- Today’s main news: Affirm debuts shopping app. Zopa profits tick upward. RateSetter recovering from loan scandal. PPDAI stock rises 7% with lift in institutional-funded loans. Oportun ends Nasdaq debut with 8% gain. Australia: RBA cuts interest rates, online lenders follow.
- Today’s main analysis: The Future of Finance: Marcus, Neobank, and fintech. (A MUST-READ)
- Today’s thought-provoking articles: Peter Renton’s quarterly marketplace lending results. Loans for sneakers. Lessons learned from LendIt Fintech Europe. What’s happening in fintech worldwide.
- Affirm debuts new app for shoppers. The app allows consumers to shop and check out with “virtually any retailer.” This Business Insider article highlights Affirm’s need to step up its game in order to compete with Amazon, 66 percent of whose customers begin their search for new product at Amazon. Affirm will have to offer better deals for consumers and make it easy to purchase things. With Affirm’s relationship with Walmart, that shouldn’t be too much of a challenge. However, it will be a challenge.
- Affirm app allows for bill splitting.
- Interview with Max Levchin, founder and CEO of Affirm.
- OnDeck survey indicates small businesses are concerned about economy. Old news, still interesting.
- Marcus, jobs, the economy, housing prices, and Oportun. From PeerIQ, well worth the read.
- Peter Renton’s quarterly MPL results. For Q2 2019. Always interesting to read how Renton’s investments have been doing. With lots of charts.
- The rose of “loans for sneakers” as a business. The focus is on Afterpay, an Affirm competitor, but this is a good read because it tackles POS lending from a consumer’s perspective. Insightful and interesting.
- What happened to Borro?
- Auto, home equity are soft spots in consumer lending.
- Maker offers multi-collateral DAI lending.
- A $40 billion pile of leveraged loans battered by huge losses.
- CFPB ruling shorts debt collectors.
- The SEC is hiring a data chief.
- Voyager selects Celsius Network for asset management.
- Zopa’s profits tick upward.
- Zopa says 9 out of 10 shoppers are confused by car finance options.
- RateSetter recovering from loan scandal.
- Wonga customers average 118 GBP payout.
- Savvy secures 20 million GBP funding facility.
- Interview with founder of Blend Network.
- Crowdfunding options for startups explained.
- Lessons learned from LendIt Fintech Europe.
- Linked Finance launches ‘Beyond Brexit’ business loans.
- ID Finance to double revenues within two years.
- Binance launches next phase of crypto lending program.
- What’s happening in the fintech revolution worldwide. A great read with interesting charts.
- Marcus, Neobank, and fintech developments. This is today’s must-read. Very detailed with lots of charts, but the focus is mostly on digital banking. Still, a very good read.
- Blockchain: The future of finance.
- China: PPDAI stock soars 7% on institutional-funding lending increase.
- Australia: RBA cuts rates. Online lenders do too.
- Australia: loans.com.au cuts rates.
- Bahrain: Beehive funds first SME.
- Malaysia: The risks and rewards of SPV 2030.
- Australia: OnDeck appoints national broker chief.
- Canada: BFS Capital opens data science and engineering hub in Toronto.
- United States
- OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA
- Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA
- Affirm ships new shopping and bill splitting app (Finextra), Rated: A
- Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A
- Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA
- My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA
- The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA
- What Happened to Borro? (deBanked), Rated: A
- Auto, home equity are soft spots in consumer lending (American Banker), Rated: A
- Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A
- A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A
- Ruling cuts short debt collectors’ victory lap over CFPB proposal (American Banker), Rated: B
- The SEC is hiring a chief data officer (Business Insider), Rated: B
- Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B
- United Kingdom
- Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA
- Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A
- Ratesetter recovering from loan scandal (The Times), Rated: AAA
- Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A
- Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A
- MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A
- Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A
- Landlords wary of tax changes (Money International), Rated: A
- PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA
- European Union
- What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA
- Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A
- ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A
- Binance Launches New Lending Program Phase (CoinCodex), Rated: A
- A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA
- Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA
- Blockchain: the future of finance (Financier Worldwide), Rated: A
- Hot home loan rates starting with a 2 (mozo), Rated: AAA
- loans.com.au jumps on October RBA home loan rate cut party (mozo), Rated: AAA
- OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B
- SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A
- Beehive funds first SME in Bahrain (Arabian Business), Rated: AAA
- BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B
OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA
OnDeck today announced the results of a national survey of U.S. small business owners that finds economic issues are the most important factors in determining their choice for president in 2020.
- Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
- Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
- 57% of small businesses surveyed said they were either Very Optimistic or Somewhat Optimistic about the economic outlook for their businesses;
- 93% of those surveyed said they plan to vote in the 2020 election.
- 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.
Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA
The point-of-sale (POS) financing provider
Affirm ships new shopping and bill splitting app (Finextra), Rated: A
Affirm’s app also allows consumers to pay at any brick-and-mortar store that accepts Apple Pay or Google Pay, which is increasingly important as 24% of consumers want the flexibility to look online and shop in-store.
Those with Apple Pay or Google Pay enabled have also seen up to 14% of transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.
Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A
Since Affirm’s launch, the landscape in the POS space is radically different than it was when Affirm entered. It is, first and foremost, a much bigger and more populated space than it once was. Other startups have come to the field — Afterpay, Uplift and Sezzle for example — but also bigger and more established names in financial services. In the last 12 months alone Square, Mastercard, PayPal and Chase have all rolled out POS installment lending products or enhancements as the market continues to pick up popularity among consumers, particularly younger ones.
Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA
Q4 is off to a brisk start. The jobs report released this past Friday shows 114K in net new jobs (vs expectations of 120K), generally flat wages, and a drop in the unemployment rate to 3.5%.
On the one hand, the US economy is near ‘stall speed’ – around 1 to 1.5% growth rate.
House prices are expected to rise 5.8% over the next year due to low mortgage rates.
Two major financing announcements this week. FinTech lender, Oportun, led by CEO Raul Vazquez, ends its Nasdaq debut with an 8% gain. The debut is notable as it represents a positive shift in the sentiment to the reception of lenders to the IPO market.
My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA
The upward trend in my returns continued in Q2, making it the fifth quarter in a row with increasing returns. My preliminary return for the 12 months ending June 30, 2019 is 6.20% (one investment is still not final), the best I have achieved since Q3 2017.
The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA
Afterpay is one of a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop. In addition to it, there are Affirm, Sezzle, Klarna, and Quadpay. They are positioned as a more consumer-friendly option than credit cards, a whole host of services bent on—because this is 2019—disrupting the powers that be.
Globally, Afterpay, which launched in Australia, has over 4.6 million customers and 35,000 retail partners. In the U.S., where Afterpay only launched in May of last year, it has two million customers and is available at 6,500 retailers. Over three million people use Affirm, while another 500,000 have shopped with Sezzle.
Silicon Valley promises aside, Afterpay is, at best, a platform that allows you to take out what amounts to a small loan on an item. After an approval process—Afterpay does not check a credit score; others like Affirm do—the customer pays a fourth of the price upfront and the rest is paid off in three equal installments every two weeks.
Also new is the $1,500 limit, up from $500, that Afterpay raised after Hyde-McCormick proved himself a responsible shopper and the $87.50 payments currently due every two weeks.
What Happened to Borro? (deBanked), Rated: A
In 2013, Borro, an innovative online lending company that was poised to disrupt pawn shop lending forever, invited me to their stylish offices at 767 Third Avenue in Manhattan.
Borro made $50 million worth of such loans in 2013 and doubled that number in 2014.
Auto, home equity are soft spots in consumer lending (American Banker), Rated: A
In its quarterly report that tracks consumer delinquency trends, the American Bankers Association said that 30-day past-due rates ticked up in eight of 11 categories in the second quarter when compared with the first quarter, but stressed that delinquencies remain well below historic norms.
Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A
Maker DAO, the most active decentralized finance app on the Ethereum network, has announced a date for its long-awaited multi-collateral DAI generation. According to observers, November 18 may be the date MKR starts accepting other assets as collateral.
Multi-collateral DAI creation has the potential to be riskier in comparison to ETH-based models. Currently, Maker is deliberately over-collateralized at above 300%, with the minimum at 150%, due to the high volatility of crypto assets.
A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A
Loans tied to more than 50 companies have lost at least 10 percentage points of face value in just three months, according to data compiled by Bloomberg. Some have dropped a lot more, with lenders lucky to get back just two-thirds of their investment if they tried to sell.
Energy is the hardest-hit sector on the list, with more than $12 billion of loans falling more than 10 cents on the dollar. Consumer and health care follow, comprising around $8 billion and $5 billion of loans outstanding, respectively.
The SEC is hiring a chief data officer (Business Insider), Rated: B
The Securities and Exchange Commission is hiring its first chief data officer, according to a job posting for the role.
Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B
Voyager Digital, LLC, a subsidiary of publicly-traded Voyager Digital (Canada) Ltd (Ticker VYGR.CN), an industry-leading best execution crypto asset broker, today announced a partnership with Celsius Network, in which Celsius will manage a portion of Voyager’s digital assets.
Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA
Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.
Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A
In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.
Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A
Customers who were mis-sold loans by the collapsed payday lender Wonga are expected to receive less than 10% of what they are owed in compensation after administrators revealed that only £41m will be put aside for claimants.
Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A
Stockport and Wilmslow based fintech company Savvy.co.uk is to create 25 jobs after securing a £20 million investment.
MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A
WHY DID YOU START BLEND NETWORK?
I started working in the financial industry as an FX trader before moving to trading gold and copper, both much more inefficient markets than FX. I realised that the UK property market was a hugely inefficient market in the sense that lenders and borrowers are not meeting. On the one hand, you have very experienced property developers across the country who are trying to access funds to build homes but traditional lenders are no longer active in providing development finance.
Instead, we lend in places such as Coventry, East Anglia, Doncaster, Northern Ireland. Northern Ireland is a very good example of our strategic approach to lending. Last year, we did around 80-85% of our business in Northern Ireland.
Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A
Crowdfunding a start up brings to mind the statement ‘Nothing worth having comes easy’, never truer than in the case of launching a start-up. Getting a new business off the ground will often require capital. Something which a lot of people don’t know how to go about getting.
- Reward based crowdfunding;
- Equity based crowdfunding;
- Debt based crowdfunding, and
- Donation based crowdfunding.
Landlords wary of tax changes (Money International), Rated: A
Half of the 200 landlords approached agreed tax changes and tougher mortgage borrowing criteria have thwarted their plans to buy more properties, while 15% admitted they had been put off buying homes to rent.
A third who still wanted to invest are considering a switch from buy to let to peer-to-peer lending secured against property, while 8% have already done so.
PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA
The stock in PPDAI Group Inc (NYSE: PPDF) closed 7% higher on Wednesday, at $2.83 per American depositary share, after it announced a positive trend in funding of loans by its institutional partners and increased loan origination volume.
For the third quarter, the Shanghai-based company, which operates an online consumer finance marketplace, said in a statement on Wednesday that the volume of loans facilitated by its institutional funding partners jumped to $2.64 billion, up 91% from the second quarter. Total loan origination volume was above PPDAI’s guidance, it said, as it reached $3.51 billion, up 14% from the previous quarter.
