To be or not to be a bank

Samir Desai, CEO and co-founder, Funding Circle

• Funding Circle’s Samir Desai said the alternative finance industry is bifurcating with the central question of whether “to be or not to be a bank”.
• He says the firm has “no plans” to ever become a bank, while consumers – especially businesses borrowing are coming to expect more from lenders. This is the main to reason NOT to become a bank, he argued.
• Desai also said the platform model means lots of other competitive edges of banks including better IT, longer ‘opening hours’ and cheaper costs of capital.

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The search for yield: the role of alternative investments in a post‐Brexit environment

Rhydian Lewis,CEO and co-founder, RateSetter

Gonçalo de Vasconcelos, Co-founder and CEO , SyndicateRoom

Mark Weedon, Head of Institutional Development, Property Partner

Thorsten Seeger, Managing Director Germany, Funding Circle

• Ratesetter’s Rhydian Lewis said Brexit has been somewhat of a boon for his firm as investors have looked further for yield but that venture capital money has become more cautious.
• Syndicate Room’s Gonçalo de Vasconcelos says volumes are improving in private markets but they are still somewhat lower than this time last year.
• Property Partner’s Mark Weedon said investors on their platform quickly bought up discounted equity available for sale by Property Partner’s secondary market in the wake of the Brexit result.
• Thorsten Seeger of Funding Circle said that despite Brexit, financial regulation is a huge hurdle to growing businesses across Europe. 

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Is high street bank collaboration bad news for customers?

Tom Blomfield, CEO, Monzo

Rob Young, Senior Vice President International, OnDeck

• Tom Blomfield of Monzo said “yes” high street bank collaboration is bad for customers. This is because banks are too focused on trying to catch customers early and rely on customer inertia to cross-sell products later on in their lives. He says banks do not have the best interests of their customers at heart. Nonetheless, he adds, ‘marketplace banking’ will soon arrive and further revolutionise expectations. Expect a half trillion dollar Facebook to emerge, he predicts.
• Rob Young of OnDeck on the other hand says, in fact, fintech firms and banks have a lot to add to customer satisfaction when collaborating and that large banks will always be beat the newer players on price.
• The audience, after an initial early lead on the “No” side, steadily moved to a narrower victory for “No” of 59 per cent vs 41 per cent.

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Why challenger banks and marketplace lenders are natural bedfellows

Craig Donaldson, Chief Executive Officer, Metro Bank

John Stepek, Editor, MoneyWeek

• Money Week’s editor John Stepek and Metrobank’s CEO Craig Donaldson explore the challenger bank’s unique rise as well as its increasing trend of partnerships. Donaldson says the challenger bank is open to more and more partnerships with fintech firms offering a “cultural match”. The bank has an edge on competitors, he adds, because they still remember being in their start-up phase whilst also nearing one million customers. “I spent £60k on advertising last year, and £55m on tech,” he said.
• Donaldson says many challenger banks incorrectly believe digital-only banking is what customer want, “actually, it’s instant gratification,” he said.

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Synergies in fintech: Identifying complementary niches

Anne Boden, CEO and Founder, Starling Bank

Anil Stocker, CEO and co-founder,  Market Invoice

Kadhim Shubber, Reporter, FT Alphaville

Raffael Johnen, Co-Founder and CEO, auxmoney

Craig Iley, MD Business Banking & Founder, Atom Bank

Matthew Ford, Founder and CEO, Pariti

Adam French, Co-Founder and CEO ,Scalable Capital

• The Financial Times’ Kadhim Shubber chaired this panel and kicked off my questioning why fintech firms need partnerships if they have a unique service.
• Pariti’s Matthew Ford argues his company’s partnerships allow the best of both worlds for both parties. Scalable Capital’s Adam French says the robo advice service is set to announce tie ups with more traditional financial players that will help lower the cost of customer acquisition.
• Collaboration is not optional, according to Craig Illey of Atom Bank, who says for larger banks to survive they will need to partner with disruptors. “No bank can operate across the whole of the services it needs to without fintechs,” he said.

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Fintech synergies in action

Nikolay Storonsky, Founder and CEO, Revolut

Nick Harding, Founder and CEO, Lending Works

• Nikolay Storonsky of Revolut, which has recently branched out into lending with a deal with Lending Works to its nearly 600k customers is uneasy about the notion his fintech firm is becoming a bank. “What we offer is better than a bank,” he said.
•  Nick Harding of Lending Works says Storonsky (as well as Monzo’s Tom Blomfield) need a new word for their services rather than banking.
• He adds that the two companies’ tie-up is now live but they still need to build a new credit model to fit their new (potential) customers in order scale up, following a question by this session’s moderator AltFi’s Ryan Weeks as to why he was rejected in recent days from a small loan.

