Et tu, Beto?
Texan Democrat goes in the naughty book.
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Texan Democrat goes in the naughty book.
After flubbing the first one, other signposts come into focus.
Anarchists give way to Tory parliamentarians; free lunch gives way to “self-organised lunch”.
A decade later, Alphaville reminisces about the squeeziest of all short squeezes.
US businesses take the pedal off investment.
News Comments Today’s main news: SoFi caught with alleged misleading ads. The Motley Fool recommends LendingClub. Prosper performance update. Australia’s fintechs are beginning to make profits. Elevate Credit plunges from record low. Today’s main analysis: Loan growth at credit card issuers. Today’s thought-provoking articles: Down payment affordability by state. Crypto lending and the turbulent 2018 market. Do banks or fintechs do […]
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Highlights from the September report include:
American Express Q3 Earnings
Revenues at AXP grew by 9% YoY to $10.1 Bn to achieve record levels. Earnings grew by 22% YoY to $1.7 Bn. NII also grew 17% YoY to $2 Bn. AXP’s premium customer base saw record-low delinquency rates while the net charge-off rate increased slightly YoY to 1.7%.
Capital One Q3 Earnings
COF’s revenues were flat YoY at $7 Bn, but earnings grew by 36% YoY to $1.5 Bn. Growth in NII was modest at 2% YoY to $5.8 Bn. COF was the only issuer who saw a drop in the net charge-off rate by 20 bps YoY to 2.4%. COF also saw its provisions for loan losses decrease by 31% YoY driven by improving credit quality of the credit card and auto loan portfolios. This release in provisions consequently led to a 3% YoY drop in allowance for loan losses to $7.2 Bn on loan growth of 1% YoY.
Synchrony Q3 Earnings
SYF’s revenues grew by 9% YoY to $3.3 Bn. Earnings grew by 21% YoY to $0.7 Bn. NII grew by 9% YoY to $4.2 Bn. SYF had the highest net charge-off rate of 5% among all issuers, which stayed flat YoY. Loans grew by 14% YoY to $88 Bn. Provision for loan losses grew by 11% YoY and the total allowance for loan losses increased by 16% YoY to $2.9 Bn, slightly outpacing loan growth.
Key findings
Average down payment amounts for conventional 30-year, fixed-rate purchase mortgage offers declined during the third quarter, while down payments as a percentage of the price stayed about the same, according to an analysis by LendingTree.
Average amounts fell by almost 10% during the third quarter, decreasing to $47,265 from $52,480. At the same time, average down payment percentages were steady from the second quarter, rising 0.03 percentage points to 18.05% from 18.02%.
The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $23 million growth equity investment from Century Equity Partners (“Century”). Century focuses on making investments in lower middle market companies that have demonstrated value propositions to the financial services industry. This investment provides The Credit Junction with growth capital to expand its ability to provide financing solutions to Supply Chain America, as well as commercialize its proprietary data and risk analytics platform.
This marks the second meaningful financing announcement for The Credit Junction in recent months, as the company secured a $150 million credit facility from MidCap Financial in March 2018.
IDology today released its Sixth Annual Fraud Report, confirming the growing importance of balancing customer friction and fraud prevention, cited by businesses this year as the number one challenge in fighting fraud. The report reveals a surge in mobile and phishing fraud schemes, a focus on artificial intelligence and machine learning as the growing trends in identity verification, and the strategic role identity verification plays in the quest to gain a competitive edge, retain and attract customers, and increase revenue.
Phishing and Mobile Fraud Surge
Credit card fraud and account takeovers remain the most widespread forms of fraud, but phishing schemes and mobile fraud have surged.
A Capital One survey conducted at ABS East 2018—a conference convening professionals from across the asset-backed securities (ABS) industry—found that most respondents (94 percent) expect buy-side interest in ABS to increase or remain the same in the coming year while only 6 percent expect it to decrease.
Of the challenges facing the industry, only 15 percent of ABS professionals elected increases in interest rates. For the majority of respondents, uncertainty around regulatory requirements (30 percent), increased credit risk (25 percent) and increased competition (24 percent) pose the greater challenges for their businesses over the next 12 months.
The Conference of State Bank Supervisors (CSBS) has filed a second lawsuit in D.C. federal district court to stop the Office of the Comptroller of the Currency (OCC) from issuing special purpose national bank (SPNB) charters to fintech companies. A similar lawsuit was filed last month in a New York federal district court by the New York Department of Financial Services.
While the non-prime consumer lending space is less competitive than prime there are many companies doing interesting things. We heard the recent news of US Bank entering the space and just today I read that the CFPB intends to change the rules for payday lenders in the new year. It is certainly a dynamic space that will be going through lots of changes in the near future.
