IPO or ICO or IEO (briefing on Colored Coins)


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The new kid on the block is IEO (Initial Equity Offering). I coined that phrase because neither IPO or ICO fits.

– IPO (Initial Public Offering) implies listing shares on a regulated Stock Market such as NYSE, Nasdaq, LSE, SIX etc. 

– ICO (Initial Currency Offering) implies issuing a new Alt Coin. The problem is that Alt Coin are not getting any serious market capitalization. For students of exotica, here is the market cap of the top Alt Coins. The last thing the world needs right now is another AltCoin.

If it is broke, do fix it

A regulated Stock Market is how the market works today. The old saw is if it ain’t broke, don’t fix it. The corollary is if it is broke, do fix it.  Here are the 4 big flaws with these legacy Stock Markets: 

  • legacy listing processes: post Enron, the SEC (followed by other Exchanges) layered on lots of expensive process to protect investors from scams, all of which were based on manual processes (which later got automated but they were still not native digital ie they were expensive and inefficient).
  • national boundaries: it is too hard to discover stocks on exchanges in local markets, so they either suffer a valuation discount or seek a listing on one of the global exchanges (where only mega-sized companies can do an IPO). (See here for our other coverage of this issue).  
  • declining revenue line from listing fees: Stock Exchanges increasingly make their money from selling data, co-located servers for HFT and payment for order flow. This leads to misalignment of interest with the two customers who matter – issuers and long term investors.    

This post, earlier this week by Efi, describes how things went wrong at traditional regulated stock exchanges.

Why Microsoft did an IPO

They did not need to raise money – they were already profitable. They wanted liquidity and price discovery so that they could motivate employees with stock. That is the function of a public market. Any public market 2.0 initiative has to bear that in mind. Investors want to buy shares of profitable business. Uber’s $66 billion valuation in private markets is being questioned because investors cannot figure out how they still lose money after having got to such scale. Then consider a bootstrapped business such as Microsoft at their IPO 25 years ago or a Mittlestand company in Germany. As an investor, which do you prefer to own? That is what the Innovation Capital business should be serving and is not.

Colored Coins 101 for business people

Part of our mission at Daily Fintech is to demystify jargon that obfuscates. We translate Fin for Tech and Tech for Fin. In this case we are translating Tech for Fin. There is so much innovation around Blockchain that it is hard for business executives to keep up to date. Our job is to find the stuff that matters and bring it to your attention.

We think Colored Coins is an important development in the Blockchain world. We will parse the tag line on their front page to explain why: 

The Open Source Protocol for Creating Digital Assets On The Bitcoin Blockchain

  • Open Source Protocol. This is like TCP/IP or HTML. No company controls it or makes money directly from Colored Coins. You make money by adding value on top.
  • Creating Digital Assets. You don’t buy an Alt Coin. Let me repeat that. You don’t buy an Alt Coin. You “color” an existing Bitcoin ( % of a Bitcoin or number of Satoshi, which is the smallest divisible unit of a Bitcoin) to represent an asset (stock in a company, a house or car or painting or whatever). Then you can buy and sell those assets frictionlessly across borders. 
  • Bitcoin Blockchain. This is about the public Blockchain. You can also use Colored Coins on Ethereum (another popular public Blockchain). If you believe that all Blockchains will be private, this is not for you. Using the analogy with the development of the Internet, this is about the Internet not a collection of Intranets. Open Coin transactions are validated by a consensus network (either Proof Of Work by Bitcoin Miners or Proof Of Stake or whatever Ethereum uses). 

Of course, an open source protocol is only as good as the use cases created by entrepreneurs. That is the subject of a future research note.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Why did Allianz invest in Berlin InsurTech startup Simplesurance?


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According to leading VC and daily blogger since blogging began – Fred Wilson:

“There are two kinds of corporate investments in startups; passive corporate VC arms and active strategic investments.

The former is made by well established investment groups like Google Ventures, Intel Ventures, SAP Ventures, Comcast Ventures, and many many more. For the most part, they don’t “suck”. They can be a good source of capital for your company, they can be supportive investors who follow on when the rest of the syndicate does, and they generally have good reputations, including with me.

The latter is when a company sees a business they want to get closer to, they take a big stake, a board seat, and they make a ton of promises about how much they are going to help the company. These type of investments and relationships have almost universally “sucked” for our portfolio companies. The corporate strategic investor’s objectives are generally at odds with the objectives of the entrepreneur, the company, and the financial investors. I strongly advise against entering into these kinds of relationships.”

