20. Patrick Clark, “ How Much is Too Much to Pay for a Small Business Loan ,” Bloomberg , May 16, 2014, http://www.bloomberg.com/news/articles/2014-05-16/how-much-is-too-much-to-pay-for-a-small-business-loan .
21. Ben Wieder, “Even Finance Whizzes Say It’s Impossible to Compare Online Small Business Loan Options,” McClatchy , June 8, 2018, http://www.mcclatchydc.com/news/nation-world/national/article212491199.html .
22. Barbara J. Lipman and Ann Marie Wiersch, “Browsing to Borrow: Mom & Pop Small Business Perspectives on Online Lenders,” Federal Reserve Board and Federal Reserve Bank of Cleveland , June 2018, https://www.federalreserve.gov/publications/files/2018-small-business-lending.pdf .
23. Patrick Clark, “Forget the Algorithms. Get Me a Loan Broker!,” Bloomberg , April 4, 2014, https://www.bloomberg.com/news/articles/2014-04-03/alternative-lenders-still-rely-on-loan-brokers .
24. Leonard J. Kennedy, “Memorandum to Chief Executive Officers of Financial Institutions under Section 1071 of the Dodd-Frank Act,” Consumer Financial Protection Bureau , April 11, 2011, http://files.consumerfinance.gov/f/2011/04/GC-letter-re-1071.pdf .
25. Consumer Financial Protection Bureau, “Request for Information Regarding the Small Business Lending Market,” Federal Register , May 15, 2017, https://www.federalregister.gov/documents/2017/05/15/2017-09732/request-for-information-regarding-the-small-business-lending-market .
26. Paul Greig, Karen Mills, Olympia Snowe, and Mark Walsh, “Main Street Matters: Ideas for Improving Small Business Financing,” Bipartisan Policy Center , August 2018, https://bipartisanpolicy.org/wp-content/uploads/2018/07/Main-Street-Matters-Ideas-for-Improving-Small-Business-Financing.pdf .
27. Liz Farmer, “Are Predatory Business Loans the Next Credit Crisis?,” Governing , May 2015, http://www.governing.com/topics/finance/gov-predatory-business-loans-crisis.html .
28. Brayden McCarthy , “It’s Time to Rein in Shady Small Business Loan Brokers,” Forbes , September 17, 2014, http://www.forbes.com/sites/groupthink/2014/09/17/its-time-to-rein-in-shady-small-business-loan-brokers/#1b7cb26972b7 .
Chapter 11
1. Gwendy Donaker Brown and Gabriel Villarreal, “New and Improved: The Small Business Borrower’s Bill of Rights,” Opportunity Fund , April 19, 2017, https://www.opportunityfund.org/media/blog/new-and-improved-the-small-business-borrower%E2%80%99s-bill-of-rights/ .
2. “The Small Business Borrowers’ Bill of Rights,” Responsible Business Lending Coalition , accessed September 22, 2018, http://www.borrowersbillofrights.org/ .
3. “The SMART Box™ Model Disclosure Initiative,” Innovative Lending Platform Association , accessed June 26, 2018, http://innovativelending.org/smart-box/ .
4.Interview with George Osborne, September 2016.
5. “About the FCA,” Financial Conduct Authority , accessed March 30, 2018, https://www.fca.org.uk/about/the-fca .
6. “Regulatory Sandbox,” Financial Conduct Authority , accessed March 30, 2018, https://www.fca.org.uk/firms/regulatory-sandbox .
7.Note: These modifications would apply as long as the waiver or modification did not conflict with FCA objectives or violate U.K. or international law.
8. “Project Innovate and Innovation Hub,” Financial Conduct Authority , accessed March 30, 2018, https://www.fca.org.uk/firms/fca-innovate .
9. “Regulatory Sandbox Lessons Learned Report,” Financial Conduct Authority , October 2017, https://www.fca.org.uk/publication/research-and-data/regulatory-sandbox-lessons-learned-report.pdf .
