- Today’s main news: FICO launches cloud-based origination solution for mid-market lenders. Monzo granted full banking license. FC SME Income Fund nearly doubles in size. Orca launches P2P comparison site. Supporting America’s Innovators Act passes.
- Today’s main analysis: Liberum/AltFi Financial Disruptors Index up 8.86% MoM, Yirendai down 16.06%.
- Today’s thought-provoking articles: How fintech is serving subprime lenders. Time to buy Yirendai based on P/E?
- FICO launches cloud-based origination solution for mid-market lenders to automate SMB lending decisions. GP:”After Misys and D+H, all large tech providers can also launch fintech solutions. Interesting that FICO focused on mid market and SMB solutions.” AT: “The question here is, will community banks and credit unions take the bait? I hope they do.”
- Key indicators from Orchard. GP:” A great handy summary. Elevate’s stock should figure here soon as well.”
- How fintech is serving subprime lenders. AT: “Last week, the big news was Elevate Credit’s IPO. Here, a video interview with Elevate CEO Ken Rees.”
- 5 metrics to help advisors master online CRE investing.
- US lending agents make inroads into P2P lending. AT: “Nothing new here.”
- States oppose OCC’s proposed fintech charter. GP:” There has always been an equilibrium between states and federal powers. Since the Internet era the states are having harder time putting borders around the electrons of the internet though. Instead or trying to prevent entities from having federal charters states should seek to create better local charters to attract business. ” AT: “The charter will likely end up in the hands of the Supreme Court. What’s at stake here is who should be allowed to regulate online banks, the states or the federal government. My take: If commerce is taking place across state boundary lines, that’s a federal issue, per the Constitution.”
- Investors want a blend of digital and traditional financial advice. AT: “We knew that.”
- Cohn said to support Glass-Steagall. GP:” Glass-Steagall is a very interesting rule that appears simple. Lately American politics has focused on apparent simple actions/solutions. It Glass-Steagall may be in fashion again.”
- Supporting America’s Innovators Act passes. GP:” The act allows to increase the number of investors under a certain exception most used for hedge funds and other limited partners fund from 100 to 250. I am also curious if their incentive to VCs to invest in rural areas will work. Is the local ecosystem of entrepreneurship the key to success or is entrepreneurshipo evently distributed through the population? “
- NYCUA, SimplyCredit partner to help NY credit unions combat disruption, accelerate lending growth. AT: “I’m all for credit unions getting into online lending if it helps their members.”
- Monzo granted full banking license.
- Funding Circle SME Income Fund nearly doubles.
- Orca launches P2P comparison site.
- Fintech buys a bank.
- Industry urges for standard default definition. AT: “I’m not sure why a standard definition is necessary.”
- There’s a simple reason why no sector is immune from obsolescence.
- RateSetter’s Peter Behrens joins George Banco board.
- 4finance Group ensures anti-money laundering compliance with cloud solution.
- Kreditech appoints senior global consumer bankers to advisory board.
- Lendbox joins P2P lending club.
- State Bank of India rebrands. AT: “It’s unclear whether the bank is intending to use the online lending model, but the headline appears to hint at it.”
- 5 future trends that would disrupt Singapore’s real estate industry. AT: “If crowdfunding and technology don’t do it, nothing will.”