Which prompts the question, why did Allianz, Germany’s largest insurance group, buy a minority stake in Berlin based startup Simplesurance? In other words, will this be a good experience for the founders of Simplesurance and the shareholders of Allianz? Lets read between the PR lines to find out.

Simplesurance is a “we bring you lunch” startup

We categorize Fintech startups as we eat your lunch or bring your lunch:

A. We eat your lunch. They take business away from Incumbents. For example, Market Place Lenders and Robo Advisers. Note: they can also do cooperative deals with incumbents, but the startup usually owns the customer relationship and that makes it a fundamentally different deal. Quite often the startup first gets traction in a market that the Incumbent does not care about but eventually there is a market share battle.

B.  We bring you lunch. This describes both Traditional Fintech as well as ventures building B2B2C revenue share partnerships with  Incumbents. 

It makes no sense for an active strategic VC to invest in a eat your lunch type of startup. They should leave that to purely financial VC. There is no strategic alignement possible between Corporate VC and an eat your lunch startup.

So far so good. Simplesurance is clearly a bring you lunch type of startup. Their  software enables a customer to buy insurance products online. That is technology that an incumbent can use. 

That puts Simplesurance in the category that we call Robo Brokers.

The PR makes it clear that Simplesurance will not only sell Allianz products, so they can act in the customer’s best interest.

Allianz is huge, with operating income over  EUR 10 billion. This deal is a rounding error for them. It is a cheap way to get a front seat at the Creative Destruction 7 Act Play and the right to go back stage and talk to the actors. They get to see how to attract customers online and figure out how to apply that at scale.

Allianz will probably buy Simplesurance at some future date. 

How Allianz figure out the cannibalization challenge with their existing agents remains to be seen. No amount of digital tech can make that problem go away.

The other game play for Allianz can be be to use Simplesurance as a digital only entry to new high growth markets. The PR mentions India as a country and that makes sense as it is mostly a blue ocean market for Insurance.

Allianz is not alone. Incumbent insurers such as Munich Re and Axa have also been active in Corporate VC.  Munich Re is taking the indirect route by investing in a Berlin-based Fintech incubator called Finleap.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Creating the virtual bank – Tink makes the Fintech 100

This week saw the release of The Fintech 100, a collaborative report put together by H2 Ventures and KPMG. The report takes a global look at the 50 established fintech businesses and 50 emerging stars and is a must read for anyone wanting to understand the industry landscape.

Behind lending and payments, it won’t surprise many to see insurance start-ups now make up the third largest industry category on the list. The report also highlights the fact 92 percent of companies covered consider themselves disruptors, rather than enablers. The growing confidence in the sector by investors and the traction some of the bigger players are achieving is clearly helping embolden new entrants.

One company that stood out in the report was Tink, a Sweedish startup looking to create a virtual bank off the back of its personal finance app. The company is hoping the new Payment Service Directive (PSD2) will eventually give them the authority to initiate payments into a bank directly. Daily Fintech took a deep dive into PSD2 back in June, and it is well worth a read.  If Tink can indeed leverage PSD2 to become a virtual bank, it will be a huge fintech game changer.

European regulators are no doubt hoping the PSD2 initiative will be the start of many ‘Tink like’ enterprises. If this is the case, then by 2020 some analysts predict up to 9 percent of retail payments revenues could be stolen from banks by companies leveraging this type of payment framework.

So, if Tink does achieve virtual bank like status, and they chose to extend their offering to businesses, how could small enterprises benefit compared to what they have today?

Here are some thoughts.

  • Many businesses today deal with more than one bank. Executing instructions on these multiple bank accounts would be much easier from one interface, rather than 3+ apps
  • Today business logic around payment instructions is rudimentary, with some basic workflow capability available in cloud accounting systems that connect to banking services. However if apps like Tink could offer simple If This Then That (IFTTT) logic and recipes from one interface, this would be highly advantageous
  • Settlement between different financial providers is generally ad-hoc and different. If a virtual bank could aggregate this and smooth cash flow, this would be a highly attractive solution

Finally, if a virtual bank could provide a centralised KYC layer, that made applying for new bank accounts and products more easily, this would be a hugely attractive feature for businesses who are tired of jumping through compliance hoops, and fintech providers who are wary of ever increasing compliance costs.

Tink could be a true disruptor, changing the way we interact with our banking providers entirely. They will own the customer, with banks simply providing a wholesale service in the background. Tink and its success in leveraging PSD2 will certainly be interesting to watch.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.





