Search Results
Working Paper
The Roles of Alternative Data and Machine Learning in Fintech Lending: Evidence from the LendingClub Consumer Platform
Supersedes Working Paper 17-17. Fintech has been playing an increasing role in shaping financial and banking landscapes. There have been concerns about the use of alternative data sources by fintech lenders and the impact on financial inclusion. We compare loans made by a large fintech lender and similar loans that were originated through traditional banking channels. Specifically, we use account-level data from LendingClub and Y-14M data reported by bank holding companies with total assets of $50 billion or more. We find a high correlation with interest rate spreads, LendingClub rating ...
Speech
The theory and practice of supervision--Remarks at the SIFMA Internal Auditors Society Education Luncheon, Harvard Club, New York City
Remarks at the SIFMA Internal Auditors Society Education Luncheon, Harvard Club, New York City.
Working Paper
Did Fintech Loans Default More During the COVID-19 Pandemic? Were Fintech Firms “Cream-Skimming” the Best Borrowers?
A growing portion of consumer credit has recently been devoted to unsecured personal installment loans. Fintech firms have been active players in this market, with an increasing market share, while the market share of banks has declined. Studies of fintech lending have shown that their digital access and ability to leverage alternative data have increased accessibility in underserved areas, enabled consumers with thin credit files to obtain credit, and provided a lower cost alternative to long-term credit card financing. This paper exams three questions: (1) Do proprietary loan rating systems ...
Working Paper
Stablecoins: Growth Potential and Impact on Banking
Stablecoins have experienced tremendous growth in the past year, serving as a possible breakthrough innovation in the future of payments. In this paper, we discuss the current use cases and growth opportunities of stablecoins, and we analyze the potential for stablecoins to broadly impact the banking system. The impact of stablecoin adoption on traditional banking and credit provision can vary depending on the sources of inflow and the composition of stablecoin reserves. Among the various scenarios, a two-tiered banking system can both support stablecoin issuance and maintain traditional ...
Speech
Opening Remarks
Federal Reserve Bank of Philadelphia President and CEO Anna Paulson opened the Bank's 10th Annual Fintech Conference with welcome remarks, sharing her thoughts on the economic outlook and monetary policy ahead of two days of discussion among bankers, fintech leaders, regulators, academics, consumer advocates, and innovators. "Over the past 10 years, this gathering has grown into one of the field's most valuable forums,” Paulson said. “The conference has consistently produced insights that shape how we think about fintech and the broader financial system."
Speech
A Look at Fintech from the Inside to the Upside
Speaking at today’s Fintech and Financial Institutions Conference, Federal Reserve Bank of Philadelphia President and CEO Patrick Harker stated that “the explosion of fintech options has been nothing short of a sea change in how we look at, interact with, and even conceive of money.” In the context of the Fed’s role to ensure a sound financial system, Harker emphasized the opportunities and challenges of rapidly evolving technologies. As fintech options proliferate, Harker noted “we have an opportunity to look anew at how new fintech applications are constructed, how they intend to ...
Faster Payments, More Disruptions
New payment technologies have transformed the banking system by increasing the efficiency and mechanisms to transfer funds. How will these innovations disrupt the banking system?
Working Paper
The Role of Bank-Fintech Partnerships in Creating a More Inclusive Banking System
Fintech firms are often viewed as competing with banks. Instead, more recently, there has been growth in partnership and collaboration between fintech firms and banks. These partnerships have allowed banks to access more information on consumers through data aggregation, artificial intelligence/machine learning (AI/ML), and other tools. We explore the demographics of consumers targeted by banks that have entered into such partnerships. Specifically, we test whether banks are more likely to extend credit offers (by mail) and/or credit originations to consumers who would have otherwise been ...
Working Paper
Global Stablecoins: Monetary Policy Implementation Considerations from the U.S. Perspective
This note explores the potential effects of the widespread adoption of a global stablecoin (GSC) on key aggregate financial sector balance sheets in the United States. To do this, we map out cash flows of GSC transactions among financial sector entities using a stylized set of 't-accounts'. By analyzing these individual transactions, we infer aggregate and compositional effects on U.S. commercial banking sector and Federal Reserve balance sheets. Through this lens, we also consider how these balance sheet changes could affect monetary policy implementation, the demand for central bank ...
Will Digital Wallets Replace Cash?
Dialogue with the Fed attendees hear about the opportunities and challenges involved with digital wallets like Venmo.