Alt Lending week ending 5th August 2022

What we can all learn about markets and speculation from the roller coaster of Crypto

The point being made in this piece is that crypto is really only a chimera. If you play in markets

where the underlying assets are purely digital and do not represent anything other than the ability to get punters (gamblers) to buy or sell then the long term destination is always going to be downward. You might make some money on the way and indeed have some fun.” The odds are marginally better than a casino” what a great quote. This is why lenders won’t take crypto assets as security for loans. Generally speaking lenders are serious people and although the level of credit expertise in lending markets is the lowest I have ever seen it the recognize when something is potentially worthless.

The low interest rate era is over. Who benefits?

Great synopsis of what has gone wrong since 2008 by Matthew Lynn. So who is going to benefit from the new higher rate scenario. Currently most fintech stocks are in the doldrums despite a weak rally in the last few weeks. Nevertheless the new challenger digital banks  as a group look likely to receive a bit of a windfall. The principal reason from a personal point of view is that they have business models which are very good at raising deposits and providing digital payment services but don’t seem to have much idea of how to use the money they have raised. The forecast of severely higher rates looks wide of the mark but we could see 3% or so.  This would make quite a bit of difference to the return on demand deposits as the whole lot could be placed on gilts with a significantly higher return than now. They do however still seem overvalued even in the new paradigm.

The age of project finance

One of my roles in life is to sit on the advisory board of a renewable energy company advising on financial techniques. This gives me real life access to project financiers and their mindset. The free wheeling easy equity placement and extortionate valuation days are over. Project finance is back with a vengeance but only if you have a good tale to tell and can back it up with realistic assumptions. The old school merchant bankers would know what to do but there are not many of those around these days. The truth is that understanding the risks is a real hands on business and sometimes those hands need to get quite dirty. Knowing your subject and really knowing your client (rather than KYC box ticking) are essentials. A bunch of analysts pawing over mountains of data won’t help you get it right if your technology is unrealistic and your engineers are drunk or charlatans. Time for a new training regime methinks.




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. Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions

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