What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA
At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks’ sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK’s P2P lenders.
- CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG’s B customers.
- Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays’ SMB clients access to MarkeInvoice’s solutions.
- French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market.
Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A
The new 18-month loan period will allow borrowers to access working capital facilities of up to €300,000 (approximately £265,194) in just 24 hours.
ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A
ID Finance, the fintech operating in Europe and Latin America, saw revenue growth of over 100% in the first 9 months of 2019 and is on track to double its revenues to €90m revenue this year. The data science, credit scoring and digital finance company is now planning its first equity crowdfunding round via Crowdcube as it targets €300m+ of revenue within 2 years.
Binance Launches New Lending Program Phase (CoinCodex), Rated: A
The Binance cryptocurrency exchange has launched the latest phase of its relatively new lending program. For the program’s eighth installment, Binance is sticking with the model of short-term loans, as users only have to commit their crypto for 14 days.
A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA
These underbanked markets, led by countries in Asia and Africa, have inspired fintech innovation that’s leapfrogging the technology available in the developed world. Ant Financial Services Group’s Alipay and Tencent Holdings’ WeChat Pay in China, Paytm in India, and Safaricom’s M-Pesa in Kenya are some well-known examples.
Take Facebook Inc.’s plan to launch a digital currency called Libra in 2020. The social network’s gigantic reach—more than 2.4 billion active monthly users—could draw a much wider audience to Libra than has used previous cryptocurrencies. For instance, global remittances by migrants reached a record $689 billion last year, according to the World Bank.
San Francisco-based 500 Startups staked 43 such companies in the 12 months ended June 30.
Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA
Goldman is losing $1.3 billion on Marcus, trying to build a Fintech leader. Etrade is going to lose $75 million from cutting trading fees to $0 to keep up with Robinhood. Revolut is losing £35 million on £60 million in revenue, with another £140 million burned by Atom, Monzo, Tandem, and the rest.
Generally speaking, from a deposit point of view, these are still all small businesses at £1 billion in assets (e.g., Betterment manages $20 billion).
The first is that the Robinhoods and Monzos of the world are 10x overpriced relative to the payments apps. I can sort of buy this — though money in motion is way easier to capture than money at rest. The second is that venture investors think a finance user is worth $1,500 in a digital bank.
Blockchain: the future of finance (Financier Worldwide), Rated: A
Recent examples of blockchain’s impact on financial markets go well beyond these initial applications or P2P lending or crowdfunding.
The first wave of applications in finance and banking is being driven by easily achievable gains in actively traded assets.
MasterCard incorporated a blockchain payment system providing vendors real time, lower cost settlements on cross-border transactions. Representing a consortium of more than 40 of the world’s largest banks, fintech firm R3 launched a payment system built on DLT platform Corda, to expedite intra-bank transfers.
St. Regis Aspen, a Colorado resort, is a partnership formed with a crowdfunding site, Indiegogo, that in lieu of a traditional IPO completed a private placement via DLT financing real estate. This sale of ‘tokens’ – fractional interests in the underlying property – raised $18m, compliant with securities laws.
Hot home loan rates starting with a 2 (mozo), Rated: AAA
The RBA has cut official interest rates for the third time this year, and already a handful of lenders have responded by slashing rates across their range of variable rate home loans. Right now, if your home loan doesn’t have a ‘2’ in front of it, you’re missing out.
OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B
Online SME lender OnDeck Australia has appointed experienced commercial lending operator Robbie Fidler as its national broker channel manager.
SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A
BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B
BFS Capital, a leader in small business lending, has officially launched a data science and engineering hub in Toronto as the company accelerates its plans to develop best-in-class digital financial products for small businesses across the globe.
News Comments Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland. Today’s main analysis: LendingClub’s Q4 2017 results. Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean […]
- Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland.
- Today’s main analysis: LendingClub’s Q4 2017 results.
- Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean faster fraud. Revolut CEO on work-life balance and overcoming challenges. The Temenos share buyback and Fidessa takeover.
- LendingClub’s Q4 2017 results. AT: “Read them for yourself.”
- Update from LendingClub’s CIO. AT: “An interesting look at the forces LendingClub faces, internally and externally.”
- LendingClub doesn’t have to share underwriting docs with investors.
- LendingTree ranks best places for a fresh start. AT: “As a Texan, I’m envious of Buffalo, New York. An interesting look at where to go if you want a fresh financial start.”
- Why faster payments mean faster fraud. AT: “Cybersecurity is one of the most important core business concerns for banks and alternative lenders alike.”
- Greenlight raises $16M.
- 7 companies reimagining real estate investing.
- Enodo provides quantifiable insights for property investors.
- Savings and deposits rates in a rising rate environment.
- Kabbage president talks about small business loans.
- The expanded Military Lending Act regs.
- How to invest in private loans.
- Challenges to the challenger bank business model. AT: “It’s a shame no real challenger banks have emerged in the U.S. The market could be taken over by foreign challenger banks moving in on the turf.”
- BankMobile launches online magazine. AT: “I’m a huge believer in branded journalism as a marketing strategy.”
- What family offices want from an alternative investment manager.
- 33% of Americans have more credit card debt than savings.
- U.S. mobile payment market to hit $3T by 2020.
- Marlette Funding a consumer lending finalist in LendIt Fintech awards.
- Klarna North America to sponsor, exhibit at eTail West 2018.
- Varo Money gets new chief marketing officer.
- Zopa warns investors of increased defaults.
- Raisin operating in the UK.
- Revolut CEO discusses challenges to building a competitive business.
- How startups can gain traction in financial services.
- Lloyds Bank puts $4.1B aside for digital strategy.
- P2P lending a part of SME finance inquiry.
- Guide to IFISAs, part 2.
- How Wonga went worldwide.
- RaboDirect bows out of Irish market.
- On the Temenos takeover of Fidessa.
- Anyfin raises 4.8M Euro.
- BNI Europa, Code for All partner to train IT developers.
- The Ripio Credit Network.
- Etherty launches blockchain-based real estate platform.
- 500 Startups, Huobi Labs to incubate blockchain projects.
- United States
- Fourth Quarter 2017 Results (LendingClub), Rated: AAA
- Q4 2017: An update from our CIO (Lending Club), Rated: AAA
- Judge Nixes LendingClub Investor Bid For Underwriter Docs (Law360), Rated: AAA
- LendingTree Ranks Best Places for a Fresh Start in 2018 (PR Newswire), Rated: AAA
- Why faster payments mean faster fraud (Tearsheet), Rated: AAA
- Greenlight raises $ 16m for kids’ debit card (Finextra), Rated: A
- 7 COMPANIES REIMAGINING REAL ESTATE INVESTMENT AND FINANCE (Builder Online), Rated: A
- Enodo delivers quantifiable insights for property investors (Realty Biz News), Rated: A
- Savings and Deposit Rates in a Rising Rate Environment (Lend Academy), Rated: A
- Kabbage’s Kathryn Petralia Talks Small Business Loans (LendEDU), Rated: A
- The Expanded Military Lending Act Regulations (The National Law Review), Rated: A
- How to Invest in Private Loans (The Student Loan Report), Rated: A
- As challenger banks seek to enter the US, the business model still faces hurdles (Tearsheet), Rated: A
- Why BankMobile has launched an online magazine (Tearsheet), Rated: B
- WHAT FAMILY OFFICES WANT FROM ALTERNATIVE INVESTMENT MANAGERS (All About Alpha), Rated: A
- 33% of Americans do not have more savings than credit card debt (KHOU), Rated: A
- US Mobile Payment Market to Reach $ 3 Trillion by 2020, Fintech Stocks Lead the Way (Investing News), Rated: A
- Marlette Funding Named a Finalist in Top Consumer Lending Platform in LendIt Fintech Industry Awards Competition (Business Wire), Rated: B
- Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B
- Carl Gish Joins Varo Money as Chief Marketing Officer (PRWeb), Rated: B
- United Kingdom
- Zopa warns over defaults as investor returns decline (Financial Times), Rated: AAA
- Fintech Raisin Crosses the Channel to Offer Services to UK Savers (Crowdfund Insider), Rated: AAA
- Revolut’s Nikolay Storonsky on long hours and high staff turnover (Financial Times), Rated: AAA
- How Startups Can Gain Traction In The Financial Services Market (Forbes), Rated: A
- Lloyds Bank Marks $ 4.1B for Digital Strategy (Bank Innovation), Rated: A
- P2P lending to form part of inquiry into SME finance (P2P Finance News), Rated: A
- Ultimate guide to Innovative Finance ISAs: Part two (P2P Finance News), Rated: A
- How Short Term Lender Wonga Went Worldwide (Silicon India), Rated: A
- China tries to bring order to sprawling online finance sector (Asian Review), Rated: A
- European Union
- RaboDirect to quit Irish market in May (The Irish Times), Rated: AAA
- Bizarre Buybacks and Expensive Takeovers (The Washington Post), Rated: AAA
- Anyfin raises €4.8 million to refinance loans with a statement selfie (Finextra), Rated: A
- BNI Europa and Code for All partner to train new generation of IT developers (Finextra), Rated: A
- What Is the Ripio Credit Network? (The Merkle), Rated: A
- Etherty launches blockchain-based, real estate trading platform (Construction Business News), Rated: A
- 500 Startups, Huobi Labs to Incubate Blockchain Projects (CoinDesk), Rated: B
- Australia/New Zealand
- FMA opens applications for personalised digital advice (Scoop), Rated: AAA
- P2P lending, payments platform JaldiCash to merge with parent firm Weizmann Forex (Financial Express), Rated: A
- ALAMI is on a journey to popularise sharia-based finance in Indonesia. (e27), Rated: A
- Wealthsimple raises $ 65 million in funding from Power Financial group of companies (Cision), Rated: AAA
Fourth Quarter 2017 Results (LendingClub), Rated: AAA
View the reported Q4 2017 earnings results from LendingClub right here.
Q4 2017: An update from our CIO (Lending Club), Rated: AAA
A core strength of LendingClub’s marketplace model is the ability to incorporate data insights quickly in order to responsibly adapt for the benefit of borrowers and investors.
From 2009 to 2014, credit supply was tight, so consumer loans experienced better-than-average loss rates. Since then, credit supply has increased, and the industry has seen a return to long-term average delinquency rates and higher losses in higher risk populations.
As a result of cumulative actions taken, our loss forecast for newly originated loans remains unchanged in aggregate compared to last quarter.
U.S. economic growth remains slow but steady, with annual GDP growth rate increasing to 2.6% in the fourth quarter of 2017. A primary driver of GDP growth since the financial crisis has been a historically low unemployment rate, which is down to 4.1% from its peak of 10% in 2009.
Updated pricing and return forecast
We continuously refine our methodology and recalibrate interest rates based on shifts in risk across the portfolio. This quarter, interest rates are increasing for certain subgrades in grades D and E.
Loss forecasts are remaining stable in aggregate for the platform relative to last quarter.