Our next guest on the Lend Academy Podcast is Stephanie Klein. She is the CEO of Braviant Holdings, a non-prime lender that has been around since 2014. Stephanie actually has quite a long history in the non-prime space going back more than a decade to her time with Al Goldstein’s (the CEO of Avant) first lending company, CashNetUSA.
Elevate Credit Inc. ELVT, -32.13% closed at a record low Monday, then plunged more than 20% in after-hours trading following an earnings report that included lowered annual guidance and myriad concerns that cropped up in the quarter. Chief Executive Ken Rees called the quarter “unexpectedly challenging” in the announcement, and then ticked off the reasons for the performance.
Elevate, which offers loans online to subprime customers through different products, reported a third-quarter loss of $4.2 million, or 10 cents a share, on revenue of $201.5 million, after reporting a profit of a penny a share on sales of $172.9 million a year ago. Analysts on average expected earnings of 13 cents a share on sales of $200.2 million, according to FactSet.
The company chopped its annual forecast, which previously called for earnings of 55 cents to 90 cents a share on sales of $790 million to $810 million. Now, Elevate expects earnings of 23 cents to 32 cents a share on sales of $790 million to $795 million in 2018. After shares closed at an all-time low of $6.35 Monday, they fell to about $5 in after-hours trading.
CREDIT referencing agency Equifax has teamed up with Open Banking technology provider consents.online to allow it to match customer data and transactions in real time.
It will be used within Equifax’s bank account verifier system that lets lenders compare sort codes and account numbers to its own database.
Users will be able to match identity information such as the consumer’s name, address and date of birth with transaction data provided through Open Banking, helping them verify who someone is faster and help avoid fraud.
Perhaps you didn’t know that about 80 percent of American households are in some form of financial debt.
Traditional banks have a bad reputation for playing hardball with loan applicants. Borrowers have to fill out more than a couple of forms and wait for days, weeks even, to get an approval. Never mind a simpler clerical error can get your request turned down.
One of the reasons traditional lenders take ages to approve and disburse credit is that they have to manually verify borrowers’ details.
You don’t just walk into any bank or credit union and apply for a loan.
The only other thing that is certain besides death and taxes is a traditional lender turning down a borrower with poor credit.
Being a millennial is a full-time job – with no paid overtime. From having people label them needy and entitled to being the objects of hate for older generations, it’s tough being a millennial.
At Money 20/20 in Las Vegas, Wealthfront announced it is opening up its financial planning service to anyone for free. The freemium service is currently in beta and will be available by the end of this year.
Heike van den Hoevel, Senior Wealth Management Analyst at
American banking is apparently just a bit too boring, the Federal Deposit Insurance Corp. has concluded. Its chairwoman, Jelena McWilliams, told the American Bankers Association conference that the agency will open an innovation office.
This is related to, but slightly different from, the tack taken in July’s report from the Treasury Department that laid out more than 80 recommendations to help nonbank financial firms. The idea then was that nonbank financial firms, which get called fintechs for marketing reasons, don’t get a fair shot because of the regulatory advantages enjoyed by regular old banks.
The message was that regulation was stifling innovation by not regulating nonbank financial firms. Companies like Square, for instance, should be able to get banking charters if they want. (Which they do.)
McWilliams seems to see the problem from the perspective of banks rather than from nonbanks and comes to what looks like a contradictory position: Nonbank fintechs are innovating like crazy and banks aren’t keeping up. But there’s nothing exactly contradictory about saying nonbanks could be doing more things under a more accommodating regulatory regime and that banks aren’t innovating as fast nonbanks.
SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced that Walker & Dunlop has selected SS&C as a technology and services partner to deliver a highly-automated solution for loan servicing, asset management, insurance compliance, document management and investor reporting. This partnership reinforces SS&C’s commitment to the agency/multifamily market.
SS&C will provide cloud-based software and outsourcing services including Precision LM for loan servicing, and AWD, an enterprise business process management system, which combines automation, workforce optimization and digital transformation for insurance compliance and renewals. SS&C’s integrated solution supports a broad range of commercial/multifamily loan programs, such as Freddie Mac (including Freddie K securitizations), Fannie Mae, HUD, Bridge, Life Company and more.
Commerce Bank announced today a multi-year partnership with SixThirty, a St. Louis-based venture fund that invests in financial technology (FinTech) startup companies. SixThirty targets investments in late-seed stage startups that have a product and market traction and are starting to earn revenue. Its portfolio and pipeline represent some of the most innovative and promising FinTech ideas from around the world.
Through its strategic relationship with SixThirty, Commerce will provide hands-on training and mentoring to the companies selected to take part in SixThirty’s business development program. Commerce team members will also participate in networking opportunities with leading technology and financial services institutions and some of the brightest and most innovative minds in the country. Additionally, Commerce will have the ability to make direct investments in ideas that present strategic, long-term opportunity to the business and the needs of our customers.