Stock exchanges are aggregators of market data feeds, not playing to the Fintech rhythm

A check on stock exchanges before Halloween makes sense. We covered stock exchanges in a two part series in May, with a focus more on Fintech innovation and naturally, we found Blockchain parties and concerts all over the planet. These activities continue to spread but today I want to highlight the major source of the extended revenue growth over the past 5yrs of Stock exchanges. Lets not fool ourselves by believing that the revenue growth is due to some innovation. It is heavily due to a government created oligopoly that exploits customer transactions data!

When and why did exchanges transform into profit centers?

Exchanges before the turn of the century were serving a global service and were operating very much like utility companies or social servicers. They were scaled versions of Jonathan’s Coffee house in London (original site of LSE) and the Button wood tree in New York (agreement that started the NYSE).

It all changed in the very first few years of the 21st century, not because they were waiting to make sure that computers could overcome the Y2K problem. It was mainly due to the wide adaptation of electronic trading for stocks at least, which led to setting up clearing and settlement businesses like DTCC. These for profit businesses post trade companies led the way to raising capital by accessing the public markets. In the US, it was NYSE In 2005; and in Europe, Deutsche Börse and LSE, in 2001.

The next pivot in their business model of these publicly traded ex-social servicers happened 100% because of regulation. SIP (Securities Information Processor) resulted in an unintended consequence that many believe as a government-led oligopoly of stock exchanges. SIP was conceived to protect end-investors from being taken advantage from those operating the electronic trading circuits. It created a filter, operated by the exchanges, in order to ensure that the best quotes get fed to the broker dealers. Simply said, exchanges which act as aggregators were also crowned with another role, the filtering SIP role.

In addition, the subprime crisis resulted in reduced trading activity and shrunk the market-maker activities. The revenues from trading volume shrank and the business shifted its focus to increasing charges on Market Data feeds. This was and is a captive market – Real-time access to Market Data feeds – is absolutely necessary for brokers, and market makers etc.

Stock exchanges are the aggregators and are continuing to charge an arm and a leg for real-time access to these feeds. In fact, they are the only aggregators that have increasing these charges.

Tabb group reports that the revenues from US stock exchanges have climbed 16% over the past 5yrs, largely due to data revenue. Of course, the acquisition spree that has been happening is very much contributing to these figures too.



From “Costly data battle heats up between traders and equity exchanges

 Lawsuits on Market data feeds are dragging

 There have been multiple lawsuits around this issue. However, the rulings take very long and in the meantime, the exchange sector continues to consolidate, leading to further strengthen of the oligopoly and resulting in fewer and fewer players. The most recent announcement of the BATS exchange acquisition from CBOE takes an innovator out of independent action. ICE is a huge conglomerate with a global web that makes the space very tough to disrupt.

The most significant lawsuit saga continues for more than 10yrs. SIFMA (Securities Industry and Financial Markets Association) and a coalition of Internet companies filed a lawsuit against the exchanges in 2006. In 2013, the U.S. Court of Appeals for the District of Columbia instructed the SEC to reexamine its approval of data fee increases and require the exchanges to justify the price hikes. Since then, the case was  awaiting review by the SEC’s own administrative court. This summer, the SEC judge threw out the case and SIFMA has stated that they will appeal the ruling.

The double disruption from IEX: speed bumps and free real-time data

IEX, the sole disruptive force left in the stock exchange space, got approval to operate just 3months ago.

Remember this is the only such business that isn’t heavily influenced and tied to the Sell-side; contrary to all others who came out of a Sell-side membership type of organization before becoming public. IEX is a membership held organization but from the Buy-side! It’s first positioning was-is to use a speed-bump in the way it operates the electronic circuits of the IEX exchange. The purpose is to protect the market from HFT rigging and serve the interests of the Buy side.

The second move, which is upcoming will be-is to offer free access to real-time data to its customers (Kurt Dew, an industry veteran has been covering these issues in Seeking Alpha as they unfold). This is a direct and major disruption to the other players that count on such data feeds constituting a major source of their revenues.

How soon will the data source of revenue disappear for exchanges? Will technology solutions and private markets become the areas of revenues for the exchanges?

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network.  Efi Pylarinou is a Digital Wealth Management thought leader.


Market Place Lending is simply automated Asset Liability Management and that is a big deal. 


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Eons ago I managed a sales team that sold core banking systems to global banks. One sales guy was consistently the best performer. I decided to find out his secret to teach it to the rest of the sales team. 

