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Alphaville puts on its sellside hat once again for the sale of the century
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Alphaville puts on its sellside hat once again for the sale of the century
Vom.
Via the magic of multiple interlocking positive feedback loops, of course.
News Comments Today’s main news: Funding Circle closes $198M ABS for U.S. SMBs. KBRA assigns preliminary ratings to Consumer Loan Underlying Bond Credit Trust 2019-P2. SoFi to create 300 jobs in Jacksonville, Florida. LendInvest postpones IPO until at least 2020. Binance offers crypto lending. Today’s main analysis: The nonbank and alternative lending industry in 2019. […]
The post Thursday August 29 2019, Weekly News Digest appeared first on Lending Times.
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Funding Circle today closed its first asset-backed securitization (ABS) of US small business loans originated through its platform. The $198 million deal marks the debut of Funding Circle’s US securitization sponsorship capability, and is the fifth securitization of Funding Circle business loans globally.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2019-P2 (“CLUB 2019-P2”). This is a $287.80 million consumer loan ABS transaction.
Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2019-P2 |
||
Class |
Preliminary Rating |
Initial Class Principal |
A |
A+ (sf) |
$200,700,000 |
B |
A- (sf) |
$37,900,000 |
C |
BB (sf) |
$49,200,000 |
A new LendingTree study ranks the 50 largest cities by its share of homes with a swimming pool. We found that about 10% of homes have pools, ranging from nearly 33% in Phoenix to 1% in Portland, Ore. We also looked at the values of homes with and without swimming pools to show how much this amenity is worth. Let’s dive in.
Key findings
Corporate eCommerce card company Brex has announced a partnership with leading SaaS eCommerce platform BigCommerce, according to a release.
Brex’s open credit line, three-month payment terms and interest-free financing are now available to all BigCommerce merchants through the BigCommerce App Store.
N26’s new SoHo office has all the design elements of a tech startup — high ceilings, distressed wood, big windows, a pingpong table, beanbag chairs, community meeting areas.
GOBankingRates found that 25 percent of consumer prefer banking with a mobile app, though nearly half preferred banking in person at a branch or ATM. Yet 76 percent said they wouldn’t open an account with a bank that doesn’t have a mobile app.
According to Fiserv, the preference for digital interactions (online plus mobile) is 58 percent, considerably ahead of the preference for branch interactions (32 percent).
When breaking out online, though, there is a preference for online (37 percent) compared to mobile (17 percent).
Fifth Third Bancorp is building out its renewable energy banking business, highlighting how the alternative power niche isn’t just for the biggest banks.
The $169 billion-asset Fifth Third recently added three new managing directors to its renewable energy investment banking group. With the additions of Timothy Beach, Ari Citrin and Oliver Janssen, the bank intends to offer more specialized capital markets and M&A advisory services to renewable energy firms, most of which are in solar.
Student debt can seem inevitable. Today, more than 44 million Americans owe nearly $1.5 trillion in student loans. This debt has been blamed for many things: Americans’ lack of retirement savings, declining rates of home ownership, even the death of marriage.
According to Oracle’s Digital Demand in Retail Banking study of 5,200 consumers from 13 countries, over 40% of customers surveyed think nonbanks can better assist them with personal money management and investment needs, and 30% of respondents who haven’t tried a nonbank platform said they’re open to trying one.
Business Insider Intelligence’s Online Mortgage Lending Report found that the top five US banks – Wells Fargo, Bank of America, and JPMorgan Chase, US Bancorp, and Citigroup – only accounted for 21% of total mortgage originations, which is a huge decline from their 50% combined market share in 2011.
According to a survey from the Federal Reserve Bank of Richmond, in 2016 only 58% of loan requests from small businesses were approved by incumbent banks, compared to 71% approved by alt lenders that same year.
AlleyWatch caught up with Matt Rodak to learn more about the company’s success, future growth plans, and recent round of funding, which brings its total funding to $13M across four rounds.
SimpleNexus makes it easy for loan originators to create co-branded mobile apps for Realtor partners to share with borrowers. The shared platform enhances the borrower experience by keeping partners up-to-speed on loan progress and putting mortgage calculators and other handy tools at partners’ fingertips.
Pagaya, a global financial technology company using artificial intelligence (AI) to reshape asset management, today announced the closing of a consumer credit asset-backed security (ABS) at $115 million. Led by structuring agent Cantor Fitzgerald, the ABS will be actively managed by Pagaya’s AI.
Pagaya has been working closely with Prosper to develop innovative financing solutions for consumers, which will be featured in this securitization.
