Is China leapfrogging in fintech?, how AI is changing lending, and embedded lending with Finastra – Tearsheet

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As US Fintech Takes Off After Valuations Fall, Is China Leaping Ahead?

Not long ago, the FT reported that almost half a trillion dollars was wiped from US fintech valuations, leaving the industry in a state of panic – even though over 30 new fintech companies have been listed in the US since the start of 2020. The pandemic created a possibility of higher interest rates, lower valuations and financial uncertainty. That may be the obvious cited reason behind the failure of fintechs, but perhaps it’s time to rethink that premise.

As fintech companies in the US fail to retain their value, the center of fintech is gradually shifting eastwards – hint: China?

What would happen if Amazon and Google actually wanted to make money from banking? If Apple opens a bank account or if Twitter has a channel to pay bills? They would likely shake up the payment landscape – as did China’s big tech.

We take a deep dive into the expansion of the fintech industry in China, and whether the US stands out from the rest of its competitors.

Read more (exclusively for Outlier members)

Where credit is to be paid Ep. 8: How AI is changing lending, with Zest AI CEO Mike de Vere and Informed.IQ CEO Justin Wickett

In the eighth episode of Where Credit’s Due, Tearsheet’s lending podcast, host Iulia Ciutina talks to Zest AI CEO Mike de Vere and Informed.IQ CEO Justin Wickettto talk about AI these days – a cost-effective way to reduce the long time it usually takes to close a loan, increasing competitiveness and profitability.

Automation allows lenders and banks to focus more on the customer experience and less on looking at data from all kinds of standardized forms. Digital lenders have shown that their bet is on technology, rather than balance sheets.

Additionally, through the use of alternative data, lenders can access a wider customer base, as people who might not have qualified for a loan under FICO can now be found eligible.

Listen / read more

The last orientation

Lending Briefing: Built-in lending with Finastra

Embedded Finance is growing in popularity and aims to attract companies in any industry looking to implement financing solutions for their business.

Lending is and will continue to be a big part of the embedded economy – it’s all about customers being able to access finance when they buy something, whether they’re buying a hot tub or needing to fix a faulty pipe in their home.

Embedded lending is point-of-sale financing, but it is not buy-now-pay-later (BNPL). It provides access to traditional regulated lending products offered by financial institutions.

This is exactly what Finastra is doing with its new built-in consumer loan solution.

Read more (exclusively for Outlier members)

Just look at the charts

1. How well will the incumbent banks perform on their Metaverse adventure?

2. How insurance companies can explore the small business insurance market

Today’s stories

Is Goldman Sachs too massive to change?
Early in his tenure, the newly appointed CEO of Goldman Sachs, David Solomon, presented a grand new vision for what the bank would become. How has it been since then? And is there still time for Solomon to make the changes it needs? A look at what Solomon has accomplished and hasn’t accomplished in his four years at the helm. (FT)

Stablecoin issuer Tether disses WSJ’s claim of scarce reserves
Stablecoin issuer Tether has refuted claims of uncertainty over its balance sheet in response to the WSJ’s claim that the company has a “thin cushion of equity.” Tether also insists it is the most honest and transparent stablecoin issuer in the market, promising it will provide monthly certificates from January despite criticism over the lack of a formal audit. (CoinDesk)

Fintech is still the golden child of capital injection in emerging markets
The fintech industry remained the most highly funded sector across emerging venture markets in the first half of 2022, more than tripling to nearly $1.68 billion in the first half of 2022 from a year ago. While roughly two-thirds of the capital used was raised in the first quarter of the year, there was a 52% drop in funding in the second quarter and a 44% drop in deals. Payment solutions was the top sub-sector for investors in 2022, attracting 42% of all investments. (The National)

Wise’s Chantal Swainston brings out “The Heard: women in fintech speaker index”
As a side project from her role as PR manager at Wise, Chantal Swainston has founded The Heard: women in fintech speaker index. The Heard brings together women and non-binary people in the fintech space who have distinguished themselves as open to public speaking and other media opportunities. The list so far includes founders and CEOs, editors and directors, and experts in diversity, equity and inclusion, crypto, web3 and product. (AltFi)

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