Wednesday November 30 2016, Daily News Digest

uk personal loan effective annual returns

News Comments Today’s main news: Ron Suber joins eOriginal advisory board. Why most P2P lenders have not offered IFISAS. Today’s main analysis : The value of P2P lending to investors. Today’s thought-provoking articles: LendingTree launches small business grant contest. LendInvest reduces minimum loan size. Meet the new Chinese middle class investor. Malaysia is ready to […]

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News Summary

United States

Prosper Marketplace President Ron Suber Joins eOriginal Advisory Board (PR Web), Rated: AAA

Ron Suber, president of Prosper Marketplace, has joined the advisory board of eOriginal, Inc., the expert in digital transactions. Suber will leverage his deep-rooted relationships with banks, mortgage companies, marketplace lenders and other financial services leaders to accelerate eOriginal’s growth, while articulating the importance and necessity of digital transaction management and eOriginal’s unique solution.

Seen as a thought leader in the financial technology space, Suber joins eOriginal at its hyper growth phase. The company recently completed a funding cycle led by private equity firm, LLR Partners, to support the demand and expand its product development and customer services. In addition to Suber, Jon Barlow, founder and former CEO of Eaglewood Capital Management, also joined eOriginal’s advisory board as the company continues to expand its expertise in marketplace lending and financial services.

“The industry is seeing a convergence of marketplace lenders and traditional lenders moving toward digital lending environments and platforms,” said Stephen Bisbee, president and CEO of eOriginal. “Ron’s experience and knowledge of marketplace lending as well as his foresight of industry trends will be invaluable to eOriginal as we continue to scale and focus on bringing fully digital transactions to a variety of industries.”

LendingTree Launches $ 50,000 Small Business Grant Contest (Yahoo! Finance), Rated: AAA

Small business owners face a long list of challenges, and for many, the obstacle of securing financial resources needed to grow a business claims the top spot on the list. That’s the driving force behind LendingTree’s inaugural $50,000 Small Business Grant Contest, where LendingTree will present the winning small business a $50,000 grant to help fund future growth.

“Since LendingTree launched its small business loan marketplace, LendingTree has been committed to helping small businesses thrive by simplifying the loan shopping process and matching the right businesses with right lenders to meet their financial needs,” said Doug Lebda, founder and CEO of LendingTree. “We wanted to take our commitment one step farther by granting $50,000 to help one small business achieve even more success.”

The contest submission page, along with disclosures and details can be found here:

Small businesses interested in participating in LendingTree’s $50,000 Small Business Grant Contest can submit their registration online from November 29, 2016 through January 13, 2017. The registration form consists of 20 questions, collecting information on historical business performance, future plans, why the business deserves the $50,000 grant and how the grant money would enable future growth. Once the registration submission period closes (5:00pm EST on January 13, 2017), LendingTree’s team of small business experts will evaluate, select and notify the winning small business.

This Startup Is Changing The Way People Invest In Single Family Homes (Forbes), Rated: A

Omri Barzilay: For the ones who are not familiar with the company, what is Roofstock?

Gary Beasley: We believe every investor has a right to invest in real estate, and Roofstock is focused on making it broadly accessible to investors large and small.

Barzilay: Does Roofstockbuy the properties on the website itself?

Watson:  As a marketplace and transaction platform, Roofstock does not own any of the homes on the site.

Barzilay: Do you guarantee a certain yield to your investors?

Beasley: A yield guarantee is something we are considering and may offer in the future as we get more and more data and scale.  Since the homes we offer on Roofstock are already rented, and the tenants have been certified to ensure an acceptable income to rent ratio and payment history, this provides an additional level of comfort for investors not available on other platforms. We do selectively offer rent guarantees, however, which gets investors part of the way there, and continue to evaluate and consider other guarantees and insurance products that could reduce investor risk.

Barzilay: We have seen many crowdsourcing solutions in recent years, including Fundrise, Realtyshares and others which raised a lot of capital. How are you different from them and from other, more traditional, turnkey companies?

Watson: We do one thing, which is rental homes, and we do it very well.  Roofstock allows investors multiple ways to invest in this sector.  The majority of our transactions today have been whole ownership, but we also offer fractional ownership in a basket of homes.

Barzilay: Gary, what opportunities do you see in the real estate technology market?

Beasley: The real estate sector is perhaps the largest financial services vertical that has yet to be transformed by technology.  In my opinion, this is inevitable, although structural inertia makes adoption a bit slower in real estate than many sectors.  Given the high fees, Byzantine processes and long timelines for closing, the sector is ripe for innovation.

Barzilay: What should we expect from Roofstock in the near future?

Watson: We recently launched two new markets and will be launching others in the near future. We are also very excited about the asset management app which is in development and combines machine learning and market analytics to provide a powerful tool for the retail investor.

Financial Poise™ Webinars Announces “INVESTING IN REAL ESTATE THROUGH CROWDFUNDING,” Premiering December 14th, 2pm CST (Benzinga), Rated: A

Investors considering making an investment in real estate have a variety of choices: retail, office buildings, industrial, raw land, and, of course residential. More and more investors are turning to the real estate market to invest their funds. This Financial Poise webinar series will cover several types of real estate classes that one may choose to invest in, explaining where to look for opportunities; how to diligence them; and best practice for execution.

Episode #4 of the REAL ESTATE INVESTING 2016 series is “Investing in Real Estate through Crowdfunding” airing on December 14, 2016 at 2pm CST (Register Here). Moderator Bill McGuinn of Sugar Felsenthal Grais & Hammer will be joined by Elizabeth Braman of, Jessica Healy of Syndicated Equities, and Allen Shayanfekr of Sharestates. Episodes 1-3 are also available On Demand through West LegalEdcenter.