Blooma, a tech startup that reduces time to revenue for commercial lenders, launches out of stealth with $2.75 million seed funding to transform the lending experience for commercial and private lenders and other organizations. The financing was led by Floodgate, a Palo Alto, Calif.-based investor. Other backers include: Abstract Ventures, Crescent Ridge Partners and Serra Ventures.
Cryptocurrency lending and borrowing startup Cred has hired former PayPal executive as its chief financial officer (CFO), according to an announcement Monday.
Fashion event agency, A-List Communications announces their lineup and new title sponsor Klarna for their 15th year of STYLE360, which will take place during the latter portion of Spring/Summer 2020 New York Fashion Week from September 9 – 11, 2019.
White Oak Commercial Finance (“White Oak”), an affiliate of White Oak Global Advisors, announced today the origination of a new revolving credit facility to healthy meal service company The Good Kitchen. Originally founded as a meal delivery service, The Good Kitchen will use the proceeds of the credit facility to expand its business into packaged meals sold at 1,500 stores across the United States.
California non-bank consumer lenders are moving away from small-dollar short term payday loans and are, instead, embracing longer-term installment…
Nearly a year after announcing a $39.5m “pre-IPO” funding round, LendInvest has delayed plans to IPO this year in favour of another private cash injection, according to a report by Financial News.
Over three-quarters of consumers in the UK use a finance app, according to a new study from Speedie Consultants that surveyed 200 people in the country. Twenty-four percent of those surveyed use their finance apps around twice a week, and 23% said they use it daily. The most common finance app users were aged 25-45, in addition to consumers over 65.
Swedish fintech payments firm Klarna has launched a new campaign focused around the introduction of Video Assistant Referee technology in the UK’s Premiere League.
According to the latest press release, leading crypto lending firm Celsius Network has seen an increase of 2,165% growth in deposits. The network has already surpassed 20,000 BTC through mobile app deposits during the first year of operations.
Know Your Money data revealed that:
• Peer to Peer and Challenger lenders comparison searches have more than doubled in 3 years
• 33% of Businesses selected a P2P or challenger lender on in 2019 – compared to just 15% in 2017
• Alternative lending interest more than doubled in the last 2 years
According to Revolut, the Fintech bank has hired Philip Doyle as Director of Financial Crime Risk, Wolfgang Bardorf as Treasurer and Stefan Wille as Deputy Chief Financial Officer.
The Zurich-based fintech, whose investors include former Deutsche Bank CEO Josef Ackermann, raised $40 million at a valuation of over $1 billion, reports Bloomberg. The latest investment brings Numbrs’ total raise to date to almost $200 million, CEO Martin Saidler told the outlet.
Notably, in contrast to many of its peers, Numbrs has joined the unicorn club not by focusing on venture capital and private equity funding, but instead by relying mostly on individuals and families — 50 have invested in the company thus far. The startup’s app enables users to aggregate their various bank accounts and manage their finances, and offers a marketplace for consumers to purchase various financial products.
The £1bn P2P Global Investments has sold one of its largest positions, in Castlehaven Finance, an Irish alternative development and bridging finance lender.
Castlehaven typically provides loans of between €1m – €20m in the property space, an increasingly big proportion of P2P GI’s portfolio.
The investment trust has provided financing in excess of €385m to Castlehaven since 2016.
The University of Oxford received an immense £150 million donation to create a centre studying the ethics surrounding AI in the modern world, whilst global audiences continue to be fascinated by shows like Black Mirror which explore the worst-case consequences of AI accessing personal data.
The project is composed of three distinct, albeit related, parts, run in sequence from January 2019 to December 2020:
Part 1: Application of AI for risk management in bank and peer to peer lending
Part 2: Application of AI for risk management in financial investments and robot advisory
Part 3: Application of AI for risk management in blockchain payments and crypto assets
Binance has launched a lending service allowing its users to earn cryptocurrency without trading, in a passive way. Currently the service is open for only a few tokens – its Binance Coin (BNB), Tether’s USDT stablecoin, and Ethereum Classic (ETC). Annualized interest rates are of 15% for BNB, 10% for USDT, and 7& for ETC.
Ten years after the financial crisis, Alternative Finance continues to exhibit strong growth. The sector is estimated to account for nearly €300 billion of inflows worldwide, a market exhibiting 25% annual growth and largely dominated by the Chinese (75%), which percentage was already recorded in 2015 by a study conducted jointly by KPMG and the University of Cambridge.
