Further Reading

Three tribes of austerity; Japanese markets in everything; A short list of Turkish banking problems; Social media versus the constitution; Beach villain; Current accounts and retained earnings

Three tribes of austerity; Japanese markets in everything; A short list of Turkish banking problems; Social media versus the constitution; Beach villain; Current accounts and retained earnings

Further reading

Does Amazon have more power than the Fed; KFC’s dystopian marketing stunt; hyperpolyglots; the something’s-not-quite-right economy; and more.

Does Amazon have more power than the Fed; KFC's dystopian marketing stunt; hyperpolyglots; the something's-not-quite-right economy; and more.

Buying and Selling Cars Through a Mobile App

car selling

The first-ever mobile application making automobile transactions possible at the touch of a screen, Blinker eliminates the role of the middleman in the car buying, selling and financing process. How Blinker Works Blinker‘s focus is on facilitating a hassle-free experience for all stakeholders involved in an auto purchasing transaction. Blinker uses a lot of dealer […]

car selling

The first-ever mobile application making automobile transactions possible at the touch of a screen, Blinker eliminates the role of the middleman in the car buying, selling and financing process.

How Blinker Works

Blinker‘s focus is on facilitating a hassle-free experience for all stakeholders involved in an auto purchasing transaction. Blinker uses a lot of dealer tools used to execute trades, but it has leveraged technology to enhance the experience and create a solution that is executable online without any middlemen driving fees. This allows users to buy and sell cars for free on the platform.

The downloadable app simplifies the process of getting approved for credit, and all the user has to do is upload a picture of his driver’s license. Documents are signed with Docusign. The user posts a picture of the car she is selling and the fund transfer is done online, which eliminates the need for any physical interaction as the entire transaction takes place on users’ smartphones.

All transactions start with one picture of the car and, in less than three seconds, the company can find out all the details about the car from the year to the make, model, approximate value, and the number of miles it has been driven. The company has partnered with Carfax and Blackbook for these reports.

Blinker has its own patented technology. Out of 17 patents filed with the U.S. Patent Office, 13 have been issued.

The Blinker Team and Platform

The Blinker platform has the same credit requirements for auto finance as any other bank. It gives instant pre-approvals with a picture of a driver’s license and, upon authorization, for a soft credit pull. The idea is to have the customer approved first followed by the car. Customers have access to unique offers on each vehicle based on credit score, income, and their ability to pay. The platform does not see the seller, the buyer, or the car.

Currently operating in four states, Blinker’s model is able to generate great auto finance deals for its users. Blinker took its own equity to create a loan portfolio to prove the viability of the model. The business caters to a full spectrum of borrowers having FICO scores between 560 and 800. The loan-to-value (LTV) ratio is usually 20% less than the average dealer offer. The portfolio has faced no delinquencies, highlighting the success of the company’s lending algorithms.

The company has raised a total of $51 million in funding and onboarded 65 professionals in its Denver office, out of which 30 are engineers on the lending side. The company’s president was in senior management at Americredit, a giant in auto finance solutions. All of the above has given birth to a company that is rapidly capturing market share and mind share in the auto industry.

Blinker is now entering into a relationship with Allied Bank and talks are going on with other customers and member groups to expand its reach. Its foundation is to be a fee-based company. It wants to follow an asset light model with no inventory or loans on its books.

Blinker’s Selling Process

The car prices and terms of sale are displayed in the mobile app for full transparency. Car shoppers can set a filter for distance/location, and more, as they search for the perfect vehicle. The average price of cars available on the app is $14,000, but it is not restricted to any particular segment and has even sold a $105,000 Ferrari. Blinker has also partnered with Manheim Auctions, the largest car auctions company in the world, to sell its inventory directly to individuals. The company is extending into selling rental cars and partnering with OEMs to sell cars not picked by dealers.

On average, a Blinker seller gets $2,500 more on a trade than they do through a dealership. Buyers save an average of $2,000 as compared to buying from a dealer. Refinancing from Blinker helps the average customer save $130/ month.

