2016-01-27
Online Lending Under a Microscope
When a market experiences the type of explosive growth that alternative lending has experienced in recent years, it’s only a matter of time before it draws scrutiny from regulators and lawmakers.
What regulators are doing in Utah
A recent article by the Wall Street Journal revealed that regulators are looking into lending standards of leading alternative platforms such as Prosper and LendingClub. Of particular focus is the use of WebBank and other Utah-based banks for lending. Banks like WebBank make loans to borrowers and back the loans temporarily until an investor on an alternative platform ultimately takes over responsibility for the loan, usually within two days. Utah has no state usury limit, meaning that WebBank and others have no interest rate cap on their loans. In addition, WebBank’s legal status as an “industrial bank” in Utah means that it has not been subject to oversight by the Federal Reserve, which regulates the majority of state-chartered banks and bank holding companies. Critics of the current system argue that the partnership between banks like WebBank and alternative lenders means that the two entities are collectively acting as a bank and should be regulated as such.
U.S Treasury
The U.S. Treasury department is taking a broader scope. In the fall, the department issued a request for information on a variety of alternative lending companies. Among the topics the Treasury wanted insight on were how customers were marketed to, how the government could help innovation and how each platform managed the credit underwriting process. Over 40 companies responded to the inquiry, ranging from Cross River Bank to OnDeck. Even online payments giant Paypal was included and in a response, the company said it was “well regulated” under existing law. “[A]dditional regulation could stifle the innovation these products bring to the market and the benefits they provide to consumers and small businesses,” Richard Nash, Paypal’s Head of Government Relations wrote at the time. SoFi echoed a similar tone. The alternative student lending platform addressed the notion that it and its competitors are not subject to consumer lending laws and operate without oversight. “This is not correct,” SoFi wrote. “As a private education lender, SoFi is a covered person under Title X of the Dodd Frank Act and is subject to examination by the Consumer Financial Protection Bureau.” Other respondents, like Lending Club, also said consumer protection regulations offer borrowers protection.
Six regulatory themes emerge
The latest update to the inquiry is a response from the Treasury, where officials noted “six themes” that emerged from lenders’ responses. According to legal firm Manatt, Phelps & Phillips, the themes are:
- Alternative lenders could do a better job to address small businesses.
- Existing underwriting models haven’t been tested in a full credit cycle.
- Credit underwriting algorithms are often seen as a black box.
- Loan terms, conditions and warranties need better standardization and transparency.
- Alternative lenders are developing more partnerships with banks and CDFIs.
- Risk retention is a major topic of debate, something journalists have noted before.
It’s possible the Treasury will issue an update in the New Year, but exact details are thus far unknown. An unfortunate comparison Attention from regulators is pushing critics to make unfortunate comparisons between alternative lenders and the mortgage lenders of yesteryear. The process in which industrial banks profit by collecting fees on loans that they then pass along to be packaged as securities gives some onlookers an eerie feeling of déjà vu. Without the appropriate oversight, this type of model can quickly turn into the out-of-control and irresponsible subprime lending culture that was responsible for the 2008 Financial Crisis. During the housing bubble, lenders raked in record profits by lending to anything that moved, knowing that the mortgages would quickly be passed along to Fannie Mae or Freddie Mac for securitization and would not be kept on the books in the long-term.
What’s next?
Despite the growing cloud over the space, regulatory scrutiny could actually serve to boost the public’s confidence in the new industry.
If alternative lenders continue to uphold a fair and honest level of practice, government inquiries and investigations will churn up an environment that consumers can continue to trust. Rules, regulations and oversight are simply part of the game in the world of finance to prevent fraud and criminality and protect the interests of consumers. If anything, this type of attention serves as a further indication that alternative lending is making a major disruptive impact on the financial world.
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MoneyLion
MoneyLion Wins “Best Financial Literacy Tool” and “Best API” at Benzinga’s 2022 Global Fintech Awards
MoneyLion’s consumer and enterprise businesses were recognized as winners of Benzinga’s 2022 Global Fintech Awards at this year’s Fintech Deal Day
New York, December 14, 2022-- MoneyLion Inc. (“MoneyLion”) (NYSE: ML), the go-to destination for personalized financial content, products and advice, is proud to announce that it has been named “Best Financial Literacy Tool” at Benzinga’s 2022 Global Fintech Awards. MoneyLion’s enterprise business, Even Financial, was also named as the winner for “Best API.”