The United States takes second place with 19% of the market, while Europe currently represents just 6%, 60% of which comes from the United Kingdom. In France, alternative finance raised €1.4 billion in 2018, a year-on-year increase of 39% according to the annual report of KPMG and the non-profit group Financement Participatif France (FPF).
The global crowdfunding market is estimated to be expanding from 2018 to 2022 to $89.72 billion. From the first recorded successful crowdfunding in 1997, to how the first dedicated crowdfunding platform ArtistShare had come about in the year 2000, crowdfunding has indeed disrupted many industries in different levels.
The problem of investment scammers is much bigger than cryptocurrency though, Wong pointed out, and much bigger than Invest: Asia.
“I don’t think Invest: Asia is big enough to move the needle if you’re running a scam in China,” he said. “That just speaks to the size of the population in China. In general, I think there’s lots of financial scams in general in China, right? For example, a couple years ago there was a big peer to peer lending scandal.”
“The peer to peer lending was legitimately becoming a hot growth FinTech sector in China, but then people were running these peer to peer scams. Because it was so hot, everyone’s talking about it. It creates the conditions for scammers to launch whatever scheme that they want to launch.”
• FY19 loan originations of $501.7 million up 36.6% on the prior year (FY18: $367.3 million), 3.1% ahead of prospectus forecast.
• FY19 revenue of $136.4 million up 31.2% on the prior year (FY18: $104.0 million), in line with prospectus forecast.
• FY19 pro forma EBITDA of $6.8 million, ahead of prospectus forecast by 11.5%.
• Prospa has now delivered approximately $1.2 billion in loans since inception and total customer numbers in Australia and New Zealand grew to over 20,000 in FY19, up 58% on the prior year.
• Customer satisfaction remains consistently high, with Prospa’s annual average Net Promoter Score in excess of +77 in 2019. Prospa also has a rating of 9.8/10 on independent review platform TrustPilot.
• Business expansion has continued with the successful launch of new cash flow products and services and diversification into New Zealand.
• Further investment in executive strength, with new Chief Technology Officer, Chief Commercial Officer and Executive General Manager, Growth Channels appointed.
The 2019 Finder Awards recognise the market’s most competitive offerings across credit cards, home loans, personal loans, car insurance, banking, insurance, technology and superannuation.
P2P lending has also become increasingly popular as an alternative lending route as small businesses find it easier to obtain loans directly from other individuals. Going forward, we can expect more cloud-based services backed by advanced analytics that offer personalized loan limits and payback schedules, based on the borrower’s credit history.
Traditional players will also get into online lending and emulate the strategies of P2P lending companies. More businesses will start adopting work-from-home policies to increase cost savings and productivity. On the tech front, businesses will start investing more in AI and analytics to get a deeper insight into customer behaviour.
– Kewal Kapoor, director and creative strategist of CHAI Kreative and Return of Million Smiles
The fourth-largest mobile phone vendor plans to launch a consumer-lending business, dubbed Mi Credit, in India in the next few weeks, according to Reuters. It will offer loans of up to 100,000 rupees ($1,451), with interest rates starting at 1.8%.
Xiaomi is positioned as a leading smartphone manufacturer in India, with 70 million mobile phones in use throughout the country. It already launched its payment app, dubbed Mi Pay, in the country in March, which is reportedly “doing well,” per Reuters. For context, in China, Xiaomi’s lending business shows a loan book worth $8 billion.
In July 2019, the company secured Rs 1.16 crore from Renaud Laplanche, the Co-founder and CEO of Upgrade, who earlier participated in the startup’s Series C funding round of Rs 77 crore in May, along with Accel Partners, Chiratae Ventures, IDG Ventures, and Bain Capital. At that time, the startup said the funds will be used for accelerating its growth and expansion to new cities.
The linked dangers of an inverted yield curve and a slowing economy have hammered banks stocks in recent months, and profit margins are already compressing. But the banks’ worries pale in comparison to challenges confronting the peer-to-peer or “market place” lenders — the start-ups that have set out, over the past decade or so, to upturn the banking industry.
Authors:
The post Thursday August 29 2019, Weekly News Digest appeared first on Lending Times.
The millennial demographic is starved of space.
Craig Wright gets caught with his pants down.
Craig Wright gets caught with his pants down.
Another reverse repo; a tree; Jim Mattis; open carry; and much more.
Non-prime lending has revolutionized the lending sector. In times where people lack a stable credit history, securing a traditional loan is not easy—and non-prime has become a go-to option in such scenarios. In the past few years, alternative financial services have gained momentum in terms of acceptability and volume. There are various companies in the […]
The post Loyalty and Fluidity in Alternative Financial Services and Traditional Lending appeared first on Lending Times.