Sold Out: Fundrise’s Income eREIT Nears $ 50 Million Cap (Crowdfund Insider), Rated: A

Fundrise has announced that is Income eREIT is “almost sold out” with less than 10% of the $50 million cap available for investors.  The debt based real estate crowdfunding vehicle has recently declared a dividend of 11.25% through December 2016.

Fundrise’s eREIT approach has replaced its single-property crowdfunding strategy.

GDS Link to Exhibit at Marketplace Lending & Alternative Financing Summit 2016 (IT Business Net), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business leasing, will be exhibiting at the upcoming conference at Marketplace Lending & Alternative Financing Summit 2016 in Dana Point, Calif., Dec 4-6, 2016.

United Kingdom

The value of P2P lending to investors (Altus Consulting Email), Rated: AAA

The image of a meteorite approaching awaiting dinosaurs is the cover art which illustrates a new report from UK-based Altus Consulting. The report asks how traditional financial service firms can “benefit from the change rather than risk extinction.” The change here is the rapid expansion of P2P lending with close to 100 firms and business volumes growing at 70% per annum (1). Clearly, an obvious attraction for investors is the high return, especially in the current low interest rate climate. The report underlines this by showing a 5.37% average growth in P2P lending since 2006 (2) and noting the positive stimulus offered by the recent introduction of tax free Individual Saving’s Accounts for the P2P market (3). At the heart of the report, is the prediction on how development through to 2020 will affect investment in the P2P lending market.

But first, to underline the longer run investment potential of P2P lending, the report looks beyond the current economic cycle, back to 1995, using UK personal loan effective annual returns net of servicing fees. It finds that on this basis “the Liberum data shows that, since 1995, not only is the yield an average of 6%, but, even through two major economic crises, there has not been a single year of negative net returns. Lending has performed more consistently through recent economic stress tests than either equities or bricks and mortar”.

With the historic value of P2P lending established, the report takes a clear-sighted look at what are the possible obstacles blocking further growth, before considering what form future development might take. The key blockers to growth identified by the report are:

  • Economic: with typical loan sizes in the tens of thousands and spread across hundreds of borrowers, it means the cost of advising a client on individual P2P loans is likely to outweigh the scale and returns on the investment.
  • Regulation: currently, many firms are operating on interim permissions pending full approval, which may be putting off advisors recommending them.
  • Operational standards: given the relative youth of the P2P industry, there is a lack of tried and tested operational standards.
  • Potential conflict of interests: due to having institutional and retail investors, there are potential conflict of interests.
  • Client underwriting and recovery: the majority of platforms don’t have standard or optimised processes; this is therefore “an area of concern for intermediaries who find it difficult to assess whether one P2P platform is better or worse than another”.
  • Standard risk definitions: the P2P lending industry lacks common risk definitions, which makes it difficult for retail investors to compare performance of loans of the same ‘risk’ type across different platforms.
  • Data feeds: the normal data feeds used by financial advisers such as FE and MorningStar do not currently include P2P data.
  • Risk rating vs established asset classes: as P2P loans are regarded as ‘non-correlated’ assets, this means an adviser has a challenge if they’re to analyse the risk of a client’s portfolio, if it includes P2P assets.
  • Over-complicated marketplace: the P2P sector has yet to see the emergence of a convenient ‘supermarket’ for purchasing its financial products

Putting these impediments aside the P2P market currently has two main sources of capital; namely individual investors looking for a better rate of return on their investments, and institutional investors, “predominantly the investment trusts and British Business Bank”. Currently, up to 60% of investment into P2P lending comes from individual investors.

As indicated in the introduction, at the core of this report aimed at financial advisers, is the prediction on how development through 2020 will affect investment in the P2P lending market. Firstly, Altus expect to see “new open ended funds enter the market encouraging new pools of capital, especially from the corporate pensions sector”. Shifting from the current status quo, the report believes institutional investors, with fewer restrictions than retail investors, allowing them to adopt P2P “relatively easily”.

Secondly, the report sees a major development in the emergence of ‘aggregators’ providing a one-stop-shop with access to multiple P2P services. The report’s authors predict that it’s probable “the majority of P2P business, both retail and institutional, will be transacted through them by 2020”.

While the FT’s Khadim Shubber ponders whether this will mean that “maybe the P2P lenders are the dinosaurs after all?” (4) for founder and CEO of Welendus Nadeem Siam, the future for P2P lending is still at its growth stage: “There are still gaps in the credit market that peer-to-peer lending haven’t exploited, which mean the peer-to-peer sector will continue growing over the next few years. This is in addition to the general public awareness of peer-to-peer lending, which is still very low. Bring these two factors together and you can get an idea of the scale of growth the peer-to-peer lending sector will face.”


(1) AltFi, 28th July 2016.
(2) AltFi Data shows the average returns since 2006 for P2P loans is 5.37%.
(3) From April 2016, lenders in the UK enjoy tax-free interest thanks to the Innovative Finance ISA (IFISA), which includes loans arranged through peer-to-peer (P2P) platforms that have full FCA authorisation, and ISA management approval from the UK’s tax authority, HMRC.
(4) ‘P2P will destroy the world, and soon’

Download the ‘Peer to peer: the meteorite approaches an Altus Consulting whitepaper’.

Why Most P2P Lenders Have Not Yet Offered IFISAS (Crowdfund Insider), Rated: AAA

P2P lending rating agency 4thWay is highlighting that 77 IFISA applications are in limbo at the Financial Conduct Authority waiting for full authorisation.  Within this group, ten of the largest UK P2P lenders are still in the queue.  In what was expected to be a big boost for P2P lenders has ended up being a slow-paced process. So what gives?

After many months of the new Innovative Finance ISA (IFISA) being approved there are only several leading peer to peer lenders participating in the savings program. Crowd2Fund and Crowdstacker were approved in April 2016. Another 15 have received the authorisation required to offer IFISAs, two significant ones being Lending Works and Downing. Lending Works has confirmed it will start offering its IFISA soon.

