Thursday January 12 2017, Daily News Digest

p2p loan investing

News Comments Today’s main news: Funding Circle raises another $100M, praised by chancellor. Today’s main analysis: Brussels, London form FinTech bridge. Today’s thought-provoking articles: What every entrepreneur needs to know before starting a business. United States What every entrepreneur needs to know before starting a business. AT: “Sharestates CEO Allen Shayanfekr shares from his own […]

p2p loan investing

News Comments

United States

United Kingdom

India

International

  • Global loan servicing software market to grow over 14% through 2021. AT: “This is a come-on to sell a report, but the interesting thing is that the software we’re talking about is software that can be used by MPLs and other financial services in the alt lending space. If the software market goes up, it’s a good sign that the industry is moving in the same direction.”

News Summary

United States

What Every Entrepreneur Needs To Know Before Starting a Business (Fortune), Rated: AAA

As the founder of a real estate crowdfunding startup, I have learned a lot over the last two years and am eager to share that information with other entrepreneurs.

The first tip I would give any entrepreneur is to forget the concept of a 9-5 work day. If you start your company thinking that all of your responsibilities will be handled in an 8-hour day, you are setting yourself up for failure.

Without a solid operations team, the inefficiencies from department to department will end up costing much more in the long term.

The capital raising environment is volatile and the key to survive a raise is to find the quickest path to profitability even if it means growing slower. Because raising capital is a long and tough process, you should make every single penny count. Sharestates started out with a $25,000 family loan and now has originated over $200 million in real estate loans since its inception in 2014. Until your company is ready to raise capital, be sure to be in touch with each department’s spend to ensure you are maximizing each dollar.

Make sure you consult an attorney to ascertain all regulatory and compliance risks – not everyone is aware that sometimes their line of business is subject to some form of scrutiny. This is especially important in an industry as new as marketplace lending.

SoFi: A Financial Services Provider That Is So Not Wall Street (TheStreet), Rated: A

In the old days, banks were imposing granite buildings housing massive vaults and offering 3% on savings and 6% mortgages. Later they morphed into unassuming suburban branches distinguished from fast-food outlets primarily by having multiple drive-through lanes. 21st Century banks increasingly live online, and the chief exemplar of that is SoFi.

Another difference is that SoFi relies less on credit scores when deciding to grant a loan compared to mainstream lenders. “We’re looking primarily at free cash flow — do you have enough money at the end of the month to pay us back for this loan?” Macklin says.

Perhaps the most marked divergence between SoFi and mainstream banks is its interest in customers’ personal lives. The company hosts meet-and-greet singles events and community dinners and provides career planning and job search assistance. It even offers coaching to help would-be entrepreneurs launch businesses.

Roseman says SoFi appears to seek refinancing business with borrowers whose student loan balances are $80,000 and up. “With that type of loan balance, they’re looking at the Ivy Leagues and the Stanford grads, more of the private college folks,” he says.

On life insurance, he suggests looking at other options before signing up for SoFi’s. SoFi doesn’t require medical exams from applicants. which means the insurer shoulders more risk, which generally means higher premiums.

He also cautions against refinancing government student loans as part of a mortgage refinance without accounting for the fact that government loans may allow for modifying payments or forgiving part of the loan.

Why You Should Invest In Peer-To-Peer Loans In 2017 (Forbes), Rated: A

Most lenders spread their loans across a variety of rankings—with the bulk in the highest-quality ratings (lowest default risk) and some in the lower quality, where yields can top 20% to offset the higher risk.

One of the big advantages of P2P lending is the very low correlation these loans have to traditional stock and bond markets.

Due to the nature and number of the loans you’ll make, the correlation to the stock market for a P2P portfolio is just 0.19. For US bonds, the correlation is even less, -0.13.

There are also add-on services you can use to improve your overall returns while better managing your risk. One tool we analyzed in our report consistently provided a net annual return of over 14%.

WILL THESE TECHNOLOGIES KILL CASH ONCE AND FOR ALL? (Ozy), Rated: A

Financial technology (fintech) is a young but $78.6 billion–strong industry, and legal precedents can only help it thrive. Unethical business practices by one company can ruin opportunities for all, and that would be a tragedy given that alternative finance holds the power to transform the industry, bringing services to millions who have long been excluded from the system.

Traditional firms like Goldman Sachs will capitalize on Lending Club’s missteps by arguing that point of sale is where it’s at — and they’ll be right.