The app has been able to garner a lot of support in a short time since launch. There have been over 175,000 downloads, and Blinker has been successful in generating $44 million in sales. That includes about 3,500 vehicles, 8,000 listings, and the funding of about 650 to 700 loans.

The Changing Auto Industry

Although there are a lot of companies in the market like Shift, Carmax, and Carvana, they are hampered by a model that charges 8%-10% of the sale price, serves only metros and/or focuses only on one part of the trade. There are no players in the market, like Blinker, that facilitate the entire transaction from listing and pricing to car finance. Blinker is able to execute transactions anywhere and anytime. All that is required is access to an internet connection and Blinker will be able to complete a car trade.

Currently, the company is completely operational in Colorado, Texas, Florida, and California. Six more states are ramping up for service. It is looking to expand across the U.S. soon and, by the end of 2018, Blinker hopes to be in all 50 states. The platform will ensure that it is free for buyer and seller. Its model is to generate fees via loans originated.

Target Customers and the Blinker Roadmap

When Blinker entered the marketplace, it had expected that the majority of its clients would be millennials. However, it realized that clients are of all ages and are buying and selling all types of cars. But to ensure optimum portfolio for its loan partners, Blinker does not finance cars below $8,000 in value or over 10 years old.

Blinker is on a mission to empower dealers and customers to transact through their smartphones. It is getting a lot of attention from national strategic partners that love the technology. Its main focus is on acquiring customers as its technology is completely built out. It will tie up with strategic partners to provide complete end-to-end transactions for members and provide revenue share opportunities to make it a win-win proposition. The aim is to become the pre-eminent platform for buying and selling used cars in the U.S.

Blinker’s Founder

Rod Buscher founded the company in 2013. He was into the brick-and-mortar auto space, operating in the industry since 1973. As cofounder of the John Elway dealership, partnering the legendary quarterback until selling the dealership in 2013 to launch Blinker, he has inside knowledge of how dealerships operate and cars are sold.

With deep domain expertise in the space, Buscher realized that people usually do not like what they get for their car trades through the dealer and are not satisfied with the financing experience. Using Craigslist for selling cars is not secure, and selling cars with liens is another headache. Blinker was born to solve this gap in service and provide an app which would “put people in control of buying, selling and financing cars.”

Buscher is out to revolutionize the car selling industry. He’s off to a good start.

Author:

Written by Heena Dhir.

Wednesday August 29 2018, Daily News Digest

US economic growth poised to accelerate

News Comments Today’s main news: Yirendai’s Q2 2018 financial results. Crowdstacker exceeds 50M GBP in funds raised for British businesses. Data breach complaints soar in the UK. Flender raises 10M Euro for SME lending. Google partners with banks on digital lending in India. Today’s main analysis: Moody’s says Q2 2018 has a strong outlook. Today’s thought-provoking articles: If Wonga […]

US economic growth poised to accelerate

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Venmo is considering eliminating its public feed (Business Insider) Rated: AAA

PayPal executives are in talks about potentially eliminating the ability for users to publicly post and view transactions on Venmo, its peer-to-peer payments app, Bloomberg reported, citing a person familiar with the matter.

2Q 2018: Strong performance in line with positive outlook (Moody’s Email) Rated: AAA

The PMIs reported strong results in the second quarter of 2018, reflecting growth in new production, earned premiums from high-quality recent vintage business and lower incurred losses. Although mortgage rates have begun trending higher and housing affordability lower, we believe credit fundamentals will remain positive for the sector, and likely drive healthy performance through the second half of the year.

Other key areas the report looks at in-depth include:

