Wednesday February 28 2018, Daily News Digest

marketplace lending investment

News Comments Today’s main news: Virgin Money to launch a challenger bank. Equifax partners with Entersekt on digital ID authentication. 1st loan originator in UK joins Mintos. Citi drops $75M into Pagaya. IOU Financial extends Midcap credit facility. Today’s main analysis: Global fintech VC investment sets new record. Global marketplace lending investment in 2017. Today’s thought-provoking articles: Goldman Sachs’ plan […]

marketplace lending investment

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United States

 

Goldman Sachs, Adviser to the Elite, Wants to Be Your Local Bank (WSJ), Rated: AAA

In a glass-walled tower in Utah’s capital, hundreds of Goldman employees are building what amounts to one of the world’s most ambitious consumer-finance startups.

Their address, 111 Main St., stands as a symbol of the changes afoot inside the firm, better known as an elite adviser to big companies and billionaires. Struggling to make money in the postcrisis world, Goldman is pushing into businesses it once dismissed as pedestrian and gimmicky, assembling a suite of banking products for the middle class it hopes will power growth.

Goldman 18 months ago began making online loans of a few thousand dollars under the brand Marcus, named after founder Marcus Goldman. Individuals once needed $10 million to get the attention of Goldman’s elite private bankers. Today, customers can open a Marcus savings account with as little as $1.

 

Where’s the best place to open a small business? (The Sacramento Bee), Rated: A

LendingTree said Sacramento ascended to the top of the list in a study that included data from more 80,000 queries submitted by new small business owners seeking loan offers through LendingTree’s small business loan marketplace to determine where businesses tend to do the best.

Sacramento was one of three California cities on the 10-best list, joining Fresno at ninth and Los Angeles at 10th. Following Sacramento on the list were Grand Rapids, Mich; Portland, Ore.; Knoxville, Tenn.; Denver; Seattle; Tulsa, Okla; Albuquerque, N.M.; Fresno; Los Angeles; and Oklahoma City, respectively. Los Angeles and Oklahoma City tied for 10th.

Cincinnati topped the list of the 10 worst cities to start a new small business. No California cities were on the 10-worst list.

Fiserv Consumer Survey Finds Digital Experiences Factor in Life’s Most Important Financial Decisions (BusinessWire), Rated: AAA

For instance, four of the top five loan payment methods are now electronic, and 21 percent of millennial investors use a robo-advisor service to make investments.

Affluent Consumers and Financial Advice
Human interactions remain an important part of financial advice, especially for the 34 percent of consumers with at least $100,000 in household investable assets. Fifty-eight percent of these affluent consumers work with a financial advisor. Among those without an advisor, only 11 percent report high interest (8-10 on a scale of 0-10) in using one. At the same time, 32 percent of affluent consumers who invest their own money grade their knowledge and expertise as a “C” or lower, suggesting an opportunity to bridge the gap with a hybrid of human and digital advice.

Among all consumers who invest on their own, only 8 percent use a robo-advisor service. However, use of such a service is much more likely among millennials (21 percent) and urban consumers (18 percent).

Rates, Fees and Service Prevail
Topping the list of selection factors among those with at least one loan are interest rates (83 percent) and low fees/service charges (83 percent), followed by customer service (75 percent), company reputation (70 percent), and knowledge of staff (65 percent). Sixty-five percent of consumers say prior experience with a lender is important.

Many consumers expressed willingness to try new ways of interacting with their lender, if there’s a benefit. For instance, if it makes the loan process faster, more than half of consumers would be willing to use a mobile device to e-sign loan documents (56 percent), take and upload photos of loan documents (54 percent), and verify their identity with a photo (51 percent). Forty-two percent of consumers indicate they would be willing to provide access to their financial information by providing their credentials to other online banking applications, up from 32 percent in 2016.

Digital channels, especially mobile, are now leading ways of communicating with a lender, although context matters based on the interaction. A lender’s mobile app is the preferred way to check when a next loan payment is due (21 percent), check the balance term (20 percent) and request a payoff (17 percent), among consumers who have conducted each of these activities in the past six months. For account questions, consumers significantly favor speaking live with a representative via phone (21 percent) over using an automated voice response system (12 percent), e-chat (11 percent) or the mobile app (11 percent).

As online lending grows up, banks work to strengthen partnerships (Tearsheet), Rated: A

Marketplace lending as an industry is hitting its stride. Some platforms are becoming profitable, some are diversifying, new players are entering the market with new business models and the competition is heating up. But that means banks need to start strengthening ties with their online lending partners.

As more consumer-facing fintech companies are learning, that’s best done by building products that make people’s lives easier.

 

 

Fintech Startups Need Industry Partners to Thrive, Report Says (Bloomberg), Rated: B

More than 75 percent of fintech executives surveyed in a new report said their primary business objective is to collaborate with traditional firms, such as banks and insurance companies. Only 18 percent said the main goal was to compete with the established players.

According to the World FinTech Report 2018 from consulting firm Capgemini and corporate networking website LinkedIn Corp., most of the startups are likely to fail if they don’t build partnerships, despite raising more than $110 billion since 2009. The survey, published Tuesday, was based on the responses of 110 global financial technology firms.

Varo Money is bringing bank fees and financial health into its marketing (Tearsheet), Rated: A

Varo Money has been targeting customers of big banks whose fees they’re tired of having to understand and pay. Despite its appeal to potential customers to switch to Varo, its ads don’t call out specific companies, as some of its peers do.

Coming to your banking app soon: Predictive analytics (Bankrate), Rated: A

Bank of America will let mobile banking customers use its new digital assistant, Erica, in March. Besides helping consumers complete routine tasks like transferring funds, Erica will offer financial advice tailored for each user.

If you have a low balance and you’ve spent a lot of money, Erica might warn that you are in danger of overdrawing your checking account. Or she could share opportunities to save additional money.

Wells Fargo has made providing customers with advanced digital tools a top priority. In February, its 17 million mobile users with consumer deposit accounts found themselves with a new predictive banking feature.

Wells Fargo confirmed that these new mobile capabilities are powered by Personetics, a company providing banking solutions that anticipate what consumers might need in the future. Personetics also powers Royal Bank of Canada’s free automated savings tool, NOMI Find & Save, which gives mobile banking customers customized tips and alerts.

Companies like Saylent are trying to help banks make sense of their data resources by identifying the customers they should focus on. Saylent gives customers tools to target people that are shopping for a car loan or a mortgage. The platform will be used by institutions like BankFirst Financial Services, a community-based institution headquartered in Mississippi.

B of A is latest big bank to announce aggressive branch expansion (American Banker), Rated: A

Bank of America plans to open more than 500 branches over the next four years as part of a large-scale investment in retail banking.

The $2.28 trillion-asset company said in a press release Monday that it will hire more than 5,400 employees as part of the expansion. The Charlotte, N.C., company did not specify where the new branches will be located, nor did it say how much the proposed brick-and-mortar expansion plan would cost.

Don’t write off branch banking yet, says KeyBank Colorado exec (Denver Business Journal), Rated: B

Customers “want to talk to people. They want to be guided,” says Michael Walters.

Fintechs’ charter hopes may lie with new FDIC board (American Banker), Rated: A

Among federal bank regulators, the Office of the Comptroller of the Currency has been the most active on fintech chartering options. But another agency, the Federal Deposit Insurance Corp., may provide crucial guidance for fintechs in the shorter term.

The FDIC still has pending an application by Square for an industrial loan company, a limited-purpose bank typically chartered in Utah that receives deposit insurance.

Can Crowdfunding Mortgage Down Payments Make Homes Affordable? (SavingAdvice), Rated: A

A lot what’s being called crowdfunding is actually more like matching funds or subsidies for down payments. The growth of these options seems to be a sign of the times — so few people can afford to buy homes nowadays that the industry has gotten creative.

Unison Financial (formerly known as Rex Home Buyer) offers down payment subsidies in exchange for equity stakes in the home. The program requires that the home buyer put up a down payment of at least 10%.

HomeFundMe provides incentives for individuals to seek out grants that are actually matching funds on down payments. Although the match ratio is impressive, two-to-one, the total grant limited to $2,500 — do the math and you see that the buyer would need to come up with another $5,000 at that maximum amount.