Mobile apps aren’t merely add-ons for banks trying to appeal to younger generations; they’re now baseline requirements.

2017 will be the year of alternative payments. Heavy hitters like PayPal, Apple Pay and Google Pay will continue to flourish as merchants increasingly encourage customers to pay via their phones or digital wallets. But smaller companies will emphasize mobile payments as well, using new apps and streamlined systems to drive more widespread adoption among consumers.

The natural next step from alternative payments is for smartphones to become people’s go-to personal finance management systems. Individuals will pay their bills, monitor their budgets and make purchases almost exclusively through mobile apps and notifications.

Approximately 24 million U.S. households rely on services like pawnshops and payday loans to access cash and credit. Fintech companies will target these millions through new products and underwriting models that look beyond traditional credit indicators.

Improved efficiencies will empower consumers and hold banks and fintech companies to higher standards of transparency and ethics.

Enhancements in financing will also enable individual verticals or marketplaces build cooperative microeconomies, thanks to improved access to capital.

Does Funding Circle’s 0M Round Signal A Return To Boom Times For Online Lending? (Fast Company), Rated: A

Last spring, following a loan-doctoring scandal at Lending Club—at the time, the industry leader—capital for online lending startups became harder to come by and many suffered layoffs. Avant, Prosper, and Lending Club cut staff by the hundreds.

Funding Circle weathered the storm, closing 2016 on a high note with $485 million in Q4 loans to small businesses. In total last year, the company lent $1.4 billion. According to Hodges, Funding Circle is cash-flow positive in its home market, the United Kingdom (where it benefits from the support of the government-owned British Business Bank), and expects to make its U.S. business profitable in 2017.

Online lenders also face increased competition from banks, many of which have shiny new platforms thanks to partnerships with startups. Kabbage, for example, has made bank partnerships central to its strategy; CEO Rob Frohwein says that licensing Kabbage technology to banks has grown to become an “eight-figure business” for his organization.

LQD Business Finance Announces Breakout Business Results In 2016 (PR Newswire), Rated: A

LQD Business Finance, an alternative lender that uses a proprietary credit-scoring algorithm to underwrite business loans, announced standout business results in 2016, its first full year of operations. Last year, LQD grew its flow of loan applications to over $140 million and loans closed to $33 million. In addition, the company closed a significant Series A funding round, complementing the $30 million credit facility secured in 2015.

Looking ahead, Souri said LQD anticipates growing its origination run rate to $80 million by the end of 2017 and to more than $200 million over the next 24 months, largely by expanding its data-driven lead generation and targeting the $200 billion market of prime and near-prime loans between $250,000 and $2 million. That market is underserved by both banks and existing alternative lenders. Additionally, LQD is in partnership talks with several banks interested in the company’s underwriting platform.

Professional Bank Services and Austin Associates Announce Strategic Merger (ProBank Email), Rated: B

Professional Bank Services, Inc. (PBS) and Austin Associates, LLC (Austin) announced today they have completed a strategic merger to create the nation’s premier bank consulting and investment banking firm. The resulting firm will operate under the name ProBank Austin, with offices in Louisville, KY, Nashville, TN and Toledo, OH.

Transaction terms are not being disclosed. ProBank Austin will continue to be privately-owned by the management and employees of PBS and Austin.

PwC Launches Blockchain & FinTech Program for Young Entrepreneurs (Coin Telegraph), Rated: A

PricewaterhouseCoopers (PwC), one of the Big Four auditors and a multi-bln dollar professional services firm, launched a program called “Startup Collider” in early September of last year. The program, which begins today, will support young entrepreneurs and startups working within the Blockchain and fintech industries.

By the end of the program, PwC hopes to see its startups cooperate with industry leaders and introduce their technologies to mlns of users and consumers. Dissimilar to many venture capital firms or accelerators, PwC also allows startups to test their technologies with its multi-bln dollar clients and partner corporations. If startups wish to pivot away from their focal point to another market within fintech or Blockchain, PwC will support the decision.

United Kingdom

Chancellor hails ‘vote of confidence’ in UK economy as Funding Circle raises £82 million (Business Insider), Rated: AAA

Chancellor Philip Hammond has praised Funding Circle as “a real success story” after the British peer-to-peer lender raised a further $100 million (£82 million).