He had found a report that senior managers really wanted and that was easy to create in our system and that was hard to create for our competitors. He had senior management attention and a moat against competition – simple and brilliant.

The report related to Asset Liability Management. So I took a crash course to understand the rather dry subject of Asset Liability Management (ALM). Despite being a dry (read boring) subject, it is key to banking. In short, a bank with good ALM has very low risk and makes good profit and vice versa. 

Asset Liability Management 101

ALM is simply matching the Bank’s Deposits (aka what a bank borrowers from Consumers aka a Liability as seen on the Bank’s balance sheet) with with their Loans (aka what a Bank Lends to a consumer or other entity aka an Asset as seen on the Bank’s balance sheet). If Assets and Liabilities get out of alignment, the Bank has high risk. For example if a Bank gets Deposits on a 3 Month Term and Lends them on a 3 Year Term, something could go badly wrong. 

Of course, if Banks can borrow on a 3 Month Term and Lend on a 3 Year Term, everything is peachy until too many Consumers ask for their money back at the same time. When that happens it is called a “run on the bank” or systemic risk; Governments and their taxpayers are signaling that they don’t like spending taxpayers money to bail out banks when that happens.

A bank with good ALM poses no systemic risk. 

Which brings us to Market Place Lending. People have pointed out that Market Place Lenders don’t pose systemic risk. If a borrower has a 3 year term then the Lender has to have a 3 year term; they have to match or the transaction does not close.

Market Place Lending has perfect ALM.

When you look at Market Place Lending in those terms you can see how powerful it is. In the original P2P Lending model Consumer A Borrows and Consumer B Lends. The marketplace simply matches them. There cannot be any ALM mismatch. If the Borrower wants a 3 Year Term, the Lender has to accept a 3 Year Term or decline the transaction. 

As the Market Place Lending market grew, intermediaries such as Banks and Hedge Funds jumped into the Transaction. Now the value chain is Consumer A Lends to a Bank or Hedge Fund who then lends to Consumer B. Of course in our complex Financial System that chain can be longer – Consumer A Lends to Insurance or Pension Fund who lends to Bank or Hedge Fund who then lends to Consumer B. However, as long and complex as that value chain gets, it is still Consumer A lending to Consumer B.

The problem for all the intermediaries in that value chain is when Consumer A and Consumer B figure that out at scale. 

“My excess cash flow goes straight to my deposit account”

That is an actual comment from a Pensioner who is living well within his means. He has an old fashioned Defined Benefits Pension that is inflation adjusted. He earns more than he needs to spend.  

 This is enabled by a  Sweep Account – well known to anybody who uses Banks prudently. That Pensioner has his bank automatically transfer money from his “Current Account” to his Deposit Account. (The Pensioner was British, if he was American he would have referred to his “Checking Account”). He knew he was getting a lousy deal on that Deposit Account, but did not fancy the hard work of figuring out how to make good risk adjusted loans via a Market Place Lending platform.

Post PSD2, a Fintech startup could sweep that into a Lending Account based on risk/return profile. That is is the sort of “take something complex and make it easy and intuitive with some UX magic” that digital startups excel at. The prize is big. It could be one of the Deposit Innovators that we profiled back in July who seizes this prize. Or an existing Market Place Lender. This is still a nascent wide open opportunity.

Sweep Accounts into Market Place Lending could eliminate the cost of funds advantage that banks have today and that is a really big deal.

To see the real spread enjoyed by Banks, look at this analysis on Nerd Wallet of the best term deposit rates and then contrast that with the Average Net Annualized Returns on Lending Club.

Dear Mr Treasurer, how much do you love your ZIRP and NIRP?

The first to break the dam might be Corporate Treasurers. Like the Pensioner, they know that they are getting a lousy deal on Bank Deposits. Unlike the Pensioner, they have the resources to do something about it. Corporate Treasurers are already doing something about it by lending to their vendors through Supply Chain Finance (SCF). When SCF connects with MPL, the change will come very fast.

Today Corporate Treasurers use sweep accounts to get excess cash into Money Market investments, such as repurchase agreements or commercial paper. SCF is another short-duration investment. However Corporates have excess cash that they don’t need for longer durations so could easily Lend to Consumers or Small Biz for a 1,2, or 3 year terms. 

That is why we believe that Market Place Lending is still in its infancy and will fundamentally change the world and why Lending Club could the Priceline of Fintech. (Disclosure I was fortunate enough to buy Lending Club stock at 3.51).

 Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Wrap of Week #42: China Marketplace Lending, Fintech book, Health Insurance, the Australian payments platform


On the aftermath of Lendit Europe, we looked at the Chinese Marketplace Lending scene with the following inquires in mind:

Part I: The Big and Scary prize

Will China MPL follow the Uber Didi trajectory?

How will global lenders get in on the action?

How is the progress from Wild West to Settler phase?

In Part 2: Which Chinese players will emerge from Consolidation

What role will BAT (Baidu Alibaba TenCent) play?

We reviewed the new  book Fintech Innovation: from Robo-Advisors to Goal Based Investing and Gamification in our analysis “Fashionista Sironi speaks about Fintech Innovation in Investing”.

In the insurance space, Health Insurance InsurTech innovation may start with dentists and a P2P network of providers as we looked at the old-fashioned organizations of Cooperatives that we call today P2P networks.

From the Southern hemisphere, we looked at the New Payments Platform (NPP), the Australian equivalent of the UK’s Faster Payments Service.

The Fintech Genome

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This week we celebrate the 2 year anniversary of Daily Fintech by launching a peer to peer knowledge network, the Fintech Genome (ala genetics).


Join, engage, interact by clicking here.


We extended an invitation to the growing Fintech community and explained the concept in “Help us decode the Fintech Genome”.


This was done without any interruption of the regular schedule of our insights. This week too, it was another trip globally.


A first look at the most hard hit public valuations in the Daily Fintech Index, after the Brexit.


A first look at the Fintech recruitment scene with the input from Nicole Curtin and Fintech Recruiters; and some disruptors.


Over to Australia, where there are three fintech IPOs in the pipeline and we look at the real time KYCexpert serving financial institutions, which is a re-branding of the Global Business Register.


A two day coverage of innovation in the Life Insurance space. First part more focused on categorizing innovation players within life insurance. Second part, more focused on the pain points of the industry and the opportunities.



We mentioned

Nicole Curtin, Fintech Recruiters, Angel list, efinancialcareers, The Banking practice, Ashmore Stark, New Finance

Global Business Register Limited (GBR), @KYCexpert, @ChimpChangeMe @CoAssets, @OnMktBookBuilds, @ASX, Kyckr, KYC.com, AvoxClarient and SmartStream

Hearsay Social, Smart Asset, Policy Genius, Slice Labs, InforcePro, Haven Life, VitalityNew York LifePacific LifeFarmers and AXA.









, a UK based a 2yr old practice which positions itself as a online talent platform for financial services.

New Finance, the financial network operating out of London via Meetup, is also stepping into the jobs space.

Ashmore Stark, i






Robo-advisors, Blockchain; Insurtech and Small Business; in-store mobile payments; Marketplace lending


The UK is in the spotlight for many reasons (some good, some bad). We gave it first position this week but we also traveled from Australia to the US.


21 #roboinvesting ventures in the UK & the Blackrock tale. Sizing the UK robo-advisory market, which seems on the way to triple its size.


An in depth look at the important B2B niche in Small Business Finance: How to tackle the Approved Payables Finance. Could this be an example of a permissioned network that makes sense, Blockchain


The 4 US based Small Business Friendly InsurTech Ventures that are filling in the gap that Zenefits left.


Growing conversion rates via a superior customer experience; focus is on in store mobile payments. A growth opportunity; a problem to be solved.


An insightful look at the value chain in marketplace lending. Where is the value in the ecosystem?


We mentioned:

ETFmatic, Nutmeg, FiverAdat, Money On toast, Money farm, EValue, Wealth Objects, Wealth Wizards, Wealth Horizon, Wealthify, Wealth Kernel, Net Wealth, Swanest, Scalable Capital, Alpima, Quantstore, Zen Assets

ApplePay, Clover, Paypal, OneTouch

CoverWallet, Embroker, Insureon, FounderShield, Zenefits

OnDeck, Kabbage, Flexport, Fluent, Credit IQ, Provenir, EOriginal, Meridian Link, Cunexus Solutions, Web Bank, Cross River Bank, CBW Bank, NSR Invest, Lending Robot, Orchard Platform, DV01, Monja, Orca Money, Kreditech, Prosper, Lending Club, Funding Circle




















Kansas: A global alternative exchange that IPO’d; BATS exchange.

Austin TX: An alternative credit history builder running in a bank; SelfLender.

Global: Western Union an incumbent innovating in payments and more; Podcast.