Non-prime lending has revolutionized the lending sector. In times where people lack a stable credit history, securing a traditional loan is not easy—and non-prime has become a go-to option in such scenarios. In the past few years, alternative financial services have gained momentum in terms of acceptability and volume. There are various companies in the market that offer instant loans even to the borrowers who have a weak credit history. But how do we infer how many people have migrated to non-prime online borrowing from the traditional borrowing set up, and how many people have migrated back to the traditional set up?
Experian’s Clarity Services, a credit reporting agency specializing in near prime and subprime consumers, offers credit data to alternative financial service (AFS) providers. This helps lenders gain a wider perspective of non-prime applicants and further enables them to make more informed decisions.
The company furnishes the AFS trends report that specifies the prevailing trends and consumer behavior in the market by studying the underlying factors. In the 2019 AFS Lending Trends Report, Clarity studied a sample of 350 million consumer loan applications and more than 25 million loans to evaluate the market trends for the 2014 to 2018 time period. Clarity also leveraged Experian’s national credit bureau data to analyze consumer behavior.
Non-prime consumers include people who may have been irresponsible with credit previously, youngsters with inadequate credit history, people who face sudden and unexpected emergencies, recent immigrants in the US or someone in immediate need of cash. The basis for the report includes factors of loan origination (involves the online and storefront channels) and loan types (includes installment payments and single pay).
In order to study the rise of the online lending market from 2014 to 2018, Clarity studied online installment and single pay loans by the number of loans originated and total dollars funded.
The graphs illustrate how online installment loans have been steadily growing from 2014 to 2018. The volume of online installment loans in 2018 was 7.4 times higher than the volume in 2014. Whereas, the volume grew up until 2016 in the case of online single pay loans, plummeted in 2017 and held steady in 2018.
As per the report, more than half of online borrowers are new to the alternative credit space. The table below illustrates the consumers who opened an online loan in 2018, tracking their past behavior from 2014 to 2018.
Clarity also tracked the activity of 2017 alternative financial borrowers in 2018 and if they continued with online platforms. The results showed that 41% of online borrowers again availed an alternative loan, while 24% of the borrowers did not show up in 2018. Also, 35% of the borrowers applied for a loan but did not open one.
Further investigations gave another interesting insight. Around 34% of 2017 borrowers who did not have any applications or loans in 2018 had switched to traditional lenders. This implies that 7% of overall 2017 borrowers migrated to traditional lending in 2018.
As per an examination of the credit classification of consumers who obtained and did not obtain loans from traditional lenders in 2018, 23% of borrowers who switched to traditional lending possessed a near prime credit score, and only 8% of the borrowers continuing in the alternative finance space were classified as near prime.
While the migration of borrowers from AFS platforms to traditional ones might not be a shocker, borrowers who had a subprime credit score and were ineligible to apply for traditional loans were mostly the ones who moved to online or the AFS space to get the credit they needed. As and when their credit scores improved, they reverted to the traditional space. While AFS is convenient in terms of credit scores and repayments, there are strong factors that influence the borrowers to move back to traditional methods.
Frauds: With the advent of technology, fraud too has evolved. With data breaches, the fraudsters create a synthetic identity that cannot be easily decoded. This is leveraged by fraudsters to open fake and additional accounts.
Generation Bias: Gen X is more comfortable with online borrowing and less likely to be inclined towards storefront options. Another study under the report implies that the Silent and Boomer generations only account for 25% to 30% of all AFS borrowers.
Income Trends: In the past five years, online installment borrowers reported a higher income (while the values have been steady since 2016) and the reported incomes of storefront installment borrowers have been stagnant since 2014.
Due to the recession in 2008, the majority of borrowers had suffered a hit to their credit worthiness. On the other side, traditional lenders folded due to the toxic asset built up in their balance sheets. This created a vacuum for the AFS players to capture. It was a win-win as they were able to tap into a multi-hundred-billion-dollar market unchallenged, and the affected borrowers got a chance to get the credit they needed desperately.
With record economic growth, the 2019 scenario is different. Borrowers are returning to traditional ways of borrowing. The trends report puts light on the activities of the borrowers and how their needs have changed over time. In the given scenario, Clarity’s alternative credit data is a key asset when studying borrower behavior in the market.
The post Loyalty and Fluidity in Alternative Financial Services and Traditional Lending appeared first on Lending Times.