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Global Microlending Market Is Projected to be Valued at Over $340 Billion by 2027, with Funding Circle, Kabbage, Others as Key Players

The global micro-lending market is projected to reach a valuation of $343.84 billion by 2027, according to a new report.

The expected increase in adoption of microlending in developing countries may improve consumers’ lifestyle or standard of living. The anticipated shift from traditional lending to micro lending may reduce operational costs and lower market risks, the report noted.

Based on providers, the banking segment held the “major share” in 2019. By region, the market across the APAC area should remain “lucrative” during the forecast period (until 2027).

As mentioned in the report by Allied Market Research (AMR), the global microlending market was valued at around $134.35 billion in 2019 and is on track to surpass the $340 billion mark by 2027 (a CAGR of 12.6% from 2020 to 2027).

As noted in the report:

“High interest on small amounts and shorter repayment [schedules] … by micro lenders [could] restrain the growth to some extent. [But the] adoption of advanced technology in micro financing is projected to create lucrative opportunities in the near future.”

While highlighting some key developments, as they may relate to the Covid-19 outbreak, the report from AMR confirmed that the pandemic led to the shutdown of many micro and small businesses. This has negatively affected the global microlending market, the report added.

It also mentioned that the worldwide pandemic situation also “hampered the cash flow of several business operations, which in turn paved the way for lucrative opportunities for the frontrunners in the industry.”

The AMR report further noted that the Micro Finance Institute (MFI) segment may register the fastest CAGR of 14.0% from 2020 to 2027.

Based on end-users, the small enterprises’ segment represented almost 40% of the total market revenue during 2019 and is projected to grow steadily until 2027 (at least). Notably, the solo entrepreneurs or self-employed segment on track to record the fastest CAGR of 13.9% during the forecast period.

Based on geography, the APAC region generated the “major share” in 2019, garnering around “half of the global microlending market,” the report revealed. The same region is also expected to register the fastest CAGR of 13.0% by 2027. The other world regions analyzed in the report include North America, Europe, and Latin America.

Some of the key market players operating in the microlending industry include Accion International, BlueVine, Inc., Fundera, Inc., Funding Circle, Kabbage, Inc., Kiva, Lendio, LENDR, OnDeck, and StreetShares, Inc.

These industry players have adopted several key strategies such as forming strategic partnerships, expanding or diversifying their products, collaborating with other firms, and launching joint ventures.

As reported recently, New Delhi based SATYA MicroCapital, a microlending firm, secured over $21 million in additional funding.

As covered, Indonesia’s social security program provider, KMSB, has partnered with Logiq to offer microlending services to local residents.

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VanEck Launches New Bid for Crypto ETF

VanEck, a top investment management firm, has been fighting to get the first crack at a Bitcoin exchange-traded fund (ETF) for years now. With a new set of hands helming the Securities and Exchange Commission (SEC), the firm is giving its pursuit another try.

Switching Things Up

Earlier this week, the New York-based investment firm filed for a new Bitcoin ETF with the SEC. Dubbed the Digital Assets ETF, the financial product is designed to monitor the performance of the Global Digital Assets Equity Index.

Launched in 2018 by VanEck’s subsidiary MV Index Solutions, the Digital Assets Equity Index gets equities prices from three over-the-counter (OTC) trading desks – Cumberland, Genesis Trading, and Circle Trade. 

It provides a reliable pricing index for institutional investment tools like ETFs while also allowing investors to execute institutional size trades more transparently.

Speaking about its new product, VanEck explained that the Digital Assets ETF would invest at least 80 percent of its assets in securities that make up its benchmark index. The index itself tracks digital asset companies’ performances – firms that operate crypto exchanges, payment gateways, mining operations, technology services, and more to the crypto industry and others.

Prospective companies would need to get at least half of their revenues from digital asset projects, or projects that could potentially generate such revenues. VanEck’s filing added:  

“Companies with less than 50% of their revenues from the global digital assets segment, including semiconductor and online money transfer companies, may be added to the Index to reach a minimum component number.”

A Lingering Lawsuit

The new ETF attempt will be the latest in a long line of trials from VanEck. Many of its previous attempts were either blocked by the SEC or withdrawn due to frustration with the agency. However, the SEC is undergoing a shakeup, with former Chairman Jay Clayton vacating his position at the turn of the year and reports of a pro-crypto candidate set to replace him.  

Now, the investment management firm appears to fancy its chances at another go. Still, this trial isn’t without its controversies.

Weeks back, SolidX Partners, a software development firm with ties to VanEck, sued the company for violating their partnership in a recent ETF filing. VanEck and SolidX had partnered to apply for the VanEck SolidX Bitcoin Trust, a Bitcoin ETF, back in 2018 after the former’s initial failures. Still, their efforts didn’t mean much as the SEC remained a sound barrier between them and their aspirations.

The partners eventually aerated in August 2020, and VanEck immediately announced that it would file a new ETF – presumably, the Digital Assets ETF – on the last day of the year.

In its suit, SolidX Partners alleged that VanEck had taken parts of its work in ETFs and repackaged them into its filing. The software development firm added that VanEck worked on its ETF while the two were still partners. It added that the latter’s ETF filing structure was similar to that of the VanEck SolidX Bitcoin Trust, and that VanEck’s actions can easily be seen as plagiarism.