  • New business volume rises in Q2. In Q2 2018, PMIs produced about $80.3 billion of new insurance written (NIW), up 14% from Q2 2017. For the first half of 2018, NIW totaled $138.8 billion while production was also up 14% on the year.
  • Premium rate cuts highlight competitive pressure. In April 2018, MGIC (senior Ba2) reduced its premium rates on its most popular policies by about 11%, effective June 2018. Competitors, inspired by corporate tax cuts, then cut rates themselves, essentially wiping out gains from the tax cuts. Given the current high persistency rates and expected ordinary loan amortization profiles, we do not expect the new lower premium rate business to become a majority of in-force business for several years.
  • GSE pilot programs signal potential changes in industry dynamics. In March 2018, Arch Capital Group (ACGL, senior Baa1 stable) and Freddie Mac (FMCC, senior Aaa stable) announced a new risk transfer pilot program, IMAGIN (Integrated Mortgage Insurance) through a newly formed Arch subsidiary that will cede 100% of the risk exposure to multiline reinsurers as an alternative to traditional mortgage insurance. A few months later, in July, Fannie Mae (FNMA, senior Aaa stable) announced a pilot program for enterprise paid mortgage insurance (EPMI). Both programs effectively serve as substitutes for single premium MI policies and highlight the evolution of the mortgage risk transfer market.
Sources: U.S. Bureau of Economic Analysis, Moody’s Analytics forecast

Read the full report here.

US credit card firm Deserve raises $ 17m funding (Fintech Futures) Rated: A

US-based credit card company Deserve has raised $17 million in Series C funding for its Generation Z ambitions.

The round was led by an unnamed investor, with additional participation from Accel, Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group and GDP Venture.

These are the most valuable cities in the US (Fox Business) Rated: A

The value of residential real estate in New York is greater than the GDP of all but six countries, according to a new study from online lenderLendingTree, which ranks the most valuable cities in the U.S. based on real estate values.

1. New York, $2.54 trillion

2. Los Angeles, $2.17 trillion

3. San Francisco, $1.25 trillion

4. Chicago, $813 million

5. Washington, $795 million

6. Boston, $697 million

7. Miami, $648 million

8. Seattle, $641 million

9. Dallas, $549 million

10, San Jose, Calif., $535 million

Docutech owner Serent Capital increases investments in fintech lending (Housing Wire) Rated: A

Serent Capital, a San Francisco-based private equity firm, and owner of Docutech, just made its 12th investment in fintech and fourth in the lending technology market.

GDS Link helps clients efficiently manage credit risk strategies and improves lending and account management efforts.

Why P2P lending should be a part of retirement portfolio? (The Financial Express) Rated: A

Below are four reasons why peer to peer lending should be an integral part of retirement portfolio:

1. Diversified Portfolio – Retired people should always have a backup option if in case one of the investment plans fails and someone suffers a loss.

2. Low Risk Investment – While it is a common belief that P2P lending carries higher risk, the reality is different.

3. Compounding Benefits – Since one receives a part of interest and principal amount back every month, the retired person can reinvest this amount and earn interests on the whole amount.

4. Is It Safe To Invest Retirement Money In P2P Lending? – Since P2P lending removes the intermediary and is a relatively new concept, many people are sceptical about this investment option.

United Kingdom

Crowdstacker Milestone: Online Lender Exceeds £50 Million in Funds Raises For British Businesses (Crowdfund Insider) Rated: AAA

Crowdstacker, a UK-based peer-to-peer (P2P) lending platform, recently announced it has exceeded £50 million in funds raised for UK businesses that are featured on its portal. According to the online lender, 100% of the P2P lending funds raised for British businesses through Crowdstacker has come directly from Crowdstacker’s “crowd.”

Top tech investors stand to lose millions if Wonga collapses (The Times) Rated: AAA

Some of the technology industry’s most respected investors face losing tens of millions of pounds as Wonga stands on the edge of failure.

Early investors including Accel, Balderton Capital and Greylock Partners are among the backers of the sub-prime lender that face losing their entire investment as it teeters close to collapse amid a rise in compensation claims.

Wonga’s backers had put about £90 million into the payday lender, including £10 million in the past month. However, if Wonga is placed into administration, shareholders are likely to be left with nothing as its assets are sold off to pay creditors, including customers with outstanding claims for redress.

If payday lender Wonga collapses what will it mean for customers? (The Guardian) Rated: A

Aside from the well-rehearsed arguments about whether or not to take out payday loans (on Monday Wonga’s website was advertising a short-term loan at an annual percentage rate (APR) of interest of 1,509%) the latest news about the company’s struggles should not particularly affect that choice. The company is still operating and is making loans. If Wonga collapses, those loans will likely end up being owned by another lender.