With most residential mortgage lenders requiring minimum down payments of at least 5%, that limits the buyer to homes worth no more than $150,000. That’s well below the average home price in the U.S. — and even beneath affordable housing program prices in many cities.

HOW INVESTING IN CROWDFUNDED REAL ESTATE IMPACTS YOUR TAXES (The College Investor), Rated: A

There are two types of investors in a crowdfunded real estate investment: Accredited and non accredited.

An accredited investor has more opportunities to invest than a non accredited investor but they also bear more risks. SEC Rule 501 of Regulation D defines accredited investor.

These investors have an annual income of least $200,000 for the previous two years and a net worth of more than $1 million.

Non accredited investors buying shares of a fund have the simplest tax impacts.

They receive a 1099-INT from the crowdfunding real estate company they are investing with and are taxed at their ordinary income tax rate.

If the investor is invested in multiple funds, their investments can be aggregated into one 1099-INT rather than receiving an individual 1099-INT for each fund.

For investors who are investing in equity investments, things get more complicated. These investors will receive a K1 tax form. A K1 is for income through business partnerships.

PeerStreet Named a Finalist in Top Real Estate Platform Category in the Second Annual LendIt Fintech Industry Awards Competition (BusinessWire), Rated: B

LendIt Fintech recently announced that they have selected PeerStreet as a finalist in the Top Real Estate Platform category for the LendIt Fintech Industry Awards.

PawnGuru pulls in $ 2.5 mln Series A (PE Hub), Rated: A

PawnGuru, an online marketplace connecting pawn shops and consumers, today announces the close of a $2.5 million Series A. With this funding, PawnGuru intends to expand its network of shops within the US, as well as to international markets, giving consumers worldwide the power to buy directly from local pawn shops online.

 

5 Financial Mistakes That Push Striving Startups Into Bankruptcy (Newsmax), Rated: A

  1. Think Big/Start Big Syndrome – You are permitted to think big but start small to have adequate fund to invest in other areas of the business. When you don’t properly handle these areas, your business might join the 90% businesses that never survived after 5 years.
  2. Lack of Financial Mentorship
  3. Inability to Utilize Viable Loan Options – Bank loans, equipment loans, invoices financing, car title loans, peer-to-peer lending networks and more, are avenues small business owners can obtain loans. It’s however pertinent to get information and evaluate the cost implications of taking a loan to finance your business.
  4. Under-utilization of Digital Technology – In terms of advertising, marketing, automation, time management, human resource functions, cloud computing, data management, blockchain technology etc. digital technology has infused speed and efficiency which has resulted in reduced cost to carryout daily business operations.
  5. Poor Recording of Cash Flow

Understanding the International Student Lending Ecosystem in the U.S. (Lend Academy), Rated: A

There are almost 1.2 million international students currently studying in the United States. They hail from countries all over the world with almost a third – more than 360,000 – coming from China and just over 205,000 coming from India. South Korea and Saudi Arabia follow behind dropping down to just over 70,000 and 55,000, respectively. With education costs often approaching six figures and beyond, an international student loan ecosystem has emerged both in the U.S. and abroad to serve the educational funding needs of this demographic.

Navigate your student-loan maze with this Philly-made calculator (Technical.ly), Rated: B

From his home office in Fishtown, Temple University grad Mason Gallik, 23, is hoping his college debt calculator can help others from making bad choices.

“It’s about being realistic about your decisions,” said Gallik, the founder of LoanMajor. “Sometimes it’s smart to look at college from a financial side and not just an emotional one.”

Currently, the company’s source of income is through affiliate links with loan marketplace Credible. For every visitor that LoanMajor leads to Credible, they get a fee. Another source of revenue Gallik hopes to set up is through affiliate links to credit card companies and banks.

United Kingdom

U.K.’s Virgin Money to Launch Digital Challenger Bank (Bank Innovation), Rated: AAA

U.K.-based lender Virgin Money said it will offer current accounts and savings products.

In its earnings call today, Virgin Money said it will begin testing these products later in the year and has already spent £38.3 million ($53.3 million) over the past year developing this digital bank.

Amigo Loans hires JP Morgan and RBC to prepare 500 million pound London IPO (Reuters), Rate: AAA

British subprime lender Amigo Loans is preparing for a stock market float in London that could value the consumer credit firm at more than $700 million.

1PM Joins Online Business Loan Marketplace For Retail Investors Mintos (London South East), Rated: AAA

1pm PLC said Tuesday that it has entered into a cooperation agreement with AS Mintos Marketplace to be a loan originator on its online loan marketplace.

The AIM-listed financial services provider to UK businesses said that it is the first loan originator from the UK to join the Mintos marketplace, which already has about 30 other loan originators globally.

British banks ordered to help people pay off credit card debts (Reuters), Rated: A

Britain’s Financial Conduct Authority ordered banks on Tuesday to take steps to help people with persistent credit card debt to keep up with repayments.

The FCA’s new rules will, however, will still allow banks to ultimately suspend a credit card if a customer fails to make any progress in repaying debts.

European Union

MIFID II aids RoboAdvice (AltFi), Rated: A

Unfortunately, in the current marketplace many opaque structures lead to charges that even a Finance degree can’t help unravel.  But technology is here to help and most of the new Robo-Advisors have simple and transparent fee structures enabling savers to compare different product offerings quickly and easily.

Whilst many in Financial Services have been critical of the growing ‘regulatory burden’ the changes MiFiD II will bring should be net positive for end users and ultimately society. Although legacy providers are likely to see revenues and margins shrink.

International

Equifax is partnering with a digital ID verification company (Business Insider), Rated: AAA

US credit bureau Equifax has formed a partnershipwith South Africa-based Entersekt, a company specializing in customer authentication and device security.

Fintech Pagaya Receives $ 75 Million in Debt Financing from Citi (Crowdfund Insider), Rated: AAA

Pagaya Investments, a Fintech company in the asset management space, has received $75 million in debt financing from Citi. Simultaneously, Pagaya announced the creation of the “Opportunity Fund” to meet growing institutional interest in consumer credit as an asset class.

Global Venture Capital Investment in Fintech Industry Set Record in 2017, Accenture Analysis Finds (BusinessWire), Rated: AAA

Fintech financing rose 18 percent in 2017, to US$27.4 billion, with the value of deals in the U.S. jumping 31 percent, to $11.3 billion. Deal values almost quadrupled in the U.K., to US$3.4 billion, and soared nearly fivefold in India, to US$2.4 billion. The number of fintech deals also rose sharply, from just over 1,800 in 2016 to nearly 2,700 in 2017, underscoring continued appetite from investors scouring the globe for innovation in insurance, banking and capital markets startups.

“Much of the growth, particularly in the U.S. and UK, has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies,” said Julian Skan, senior managing director in Accenture’s Financial Services practice.

“Much of the growth, particularly in the U.S. and UK, has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies,” said Julian Skan, senior managing director in Accenture’s Financial Services practice.

India, US, UK drove global growth

Kabbage Inc, a U.S. online lender for small businesses, alone raised US$900 million in three separate rounds in 2017. Online lender Social Finance Inc, also known as SoFi, raised US$500 million in February, and LendingPoint raised US$500 million from a credit transaction in September. As startups grow and their businesses mature, funding rounds have increased in size, while some companies have opted to use credit facilities to speed up their expansion.

In the U.K., digital insurance distributor BGL Group raised US$900 million, pushing overall fintech investments in the country to an all-time high of US$3.4 billion. Payments venture TransferWise had the second-largest fundraising in the U.K., raising US$280 million.

India’s digital payments startup Paytm received US$1.4 billion in venture capital, helping drive fintech fundraising activity in the country to nearly five times the 2016 levels. The number of fintech deals in India increased 65 percent over 2016.

More deals in China, fewer megadeals

Mega fintech deals that had catapulted China to the top destination in the world for venture capital money in 2016 fell in 2017, as investors pulled back after pouring billions of dollars into giant-sized transactions. Fintech funding in the country declined 72 percent in 2017, to US$2.8 billion, from a record US$10 billion in 2016, when several companies – including Ant Financial and wealth management platform Lufax – had multi-billion-dollar financing rounds. The average deal size in China in 2017 was US$19 million, down from US$186 million in 2016, though the country still had large transactions, such as the US$440 million that real estate broker Homelink raised in April and the US$290 million that online finance firm Tuandai raised in June.