Platform Summary and Projections as of February 20, 2018
Judge Nixes LendingClub Investor Bid For Underwriter Docs (Law360), Rated: AAA
Morgan Stanley, Goldman Sachs and the other underwriters of LendingClub Corp.’s $1 billion initial public offering for now don’t have to produce roughly a thousand documents sought by a class of investors suing the peer-to-peer lending company for alleged stock fraud, a California federal judge ruled Tuesday.
LendingTree Ranks Best Places for a Fresh Start in 2018 (PR Newswire), Rated: AAA
LendingTree, the nation’s leading online loan marketplace, today released the findings of its study on the best cities for those seeking a fresh start.
First, the study looked at eight elements to consider when going through a financial recovery, such as the local median income and rents, and if the state has laws to protect debtors from aggressive collections and penalties, in case methods like debt consolidation or refinancing to lower rates aren’t enough to manage liabilities.
Next, to determine what opportunities there might be for people seeking a solid job and income, the study looked at the percentage of people in these metros who are between the ages of 35 and 64, single, employed, have health insurance coverage and are currently enrolled in school.
Lastly, to get an idea of how well people in an area are recovering from financial calamity, LendingTree calculated how quickly credit scores are rising after a bankruptcy by using proprietary data on the average credit score, on a geographic basis, of LendingTree customers who declared bankruptcy between three to four years earlier.
1. Buffalo, N.Y. – 67.6
At $738, Buffalo has the lowest median rent among the 50 cities reviewed, and 94 percent of adults over the age of 35 are insured (second highest). Residents who declare bankruptcy have an average credit score of 664 three years on, tied for the second highest score for the cities reviewed, suggesting that conditions are favorable for financial recovery. However, Buffalo ranks poorly in two metrics: at $52,303, median income is the seventh lowest, and only one other city has fewer students over the age the 35.
2. Minneapolis – 62.9
At just 3.7 percent, the exceedingly low unemployment rate for citizens in Minneapolis between the ages of 35 and 64 helps push the city to the No. 2 spot. Not only are most over-35s employed, but they also earn a median salary of $70,915, the eighth highest in the cities reviewed, 94 percent have health insurance and median rents are relatively low at $963.
3. Salt Lake City – 62.6
Only two other cities have more over-35s enrolled in school (Virginia Beach and Washington), and only five have more unmarried over-35s (New Orleans has the most). That could be due to the lowest unemployment rate for over-35s of any city reviewed (3.6%), and higher-than-average median income of $64,564 for that same group. That combines nicely with a moderate median rent of $967.
Why faster payments mean faster fraud (Tearsheet), Rated: AAA
Less than a month ago Early Warning Services, the network that powers peer-to-peer payments platform Zelle, touted $75 billion in funds moved through its bank-supported platform with plans to expand its member network. One member bank, however, also reported a fraud rate of 90 percent shortly after implementing Zelle last year, said someone familiar with the statistics who wished to remain anonymous.
Fraud detection in banks, however, is no longer just about building a wall to keep outsiders out; cybersecurity teams need to install a filter that can identify who can and should enter the system.
Bank of America will spend $600 million this year on cyber defense alone, its chief operations and technology officer Cathy Bessant recently told Tearsheet. In December Menlo Security, a company that provides malware isolation solutions, raised $40 million in Series C funding, bringing its total funding to $85 million. JPMorgan Chase, HSBC and American Express Ventures are among its investors.
Greenlight raises $ 16m for kids’ debit card (Finextra), Rated: A
7 COMPANIES REIMAGINING REAL ESTATE INVESTMENT AND FINANCE (Builder Online), Rated: A
Companies like Better Mortgage, Blend and LendingHome are reengineering the way mortgages are applied for and underwritten. While Cadre and Fundrise are moving real estate investments from Excel spreadsheets to the digital world.
GreenSky offers on-the-spot loans of up to $65,000 for home improvement projects with generous zero-interest promotional periods. Lemonade offers urban renters and homeowners insurance for as little as $5 and $25, respectively. LendingHome provides financing for house flippers, and more recently, homeowners.
Enodo delivers quantifiable insights for property investors (Realty Biz News), Rated: A
With the Enodo platform investors can cut to the chase with a platform that supports their decision-making through acquisition all the way to renovation, with features including rent price forecasting. In other words, Enodo is a real estate investing platform that provides quantifiable data, meaning investors no longer have to rely on hunches alone.
Enodo allows investors to carefully analyze any property in the country using basic physical and investment parameters. Users can also identify comparable properties, predict operating expenses and more. Parameters include things such as the year the home was built, number of units, amenities, market demographics and more.
Savings and Deposit Rates in a Rising Rate Environment (Lend Academy), Rated: A
This thread called Cash Parking on the Lend Academy Forum was created back in December 2016 and since then, forum members have discussed opportunities at banks and credit unions.
The discussion caught my eye when one user posted a 3% 5 year CD which happened to be offered by my local credit union.
Signing Up for a Savings Account at Marcus
Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS Bank. Rates are now 30 basis points higher at 1.5% on Marcus accounts.
Their investment has paid off and it was recently reported that they had $17 billion of deposits. Since Goldman Sachs acquired GE Capital’s retail deposits, deposits have grown a whopping 90%.
Kabbage’s Kathryn Petralia Talks Small Business Loans (LendEDU), Rated: A
She’s been hailed by Forbes as one of the most powerful women in the world, and TechCrunch recognized her for “crushing it” last year. Both sources refer to her success as a leader at Kabbage, Inc. which has financed over $4 billion to more than 130,000 businesses to date.
Q: What sets Kabbage apart from other online small business lenders?
A: Our focus on real-time access to third-party data and our ability to stay connected to our customer’s data all the time. This technology allows us to provide an automated experience.
Q: So, user experience seems to be a big advantage for non-traditional lending sources. While that’s an advantage, what disadvantages does a lender like Kabbage have against a traditional lender?
A: There are lots of things. First, traditional lenders like banks have well-known brands; they have access to really cheap capital. They have a lot of customers already. They already have access to a framework which they operate with the ability to move funds.
The only thing they don’t have is the ability to serve the market, because it’s too expensive for them to serve our customers with the type of product they need.
Q: Was there a typical small business customer that you would lend to? Do you lend to certain business more often than others today?
A: Well, we got our start making loans to eBay sellers which you may or may not know. The reason we started there was because that’s where the first API was available, so we could get information on a business’ performance. Then as more APIs became available, we were able to expand our business. So for a long time, all of our customers were eCommerce businesses.
But about three years ago, we began expanding to service brick & mortar businesses, and today, about 85% of our customers are brick & mortar businesses.
Q: Over the last 5 years, fintech lending has grown to take up more of the small business lending market. Where do you see the market share in 5 years? Where’s Kabbage in this equation?
A: If you’re talking about businesses seeking less than half or a quarter million dollars, I think it’ll stay the way it is with largely non-traditional players, like Kabbage, filling that space. And I think banks could serve that market through partnerships, but overall, I think it’s going to look much the same as it is now.
The Expanded Military Lending Act Regulations (The National Law Review), Rated: A
The Military Lending Act’s (“MLA”) lending restrictions are expanded to apply to consumer credit card issuers and unsecured consumer lenders. Compliance in most areas was mandatory as of October 3, 2016, but as to credit cards the mandatory compliance date is October 3, 2017.
The MLA applies to active-duty military personnel, active Reserve and National Guard personnel serving on Title 10 orders, and their dependents with a valid military identification card.
How to Invest in Private Loans (The Student Loan Report), Rated: A
The $1.45 trillion student loan market is made up of public and private student loans.
We now live in a world where crowdfunding and P2P investment opportunities are everywhere. The student loan market is no different. Companies like Sofi are shaking up what it looks like for both students and investors alike.
Sofi (short for Social Finance) has funded over $25 billion in student loans, with over 437,000 members around the country.
As challenger banks seek to enter the US, the business model still faces hurdles (Tearsheet), Rated: A
European digital banks N26 and Revolut will launch in the U.S. later this year, and there are reports that U.K. challenger bank Monzo is mulling a move into the U.S. market. Meanwhile, three U.S. banking startups — Varo Money, Square and Moven — recently announced plans to apply for or acquire U.S. banking licenses.
For N26, winning means customers loving N26 like in Europe. U.K.-based Revolut, which plans to launch in the U.S. later this year with a multi-currency bank account, said winning means acquiring millions of customers, particularly those who travel often; and to San Francisco-based Chime, a win is to bring large numbers of customers away from traditional institutions.
Why BankMobile has launched an online magazine (Tearsheet), Rated: B
BankMobile has launched a content marketing website called Paradigm Money to help customers navigate personal finance.
The site, which launched this month, includes news, opinion pieces, interviews and advice.
BankMobile, which was born as the mobile-only offshoot of Customers Bank which sold it last year, has 1.8 million customers to date and opens about 300,000 new accounts each year.
WHAT FAMILY OFFICES WANT FROM ALTERNATIVE INVESTMENT MANAGERS (All About Alpha), Rated: A
Competition within the alternatives sector for family office investments is at an all-time high, as these investors get more comfortable with the range of assets available to them and their general understanding of alternatives rises. Fund managers want to win these wealthy investors over, but often find they are unsure of how best to pursue them. The family office client is increasingly demanding a more tailored approach to wooing them over. Managers who can adapt their prospecting tactics stand a better chance of winning a partnership with these prized investors.
A Q4 2017 research study, “Single-Family Offices and Alternative Investments,” by Institutional Capital Network, provides a framework for the changing dynamics in family office activity within the alternatives space. Some of the research findings that stand out in particular include:
First-generation founders have a “stay-rich” mentality, while second-generation are more likely to have a “get-richer” perspective.
About 40% of second generation single-family offices are investing 15% or more of their total portfolios into alternatives, compared to 20% of first generation single-family offices that are investing at similar levels. In 2017, 71% increased their direct allocations relative to 2016, and 82% intend to do so in the future.
33% of Americans do not have more savings than credit card debt (KHOU), Rated: A
In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.
While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.
Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.
US Mobile Payment Market to Reach $ 3 Trillion by 2020, Fintech Stocks Lead the Way (Investing News), Rated: A
A new Market Research Reports Search Engine report states the US mobile payments will grow from $550 billion in 2015 to reach $2.8 trillion by 2020, representing a compound annual growth rate (CAGR) of 39.1 percent over the course of that period.
Marlette Funding Named a Finalist in Top Consumer Lending Platform in LendIt Fintech Industry Awards Competition (Business Wire), Rated: B
LendIt Fintech, the world’s leading event in financial services innovation, announced today that they have selected the Best Egg Personal Loan Platform provided by Marlette Funding, LLC, as a finalist in the Top Consumer Lending Platform category for the LendIt Fintech Industry Awards. The Top Consumer Lending Platform finalists were selected from companies that demonstrate a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.
Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B
Klarna, a global payments provider, is a sponsor of and will be exhibiting at next week’s eTail West 2018 in Palm Springs, Calif.