If Wonga falls, responsible credit providers must be there for those in need (Metro News) Rated: A

Research from StepChange Debt Charity found that an estimated 1.1million people used high cost credit for everyday household costs in 2016. A recent update of this research found that this had increased in 2017 to an estimated 1.4million people. It’s becoming a bigger and bigger problem.

This has led to a situation where one in four working adults in the UK are now unable to afford an unexpected £500 bill and a growing number of low income households are becoming reliant on credit to cover basic needs.

UK data breach complaints soar under new EU rules (Financial Times) Rated: AAA

The Information Commissioner’s Office (ICO) said they received more than 6,200 complaints in the first 6 months of GDPR; the majority of complaints were from customers saying their data was shared without permission and companies self reporting cases where data was accessed.

10 percent of complaints come from the financial services market, other sectors include education, healthcare and local governments.

The ICO is looking to increase funding by almost 50 percent and hire more than 200 more workers to handle the amount of complaints.

Victory Park Capital fund holds steady with dividend, eyes performance fee (Altfi News) Rated: A

The £332m VPC Specialty Lending investment trust has announced its second consecutive dividend of 2p per share this year, its target level, following a two year turnaround amid lower than expected returns, according to an investor update.

Following on from recording its highest monthly return to date for May 2018 the closed-ended fund has declared an interim dividend of 2p pence per share for the three-month period to 30 June 2018.

Tide CEO: Why SMBs Need Their Own Bank (PYMNTS) Rated: A

Small business (SMBs) are distinct from other customer groups, Tide CEO Dr. Oliver Prill told Karen Webster during this week’s Monday Conversation, with a specific set of product and service needs that often go unmet because they are so unique. That means small businesses of all sizes — particularly the small businesses with fewer than 10 employees — simply deal with inefficiencies in their work flow that are actually rather damaging.

Starling looks for further funding as users grow fivefold (Financial Times) Rated: A

UK based digital bank Starling Bank is looking to raise additional capital as the bank has seen user growth reach more than 200,000, up from 43,000 in November.

The bank is also making significant progress on account balances, Starling accounts averaged £420 while competitor Monzo came in at less than £150.  The fresh capital raise will be led by existing investor Harald McPike who owns more than 50 percent already and is a Bahamas based hedge fund investor.

Starling to help RBS develop digital bank (FinExtra) Rated: A

Royal Bank of Scotland (RBS) has reportedly enlisted the help of challenger bank Starling in its efforts to develop a digital bank of its own.

The news, reported by The Times newspaper, came as a result of a letter to shareholders from Starling’s chief executive Anne Boden which stated that it has signed a contract “to provide payment services to support new initiatives at RBS/NatWest”.

China

Yirendai Reports Second Quarter 2018 Financial Results (PR Newswire) Rated: AAA

In the second quarter of 2018, Yirendai facilitated RMB 11,736.2 million (US$1,773.6 million) of loans to 177,754 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 38%; 23.4% of loan volume were generated by repeat borrowers who have successfully borrowed on Yirendai’s platform before; 76.3% of the borrowers were acquired from online channels; 100% of the loan volume originated from online channels was facilitated through mobile.

In the second quarter of 2018, Yirendai facilitated 202,380 investors with total investment amount of RMB 12,175.4 million (US$1,840.0 million), 100% of which was facilitated through its online platform and 96% of which was facilitated through its mobile application.

Chinese fintech company X Financial files for a $ 250 million US IPO (Nasdaq) Rated: AAA

X Financial, which operates a peer-to-peer lending platform in China, filed on Tuesday with the SEC to raise up to $250 million in an initial public offering.

The Shenzhen, China-based companywas founded in 2014 and booked $445 million in revenue for the 12 months ended June 30, 2018. It plans to list on the NYSE under the symbol XYF. X Financial filed confidentially on January 8, 2018. Deutsche Bank and Morgan Stanley are the joint bookrunners on the deal. No pricing terms were disclosed.

China Holds to Hard Line on Peer-to-Peer Lending, Pledged-Stock Loans (Caixin) Rated: A

At a recent meeting entitled “Disposing of Financial Risk,” regulatory officials devoted most of their time to discussing China’s peer-to-peer (P2P) lending industry and pledged-stock loans.