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Why we're launching a bank

Jaidev Janardana, CEO, Zopa

• Jaidev Janardana of Zopa says people are ask him either think he is a masochist or a traitor.
• The reason has not got today with either of these. “We think it is best to achieve our vision for customers to believe Zopa is the best place for our money,” he said.
•  Zopa will aim offer a full spectrum of consumers’ financial needs and is uniquely positioned to do so.
• The firm will not do either current accounts or SME lending, however. But Janadarna says traditional banks have been overcharging for their services and therein is Zopa and others’ opportunity to disrupt the market. 

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Cracking the IFA market: What needs to be done?

Richard Wazacz, Head of Octopus Choice, Octopus Choice

Julia Groves, Partner & Head of Crowdfunding, Downing

Harriet Greenen, Deputy business features editor, City AM

Ceri Williams, Investor Operations, RateSetter

Jake Wombwell-Povey, CEO and Co-founder, Goji

Iain Niblock, CEO and Co-founder, Orca Money

• Ceri Williams of Rates setter says IFAs are used to buying unitised and standardised products. “however, this is a way to protect client assets against inflation.”
• Octopus Choice’s Richard Wazacz says these investors tend to be cautious of new investment markets but he says most people use IFAs at some point in the life many value the
• Julia Groves of Downing asset management questions how necessary IFAs are to the P2P industry considering the market is now more than £10bn in size.
• Jake Wombell-Povey said that the Innovative Finance ISA will be a game changer for the opening of the market to IFAs.
• City AM’s Harriet Green asks the question whether this will put pressure on the industry given the scale of the cash waiting on the side-lines.
• Groves adds as the last comment of the session that she envisages many financial advisors simply being disrupted by the growing market for robo-advice. 

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Standardisation, positioning, or track record: What's the key for long‐term capital managers?

Gabriella Kindert, Head of Alternative Credit, NN IP

Rod Lockhart, Managing Director, LendInvest Capital

Andrew Holgate, Co-Founder and Chief Credit Officer, Assetz Capital

Robert Stafler, Founder and CEO, Fintex Capital

Jeremiah Silkowski, Founder and CEO, SQN Capital

Peter Renton, Founder, Lend Academy

• Gabriella Kindert, head of alternative credit at NN IP says she is trying to convince her board about the investment opportunities in alternative lending platforms but there are several hurdles – mostly regulatory.
• Robert Stafler of Fintex Capital says his firm has issued over $75m of bonds in the space, but that few pension funds apart from Aegon have taken the opportunity to help grow the asset class.
• LendInvest Capital’s Rod Lockhart says he believes there is a strong argument for alternative credit within a multi-asset portfolio of longer term investors.
• Kindert adds that a major problem across the broader alternative credit spectrum is a lack of suitable data in the field.  Andrew Holgate of Assetz Capital concurs and says before data is trusted and transparent very large investors will struggle to trust it. 

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Securitisation spotlight: Why the growing demand for marketplace lending paper will drive down funding costs

Simon Champ, Chief Executive Officer & Global Head of Business Development , MW Eaglewood Europe LLP

• Rupert Taylor, CEO of Altfi Data and the manager of the P2P Global Investments trust Simon Champ explore the cost of capital in online lending in the second fireside chat of the day.
• Champ says while the closed ended fund is on a discount, he is very cognisant to try and close the gap with its net asset value.
• Champ says for the fund to continue to develop it has to lead the way in growing the industry including investing in new platforms in emerging fields of alternative credit.
• Would he change the name of P2P GI today? Perhaps not but Champ says the fund it very much in broader alternative credit universe.

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Identifying and quantifying risk and return in the different underlying loan types of MPL

Rupert Taylor , CEO and Co-Founder,  AltFi Data

• Without standardisation comparison of return is difficult and comparison of risk adjusted return is impossible. 
• However standardised and verified disclosure can help investors appraise not only asset risk but also enterprise risk.  
• Cash flow analysis allows for the construction of time weighted series which can de-construct net return into its constituent parts. This allows an understanding of the level of risk by illustrating how much loss is incurred to achieve a level of net return. 
• Provision of this granularity of data also allows originators to demonstrate to investors that their motivations are aligned.

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Comparing risk reward characteristics across mainland Europe and the UK

Aloysius Fekete, chief product officer,  AltFi Data

George Georgakopoulos, CEO, 4finance

Patrick de Nonneville, chief operating officer, Lendix

James Levy, founder, Clearwater Private Investment

Niels Turfboer, Spotcap

• Transparency in the sector is important and serves both customers and regulators, said George Georgakopoulos, CEO of 4finance. It should be part of product.
• The sector needs trust with investors, said James Levy, founder of Clearwater Private Investment.  Investors don’t want to spend time going through the verification process, they want shortcuts. That can mean different things- seeing data like at AltFi, going through a securitization process, or collaborating with banks.
• Countries in the EU have responses to different regulations, which often means going for highest regulation and being cautious, said Niels Turfboer from Spotcap

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Consumer or business lending ‐ which has seen greater innovation in credit underwriting?

