
[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s newsletters .[/alert]
1. 60 Minutes: Fintech shaking up the financial industry: Looks like fintech has reached the mainstream with this 60 Minutes segment on Stripe and the entire financial technology movement. Until now, much of the excitement about the changes going on in finance were relegated to tech publications, the startup press, or within tighter financial circles. With this profile on 60 Minutes, it's a big step forward for some of the younger firms in the industry that will continue to exert pressure on incumbent financial organizations to innovate (or parter/buy the innovators).
Counterpoint: While the startup ecosystem patted itself on the back after the airing of the episode on CBS, a few outspoken voices complained that the coverage didn't go a good enough job explaining the whole story. Sure, startups are innovating and all that, but the banks do, and will continue to, play an important role in the financial system.
2. Is the online finance apocalypse upon us? : In spite of the good press the industry got in the 60 Minutes piece, this was a very trying week for online lenders. Bloomberg is now reporting that Prosper, the pioneering marketplace lending platform in the U.S., is indeed eliminating 171 jobs, closing their Utah office and letting go of their chief risk officer. That amounts to 28% of its staff. Oh, and CEO Aaron Vermut’s salary has also been cut to zero.
OnDeck, an online business lender and one of the first from the current class to make it to public markets, saw its share price shellacked as an FBR analyst cut his estimates on the firm. “FBR analyst Bob Ramsey blamed the weaker outlook on reduced volume of loans sold and slower origination stemming from diminishing marketplace demand and tougher underwriting standards.”
There’s definitely some alarming things going on in online lending right now — the most important is the rapidly diminishing demand for these loans from both retail and institutional investors. Time will tell whether this is just the rebalancing of supply and demand in the space or whether something organic is afoot.
Oh yeah, also, growth in roboadvisor land is rapidly decelerating.
3. New technology turns smart cars into payment devices: Payment technologies in cars have gained a lot of momentum in the past few months. We wrote recently how new payment technology is helping Gett, one of the top competitors in the on demand transportation market, compete with Uber.
However, there have been a series of strategic partnerships in the last year that have given insight into a new, and bigger, concept than just being able to pay for things from the comfort of your vehicle: Turning the automobile into a credit card.
Imagine the following scenarios:
- Purchasing food from a restaurant while driving there, and the kitchen being informed of when to cook the food in accordance with traffic and arrival time
- Purchasing groceries while driving to the supermarket, while the supermarket knows when you will be arriving to allow curbside delivery
- Emergency mechanical situations, where the car guides the driver to the nearest mechanic, with the part needed to be fixed already waiting and paid for before the car arrives