- United States
- FICO Launches Cloud-Based Origination Solution to Help Mid-Market Lenders Automate Small Business Lending Decisions (Yahoo! Finance), Rated: AAA
- Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA
- How fintech is serving subprime lenders—inside Elevate Credit’s IPO (SRN News), Rated: AAA
- Should Elevate Credit IPO Worry Other Online Lenders? (NASDAQ), Rated: A
- 5 Metrics to Help Advisors Master Online Commercial Real Estate Investing (Think Advisor), Rated: A
- US lending agents make inroads into peer-to-peer space (Global Investor Magazine), Rated: A
- States Oppose OCC’s proposed Fintech Charter (JD Supra), Rated: A
- Investors want a blend of digital and traditional financial advice (Investment Executive), Rated: A
- Cohn said to support Glass-Steagall (American Banker), Rated: A
- Supporting America’s Innovators Act Passes the House of Representatives (Crowdfund Insider), Rated: A
- NYCUA and SimplyCredit agree to new business partnership (CU Insight), Rated: A
- United Kingdom
- Monzo, a UK digital-only challenger bank, granted full banking license (TechCrunch), Rated: AAA
- Funding Circle SME Income Fund Near Doubles In Size With Placing (ALLISS) (Morningstar), Rated: AAA
- Orca launches peer-to-peer comparison site (Bridging&Commercial), Rated: AAA
- Forget about banks buying fintechs — this deal happened the other way around (Yahoo! News), Rated: A
- Industry urges for standard default definition (P2P Finance News), Rated: A
- There’s a simple reason why no sector is immune from becoming obsolete (City A.M.), Rated: A
- RateSetter’s Peter Behrens joins George Banco board (P2P Finance News), Rated: B
- European Union
- 4finance Group Ensures Compliance with New Anti-Money Laundering Requirements Using Cloud Solution (PR Newswire), Rated: A
- Kreditech Appoints Senior Global Consumer Bankers to its Advisory Board (Kreditech), Rated: B
- The Best Low P/E Chinese Stocks to Buy in April (Madison.com), Rated: AAA
- WeiyangX Fintech Review (Crowdfund Insider), Rated: A
- FinTech Tracker: Lendbox Joins The P2P Lending Club (Bloomberg Quint), Rated: AAA
- State Bank of India to Enter Digital Fintech Era With New Brand Identity (BW Disrupt), Rated: A
- Here are 5 future trends that would disrupt Singapore’s real estate industry (Singapore Business Review), Rated: A
FICO Launches Cloud-Based Origination Solution to Help Mid-Market Lenders Automate Small Business Lending Decisions (Yahoo! Finance), Rated: AAA
FICO has launched FICO® Origination Manager Essentials to help smaller financial institutions make faster, smarter small business lending decisions. Delivered as a cloud service, the easy-to-use loan origination system streamlines and automates the decision process and gives smaller institutions access to the same powerful analytics in risk assessment for which FICO is known. Lenders using the solution can process small business loan applications in as little as 60 seconds, as opposed to days, which is still the average processing time for many lenders today when dealing with small business credit.
Currently, small banks and credit unions are challenged by nimble lenders who operate online and can give auto-approvals for loans in minutes. Origination Manager Essentials, delivers banks the same technical advantage so they can compete on experience and relationships rather than technology.
Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA
How fintech is serving subprime lenders—inside Elevate Credit’s IPO (SRN News), Rated: AAA
Should Elevate Credit IPO Worry Other Online Lenders? (NASDAQ), Rated: A
Texas-based lending company, Elevate Credit, Inc. went public on New York Stock Exchange, priced at $6.50 per share. This was the company’s second attempt to be listed after postponing its IPO in Jan 2016 due to unfavorable market conditions.
On the first day of trading, Elevate Credit’s shares increased 10.9% versus LendingClub’s gain of 1.7% and On Deck Capital’s closing at the price it opened with. But this outperformance in terms of price might not be an indication of threat for the peers.
The model of lending and customer examination used by the company have not been experienced at times of recession and the changing interest rate environment, making it a risky investment as of now. Moreover, it reported high net charge-off rates in the last few years. Hence, other lending companies might appear more lucrative to investors at present compared to Elevate Credit.
5 Metrics to Help Advisors Master Online Commercial Real Estate Investing (Think Advisor), Rated: A
According to a recent study conducted by Accenture, 90% of advisors say clients are more educated about investing than they were five years ago.
However, even in this DIY-friendly arena, financial advisors still play a pivotal role in analyzing single-asset investment opportunities and providing expert guidance. In order to do so, they must educate themselves on the following five metrics:
- Capitalization Rates.
- Cash Flow.
- Capital Improvements.
- Occupancy and Lease Rates.
US lending agents make inroads into peer-to-peer space (Global Investor Magazine), Rated: A
Major US lending agents are continuing to move into the peer-to-peer space, bypassing traditional lines of intermediation to connect clients with end borrowers.
The growing interest in peer-to-peer, or direct lending, has been spurred by the constraints being felt by typical intermediaries, including broker-dealers, which have limited capacity to service market activity to the levels they once did.