Michael Elalouf, chief financial officer, iwoca

Brian Norton, co-founder and CEO, Future Finance

• Having data about company allows you to keep a credit profile of companies and be as informed as possible, said Michael Elalouf, chief financial officer at iwoca. His company does that with “machine learning” or picking up default data and keeping track of why or how it defaults.
• Future Finance, which makes loans to students in the UK, uses data to formulate a debt to income test and determine if students can pay back their loans, said Brian Norton, co-founder and CEO of Future Finance. The company can predict the chances of a student graduating and getting a job based on university career expectations.

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Blockchain 101: Understanding the synergies between blockchain and alternative finance

Iain Niblock, CEO and co-founder, Orca Money

Rob Haslingden, head of product marketing and propositions, Credit Services Experian

Martins Sulte, co-founder and CEO, Mintos

Hugh Halford-Thompson, chief innovation officer, BTL Group LTD

John Pellew, founder and CEO, Othera

Jake Wombwell-Povey, CEO and co-founder,Goji

Rupert Taylor, CEO and co-founder, AltFi Data

• The panelists all agreed that it is very difficult to compare like with like in regards to alternative financing. A standard is needed in the industry, with some thinking that regulators may be the ones to enforce a basic standard. Standardisation becomes even harder for companies with platforms in various countries, said Martins Sulte, co-founder and CEO of Mintos.
•  Blockchain could be one way to validate the data once a standard is agreed upon, as each transaction is recorded and cannot be erased. Another appeal is the transparency it creates and the ease of communication it creates between different parties.
• As the sector moves to open banking, where personal data is shared across various platforms, blockchain will be looked as a way to secure information. 

The complexities of volume reporting for equity crowdfunding

Vanessa Cowing, general counsel, Venture Founders

Simon Potter, investment manager, Seedrs

Andrew Hodson, head of business development, Growthdeck

Sergey Chetverikov, investment director, Startrack

Rohin Modasia, CEO  and founder, Global alternatives

Goncalo De Vasconcelos, co-founder and CEO, SyndicateRoom

Rupert Taylor, CEO and co-founder, AltFi Data

• Goncalo De Vasconcelos, co-founder and CEO of SyndicateRoom said that most investors aren’t aware of the Enterprise Investment Scheme, which gives investors tax relief for buying shares in smaller higher-risk trading companies
• Clients that have a diverse portfolio tend to have the best results, according to research from Seedrs.
• One of the biggest issues with equity crowdfunding is measuring how the platforms perform. Each has different investments schemes and schedules, so finding one way that works for all platforms is difficult. One way is showing investors the Internal Rate of Return of their portfolios.
• Rohin Modasia, CEO  and founder of Global alternatives, said that especially when it comes to the secondary market, the breadth of data becomes important. The sector needs a “rich data driven environment for investors to access where they are making market decisions,” he said.
• Transparency is great, but each platform needs to look at who their investors are and what information they need, said Vanessa Cowing, general counsel of Venture Founders. Research needs to cater to all types of investors.

How platforms can be customer focused

Jane Dumeresque, chief executive officer, Folk2Folk

Jack Percival, partnerships lead, Zopa

Will White, operations director, Loot

Matthew Ford, founder and CEO, Pariti

Rob Straathof, CEO, Liberis

• Fintech platforms serve different niches. What works for one customer base doesn't work for another, said Jane Dumeresque, chief executive officer of Folk2Folk.
• Many of these companies don't have to be banks. Companies like Loot and Pariti want to be different. They want to get customers on board and then narrow their focus to serve their needs.
• There is a lot of integration in the sector. For example, Zopa networks with a lot of platforms and created an API for platforms to integrate products with their own services, said Jack Percival, partnerships lead at Zopa.

The regulation of fintech in the UK and US

 Robert Lawther, head of financial institutions, Hiscox

Jonathan Segal, partner, Fox Williams

John Battersby, head of communications at Ratesetter

Andrew Tyrtania, client projects director, Compliancy Services

Jonathan Wade, corporate finance partner, RSM

Martin Cook, general counsel, Funding Circle

Joseph Lazaris, partner Enterprise Incubator & Consultancy

Ed Dartkey, Partner K&L Gates LLP

Karteek Patel, CEO and co-founder, Crowdstacker

Brian Korn, Manatt, Phelps & Phillips

• There has been delay in some platforms getting approved for the Innovative Finance Individual Savings Accounts. Martin Cook, general counsel at Funding Circle said this is likely due to all of the platforms having different models.
• "We do things because it's the right thing to do" not because it is in regulation, said Cook. It firms want to succeed, they need to build a model that is both scalable and sustainable, not to meet regulatory requirements.  
• The difference between the US and UK regulation is that in the UK you are only allowed to do something when given permission, while in the US, you are allowed to do anything, until it's forbidden, said Brian Korn from Manatt, Phelps & Phillips.
• The US is likely to not have a national fintech regulatory system anytime soon. Ed Dartkey, a partner at K&L Gates LLP, said that it's likely individual states will take a tougher stance on the marketplace, consumer and business lending in response to Donald Trump's stance on deregulation.
• The biggest challenge for the FCA moving forward will be treating customers fairly and data protection, with the EU's recent data protection act being a challenge for firms as well.