Global: Distribution strategy alternatives for Online business lending;

Global: 21 Insurtech Ventures changing the Auto Industry (continuation of coverage)

Global: One way that marketplace lending could thrive; watch Warren Buffet’s lips.








Pirates with Ties interview with David Thompson of Western Union

WU Edge




What’s the Trojan Horse distribution strategy for online business lending?

PayPal Working Capital, Square Capital and Shopify Capital.




@Fundera @OnDeck



InsurTech Comparison Sites transform to Robo Brokers as Insurance value chain shifts


AccuScore Telematics

DriveWay Telematics

Metromile Telematics

Octo Telematics Telematics

RootInsurance Telematics

TheFloow Telematics

TrueMotion Telematics

Wunelli Telematics

OkChexian Telematics

Acculitx Telematics

DriveSpotter Telematics

Telematic Telematics

Citymile Telematics

Goji Robo Broker

Cuvva Just In Time

CoverHound Comparison

Insurify Comparison

RenewBuy Comparison

TheZebra Comparison

ClaimDi Claims Process

SnapSheet Claims Process


Marketplace Lending depends on savers moving on from bank deposits



The IPO window is open but only the best can get through. The headwinds are still there for Fintech but skilled sailors are needed to ride the wind through turbulent weather. One of the first ventures to go through is the BATS (Better Alternative Trading System). We covered BATS in an earlier research note on Fintech in action on Western Stock Exchanges. The key point is that BATS is number 1 in ETFs. This is important because ETFs are powering Robo Advisers.


One of the largest underserved segments in the US, are individuals that don’t own this Digital Asset – Credit history. SelfLender is the first all-online credit builder loan; ideal for students, young adults especially those in no-mans land 18-21yrs old, foreign students, immigrants, H1-B visa holders, and others with zero credit history who need to establish credit.


What options do small business lenders have to maintain healthy margins, as the popular channels are failing?






Which Chinese Market Place Lenders will emerge from consolidation?


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This is part 2 of our research into Chinese Market Place Lenders. Part 1 is here.

Ppdai is credited with being the first MPL (then called P2P Lending) in China, following close behind pioneers in UK and USA. Since then, literally thousands of platforms emerged. This is clearly unsustainable. Market Place Lending is a networks effects business. More borrowers lead to more lenders and vice versa. So the thousands of MPL platforms in China has to come down to a handful of companies.

Top of the Pops

The top 20 platforms as tracked by Wangdaizhijia and reported by Lendit are:

1 Hongling Capital
2 Lufax
3 PPmoney
4 Wzdai
5 Weidai
6 Xinhehui
7 Yooli
8 Jimubox
9 Jinxin99
10 Renrendai
11 Srong
12 Yirendai
13 Xiangshang360
14 Edai
15 Niwodai
16 Touna.cn
17 Eloancn
18 Qianbaba
19 Itouzi
20 Tuandai

Source: Wangdaizhijia

The only names that resonate in the West are Yirendai (because they did an IPO in America) and Lufax (because they are publicly mulling an IPO in Hong Kong). Lufax is being valued almost 10x Yirendai and ranks second place vs 12th for Yirendai. So Yirendau could be like Ondeck vs Lending Club, first out of the IPO gate but small compared the market leader and it may be acquisition bait during the consolidation phase.

The IPO process for Lufax may bring a) capital b) more mature processes (due to public scrutiny) and c) consumer name recognition. For the latter, the Hong Kong venue for Lufax makes the most sense.

Here are the top 3 ranked by Transaction Volume:

Company Transaction Vol No. of borrowers  
Hongling Capital 300,401 3,944  
Lufax 137,250 24,984  
PPmoney 130,909 5,506  

Here are the top 3 ranked by No of Borrowers:

Company Transaction Vol No. of borrowers  
Xiangshang360 46,872 30,497  
Luffa 137,250 24,984  
Weidai 83,250 11,550  

(Yirendai is 4th).

Note LUFAX in second place on both scores. If their IPO in Hong Kong goes well, they look like a strong contender.

What role will BAT (Baidu Alibaba TenCent) play?

These are behemoths by any definition. In simple market cap terms (rounded to nearest $ billion as of Oct 2016):

Baidu = 61

Alibaba = 263

TenCent = 258

In comparison Lending Club = 2 and Lufax (pending IPO) = 18.

How much these giants want to get into Lending is the key question. All three have launched online banks, with Baidu the most recent into the game.

So, we can expect plenty of excitement as the MPL market in China matures.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.