10. Rowland Manthorpe, “What is Open Banking and PSD2? WIRED Explains,” WIRED , April 17, 2018, https://www.wired.co.uk/article/open-banking-cma-psd2-explained .
11. “Open Banking Standard,” Payment Systems Regulator; Payments Strategy Forum , https://www.paymentsforum.uk/sites/default/files/documents/Background%20Document%20No.%202%20-%20The%20Open%20Banking%20Standard%20-%20Full%20Report.pdf .
12. Martin Chorzempa, “P2P Series Part 1: Peering Into China’s Growing Peer-to-Peer Lending Market,” Peterson Institute for International Economics , June 27, 2016, https://piie.com/blogs/china-economic-watch/p2p-series-part-1-peering-chinas-growing-peer-peer-lending-market .
13. Joseph Luc Ngai, John Qu, Nicole Zhou, Xiao Liu, Joshua Lan, Xiyuan Fang, Feng Han, and Vera Chen, “Disruption and Connection: Cracking the Myths of China Internet Finance Innovation,” McKinsey Greater China FIG Practice , July 2016, https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/whats%20next%20for%20chinas%20booming%20fintech%20sector/disruption-and-connection-cracking-the-myths-of-china-internet-finance-innovation.ashx .
14. (Robin) Hui Huang, “Online P2P Lending and Regulatory Responses in China: Opportunities and Challenges,” Centre for Financial Regulation & Economic Development , May 8, 2018, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2991993 .
15. Martin Chorzempa, “P2P Series Part 3: China’s Online Lending Consolidates As Market Grows,” Peterson Institute for International Economics , October 12, 2017, https://piie.com/blogs/china-economic-watch/p2p-series-part-3-chinas-online-lending-consolidates-market-grows .
16. Sidney Leng, “One Third of China’s 3,000 Peer-to-Peer Lending Platforms ‘Problematic’: New Report,” South China Morning Post , September 24, 2016, http://www.scmp.com/news/hong-kong/economy/article/2022317/one-third-chinas-3000-peer-peer-lending-platforms-problematic .
17. Matthew Miller, “Leader of China’s $9 Billion Ezubao Online Scam Gets Life; 26 Jailed,” Reuters , September 12, 2017, https://www.reuters.com/article/us-china-fraud/leader-of-chinas-9-billion-ezubao-online-scam-gets-life-26-jailed-idUSKCN1BN0J6 .
18. Neil Gough, “Online Lender Ezubao Took $7.6 Billion in Ponzi Scheme, China Says,” New York Times , February 1, 2016, https://www.nytimes.com/2016/02/02/business/dealbook/ezubao-china-fraud.html .
19. (Robin) Hui Huang, “Online P2P Lending and Regulatory Responses in China: Opportunities and Challenges,” Centre for Financial Regulation & Economic Development , May 8, 2018, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2991993 .
20. Leng Cheng, “Quick Take: China to Improve Oversight of Peer-to-Peer Lending,” Caixin , August 28, 2017, https://www.caixinglobal.com/2017-08-28/101136810.html .
21. Martin Chorzempa, “P2P Series Part 1: Peering Into China’s Growing Peer-to-Peer Lending Market,” Peterson Institute for International Economics , June 27, 2016, https://piie.com/blogs/china-economic-watch/p2p-series-part-1-peering-chinas-growing-peer-peer-lending-market .
22. David Meyer, “Jack Ma’s Chinese Fintech Firm Just Raised So Much Money It’s Now Worth More Than Goldman Sachs,” Fortune , June 8, 2018, http://fortune.com/2018/06/08/ant-financial-alipay-14-billion-funding/ .