Some, but apparently not all, P2P lending providers that lend their own money on their own platforms might have to change their structure or desist in doing this. Funding Circle and RateSetter are among those that have lent their own money. We do not know if they too have been told to stop.

Funding Circle, RateSetter and Zopa – may not be approved until the regulator is just about ready to give all three of them the nod, in order to ensure none of them get an unfair advantage. So there’s a wait for the lowest common denominator.

The providers have to show that lending is demonstrably directly between a lender and a borrower, and not between the P2P lending platform and the borrower. Otherwise, they need to change their contracts. Growth Street is just one example of an already convincing platform that changed its contracts recently in order to make this direct relationship clearer.

LendInvest reduces minimum loan size (Mortgage Strategy), Rated: AAA

LendInvest has cut its minimum loan size to £75,000 from £100,000 as it expands to become a nationwide lender.

The lender says it is making the change after launching into both Northern England and Scotland, with lower average property values.

Why financial health apps are natural allies for marketplace lenders (alt fi), Rated: A

It’s no surprise, then, that we’re now hearing rumours of further collaborations between financial health tools and online lenders. Nothing signed and sealed yet, but certainly there are conversations going on.

You’d be forgiven for thinking that these firms sound a lot like robo-advisors, but my opinion is that they sit more comfortably within the “financial health” sub-sector of fintech, because they’re as much interested in creating savings as they are in the distribution of them.

The apps could well refer their users to the marketplace lending sector as either borrowers or as investors, and my conversations with some of those in the financial health space would suggest that they already understand the appeal of marketplace lending as an asset class.

So what’s the hold up? Scale, primarily. The apps themselves are fairly early stage, and while they’re growing fast and raising capital, they have some way to go in terms of establishing a solid foundation of users.

EIGHT years to buy a turkey – how to fight back against the banks stuffing savers (Mirror), Rated: A

A new study from peer-to-peer lending firm Octopus Choice has highlighted the pitiful returns on offer from high street savings accounts.

It looked at how long it would take to pay for a range of Christmas staples, using only the interest earned from £1,000 saved in one-year accounts with a range of high street lenders, including HSBC, Royal Bank of Scotland and Barclays.

Octopus found that savers would have to wait a whopping eight years before they could afford a turkey from Marks & Spencer, seven years to buy a Christmas tree, and almost TWO DECADES to cover the cost of a kid’s mountain bike from Halfords.

European Union

French Real Estate Crowdfunding Platform Immovesting is Now Prefunding Deals (Crowdfund Insider), Rated: A

Immovesting, a Paris-based real estate crowdfunding platform, has initiated pre-funding of deals to help support developers / sponsors listing projects on their platform. The “garantie de collecte” or collection guarantee program assures that funds are received on-time regardless of the funding status. This was said to be a first for the French real estate crowdfunding market.

The pre-funding will be utilized on two new listings: The first is for the construction of a luxury residence in Fréjus (83) by IPGest, a specialist developer for the region of Fréjus Saint-Raphaël. The second involves the creation of a commercial complex of 3,200 m2 in the center of Jouy-le-Moutier (95) by the SOPPEC group.


CreditEase Wealth Management Releases Survey of Chinese New Middle Class Investment Habits (PR Newswire), Rated: AAA

CreditEase Wealth Management, the wealth management unit of CreditEase, one of China’s largest fintech Companies, announced the results of a report conducted jointly with Bloomberg Businessweek China surveying Chinese new middle class investment habits. Among the results, the report showed that:

  • 76% of new middle class investors are willing to accept investment advice through digital channels
  • 73% prefer low volatility products
  • 62% prefer personalized investment products
  • 61% prefer investment products with low service fees

China’s new middle class is an important contributor to the country’s RMB 50 trillion in total savings and nearly RMB 100 trillion of investable money — estimated to rise to RMB 200 trillion by 2020. However, with only 12% of Chinese investors using investment advisors, as compared to 67% of US investors, the need for reliable wealth management and investment advice is mushrooming. Combined with widespread use of the mobile internet for daily transactions, and relative lack of “traditional” investment advisors, there is a potentially enormous market opportunity for innovative new solutions.

CreditEase Wealth Management believes that “robo-advisors”, which provide automated, algorithm-based portfolio management advice, will play an increasingly important role in filling the “advice gap” for new middle class investors.

“In China’s dynamic investment environment, planning a long-term investment strategy has always been challenging,” said Mr. Tang Ning, CEO and Founder of CrediteEase. “And in recent years, the number of new investment products and options available to new middle class investors has expanded tremendously. By providing powerful, user-friendly tools to create intelligent and balanced portfolios, we believe that sophisticated robo-advisors will help guide investors towards realizing long-term, sustainable wealth creation.”

CreditEase Wealth Management recently launched Toumi RA, its own robo-advisor product to help investors build cross-regional, cross-border portfolios with diversified asset classes. Based on modern investment portfolio theory and advanced back-end algorithms, Toumi RA provides global ETF portfolio asset allocation by tracking stock, bond and property market indexes in China, the U.S. and other countries in real time.

China’s banking regulator asks peer-to-peer lenders to register (Reuters), Rated: A

China’s banking regulator has issued new guidance to tighten control over a fast-expanding peer-to-peer (P2P) lending sector, the regulator said in a statement to Reuters on Tuesday.

The guidance, which the China Banking Regulatory Commission (CBRC) said was aimed at building a comprehensive industry database to lay the foundation of future regulation, requires P2P lenders to register with the government, the commission said.


Disruptive Fintech Startups Lassoed (Business World), Rated: A

Financial transactions used to be the domain of behemoth banking institutions, till financial technology (fintech) startups began to disrupt the space. All of a sudden in 2013, fintech startups started leveraging the Internet, with the result that customers began paying for groceries through mobile phones, instead of cards or cash. They even started buying insurance policies with guidance from robo advisories instead of their friendly personal counsellor.