In fact, they spoke of little else.

Beijing (Failed) Protests Over Collapse of China’s Peer-to-Peer (P2P) Industry (Whats on Weibo) Rated: A

China’s P2P industry has seen a quick rise and fall over the past year, causing some panic and chaos.

Earlier this week, China’s New Fortune magazine reported of one case where an investor had just invested 360,000 RMB (±US$52,700) into P2P platform Guojinbao, when they discovered the platform was already abandoned the day before, and there was no way to get their money back. It is just one among many recent cases.

European Union

Irish P2P Lending Platform Flender Raises €10 Million Through Latest Funding Round For SME Lending (Crowdfund Insider) Rated: AAA

Irish peer-to-peer lender Flender has reportedly raised €10 million through its latest funding round to lend to small and medium-sized enterprises (SMEs). Flender, which was launched in early 2017,  is authorized and regulated by the Financial Conduct Authority under Registration Number 657861. The online lender is now on a mission to enable businesses and consumers the ability to borrow money through their existing networks of friends, family, and customers. 

Flender also reported that it intends to offer established small businesses an innovative new way to access finance by leveraging their loyal customer base. The lender will facilitate and formalize an existing and large market of social lending across the UK and Ireland.

International

Aussie super asset allocation “riskier”: Research (Financial Standard) Rated: AAA

UBS Asset Management’s latest pension fund indicator report highlights the propensity of Australian superannuation funds to invest a substantial portion of retirement savings in “risker” assets such as equities.

According to the report, the asset allocation of Australian superannuation funds is heavily geared towards equities, with 45% of assets allocated to equities. The asset manager said Australia’s equity allocation is almost double its bond allocation, which attracts 26% of assets.

Source: Financial Standard

MAKING SENSE OF PRIVATE CREDIT FUNDS (all About Alpha) Rated: AAA

The paper distinguishes among five strategies, then adds a catch-all “other” category. The five are:

  1. Business Development Companies. The BDCs operate under specific regulations mandating their “significant managerial assistance” to their debtor companies. The majority of BDCs are treated as RICs for tax purposes, which involves additional regulatory oversight.
  2. Senior Loan Funds. These are closed-end vehicles that make first or second lien loans to small- and mid-sized companies. They use floating rate spreads composed of a risk premium and the benchmark rate, and typically target gross returns in the neighborhood of 10%.
  3. Mezzanine Funds. These are also closed-end vehicles. Typically, they make junior capital investments (often a hybrid between debt and equity) in small- and medium sized companies funding acquisitions, growth, recapitalizations, or buyouts. They typically target return in the mid- to upper teens, given their position subordinate to the senior liens.
  4. Distressed Debt Funds. These can be either closed- or open-end vehicles. They invest in the debt securities of mid- to large-sized companies that are experiencing financial distress, seeking deeply discounted purchases. There are a variety of strategies involved under this broad heading, including loan-to-own or turnaround lending.
  5. Special Situation Funds. These are typically closed-end vehicles. They, too, target mid- to large-sized companies in tight circumstances. They have a much broader mandate than the distressed debt funds, investing across the capital structure.

Getmoder Foundation Offers a Reliable Platform for Lending and Borrowing Crypto Currencies and Digital Assets (Digital Journal) Rated: A

Cryptocurrency has significantly opened a new world in financial sector which was primarily owned by bank namely lending and borrowing capital. Even through peer to peer lending and borrowing has developed in the recent years in fiat currency space, it’s only recently hat options for lending and borrowing cryptocurrencies are on the rise. Getmoder Foundation provides reliable platform for this recent practical option.

Getmoder is a known open-platform for lending and borrowing cryptocurrencies and digital assets. This platform allows lenders and borrowers to enter to fully collateralized crypto versus crypto lending agreement. With Getmoder lenders will be able to earn increased interest income on their long-term digital assets investments.