The Schall Law Firm, a national shareholder rights litigation firm, announces the filing of a class action lawsuit against Jianpu Technology Inc. (“Jianpu” or “the Company”) (NYSE: JT) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission.
Investors who purchased the Company’s shares pursuant to and/or traceable to the Registration Statement and Prospectus issued in connection with Jianpu’s initial public offering on or about November 16, 2017, are encouraged to contact the firm before December 24, 2018.
The House Crowd gives retail investors the chance to make an investment – starting from £1,000 – in property developments and builds the properties itself.
The site is in Altrincham town centre and will result in a total of 40 units comprising 31 apartments, eight townhouses and one commercial unit (pictured above).
The industry gathered at a Peer-to-Peer Finance Association (P2PFA) event held in London last Wednesday, to discuss the Financial Conduct Authority’s (FCA’s) review of the sector ahead of the 27 October deadline for feedback.
The most contentious element of the FCA review was its proposals to introduce categorisation and appropriateness tests for P2P investors. Under the proposed changes, platforms would be restricted to marketing to those who are certified as sophisticated or high-net-worth investors or those that certify that they will not invest more than 10 per cent of their net portfolio in P2P.
At the P2PFA event, which was held under Chatham House rules, stakeholders suggested that the FCA had misinterpreted the findings of a 2016 survey conducted by the Cambridge Centre for Alternative Finance, which collected responses from investors. It was suggested that the FCA had used these findings as justification for the proposed marketing restrictions.
nCino, the worldwide leader in cloud banking, today announced that members of the company’s leadership and market development teams will speak at two upcoming fintech industry conferences.
Nathaniel Ward, nCino’s regional vice president of market development for EMEA, will be speaking at MoneyLive Nordic Banking 2018 in a session titled: New Models in Banking: The Impact of Digitalisation. This session will explore the benefits and opportunities of cloud banking, and how to enable a workforce through digital transformation. This session will take place on 8 November at 09.45 at the Copenhagen Marriot Hotel.
Later in November, nCino’s chief innovation officer, Nathan Snell, will participate in a fireside chat at LendIt FinTech Europe 2018. In a session titled: The Rapid Pace of Product Launches in the Digital Age, Snell will discuss AI’s potential impact on the future of banking.
The surge of cryptocurrencies and “hodling” investment strategies of 2017 precipitated a flood of crypto asset-backed lending platforms coming to market.
The idea is a simple – take the concepts and models of traditional asset-backed lending and implement them with new “crypto assets” like Bitcoin and Ether. So if cryptocurrency miners or hodlers need short term access to fiat currency to pay expenses but don’t want to liquidate their positions, they can take out loans against the value of their crypto assets.
As such, platforms like ETHLend, SALT Lending, Nuo Lend and a plethora of others provide an alternative vehicle for investors who want to simultaneously hold and use their cryptocurrency.
Nexo writes that it has received a huge inflow of corporate as well as individual XRP users who sought Nexo loans by keeping their crypto holdings as collateral. The loans ranged between $1,000 to $2,000,000. The service provider goes on to suggest that it is humbled as well as thrilled by the recognition it has received from the XRP community. The firm went on to share some testimonials by clients.
Australian fintech revenues are up 2.25 times and more of the startups have hit profitability as the local sector matures, according to the latest EY Census released at the FinTech Australia Intersekt conference.
Almost one in five (19%) fintech companies are now profitable with those aged three years or older now making up 43% of the local industry, up from 31% last year and just 20% in 2016.
The 2018 EY FinTech Australia Census, now in its third year, paints a picture of a sector now established and coming into its own as an alternative within the financial services landscape.
From eco friendly decor to cupcake tiers, there’s always a new wedding trend on the rise. But according to recent research by peer-to-peer lender (P2P), RateSetter, low rate personal loans are also becoming many couples’ wedding essential.
A big reason loved up couples are opting for personal loans to help pay for their big day is to minimise credit card debt – 40% of RateSetter customers admitted to have taken out a personal loan to avoid using their plastic.
Contrary to the popular belief that men are not as involved in wedding planning, the data revealed that men were 66% more likely to take out a personal loan, compared to women (34%).
Budding entrepreneurs with revolutionary business ideas (usually) need financing to keep their operations running. Banks have encouraged the growth of small-scale industries with access to credit, but the supply cannot keep up with the demand. Enter: Financial technology companies, aka FinTechs.
The global FinTech industry is maturing rapidly – with over $41.7bn invested in just the first half of 2018. Part of those deals was for FinTech lenders, who have supported the trend of industrialisation by granting business financing to those who were denied from traditional banks.