P2P and marketplace lending equity investments recover in 2017 to set new record (AltFi), Rated: AAA

Deals in the sector slowed down in 2016 with a year on year decrease of 12.8 per cent, possibly as a result of Lending Club’s annus horribilis. Total amount invested fell from $8.6bn in 2015 to $7.5bn the next year.

However, investment rebounded in 2017 to reach $8.9bn, a year on year increase of 18.6 per cent. The top ten P2P and marketplace Lending deals in 2017 raised half of the total funding for the year, raising a combined total of $4.4bn. The largest deal in 2017 was the previously mentioned $1.2bn Series B round to Lufax, led by COFCO with co-investment from China Minsheng Bank and Guotai Junan Securities.


Creditcoin Turns Digital Wallets into an Investment Market (Coinspeaker), Rated: A

In response to this, two reputed fintech innovators, Gluwa and Aella Credita have joined forces to launch Creditcoin, an inter-blockchain P2P lending market that operates across distributed ledgers ensuring permanent record of transactions that cannot be alter or tampered with.

Allianz Investment Arm Co-Leads Funding Round in Fintech C2FO (Bloomberg), Rated: B

Financial technology startup C2FO raised $100 million in funding in a new round led by the investing arm of global insurance and asset management giant Allianz SE as well as Abu Dhabi’s Mubadala Investment Co.

MSTS Taps World Fuel VP As Head Of Business Development For APAC (Payment Week), Rated: B

Australia

Fintech business lenders to self-regulate (Financial Review), Rated: AAA

A lack of transparency around fintech borrowing costs for small businesses has prompted the industry committing to adopt a code of conduct and standardised interest rate and fee disclosures.

The fintech sector hopes moves to self-regulate will help start-ups win trust and avoid concerns that helped prompt the royal commission into the banks.

The Australian Small Business and Family Enterprise Ombudsman, FinTech Australia and the Bank Doctor, an SME advocate, will drive start-ups to improve disclosures that will allow small business customers to compare total costs, understand obligations and penalties if payments are missed, and ensure disputes are dealt with quickly and fairly.

India

Extending access to credit: Are alternate finance platforms creating tangible impact? (ET Rise), Rated: A

In its ‘Consultation Paper on Peer to Peer Lending’, the RBI highlighted how these web-based platforms are providing easier access of credit to small entrepreneurs by bringing prospective borrowers and lenders together. With more individuals lending to one another, interest rates for borrowers are going down, even as the increased availability of affordable credit stimulates greater financial activity and drives business growth. As a result, consumer segments such as MSMEs – until now either com ..
Borrowers from tier-2 and tier-3 cities comprised 20% and 17% of the total number of loans disbursed. New-to-credit borrowers comprised 35% of fulfilled borrowers on the platform, while those with poor credit ratings accounted for 10% of the overall number. Most strikingly, an analysis of credit bureau reports revealed how only 2.5% of the borrowers from tier-3 cities who received funds from the platform got any loans from other banks or financial institutions after the Faircent loan, underlining the major credit gap that the online platform is plugging within the economy.
Asia

Equity crowdfunding in Japan poised to grow fivefold this year (Asian Review), Rated: AAA

Crowdfunding campaigns that offer stock in exchange for capital are set to swell this year in Japan as the prospect of high returns draws investors to a relatively new channel for fledgling companies.

Indonesia’s P2P firm UangTeman likely to raise up to m Series B (Deal Street Asia), Rated: A

Indonesian peer-to-peer lending platform UangTeman said it is set to raise a Series B financing round by mid-2018, claiming it would be one of the largest such rounds for a fintech firm in Southeast Asia.

Canada

IOU Financial Extends Credit Facility with Midcap Financial (Cision), Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), online lender to small businesses (IOUFinancial.com), announced today that it has modified and extended its secured credit facility (the “Credit Facility”) with MidCap Financial, (“Midcap”) until December 31, 2020. The amount of the Credit Facility is USD $20 million, with a term portion equal to USD $15 million and a revolver amount of USD $5 million.

IOU and Midcap have further agreed to allocate USD $1 million from the Credit Facility amount of USD $20 million, to support Canadian loan originations. This will be formalized in a separate amendment to this facility.

Authors:

George Popescu
Allen Taylor

Are the UK’s political polls wrong, again?

The UK has been to the polls three times in the past three years, and all produced surprise results – in part because the dominant media narrative was shaped by polling that turned out to be off-beam.

In the last few months opinion polls have suggested that the Tories and Labour are neck and neck, with much media chatter about why Labour is failing to capitalise on the torrid time their opponents are experiencing at Westminster.

Continue reading: Are the UK’s political polls wrong, again?

The UK has been to the polls three times in the past three years, and all produced surprise results – in part because the dominant media narrative was shaped by polling that turned out to be off-beam.

In the last few months opinion polls have suggested that the Tories and Labour are neck and neck, with much media chatter about why Labour is failing to capitalise on the torrid time their opponents are experiencing at Westminster.

Continue reading: Are the UK’s political polls wrong, again?

Tuesday February 27 2018, Daily News Digest

LendingClub

News Comments Today’s main news: SoFi’s new CEO wants to get the company ready to go public. Revolut’s transaction volumes increased 700%. China to crackdown on non-bank lending. Blender raises $16M. Today’s main analysis: Stay away from LendingClub’s notes and shares. Today’s thought-provoking articles: Legacy banks, digital startups see opportunity to go beyond storing money. LendingBlock aims to mainstream […]

LendingClub

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China

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United States

Anthony Noto’s Mission as SoFi CEO: Get the Startup Ready to Go Public (Bloomberg), Rated: AAA

Anthony Noto, the new chief executive officer of Social Finance Inc., is looking to steer the company out of crisis and get it in shape for a potential initial public offering.

The vision for SoFi outlined by Noto didn’t stray far from the one set by his predecessor Mike Cagney, who was ousted after accusations of sexual misconduct inside the company. Noto wants to create a broad online financial-service company, adding checking and savings accounts and wealth management to the main business of refinancing student loans.

SoFi’s new CEO says bank charter remains an option (American Banker), Rated: A

In an interview during his first day on the job, Anthony Noto did not promise any big course changes, though he did leave open the possibility that SoFi will revive its quest to get a banking license.

LendingClub’s Underwriting: Stay Away From The Notes And The Shares (Seeking Alpha), Rated: AAA

I bought my first batch of $25 notes on April 22, 2016. Now, it is important to note that LendingClub is very clear in its advertising that “99% of portfolios with 100+ Notes have seen positive returns.” So I suppose I added a level of risk by not having a portfolio worth at least $2500. But even still, returns can be .1% annualized and count as ‘positive’, but that is not an acceptable return by anyone’s standards given the risks involved in lending to strangers.

My Portfolio

To date, I have received $436 in payments, $96 of which is interest. I have lost $100 on notes that have charged-off, meaning that there is zero expectation of future payment and LendingClub collectors have stopped attempting to reach the borrower. I also have a note that is late, and based on how things have gone so far, I fully expect that to charge-off too and will lose the $11.50 still owed. In short, I have already lost almost 20% of my initial investment, crossing my fingers that none of the 14 notes I still have that are current don’t enter a late status with more than a year to go before the oldest reaches full term. My results have been dismal.

Source: Seeking Alpha

LendingClub’s ratings are A-G, with A being the safest. As you can see, the vast majority of my portfolio sits in A-C, with one E and one G note (LendingClub did away with F and G notes last year).

Source: Seeking Alpha

Legacy Banks and Digital Startups See a Big Opportunity to Move Beyond Simply Storing Money (AdWeek), Rated: AAA

Change can be hard for the financial industry, which is dominated by decades of processes and internal systems. But with a slew of upstarts making their way into the trillion-dollar industry, the old guard is finding innovative ways to beat these challenger brands at their own game.

