Wednesday March 2 2018 Daily News Digest

Alibaba and Tencent investments

News Comments Today’s main news: Vanguard partners with Raisin. Rumor alert: Upstart seeking $100M from investors. LendInvest changes commercial property products. Apple may be blocking Chinese P2P lenders from app updates. Today’s main analysis: PeerIQ’s MPL earnings insights report. (A MUST-READ) Today’s thought-provoking articles: Fintech holds promise to expand credit. How the PE lifecycle can be audited by the blockchain. How […]

Alibaba and Tencent investments

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United States

Online lender Upstart is said to seek $ 100 million from investors (American Banker), Rated: AAA

Upstart, which was founded by Google veterans, is testing venture capitalists’ appetite for an investment round of about $100 million, said two people briefed on the matter.

The San Carlos, Calif.-based startup is looking to sell shares that would value the business at $500 million to $1 billion, said one of the people, who asked not to be identified because the discussions were private. This venture capitalist didn’t pursue a deal because of an existing competitive investment.

PeerIQ’s Marketplace Lending Earnings Insights (PeerIQ Email), Rated: AAA

    • Where are we in the credit cycle? Earnings calls indicate CEOs/CFOs are constructive on the health of the US consumer and see a tax reform as improving consumers’ disposable income. However, an increasing supply for credit and demand for credit, as well as re-normalization trends and increased competition are leading to higher charge-offs.
Source: PeerIQ
  • Credit re-normalization continues across all major lending groups. Credit performance this quarter is mixed. We observe improvements, and record low delinquencies from ONDK, OMF, and FinTechs in particular. LendingClub expects 31 bps lower charge-offs going forward due to tighter credit standards. At Discover – a bellwether for personal loan performance – the net charge off rate jumped 92 bps YOY to 3.62% – the largest increase in several years.
  • Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. American Express increased loan loss provisions 33% although loan growth was only 14%.
  • GS & Morgan Stanley remain comparable in market cap, revenues, and margins – are focused on lending to improve ROE. MS is doubling the size of its warehouse lending footprint. GS continues to invest in Marcus and aggressively pursue M&A. If GS executes on its strategic plan of generating, in 5 years we should observe a growth in ROE from their consumer lending activities.
  • Bank FinTech partnerships, and M&A continues. Banks are either partnering with FinTechs or investing in beefing up their technology capabilities in payments, lending, digital banking and wealth management. Banks like JP are partnering with Amazon by rolling out co-branded checking accounts and credit cards. A specter is haunting financial services – the specter of Amazon.
  • Lenders are taking actions to pass rising rates on to borrowers to protect margins and investor returns. Lenders are also trying to reduce all-in funding costs by reducing the credit spreads on their securitizations.
Source: PeerIQ

Read the full report here.

 

Fintech Holds Great Promise To Expand Credit, Says Fed’s Bank Supervision Ace (Forbes), Rated: AAA

Fintech holds great promise to expand credit, Federal Reserve Vice Chair for Bank Supervision Randy Quarles told a forum on financial services for the underserved Monday.

While promoting the advantages of algorithm credit rating and other forms of fintech, he voiced it is important for banks to understand the risks when they offer new products of their own or partner with emerging fintech companies.

Touching on another issue, Quarles said the decline in lending by small banks to small businesses can be attributed in part by entrepreneurs using big bank credit cards.

THE PE LIFECYCLE CAN BE AUDITED BY BLOCKCHAIN (AllAboutAlpha), Rated: AAA

The hyperledger fabric is an open-source cross-industry collaborative effort to create a standardized enterprise code base. No cryptocurrency is required, the network is permissioned, and the system of consensus is PBFT rather than proof of work.

That latter point is important in the finance/auditing context, and so is worthy of some explanation here. The usual system in blockchains is “proof of work.” The creator of a new “block” within the chain is required to do something mathematically laborious, a calculation, also called “mining.” This is what allows the trustless and distributed consensus that made possible the creation of “bitcoins” and the launch of blockchain as a technology.