PeopleFund, Korea’s fast-growing financial technology platform that connects borrowers and investors, has secured US$11M in series B funding.
The funding was led by KakaoPay, a subsidiary of Kakao that allows payments within Korea’s popular chatting app, KakaoTalk.
Returning investors included Dayli Financial Group, 500 Startups, and D3 Jubilee.
Authors:
An export model of education is exposed to ideological pressures from two directions
IGC “will seek listing on an exchange that embraces [its] innovation”.
After the Great Recession from 2007-2009, income growth nearly flattened for the average American while prices have been continuously rising. Almost half of America is unable to raise $400 for an emergency. With payday loans turning out to be predatory debt traps, it is almost impossible to raise a small loan for a short period […]
After the Great Recession from 2007-2009, income growth nearly flattened for the average American while prices have been continuously rising. Almost half of America is unable to raise $400 for an emergency. With payday loans turning out to be predatory debt traps, it is almost impossible to raise a small loan for a short period of time.
Realizing the fact that almost two thirds of the country is under a non-prime credit risk, Hundy wanted to reduce the grievances of the new middle class. The idea was to build a true peer-to-peer lending marketplace which would serve as a platform for raising loans of up to a few hundred dollars at a low interest rate. The platform is open to everyone and is easy to access. It is a friendly, convenient, and transparent way to borrow money from peers.
The mobile application is a community-based model which facilitates interaction between the borrower and lender. The company’s long term goal is to build a network where people can borrow, save and invest, all at the same place.
Focused on small dollar loans in the marketplace lending market, Hundy is based out of San Francisco. The mobile native platform was launched in 2016 and focuses on providing loans to the underserved at a fair price. It has raised over $400,000 in a friends and family round. In a conversation, Pete Budlong, the founder and CEO of the company, discussed how instability has become the new normal after 10 years of recession and how Hundy addresses this issue.
Getting a loan over the Hundy application is a very simple process. Users sign up using Facebook. After signing up, they sign agreements and link bank accounts. After a credit approval process, their profile is ready and they can start applying for loans. The company offers the option of hard and soft credit pulls so as not to adversely affect the user’s credit score.
On getting credit approval, users can immediately request their first loan of up to $100. However, if not approved automatically, they’ll get approved based upon their participation in the community over time. Once approved and a request for a loan has been made, the user’s application is processed within minutes and the loan amount transferred into their bank account by the next business day.
Loan payments, along with a repayment fee, will be withdrawn from the user’s bank account on the selected date of repayment, which can be up to four weeks after the date of loan issuance. If the user can’t pay off the loan on time, there is an option to convert the loan into a 60-day installment loan with no penalty. Every time a loan is paid off, the borrower’s credit limit will go up until it reaches the maximum of $250. The borrower is updated throughout the process via e-mails and text messages, making all transactions over the platform transparent and fair.
The company has originated over 1,000 loans and has an APR of 180% as compared to 350% for traditional payday lenders. Its main competitor in the online space is LendUp, and it competes with payday lenders in the offline market.
Currently holding a full lending license in California, Hundy is planning to expand its services to other states in the US. The app will be launched in Texas and Florida by the end of this year. The mobile application was ranked as high as 89 in the app store under the finance category with about 70K registered installs. Around 60,000 downloads are wait-listed. This is a massive reach considering that the company is not engaged in any kind of advertising activity. Another co-founder of the company, Ram Hegde has been operating a developer team in India, and a team of two in the US is helping Pete with the marketing.
The community currently has a monthly growth rate of 30%, which is doubling every two to three months. Most of its traffic, about 95%, comes from iOS devices.
The company’s goals are structured into three milestones. The first leg constitutes the launch of the social feed, which is already finished. Almost one-third of Hundy’s borrowers participate on this social feed. The second leg accounts for a non-profit lending product. The company made a formal announcement for the non-profit product at the Money 20/20 startup academy. The third leg involves for-profit crowdfunding, and the company aims to accomplish this by the end of this year.
As of now, the company is not looking to raise money but to originate borrowers. Once the application manages to strengthen its hold on the borrower side, it will focus on engaging lenders. The aim is to build a community-based lending platform where borrowers and lenders can directly interact with each other. These communications between various stakeholders also help create a database for developing machine learning- and artificial intelligence-driven algorithms for the platform. Currently, the company is serving accredited investors through a Reg D exemption but will soon leverage Reg CF and Reg A+ for allowing unaccredited investors to pool their money for loaning to potential borrowers.
People find it difficult to take out small loans at a reasonable rate of interest. The Hundy application proves to be a great platform in such scenarios, offering short-term loans at a fair price. It is aiming to provide affordable loans, not just in California but all across the US, by building a community where borrowers and lenders can communicate directly with each other through the app.
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Written by Heena Dhir.