“A lot of these companies have what we call ‘technical debt’—very expensive mainframe systems that are very difficult to change, run [and are] expensive and obviously that limits their ability to innovate,” said Oliwia Berdak, principal analyst at Forrester Research. “The biggest challenge is often culture … In banks the attitude has always been to perfect [products] before it’s unleashed on customers and [technology] is a big change where you’re working with a certain degree of uncertainty and risk.”

According to data collected by Accenture, 90 percent of banking executives said that their companies needed to “innovate at an increasingly rapid pace just to remain competitive,” but only 47.8 percent say that they are actually “investing comprehensively” in digital.

Another challenge: For all the talk about slick mobile banking apps and services, consumers—gasp—still like going to physical banks to manage financial decisions. Eighty-seven percent of customers enjoy going to a physical bank and prefer to interact with a human while there, per Accenture.

Source: AdWeek

Retail Banks Are Missing Opportunities to Give Digital Financial Advice (Wealth Management), Rated: A

Most customers who received face-to-face financial advice from their retail bank felt their needs were completely met (58 percent), but satisfaction drops when advice is delivered by other means, according to J.D. Power’s 2018 U.S. Retail Banking Sales Practices & Advice Study. Only 45 percent of customers who received digital advice through their bank’s website or mobile app felt their needs were met and only 33 percent felt their needs were met via email.
The majority of customers surveyed for the study (58 percent) said they want to receive advice through their bank’s website and mobile app, but only 12 percent said they received advice in that manner.

Why neobanks need to find a niche offering (Tearsheet), Rated: A

Customers still aren’t excited about digital-only banks. Less than 10 percent of Americans looking to open a checking account would consider doing so at a digital bank, according to a new report by Cornerstone Advisors.

For example, San Francisco-based neobank Chime’s customers are mostly middle-income millennials, with a median age of 29 and incomes between $45,000 to $65,000. Chime says it caters to a gap in the market for younger customers who felt larger institutions weren’t meeting their needs.

Neobanks should focus on a “clear, differentiated value proposition” for the customer, but too many of them are just adding a little technology to a customer experience that’s not terribly different from what the big banks offer, said Satya Patel, a partner at Homebrew, a seed-stage venture capital firm based in San Francisco and an investor in Chime.

How Capital One is rethinking its approach to products (Tearsheet), Rated: A

For the past year, Capital One has been rethinking how it can get out of the too-common approach of “innovating” by layering new technology on top of an old product — it’s realized it needs to entirely reconsider the customer’s interaction with it.

Are banks too blasé about mobile security? (American Banker), Rated: B

About a third of companies have knowingly sacrificed security for expediency or business performance, according to a newly published study, and researchers said that bankers’ responses were consistent with the group as a whole, which included health care and other sectors.

Bringing Credit Invisibles Into Focus with Alternative Financial Data (LendIt), Rated: A

Ten percent of the U.S. adult population do not have a credit score or history with any of the big three credit bureaus.

That’s 1 in 10, or roughly 26 million people who are considered “credit invisible.”

But the financial underserved market spends $173 billion in fees and interest to use $1.94 trillion in financial services, according to the 2017 Center for Financial services Innovation study.

There are four basic categories of people who fall under the credit invisibles umbrella:

  • Millennials: People between 18– 34 and have not yet borrowed money or gotten a credit card.
  • Low-Income: People who don’t make enough money to gain access to credit.
  • Recent immigrants: People who recently moved to the U.S. but haven’t established credit.
  • Mass-affluent: People who earn more than $100,000 per year and pay with cash instead of credit.

Mobile Payments In US To Reach $ 3 Trillion Within Two Years (Payment Week), Rated: A

in 2015, mobile payments in the US represented $550 billion. That’s good by most any standard, but the growth expected is staggering. By 2020, that number is projected to hit $2.8 trillion. That represents a compound annual growth rate (CAGR) of 39.1 percent, which is far beyond most any but the most unlikely investments.

China represents $5.5 trillion in mobile payments use as of right now, a combination of various societal factors like a comparative eschewing of the personal computer in favor of the mobile device, as well as a near-ubiquity of locations that accept the system.

BREAKFORM | RE Closes a Small Lot Subdivision Development in Record Time Via Crowdfunding (PRWeb), Rated: A

BREAKFORM | RE closed its latest small lot subdivision development project in the prime West Hollywood adjacent neighborhood in record time using Equity Multiple, one of the leading real estate crowdfunding platforms. The offering was 145% subscribed in 72 hours.

Credible Appoints Chris Bishko as Chief Financial Officer (BusinessWire), Rated: B

Credible, the consumer finance marketplace that helps consumers save money and make smarter financial decisions, today announced that it has appointed Chris Bishko as chief financial officer. Mr. Bishko will report to Credible’s founder and CEO Stephen Dash.

New York Lawmakers Open to Revisiting the BitLicense (CoinDesk), Rated: B

A bill to reform the regulation could be introduced “very soon,” State Senator David Carlucci told CoinDesk.

But what is likely to remain is the animosity toward the BitLicense, as evidenced by the small but dedicated protest gathering outside just before the roundtable began, not to mention the grievances aired by the two dozen or so attendees.

United Kingdom

Transaction volumes increase 700pc at fintech firm Revolut (Independent.ie), Rated: AAA

Fintech start-up Revolut has seen its monthly transaction volume increase by over 700pc in the last 12 months to $1.5bn (€1.2bn).

Lendingblock Aims to Popularize Crypto Lending in a Secure and Transparent Way (cryptovest), Rated: AAA

Lendingblock aims to become the first to build a marketplace where cryptocurrency lenders meet borrowers, and can exchange their assets across blockchains. The platform aims to bring securities lending to the crypto economy. The current estimates of the market paint a picture of enormous potential for development: in 2017, $2 trillion of assets on loan in traditional securities lending brought approximately $4 billion in revenue. Replicating this in crypto could generate up to $300 million within 3 years as the project notes in its white paper.

 

Britain’s big banks play catch up with fintech with new apps (Reuters), Rated: A

British retail banks are poised to introduce money management apps to compete with those already launched by financial technology start-ups, betting their trusted brands, broad client base and deep pockets will help them make up lost ground.

NatWest sets up network of fintech accelerator hubs (Finextra), Rated: B

The UK’s NatWest is launching four specialist fintech accelerators based in its Bristol, Edinburgh, London and Manchester sites.

China

Screws to tighten further on non-bank lending (The Standard), Rated: AAA

China will tighten its crackdown on illegal fundraising to fend off financial risks, according to an inter-agency meeting.

European Union

European Fintech Alliance raises bank API fears (Finextra), Rated: A

The European Fintech Alliance has fired another broadside in its tussle with the financial services establishment over PSD2, raising fears that banks will develop substandard APIs as a way to fend off competition.

Specifically, the alliance of 74 fintechs, challenger banks and fintech associations is unhappy that the Regulatory Technical Standards on strong customer authentication and common and secure communication under PSD2 allow banks the possibility to be exempted by their National Competent Authority from having to accommodate licensed Third Party Payment Services Providers (TPPs) to access accounts via the so called fallback option in case of malfunction of the API.

International

Marketplace lenders worldwide raised nearly bn last year (P2P Finance News), Rated: AAA

THE GLOBAL marketplace lending sector saw nearly $9bn (£6.45bn) invested across 233 deals last year, marking a new funding record for the industry.

Consultancy firm Fintech Global, who compiled the data, found that equity investment in the sector rebounded to $8.9bn last year after a slowdown in 2016. The total was boosted by the top 10 deals, which raised a combined $4.4bn.

The second half of the year was strongest for funding, with the largest deal of the year closing in the fourth quarter when Shanghai-based peer-to-peer lender Lufax raised $1.2bn.

Online lender ID Finance bolsters security with beahvioural biometrics (Finextra), Rated: A

ID Finance, the emerging markets fintech company, is incorporating behavioural biometrics into its AI-based fraud scoring engine to eliminate fraud, boost loan approvals and reduce the incidence of non-performing loans.

The behavioural biometrics system studies the unique typing and behavioural patterns users display during the loan application process to capture a range of patterns. These include mouse movements, to how fingers interact with a keyboard. The biometrics record patterns such typing speed, typos, flight time between keys, keystroke depressions, as well as the patterns from actual input.

