Displaying items by tag: fintech

For years, alternative investments were mainly the domain of institutional investors, with private individuals largely excluded from opportunities like hedge funds and private equity. The rise of fintech has changed this, offering wider access through platforms that enable everyday investors to participate in alternative investments. 

These platforms utilize technologies like AI, blockchain, and crowdfunding to lower barriers and provide more transparent, secure options. This democratization allows regular investors to diversify portfolios and tap into high-potential markets, like venture capital or cryptocurrency. 

However, the illiquidity and volatility of many alternative assets still pose risks for inexperienced investors. As fintech continues to evolve, it will further shape the future of alternative investments, but due diligence remains essential for success.

Finsum: There have been monumental innovations in fintech in the last decade, but perhaps the strongest is in the alternative investment space. 

Private credit has shifted from corporate finance to consumer lending, with firms like Elliott, Carlyle, and Fortress purchasing billions in loans from FinTech’s. Companies like Klarna, SoFi, and Upstart, once dominant, have struggled with high costs and rising interest rates, prompting them to offload loans. 

By moving loans off their balance sheets, these FinTech’s hope to boost new lending, though the long-term financial impact is uncertain. Upstart, known for its AI-powered underwriting, faces substantial risks from loan defaults, leading to significant losses. 

Private investors, focused on high returns from loan interest, are seizing opportunities, as seen in deals that boosted stock values for Upstart and SoFi. Despite FinTech’s’ ambitions to disrupt traditional banking, private credit is now positioned to challenge their dominance.

Finsum: We’ll see if private credit can improve where fintech has not, but this could drastically change the industry. 

You’re unlikely to see fresh faces among fintech firms.

People person? Bummer, huh?

In any event, according to a major new report, according to a new report Exploring Fintech in 2023 by Erlang Solutions, driven by the tumultuous economic climate, for the year, half of all fintech firms have nipped hiring in the bud, reported yahoo.com.

Among a number of fintech employees, the first half of last year didn’t exactly smack of a Hallmark moment. From mortgage lenders to firms processing digital payments, across 45 companies, more than 4,000 saw their roles go down the drain.

Chomping at the bit to expand and fueled by factors like low interest rates, during the dawn of the pandemic, Fintechs flourished, according to Bloomberg.com. Since then, a plummet in earnings and slumping shares fueled a drop in earnings among firms.

“After several years of sky-high venture funding and more unicorn valuations than you can count on one hand, a lot of fintechs are being forced to mature and streamline more rapidly than they planned to, and job cuts are a quick way to do so,” said Charlotte Principato, financial services analyst at Morning Consult. “This was bound to happen at some point.”

Fintech firm WBI and ETF provider Pacer recently announced a strategic partnership to transform how financial advisors interact with clients to personalize and implement model portfolios. WBI offers investment technology that optimizes multi-manager portfolios that target loss or return. The platform’s interactive toolkit takes inputs from the client and assistance from an advisor and establishes client benchmarks for loss and return. The imbedded invest-tech then optimizes a portfolio to meet the client’s targets. Advisors can instantly customize the portfolio to position the client for success. Pacer is a well-known ETF firm that focuses on strategy-driven, rules-based ETFs. The two firms will work together to promote the targeted loss portfolios of WBI’s technology platform. WBI and Pacer will also look for other opportunities to partner on model construction. Matt Schreiber, Co-CEO at WBI had this to say about the partnership, "WBI is excited to work with Pacer. Their rules-based ETF offerings seek to produce strong risk-adjusted returns which are favored by the platform’s optimization engine. This partnership allows both parties to build on the momentum around our innovative products and shared mission to help improve investor outcomes."

Finsum:Fintech firm WBI and ETF provider Pacer are joining forces to promote WBI’s targeted loss portfolios that advisers can construct for clients. 

Ethic, which is an ESG investing fintech that offers direct indexing to investment advisors, has raised $50m in a Series C funding round. Ethic is available to advisors that use the custody services of Fidelity, Charles Schwab, U.S. Bank, Northern Trust, Morgan Stanley, or Pershing. The company offers custom direct indexing portfolios that reflect a client’s values, financial goals, and tax preferences. The firm also offers impact reporting and educational materials. The asset manager, which focuses on socially responsible portfolios, currently has over $2 billion in assets. The latest funding round was led by Jordan Park Group. Other firms involved in the funding round include UBS’s venture arm, UBS Next, and existing investors such as Oak HC/FT, Nyca Partners, Sound Ventures, Urban Innovation Fund, and Kapor Capital. In an announcement, the firm stated that the new capital will “support Ethic’s ambitious growth plans, including expansion into new markets and products, and continued investments in its platform experience.”

Finsum:Direct indexing firm Ethic raised $50 million in a new funding round to expand into new markets and products.