But “proof of work” takes up a lot of computational energy, and for some non-currency uses of blockchain it is just too much trouble. So alternatives protocols have developed within the blockchain world, and one of them has the ungainly name “practical byzantine fault tolerance.” That term comes from a game-theoretical issue called the “Byzantine Generals’ Problem,” which is something like the “prisoner’s dilemma” on steroids. But it is generally best to ignore all of that and just to think of the alternative protocol as PBFT.

Avant Founders Raise $ 15 Million for Blockchain Firm, Token Sale (Bloomberg), Rated: A

The team that founded marketplace lender Avant Inc. raised about $15 million to start a firm that will use blockchain technology and digital tokens to motivate companies to share data about customer identities and credit worthiness.

The venture, which is called Springcoin but does business as Spring Labs, is building a decentralized network that seeks to allow lenders, banks and data providers to pay one another for direct access to consumer information, Spring Labs Chief Executive Officer Adam Jiwan said in an interview. Many companies are hesitant to give out customer data due to concerns about regulation and security, while others don’t have a financial incentive to do so, he said.

TD Bank in commercial lendtech revamp with nCino (Fintech Futues), Rated: A

Chalk up another big win for cloud-based lendtech vendor nCino. The North Carolina-based fintech has signed a deal with TD Bank in the US that will put nCino’s Bank Operating System to work for the bank’s corporate and commercial lending divisions, reports David Penn at Finovate.

The technology is already live with employees in the TD Equipment Finance department. nCino’s platform will give prospective business borrowers faster decisions on their loan requests, as well as add transparency to the loan process. The Bank Operating System will also enable the bank’s credit risk management, sales, and underwriting professionals to benefit from insights into TD Bank’s commercial lending portfolio and better collaborate on deals. Built on top of Salesforce.com, nCino’s Bank Operating system features CRM, loan origination, account opening, workflow, content management, business process management, customer engagement, and instant reporting all on a single platform.

How blockchain is affecting banking (Stitcher), Rated: A

In this episode the host John Siracusa and co-host Sarah Bacehowski. Interview Jason Jones co founder of the Lendit Fintech Conference they discuss how blockchain is affecting national and global banking today and how it may impact credit and lending.

Fintech’s Focus Shifts Toward Finance (CFO), Rated: A

The financial technology industry is maturing at a dizzying pace, having exceeded a combined $31 billion in total funding last year alone, according to KPMG’s recent Pulse of Fintech report.

With this sustained influx of funding, innovations within the space are moving traditional banks to partner up with fintech firms. That benefits both sides as well as customers like corporate finance departments.

On Deck Capital and Lending Club have both recently found themselves in publicly precarious situations related to risk management. On Deck has had to change its strategy several times over the years to address investor concerns. Lending Club experienced a systematic fraud issue that resulted in a CEO departure, stock-price drop, and public cynicism. Other, smaller companies have faced similar problems stemming from a deficient focus on this important role.

Top 5 Debt Consolidation Loan Companies for 2018 (Student Loan Hero), Rated: A

Using a personal loan to consolidate debt can simplify your financial life. But this move is most worthwhile if you can get debt consolidation loan rates that are lower than what you’re currently paying.

This overview can help you quickly find debt consolidation loan companies with the best rates. From there, you can find the lender that offers the best rates and terms to help you get ahead of your debt.

Source: Student Loan Hero

Omnichannel and Short-Term Lending (Lendit), Rated: A

Research conducted in late 2016 noted that three things were apt to cause the average customer to end his or her interaction with a company. These included being transferred between multiple employees when seeking a resolution to a problem, long wait times, and having to repeat themselves during a transaction process. To solve these kinds of discrepancies between customer expectations and the quality of service provided across multiple platforms, more companies are taking an omnichannel approach to the customer experience—especially in the financial services industry.

Below are three questions and answers about how this novel approach to customer experience can benefit both short-term lenders and borrowers.

  1. What does the omnichannel approach offer businesses and customers in the short-term lending industry?
  2. What obstacles stand in the way of the mass adoption of omnichannel lending?
  3. What is the best way for short-term lenders to implement an omnichannel model?