The company announced its sixth funding round on Thursday, which takes its total equity funding to over $370 million (£300 million).

The latest funding round was led by existing investor Accel Partners, with participation from other existing backers including Baillie Gifford, DST Global, Index Ventures, Rocket Internet, Temasek, and Union Square Ventures.

UK MD and co-founder James Meekings told Business Insider that the money will go towards building out Funding Circle’s technology platform and hiring more staff.

Brussels and London Form ‘Fintech Bridge’ (Fortune), Rated: AAA

“B-Hive,” the part-government-owned platform set up to facilitate innovation between Belgium’s fintech sector and the traditional financial and technology sectors, has signed a memorandum of understanding (MoU) with Innovate Finance, the trade body for Britain’s fintech sector, it said on Wednesday.

In 2015 Britain’s fintech sector, whose ranges from app-based payment services to crowdfunding and peer-to-peer lending firms, employed over 60,000 people and generated 6.6 billion pounds ($8 billion) in revenue, according to the Treasury.

Crowdstacker Claims the Title of Biggest UK Crowdfund (Crowdfund Insider), Rated: A

Yesterday we published an article about BrewDog raising £10 million on Crowdcube.  The funding round via Mini-bonds was described as the largest ever on a UK crowdfunding platform.  Later in the day, Crowdfund Insider was contacted by Crowdstacker saying not so fast – they believe they have the largest crowdfund record for a UK platform.

Their new record-breaking claim to a single raise has been undertaken via its peer to peer lending platform for leading specialist lender, Amicus Finance plc.  To date, £12 million has been invested.

P2P Platform Flender Surpasses £485,000 During the Final Week on Seedrs (Crowdfund Insider), Rated: A

With less than a week until its Seedrs campaign comes to an end, P2P lending platform Flender has secured 98% of its £500,000 funding target (more than £485,000) from 225 investors.

Funds from the equity crowdfunding campaign will be used for key hires, including a direct sales team and in-house software developers; marketing, including online targeting and above-the-line advertising; product development, specifically native iOS and Android versions plus roadmap features for all channels. Flender’s Seedrs initiative is currently scheduled to close next Tuesday (January 17th). 

iBAN Seeking £100,000 on Seedrs to Create Crowdlending App iBAN Wallet (Crowdfund Insider), Rated: A

Online lending platform, iBAN, recently launched an equity crowdfunding campaign on Seedrs with a mission to raise £100,000 to create its new crowdlending app, iBAN Wallet.

The lender stated that the app would connect lenders and borrowers directly, helping them to control their finances and transfer money while on the go. Through the app, iBAN users will have a modern money management tool, integrated with gamification, and risk management.

4thWay Predicts UK P2P Lending Market to Grow Up to 50% in Coming Year (Crowdfund Insider), Rated: A

4thWay, a P2P ranking site, has published a report on the UK peer to peer lending market.  According to their numbers, delivered another “record year”, with a total of £3.02 billion facilitated via 35 various platforms in the UK.

The totals are as follows:

  • Consumer loans £1.27bn
  • SME loans including invoices £1.01bn
  • Development and short-term property loans £690m
  • Asset-backed (HNW pawnbroking) £40m
  • Rental property £10m

4thWay said investors typically received returns of 3%-7% net of costs and bad debts. Lower returns went to investors who desired greater liquidity and the higher returns to those lending for up to five years.

Bad debts at the majority of P2P lending platforms remained consistently very low at less than 1%.

LandlordInvest gains ISA manager status from HMRC (P2P Finance News), Rated: A

LANDLORDINVEST has been approved by HMRC as an ISA manager, paving the way for the launch of its Innovative Finance ISA (IFISA), Peer-to-Peer Finance News has learnt.

At present, just 18 companies are authorised to offer IFISAs, most of which are very small firms. Out of the eight members of the Peer-to-Peer Finance Association, only Lending Works has HMRC approval. Just before Christmas, Landbaygained full authorisation from the FCA, meaning that HMRC permission is the next step.

LandlordInvest has said that its IFISA will offer investors annual returns ranging between five and 10 per cent.

P2P to “explode” in 2017, but some platforms may close (P2P Finance News), Rated: A

PEER-TO-PEER lending will grow by 50 per cent this year driven by the Innovative Finance ISA (IFISA), but some platforms will fall by the wayside, predicts new research.