The regulators didn’t know what to make of it then. Was fintech a fad? Weren’t banks too conventional to run on virtual platforms? Banks and financial institutions had to concede, though, that fintech had led to savings on both operational costs and time.

The growth of Peer to Peer lending (P2P lending) has skyrocketed and fast. The past year alone spawned about 20 P2P lending platforms. The industry estimates about 57.7 million small businesses in India, which offer a huge market for P2P fintech startups.

To protect borrowers and lenders on these online platforms, the RBI now proposes that the insufficiently regulated P2P lenders register as non-banking financial companies (NBFCs).

In August, the Securities and Exchange Board of India (Sebi) cautioned investors against online platforms like GREX that raise funds. The market regulator said these platforms were “neither authorized nor recognized” by law. According to industry estimates, close to 200 companies have raised about Rs 350 crore to Rs 450 crore across online platforms in the past year and a half.


Malaysia: Ready to embrace alternative lending (Enterprise Innovation), Rated: AAA

On May 2016, Malaysia’s Securities Commission (SC) issued its guidelines on how peer-to-peer (P2P) lending is to operate in the country, including requirements for the registration and obligations of a P2P operator as provided in the revised Guidelines on Recognized Markets.

In 6 November 2016, the SC had registered six P2P lending platforms – B2B FinPAL, Ethis Capital, FundedByMe Malaysia, ManagePay Services, Modalku Ventures (aka Funding Societies Malaysia), and Peoplender.

Are the guidelines provided by the Securities Commission of Malaysia sufficient to drive growth in the P2P lending space?

Kevin Teo: The Securities Commission of Malaysia has established a fair set of guidelines to ensure not only consumer protection, but also sufficient room for innovation. As an applicant of the license, we found the selection process to be rigorous and frankly quite intimidating, especially given that there were more than 50 applicants for a handful of licenses.

This ensures that the selected licensees deliver quality service to the public and earn their trust. Consistent education from industry stakeholders is needed to tell the public about such services, and a stamp of approval from a regulatory body adds to the credibility and legitimacy of the budding industry.

Will P2P lending disrupt Islamic banking in Malaysia?

Kevin Teo: Nope, we don’t think so. In fact, we believe it would help Islamic banking, as P2P financing matures and platforms begin to structure their products to be Syariah-compliant, offering Muslim business owners an additional avenue to grow their business.

What is your prediction for P2P lending in Malaysia and Southeast Asia in 2016?

Kevin Teo: P2P financing is a capital-intensive business. Most platforms do not earn a single cent until years after.

To grow in an over-crowdfunded market, they would be tempted to slash interest rates below borrowers’ risk level to attract borrowers, approve loans recklessly and embark on a cycle of negative competition, ultimately resulting in huge loan defaults to investors. Hence in recent months, many smaller or poorly managed P2P financing platforms in other markets had shut down under the weight of loan defaults and economic downturn.

Malaysia is in a uniquely fortunate situation that the Securities Commission evaluated and limited the number of P2P financing platforms. This reduces the chance of poor management and insufficient resources for platforms in Malaysia.


Peer-to-Peer Pressure: Next Steps for Canadian Fintech (Mondaq), Rated: A

It’s likely we will see more legislation for fintech in 2017.

Like those countries, Canada is seen as being a global fintech hub – with renowned national financial institutions pioneering projects with blockchain technology and fintech startups increasingly popping up across major cities. Regulation, however, is not moving at quite the same pace.

There was something of a milestone in September of this year, when the Ontario Securities Commission (OSC) decided to grant an exempt market dealer registration to an online lender, Vault Circle Inc. This was a significant step forward for peer-to-peer lending platforms in Ontario, which are currently subject to strict securities legislation. The exempt market dealer licence for Vault Circle Inc. means it now has regulatory approval to participate in the accredited investor marketplace.


George Popescu
Allen Taylor

India’s central bank under demonetisation, “helicopter hoover” edition

So continues our musings on the impact of demonetisation — India’s massive monetary experiment which saw 86 per cent of its currency taken out of circulation on November 8 as the government targeted so-called black money — on the Reserve Bank of India’s balance sheet. This time we wonder about how the RBI *should* act.

Continue reading: India’s central bank under demonetisation, “helicopter hoover” edition

So continues our musings on the impact of demonetisation -- India's massive monetary experiment which saw 86 per cent of its currency taken out of circulation on November 8 as the government targeted so-called black money -- on the Reserve Bank of India's balance sheet. This time we wonder about how the RBI *should* act.

Continue reading: India’s central bank under demonetisation, “helicopter hoover” edition

Opening Quote: RBS fails stress tests

RBS fails stress tests, operating profits up at Sage and low expectations for Opec. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here. Continue reading: O…

RBS fails stress tests, operating profits up at Sage and low expectations for Opec. FT Opening Quote, with commentary by City Editor Jonathan Guthrie, is your early Square Mile briefing. You can sign up for the full newsletter here.

Continue reading: Opening Quote: RBS fails stress tests

Further reading

Donald Trump, the first president of our post-literate age? Also, nuns turned traders by negative rates, Castro’s own demonetisation, Gogol in N Korea and questions from China’s civil service exam.
Continue reading: Further reading

Donald Trump, the first president of our post-literate age? Also, nuns turned traders by negative rates, Castro's own demonetisation, Gogol in N Korea and questions from China's civil service exam.

Continue reading: Further reading

Reported Trump Treasury pick is “oasis of blankness” Steve Mnuchin

The New York Times has reported that Steve Mnuchin will be Donald Trump’s pick for Treasury Secretary, which prompted the following reaction from one of our sources in the nearly $14tn market: “It could’ve been way worse.”

