Alternative Lending: The Trump Administration, Regulation and Partnerships

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For all the talk of tweets and diplomatic phone calls, there are also significant discussions about the impact of the incoming Trump administration and how he may work with Congress. Some of those more serious discussions took place at the OPAL Group’s Alternative Investing Conference in beautiful Dana Point, Calif.

With originators, investors, providers and other key industry stakeholders coming together, attendees received a full spectrum, beginning-to-end view of alternative lending. Throughout the conference, there were several topics that were clearly top of mind. The predominant themes were:

  • The New Administration. Time and time again, conversations at the event focused on predictions as to what the alternative lending landscape would look like under the Trump administration. The consensus was largely optimistic and there was a feeling that many positives are yet to come.
  • FinTech Charter Proposal. Recently, the Office of the Comptroller of Currency’s (OCC) announced that it would move forward with considering applications from financial technology (FinTech) companies to become special purpose national banks. As noted by Comptroller Thomas J. Curry, “It is clear that FinTech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters.” He explained that considering FinTech charter applications provides businesses a choice without creating a requirement. At the OPAL event, there was a great deal of dialog surrounding the proposed charter. Attendees had many questions on the table as to whether any marketplace lender today could meet the stipulations of what was proposed.
  • Stronger Together. Traditional banks partnering with MPLs was another hot button issue at OPAL. The consensus? 2017 will be a big year for partnerships, and likely little to no acquisitions. Lend Academy recently went into greater detail on the topic and noted, “Both banks and FinTech companies have come to the realization that they have core competencies that are complimentary.”

Looking to the New Year

Currently, the alternative lending industry segment is comprised of various disruptive, technology-savvy game changers. They are all unique and each of the asset classes are originated a bit differently, managed a bit differently and stored separately.

For investors, these numerous variations equal an expanded amount of due diligence and increased risk. From an investor perspective, a consistent solution will alleviate risk and remove the uniqueness. Digital transaction management removes the ambiguity from these disparate processes and provides structure post-signature to create a secure, consistent, scalable process for investors.

By leveraging digital technology, the signature and post-execution a securitization can be streamlined, resulting in scalability. For alternative lenders to truly lower the cost of capital, digital asset securitizations must take place.

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