LAUREL ROAD DEBUTS TRULY DIGITAL MORTGAGE PLATFORM (PR Newsire), Rated: A

Laurel Road, an online lender and FDIC-insured bank, today debuts a truly digital mortgage product that uses the company’s secure lending technology to offer home buyers and owners personalized mortgage options at real, competitive rates. Laurel Road’s platform builds mortgages entirely online, simplifying the process with transparent fees and a customized end-to-end digital experience with human support only when customers need it.

Additional product features include:

  • Truly digital experience – Laurel Road’s mortgage product puts customers in the driver’s seat by enabling a digital-first user experience, with human support via phone or online chat as needed but never required outside of closing
  • Stated pricing – Customers who have a price range or specific house in mind can input these details upfront to generate customized options and rates
  • Maximum affordability – By inputting basic financial information, customers can determine the maximum affordable loan they’re eligible for early in the process with no commitment required
  • Added savings – Customers have the ability to earn savings off their closing costs by using the online capabilities throughout the process, such as data verification
  • Optimized for efficiency – Digitally-enabled experience and built-in incentives for options that streamline the process allows Laurel Road to invest more in customer experience and deliver mortgages in just a few weeks
  • Educational resources – Prompts integrated into the user journey will help customers establish their financial readiness and evaluate how Laurel Road can be a partner in the process
  • Expert options and clear terms and fees – Based on a customer’s preferences, 3 unique mortgage options are presented in a transparent way so one doesn’t get caught with misleading teaser rates or hidden fees
  • Soft credit pull – Laurel Road will conduct a soft credit pull during preliminary stages to avoid credit penalties when customers are still exploring options

DiversyFund Hires New Chief Technology Officer (Digital Journal), Rated: B

DiversyFund has named Mark Brogowicz as its new Chief Technology Officer as the firm ramps up its efforts to reinvent alternative investing through its revolutionary crowdfunding platform.

Brogowicz will lead the firm’s product and engineering teams. Brogowicz previously helped Los Angeles startup PeerStreet launch their product and is now looking to replicate that process in San Diego.

MassChallenge wants to pair fintech startups with finance giants (Boston Business Journal), Rated: B

MassChallenge is preparing to launch a program for startups specializing in financial services technology, or fintech — a fast-growing field that’s increasingly a top priority for Boston’s investment firms, banks and insurance companies.

While details are still being worked out, the program is expected be similar to the Boston-based organization’s accelerator for health technology startups, according to MassChallenge. That program, known as Pulse@MassChallenge, pairs later-stage startups with some of the industry’s biggest local and national players, like Aetna and Vertex Pharmaceuticals. The program provides them with mentoring, office space, and an opportunity to compete for cash prizes.

Shinnecock Partners Publishes an Investor’s Guide to Fine Art Secured Lending (PR News), Rated: B

Shinnecock Partners, a 28-year old family office boutique with significant expertise in alternative finance and fintech, has published “Creative Collateral: Lending Against Fine Art,” by the firm’s founding partner, Alan C. Snyder and co-authors/firm analysts Michael Cervino and Christian Williams. The 16-page report outlines a little-known niche investment opportunity, art-secured lending, which, as reported by Deloitte, is a $15 – $20 billion market that is growing at an annual rate of 13 percent.

The research paper covers:

  •     An overview of the market and the “buzzword” lexicon
  •     Key factors to consider
  •     Risk mitigants
  •     An investor participation road map

You can access the report at: 

Private Lending Association to Offer Class for Certified Fund Manager Designation (PR Newswire), Rated: B

The American Association of Private Lenders (AAPL) is offering the Certified Fund Manager (CFM) designation class May 9, 2018, at the Geraci Activate Conference, located at the Sofitel Hotel in Beverly Hills, California. AAPL members are eligible for the CFM designation and may register for the class at  or  The CFM designation class requires a separate registration from the Geraci Activate Conference.