Just five IFISAs have been launched so far, but independent P2P analysis firm 4th Way is forecasting a total of 16 by the end of the year, which will boost lending.

“Interest rates in peer-to-peer lending will continue to fall in 2017, benefiting borrowers at the expense of lenders,” he said. “However, we believe P2P has been kind to lenders, as they have been rewarded generously for low risk.

“Over the long term, the amount of interest lenders can earn will be aligned to risk. The high-quality of the loans that most lenders are lending in means more lenders will pile in to push rates closer to a fairer level.”

India

Crowdfunding versus REIT: Crucial differences (MoneyControl), Rated: A

Crowdfunding, the world over, has been about peer-to-peer funding. However, there are many challenges in the Indian real estate market, such as the absence of an organised trust/agency, which make crowdfunding a non-starter. So, what makes crowdfunding different from a Real Estate Investment Trust (REIT)?

With REITs, investors only know the portfolio and not the properties. However, in crowdfunding, individuals can single out a particular building or builder to invest in, he explains.

David Walker, MD of SARE Homes, points out that REIT has already gained official sanction, while crowdfunding is still not officially recognised in India, unlike in the developed nations.

International

Global Loan Servicing Software Market to Grow at a CAGR of Over 14% Through 2021 (Yahoo! Finance), Rated: A

Technavio market research analysts forecast the global loan servicing software market to grow at a CAGR of more than 14% during the forecast period, according to their latest report.

The market study covers the present scenario and growth prospects of the global loan servicing market for 2017-2021. The report also presents a detailed analysis of the key vendors in the market, along with a comprehensive analysis of the emerging trends and challenges faced by the vendors.

The increasing demand for the lending market has given rise to efficient loan servicing software that helps the lenders in managing loan databases and debt collection activities.

Loan servicing software enables lending organizations to minimize financial risk exposure in addition to increasing their operational efficiency. Loan servicing software also supports a wide variety of loan industries and lending products that include SME lending, peer-to-peer lending, mortgage lending, payday loans, credit unions, microfinance, retail lending, POS financing, auto lending, and medical financing. Loan servicing software handles the mortgage, home equity, and other consumer loans on one platform. All these factors are collectively increasing the adoption of loan servicing software.

Authors:

George Popescu
Allen Taylor

August 16th 2016, Daily News Digest

August 16th 2016, Daily News Digest

News Comments I continue to believe that the P2P market is back in an uptrend : OnDeck, Yirendai and Lending Club stocks are up and there is a lot of demand for securitizations ( Avant, Lending Club, Ernest, etc.). The next battle is going to be regulatory : Madden vs Midland effects, regulators in Washington […]

August 16th 2016, Daily News Digest

News Comments

United States

United Kingdom

  • P2P research firm 4th Way attempts to rate UK p2p platforms. I am afraid it’s a little confusing. I would like to see a clear table of what the rating scale is, what they mean, and then access , for free, the ratings per company. I suggest as a business model that they can charge to get the full report showing the basis of the ratings and their analysis.

Brazil

Australia

China

 

United States

Shares in Yirendai Jump as Chinese P2P Lender Executes on Objectives, ( Crowdfund Insider), Rated: AAA

Yirendai (NYSE:YRD), the publicly traded offshoot of huge P2P lender CreditEase, announced Q2 results last week and the markets liked what they heard. While Yirendai held their earnings call on Wednesday, August 10th, it has taken a few days for the news to sink in.

The shares in YRD were also boosted by a report from Needham & Company that bumped up the price target from $14 to $35.

Yirendai topped expectations by a good amount and delivered solid growth for the quarter as the online lender facilitated RMB 4.5 billion ($683 million) worth of loans, an increase of 118% year-over-year from Q2 2015. According to Dennis Cong, CFO of Yirendai, the quarter also accomplished another milestone by crossing the $3 billion mark in loan originations. Net revenue came in at $110 million – a 140% increase year over year. Guidance for the full year 2016 was also boosted. According to notes from the conference call;

On the conference call, Yihan Fang, Yirendai CEO, reviewed the “positive development of regulation”. Yirendai stated it has been “actively participating in regulation development” something they believe will enhance their leadership position.

Online lenders are ripping higher today — here’s why, (CNBC), Rated: A

Shares of both Lending Club and OnDeck Capital shot up in trading Monday, respectively adding more than 7 percent and more than 3 percent. The moves come on a day when the broader banking sector is edging only slightly higher.