MoneyLion and Even Financial were honored alongside other top Fintechs, banks, research companies and more. MoneyLion’s consumer business continues to push financial literacy through innovative and personalized content. With the MoneyLion app, users can view personalized financial content in short-form video format and receive personalized financial product recommendations such as loans, insurance and investing. As MoneyLion’s enterprise offering, Even Financial digitally connects and matches consumers with real-time personalized product recommendations from banks, insurance carriers, and Fintech companies on mobile apps, websites and other digital touchpoints through its financial product search engine and Embedded Finance Marketplace technology. This technology powers both the MoneyLion Marketplace, in the MoneyLion app, as well as more than 1,000 enterprise partners.
“We’re thrilled MoneyLion’s consumer and enterprise businesses were recognized by Benzinga,” said Dee Choubey, Co-Founder and CEO of MoneyLion. “Both awards showcase MoneyLion’s every time you money approach to helping our customers. The financial literacy gap is a huge problem for millions of Americans and we remain committed to reducing its effects through engaging, informative content and key partnerships designed to bring an elevated educational experience to all.”
These awards follow the October announcement of MoneyLion University, where MoneyLion launched its latest initiative aimed at closing the gap in money and financial education across the United States.
“We could not be more pleased with Benzinga’s recognition of our company’s API technology,” stated Phill Rosen, CEO and Founder of Even Financial. “Our technology natively integrates real-time credit decisions and product recommendations from the industry’s largest network of connected financial services providers, offering access and choice to consumers searching for financial products. Our elegant Embedded Finance Marketplace, API and search engine enable any company to add trusted, personalized financial products and services to their business, reaching people when and where they need it.”
Even Financial has been named a listmaker for the Benzinga Global Fintech Awards for the last two years and was a previous award winner. In 2021, Even was selected as a listmaker for Best API and, in 2020, selected as a listmaker for both Best API and Best API Platform. In 2019, Even was awarded the Benzinga Rocky Award.
The annual Benzinga Global Fintech Awards take pride in recognizing and honoring the companies and individuals who are propelling the Fintech and financial services industry forward with the most impressive technology advancements and innovations. A panel of industry experts from a wide range of companies reviewed and judged the nominations. Winners were announced at Benzinga’s Fintech Deal Day on December 8, 2022, where MoneyLion’s Chief Customer Officer Cynthia Kleinbaum spoke on the panel, Expert Growth Hacks For Reaching Underserved Markets.
About MoneyLion MoneyLion is the go-to destination for personalized financial content, products and advice. MoneyLion’s mission is to rewire the financial system to positively change the path of every hard-working American. MoneyLion uses its proprietary data advantage and technology to empower its customers. MoneyLion engages and educates its customers with daily, hyper-personalized money-related and money-adjacent content that is delivered through each customer’s own content feed. MoneyLion provides its customers a full suite of financial and non-financial solutions, bundling its proprietary, low-cost financial products with products that are offered through its marketplace technology and network affiliate partners. MoneyLion also leverages its distinct data, technology, and network advantages to deliver leading embedded finance and marketplace solutions for enterprise customers. Since its founding in 2013, MoneyLion has empowered millions of Americans to take control of their finances and live their best financial life, every day.
For more information about the company, visit https://www.moneylion.com/ and https://www.evenfinancial.com. For investor information and updates, visit investors.moneylion.com and follow @MoneyLionIR on Twitter.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221214006032/en/
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Even Financial [email protected]
Built In
Even Named A Built In “2023 Best Places to Work”
New York, Jan. 11, 2023 -- Even Financial ("Even"), an independent subsidiary of MoneyLion Inc. (NYSE: ML), and a leading embedded finance marketplace platform, is proud to announce that it was honored in Built In’s “2023 Best Places To Work” Awards. Specifically, Even earned a place on the Hybrid Best Places to Work in New York.
The Best Places to Work Awards, now in its fifth year, honors companies across numerous categories, sizes, remote-first employers as well as in person and hybrid working companies across the U.S.
Built In determines the winners of Best Places to Work based on an algorithm, using company data about compensation and benefits, and also weighs criteria like remote and flexible work opportunities, as well as other people-first cultural offerings.
This announcement follows Even’s recent win at the Benzinga Global Fintech Awards for “Best API.”
About Even Financial
Even is the industry-leading embedded financial marketplace and independent subsidiary of MoneyLion Inc. (“MoneyLion”) (NYSE: ML). MoneyLion is a leading digital financial services and lifestyle content platform serving both consumer and enterprise customers. As part of MoneyLion’s enterprise offering, Even digitally connects and matches consumers with real-time, personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints through its marketplace technology. Even's infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial services providers (such as SoFi) and channel partners (such as TransUnion) via its industry-leading API and embedded finance marketplaces. Even enables any company to add financial products to its business, with full compliance and security at scale. Even was named one of "America's Best Startup Employers'' by Forbes for 2022 and was named to the 2021 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world. Learn more at www.evenfinancial.com and investors.moneylion.com.