Seek Capital Wins Again, #1 Customer-Rated Lender for the Business Loans Category from LendingTree in Q4 2017 (PR Newswire), Rated: B

On LendingTree’s platform, Seek Capital has a 4.9 out of 5 star rating. 57 different businesses have reviewed Seek Capital on LendingTree.

Seek Capital specializes in getting startup business loans for new businesses. While there is a large array of funding options for established businesses, new businesses are left with little to no options. Seek Capital provides solutions to this under-serviced segment of the business funding market. In 2017, Seek Capital originated close to $100 million for startup businesses in the form of an unsecured line of credit.

United Kingdom

LendInvest changes commercial property products (Mortage Introducer), Rated: AAA

Borrowers wishing to fund the purchase of, extend the lease on, or refurbish a commercial property where the use will remain commercial, are directed to the updated commercial bridging product.

LendInvest has increased the maximum term for its commercial bridging loans from 12 to 24 months, and reduced rates.

Its commercial bridging rates vary between LTV but the base 60% has been reduced from 0.90% to 0.79%.

Best refer-a-friend schemes: how you can earn up to £500 (Which?), Rated: A

NatWest has launched its first ever refer-a-friend scheme, which could earn eligible customers up to £500 – and it’s not the only company offering incentives for signing-up your loved ones.

Until 20 April 2018, eligible customers will receive up to £500 when their friends and family join NatWest. But it’s not open to everyone, with NatWest randomly selecting 300,000 customers for the test phase.

Refer-a-friend: current accounts

Earn £500 with NatWest-NatWest recently launched its first ever refer-a-friend scheme, offering existing members the chance to earn up to £500 by recommending its current accounts to friends and family.

Earn up to £500 with Nationwide-Nationwide is offering existing members the chance to earn up to £500 by encouraging friends and family to switch their current account.

Earn £25 with Vanquis -Vanquis Bank customers could earn £25 for convincing friends and family to sign up to the Vanquis Credit Card.

Earn £25 vouchers with Scottish Friendly-Customers of Scottish Friendly could earn £25 by introducing a new friend or family member to the company.

P2P securitisation boom still on the cards (Peer2Peer Finance), Rated: A

PREDICTIONS of a securitisation boom in the peer-to-peer lending sector last year failed to materialise, but analysts are still optimistic about the market.

Ratings agencies such as Moody’s predicted a boom in P2P securitisations, but the only activity in 2017 was a £208.9m Zopa deal led by investment trust P2P Global Investments.

Ratings agency S&P Global is also expecting more activity and has predicted a 30 per cent increase in securitisations from marketplace lenders around the world during 2018.

7 TECH STARTUPS THAT ARE TAKING IRELAND BY STORM (Irish Tech News), Rated: A

Pro-business policies have made the country an extremely favourable environment for startups, and the capital can lay a convincing claim to be Europe’s Silicon Valley. Here are just seven of the most interesting and highly awarded startups finding success in Ireland.

Mingo- Mingo are aiming to replicate the success of digital currencies like Bitcoin and Ethereum by floating their own currency called (quite logically) Mingocoin.

Trezeo- Firms are using digital tools to revolutionise the process of transferring and storing traditional currencies as well as digital-only ones. Trezeo are a perfect example of this mindset, and offer a product that’s of use to the everyman rather than the big financial institutions.

FlenderFlender is one of the success stories from crowdfunded investment platform Seedrs. The premise: peer-to-peer lending, where lenders can set their own rates and terms for borrowers to agree to.

Don’t Innovate for Innovation’s Sake. Understand the Need for Change. (Retail Tech News), Rated: A

Here, Luke Griffiths (pictured below), general manager, Klarna UKexplains why that means it’s crucial that retailers consider the shopping journey from browsing through to purchase, delivery, and returns.  

It’s no longer good enough for retailers to wait on the sidelines while others make the first move into innovation – something which was highlighted in a recent white paper Klarna produced in association with Internet Retailing. In it, we explored the main qualities needed to be successful in today’s ever-changing retail sector.

Retailers can’t afford to ignore more innovative payment options. This was highlighted by recent Klarna research, which found that 53% of shoppers are looking for new, easier ways to pay online; while 56% would buy more online if there was more variety in payment options available.