Carl Gish Joins Varo Money as Chief Marketing Officer (PRWeb), Rated: B
Mobile banking startup Varo Money, Inc. today announced the hire of Carl Gish as Chief Marketing Officer. Gish is a marketing and general management executive with more than 20 years of experience across well-known, high-growth consumer brands and e-commerce businesses, including Amazon, Unilever, Dyson, eBay and Affirm. He will lead all aspects of the company’s branding and marketing, and will work directly with CEO Colin Walsh to drive large growth in Varo’s customer base across multiple marketing channels and partnerships.
Zopa warns over defaults as investor returns decline (Financial Times), Rated: AAA
The UK’s oldest peer-to-peer service is warning investors that defaults on its recent loans will be running at a higher rate than during the financial crisis.
Fintech Raisin Crosses the Channel to Offer Services to UK Savers (Crowdfund Insider), Rated: AAA
Savings marketplace Raisin has launched in the UK.
Revolut’s Nikolay Storonsky on long hours and high staff turnover (Financial Times), Rated: AAA
Over the past three years, and with the backing of Balderton Capital and Index Ventures, two European venture capital firms, Mr Storonsky’s company has raised about £60m and had a valuation of £300m last year.
How Startups Can Gain Traction In The Financial Services Market (Forbes), Rated: A
The United Kingdom’s financial technology sector attracted a record £1.34bn in venture capital investment in 2017, with 90% of that money going to startup and early stage businesses based in London.
Those raising cash last year included peer2peer lending platform Funding Circle (£81.9m); payments company, Transferwise (£211m) and challenger bank, Monzo (£71m).
Last week I spoke to two fintech entrepreneurs – Ollie Purdue of online bank account provider, Loot and Jared Jesner, CEO of currency exchange, WeSwap – about their reasons for entering the fintech arena and how they hope to carve out a niche in a crowded market.
Lloyds Bank Marks $ 4.1B for Digital Strategy (Bank Innovation), Rated: A
British bank Lloyds has put aside £3 billion ($4.1 billion) for digital development and growth, the bank announced today.
The £3 billion is a 40% increase on the spend Lloyd marked for its previous three-year expansion plan.
P2P lending to form part of inquiry into SME finance (P2P Finance News), Rated: A
POLITICIANS are going to consider the availability and uptake of peer-to-peer lending as part of an inquiry into finance for small-and-medium-sized enterprises (SMEs).
Ultimate guide to Innovative Finance ISAs: Part two (P2P Finance News), Rated: A
Lending to small- and medium-sized enterprises (SMEs) has soared in recent years. Members of the Peer-to-Peer Finance Association have cumulatively lent a total of £5bn to businesses versus £3bn to individuals, as of the end of 2017.
Loans to SMEs tend to produce a higher rate of return than loans to consumers, but they can also be riskier in some cases. The average size of loan is also much higher.
How Short Term Lender Wonga Went Worldwide (Silicon India), Rated: A
Today the brand eclipses its competition, with many of its 400 failing to survive in 2016 as fresh price caps on loan and repayment charges came into action.
With UK-domination taken care of, the lender has been expanding rapidly overseas, starting its journey by launching in Canada, South Africa and Poland, before going on to purchase and assimilate a number of foreign short term lenders as part of its global growth.
To launch Wonga Spain, the lender purchased Spanish credit agency Credito Pocket in 2013, going on to purchase German “pay later” payment firm BillPay (with two million users to its name) and a stake in Indian firm Nahar Credits Private in October of the same year.
China tries to bring order to sprawling online finance sector (Asian Review), Rated: A
China’s 1.2 trillion yuan ($189 billion) internet finance industry has reached a turning point as regulators tighten regulations after one too many cases of bankruptcy and fraud.
RaboDirect to quit Irish market in May (The Irish Times), Rated: AAA
RaboDirect Ireland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.
The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.
Bizarre Buybacks and Expensive Takeovers (The Washington Post), Rated: AAA
In November, Swiss fintech company Temenos Group AG spent 150 million Swiss francs ($160 million) buying back its shares at an average price of 122 francs each. Weeks later, with the stock at 115 francs, it’s preparing to sell shares to fund a $1.9 billion takeover of British rival Fidessa Group Plc.
The return on invested capital looks set to be just over 6 percent in 2020, based on the stated cost synergies plus Fidessa’s forecast operating performance. That’s well below the target’s 9 percent cost of capital.
Anyfin raises €4.8 million to refinance loans with a statement selfie (Finextra), Rated: A
BNI Europa and Code for All partner to train new generation of IT developers (Finextra), Rated: A
BNI Europa, through Puzzle, its online credit brand, created a partnership with <Code for All_> to provide financial aid to anyone who wants to learn to become a IT developer.
This partnership provides an intensive code training program of 14 weeks supported by an online credit solution that offers special payment conditions to the program’s students.
What Is the Ripio Credit Network? (The Merkle), Rated: A
The Ripio Credit Network wants to offer a real global credit ecosystem which is more suitable than traditional solutions and even than similar peer-to-peer lending services. While that sounds like a tall order, the RCN protocol will connect lenders and borrowers all over the world via the native RCN token.
As is the case with any blockchain ecosystem, the Ripio Credit Network has its own native RCN token. It is the network’s payment channel first and foremost. Although credit transactions can be settled in any local currency, one does need RCN tokens to access the network and facilitate transactions.
Etherty launches blockchain-based, real estate trading platform (Construction Business News), Rated: A
A new investment portal, Etherty, has launched offering a real estate linked-crypto currency that enables investors to seize property investment opportunities all over the world, primarily in key markets such as Dubai, Mexico, and Australia.
500 Startups, Huobi Labs to Incubate Blockchain Projects (CoinDesk), Rated: B
500 Startups, the Silicon Valley startup accelerator, announced Tuesday it is partnering with cryptocurrency exchange Huobi’s incubator wing, Huobi Labs.
The two companies will support startups in various areas, including developing business plans, focusing on elements such as white papers, marketing strategies, community engagement and fundraising efforts, the accelerator said in a press release.
FMA opens applications for personalised digital advice (Scoop), Rated: AAA
The FMA is now open for applications from providers seeking to offer personalised financial advice to consumers through digital tools and platforms (so-called robo-advice).
P2P lending, payments platform JaldiCash to merge with parent firm Weizmann Forex (Financial Express), Rated: A
Weizmann Forex Limited (WFL), a foreign exchange and inward remittances platform, has approved the acquisition of its unit Weizmann Impex Enterprises Ltd (WISE). The proposed deal is supposed to take place on April 1st and will be done through a Scheme of Amalgamation, the company said in a press release. WISE is authorized by the Reserve bank of India to issue and operate semi-closed prepaid payment systems in India. The company owns ‘JaldiCash’, a payments platform that claims to have a network of more than 18,000 channel partners across 29 Indian states and more than 520 districts through their B2B model. JaldiCash works on a P2P model lending model, enabling loans for retailers, hotels and other services
Islamic banking assets is only 5.03 per cent of the total banking sector’s assets in the country, with a market share of IDR356.5 trillion (US$26.7 billion).
According to ALAMI CEO Bembi Juniar, this is due to the lack of infrastructure, support from key opinion leaders, and education on the benefits of sharia-based financial services.
So ALAMI offers a platform that serves as an aggregator for sharia-based financing for SMEs.
Wealthsimple raises $ 65 million in funding from Power Financial group of companies (Cision), Rated: AAA
Canada’s digital investor has raised a $65 million investment from the Power Financial group of companies, bringing their total investment in Wealthsimple to $165 million. Wealthsimple manages approximately $1.9 billion for over 65,000 clients in Canada, the United States, and the United Kingdom. More than 80 per cent of people who use digital investing in Canada use Wealthsimple.
Regulation D is a set of rules under which an issuer can sell its securities without having to register with the SEC. Rule 506 under Regulation D has been the most widely used means of raising capital in the US. Rule 506 was basically bifurcated into two separate rules — 506 (b) and 506 (c) […]
Regulation D is a set of rules under which an issuer can sell its securities without having to register with the SEC. Rule 506 under Regulation D has been the most widely used means of raising capital in the US. Rule 506 was basically bifurcated into two separate rules — 506 (b) and 506 (c) — after the passing of Title II of the Jumpstart Our Business Start-ups (JOBS) Act in September 2013. 506 (b) is merely the extension of the old Rule 506, and 506 (c) is the new section that has completely revolutionized the world of private investing.
Under rule 506 (b), companies are free to accept backing from accredited investors and 35 non-accredited investors for an unlimited amount. Under rule 506(c), companies can sell to accredited investors only. On top of that, they need to verify that each investor is accredited.
An accredited investor is one who has a net worth of $1,000,000 excluding his primary residence, or if he has made $2,000,000 on an annual basis in the past two years.
So what is the advantage of this new rule? It allows for general solicitation.
506(b) does not permit general solicitation. The issuer needs to prove a pre-existing relationship with investors. This reduces the pool of investors a company can target. With general solicitation allowed under 506(c), start-ups can leverage the internet, TV, radio, and other media to attract a larger base of investors. This has “democratized” investing and the ability to raise capital. A company offering securities need not have any prior relationship with investors. Rather, they can publicly promote their capital-raising offer.
Crowdnetic, now FinMkt, tracked 6,063 investment crowdfunding private offerings under JOBS Act Title II 506(c) rules, which have combined recorded capital commitments (“RCC”) of approximately $870.0 million in the two years between September 23rd, 2013 (when Title II rules went into effect) and September 23, 2015 (the date of the report).
There is not an ounce of doubt that Rule 506(c) has brought a lot of upside for the issuers as they can broaden their reach by advertising their offering. The issuing company can raise more capital at a much faster pace without relying on the traditional gatekeepers that earlier helped them to find suitable investors. From the perspective of the investor, under rule 506(c), the advertised offering benefits them, as well. They now have a much larger choice available and can get on board a startup much earlier in its life as compared to waiting for an IPO.
Effect of 506(c) changes
There is an additional burden of verifying investors and making sure they meet the SEC’s definition of “Accredited Investor.” Many companies have sprung up to help start-ups outsource this tedious legal due diligence.
Startups have been using social media to attract users and customers since at least a decade. Now, they are able to leverage their skill set to attract money for their ventures. We are used to hearing about CAC (i.e. Customer Acquisition Cost); we will soon be reading about CAI – Cost of Acquisition of Investor. This metric will become a key success factor for start-ups looking to grow aggressively, and it allows them to even sidestep venture capitalists for funding.
Research by Crowdnetic shows that investors are comfortable investing in startup equity, thus highlighting that markets and investors have accepted this new rule with open arms.
What does it mean for alternative lenders?
This rule is a boon for marketplace lenders. They have proved adept at bringing thousands of lenders onto their platforms. P2P lenders have generally been a happy lot due to higher risk-adjusted returns they’ve been able to generate through platforms. The company should be able to tap this base for equity fundraising, as well. If you’ve invested $50,000 through SoFi, you might be predisposed to invest $10,000 in its equity.
And not only start-ups, even VCs and accelerators are taking note of the rule and its implied implications. 500 Startups has recently filed a Form D under 506( c ) for a fintech fund targeting a raise of $25 million. It is a prominent accelerator and has invested over $350 million in 1800 companies. This shows that the entire ecosystem of fundraising is poised for an upheaval with the 506(c) rule.