Shares of lenders OnDeck Capital and Lending Club have risen recently, signaling shareholder optimism.

Online lenders, their customers and investors in the companies know: It isn’t demand that counts here, its supply. And the lower-for-longer monetary policies adopted in the U.S. by central bankers play into online lenders’ hands.

There is still plenty more appetite for online lenders’ products, since they often provide capital to borrowers at a rate lower than what they would get from standard credit cards.

“They should be fine growing far into the future at a 25 percent rate,” the source said. “But there are a lot more borrowers than lending capital.”

Avant Secures $ 255 Million Asset-Backed Securitization Led by J.P. Morgan, Credit Suisse and Morgan Stanley and Renews 2 Million Warehouse Facility, ( PR Newswire), Rated: AAA

Online lending platform Avant announced today two closed transactions, including a$255 million 144A asset-backed securitization deal and the renewal of its $392 million warehouse facility held by J.P. Morgan and Credit Suisse.

The three tranche AVNT 2016-C securitization transaction includes Class A, B and C fixed-rate notes that were rated A-, BBB- and BB by Kroll Bond Rating Agency (KBRA). Credit Suisse served as the lead bookrunner with J.P. Morgan and Morgan Stanley serving as joint bookrunners. The ABS deal was strongly received by investors and was significantly oversubscribed. The transaction will provide debt financing for Avant’s core U.S. installment loan business.

To date, more than 500,000 customers have been served worldwide through the Avant platform.

Regulators Renew Interest in Understanding FinTech, (Business2Community), Rated: A

It’s been more than eight years since marketplace lender Lending Club shut down for six months in order to explain their process and platform to the Securities and Exchange Commission.

Part of the reason for the recent interest in FinTech is the mistaken belief that there are currently no laws in place to protect consumers from these new technologies. On the contrary, such firms are not only subject to government oversight but have also worked hard to self-regulate including the formation of the Marketplace Lending Association.

Notably Senators Sherrod Brown and Jeff Merkley recently sent a letter to Fed Chairperson Janet Yellen, Comptroller Thomas Curry, and others requesting more information on what regulators were doing in regards to FinTech. In it the senators said, “These [FinTech] companies are changing financial services, and it is vital that the regulators and Congress understand all the impacts and take actions as appropriate.” This was actually Brown’s third such letter regarding FinTech. Currently the Office of the Comptroller of the Currency (OCC) is in the process of reviewing FinTech regulations and how these companies fit into the current framework.

Congressman Lacy Clay recently alluded to these advantages but also added that the sector must work to do more, saying, “Marketplace lending and FinTech cannot ignore the capital needs of communities of color and women- and minority-owned businesses.”

Two CEOs tell us where alternative lending is headed, (Business Insider), Rated: A

Rob Frohwein, CEO at Kabbage. Kabbage is a US-based small business and consumer lender. The company doesn’t offer a P2P lending marketplace like Lending Club; it originates and holds loans on its books rather than serving as an intermediary between borrowers and investors. “Balance sheet lenders have a more stable source of capital because investors know the return they’re going to get.” Frohwein says that alt lenders can be successful in both good and challenging economies, but that it’s critical firms do not assume past market behavior is indicative of the future. Alt lenders need to have multiple liquidity options in place, even if that means making a trade-off on their balance sheets to achieve such flexibility.

Ron Suber, president at Prosper Marketplace. US-based Prosper offers a P2P marketplace for consumers and closely competes with Lending Club. Suber says that Prosper has no plans to pursue an on balance sheet model.  Suber says that “there is no magic answer,” there are three models in the industry — on balance sheet only, marketplace only, and hybrid — and it’s not clear that one is better than the others. But Suber is confident in Prosper’s marketplace model. “We’ve found investors that have committed to us in the marketplace model and banks who love the ability to work with us in a non-balance sheet format to get the yield and the risk that they require.”

Suber is more optimistic than Frohwein and suspects that the recent slew of bad news is behind the industry. “The insatiable quest for yield around the world is getting even stronger. So more and more pensions, endowments, foundations, and smart money is starting to find the platforms that are institutional, that have enterprise risk solutions, that support securitization.” But while Suber expects profitability to increase for the top platforms, he also expects that the industry will thin out.