 

British Business Bank provides 1pm with £35m funding line (Leasing Life), Rated: A

The British Business Bank provided 1pm Group with a £35m asset finance facility which will be used mainly on hard assets through its subsidiary Bradgate Business Finance.

At the end of February 1pm has entered into a cooperation agreement with Mintos to be a loan originator on its online marketplace for loans.

1pm is the first loan originator from the UK to access the Mintos marketplace and joins approximately 30 other loan originators globally.

 

 

It’s time to crack down on high-cost credit cards, says Labour MP (The Investment Observer), Rated: B

Stella Creasy is hoping to crack down on high-cost credit cards, introducing a cap on fees and interest charges.

The Labour MP, who was credited with the caps on interest rates and fees charged by payday loan companies, will attempt to enforce similar laws for credit cards on in Parliament on Tuesday.

The FCA has ruled out capping credit card costs after reviewing the market last year.

 

China

Apple App Store Said to be Blocking Chinese Peer to Peer Lenders from Updating Apps (Crowdfund Insider), Rated: AAA

We have received some information from an insider regarding Chinese peer to peer lending platforms being unable to update their Apps in the Apple App store due to a regulatory disconnect.

The problem is that not a single Chinese peer to peer lender has passed the necessary evaluations as regulators have not yet processed any. The first batch of approvals from the Chinese authorities is due at the end of April with the deadline by the end of June. According to the source, it is even more perplexing due to the fact that having an updated iOS App is necessary to comply with the Chinese regulations and pass the tests.

The Apple enforced process is described as follows:

  • We need to update our iOS App so that we can provide updated features to customers that are in compliance with regulations
  • Local financial regulators will not allow us to complete the record-filing process if they see that we have not come into compliance across all of our platforms (Android, iOS, PC)
  • If we can’t complete the record-filing process, then we will not be allowed to update our business license to include “internet loan information agency” in permitted activities
  • If we can’t update our business license, we can’t provide the necessary documentation to App Review to have our App Update approved
  • If we can’t get our iOS app updated, then we won’t be in compliance with regulations
  • Dead-end feedback loop back to point #1….
European Union

Vanguard Teams With German Fintech Raisin (Investopedia), Rated: AAA

Vanguard, the king of passive investing and one of the world’s largest fund managers, is partnering with Raisin, the German fintech, enabling some of its investments to be sold on the fintech’s platform.

Raisin, among Europe’s largest fintechs, counting more than 100,000 customers, will offer four portfolios comprising index or exchange-traded funds from Vanguard and BNP Paribas. The Financial Times reported that the investment portfolios have annual costs on average that are less than 0.5%. According to The Financial Times, this is the first time Raisin is getting into the investment area, previously focusing its efforts on brokered savings deposits.

Banks deploy ID software for client verification (Financial Times), Rated: A

Banks have begun to implement new technologies to help verify who the customer is, though the new GDPR rules in Europe could complicate usage; the General Data Protection Regulation, which will restrict how companies collect and store data, allows for customers to ask for their data to be removed and non compliance results in huge fines; banks have started to slowly add new technology but they are still figuring out where to limit storage; new companies are trying to sell services into bank that allow them to collect information but store it in a certain way to be compliant; with new technology being developed so rapidly, governments need to ensure they keep up with innovation and clearly tell the market how to comply.

German fintech Penta launches new business banking platform (AltFiNews), Rated: A

Berlin-based Penta has announced its newest fintech “Compass”, a platform that allows incorporating businesses in Germany to deposit their share capital and open a bank account in under 24 hours.

According to Penta, incorporating a business can take up to 6-8 weeks because of the bureaucratic process of opening a bank account and registering with the correct government bodies, which is legally required in Germany. Penta’s latest proposition will allow founders to open a bank account in a process that takes less than 15 minutes, completing the whole process online for free.

 

International

BBVA-backed fintech launches global bank account (American Banker), Rated: AAA

A new fintech backed by the Spanish bank BBVA aims to do something that others before it have failed to do: simplify international payments.