Rule 506 will break the hegemony of investment bankers and VCs over the fundraising process. A startup doing well can target its own user base for accredited investors rather than having to pay sky-high fees or dilute control to VCs. The startup community has been extremely receptive to the change, and you can see multiple platforms launched for the sole purpose of helping thousands of start-ups raise funding from a wider pool of investors. It is easy to see that 506(c) has been a win-win for all involved.
Written by Heena Dhir.
News Comments Today’s main news: DBRS confirms SoFi professional loan program 2016-B LLC. Bond buyers return to online lenders. RateSetter acquires Vehicle Trading Group. Linked Finance receives full FCA authorization. Australian banks have paid $60M in forced refunds. StashAway raises $2.2M. Today’s main analysis: Prosper Marketplace Issuance Trust PMIT 2017-1. Today’s thought-provoking articles: Bond buyers return to online lenders. China, […]
- Today’s main news: DBRS confirms SoFi professional loan program 2016-B LLC. Bond buyers return to online lenders. RateSetter acquires Vehicle Trading Group. Linked Finance receives full FCA authorization. Australian banks have paid $60M in forced refunds. StashAway raises $2.2M.
- Today’s main analysis: Prosper Marketplace Issuance Trust PMIT 2017-1.
- Today’s thought-provoking articles: Bond buyers return to online lenders. China, US agree on economic cooperation. European cross-border lending opportunities. Fintechs, banks, and financial inclusion.
- DBRS confirms SoFi professional loan program 2016-B LLC. GP:”SoFi securitizations continue to perform well.”
- Prosper Marketplace Issuance Trust PMIT 2017-1. GP:”Prosper’s securitization also prices tighter than Lending Club’s”
- Bond buyers return to online lenders. GP:”And to follow up on the articles above,in general bonds market for online lenders seems to be going in the right direction.”
- New Fed Mortgage rolls out fast track mortgage.
- Nuance strengthens biometrics security. GP:”An interesting offering using voice recognition, image recognition. I wonder if one can use a webcam interview for KYC and to reduce fraud efficiently.”
- Mortgage search goes digital.
- CFPB explores ways to assess the availability of credit for small businesses. GP:”The risk is for the CFPB to force SMB loans to be regulated like individual loans because they are de facto underwritten on the owner’s credit.”
- 500 Startups creates pooled investment fund for fintech. GP:”Fintech investments continue. There are a lot of opportunities and innovation never stops.”
- TSB offers online consumer lending.
- First Federal Lakewood invests in Numerated Growth Technologies.
- Nicki Minaj starting a charity to pay off student loans. GP:”The fact that non finance celebrities are doing PR in the student loan direction , especially with this kind of message, to me signal an image change about student loans. Thsi is not unlike the change in how banks were perceived past 2008. I would be concerned that student loan lenders may one day be seen in the same way as banks by the majority of the public if not worse.”
- HSBC tech chief on digital challenger banks.
- Assetz Capital reaches quarter of a billion lending milestone. GP:”Congratulations”
- RateSetter buys Vehicle Trading Group. GP:”Auto loans perform well until one goes down too low on the credit spectrum or the used vehicle market drops due to too many used vehicles on the market.”
- Linked Finance receives full authorization. GP:”Congratulations!”
- Deloitte launches enhanced digital banking offering. GP:”Deloitte is very present in the online lending space.”
- The job creation contradiction in fintech.
- Welsh startups can become unicorns with $1B plus valuation.
- Property is top pick less than a year after funds gated.
- Alternative Lending Index unveils European cross-border lending opportunities. AT: “This is one of the most interesting reads on EU lending I’ve seen awhile. Takeaway: If the Baltics were a single country, it would be the fourth largest alt lending market in Europe.”
- EU executive asks bank watchdog to rethink screen scraping ban.
- US anniversary, possible regulation of Irish crowdfunding.
- Small business fintech around the globe.
- A paradigm shift in fintech.
- Online financial advice lacks the human touch.
- Big banks pay $60M in forced advice refunds. AT: “That was fast.”
- Robo-advisor to get access to Westpac’s Panorama platform.
- Ignition Wealth partners with BT Panorama.
- DIY investors reject financial advice.
- Borrowers could save more than $3K per year with online lending.
- OnDeck business loans helps franchises get on with it.
- United States
- DBRS Confirms SoFi Professional Loan Program 2016-B LLC (DBRS), Rated: AAA
- Weekly Industry Update: Prosper Marketplace Issuance Trust (PMIT 2017-1) (PeerIQ), Rated: AAA
- All Is Forgiven? The Bond Buyers Return To Online Lenders (PYMNTS), Rated: AAA
- New Fed Mortgage rolls out the “Fast Track Mortgage” (PRWeb), Rated: A
- Nuance Strengthens Biometrics Security Portfolio and Attacks Fraud with Advanced, Multi-Modal Offering (NASDAQ), Rated: A
- The mortgage search goes digital (American Banker), Rated: A
- CFPB Explores Ways to Assess the Availability of Credit for Small Business (CFPB), Rated: A
- 500 Startups Creates Pooled Investment Fund for Fintech (Crowdfund Insider), Rated: A
- TSB offers online consumer lending (The Mountain Press), Rated: A
- JPMorgan formally quits R3 (LinkedIn), Rated: A
- First Federal Lakewood invests in Boston startup Numerated Growth Technologies (Cleveland Business), Rated: B
- Nicki Minaj Is Starting An ‘Official Charity’ To Pay Off Student Loans (Huffington Post), Rated: B
- United Kingdom
- HSBC tech chief on digital challenger banks: ‘We are building similar stuff ourselves’ (Business Insider), Rated: AAA
- Assetz Capital reaches quarter of a billion lending milestone (P2P Finance News), Rated: AAA
- Sub-prime vehicle finance provider bought out of administration (AM Online), Rated: AAA
- Linked Finance receives full authorisation from UK regulator (The Irish Times), Rated: AAA
- Deloitte Launches Enhanced Digital Banking Offering (PR Newswire), Rated: A
- The job creation contradiction in fintech (AltFi), Rated: A
- Welsh start-ups can become unicorns with a $ 1bn plus valuation (Wales Online), Rated: A
- Property is top pick less than a year after funds gated (FT Adviser), Rated: A
- WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA
- IFRM: A Risk Control Model keeping No Bad Debt! (Xing Ping She Email), Rated: A
- European Union
- Alternative Lending Index Unveils European Cross-Border Lending Opportunities (Crowdfund Insider), Rated: AAA
- EU executive asks bank watchdog to rethink ‘screen scraping’ ban (Reuters), Rated: A
- US Anniversary and the (Possible) Regulation of Crowdfunding in Ireland (Lexology), Rated: AAA
- Breaking Banks: Small-business fintech around the globe (American Banker), Rated: A
- A ‘paradigm shift’ is taking place in financial technology (Business Insider), Rated: A
- Online Financial Advice Lacks The Human Touch (iexpats.com), Rated: B
- Australia/New Zealand
- Big banks pay $ 60m in advice refunds (Financial Standard), Rated: AAA
- Robo adviser to get access to Westpac’s Panorama platform (Financial Review), Rated: AAA
- Ignition Wealth partners with BT Panorama (Money Management), Rated: A
- DIY investors reject advice, says ASX study (ifa), Rated: A
- Borrowers could save more than $ 3000 a year by switching to an online lender (News.com.au), Rated: A
- OnDeck business loans help franchise businesses get on with it (Professional Planner), Rated: B
- Fintechs to drive financial inclusion or will banks save the day? (India Times), Rated: AAA
- Fintech firm Telr gets $ 3 million funding (The Hindu), Rated: A
- The Rainmakers (Business Today), Rated: A
- Singapore Fintech Startup StashAway Raises US $ 2.2 Million in Series A (Crowdfund Insider), Rated: A
- Why should security professionals pay attention to the rise of fintech? (MIS Asia), Rated: A
- futureshare Launches to Help Canadian Homeowners Unlock Their Real Estate Wealth (Marketwired), Rated: A
- COMPANY AIMING TO PUT IDLE MONEY TO USE (Barbados Advocate), Rated: A
DBRS Confirms SoFi Professional Loan Program 2016-B LLC (DBRS), Rated: AAA
DBRS, Inc. (DBRS) has today reviewed and confirmed the four outstanding publicly rated classes from SoFi Professional Loan Program 2016-B LLC. All four classes were confirmed because performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their current respective rating levels.
|Issuer||Debt Rated||Rating Action||Rating||Trend||Notes||Published||Issued|
|SoFi Professional Loan Program 2016-B LLC||Post-Graduate Loan Asset-Backed Notes, Class A-1||Confirmed||AAA (sf)||—||May 19, 2017||US|
|SoFi Professional Loan Program 2016-B LLC||Post-Graduate Loan Asset-Backed Notes, Class A-2A||Confirmed||AAA (sf)||—||May 19, 2017||US|
|SoFi Professional Loan Program 2016-B LLC||Post-Graduate Loan Asset-Backed Notes, Class A-2B||Confirmed||AAA (sf)||—||May 19, 2017||US|
|SoFi Professional Loan Program 2016-B LLC||Post-Graduate Loan Asset-Backed Notes, Class B||Confirmed||A (high) (sf)||—||May 19, 2017||US|
Weekly Industry Update: Prosper Marketplace Issuance Trust (PMIT 2017-1) (PeerIQ), Rated: AAA
Prosper priced its first unsecured consumer deal of 2017 on May 19th, representing the sixth deal consisting of Prosper collateral, and the first deal backed by Prosper’s consortium of institutional investors. The deal was structured by Credit Suisse and co-led by Jefferies.
The Consortium appears on track to deliver the $5 Bn loan purchasing commitment to Prosper as evidenced by i) size of the deal size ($470.8 Mn), ii) average age of the portfolio (two months), and speed to marketing th deal. The deal generates incremental revenue for Prosper which holds unrestricted cash and cash equivalents of $22.3 MM.
We note that Kroll has added 4.5% points for base case loss range reflecting the somewhat higher path of losses on CHAI 2016-PM1 than initially expected. (CHAI 2016 PM-1 has a revised base case loss range of 12 to 14% from 10.61% initially).
The deal’s excess spread is substantially tighter, reflecting higher coupons, improved market conditions, and stronger investor appetite for MPL ABS bonds. The attractive excess spread of ~10% implies a significant return for residual tranche investors assuming base case loss estimates are borne out.
Improved Predictive Risk Model PMI-7
Prosper made a significant change in the in the credit underwriting by switching from Experian to TransUnion, the dominant credit bureau in the FinTech sector. The switch to TransUnion affords Prosper access to trended bureau data, more diverse credit attributes, and alternative data. Trended data provides lenders with a longitudinal view rather than merely a snapshot into a borrower’s credit behavior.
Prosper rolled out a new proprietary credit risk model PMI-7 on December 20th based on the TransUnion dataset. Although the trended bureau data is a significant long-term enhancement, it will take some time for Prosper to re-calibrate models based on new performance data. Investors and Prosper will be monitoring the vintage performance from PMI-7 closely to assess the smoothness of the transition.