VanEck Launches New Bid for Crypto ETF

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New OCC Regulations Could Be a Double-Edged Sword for Crypto Sector

The latest crypto guidelines from the OCC are being hailed as a win for the industry but Avanti Bank executive Caitlin said that they could prove to be a double-edged sword in the long run. The Office of the Comptroller of the Currency (OCC), a US Treasury Bureau engaged in regulating banks, issued a letter last week which detailed how national banks can use blockchains and stablecoins for making payments.

New OCC Regulations Could Be a Double-Edged Sword for Crypto Sector

The news has not received much traction as it got drowned in the noise around Bitcoin’s historic rise and crash and other political events in the country. However, since then, many crypto personalities have shared their views on the letter, some hailing it as a welcome step from the authorities. Circle CEO Jeremy Allaire, whose company backs the USDC stablecoin said,

“The new interpretive letter establishes that banks can treat public chains as infrastructure similar to SWIFT, ACH and FedWire, and stablecoins like USDC as electronic stored value. The significance of this can’t be understated.”

The reality could be more complicated

Crypto supporters suggest that the reality is more complex than what the supporters or detractors of the letter assume. Wall Street Veteran Caitlin Long, who played an instrumental role in creating the blockchain laws of Wyoming said that the OCC letter is a “double-edged sword” for the industry. The guidance could be useful for big banks to remove all crypto startups from the bank. As national banks, they will have an advantage over startups and will not require regulators’ nod before entering into the stablecoin industry.

Crypto companies and smaller banks will need to get approval from regulators before working with stablecoins. This system is unfavorably tiled to provide benefits to large banks. This would allow the big banks in the US to create their own systems more quickly and let the network effect work for them faster.

New OCC Regulations Could Be a Double-Edged Sword for Crypto Sector

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Open Banking: UK Fintechs have Asked FCA to Adopt a More Market-led Approach to Open Finance Services

Fintech companies are reportedly urging the UK’s Financial Conduct Authority (FCA) to “break” banks during 2021.

A group of London-based startups is asking the FCA to look into ending the control and dominance of traditional banking institutions, specifically their use of consumer data. The companies have stated that this move should increase healthy competition in key financial services such as savings, credit, mortgages and pensions.

The Coalition for a Digital Economy (Coadec), which serves as the policy voice of Fintech startups and other tech scaleups and reportedly includes former UK Prime Minister Tony Blair’s son Euan as one its board members, is recommending a more market-led approach to providing open finance services (somewhat like in Australia).

Coadec is calling on the FCA to put an end to what they consider to be an “overly-standardized” approach to offering these types of financial services.

The Coadec consortium notably includes Fintech Unicorn TransferWise and Seedrs. In statements shared with City A.M., the group suggested that the FCA needs to “break banks” and offer a more transparent open banking system. Specifically, the FCA should allow other providers (not just banks) to engage in platforms through which consumer data, user accounts and customer transactions are shared among various parties, the consortium recommended.

Joel Gladwin, Head of Policy at Coadec, noted that if Fintechs are provided more access to data this year, then it should increase competition in key services like savings, credit, mortgages and pensions.

Gladwin added:

“Banks were able to send armies of slick lobbyists and magic circle lawyers to Brussels to build extra barriers to Fintechs and maintain their gatekeeper roles.”

But if consumers are able to have greater control of their banking details and related information, then it could help increase trust, promote more engagement and empower activity, Gladwin claims.

He further noted:

“By granting consumers a new data sharing right, and encouraging a market of specialists to compete, banks will have very little room for maneuver this time. Ultimately, this will allow consumers to access better, and more tailored, financial services than they do currently.”

The Fintech companies stated that there has to be an end to bank charges on third-party firms for accessing their financial data. They also recommended removing the 90-day re-authentication requirements, which asks customers to re-authorize their banking provider to release their financial data for use by other parties.

According to Gladwin:

“It is an unnecessary barrier that is preventing consumers from accessing better financial services. As the Brexit transition nears, the Government will have greater flexibility to find a better solution.”

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Biden team will boost crypto’s role in US infrastructure, says Circle CEO Allaire

One of the leaders in U.S. crypto is optimistic that the space will grow under the administration of Joe Biden governing from the middle. 

Jeremy Allaire, CEO of Circle, took to CNBC’s Squawk Box on Monday to argue that the Biden administration will push crypto forward as part of a broad effort to update infrastructure:

“I think that they will ultimately be supportive because this is an infrastructure change as big as the initial commercial internet, and they’re going to be focused on infrastructure changes that make America more competitive.”

Overall, moderate politics benefit crypto, Allaire reasoned: “You’ve got moderates, both on the left and the right, who I think see this constructively.”

Allaire’s comments follow a Twitter thread on Sunday that included similar comments about partisan division:

On Squawk Box today, Allaire referenced, in particular, concerns that the left wing in the United States had taken a hard line against new financial tools, especially stablecoins: 

“You have on the very liberal end of the spectrum a view that somehow this is not good for individuals who have less access to the financial system, when in fact, the opposite is the case, that this technology — in particular stablecoins — hold promise of opening up and widening access to the financial system more deeply than the existing banking system.”

These comments are likely in reference to a bill introduced last week that would outlaw all stablecoins that do not file the same registrations as traditional banks, including Circle’s own USD Coin (USDC).

In response to a question as to whether recent moves against stablecoins were linked to proposals for the Federal Reserve to issue its own central bank digital currency, Allaire countered that private firms are just much further ahead.

Biden team will boost crypto\’s role in US infrastructure, says Circle CEO Allaire

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