Celsius: Get Dollars When You Need Them or Get Paid to HODL (cryptovest), Rated: A

The global financial system is wobbling. Banks and other traditional financial institutions have so far managed to survive the crisis resulting entirely from their errors, greed, and arrogance. Now, many believe, they won’t live through the crypto revolution unless they embrace it.

Meet the Celsius Wallet – a combination of a digital wallet and a peer-to-peer lending platform where members can earn passive interest on their crypto holdings and use them as collateral to get loans in fiat currencies.

Australia

‘Essential’ brokers advising Xinja on mortgage strategy (TheAdviser), Rated: A

The chief executive of banking disruptor Xinja has revealed that mortgage brokers have been involved in the group’s home loan plans and will be “essential” to its strategy.

The crowdfunded online lender recently received an Australian credit license (ACL) from the Australian Securities and Investments Commission (ASIC) and plans to utilise the broker channel to facilitate its digital home loan approval process.

Mortgage franchise sees decline in loan settlement (AustralianBroker), Rated: A

Mortgage franchise Yellow Brick Road posted a 2% decline to $7.74bn in loan settlement volume in the first half of FY18 over the previous period as it reduced its number of branches.

Overall, the company delivered 85% growth in profitability, with net profit before tax increasing to $0.53m in the first half of FY18 over the same period of FY17. It cited higher revenue – up by 5% – and lower costs – down by 4% – as drivers of its result.

The company also expects the addition of a small business lending product through its partner Prospa to provide additional revenue opportunities for its network and support growth in commercial lending.

India

P2P platforms as NBFCs gaining popularity in small cities, but there’s a catch (Financial Express), Rated: AAA

P Kanwal is from Punjab’s Bhatinda. He has a furniture business which mainly deals in cash, because of which it was difficult for him to get a secured loan from the formal banking system. For him, a Peer-to-peer (P2P) lending platform came as a rescue, which got him an unsecured loan for his kid’s education and expanding his business.

This not just the story of Mr Kanwal, but many more small entrepreneurs who are operating their businesses in Tier-1, Tier-2 cities and far-flung areas, some not even on Google map, who are getting financial support through P2P lending.

The pattern that emerges currently from the P2P lending is that borrowers from tier-2 and tier-3 cities comprised 20% and 17% of the total number of loans disbursed through the platform. The new-to-credit borrowers comprise 35% of fulfilled borrowers, while those with poor credit ratings accounted for 10% of the overall number.

MENA

Peer-to-Peer Lending Startup Blender Raises Million in Debt Financing and Equity (CTech), Rated: AAA

Israel-based peer-to-peer lending startup Blender P2P Israel Ltd. has raised $16 million in equity and debt financing, the company announced Monday.

Latin America

Airfox Launches Mobile App in Brazil, Giving Unbanked Access to Financial Services (PRWeb), Rated: A

Airfox, a mobile financial services company, today launched its free Android app in Brazil, giving millions of people unprecedented access to much-needed financing solutions.

More than 44 percent of Brazil’s population is unbanked, another 30-44 percent lack sufficient access to mainstream financial services, and those with credit cards face interest rates upwards of 200 percent (sources: World Bank, Bloomberg).

Canada

Big banks strive to give better digital financial advice (BNN), Rated: AAA

CTV’s Chief Financial Commentator Pattie Lovett-Reid discusses the Canadian banks’ quest to deliver quality online financial advice in an effort to catch up with the digital age.

Africa

PayJoy Partners With Vodacom & CBA to Bring Smartphone Financing to Tanzania (Crowdfund Insider), Rated: AAA

PayJoy, a San Francisco fintech startup, announced this week it has teamed up with Vodacom and CBA to bring smartphone financing to the country of Tanzania.

PayJoy Teams Up With Allied Mobile to Bring More Smartphones to Africans (Crowdfund Insider), Rated: A

PayJoy, a San Francisco fintech startup, announced on Friday it has teamed up with mobile distributor Allied Mobile to bring affordable smartphone payment plans to markets across the continent of Africa. According to the duo, Allied Mobile will use PayJoy Checkout, an instant paperless finance system for customers without access to formal credit, and the patented PayJoy Lock which enables “pay-as-you-go” access to the phone. 

Authors:

George Popescu
Allen Taylor

Competing With Banks Through a Mobile App

mobile banking

According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost […]

mobile banking

According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost trust in traditional banks, and millennials don’t see the appeal in standing in line for banking services. To fill the void, Varo Money has launched a mobile banking business. The aim is to disrupt how banking is done in the United States. Its goal as to help customers cover their expenses, pay their bills, and build wealth over time.

Varo Money was founded in 2015 by Assaf Guery, Colin Walsh, Mykola (Kolya) Klymenko, and Roger Van Duinen. Its headquarters is located in San Francisco, California. The company has managed to raise over $78 million in various funding rounds with PE giant Warburg Pincus as the lead investor. CEO and Co-Founder Colin Walsh previously served for over 25 years in various reputed financial institutions like Amex in Europe, Lloyd Banking group, and Wells Fargo.

More Than a Bank

Throughout his professional career, Walsh realized a growing need to empower the next generation with tools that will help them improve their overall financial condition. He also realized incumbents were too entrenched in their existing business models to concentrate on developing products for the millennial generation. This became the driving force behind Varo Money. So he built a talented team with deep financial services expertise and a strong consumer technology knowledge. Varo Money is trying to be a one-stop shop for users’ banking needs and wants to inculcate better financial habits among customers by providing them with the right tools and financial guidance.

Last year, Varo Money launched their mobile app and banking products through a partnership with The Bancorp Bank. The partnership helped the platform come to the market with a FDIC-insured product. This helped them compete against incumbent banks and appeal to a larger cross section of the population. But Varo has big ambitions and wants a bigger share of the pie. That’s why the company applied for a national bank charter through the OCC. Even though obtaining this charter will be an uphill task, considering no new charter has been issued in the last decade or so, it’s a courageous move. It puts the spotlight on the young entrant and highlights its intention to be a serious regulated player in the industry.

Varo’s Business Model

The foundation of the Varo Money platform is relationship banking. It offers a basic consumer checking account just like any other bank, but the difference is a customer can perform all the basic functions like deposits and money transfers without having to go visit a bank branch. It even issues a debit card to customers and has started offering savings accounts. A customer can open a savings account on his or her mobile app and Varo offers interest rates up to 50 basis points as compared to 1 or 2 basis points offered by traditional banks.

Apart from the bank account, Varo also offers short- and long-term financing solutions. The short-term line of credit is a flexible line of credit (LOC) and is available to customers unexpected financial challenges. The LOC helps customers manage cash flows while avoiding the need to take a payday loan or cash advance. Also, 3- and 5-year fixed rate installment loans are aavailable for long-term financial needs.

Varo Money’s Technology and Competitive Posture

Varo Money is available as an iOS application with an Android version coming soon. The app is loaded with features like touch ID, a geolocation service to spot nearby ATMs, and the ability to link other accounts through APIs. The app is free and requires no minimum balance to open an account. Also, there are no foreign exchange charges or overdraft fees. Its customer base has access to over 55,000 ATMs worldwide as compared to 18,000 ATMs for Chase and 12,000 for Wells Fargo.

Varo charges a nominal fee for debit card usage. It also sells financial products of its partner bank earning income from that partnership. However, its lending products are a primary income generator. The pricing and structure of LOC products are developed to compete with other alternative lenders in the market.

Varo has a lot of competitors in different niches of banking. Players like Discover, Ally, and Goldman Sachs concentrate on only a few lending segments; these lenders do not follow a complete relationship model, but only offer a specific product. On the other hand, there are neobanks like Chime, Simple, and BankMobile that are single-purpose saving apps. Though they are doing a great job when it comes to user experience, the range of products offered by them is narrow compared to a full suite of products offered by a traditional bank.

This is where Varo Money is different. It is focused on customer relationships and wants the ability to offer the entire gamut of banking services to consumers. This gives it multiple cross-selling opportunities and reduces the cost of client acquisition. Its strategy seems to be paying off. In just 7-8 months, Varo has garnered tens of thousands of customers and over 100k downloads.