23. Matthew Wong, “China’s New Fintech Empires,” CB Insights Future of Fintech Conference , New York, NY, June 20–21, 2018, https://www.cbinsights.com/reports/FoF_2018_FinancialServicesinChina_Vignette.pdf?utm_campaign=FoF18&utm_campaign=FoF18&utm_source=hs_email&utm_source=hs_email&utm_medium=email&utm_medium=email&_hsenc=p2ANqtz-8jQ1RXnbV60GDuCwW59FlZkXngHFRn29Vr3VaxYkz3hGoVFF4Dcur_S31z8O9XXIC1aM1t&utm_content=64002117&_hsenc=p2ANqtz%2D%2Dh_aipQH-ls9_58J-GQDjFizf1dIyJcKIKwWISCGOQfN3nG3-tIqb951VMy34uIof2UieV6rwNSA9qtKTFhuMAXNlnFA&_hsmi=64002117 .
&nb
sp; 24. Stella Yifan Xie, “Jack Ma’s Giant Financial Startup is Shaking the Chinese Banking System; Ant Financial is Transforming How Chinese Run Their Daily Finances, Drawing Flak from Big Banks and Warning Shots from the Government,” Wall Street Journal , July 29, 2018, https://www.wsj.com/articles/jack-mas-giant-financial-startup-is-shaking-the-chinese-banking-system-1532885367 .
25. Raghuram Rajan and Luigi Zingales, Saving Capitalism from the Capitalists (New York: Crown Business, 2003), 1.
26. “Sound Practices, Implications of Fintech Developments for Banks and Bank Supervisors,” Bank for International Settlements: Basel Committee on Banking Supervision , accessed July 2, 2018, https://www.bis.org/bcbs/publ/d431.pdf .
27. “As Fintech Evolves, Can Financial Services Innovation Be Compliant?,” EY , 2017, https://www.ey.com/Publication/vwLUAssets/ey-the-emergence-and-impact-of-regulatory-sandboxes-in-uk-and-across-apac/$FILE/ey-the-emergence-and-impact-of-regulatory-sandboxes-in-uk-and-across-apac.pdf .
28. “Recommendations and Decisions for Implementing a Responsible Innovation Framework,” Office of the Comptroller of the Currency , October 2016, pp. 4–5. https://morningconsult.com/wp-content/uploads/2016/10/2016-135a.pdf .
29. Brenna Goth, “Arizona Becomes First Sandbox State for Fintech Products,” Bloomberg BNA , March 22, 2018, https://www.bna.com/arizona-becomes-first-n57982090236/ .
30. James M. Lacko and Janis K. Pappalardo, “Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms: A Bureau of Economics Staff Report,” Federal Trade Commission , June 2007, https://www.ftc.gov/reports/improving-consumer-mortgage-disclosures-empirical-assessment-current-prototype-disclosure .
31. Note: The 1968 Truth in Lending Act (TILA ) provides strong protections for consumer borrowers by requiring lenders to disclose terms and costs. TILA applies to banks and fintech lenders that make consumer loans, but does not apply to small business borrowers. There are other laws, such as the Equal Credit Opportunity Act (ECOA), which guarantees non-discrimination and applies to any borrower whether they are interacting with a bank or nonbank lender. The operating principle of TILA should be expanded to follow that of ECOA, providing equal protections to both small businesses and consumers when they borrow, regardless of the source of their loans.
32. Note: Industry players have made recommendations on what these regulations might look like through the Small Business Lending Subgroup of the CSBS Fintech Industry Advisory Panel, https://www.csbs.org/csbs-fintech-industry-advisory-panel .
33. Richard H. Neiman and Mark Olson, “Dodd-Frank’s Missed Opportunity: A Road Map for a More Effective Regulatory Architecture,” Bipartisan Policy Center , April 2014, http://bipartisanpolicy.org/wp-content/uploads/sites/default/files/BPC%20Dodd-Frank%20Missed%20Opportunity.pdf .
34. Steven T. Mnuchin and Craig S. Phillips, “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation,” U.S. Department of the Treasury , July 2018, https://home.treasury.gov/sites/default/files/2018-07/A-Financial-System-that-Creates-Economic-Opportunities%2D%2D-Nonbank-Financi…pdf .