Bond investors in the deal benefit from credit enhancement consisting of over-collateralization, subordination, reserve accounts, and excess spread. For PMIT 2017-1, the A, B, and C tranche has a total credit enhancement of 43.9%, 31.1%, and 10.4%.
The Prosper deal priced tighter than a recent LendingClub prime deal ARCT 2017-1, in part due to the much higher initial credit enhancement in PMIT as compared to other recent deals.
We observe a parallel shift in the credit curve: For instance, PMIT 2017-1 A (A-rated) has about 44% credit enhancement and 0.8 year WAL; ARCT 2017-1 A (BBB-rated) has about 29% credit enhancement with a similar WAL. PMIT 2017-1 A was priced 95 basis points tighter than the senior class in ARCT 2017-A.
Walking down to lower junior tranches, PMIT 2017-1 C (B-rated) was priced about 40 basis points wider than ARCT 2017-1 B (BB- -rated). The steepening in the pricing curve again reflects demand for senior rather than equity-like risk profile.
We continue to observe a pattern of higher CNL triggers in recent deals, reflecting conservative outlook from market participants. Exhibit 4 shows several cumulative net loss (CNL) trigger profiles in recent personal loan ABS deals. Here, we summarize the cumulative loss trigger profiles from recent deals and contextualize the CNL triggers of the new Prosper deal with those of CHAI 2015-PM1.
All Is Forgiven? The Bond Buyers Return To Online Lenders (PYMNTS), Rated: AAA
After the rather spectacular fireworks display that Lending Club had going on this time last year, it was not great surprise when the bond buyers who had been snapping up P2P marketplace debt suddenly got a case of cold feet and starting fleeing those marketplace lending platforms.
Since April of this year, over $2 billion in securities backed by loans have either been sold or are being prepared for an imminent sale, according to credit-rating firms and people familiar with the matter.
That is some much needed good news for the segment, as it represents more than was issued in the entire second quarter of 2016, according to data tracker PeerIQ.
And it seems to be a continuation of recent activity that saw $3 billion in bonds backed by online loans that were issued in the first quarter of 2017, double the amount from the same period a year earlier.
Bonds backed by online loans is a small part of the securitization market — as of 2016, $7.8 billion of bonds backed by online loans were issued, compared with $191 billion in total issuance of asset-backed securities, according to S&P Global Ratings.
New Fed Mortgage rolls out the “Fast Track Mortgage” (PRWeb), Rated: A
NewFed Mortgage Corp., a multi-state residential mortgage lender is excited to announce their “Fast Track Mortgage” loan origination technology integration with BeSmartee, an online mortgage automation company based in Huntington Beach, California. This smart technology platform utilizes intuitive artificial intelligence targeting the specific needs and qualification of borrowers.
Fast Track is an online self- serve platform offering mortgage shoppers the convenience of 24/7 access to obtain a personalized rate and cost quote with the option to continue to apply and obtain a conditional loan approval in less than 15 minutes. Fast Track streamlines the application process by allowing the borrower online to pull their own credit report, calculate costs, obtain loan disclosures on the spot and receive an automated loan approval and along with the option to order their home appraisal. The ease of Fast Track Technology allows borrower to send documents right through their specially created account.
Nuance Strengthens Biometrics Security Portfolio and Attacks Fraud with Advanced, Multi-Modal Offering (NASDAQ), Rated: A
Nuance Communications, Inc. (NASDAQ:NUAN) today took a major step towards reducing the risk of consumer fraud by announcing a new suite of biometric security solutions, driven by the latest in artificial intelligence (AI) innovations. The new Nuance Security Suite includes not only the company’s award-winning voice biometrics technology, but also new advances in facial and behavioral biometrics that combine to provide advanced protection against fraud, across customer service channels.
Applying deep neural networks (DNN) as well as advanced algorithms to detect synthetic speech attacks, and integrating facial and behavioral biometrics means the Nuance Security Suite takes fraud prevention to new levels. By combining a range of physical, behavioral, and digital characteristics to provide secure authentication and more accurately detect fraud across multiple channels – from the phone to the Web, mobile apps and more – Nuance’s new Security Suite allows enterprises to attack fraud head-on, while at the same time offering an improved customer experience.
With its latest Security Suite, Nuance can equip an organization with one or more of the following options to fight fraud, improve security and boost the customer experience:
- Voice biometrics – authenticates the customer when they say a predetermined phrase like “My voice is my password,” or during the course of normal conversation with an agent to determine if the customer is indeed who they say they are.
- Facial biometrics – utilizes the camera on a smart phone to verify the person in real time.
- Behavioral biometrics – tracks how users interact with Web and mobile applications, (e.g. scrolling, mousing, or tapping), creating a pattern against which to compare.
- Additional biometric modalities – In addition to offering support for voice, facial, and behavioral biometrics, the Nuance Security Suite can also accept plug-ins for other emerging authentication technologies such as retinal scans.
The mortgage search goes digital (American Banker), Rated: A
Interest rates on the rise and a lower inventory of homes on the market are tightening access to the housing market. At the same time, nonbank, online-only lenders have boomed, accounting for 73% of loans originated, according to the Federal Housing Authority.
This trend is likely to continue in the coming years. And members of the digital-native Millennial generation, who rely on online search to find home loans–and everything else–are taking over as the primary home-purchasing segment of the population–Millennials accounted for 84% of closed home loans in January 2017, according to the Ellie Mae Millennial Tracker™ report. In this environment, an effective organic local search strategy is no longer just beneficial for traditional mortgage lenders; it’s existential.
Of 5,849 loan officers whose online presence Yext studied across the online ecosystem (including sites like Google, Facebook, Bing, Yelp, and many others), 64% of their business listings contained incorrect addresses, 42% had phone number errors, and 46% had errors in business names. 9.25% of loan officer listings were duplicates, and 57.8% of loan officers studied had no online presence at all.
The Consumer Financial Protection Bureau today launched an inquiry into ways to gather and use new and existing information to identify the financing needs of small businesses, especially those owned by women and minorities. Small businesses typically need access to credit to take advantage of growth opportunities, yet public information on this lending market is inconsistent and incomplete. The Request for Information asks for public feedback to help the Bureau better understand how to bridge this information gap. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the CFPB to collect data about small business lending to help identify needs and opportunities in the market and to facilitate enforcement of fair lending laws.
500 Startups Creates Pooled Investment Fund for Fintech (Crowdfund Insider), Rated: A
The Silicon Valley based operation has committed over $350 million in early stage investments. Over 1,800 companies have benefited from both funding and support around the world since the global seed fund was launched in 2010. Some of the better known investments include Twilio, Credit Karma, Maker Bot and more.
TSB offers online consumer lending (The Mountain Press), Rated: A
PIGEON FORGE — Tennessee State Bank is excited to announce online consumer lending, powered by Lending Club, the world’s largest online credit marketplace, is now available.
These loans range from $1,000 to $40,000, are unsecured (which means no collateral is required), and can be used to eliminate high interest debt, kick-off a home improvement project, or make a major purchase.
JPMorgan formally quits R3 (LinkedIn), Rated: A
Not subscribing to a consortium like R3 is not the same as banks not leveraging blockchain/DL. Here is a link to an excerpt from a report we did on a bankers perspective (former head of digital banking at Deutsche Bank) on blockchain which may provide some insights:
The mutual bank, with $1.6 billion in assets, has announced an investment partnership with Boston’s Numerated Growth Technologies Inc., a fintech (the term ascribed to programs and technology that support financial services) startup spun out of Boston-based mutual Eastern Bank own in-house fintech accelerator, Eastern Labs. Numerated’s platform focuses on small-dollar loans, allowing the loan process to be managed in real-time — reportedly conducting the process in as quick as five minutes, according to the firm — in addition to automating marketing to existing and prospective bank customers, which helps feed the loan pipeline as fewer consumers visit brick-and-mortar bank branches.
First Federal Lakewood invests in Boston startup Numerated Growth Technologies (Cleveland Business), Rated: B
The mutual bank, with $1.6 billion in assets, has announced an investment partnership with Boston’s Numerated Growth Technologies Inc., a fintech (the term ascribed to programs and technology that support financial services) startup spun out of Boston-based mutual Eastern Bank own in-house fintech accelerator, Eastern Labs.
Numerated’s platform focuses on small-dollar loans, allowing the loan process to be managed in real-time — reportedly conducting the process in as quick as five minutes, according to the firm — in addition to automating marketing to existing and prospective bank customers, which helps feed the loan pipeline as fewer consumers visit brick-and-mortar bank branches.
Nicki Minaj Is Starting An ‘Official Charity’ To Pay Off Student Loans (Huffington Post), Rated: B
Last weekend, hip-hop living legend Nicki Minaj made waveswhen she decided ― seemingly spontaneously ― to start making tuition and student payments for straight-A students who reached out to her via Twitter.
Most notably, Minaj announced that she was in the process of launching an “official charity for Student Loans/Tuition Payments,” meaning kids who are having trouble paying their way through school could soon get some much-needed help.
HSBC tech chief on digital challenger banks: ‘We are building similar stuff ourselves’ (Business Insider), Rated: AAA
One of HSBC’s most senior technology executives says that the big bank is not far behind digital-only challenger banks when it comes to consumers offerings.
Raman Bhatia, HSBC’s head of digital for retail banking and wealth management in the UK and Europe, told Business Insider that while startups enjoy a technological advantage, HSBC is working hard to catch up.
Bhatia pointed to HSBC’s SmartSave app as an example of how the bank is keeping pace with digital rivals. The app helps people automatically put money into savings based on pre-set rules. It evolved from Nudge, an internally developed and trialled savings app HSBC worked on last year. SmartSave was trialled with around 2,000 HSBC customers in December.
Assetz Capital reaches quarter of a billion lending milestone (P2P Finance News), Rated: AAA
ASSETZ Capital announced that it has now lent £250m to UK businesses.
The peer-to-peer lender said it has provided up to £25m of secured loans a month since its launch in 2013, with more than £55m lent so far this year.
Stuart Law (pictured), chief executive of Assetz Capital, said investors have earned more than £21m with actual rates of between 3.75 per cent and 18 per cent.
Sub-prime vehicle finance provider bought out of administration (AM Online), Rated: AAA
Peer-to-peer lending company RateSetter has acquired sub-prime vehicle finance provider Vehicle Trading Group out of administration.
The Leicester-based operation has now been sold to RateSetter, which is planning to rebrand the business, but Insider Media reported that the deal “will not impact its day-to-day operations”.
Linked Finance receives full authorisation from UK regulator (The Irish Times), Rated: AAA
Linked Finance, a peer-to-peer lending platform, has received full authorisation by the UK’s financial conduct authority to enter the UK lending market.
Figures from the first quarter of 2017 show that the company’s Irish platform increased lending activity by more than 326 per cent on the same period a year earlier.
Since its launch in 2013, Linked Finance has facilitated more than 870 loans and more than €25 million in funding for Irish small to medium enterprises.