That’s because we no longer face the risk — however small — of a Treasury head that favours policies like returning to the gold standard, or eliminating deposit insurance. And in these turbulent times, there’s something sort of soothing about having yet another former Goldman Sachs partner in the Treasury, right? (Though it’s possibly not super comforting that he ran a mortgage lender that was called, um, a “foreclosure machine.”)

Continue reading: Reported Trump Treasury pick is “oasis of blankness” Steve Mnuchin

The New York Times has reported that Steve Mnuchin will be Donald Trump’s pick for Treasury Secretary, which prompted the following reaction from one of our sources in the nearly $14tn market: “It could’ve been way worse.”

That’s because we no longer face the risk — however small — of a Treasury head that favours policies like returning to the gold standard, or eliminating deposit insurance. And in these turbulent times, there’s something sort of soothing about having yet another former Goldman Sachs partner in the Treasury, right? (Though it’s possibly not super comforting that he ran a mortgage lender that was called, um, a “foreclosure machine.”)

Continue reading: Reported Trump Treasury pick is “oasis of blankness” Steve Mnuchin

Tuesday November 29 2016, Daily News Digest

Tuesday November 29 2016, Daily News Digest

News Comments Today’s main news: What SoFi is planning next. Today’s main analysis : Incumbent finance companies say FinTech partnerships boost revenue. Today’s thought-provoking articles: How marketplace lending is evolving. How UBank is using Agile to lead online banking. P2P lending offers a new form of financial inclusion. United States SoFi is dominating and here’s what […]

Tuesday November 29 2016, Daily News Digest

News Comments

United States

United Kingdom



News Summary

United States

SoFi Is Dominating The Finance Space: Here’s What They’re Planning Next (Forbes), Rated: AAA

There is more than one trillion dollars of student debt in the U.S. today, making student loan debt the second largest amount of debt, second only to the $8.5 trillion owed in mortgages. Despite the gargantuan size of the market, there have traditionally been very few options: 90 percent of the loans are made by the government at standard 7 to 8 percent interest rates.

Dan Macklin, VP of Community and Member Success, co-founded SoFi at Stanford with CEO Mike Cagney as well as James Finnigan and Ian Brady. Macklin and I sat down recently to discuss the future of SoFi and his unusual and effective community growth tactics.

When you started out you were groundbreaking in your market and now there are a number of competitors seemingly coming up behind you. Is that a fear, are you always looking backwards? And how are you developing?

It’s great that other competitors are coming into the market because it validates the fact that this is a real market. It’s actually helpful for us in everything we do in that if another competitor gets some press we always see a spike in SoFi traffic because those articles almost definitely mention the fact that SoFi is the dominant player in the industry. We’re very happy with that!

Now you’re developing and you’re helping other smaller businesses get started as well. Why are you doing that?

We developed the SoFi Entrepreneur Program to help entrepreneurs who are starting a company and have student debt.

It’s very true that student debt is holding many people back from entrepreneurship and we want to try to alleviate that and encourage people to start those companies.

Through the program we do two things. One, we allow people to defer their loans for six months, that can be extended to 12 months, and that gives just a little bit of time where they can devote their time and energy to their companies and not have to worry about that student loan payment. But then second, and I think more importantly, we try and help them proactively as much as we can. We introduce them to investors, we bring them along to conferences, and we promote their products to our customer base.

Being the co-founder of a scrappy start-up is one thing and one type of job. What are the challenges that you’ve personally faced now that it’s a much bigger company? And what tips would you have for others, having been through this process?

So as a co-founder, I don’t know everything that’s going on in the business, but that’s the way it should be, because if you try to keep too close a hold on things then you won’t grow at the pace that you could be growing at.

How are you developing? Now that you’re a large established company and maybe a more-trusted brand, how are you developing your approach to market?

We’re doing a lot more marketing. You may have seen the Super Bowl ad earlier this year, and we’re doing a lot more out-of-home ads: billboards, taxi tops, as well as TV.

We’re now working with more than 600 companies who are helping their employees and offering SoFi as an employee benefit. Student loans are a big problem for the young workforce of the US today, and we see student loan benefits as the new 401k.


At least one start-up, however, appears to be bucking this trend: on Black Friday, payments start-up Stripe announced a new funding round that will nearly double the company’s most recent valuation, bringing its value to $9.2 billion, the company said. The new funding round, as The Wall Street Journal first reported, includes $150 million from investors such as CapitalG, the investment arm of Alphabet, Google parent company; General Catalyst Partners; and Sequoia Capital, an early investor. Stripe is now valued more highly than other private fintech start-ups, including $4 billion Social Finance.

Stripe, meanwhile, is also trying to build out new ways to make money, essentially also becoming a financial-services company by broadening its portfolio to include fraud prevention tools, among other things. Stripe’s clients include other highly valued start-ups like Lyft and Slack, more traditional retailers like Macy’s and Adidas, and less-traditional clients like NASDAQ, UNICEF, and “both presidential campaigns,” TechCrunch reports.

SoFi Offers Term Life Insurance for Millennials (Crowdfund Insider), Rated: AAA

SoFi has partnered with Protective Life Corporation to provide individual term life insurance of up to $1 million. All you have to do is complete the form online.

SoFi notes that Millennials are the least likely to posses life insurance. They also say that Millennials overestimate the cost of life insurance premiums by 213%. The expected high cost of term life is  “causing them to delay getting coverage”.

PeerStreet Raises M For Real Estate Loan Marketplace (Socal Tech), Rated: A

Los Angeles-based PeerStreet, a startup which operates a marketplace for investing in real estate backed loans, has raised $15M in a Series A funding round. The funding was led by Andreessen Horowitz, and also included The Kaiser Family Foundation, Rembrandt Venture Partners, Montage Ventures and others.