35. Richard H. Neiman and Mark Olson, “Dodd-Frank’s Missed Opportunity: A Road Map for a More Effective Regulatory Architecture,” Bipartisan Policy Center , April 2014, http://bipartisanpolicy.org/wp-content/uploads/sites/default/files/BPC%20Dodd-Frank%20Missed%20Opportunity.pdf .
Chapter 12
1. William Goetzmann, Money Changes Everything: How Finance Made Civilization Possible (Princeton, NJ: Princeton University Press, 2016), 50.
2. Note: All estimates are merely guesswork, but if 13 percent of small businesses are seeking capital (Chapter 5 ), an improvement of 5 percent in the number of businesses funded would mean 187,500 additional creditworthy businesses served by the market. The 5 percent estimate stems from the level of the Small Business Administration ( SBA ) loan portfolio as a percent of the total market, assuming SBA is a proxy for the market gap. SBA’s loan portfolio runs between 5 and 10 percent of the market, only guarantees loans that banks would not make under market conditions, and has less than a 5 percent loss rate.
3. Frank Rotman, “The Copernican Revolution in Banking,” QED Investors , April 8, 2018, https://s3.amazonaws.com/qed-uploads/The+Copernican+Revolution+in+Banking+-+Publication+Version.pdf .
4. Note: The mortgage lending environment leading up to the financial crisis is an example of where lenders’ incentives were not aligned with full disclosure of terms or the best interests of their borrowers.
5. Interview with Jack Dorsey at Harvard Business School, March 12, 2014, https://www.thecrimson.com/article/2014/3/18/an-afternoon-with-jack/ .
6. Interview with Eric Groves, July 18, 2018; “About Alignable,” Accessed December 3, 2018, https://www.alignable.com/about ; Note: The author is an investor in Alignable.
7. H.R. 4173 (111th): Dodd-Frank Wall Street Reform and Consumer Protection Act—Section 1071, https://www.govtrack.us/congress/bills/111/hr4173/text .
8. Anastasia Santoreneos, “FinTech Aus Calls on Parliament to Pass Consumer-friendly Laws,” Money Management , August 17, 2018, https://www.moneymanagement.com.au/news/financial-planning/fintech-aus-calls-parliament-pass-consumer-friendly-laws .
9. Ross Levine , “Financial Development and Economic Growth: Views and Agenda,” Journal of Economic Literature 35, no. 2 (June 1997): 688–726, https://www.jstor.org/stable/2729790 .
10. “About Us,” When Pigs Fly Bakery , accessed September 23, 2018, https://sendbread.com/about-us/ .
Index 1
A
Access to capital
Alibaba
Alignable
Alipay
Amazon
American Action Forum
American Dream
American Express
American Recovery and Reinvestment Act
Annual percentage rate (APR)
Ant Financial
Application programming interfaces (APIs)
Artificial intelligence (AI)
Automated teller machine (ATMs)
Automation
B
Bad actors
Balance sheet
BancAlliance
Bank of America
Banks
Barclays
Barriers, viii
Bell Labs
Big data
The Big Top Deli
Bipartisan Policy Center
Blockchain
BlueVine
Brunswick, Maine
Brunswick Naval Air Station
C
C2FO
Call reports
Capital One
Cash flow
Celtic Bank
China
CIT
Citibank
Citizens Bank
Collateral
Commercial and industrial loans
Community banks
Community Development Financial Institution (CDFI)
Community Reinvestment Act (CRA)
Compliance
Conference of State Bank Supervisors (CSBS)
Consolidation
Consumer Financial Protection Bureau (CFPB)
Cook, Scott
Creative destruction
Credit cards
Credit Karma
Credit risk
Cryptocurrency
Customer-product fit
Fintech, Small Business & the American Dream Page 24