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Home » Daily Briefing » Daily briefing - 23 October 2018

Daily briefing - 23 October 2018

Jeremy_Allaire_Circle_CEO-0
Jeremy Allaire, CEO of Circle

Lending is going digital, from the foothills of Kilimanjaro to Beverly Hills, as banks and non-bank lenders compete to offer quick and automated unsecured loans. Players are entering the market from all directions, ranging from global banks to payments businesses. Take Paypal, which has been building out an infrastructure that includes its recent acquisition of card reader iZettle, and is now backing digital lender Tala, which serves businesses in Kenya, Tanzania, Mexico and the Philippine. Kenya in particular seems a testing ground for these players, with Tala following lenders such as Branch. Despite early scepticism, research shows that the combination of machine learning with digital lending allows lenders great variety in learning how to best deal with recalcitrant borrowers, with collections taking on an outsized role in the process.

HSBC follows Barclays into the US digital lending business as it tries to forget the horror show it produced on its last foray into the US. "The UK banking giant said on Monday that it is launching a digital lending platform for US customers in the first half of 2019. The platform will be powered by online lender Avant, which has already processed almost $5bn of loans for more than 600,000 customers. 'The US unsecured personal loan market is growing at 20 per cent annually and has surpassed $125 billion in balances,' said Pablo Sanchez, Regional Head of Retail Banking and Wealth Management for HSBC in the US and Canada." HSBC already offers credit cards in the US. HSBC acquired subprime lender Household ahead of the 2007 subprime crisis and closed the business in 2009.

Circle chief executive Jeremy Allaire is — unsurprisingly — calling on G20 regulators to kick on with global rules on digital assets. Last Friday, the Paris-based Financial Action Task Force called on jurisdictions worldwide "to licence or regulate cryptocurrency exchanges and other related companies to help stamp [out] the use of coins for money laundering and terror financing." Allaire welcomed the move but said regulation should go further, including to cover the controversial issuance of digital money through initial coin offerings. For those interested in the differences between issuances of digital assets, cryptocurrencies and initial coin offerings, it's worth listening to Barry Silbert over at the Unchained podcast. Silbert's Digital Currency Group is a major investor in businesses such as Bitpesa.

Always interesting to watch what's going through Barclays' accelerator: the bank was an early mover in all things digital asset and blockchain, and now it's angling heavily towards AI-driven partnerships. AI for headhunting, document conversion (into digital text) and trade finance figure. See the whole list here at American Banker.

Hallowe'en horror stories, part one: Here's a piece from South Africa detailing how Bain & Company elbowed its way into the South African Revenue Service from Scorpio at the Daily Maverick. The story here starts with Bain's South African head Vittorio Massone finding out that Tom Moyane is being appointed to the top position at SARS.

LAFFERTY BENCHMARKING

In the 2018 edition of the Lafferty Banking 500, HSBC and Barclays scored three stars. Goldman Sachs scored two stars.

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