Conclusion

Varo Money is focused on replacing traditional banks with its comprehensive suite of online banking services and products. Coupled with its obsession for helping millennials make smarter financial decisions, Varo Money is looking to be an emerging player in the digital bankin sector.

Author:

Written by Heena Dhir.

Monday February 26 2018, Daily News Digest

bank accounts

News Comments Today’s main news: Revolut breaks even, prepares for global expansion. RateSetter finances divorces. Which Isas pay 6% or more. Half of all employers offer financial advice. CoAssets increases revenue by 471% in half a year. Today’s main analysis: Do Americans really want a bank branch? Today’s thought-provoking articles: Ron Suber, Godfather of Fintech. Unscrupulous banks fueled the rise […]

bank accounts

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

APAC

Africa

News Summary

United States

How Helping Your Employees Improve Their Credit Helps Your Bottom Line (Forbes), Rated: AAA

One possible cause of an employee’s poor attitude is that he or she has looming debts or is attempting to climb out of a credit score canyon. Workers facing these challenges are often unable to completely focus on their job responsibilities. It’s no surprise that constant stress over meeting financial obligations leads to a loss of focus and time dedicated to work obligations. And because employees work for paychecks that go toward their debts, it makes sense that they begin to associate the two.

Defeating Debt-Fatigue

About 

Giving the middle class credit: New bill a step in right direction (The Hill), Rated: A

Consumers need access to credit, and bank-fintech partnerships are one way to meet their needs. Indeed, bank-fintech partnerships are good for both consumers and banks.

As I noted, consumers benefit because banks can use fintech to deliver safer, more transparent, lower-cost and more convenient financial products and services over the internet and mobile devices.

Banks benefit because fintech companies can leverage big data and technology, offering the infrastructure banks need to serve and welcome more people into the financial system.

An excellent example of community banks using fintech to compete with the Wall Street banks is Radius Bank, a $1-billion asset institution in Boston, which according to news reports is establishing “long-term relationships” with fintech providers, and is finding them to be “mutually beneficial.”

Ron Suber, the Godfather of Fintech (Lend Academy), Rated: AAA

In this podcast you will learn:

  • Ron’s background and how he became interested in marketplace lending.
  • Why he saw a big opportunity for Prosper back in 2012.
  • What was behind Ron’s decision to leave Prosper last year.
  • What rewirement means to Ron and why it is important.
  • How the typical work week looks today for Ron.
  • Highlights of some of the trips he has taken recently.
  • What it was like doing the road show for the Credible IPO in Australia.
  • Details of the meeting Ron recently had with the Australian Treasurer.
  • What Ron is doing at Prosper these days.
  • Knowing what he knows now, what he would have done differently at Prosper.
  • What the marketplace lending industry still needs to improve upon today.
  • What inning the industry is in today.
  • What Ron looks for when he considers a new investment.
  • Why he pulled the trigger on some of his recent investments.
  • Ron’s view on Marcus and its impact on the online lending space.
  • What area of fintech Ron is most excited about today.
  • How he is able to maintain so many connections in fintech.
  • What is next for Ron Suber.

 

Chris Larsen Of Ripple (XRP) @Google (ValueWalk), Rated: A

Fed Minutes (PeerIQ), Rated: A

The Fed released the minutes of the January FOMC meeting and provided a bullish outlook to the economy with upside risks due to tax reform. The committee indicated that they were on track to raise interest rates in the March meeting, and market participants are expecting 3 rate hikes in 2018.

Meritize Raises $ 6.8M in Seed Funding (Finsmes), Rated: A

Meritize, a Frisco, Texas-based student lending platform, raised $6.8M in seed funding.

Colchis Capital, Chicago Ventures and Cube Financial Holdings led the investment round with participation from ECMC, College Loan Corporation, University Ventures, City Light Capital, PC Squared and Meritize management.

LendingPoint Co-founder Weighs in on Lending Club’s Earnings Report (deBanked), Rated: B

“In my view, [Lending Club’s] underlying problem is that they don’t have alignment of interest between their stakeholders,” Tavares said. “At LendingPoint, we have a different approach. We look at it really as a balance sheet model, which means that we put everything on our books. We use our own equity. We leverage other investors’ capital, but we’re not an origination platform…Lending Club’s model primarily is that they have to continue feeding the beast, so to speak, in order to continue making their revenues. They don’t have inventory to continue generating assets or to monetize going forward. That’s a significant shortcoming in their model,” he said.

Bay Area Man’s Opportunity Fund Giving Small Businesses A Leg Up (CBS Local), Rated: A

About 8,000 small business loans are denied every day in this country, according to the U.S. Federal Reserve. It’s a story Alicia Villanueva knows all too well.

So in 1992, Weaver founded Opportunity Fund, launched with a consortium of 15 banks. But although the San Jose-based non-profit works with traditional lenders, its business practices are a bit different. Weaver says Opportunity Fund delves into an applicant’s financial picture and character.  And since it lends to people with bad or non-existent credit, a granted loan comes with an automatic offer of hands-on financial management support, and a hefty dose of financial responsibility.

Today, Opportunity Fund loans about $5 to $7 million a month to small business owners in California and 13 other states. The money comes from business and private donations. An average loan can range from $2,600 to $250,000. Under Weaver’s leadership, 6,200 businesses have received loans.

Opportunity Fund, along with other partners like Lending Club, is set to expand into other parts of the U.S. later this year.

A Look at CUneXus’ Strong Growth in 2017 (Finovate), Rated: A

Lending automation company CUneXus published some impressive growth stats today. Here’s a quick overview of a few of the California-based company’s success metrics:

  • Grew from 45 FI clients to 72 over the course of one year, from 2016 to 2017, a 60% year-over-year increase
  • Reaches more than 6.5 million potential end consumers across the U.S.
  • Averaging more than $6 million in new loan requests per day
  • Generated more than 140,000 loans totaling more than $2.5 billion with its 1-click borrowing solution

These and other FI clients have reported that CUneXus has helped contribute to their own success, including:

  • Loan processing times cut in half
  • A 110% increase in pre-approved lending activity
  • A 135% spike in funded loan amounts

3 Ways Technology is Bringing in New Real Estate Investors (Realty Biz News), Rated: A

Today, in addition to teaming up with development companies, many investors are using technology solutions to research options remotely. Here are the three trending ways technology is revolutionizing how new investors step into the real estate market space.

Mobile apps like Vacation Rentals by Owner (VRBO) and Airbnb have become popular and more people are now looking to invest in such short-term rentals.

Big data is now a critical offering for the public, and the real estate niche is looking for ways of gathering and presenting the information for driving purchase behavior.

Following the success of the customer-centric applications, it’s clear to see that the industry holds a huge potential if technology is leveraged to bring in new investors. Real estate is the largest global economy asset with figures hinting at $217 trillion – surpassing the world’s GDP of $80 trillion! This is a clear indicator that there is a huge potential for financial freedom creating entrepreneurs looking to tap into the real estate market.

New York Federal Reserve: Fintech Has Improved the Mortgage Lending Market (Crowdfund Insider), Rated: A

The New York Federal Reserve has published a staff report pertaining to “The Role of Technology in Mortgage Lending”.

While still relatively small, this segment of onlien lending has grown annually by 30% from $34 billion of total originations in 2010 or 2% of the market, to $161 billion in 2016 or 8% of the market.

The Fed research finds that Fintech lenders reduce mortgage processing time by about 10 days, or 20% of the average processing time.

Additionally, default rates tank by a whopping 25% indicating the credit process is superior to the antiquated analog method of traditional banks.

 

 

Do the Majority of Americans Really ‘Want’ to Use a Branch? (The Financial Brand), Rated: AAA

According to research conducted by Novantas, 60% of Americans said they would rather open a new checking account in person at a bank branch than on a phone, tablet or desktop computer. Reinforcing this finding is the reality that most consumers still only use digital channels for the most basic banking functions, such as checking account balances and transferring funds. For more complicated issues, like problems with an account or advice, most consumers prefer human contact.

The reliance on branches in North America is almost double other countries, where better digital offerings have been introduced. In fact, according to Novantas, 75% of consumers in Australia report visiting the branch less than once per month, or even less! The UK is very similar while, interestingly, only about half of US consumers exhibit the same behavior.


