta’s new white paper titled, “Lending 3.0: Building a better world for lenders and borrowers” takes us through the different stages in the recent history of small business lending.


According to Marqeta, Lending 1.0 was traditional bank lending where loan applications were complex, credit decisions took a long time and a great deal of effort was required from the small business owner. Lending 2.0 was about the arrival of fintech lenders that were digital-first and provided an online journey for loan applications with quicker lending decisions. We are now entering Lending 3.0., which is all about real-time data and that doesn’t just include bank account information but also how funds are being spent.


The white paper goes into some depth about how Lending 3.0 works, its seven key attributes and what it means for the different functions of a lending business.

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Europe’s Tech Sector Pulls Away From Banks.



The equity value of European banks, hit by loan losses and historically low interest rates, has slipped below the region’s technology groups for the first time. In Europe, listed tech companies are now worth a combined €842bn, above banks’ €822bn, according to Refinitiv. The data provider’s European bank stocks index has dropped by a third this year, making the sector the worst performing in the region, while its tech index is up by 11 per cent.


In 2010, tech made up just 4 per cent of the MSCI EMU index, which covers large and mid-cap companies in the eurozone, while banks accounted for 24 per cent, according to research by Morgan Stanley. Today, tech is 12 per cent while banks have dropped to 13 per cent. Globally, tech stocks have been among the most resilient in the face of the pandemic.


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CBILS Extension Could Hurt Authorised P2Ps.



Following Chancellor Rishi Sunak’s announcement that CBILS borrowers can have an extra four years to repay their loans, concerns have been raised over the impact that this may have on the P2P lending community.

At present, P2P lending platforms are limited to using institutional investors to fund their CBILS lending. However, these institutional funding lines were put in place when borrowers were being given a six-year deadline to repay these loans. The deadline has now been extended to 10 years.


It has been suggested that platforms may end up paying a higher cost of capital on the borrowers side, as a result of the extension and lack of P2P access to the term funding scheme. This may require platforms to introduce additional fees or to reduce their rates to investors.


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Fintech Lenders In Indonesia To Support Government With Disbursing Loans To SMES As Part Of Covid Relief Effort.



An association of 156 Fintech lenders, is reportedly planning to work cooperatively with the Indonesian government to distribute funds that are meant to offset the economic problems and challenges created due to COVID-19. As of September 2020, the Indonesian government has issued 25% of the planned $46.8 billion it has set aside for COVID-related financial relief for local businesses. The association has been creating credit profiles for 25 million local entities since June of this year. It manages this data by using appropriate analytics tools developed to reach underbanked or financially underserved Indonesians and their micro-, small and medium-sized enterprises. The data may be used to assist with disbursing COVID relief funds to local residents and businesses that the government is planning to help.


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Thank you for the time!




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