Credible adds MEFA to its marketplace (Bankless Times), Rated: A

Student loan marketplace has partnered with the Massachusetts Educational Financing Authority (MEFA) in a move which sees MEFA offering student loan refinancing to borrowers across the country. now offers student loan refinancing through six lenders.

In a release said the average borrower saves an average of 1.59 percentage points and $18,668.

For Underbanked, Higher Fees And Auto Payments (, Rated: A

There are 67 million adults in the United States who are part of the “underserved” market, and those individuals, who do not have bank accounts, paid as much as $141 billion in fees for various financial products last year.

The study found that border trends are afoot, as those individuals have begun shifting some of their financial activity, traditionally tied to alternative financing, in part away from online payday firms and storefronts. Activity has, in fact, moved toward other conduits, such as small business marketplace lenders. Marketplace loans jumped by as much as 210 percent, and payday loans across storefront and online conduits slipped by 23 percent — a finding the study attributed to installment loans, or subprime cards, in the wake of regulatory pressures.

8 million Americans could get a lower rate on their student loans (CNN Money), Rated: A

Eight million Americans could get a lower interest rate on their student loans, and many of them might not even know it.

That’s the estimated number of borrowers eligible to refinance their debt, according to a new report from Credible, an online student loan marketplace. It’s roughly one-third of all people who are currently paying down student loans.

Your eligibility does depend, though, on how much money you earn relative to the amount of debt you have, and it helps to have a good credit score.

Credible, which helps student borrowers shop around for the best rates, analyzed data from its users over the past 17 months to see who was getting the best rates, and how much money they were saving. Here’s a look at what they found.

Recent grads who used Credible to refinance had an average income of $54,200 and a loan balance of $49,379.

On average, borrowers who refinanced reduced their rate by 1.7 percentage points, cut their term by five years, and can expect to save $18,668 over the life of the loan, according to the report.

Money360 Closes .5 Million Bridge Loan for Signal Hill, California, Property (Yahoo! Sports), Rated: A

Money360, the leading commercial real estate marketplace lending platform, announced today that it has provided a $10.5 million bridge loan for a fully occupied, single-tenant suburban office complex in the Southern California coastal community of Signal Hill, California.

Totaling 72,485 square feet, the 3.7-acre complex features three, three-story buildings connected by steel-framed pedestrian bridges in a campus-like setting that surrounds an attractive water feature. The complex has been fully built out for classroom and administrative office use and is currently leased by an established private university providing post-secondary education in pharmaceutical, nursing and clinical research studies.

LendIt Launches Fintech Industry Awards (LendIt Email), Rated: B

March 7, 2017, following the close of the second day of the LendIt USA conference on March 6-7, 2017.

Nominations are now being accepted in 18 categories recognizing top performers, innovators and emerging talent in lending and fintech, including:

  • Top Consumer Lending Platform
  • Emerging Real Estate Platform
  • Top Fintech Equity Investor
  • Top Fund Manager
  • Best Journalist Coverage
“The lending industry is entering its 2.0 phase, after maturing in 2016,” said Peter Renton, co-founder and chairman of LendIt. “As we seek to connect the global online lending community and foster innovation and industry growth, we must recognize those that are making the biggest contributions and innovations and moving our industry forward.”
Categories were designed by the expert team at LendIt to reflect the most vital stakeholders in the online lending and fintech industries. LendIt expects to receive hundreds of nominations from leading and emerging lenders, law firms, accounting firms, banks, investors, journalists and executives that make the marketplace lending industry as vital and competitive as it is today.
The awards will be judged by a panel of 30+  industry experts, representing a diverse cross-section of the industry. Distinguished judges include:
  • Glenn Goldman – CEO at Credibly
  • Brian Korn – Partner at Manatt
  • Gilles Gade – CEO at Cross River Bank
  • Angela Ceresnie – Chief Operating Officer at Climb Credit

“There is no better place than LendIt USA 2017 to announce the winners of our first-ever LendIt Awards, as this year we are expecting more than 5,000 attendees, making it the largest fintech event ever held in New York City,” said Jason Jones, co-founder of LendIt. “LendIt is dedicated not only to connecting the global online lending industry, but also the global fintech industry, as online lending has been so important in putting fintech on the map.”

The awards nomination period closes on December 21 with finalists announced mid-January.

LendingTree Survey finds Most Americans Waive Budgets for Holiday Shopping (PR Newswire), Rated: B

LendingTree®, the nation’s leading online loan marketplace, recently conducted its second annual Holiday Shopping Survey among 1,062 American adults and found that once again, more than half of Americans  plan to shop for the holidays without a set budget. With more 43 percent admitting to having some form of financial regret after holiday shopping, some consumers may be facing more debt in the new year.

According to the survey, 27.02 percent of American’s were saddled with holiday-related debt in the first few months of 2016, and 4.6 percent are still paying off last year’s shopping debt. However, this is an overall improvement from last year, where almost 31 percent welcomed the new year with holiday shopping debt.

oughly two out of three shoppers (66.1%) estimate they will spend, in total, $500 or less on gifts during this holiday season. This represents a slight increase from the 64 percent who planned to do the same last year.

First Responders treated to National Funding Holiday Bowl (PR Newswire), Rated: B

 National Funding, this year’s title sponsor of the Holiday Bowl, announced today that they have pledged to match all public ticket donations for first responders and military service members, up to $100,000.  The San Diego business community and local San Diegans have the opportunity to help National Funding send up to 8,000 police officers, firefighters, sheriffs, lifeguards, paramedics, emergency supporters and military personnel to enjoy America’s Finest Bowl Experience.

National Funding CEO and founder, Dave Gilbert has committed this generous giveback on top of his one-year title sponsorship agreement and his support of the Holiday Bowl’s pregame FanZone.