However, this non-traditional activity appears to be growing within the framework of the traditional banking system. Banks may not act as a credit intermediary, but their infrastructure and technology is sought after.
States Oppose OCC’s proposed Fintech Charter (JD Supra), Rated: A
Because of their opposition, the states are likely to mount legal challenges to any final rule. For instance, there is a significant open question about whether OCC’s enabling statute, dating back to 1863, even conveys authority to grant such charters. States might also argue that the charter represents a violation of state sovereignty. Absent a distinct shift in Supreme Court precedent, however, this position seems dubious because such companies are almost always engaged in interstate commerce and because the benefits of state regulation are easily outweighed by the access created by a unified federal system.
Investors want a blend of digital and traditional financial advice (Investment Executive), Rated: A
A slight majority of investors don’t want to deal with either upstart robo-advisors or established, traditional financial advisors. Instead, they want a hybrid scenario that marries the best of both worlds, according to a new report from global consulting firm Accenture LLP.
Specifically, 51% of investors in the U.S. and Canada across a range of asset classes who were surveyed for the report prefer combination of face-to-face, personalized advice and access to low-cost digital tools, rather than retaining only a dedicated advisor or relying on a robo-advisory service.
That sentiment is also shared among high net-worth investors with investible assets of between $1.5 million and $10 million as 56% of them say they need more than just traditional advice.
Cohn said to support Glass-Steagall (American Banker), Rated: A
Gary Cohn, the former president of Goldman Sachs and current director of the White House National Economic Council, told federal lawmakers in a private meeting that he could support legislation to reinstate the Glass-Steagall Act, which separated commercial from investment banking. According to the Wall Street Journal, Cohn said he “could support a simple policy completely separating the two businesses” and “expressed an openness to working with” Sen. Elizabeth Warren, D-Mass., an ardent critic of big banks, on the issue.
Supporting America’s Innovators Act Passes the House of Representatives (Crowdfund Insider), Rated: A
The US House of Representatives passed the Supporting America’s Innovators Act (HR 1219) today. The bill received solid backing with a vote of 417 for and 3 against. The bill now moves to the Senate for review.
The Act amends an exemption under the Investment Company Act of 1940 increasing the investor limitation from 100 to 250 people for qualifying venture capital funds. The bill would also eliminate a significant barrier facing small businesses and startups by incentivizing venture capital funds to grow their investments in rural-state entrepreneurs, helping local economies grow and thrive.
NYCUA and SimplyCredit agree to new business partnership (CU Insight), Rated: A
A new partnership between the New York Credit Union Association and San Francisco-based fintech company, SimplyCredit, aims to help New York’s credit unions combat online disruption and accelerate lending growth. Through the partnership, SimplyCredit will enable consumers to refinance high-APR credit card balances with participating New York credit unions using a seamless mobile and web interface.
SimplyCredit’s online tools enable members to not only apply for personal lines, but to also enroll credit cards and schedule balance transfers and line payments. As a result, many members are saving $2,000 or more in interest payments a year. Combined with this service are sophisticated analytics and marketing support that have achieved application rates of nearly 6% on marketing campaigns.
Monzo, a UK digital-only challenger bank, granted full banking license (TechCrunch), Rated: AAA
Monzo, one of a number of so-called “challenger” banks in the U.K. aiming to re-invent the current account, has had the “restrictions” on its banking license lifted and says it will begin rolling out full current accounts to its pre-paid card and beta app users.
This can also include being able to lend those deposits out at some point in the future, which, like rival Starling and traditional banks, forms the basis of the company’s initial business model.
Funding Circle SME Income Fund Near Doubles In Size With Placing (ALLISS) (Morningstar), Rated: AAA
Funding Circle SME Income Fund Ltd on Friday said it has raised GBP142 million in a placing of 142 million C Shares at 100 pence, nearly doubling the fund’s size.
Shares in Funding Circle SME were up 0.4% at 103.25 pence Friday.
Orca launches peer-to-peer comparison site (Bridging&Commercial), Rated: AAA
Orca – a data, research and analysis provider to the UK P2P lending market – has announced the launch of its new platform, which offers unique standardised metrics to compare P2P investments.
The platform allows users to perform in-depth due diligence on P2P investments and benchmark them in a similar manner to a traditional asset class so that they can make risk-adjusted, informed investment decisions or recommendations.