Deloitte Launches Enhanced Digital Banking Offering (PR Newswire), Rated: A
Deloitte today announced the launch of its enhanced Digital Bank offering to further accelerate a bank’s digital transformation. Based on the Salesforce Intelligent Customer Success Platform and utilizing the Salesforce Financial Services Cloud, Digital Bank helps banks create exceptional experiences by providing tailored banking capabilities with accelerated implementation and realization of value.
Digital Bank’s capabilities and potential benefits include:
- Augmented Salesforce Platform with many technologies, fintech solutions and AppExchange partners, as well as personalized channel engagement through automated marketing using Salesforce Marketing Cloud
- Ability to expand relationships by having full visibility into bank relationships across business units
- Established customer trust through multifactor secured cloud banking platforms and improved onboarding for customers through a fully mobile process enabled by many technologies
- Increased speed and agility to meet customer needs, as well as the regulatory needs of the banking industry, using predictive analytics based on account behavior to recommend next best offers and next best actions
- Accelerated implementation allowing banks to generate ROI faster, including linking newly created accounts in Salesforce to a blockchain secured digital identity
The job creation contradiction in fintech (AltFi), Rated: A
It got me thinking about the broader impact of fintech lenders in the UK, especially those built to fund businesses. Companies like Funding Circle – the country’s largest marketplace lender for SMEs – regularly reference their impact on job creation in corporate updates. The logic is that the loans that Funding Circle and other platforms like it facilitate help small businesses to grow, and so too to hire more staff.
Leading US firm OnDeck released a report in late 2015 analysing the economic impact of the first $3bn lent through the platform. The report found that OnDeck loans had powered $11bn in business activity, creating 74,000 jobs across the country. Similarly, Funding Circle published findings last summer suggesting that its lending had supported the creation of 40,000 jobs in the UK since 2010, boosting the economy by £2.7bn.
In this way, they are unquestionably killing jobs, as well as creating them – but nobody ever talks about that.
Barely a month goes by without news of a fresh round of bank branch closures. In March, for example, we learnt that RBS and NatWest would be cutting 158 branches and 400 jobs across the country.
Welsh start-ups can become unicorns with a $ 1bn plus valuation (Wales Online), Rated: A
As a result, Improbable has become one of the few UK start-ups to achieve the so-called ‘unicorn’ status, namely having a valuation of over $1bn.
Since then, their numbers have grown to nearly 200 firms globally and that are collectively valued at £523bn. The most valuable is Uber, the online taxi company that, in only four years, has reached a valuation of over £50bn.
A recent article in Forbes Magazine suggested that investors, with few places to put their money during an era of near zero interest rates, are fuelling the growth in unicorns as they look for better returns.
Property is top pick less than a year after funds gated (FT Adviser), Rated: A
According to research from peer-to-peer lending platform Kuflink, conducted in the first week of May, nearly a third of UK investors are planning to direct their attention to traditional asset classes such as property over the course of the financial year.
This comes after some of the largest property funds in the UK temporarily stopped investors from cashing-in their money last summer when thousands of people panicked after the European Union referendum and pulled out of the asset class.
The Kuflink survey, which questioned 1,100 investors across the UK, also found that Brexit and the snap election have impacted UK investment decisions more than any other political event in their lifetime.
Almost 40 per cent of investors are taking a more cautious approach by favouring ‘safe-haven’ asset classes, while 38 per cent are waiting until after the 8 June election to make any further investment decisions.
WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA
Belt and Road Forum for International Cooperation, also known as the Belt and Road Initiative, was held in Beijing on May 14-15.
On May 12, the State Council Information Office of China announced that China has reached a series of agreements with U.S. related to agriculture, investment, energy and especially in financial service area.
Key points of the Initial Agreements of the China – US Economic Cooperation 100-Day Plan in financial service area:
- By July 16, 2017, China is to allow wholly foreign-owned financial services firms to provide credit rating services in China, and to begin the licensing process for credit investigation.
- The People’s Bank of China and The U.S. Commodity Futures Trading Commission (CFTC) are to work towards a Memorandum of Understanding (MOU) concerning the cooperation and the exchange of information related to the oversight of cross-border clearing organizations.
- By July 16, 2017, China is to issue further necessary guidelines and allow wholly U.S.-owned suppliers of electronic payment services (EPS) to begin the licensing process.
The hotly anticipated initial public offering of Alibaba’s finance arm, Ant Financial, has reportedly been delayed until at least the end of 2018 because of the need to secure regulatory approval and to focus on building the business.
E-commerce giant Alibaba Group and affiliated online payment service Alipay are aiming to use facial recognition technology to help retirees simplify pension authentication. Shenzhen is chosen to be the first pilot city.
The Peoples Bank of China (PBOC), the country’s central bank, announced that it has set up a Fintech committee to enhance research, planning and coordination of work on financial technology.
Happigo Home Shopping Co. Ltd., a leading Chinese multichannel e-retailer, announced that the company had the local government approval to build a small loan company.
The new micro-credit company will be named “Happy Tongbao”, which has about RMB 300 million in registered capital. It will focus on online micro-credit and expects to start its business in Hunan Province, lending to merchants in desperate need of a loan, then gradually expand to the entire Chinese market. Entrusted loans, bill business, financial advisory and other online business models is said to be covered in its future development.
To reduce lending risks, Happigo said it had developed a cloud system for tracking merchants on its online shopping platform to help it keep a record of the business of would-be borrowers’ cash flow.
IFRM: A Risk Control Model keeping No Bad Debt! (Xing Ping She Email), Rated: A
IFRM ( Internal Financal Risk Management) is a unique method created by Xeenho, focusing on the operation modes of platforms. In the IFRM Solution, the risks of P2P lenders are evaluated through three indicators: FOW (qualitative indication system), TOS (quantitative indication system) ,O2O Due Diligence, and Big Data Supervision. By using the model, Xeenho has been keeping the Zero Bad Debt since 2014 with a business volume up to $400M.
FOW ——qualitative indication system
FOW means Forbidden, Observation and Warning. FOW detects and prevents P2P fraud, if a platform is categorized as Forbidden, Observation or Warning then it won’t proceed to the next step.
TOS ——quantitative indication system
TOS means Transparency, Operation and Safety. TOS thoroughly evaluates a platform, from its basic information to its UX, and the risk is ranked thereafter.
O2O ——due diligence from online to offline
O2O means making due diligence from online to offline, in order to ensure a platform that passed FOW and TOS is as good as it seemed to be.
Big Data——Analytics & Observation System
This dynamic surveillance system continuously over watches the performance of a platform, and adjusts the rating accordingly.
Alternative Lending Index Unveils European Cross-Border Lending Opportunities (Crowdfund Insider), Rated: AAA
Twino, one of the leading Baltic lending marketplace, has produced in conjunction with KPMG Baltics a report called Alternative Lending Index which assesses the potential of alternative finance in 23 European countries based on a set of economic credit data. While the report does not pretend to exhaust the analysis of the drivers and hurdles of alternative finance across Europe, it presents a very useful snapshot of the Pan-European credit landscape that should help support international strategies.
The first platform to tackle cross-border lending was Estonian pioneer Bondora in 2009. Since then, and particularly in the past two years, international lending marketplaces have mushroomed in the Baltics. There are now more than a dozen of them, with a strong dominance of consumer lending platforms. Leaders such as Mintos and Twino have long passed the €100 million mark in cumulated loan funding. They currently grow at a rate of between €10 to €20 million worth of new loans funded a month. If you operate a lending marketplace in the UK, France or Germany you should know these platforms because they are targeting your smartest investors:
- Estonia: Bondora, Crowdestate, Estateguru, Investly.
- Latvia: Twino, Mintos, Swaper, Viainvest, Viventor, DoFinance
- Lithuania: Finbee, Lenndy, Savy
Together, these platforms have funded over €500 million in cumulated loan volume – which would make the Baltics, if it were a single country, the 4th largest online alternative lending market in Europe after the UK, France, and Germany.
Together, these platforms have funded over €500 million in cumulated loan volume – which would make the Baltics, if it were a single country, the 4th largest online alternative lending market in Europe after the UK, France, and Germany.
The ALI ranks 23 European countries. It concludes that countries with the highest gaps and inefficiencies in traditional lending, hence the highest potential for alternative lending in Europe are, in that order:
- Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland.
Conversely, the countries where the existing sources of financing available to households and corporate borrowers are sufficient and the potential for the development of alternative lending is therefore considered low, leaving little room for alternative lenders are:
- France, Germany, Netherlands, Austria, Finland and Sweden.
Read the full report.
EU executive asks bank watchdog to rethink ‘screen scraping’ ban (Reuters), Rated: A
The European Union’s financial services chief said on Friday he will ask the bloc’s banking watchdog to rethink its proposed ban on “screen scraping” or financial technology firms directly accessing bank accounts.
It marks a reprieve for fintech firms trying to wrestle market share from long established banks in the fast growing payments and apps sector.
US Anniversary and the (Possible) Regulation of Crowdfunding in Ireland (Lexology), Rated: AAA
The US has just celebrated the first anniversary of its regulated crowdfunding regime, known as “Regulation Crowdfunding”. It was by all accounts a very happy anniversary for many US start-ups, as Regulation Crowdfunding reportedly raised $40 million in its first year. US advisory and education firm, Crowdfund Capital Advisors report that the average successful crowdfunding campaign raised around $282,000 from around 312 investors. Regulation Crowdfunding allows companies to raise up to $1,070,000 over a 12-month period.
An unregulated environment brings with it its own set of benefits and drawbacks:
- On the positive side, the absence of a regulatory framework means there are no restrictions on who can invest, or on the amounts that can be raised or invested. In contrast, the Regulation Crowdfunding regime in the US has strict limits on the amount which a person may invest through crowdfunding each year. These limits are determined by an individual’s annual income and net worth.
- On the negative side, the lack of regulation means that many investor-protection mechanisms are simply not available. For example, the Central Bank’s codes of conduct and client asset rules do not apply to crowdfunding platforms.
The Department of Finance (the “Department”) and the SME State Bodies Group have issued a public consultation paper on the possible ‘Regulation of Crowdfunding in Ireland’. They are considering how to facilitate the development of crowdfunding in Ireland for the benefit of the economy while also ensuring adequate protection for small investors and consumers.
The objective of this consultation is to invite the views of interested parties on whether a regulatory regime would be appropriate for the crowdfunding sector.
Breaking Banks: Small-business fintech around the globe (American Banker), Rated: A
How do we get money to small businesses that make the economy work for most people around the world? What kind of systems do we need to create? And how do we make them flexible so multiple cultures can utilize them?
Rize is an online savings-app focused on Millenial. All the funds held within Rize are SIPC insured up to $250,000. The popularity of the app is on the rise, with more than 5000 sign ups in the last 2 months alone. Rize is a sort of an upstart bank account that pitches itself as being built for […]
Rize is an online savings-app focused on Millenial. All the funds held within Rize are SIPC insured up to $250,000. The popularity of the app is on the rise, with more than 5000 sign ups in the last 2 months alone.