The banking industry has seen the closure of 1,700 branches in the 12 months ending in June 2017 – the largest one-year decline on record. Capital One Financial Corp. has cut 32% of its branches from mid-2012 to mid-2017, while SunTrust Banks Inc. cut 22% and Regions Financial Corp. has cut 12%.

U.S. Bank Offers New Online Tool to Help Consumers Get Fast, Convenient Car Loan Approvals (BusinessWire), Rated: A

Working with financial technology startup AutoGravity, U.S Bank created a new platform on USBank.com that provides a simplified, streamlined loan application process for users that typically takes just minutes to receive a loan decision.

Car buyers using the new U.S. Bank tool simply:

1) Pick their car and select a dealership online

2) Apply for a pre-approval for a U.S. Bank loan online

3) Close the loan at the dealership and drive off in their new car

When Weak Bank Lending Is a Good Sign (WSJ), Rated: A

Total commercial and industrial loans extended by U.S. banks were up just 1% from a year earlier on Feb. 7, according to weekly Federal Reserve data. For the month of January, C&I loans were down an annualized 10.8% compared to December, according to calculations by Keefe, Bruyette and Woods.

Asked how demand for loans has changed over the past three months from large and medium-sized firms, 84% said it was “about the same” or “somewhat stronger,” while just 16% said it was “moderately weaker.” For small firms with annual sales of less than $50 million, 88% of bankers said loan demand was about the same or better, while only 12% said it was weaker.

Financial incumbents are starting to care about financial education (Tearsheet), Rated: A

On Wednesday, Greenlight Financial Technology — the creator of a smart debit card for kids, teens, and college students — closed $16 million in a Series A funding round. Its investors went beyond your traditional venture capital firm, including a disparate coalition of  financial services bigwigs like SunTrust Bank and Ally Financial as well as the Amazon Alexa Fund, among other VCs. Greenlight, whose mission is to help strengthen financial literacy among kids and give parents a platform to raise “financially smart kids,” will use the new funds to develop its products.

That coalition of Greenlight partners signals a renewed understanding of the reality of most Americans’ financial lives — 57 percent of Americans are financially unhealthy according to the Center for Financial Services Innovation — by legacy financial services companies coming to terms with the fact that they need to be in the business of financial health in order to keep customer relationships in tact over the long term.

Don’t be THAT credit union. Offer short-term loans to your members. (CUInsight), Rated: B

CashPlease is an innovative new short-term, small-dollar loan solution that allows credit unions to implement a consumer loan product efficiently and compliantly.  Here’s how:

  • No additional loan officers or other additional staff needed
  • Underwriting technology that is automated and proven
  • Assistance with compliance best practices
  • Data-driven marketing to educate consumers about the availability of lower-cost loans

ATTORNEY GENERAL HERRING OBTAINS FULL RESTITUTION FOR CUSTOMERS OF ONLINE LENDER (Virginia.gov), Rated: A

Attorney General Mark Herring announced today that his office has reached a settlement with eight affiliated online lenders and debt collectors to resolve allegations that the companies offered unlawful open-ended credit plan loans and engaged in unlawful debt collection practices including contacting borrowers’ employers and implementing wage garnishments. As a result of the settlement, borrowers will receive nearly $150,000 in restitution and forgiven debt.

The settlement includes the following key terms relating to loans made by the lenders during the period from January 2015 through June 19, 2017:

  • The Lenders agree to refund all interest and fees paid by consumers in excess of 12% of the loan amount, totaling approximately $85,000;
  • The Lenders agree to forgive all outstanding remaining debt of Virginia consumers, totaling over $63,000;
  • The Lenders agree to a permanent injunction against consumer lending activity in Virginia;
  • The Debt Collectors agree to a permanent injunction against all debt collection activity in Virginia;
  • The Lenders agree to pay $10,000 in civil penalties and $10,000 in attorneys’ fees;
  • The Debt Collectors agree to pay $75,000 in civil penalties and $10,000 in attorneys’ fees.

The companies include six lenders (Field Asset Service Team, LLC; VIM Holdings, LLC; MR Capital Group, LLC; Nascent Holdings, LLC; B Financial, LLC; and DTS Capital, LLC, collectively “the Lenders”) and two debt collectors (Bradley Goldberg & Miller, LLC and U Solutions Group, LLC, “the Debt Collectors”) that acted in concert to provide and collect open-end credit plan loans made over the Internet to Virginia consumers.

The Lenders offered open-end credit plan loans and imposed “service fees” as high as $160 per month. The Debt Collectors then emailed consumers in an effort to collect on these loans and contacted the consumers’ employers to implement wage assignments and collect money directly from the consumers’ paychecks.

CFPB Drops Lawsuit Against Payday Lender (JD Supra), Rated: B

The CFPB has dropped a recent lawsuit against a payday lender accused of charging up to 950% interest.

The case is CFPB v. Golden Valley Lending, Inc., et al., Case No. 17-cv-02521 (District of Kansas).

United Kingdom

Difficult divorce? RateSetter can help (P2P Finance News), Rated: AAA

The ‘big three’ peer-to-peer lender has been offering a family finance product for a number of months, whereby individuals can apply for a loan to pay for their divorce litigation.

The P2P platform offers personal loans ranging from £500 to £35,000, with terms between one year and five years, according to its website. Borrower rates range from 3.9 per cent to 29.9 per cent.

Unscrupulous banks have fuelled rise of alternative lenders (RealBusiness), Rated: AAA

Now it emerges that one bank was actively working against small businesses in its greed-fuelled quest for profits and bonuses. RBS has been exposed for making up fees, imposing punishingly high interest rates, acquiring equity and property from failed businesses – and pocketing huge bonuses off the back of it.

As a result, it is alternative lenders that are now the go-to for independent businesses in need of assistance when it comes to growth. Take, for example, the business cash advance, which is sometimes referred to as a merchant cash advance. This funding can be from as little as £500 up to £300,000 and is advanced to the business against future credit and debit card turnover.

These Isas pay 6% and more – but should you invest? (Which?), Rated: AAA

Last week, Ratesetter launched an Isa paying a top rate of 5.8%, while yesterday (24 February), Easyjet founder Stelios Haji-Ioannou launched an tax-free account aiming to pay 4.05% per year.

Other innovative finance Isas are currently paying returns as high as 16% a year.

Zopa is currently paying between 4% and 4.6%. Zopa primarily lends to individuals, Ratesetter lends to both individuals and businesses whereas Funding Circle lends exclusively to small businesses. The latter’s innovative finance Isa is only available to existing customers, but is projecting an annual return of 7.5%.

EasyMoney launches Innovative Finance ISA (P2P Finance News), Rated: A

EASYMONEY, part of Sir Stelios Haji-Ioannou’s ‘easy’ family of brands, has launched in the UK with an Innovative Finance ISA (IFISA) offering a target rate of 4.05 per cent a year.

Jacob Rothschild-backed firm plans £100m float (Professional Adviser), Rated: A

Augmentum Fintech, which is preparing to float next month, has unveiled plans to issue a target of 100 million ordinary shares at a price of £1 each, with a maximum issue size of 125 million shares.

FCA seeks feedback on its ideas for a global sandbox (Mondaq), Rated: A

The FCA’s new webpage contains its ideas for a global sandbox [14.02.02]. Its current sandbox only allows firms to test their ideas in the UK.

It highlights three areas:

  • addressing “pre-identified challenges” in areas known for “regulatory problems that cross jurisdictional boundaries” e.g. AML and KYC on-boarding.;
  • enabling firms wishing to expand in different markets to “bring their ideas to market more quickly and easily, creating more effective competition.” The FCA asks for firms who could benefit from testing out their ideas in a number of markets to get in touch; and
  • policy and regulatory challenges – the FCA suggests the sandbox could be used to convene “joint events and papers on emerging trends and challenges” using the experiences of the range of firms and regulators taking part to develop “consistent approaches”.

Brexit to shut the door on lengthy London house price boom (Euronews), Rated: A

British inflation will outstrip gains in house prices this year and next, particularly in the capital, as uncertainty over Brexit and weak consumer spending power hits demand, a Reuters poll found on Friday.