The Orca platform will also offer market data on items such as interest rates, default rates, bad debt rates and a platform’s financial standing.
Forget about banks buying fintechs — this deal happened the other way around (Yahoo! News), Rated: A
StatPro, a fintech company long before fintech was even a term, on Friday announced a deal to buy UBS’ Delta platform for €13 million (£11.1 million).
Shares in AIM-listed StatPro jumped 10% on news of the deal, which both the company and house broker Panmure Gordon called “transformational.”
Industry urges for standard default definition (P2P Finance News), Rated: A
Peer-to-peer lenders are backing calls for a standardised definition of defaults in the sector.
Although actual default rates are low, the definition of when a loan has failed is not consistent across all platforms, making it harder for investors to compare.
Members of the Peer-to-Peer Finance Association (P2PFA), such as Zopa and RateSetter, define a loan as being in arrears if repayments haven’t been met for more than 45 days. A loan is then declared as being in default, and recoveries started, if the amount owed becomes 120 days late.
MoneyThing founder Ed Pearce says the business lending platform defines a default as when a borrower fails to repay for two consecutive months.
Property lender Kuflink declares a default at three missed payments at any point in the loan period. Meanwhile, an asset-backed loan from Lendy, formerly known as Saving Stream, is in default if the amount owed is not paid within 180 days, which the platform calls a tolerance period.
Despite the differences, the P2P rules are actually slightly more definitive than those in the mainstream banking sector.
There’s a simple reason why no sector is immune from becoming obsolete (City A.M.), Rated: A
Financial institutions exist to reduce transactions costs. Without them, somebody saving money for a rainy day or for their pension would have to seek out and assess the credit worthiness of a vast number of individuals or companies before lending them money. And, without securities markets and banks providing on-demand deposits, the cost of individuals realising their investments at convenient times would be huge.
Airbnb can thrive because the internet means that those who wish to rent out rooms temporarily don’t have to group them altogether in one building in a permanent business.
Peer-to-peer lending radically simplifies the “middle-man” in credit transactions; and other innovations are on their way in finance. In China, 2,000 platforms intermediate £100bn of peer-to-peer lending. And a combination of the development of drones, the internet and modern computerised logistics means that Amazon provides services from a warehouse in Dundee to people who have never heard of Dundee.
If you want to predict major developments in business and commerce, you should look at how technology will change transactions costs.
RateSetter’s Peter Behrens joins George Banco board (P2P Finance News), Rated: B
RATESETTER’s co-founder and chief operating officer Peter Behrens has joined the directors’ board of guarantor loan provider George Banco.
The specialist lender, which provides finance to borrowers with poor or no credit history by involving a third person who can step in if the former run into repayment issues, is looking to increase its penetration into the broader consumer finance market.
4finance Group Ensures Compliance with New Anti-Money Laundering Requirements Using Cloud Solution (PR Newswire), Rated: A
Silicon Valley analytic software firm FICO today announced that consumer online lender 4finance Group is using the FICO® TONBELLER® Siron® Anti-Financial Crime Solutions to ensure anti-money laundering regulatory compliance across its global network. Supported by the FICO® Analytic Cloud and Amazon Web Services (AWS), the FICO solution has been deployed by 4finance Group in nine EU countries and in Georgia in six months, and is being rolled out across the rest of the lender’s global network.
Headquartered in Latvia, 4finance Group uses the FICO modules Siron®AML (Anti-Money Laundering) to monitor customer activity, and Siron® KYC (know your customer) to do customer due diligence, including PEP (politically exposed persons) sanctions, and known criminals screening.
Kreditech Appoints Senior Global Consumer Bankers to its Advisory Board (Kreditech), Rated: B
Consumer finance technology company Kreditech has appointed two new independent Board Members to further strengthen its Advisory Board: Michael Lenora joined as Independent Chairman, Andy Golding as Independent Board Member. These recognized experts from the consumer finance industry will support Kreditech further in its mission to provide access to credit for the underbanked.
The Best Low P/E Chinese Stocks to Buy in April (Madison.com), Rated: AAA
Chinese tech stocks have a reputation for being pricey and volatile stocks. But if we look closer at this market, we’ll notice that several high-growth plays are still trading at surprisingly low multiples.