The fintech, Denizen, claims it has created a “global banking platform” that allows customers to receive money in one country and pay it out in another immediately, avoiding international transfer fees and eliminating currency exchange fees.

The firm says the cross-border money movement service is the first in a planned series of products. Denizen is currently available to expatriates living in Spain and the United States. The service is set to expand in 2018, adding as many as 10 European Union countries in the second half of the year as well as the United Kingdom.

Finastra appoints new CTO to lead next wave of financial services innovation (Fintech Finance), Rated: B

Finastra today announced that Eli Rosner has joined the firm as Chief Product and Technology Officer. Eli is responsible for global product and technology strategy and will support Finastra to deliver world class products, fully integrated solutions and its open FusionFabric.cloud platform for innovation.

Eli brings more than 25 years of industry experience to the role at Finastra. He joins from NCR Corporation where he served as CTO and Head of Product Management. Based in London, Eli will lead a global team of strategy and product managers, enterprise architects, data scientists and software engineers.

Australia

Online lender launches new loan portal (The Adviser), Rated: AAA

A custom-built introducer portal designed to facilitate fast, real-time processing of loan applications for brokers has been launched by an Australian marketplace lender.

Online lender Zagga this week launched the new portal, which uses custom-built algorithms to match wholesale investors with borrowers.

Speaking to The Adviser, Zagga CEO Alan Greenstein said the portal would provide brokers with simple, fast, and direct access to the loan application process from start to finish.

Sydney Angels funds QPay $ 570k to steal millennial students from banks (Finextra), Rated: A

Australia’s first ever student marketplace app, QPay, has raised $570,000 from a series of high profile investors, including Sydney Angels and the Sydney Angels Sidecar Fund 2, to break into student banking through the release of a student-targeted QPay MasterCard.

QPay aims to use the QPay MasterCard to capture the largest cluster of millennial consumers at the point when they’re most likely to begin making serious financial decisions – when enrolled in tertiary education.

Asia

How Alibaba and Tencent became Asia’s biggest dealmakers (Financial Times), Rated: AAA

The China Music story shows just how hard it can be to say no to Tencent — and the other big player in the Chinese tech world, Alibaba. With their large resources and long-term perspective, the two Chinese groups are transforming Asia’s investment landscape, posing challenges for private equity and venture capitalists as well as the start-ups looking for funds. In some parts of the region, SoftBank, the Japanese investment group, is playing a similar role.

The reach of Tencent and Alibaba in their home market dwarfs that of the big tech groups in the US. While the latter accounts for less than 5 per cent of all venture capital flows in their home market, Alibaba and Tencent account for 40-50 per cent of venture capital flows in mainland China, according to data from McKinsey.

If the venture capital market in China has become a fierce battle between Alibaba and Tencent, in other parts of the region it is often a three-pronged competition that also includes SoftBank.

 

Can Korean entrepreneurs help create Indonesia’s next unicorn? (The Investor), Rated: A

Indonesia is home to four unicorns — startups whose value reaches over US$1 billion — Go-jek, Traveloka, Tokopeida and Bukalapak. But the world’s fourth populous country with more than 250 million potential spenders wants more such success stories.

“Currently, we have four startup unicorns from Indonesia but none are from fintech services. I hope to see the next unicorn from this field,” said Rudiantara, adding that he believes P2P lending fintech startups have a chance to become the next unicorn.

His wish may soon become a reality as Indonesia’s market potential, combined with the government’s push for creating a startup hub are attracting aspiring entrepreneurs from all around the world.

Africa

How technology is changing wealth management (Money Web), Rated: AAA

The investment world is no different. Robo-advice is but one small part of the broader fintech landscape, but it has already made a major impact on the investment space through improved access and by allowing investors to plan for specific needs without the use of a traditional advisor. Technology has also made pricing more competitive.

According to Accenture, global investment in fintech ventures tripled from just over $4 billion in 2013 to more than $12 billion in 2014.

Authors:

George Popescu
Allen Taylor

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

United Kingdom

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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