RealtyMogul.com Launches Its First Crowdfunded Real Estate Investment Trust, (Realty Mogul), Rated: AAA

MogulREIT I is one of the first such products to launch since the passage of Reg A+, which has opened up the real estate market to more investors than ever. MogulREIT is designed to offer investors distinct advantages:

  • No sales commissions and fees capped at 3% (compared to traditional non-traded REITs, with average total expenses of up to 15%)
  • Access to a diversified pool of curated, pre-vetted commercial investments in cash-flowing properties
  • A minimum investment of $2,500, broadening access to real estate to more retail investors

The launch of the “REIT” marks a new wave of opportunity to invest in real estate. Until recently, private investment markets have been off-limits to the majority of retail investors. However, recent legislation like Regulation A+ and Title III of the JOBS Act has leveled the playing field by allowing non-accredited investors making less than $200,000 per year to access these investment opportunities through online crowdfunding. Through Reg A+, MogulREIT I gives nearly all investors a new entrance to curated and pre-vetted private real estate investing.

Lenny gamifies credit education for millennials, (Lenny), Rated: A

Lenny, the first [Comment: I did not verify this statement of being first, such a statement is always hard to verify.] iOS app to offer credit lines to Millennials, today launched Lenny Points (LPs), an in-app credit education game that offers incentives for users to learn responsible financial behaviors. Users can now accrue LPs to increase their credit line balances and unlock custom offers from bank and credit card partners. The new feature is the first rollout of Lenny’s patent-pending credit education system.

LP rewards users when they achieve specific credit goals on the app such as:

● Making monthly payments in full
● Making monthly payments on-time
● Maintaining a credit utilization ratio under 30% (Learn more)
● An increase in a user’s credit score

Bizfi originates $ 144M + in Financing to Small Businesses in Q2 2016, (BizFi), Rated: A

Today, Bizfi, the premier fintech company with a platform that combines aggregation, funding and a marketplace for small businesses, announced they have originated more than $144M for 3,580+ small businesses in the second quarter of 2016. This is an increase of 25% in year-over-year small business lending originations.

Bizfi’s platform uses APIs to leverage a wide variety of sources to quickly offer loans and other financial products to small businesses. Its technology is strengthened by strategic relationships with more than 45 funding partners, 15 of which are integrated within the platform, including OnDeck (NASDAQ:ONDK), Funding Circle, BHG, Bluevine, Dealstruck and Kabbage. Bizfi is also a direct lender on the platform providing financing to small businesses.

 Small businesses are going to Bizfi.com to access financing directly from Bizfi or the dozens of partners that participate in its marketplace. Several companies that serve small businesses have white-labeled the Bizfi platform in order to provide these businesses with access to SMB financing. In March of this year, Bizfi announced a partnership with Western Independent Bankers (WIB), a trade association with community and regional banks across the Western United States. In July, Bizfi forged a partnership with the National Directory of Registered Tax Return Preparers & Professionals (PTIN). These partnerships provide hundreds of thousands of small business owners across the country with access to financing through the Bizfi platform.

Founded in 2005, Bizfi and its family of companies have provided in excess of $1.7 billion in financing to more than 31,000 small businesses in a wide variety of industries across the United States.

Why Loan Funding And Credit Matter More Than CFO Exit For LendingClub, (Benzinga), Rated: A

LendingClub’s loan origination in the quarter fell to $1.9 billion from $2.8 billion a year ago, but the fact that 15 of its top 20 investors (including Jefferies) returned to the platform may signify some stabilization in the business.

Harralson added that LendingClub’s other positive developments include:

    1. The company beginning to cut expenses.
    2. Additional spend in “saving” the funding base by performing due diligence requests.
    3. The creation of incentive plans for investors to accelerate their activity.
    4. An increase to the rate the platform charges borrows — a move that “shone through in the quarter.”

 

United Kingdom

P2P Lending Research Firm 4th Way Rates UK Platforms, (Crowdfund Insider), Rated: AAA

4thWay, a research and rating firm that wants to be the “Morningstar” of peer to peer lending, has published a list of P2P lenders that have achieved their highest rating of 5/5 stars or “PLUSes”. The 6 plaforms are as follows: Funding Circle, Landbay, Lending Works, Proplend, RateSetter and Zopa.

Source: Crowdfund Insider

4thWay explained their system is based off of “rigorous stress tests carried out on all the platforms using international banking standards – Basel (1)”.  Their ratings seek to indicate whether investors could expect to lose money during a very severe recession. As a risk-adjusted rating, they also take into account interest earned, so they show investors how long it might take to recover from those losses.

