The UK’s Centre for Social Justice a centre-right think tank has published a paper suggesting that approximately 2.4% of the population or 1.08 million people had admitted to borrowing money from “ someone locally who charged interest” outside of the regulated finance sector and nearly half of those using illegal moneylenders used the cash for everyday expenses. This obviously highlights a couple of basic problems. One is the lack of regulated products for these people to use and another that this is much bigger than was originally thought. This is not peripheral it is a whole industry. In addition some of these “ contracts “ led to somewhat unusual requests for repayments including sexual favours and downright violence. What a surprise? Why then are the FCA so concerned about outifits like Klarna which are at least transparent when this kind of thing is going on at a massive scale. The CSJ suggest the public should at least know the scale of this problem. I cannot help but agree.
A friend of mine told me the other day that he had studied the current Russian invasion of Ukraine more that any other conflict in recent history but still could not make head or tail of it. I have to admit to wondering exactly what Putin is trying to achieve. OK he has Nuclear weapons but mutually assured destruction (MAD) cannot be an answer to anything. Can it? I also know that he has some control over information flows to Russian people but this is 2022 not 1917. Some people may be fooled but not everybody and keeping what is going on in Ukraine quiet is not possible in the long run. The economy is tanking thanks to Western sanctions, the bright and ambitious are deserting Russia in droves. The armed forces seem less than dynamic and on top of that Russian is suffering from demographic problems including an aging and declining population. Putin obviously does not care about the people who keep him in power, despots rarely do but what exactly is he trying to achieve? Splitting the West. He has united them. Creating a greater Russia. He now has 44 million Ukranian enemies. Being thought strong and powerful. He looks weak and may well end up being executed for war crimes. Now it look like he cannot pay his country’s debts. I don’t get it. Will anyone ever lend to Russia again?
I must admit I like Fintech start ups that concentrate on what is important in terms of finance. Pipe is one such company that has as its flagship idea the reclassification of regular turnover including as far as I can see assets that have not even been invoiced yet as security for debt. Well invoice discounting is not exactly new and nor is peer to peer lending but they seem to be filling a gap in the market place and at the same time will force their competition, VC’s family offices and so on to sharpen their pencils. I am all in favour of competitive new ideas. I don’t know whether this will work in the long terms but with the last fund raise based on a valuation of $ 2 billion they must be doing something right. Certainly VC’s and their ilk could do with a bit of new thinking. I had a depressing conversation with someone in the finance world the other day who seemed to think that the key to venture capital were gatekeeping analysts producing reports. No room for flair, or great ideas or wondering why what seems like a good idea doesn’t get an audience. Good luck to this one.
Howard Tolman is a well-known banker, technologist and entrepreneur in London,We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.
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