YY Is a Chinese social network, powered by family of apps, which enables users to share photos and stream live videos. Revenue from YY’s live streaming business rose 42% annually to 2.22 billion yuan ($319.5 million) last quarter, which accounted for 89% of its top line.
Yirendai is basically China’s version of LendingClub (NYSE: LC), a peer-to-peer (P2P) lender which directly connects investors to lenders while cutting banks out of the loop. This is a very hot market — research firm Yingcan estimated that China’s P2P industry brokered about 982 billion yuan ($142 billion) in loans in 2015 — nearly quadruple the amount brokered in 2014.
WeiyangX Fintech Review (Crowdfund Insider), Rated: A
On March 31, Ant Financial, the finance arm of Alibaba Group Holdings, revealed its new payment service for virtual reality shopping at the Shenzhen Innovation Week.
On March 28, Shanghai Insurance Exchange (SHIE) and nine insurance institutions announced that they had successfully verified the feasibility towards applying blockchain technology to their insurance exchange.
Omni Prime, a consumer finance provider, announced that it had completed the asset-backed securitization of RMB 500 million of notes in a transaction that closed on March 28. The asset-backed securitization was carried out as a joint effort of JD Finance, Hony Capital and Omni Prime. The consumer loans, which were rated as A notes and B notes, were purchased by JD Finance and Hony Capital, and Omni Prime.
On March 28, Ant Financial and China Construction Bank signed a strategic cooperation agreement to develop a QR code payment business.
On March 27，the National Internet Finance Association of China held the Third Member Conference and announced to establish the P2P Finance Association. The association would be led by the People’s Bank of China, in conjunction with China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission etc.
On March 28, Credit Intelligence Company Yongqianbao closed on RMB 466 million ($67 million) in Series C funding led by Golden Brick Capital and CICC Alpha. Other participants in the round included Cash Capital, Source Code Capital, WeWork and GX Capital.
On April 1, Chinese online finance and lending company China Rapid Finance announced it would file for an IPO on the New York Stock Exchange with a fund-raising target of US$100 million. Morgan Stanley, Credit Suisse and Jefferies will be the underwriters.
FinTech Tracker: Lendbox Joins The P2P Lending Club (Bloomberg Quint), Rated: AAA
Peer-to-peer (P2P) lending was among the first forms of fintech that Indian consumers were exposed to. In a country where access to formal credit has always been a problem, and loans from friends and family are common, P2P lending seemed like a no-brainer. And it didn’t disappoint.
Early entrants into the market like Faircent saw a strong response to their P2P lending platforms, which, in turn, has attracted newer entrants like Lendbox which launched P2P lending operations in November 2015.
At Lendbox, business has been growing at an average of 20 percent month-on-month over the past year, Bhuvan Rustagi, one of the three co-founders of Lendbox told BloombergQuint in a phone conversation. The platform currently has outstanding loans of Rs 20 crore, Rustagi said. BloombergQuint could not independently verify these claims since Lendbox is a private company.
State Bank of India to Enter Digital Fintech Era With New Brand Identity (BW Disrupt), Rated: A
State Bank of India, the nation’s largest banking and financial services provider, unveiled on 7th April, 2017, its new brand identity, designed to position SBI as a modern, progressive bank, ready to meet the financial needs of all Indians.
While the legendary SBI monogram has been the de-facto symbol of State Bank of India, combining it with the abbreviated SBI word mark was pivotal to the new identity. It made the brand more concise, modern and approachable, infusing new energy, while retaining its core values.
Here are 5 future trends that would disrupt Singapore’s real estate industry (Singapore Business Review), Rated: A
Wang said e-commerce and changing consumer habits render shopping malls obsolete.
The second trend is the utilisation of data analytics. Wang said big data and advanced analytics allows for richer insights into all types of transaction data.
There is also a growing trend in terms of green and sustainable buildings.
Wang also cited crowdfunding as a major driver, saying real estate crowdfunding brings a greater variety of quality real estate assets with lower barriers of access.
Lastly, Wang said that the most important trend that would be unfolding is towards education, where the next generation of real estate professionals must be prepared for the evolutionary challenges that technology will bring. –