Next year, house prices will rise 0.9 percent in London and 2.0 nationally, still both below the 2.1 percent expected inflation rate. In 2020, London prices will increase 2.0 percent and by 2.3 percent nationally.

“Quite simply, with loan-to-income ratios for first time buyers sitting at around four times, average salaries of 33,000 pounds ($46,000), and your average flat in London costing over 500,000 pounds, it’s extremely difficult to see how London can be viewed as anything but very expensive,” LendInvest’s Lockhart said.

China

Hang Seng Bank deploys fintech to simplify mobile banking, mulls use of facial recognition at ATMs (SCMP), Rated: A

Hang Seng Bank plans to expand the use of fintech to mobile banking services and is also toying with the idea of incorporating facial recognition, after initial success with iPhone X, to allow customers to withdraw cash from its ATMs across the city, according to its chief executive.

The global facial recognition market is forecast to be worth US$6.5 billion by 2021, up from US$2.3 billion in 2016, according to estimates from research company Technavio.

European Union

Klarna Bank AB appoints Niklas Savander to Board of Directors (LeapRate), Rated: B

Klarna Bank AB has announce the appointment of Niklas Savander to the Board of Directors with effect from Thursday 22nd of February 2018. Niklas Savander will replace Niklas Adalberth.

International

Digital banking start-up Revolut breaks even as it prepares global expansion (CNBC), Rated: AAA

Revolut said Monday that it had broken even for the first time in December, and that its monthly transaction volume surged to $1.5 billion, an increase of over 700 percent in the last 12 months.

The start-up has signed up a total of 1.5 million users to its mobile app, up 50 percent from a figure it achieved in November.

Cryptocurrency A Risk Factor, Bank Of America Says In Annual SEC Filing (International Business Times), Rated: A

The 10-K filing referred to cryptocurrencies, without naming any specific one, three times under a subsection titled “Risk Factors” and described three different ways in which they could pose problems for the bank’s business.

The first reference was under geopolitical risks, with the bank talking about international money-laundering.

The third reference was along similar lines, with BoA saying: “The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions,” adding it “might not be successful in developing or introducing” competing products at lower prices.

 

Australia

SPOTCAP AWARDS SCHOLARSHIP TO ASPIRING FINTECH ENTREPRENEUR (Global Banking & Finance), Rated: A

Spotcap today announced Vishal Uppal as the winner ofthe Fintech Scholarship 2017. The first of its kind in Australia, the scholarship awards one aspiring graduate with an interest in fintech $10,000 towards the cost of their tuition.

India

Guide to smart banking: Why P2P lending is an ‘interest’ing idea (Business Line), Rated: AAA

P2P lending, on the other hand, is a completely tech-driven investment, which gives a net annualised return of 18-22 per cent to lenders, who start earning their principal and interest back from the very first month. The returns are higher because you can lend directly to the borrower and the intermediary costs are drastically reduced.

A majority of investors on these platforms are salaried professionals aged between 20 and 35 years looking for additional sources of income.

On Faircent.com lenders can invest as low as 750 per loan size or choose tech-enabled processes like auto-invest to save time. These features are a major attraction for millennials and, in fact, according to the last Research and Analytics report on P2P lending published by Faircent.com, 64 per cent of lenders are below 35 years of age.

Retirement plan: How real estate investment can help millennials secure their future (Financial Express), Rated: A

A growing number of millennials are also opting for investments into commercial real estate, as opposed to investments into residential properties made by their parents.

Commercial real estate: better yields for better financial security

Leases on these properties are usually taken out for multiple years by blue-chip companies, thus ensuring that steady rental income is assured for a specific duration of time. With India’s rise as a prominent international business destination, the sector is also witnessing remarkable growth; the country’s 537 million square feet of rent-generating commercial real estate inventory is currently estimated to be worth nearly $70 billion.

How technology is enabling millennials to make high-value real estate investments

The investments can start as low as Rs 5 lakh, making the entire process extremely affordable for millennial buyers whilst also allowing them to make multiple investments to diversify their portfolio, increase rental incomes, and minimise risk. Average rental returns to the tune of 7%-8% are quite common, while the overall returns can be as high as 22%.

India is projected to become the youngest country in the world by 2020, with a median age of 29.

Movers And Shakers Of The Week [19-24 Feb 2018] (Inc42), Rated: B

BigWin Infotech, a government recognized fintech startup has appointed Suneel Mohnot a the Director on its board.

BigWin Infotech is a self-funded startup who has recently forayed into P2P lending business through its solely owned market place PaisaDukan.com post revised RBI guidelines for NBFC-P2P and one of the strong contenders for NBFC-P2P license.

APAC

CoAssets Reports Half-Year Results With 471% Increase In Revenue (AsiaOne), Rated: AAA

CoAssets Limited (“CoAssets” or the “Group”) (ASX: CA8), a leading crowdfunding platform and Fintech lender specialising in facilitating funding for businesses reported its financial and operating results for the half year ended 31 December 2017, together with an update on the Group’s growth and capital strategy to the Australian Securities Exchange (ASX) on 22 February 2018.

Total reported revenue increased by 471% from S$446,040 in 2016 to S$2,547,554 in 2017. Group’s profits in year 2017 was S$2,046,013, from a loss of S$3,899,325 in 2016. This increase in profits was due to business activities as well as investment gains. Operating expenses decreased from S$3,570,287 in 2016 to S$2,577,013 in 2017. This represents about S$1million or 28% in cost savings. Registered investor base reached 433,805 as at 31 December 2017. This represents an 88.17% increase from 30 June 2017.

Singapore — CoAssets Pte Ltd (“CAPL”)

After receiving the Capital Market Services (CMS) licence from the Monetary Authority of Singapore (MAS) in June 2017, the company crowdfunded more than S$5.11million worth of deals from 1 July 2017 to 31 December 2017.

Singapore — CoAssets International Pte Ltd (“CAI”)

The company disbursed more than S$6.65million worth of loans over the last 6-months, with its loan book growing to more than S$16.21million as at 31 December 2017.

China — CoAssets China

This represents the Group’s fastest growing market, achieving remarkable growth in registered user base of more than 117% (from 173,000 to more than 375,000 members) from 1 July 2017 to 31 December 2017. The CoAssets platform in China funded more than RMB28.15million (S$5.94million) worth of crowdfunding projects over the last 6-months in 2017.

Hong Kong — Fintech Pte Ltd

In April 2017, the Group acquired Fintech Pte Ltd, an online corporate cash management platform called “PiggieBank ” in Hong Kong.  Since then, PiggieBank has successfully managed funds flow of more than S$21. 39million as at 9 February 2018.

Hong Kong — Brighten Finance Limited (“BFL”)

As at 31 December 2017, BFL’s loan book was worth HK$36.91million (S$6.27million).

EF, KoinWorks Serve Online Loans for Courses (netral english), Rated: A

English First, an English Education Institute signed a joint venture with KoinWorks – a Indonesian Peer to Peer Lending Platform – that serves investments and online loans without collateral for various productive loans.

Africa

Blockchain and financial services disruption (Punch), Rated: AAA

Key areas of the financial services that are most likely to be affected by blockchain include transfers, payment and lending. We have seen different start-ups such as OneFi, Inspire, Upstart, and Funding Circle, playing critical roles in peer- to -peer lending and services to individuals.

The closest we have seen so far is what VoguePay, a leading online payment start-up, has done.

It recently launched a multi-currency payment platform to enable businesses to send and receive payment from local and international customers, allowing merchants to accept payment in dollars, Euros, Rands, Cedis, Naira and Bitcoin payment.

The average Nigerian bank pays about five per cent interest rate on fixed deposits while requesting for two-digit interest rates on loans from customers. Economically, this does not make much sense because the margin is too wide when compared to what they offer for holding customers’ fund. Many people are tired of the highly monopolistic nature of banking.

Authors:

George Popescu
Allen Taylor

Guest post: The Petro and the Assignat

In this guest post, Tony Yates compares Venezuela’s initial coin offering to the creation of assignats during the early stages of the French Revolution.
Continue reading: Guest post: The Petro and the Assignat

In this guest post, Tony Yates compares Venezuela's initial coin offering to the creation of assignats during the early stages of the French Revolution.

Continue reading: Guest post: The Petro and the Assignat