Landbay (2) and Proplend (3) received the lowest risk scores. A score of 2 means that stress tests indicate investors will not make any losses in a severe recession even before interest earned is added on. A score of 3 means that losses before interest are modelled at under 2.5%, which is easily recovered by interest earned.

Brazil

Fitch: Brazil Banks to Rethink Digital Strategy as Fintechs Grow, (Yahoo Finance), Rated: A

Brazilian banks face the challenge of competing with companies that are different from their traditional and sometimes rigid business models.

Higher mobile Internet penetration is shifting consumer behavior toward Fintechs as customers move to a digital-only channel. An increasing number of more agile start-up companies (most notably in the peer-to-peer (P2P) lending and digital payment segments) are tapping clients often underserved by traditional banks.

In Brazil, there are around 150 Fintechs.

The Brazilian Central Bank already implemented a set of rules for nonbanking payment institutions and payment arrangers in 2013, but some rules are still not clear. Regulation for P2P lending is still lacking.

Fintechs will always have an advantage by being more agile and offering more customized and convenience alternatives.

Australia

OnDeck Australia launches free credit score service for small business, (PR Wire), Rated: A

The service, which is 100 percent online and free, will give small business owners access to a clearer picture of their financial situation and eligibility for a business loan.

The data for the Know Your Score website is provided by credit bureau Veda. To apply, small businesses simply enter their details and receive the free credit score as soon as the application has been submitted.

SocietyOne chief Jason Yetton says lending jumps tenfold, (The Sydney Morning Herald), Rated: A

Peer-to-peer lender SocietyOne says its new personal lending surged tenfold in the past year, as yield-hungry investors try to grab some of the high returns banks enjoy from consumer finance.

SocietyOne chief executive Jason Yetton, a former senior Westpac banker, said on Tuesday that since the beginning of this year, the business had arranged $50 million of personal loans on its online platform.

This was nearly double the $26 million of new lending in the December half of last year, and 10 times the $5 million from the corresponding period of 2015.

As a result of this growth, Mr Yetton said SocietyOne’s total portfolio of outstanding personal loans was almost $100 million. This is about 0.5 per cent of the $20 billion personal loan market.

P2P lenders such as SocietyOne and rival firm RateSetter operate by offering borrowers lower interest rates than banks, while also delivering high returns to investors, who take on the credit risk and fund the loans directly.

SocietyOne, which has investors including Westpac and companies owned by Kerry Stokes, Lachlan Murdoch and James Packer, only accepts money from institutional and sophisticated investors, and Mr Yetton said it had created a “community of funders” which included various customer-owned lenders.

While record low interest rates may be helping to attract investors to P2P lending platforms, some senior executives in banks have argued the P2P businesses may struggle if interest rates rise, or if more borrowers fail to repay loans.

Mr Yetton, who was hired in March, is aiming to distribute SocietyOne’s loans to a much wider range of borrowers – it has so far lent to around 5000 borrowers, with an average loan size of $20,000.

China

P2P lending platforms tapping overseas markets, ( China Economic Net), Rated: A

Domestic P2P lending platforms have started to tap overseas markets.

Dianrong.com announced the cooperation with Hanwha Group at the end of last year; Maizijf.com has set up the branch office in Boston, USA; and in April, mmtvip.com set up the subsidiary in Los Angeles, USA.

It is known that domestic P2P lending platforms basically choose to cooperate with overseas institutions during overseas market development, to expand overseas market in the form of Joint Venture Company.

It is noteworthy that among a few numbers of platforms expanding into the overseas markets, both Maizijf.com and mmtvip.com choose to penetrate into the overseas market with student loan as the entry point.

According to data, there were more than 300000 Chinese students in the USA in 2014, many of whom cannot enjoy American student loan financial services. Therefore, some domestic P2P lending platforms think highly of loan needs of overseas students.

Meanwhile, at present Maizijf.com and mmtvip.com set the highest credit limit of USD 100,000 to overseas Chinese students.

“Due to American requirements for online loan platform business license and relevant supervisions, it is difficult for domestic P2P lending platforms to develop American local capital and lending business targeting American students shall be limited in many legal aspects,” said Zhang Yexia.

Author:

George Popescu