Marketplace lending

Compliance flexibility, state law harmonization and funding transparency requirements are among the regulatory steps that can encourage continued innovation.

Fintech has upended parts of the banking industry and made old ways of doing business obsolete. But that's also what makes it an exciting time to be a banker, says Citizens Bank CEO Bruce Van Saun.

Noah Breslow, who drew opposition from a hedge fund that wants the online small-business lender to pursue a new course, won 84% of the vote Tuesday.

Once focused mainly on growth, the New York-based small-business lender said it will lay off employees and cut other expenses in an effort to become profitable. The moves are a sign of waning patience among investors in the once-frothy sector.

Five Star Bancorp in California is the latest bank to work with a marketplace lender on referrals. The move comes as the SBA programs have record volumes while concerns linger about banks working with third parties.

The online consumer lender has struggled to bounce back from a scandal that turned its fortunes a year ago.

The systems problem drew attention to a difficulty that the online-lending industry has faced recently: returns on loans are falling, and persuading investors to buy loans from the platforms is getting harder.

The hand-wringing over business lending has overshadowed the fact that consumer lending — particularly for regional banks — has become a strong and steady engine of growth.

For all the talk of cooperation and partnerships with banks, financial services startups are doing well in underserved niche markets such as actors and musicians.

"Virtually every venture capitalist I know is excited about insurance as the next big thing in fintech," says Sam Hodges, co-founder and U.S. managing director at Funding Circle.