Australia

Australia: How can you avoid unfair contract terms? (Mondaq) Rated: AAA

Have you heard about Prospa? This startup shot to Australian Financial Review fame in early June this year. It is an online lender which offers unsecured business loans to small businesses which big lenders consider to be too risky.Their own business was going remarkably well. So well in fact that Prospa was getting ready to take the ASX by storm and launch an IPO. The excitement was surely palpable, the founders would have been so proud of themselves and their strong team for getting to this point. The dollars were about to roll in!

And then, right before the IPO was about to take place, ASIC raised concerns purportedly regarding Prospa’s potentially unfair contract terms. This is not surprising given the climate of industry-wide reviews of lending practices. This concern led to postponement of the IPO on 6 June 2018, only 15 minutes prior to launch. A $576 million dollar ASX float on hold, indefinitely, whilst these standard form contracts were scrutinised. The issue? Potentially unfair terms in their standard form contracts contrary to the Australian Consumer Law.

India

Google Teams With Banks to Launch Digital Lending for India (Bloomberg) Rated: AAA

Alphabet Inc’s Google is partnering with four Indian banks to grant consumer loans online, as the fight for a $1 trillion digital finance market intensifies.

The U.S. search giant is teaming with HDFC Bank Ltd.ICICI Bank Ltd.Kotak Mahindra Bank Ltd. and Federal Bank Ltd. to offer instant, pre-approved loans to customers “right within Google Pay in a matter of seconds,” it said in a statement.

From Facebook Inc.’s WhatsApp to Jack Ma’s Ant Financial, internet giants are joining a race to provide financial services in the world’s fastest-growing mobile arena. Online lending is becoming the next frontier as mobile users look for small loans with minimal paperwork, served to them even without credit ratings as fintech companies use data and algorithms to determine risk.

Digital Lending Startup ZestMoney Raises $ 13.4 Mn From Xiaomi, Others (Inc42) Rated: A

Bengaluru-based digital lending startup ZestMoney has raised $13.4 Mn in extended Series A round of funding led by Chinese smartphone maker Xiaomi.Existing investors PayU, Ribbit Capital and Omidyar Network also participated in the round.

The company plans to strengthen its technology and data science capabilities as well as expand use cases for the core ZestMoney Affordability Product.

How digital lending is helping bridge the credit gap in India (Qrius) Rated: A

Over the past two years, digitisation and the rising penetration of internet in India have irrevocably transformed the lending process from being extremely long and complex to a quick and technologically-exercise. The emergence of digital lending has challenged the stronghold of traditional financial institutions as the chief credit enablers in the economy while presenting consumers with an opportunity to access credit in a simplified and efficient manner.

Credit lending in India: Then and now

For decades, the credit lending market in India has been dominated by traditional banks and Non-banking financial companies (NBFC’s). Their complex policies and methods of operation have made it extremely difficult for the majority of Indians to avail credit. As a result, the gap between the demand for and supply of credit has amplified, while the number of underserved consumers in the country has risen exponentially.

Asia

Indonesia offers a fresh battleground for fintech (Nikkei Asian Review) Rated: AAA

Coinhako is just one of the many “fintech” startups flocking to Indonesia. The Indonesian Fintech Association said there are more than 200 fintech companies in the country, including the 31 e-payment providers that have secured licenses from Bank Indonesia and more than 60 peer-to-peer lending companies registered with the Financial Services Authority.

Despite still seeing fintech companies as potential threats, Indonesia’s major banks are also investing in local startups. Bank Mandiri has invested in P2P lending startups Amartha and KoinWorks through its venture capital arm Mandiri Capital Indonesia.

P2P Lending Fintech May Contribute Rp25tn to GPD, Indef Says (Indonesian News Portal) Rated: B

The Institute for Development of Economics and Finance (Indef) said that fintech-based companies offering peer-to-peer lending services can improve Indonesia’s macroeconomics capability.

Indef’s review, done together with the Indonesian Fintech Association (Aftech), estimates that fintech development in Indonesia can contribute up to Rp25.97 trillion to the GDP.

Speaking at the discussion with the theme “Lending Fintech Roles to Indonesia’s Economy” in Jakarta, August 28, Indef economist Bhima Yudhistira Adhinegara said that the Rp25.97 trillion contribution includes both direct and indirect impacts.

Authors:

George Popescu
Allen Taylor