Fintech Firms Branching Into Other Services

April 25, 2016         By: Mike Dautner

It has been predicted for some time now that financial technology firms would eventually branch out into other mainstream financial services.

With Funding Circle’s move into securitization, that prediction is becoming a reality. Reports from Bloomberg indicated that Funding Circle has hired Deutsche Bank to help in the arrangement of the securitization of P2P loans in Europe.

Funding Circle met with Deutsche Bank advisors earlier in the week to discuss the securitization and selling of £130 million worth of P2P loans in Europe.

Securitization is the process of taking assets that generally cannot be turned into cash quickly and grouping them into a new asset which can be sold at market.

The move by Funding Circle to securitize P2P loans shows the maturity and growth of the peer-to-peer sub-industry of financial technology.

Before the rise of fintech, SMEs (small and medium sized businesses) in Europe had been tied very closely to the banking sector.

But now that SMEs have alternative avenues of funding, it appears that even traditional banking institutions recognize the success of the new SME-fintech relationship.

“We do see some opportunity for the future of the securitisation of marketplace lending backed by SME loans,” said Moody’s Credit VP Monica Curti.