Gleaning through Tungsten’s Interim Financial Report

- January 22, 2015 3:37 AM | Categories: ,

imgres My colleague Peter Smith covered Tungsten’s financial result earlier this week-  see Tungsten’s Half-Year Results: Short-Term Disappointment, but Long-Term Promise Okay Tungsten is losing money. But so are Lending Club, OnDeck, and many others that are trying to change the way finance is done, in Tungsten’s case, transactional business invoice financing. I read through their interim report the other day, and a couple themes stuck out beyond the financials: Potential Market Size is huge With Tungsten’s current network, if all buyers were enabled to provide Tungsten Early Payment to suppliers for invoices shown as “approved to pay”, the annual value […]

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Why APIs matter in Fintech

- January 21, 2015 4:09 AM | Categories: ,

freeimages.co.uk techonology images It’s getting harder to turn around in finance, especially fintech, without bumping into some reference to APIs, or application programming interfaces. Why do we normal folks have to worry about APIs? Aren’t they for the tech guys? APIs basically lay out the rules for how one application can talk to another. As Susan Joseph pointed out on her post around Marketplace Lending, the API is critical because it communicates information about the loans. Marketplace lending is unique because it offers its’ investors a deep dive into important data. This means, in practical terms, you have a lot of good information […]

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Quantifying the Size of Shadow Bank Assets

- January 20, 2015 4:55 AM | Categories:

shadowbanking_2414190a The Financial Stability Board (FSB) recently released their report on the Global Shadow Banking market and has come up with a figure of $75 trillion for the market. That’s right, trillion. These are financial assets help by money fund, hedge funds, broker dealers, essentially anyone other than what is defined as a bank. I’ve done some prior posts on this market here and here I commented that the market lacks data and the real question is risk being pushed to where it cannot be seen? The reason this is considered “shadow” (doesn’t that term really scare people) is that these […]

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Is the Consumer Financial Protection Bureau ready to Rock Marketplace Lenders World?

- January 19, 2015 5:49 AM | Categories:

Trade Financing Matters welcomes this guest post from Susan Joseph, a former General Counsel of a start-up peer lending financial services/tech disrupter. The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Act and is a US government agency whose mandate is to protect consumers of financial services and products. This means there are strong federal rules that protect consumers. It also means there is federal enforcement if you break those rules, and that enforcement can result in injunctions that shut your business or fines and penalties. The CFPB has a broad reach and can specifically make rules effecting […]

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The Confusion Around Fintech Lists

- January 15, 2015 2:02 AM | Categories: ,

images I see this mega basket called Fintech and it’s the word of the year besides disruption (but both are generally used in the same sentence). I remember not too long ago it was Asset Bubbles. I guess the whole world of Internet finance 1.0 has transitioned into fintech 2.0. Fintech seems to span everything from infrastructure (Blockchain/Bitcoin) to credit, payments, settlement, processing, analytics, and discrete detailed solutions. What annoys me is the Fintech lists that throw companies together from all walks of life and rank who is best in innovation. For example, here is KPMGs Top 10 Fintech Innovators: 1. […]

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Why Online Lenders are a threat to Factoring – Part II

- January 14, 2015 4:42 AM | Categories:

images One could argue that Merchant Cash Advances are a huge threat to factoring. They have several distinct advantages (and disadvantages) compared to commercial finance companies. The hoops that a borrower must go through with a factor are several and very operationally intensive. Loan Set up – the borrower must send the finance company their Accounts Receivable, their Accounts Payable, and contra accounts for the factor to underwrite the credit worthiness and assess the willingness of their portfolio of account debtors. It is operationally intensive. With MCA, you send me your historical Credit Card and you can have an advance later […]

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Merchant Cash Advances evolve to Online Lending Platforms – Part I

- January 13, 2015 4:35 AM | Categories:

images We are seeing financial innovations over the last few years that we have not seen ever. Period. Small business lending has seen the brunt of these changes, and these innovation can be directly attributed to data, analytical models, and improving credit scoring models. Before the financial recession of 2008, banks made small business loans based on various automated technologies. But since that time, they have backed off and the void has been filled by Peer to Peer or Marketplace lenders, and Merchant Cash Advance (MCA) products that have evolved beyond financing a company’s credit card receivables. Just what are MCAs? […]

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Facilitating Latin America’s trade trajectory

- January 12, 2015 4:43 AM | Categories:

south-south Dino Sani is head of Treasury Services, Latin America, for BNY Mellon. Latin America’s trade outlook – both internationally and intra-regionally – shows great promise, with appetite for Latin American exports experiencing a significant resurgence. The post-crisis recovery is driving trade with developed markets, and, while demand from emerging markets for Latin America’s raw materials has slowed somewhat, the emerging markets’ growing middle-class populations (most notably in Asia) are now fueling demand for Latin America’s consumer goods. Indeed, while the recovery of the US in particular undoubtedly bolsters Latin America’s cross-border trade activity, it is the region’s deepening “south-south” trade […]

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Are ABI’s Bankruptcy recommendations too debtor friendly? – Part III

- January 9, 2015 5:16 AM | Categories:

This is the final post on commentary around the American Bankruptcy Commission’s recent report to reform Chapter 11. Here are a few more snapshot summaries from some of the ABI’s recommendations: 363 Sales and DIP Financing With companies facing significant distress due to vast over-leverage, debtors have increasingly turned to asset sales under Section 363 of the Bankruptcy Code, rather than Chapter 11 plans, to dispose of their assets quickly. The new recommendations recognize this feature of modern bankruptcy practice – company wants to sell all assets and proposes to set up a mechanism to do that. The recommendations seek […]

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Are ABI’s Bankruptcy recommendations too debtor friendly? – Part II

- January 8, 2015 4:10 AM | Categories:

drowning-in-debt This post continues comment on the American Bankruptcy Commission’s recent report to reform Chapter 11. In essence, bankruptcy is a value reorganization event – it fixes value to an estate on the effective date of an agreed plan and finds a way to distribute that value to creditors if the firm cannot continue as a going concern. The valued received is a waterfall, that is, senior creditors get what’s owed to them first, than junior creditors, etc. till cash runs out. For example, if a senior secured creditor with a blanket lien on the debtor’s assets is owed $10, a […]

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Are ABI’s Bankruptcy recommendations too debtor friendly? – Part I

- January 7, 2015 4:40 AM | Categories:

drowning-in-debt Recently, the Commercial Finance Association held a webinar to discuss The American Bankruptcy Institute’s Commission (ABI) final report to reform Chapter 11, the rules that handle bankruptcy. The report is available here and is over 400 pages long and contains 241 recommendations. The ABI released its proposal following a three-year study of Chapter 11 bankruptcy law. Why are these recommendations so important? In most Chapter 11 reorganization cases filed, management hopes to bring the business back to solvency and to present a plan of repayment to its creditors. The goal is to help companies get back on their feet and […]

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Can Marketplace Lending Go the Distance? An Insider’s View Part II

- January 6, 2015 4:54 AM | Categories:

The first installment of our discussion with Susan Joseph covered why 2014 was the year for Peer to Peer or Marketplace lending. Today we look into why she thinks it will be successful, and what products she offers, and how well the auction is performing. DG: Customer acquisition is always the critical piece. As these platforms move to business loans from consumer, what thoughts do you have around their ability to scale? SJ: The devil is in the details. Customer acquisition is unpredictable and the cost is high. You win on volume. The market for business loans is very fragmented […]

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