“We’ve been thrilled to sponsor the Holiday Bowl for the past two years as a way to support our hometown. This year, we wanted to offer something special to our first responders and the military, who are such a vital part of the San Diego community. We are matching donations as a way to collectively thank and recognize their important contributions to the city and the country.”

Local businesses or individuals who wish to support National Funding’s efforts to send local first responders to the game can learn more The deadline to pledge tickets is December 9th. Tickets will be distributed by the National Funding Holiday Bowl directly to first responder groups in San Diego.

The National Funding Holiday Bowl kicks off at 4:00 p.m. PST, Tuesday, December 27th and features a classic college football rivalry between the Pac-12 and Big Ten Conferences. The National Funding FanZone will kick off four hours before the Holiday Bowl, hosting a craft beer garden, local food trucks, interactive football skills challenges and a sports lounge. Access to the pregame party is included with each game ticket.

United Kingdom

54% of incumbents say fintech partnerships have boosted revenue (Business Insider), Rated: AAA

The growing number of partnerships between fintechs and legacy players suggests that incumbents believe there are benefits to working with new market entrants.

  • Cost savings. Eighty-seven percent of respondents said they were able to cut costs to some extent by working with fintech providers.
  • Brand refreshes. Eighty-three percent of respondents said collaborations with fintechs offered opportunities for incumbents to refresh their branding.
  • Increased revenue. Fifty-four percent of respondents said partnerships had resulted in boosted revenue. It’s worth noting that this is the benefit seen by fewest incumbents, which suggests it may take longest to emerge as the parties involved work out a business model that suits everyone.

The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:

  • Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees
  • Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
  • Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.

Key themes discussed as marketplace lending sector evolves (Structured Credit Investor), Rated: AAA

Q: In an eventful year for the marketplace lending industry – during which growth has been rapid, but not without setbacks – which key themes stand out?
Chris Kennedy, md, MountainView:
The market has seen incredible growth up to this stage. Part of the process of a growing market is pull-backs and right now we are experiencing some of that, but this is still a huge opportunity for growth for investors – both investors in loans and in platforms. Unsecured consumer debt and unsecured small business debt is a US$1.2trn opportunity – at least – as US banks are over-regulated and do not have the economics to make these loans effectively.

Right now the M&A shake-out will only help the larger players grow market share and self-regulate to a certain extent, developing common standards with regard to being a data furnisher to the credit bureaus and really focusing on what works. I think everyone will realise that lending into the prime space, as SoFi does, works. These borrowers perform and the loans are good loans, so relative to global yield curves, these are above-average opportunities.

Q: The importance of thorough due diligence has come to the fore this year. What is driving this?
Charles Moore, chief commercial officer, Global Debt Registry:
This year has really put due diligence under the spotlight. It has always been important, but the specific issue of due diligence that has really come into focus has been loan verification.

Currently, the loan verification approach taken is generally to compare a loan tape to a loan agreement. The challenge in marketplace lending is that they are both electronic documents that are both provided by the seller of the asset, which represents something of a conflict of interest and is not a particularly robust model. That was being questioned last year by some of the risk departments, but I think this year is when it has really been brought to the front office and become part of the deal conversation.

Q: The concept of ‘trust but verify’ has been increasingly discussed in marketplace lending. Why is data standardisation important in this regard?
Brady Akers, director, Orchard Platform: 
Trust and verification are critically important, especially for this emerging industry to grow, and transparency is a necessity. I think it will take a coordinated effort for participants across the industry, and companies like Global Debt Registry, PwC and Thomson Reuters will play a vital role in due diligence and validating that borrowers actually exist, and that the data is accurate.


Institutional investors looking to enter this space, or deploy more capital, begin their research with data analysis. Right now, that is a very difficult and expensive process because datasets are not consistent across lenders.

Q: Regulatory initiatives are changing the market. What are the implications of this from an audit perspective?
From an auditor’s perspective, we are starting to see some requests that not only lenders but also platforms go out and seek independent third-party fair value marks – not only on the loan portfolios, but also the servicing assets of these platforms. On the loan side, it has been a pretty simplistic model of holding the loans at par and adding monthly adjustment for accrued interest and layering in some loss provision. Talking to investors and platforms, we have said that you really want to bake in a more robust approach and move to a discounted cashflow methodology.

Q: How much of an issue is loan stacking and should market participants be worried about it?
The process is really understanding and tracking borrowers, so platforms will need to work with the credit bureaus to create some kind of data exchange. However, loan stacking is only affecting something like 5%-10% of the market.

How to cut mortgage fraud risk (Money Marketing), Rated: A

Recent figures from Financial Fraud Action UK revealed a financial scam was committed, on average, every 15 seconds during the first six months of 2016, says Roy Armitage, head of credit at Lendinvest.

That represents a 53 per cent rise year-on-year, with these scams coming in all shapes and sizes. Furthermore, a staggering 56 per cent of UK organisations have been affected by fraud in some way, and it is one of the biggest risk concerns facing board members.

It is crucial that lenders engage with these data feeds and add in their own information in a structured way. The richer those structured data feeds become, the more they benefit everyone across the industry.

However, the data can only do so much. There is no single algorithm that can look over that data and then decide if the application is credible and transparent. It’s also vital therefore to employ quality and experienced underwriters who know how to cast a truly critical eye over all application data.

LendInvest appoints former Castle Trust manager as BDM for Northern England (Mortgage Strategy), Rated: A

Online mortgage lender LendInvest has appointed its first business development manager for Northern England.

Damien Druce joins from Castle Trust where he was National Development Manager and was previously head of distribution and development at Crystal Specialist Finance.

He will be based in Greater Manchester and will travel extensively, considering bridging and development loan opportunities between Staffordshire and the Scottish borders.

Metro Bank revamps online banking platform (altfi), Rated: A

Metro Bank, the first in a flurry of UK-based challenger banks to receive a licence over the past five or six years, has launched an upgraded version of its commercial internet banking platform. Organisations with subsidiaries are now able to use a single customer view dashboard to keep tabs on all offshoots.

