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Hi 5! The five fintech stories we’re following this week

top fintech stories

Insurtech’s rising star

Insurtech continues to shine on with the hope and possibility of youth. Tradestreaming’s Gidon Belmaker examines how insurers are increasingly offering IoT-enabled policies for different lines of insurance that calculate the risk for each person, digitally. In a world where a house is smart enough to know what room temperature its owners prefer, IoT-enabled policies make a lot of sense. The challenge for insurers looking to get into the IoT game will be filtering, processing, and reacting to really big data in real time.

In the spirit of being hopeful, insurtech’s top women execs spoke with Tradestreaming to share their career advice for women looking to enter this fast-growing field.

Fintech’s murky waters

It’s been a hard couple of weeks at Wells Fargo. After the firm’s pamphlet for Teen Day 2016 angered the theater community by implying that the arts were merely a childhood pastime, scandal struck one of America’s biggest banks yet again, on a much larger scale. After discovering that over 2 million fake bank and credit card accounts had been opened at the bank, Wells Fargo fired 5,300 employees.

Twitter did not approve. Analysts lambasted the bank for trying to shift a top-tier management problem onto hapless employees facing unrealistic sales goals. And while Wells Fargo has since eliminated product sales goals, Carrie Tolstedt, the unit leader in charge of those 5,300 ex-WF employees, walked away with about $125 million in stock and options.

Speaking of crime and payment, Tradestreaming’s Josh Liggett’s in-depth reporting on the shady world of prison payments showed that justice – and fintech – are not always accessible to inmates.

While the financial industry is experiencing a surge in growing transparency and lower fees thanks to growing competition, the prison payment industry isn’t undergoing a similar renaissance. Instead, inmates are held prisoner to high fees and limited services within an old system masquerading as innovative fintech.

Fintech real-estate companies are getting creative

Ok, yes. A fraudulent mortgage market did cause the Great Recession of 2008. But the mortgage market is getting innovative with online offerings that seem to have the consumer – not just profit – in mind. Digital lender Point, which enables homeowners to sell a percentage of their home to investors, is putting borrowers and lenders on more even turf by better aligning incentives between them. Last week, the company raised $8.4 million, bringing total fundraising to $15.4 million.

Real-estate crowdfunding platform Roofstock is also out to change the digital real-estate market, by simplifying the process of buying or investing fractionally in occupied singly family housing. According to Roofstock’s chairman and co-founder, Gregor Watson, Roofstock recently signed a deal with an Asian group that wants to invest a whopping $250 million on the platform.

Work and play

The fintech interview process can be daunting for interviewees. Potential candidates can take solace and solid tips from Tradestreaming’s interview advice from top fintech execs. Keyword takeaways: passion, motivation, openness. Oh, and don’t ask about salary.

Of course, young fintech wannabes might have other things on their minds. Like beer. On last week’s ESPN College Gameday show, a student put up a sign with his Venmo number and a request that his mother send beer money. Instead, over two thousand complete strangers donated to his beer fund. Here’s a selection of what fintech companies’ signs might look like come next College Gameday.

Prophets of Wall Street

No one knows exactly what the future has in store – but people are making some educated guesses. Aon estimates that self-driving cars will cut U.S. insurance premiums by 40%, though automation will carry its own unique risks. Chinese ecommerce giant Alibaba thinks the future of identify verification lies in the red veins of your eyeballs.

And because your week wouldn’t be complete without a blockchain update, Goldman Sachs filed a patent for blockchain-enabled forex, in the hope of speeding up and reducing cost of trading currencies.

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How Roofstock simplifies investing in single family real estate

Buying occupied single family housing has become a favorable investment strategy for many entrepreneurs. The average annual gross return in Q1 2016 was over nine percent with some markets returning over 20 percent gross annually.

Some people want to invest in real estate but find themselves locked out of the market. Investors may not have the liquidity to buy a house outright, or may not be interested in having a leveraged investment. The single family market is also extremely fragmented. If you live in Hong Kong and want to buy single family units in California, you need to build an infrastructure, like deal flow contacts, property managers, and an oversight team, which can be very costly.

One solution for investors is Roofstock, a Khosla Ventures and Bain Capital-backed marketplace of occupied single family homes that generate cash flow from the first day of investing. Investors from all over the world are able to build a diverse portfolio of fractional investments in rented single family properties, or purchase properties outright through a loan issued via the site’s integrated application process.

“Trying to cram everyone into one type of investing style doesn’t make sense,” said Roofstock chairman and co-founder Gregor Watson. “We’re targeting people who want the control of owning the asset outright, whether for generational planning or tax purposes, and those who wants to diversify their portfolio acquire one or two houses.”

Watson started buying, rehabbing, and renting out single family homes after the fallout of the ’08 real estate bubble, amassing $4 billion in investments. Once all the hard work was done and properties rented out, Watson found it difficult to cash out of deals.

“I called brokers about selling a property, and they asked ‘when are you going to move the person out?’” he said. “I started laughing, since the best buyer for this home isn’t local. It’s someone out of state looking for an investment.”

Putting rented single family houses into the right hands isn’t Roofstock’s only function. By digitizing the process of purchasing a property, the marketplace cuts out expensive portions of investment process, like broker fees, and streamlines the financing and title processes.

Roofstock also approaches purchasing properties differently, inverting the due diligence and property security steps. By finding a property, doing due diligence, then offering it to the public at market value, investment terms are clear from day one. There is also less of a worry that a property falls out of escrow,  something investors try to avoid when investing in a property.

Investing in single family homes isn’t all sunshine and moonbeams. For those who’ve never invested in single family, things can get pretty sketchy if you can’t find a renter. Prospective residential investors may want diversification that comes with multifamily as opposed to the concentrated risk, or the all or nothingness, of single family.

There are a number of crowdfunding platforms currently available for real estate investors, but Roofstock is the only one focusing specifically on the single family residential market.

Roofstock’s current investor base consists mostly of family offices and institutional investors, who already understand the risks that come with single family investments. Some retail investors have invested on the site, but the site hasn’t targeted these users yet. The company has kept return on investment and total investment dollars on the platform private, but Watson said Roofstock recently signed a deal with an Asian group that wants to invest $250 million on the platform.

“We turned the way real estate investing is done on its head. We’re getting real scale, and now it’s just a time to focus on execution,” he concluded.