Metro Bank does not currently use marketplace lending platforms as a distribution channel for lending to small businesses, as far as we’re aware, but has been lending through consumer focused peer-to-peer site Zopa since May of last year. The challenger bank currently holds around £7.3bn in deposits, with 52 per cent coming courtesy of commercial customers.

Its revamped digital banking platform was built by Backbase, a fast growing fintech software provider.

A backward step as peer-to-peer pioneer Zopa takes banking road? (Evening Standard), Rated: A

Banks have performed a similar role for centuries but what is different about Zopa and the other marketplace lending platforms which have followed its lead is that they use the internet to find and match the borrowers and lenders.

As peer-to-peer infrastructure and regulatory costs are negligible in comparison to the banks, borrowers and lenders get a much better deal.

So it came as a shock last week when Zopa announced it was to apply for a banking licence. Its entire ethos has been to set out its stall as the future — yet here it was embracing the past.

With that action, all the promise that peer-to-peer technology would bring a new form of lending was called into question.

How all this would continue to work if all peer-to-peer lenders followed the Zopa lead and started to operate as banks is not immediately clear, given that their costs would soar and the value disappear because of that regulation and capital requirement.


How UBank’s FinTech culture enables Agile to thrive (, Rated: AAA

Some organisational cultures can find it difficult to adapt to an Agile mindset. Central to adopting an Agile approach is emphasising visibility and transparency. This includes making everything (including bad news) visible across the entire organisation. It also means prioritising face-to-face communication. Finally, open team reflection is critical to identifying where things went wrong and how they should improve.

One organisation that has done this successfully is online bank, UBank.

To help drive the Agile approach even further, UBank’s digital team was recently organised into four cross-functional scrum teams, rather than by role-based functions. Cross-functional teams are used to foster a culture of innovation and encourage out-of-the-box thinking and problem solving.

Within a few weeks, UBank’s flat structure enabled this reorganisation of teams to work smoothly. The teams started talking a lot more, sharing development work, doing code reviews on each other’s code,

Strong executive support helped ensure success. Taking UBank’s CEO and other divisional leaders on the Agile journey helped guide the business transformation that the digital team was trying to achieve. To accomplish this, Bulletproof coaches worked with the product owners to link UBank’s goals to the initiatives that the digital team worked on.and clarifying with the product owner when they weren’t clear on exactly what they should be developing.

However, if you’re not there yet, there are some key takeaways that you can look into before you start your Agile journey.

  • Have a clear organisational vision: Have buy-in across the business about what your purpose is.
  • Provide visibility at the executive level: It’s important that everyone has visibility into why the cross-functional development teams are working on certain initiatives.
  • Foster a trusting environment: Software development is complex in nature which means issues will always arise.

HashChing trailblazes fully-digital loan approval (Australian Banker), Rated: A

Online home loan marketplace HashChing has announced they are set to pilot their new virtual identification system this weekend.

The technology will allow brokers on the HashChing platform to scan their clients’ faces via video call, along with a picture of their driver’s license or passport. 

Speaking to Australian Broker, HashChing co-founder and CEO Mandeep Sodhi said they partnered exclusively with South African company e4 International to develop the groundbreaking new technology.

The new system will dramatically speed up turnaround times and decrease processing costs, Sodhi said. Currently it can take one to a few weeks for brokers to validate their customers’ identities.


Peer-to-peer lending: A new form of financial inclusion (The Jakarta Post), Rated: A

Players within the financial services ecosystem expect P2P lending to become a solution for the lack of access to financial services in the country and to achieve financial inclusion through synergy with other financial institutions and technology companies.

The platform offers numerous advantages over banking services. For example, its flexibility allows it to channel capital to virtually anyone, in any amount, effectively and transparently, at low interest rates.

Financial services like P2P lending promise to be a solution for Indonesia, which has been struggling to overcome a bundle of problems: First, Indonesia still has to increase financial inclusion. The Indonesian FinTech Association has reported that 49 million SMEs are not bankable, as they are unable to provide collateral to access conventional loans. P2P lending can help creditworthy SMEs by providing loans without collateral.

Second, Indonesia must overcome regional disparities in financing across the archipelago. Some 60 percent of financing services are now concentrated in Java. P2P lending, meanwhile, can reach anyone in any place.

Third, there is a gap in infrastructure financing of Rp 1,000 trillion (US$73.9 billion) annually. The existing financial institutions can only provide about Rp 700 trillion in loans of the total annual demand of Rp 1,700 trillion. With lower overhead costs, combined with innovative credit scoring algorithms, P2P lending can close the gap in the infrastructure financing.


Learning from other countries, the potential of P2P lending can be optimized through collaboration with banks. China, for instance, has a dynamic SME ecosystem that allows support from financing services. In that environment, the number of P2P lending companies has soared over the past five years, while that of banks in China has doubled.

Despite its huge potential, P2P lending should be regulated carefully. The role of regulators is highly needed to nurture a healthy business ecosystem.

To ensure business safety, a significant capital ownership requirement (above Rp 20 billion) would be an important part in a selection mechanism and for quality control, since P2P lending is a capital-intensive and scalable business.

P2P lending firms must also guarantee the security of public funds and data while maintaining reasonable interest rates to ensure the financial health of the public.


George Popescu
Allen Taylor

Dear RBI, about your balance sheet in this newly demonetised world…

Will the Indian central bank send billions of rupees to the Indian government as a demonetisation gift? Or… not?

Continue reading: Dear RBI, about your balance sheet in this newly demonetised world…

Will the Indian central bank send billions of rupees to the Indian government as a demonetisation gift? Or... not?

Continue reading: Dear RBI, about your balance sheet in this newly demonetised world…