Rize is a sort of an upstart bank account that pitches itself as being built for a more technologically savvy generation. Rize major users emerge from 22- 28 age category who earn close to $30- 45K per annum. Millennials are entering a time when they are seeing their buying power grow along with a need for a wider array of items. They are buying houses, starting families, building new businesses, etc. All these activities require money. Rize enables them to analyse how much cash they should be saving, helps them choose smart financial goals and most importantly automates saving by shifting money from their checking account after each payday to their Rize account. It allocates the monies to the user’s financial goals, pushes them to save more and educates them about relevant money matters.
According to research reports, 80 million Millennials are saving nothing. Imagine young Millennials living a life without a safety net or any kind of financial planning for the future. Rize is just the right platform for the digital generation across the world. An exclusive tool targeted at the Millennials, it enables online savings built around automated behavioral design.
The start-up’s secret sauce is helping users visualize their goals and incentivizing them via peer comparison. Strong social pressure is built when you see your friends saving more than you. The baby boomers rat race concept is being inverted on its head by healthy competition encouraged through Rize. The app’s aim is to help users save before they spend, once the money is out of sight from their checking to Rize account, the thought of spending that money just won’t emerge. The young fintech company has been able to push its users towards a saving rate of 10%; compare it to the average savings rate of -2% and it helps us understand what Rize is trying to address. In fact, the user base also has responded with 40% signing up for an emergency fund. This highlights that the knowledge is there, they just needed a financial tool to help them execute the process.
Rize has a very simple business model. It is not looking to monetize anything so early in its life and has left it entirely to the users to pay as much as they want. They are working on a contribution model, where the user decides if they feel that the app has been helpful and if they would like to pay anything for the service. Savings can be withdrawn at any time and as many time as one wants, for free of cost. It is a regulated company and just like a Registered Investment Agents (RIA), they will charge brokerage and deals in short-term savings which earn interest. This underlines the second and most probably their major revenue stream. When the app becomes the first choice for savings, the start-up will have the ability to influence a lot of choices for its users. Its platform will become extremely lucrative for financial companies looking to push their services. More importantly, the targeting opportunities are enormous; if the user has saved for a house, he will be shown advertisements featuring loan options from a bank or a marketplace lender and the listing of a local agent to help the user buy his dream house. This curation will be a win-win as the user will only see relevant advertisements and the advertiser will look in to cash in on a predetermined intent to buy their service.
Rize is based out of San Francisco and Washington D.C; it was launched in December 2015 with a seed capital of $125,000 from 500 startups. Rizeup.io was founded by individuals who have a lot of successful start-ups under their belt. Justin Howell, CEO has a degree in Psychology from Harvard and has been a dedicated entrepreneur – co-founded and worked at several startups (TripUp, Project Avocado), also acted as an advisor to numerous other early-stage companies, including as an investor and board member. Rishi Kumar CTO, he was senior Director of Audience Intelligence before he decided to team up to start Rize. Kirk Voltz, head of design holds a degree in Design from Virginia Tech . He is also the co-founder and creative director for Bronx Brewery. Mizel Djukic, head of product was a senior product manager at Millennial Media and was part of two successful startups (Pixel and Paper design LLC). The company is a team of four and is in private beta currently.
Rize uses state of the art security, personal information of all the clients are anonymized, encrypted, and securely stored. As mentioned above all the funds held within Rize are SIPC insured up to $250,000. These features are necessary to ensure that user feels safe while using the Rize account. It is currently working with over 2500 banks and credit unions all around the United States; soon they will be providing international features too.
Future of savings
According to a recent study by Card hub, the average household credit card debt is now at its highest level since 2008. Even more alarming is that many people have no savings at all. In fact, almost 30% report having a zero balance and 62% has less than $1,000 in savings. According to a survey by GOBankingRates.com, an additional 21% report having no savings account whatsoever. With all this alarming statistics, Rize can become the best birthday gift from a parent to their millennial child. The important thing for Rize is to differentiate itself from the numerous savings app in the market. The ability of the algorithms to nudge the user into saving will be the key success factor.
Author: Heena Dhir and George Popescu
News Comments United States EarnUp raises a $3mil seed round to help 200 million consumers smooth their loan repayment experience. Could EarnUp be a good lead source for lenders ? Or a good alternative data source ? A great table of MPL raises and valuations from CrunchBase, who claims that data hints at future down […]
- EarnUp raises a $3mil seed round to help 200 million consumers smooth their loan repayment experience. Could EarnUp be a good lead source for lenders ? Or a good alternative data source ?
- A great table of MPL raises and valuations from CrunchBase, who claims that data hints at future down rounds for marketplace lenders. However, we have recently seen BizFi, Promise Financial and more raising good rounds at decent terms. Perhaps there is a difference between fund-raising for mature MPLs and fund-raising for challenger Alt Lending 3.0 start-ups.
- Very interesting 1st hand data from Morningstar about the state of US consumer debt, including trends and statistics. Credit Cards charge-off rate chart, 90 days delinquent data per asset class.
- 500 Startups shares fintech investment trends chart and data and discussed government policies that could and should enable fintech innovation.
- Through the survey of France’s P2P and MPL lenders, a great analysis of the lessons learned from Lending Club’s crisis.
- Securitization trends in Marketplace Lending. A must read.
- Acquiring borrowers is difficult. Acquiring borrowers at purchase decision time is easier. Focusing on point-of-sale partnerships to generate credit demand is a very interesting direction which is, therefore, popular and gaining ground. A quick article as a reminder of this interesting direction.
- Royal of Canada dumped 99.5% of their LC stock in Q1 2016. Interesting timing.
- Getting SME lender’s loan data is at best difficult. In a space where we talk about transparency, SME originator’s data is a good example of the opposite. RateSetter stands out for publishing their data which lead to a nice summary, mostly figure based, article. I am not sure if this data is from RateSetter Australia only or includes other geographies.
- A small article, that is not well researched, not well documented, but asks a question that is worth exploring a lot more “How can p2p lending companies fail, and what happens in that case ?” . The quick and dirty answer is: if they are setup right, where the operations and the loan books are separate with backup servicing, the only effect is that new loans stop being generated. We would love to publish a long article on this matter.
- Banks in the EU lend even less to SMEs than in the US. A quick paragraph volunteering an explanation and some predictions that could be true: the double whammy effect. Readers should read more on the state of the Italian banks, the EU-Italy bank-bailout dispute, and the probability of a Greece-style crisis in Europe lead by Italy.
- News Comments
- United States
- Paying Loans Sucks – FinTech Startup EarnUp Lands $3 Million To Intelligently Automate Payments, (PR Newswire) ,Rated: AAA
- Data hints at down rounds, but not wipeout, for marketplace lending, ( TechCrunch), Rated: AAA
- State of the U.S. Consumer—Please Sir, Can You Lend Me Some More?, (Morningstar), Rated: AAA
- Fintech Investment is Exploding — 5 Ways Governments & Ecosystem Builders Can Help, (500 Startups), Rated: AAA
- The Lending Club Predicament & The Lessons Learned, (Crowdfund Insider), Rated: AAA
- Marketplace Lending Securitization Tracker, (PeerIQ), Rated: AAA
- Why mobile point of sale (MPOS) Is Gaining Ground in FinTech, (Tech.co), Rated: AAA
- Royal Bank Of Canada Sold A Lot More LendingClub Corporation Common (LC) Stock, (Fidaily), Rated: A
- The average RateSetter business loan, (Finder), Rated: AAA
- United Kingdom
- If Funding Knight went bust how safe is peer-to-peer lending?, (The Telegraph), Rated: AAA
- European Union
- Why Funding SMEs Within The EU Capital Markets Union Action Plan Is Challenging, (Seeking Alpha), Rated: A
Paying Loans Sucks – FinTech Startup EarnUp Lands Million To Intelligently Automate Payments, (PR Newswire) ,Rated: AAA
EarnUp, a consumer-first fintech platform that intelligently automates loan payments, announced its launch today with $3 million in seed funding. Blumberg Capital, Kapor Capital, Camp One Ventures, Fenway Summer Ventures, and other leading angel investors provided seed capital to accelerate the platform’s development and expand user access with a mission to improve consumer financial health. Forbes recently announced EarnUp as a winner of the prestigious Financial Solutions Lab in partnership with JPMorgan Chase & Co. (NYSE: JPM) and the Center for Financial Services Innovation. Though still in private beta, EarnUp already manages hundreds of millions of dollars in consumer loans on its platform. More information is available at www.EarnUp.com.
“Millions of Americans suffer financial stress from income volatility, where their income doesn’t match up with when loan payments are due,” said Matthew Cooper, co-founder of EarnUp. “Our product solves this issue by effectively budgeting for the consumer. We help put money aside as it comes in, giving people peace of mind in knowing the money they need will be there when loan payments need to be made. We give control back to the consumer.”
There are over 200 million Americans with debt and a typical household may have income and expenses hitting their bank accounts over 20 times a month. This financial chaos causes incredible stress for consumers, who may struggle to come up with even the minimum loan payments on time. EarnUp works by automatically putting a few dollars aside for future loan payments whenever consumers can afford it, then sending those payments and making sure they are applied in a way that reduces debt faster.
EarnUp has been bootstrapped to date and the $3 million in seed financing represents the company’s first institutional funding.
Data hints at down rounds, but not wipeout, for marketplace lending, ( TechCrunch), Rated: AAA
Comment: This is bad news for entrepreneurs. VCs usually have terms that protect them in a down round.
Private valuations across the lending space, where available, showed marked appreciation in 2014 and 2015. SoFi, for instance, was valued at $3.5 billion as of July, up from about 1.4 billion in early 2015 and $400 million in early 2014.
Those are post-money values, but the appreciation is well in excess of the sums invested. Avant showed a similar rise, with its post-money valuation doubling in less than a year. And Prosper more than doubled in less than a year, hitting a $1.8 billion valuation in April of last year.
Alternative lending currently looks like the reverse of the standard VC model, in which private markets are where one builds a business, and public markets are where one gets a lucrative exit.
That said, while we can expect down rounds near-term, it’s not clear VCs will lose their shirts in marketplace lending forays, particularly those who were mid- or early-stage investors.
High VC ownership levels mean that even a lackluster exit could return all or more of invested capital. Even after LendingClub’s stock plummet, for instance, VC’s post-IPO stakes would be worth more than the $392 in disclosed investments before going public.
Nonhousing consumer debt levels are increasing, with student-loan debt leading the charge, according to the Federal Reserve. Student-loan delinquencies more than 90 days past due have risen since late 2011. With the proliferation of postcrisis loans made to students, especially to those attending for-profit colleges with focused specialties, Morningstar Credit Ratings, LLC expects to see challenges in the sector.
Credit Card and Mortgage Delinquencies at Lows Since the crisis, credit-card and mortgage delinquencies have
Since the crisis, credit-card and mortgage delinquencies have improved, with the balance more than 90 days delinquent declining, according to the Federal Reserve Bank of New York. After seaking at 8.9% in the first quarter 2010, mortgage delinquencies have come down considerably from their highs, resting at 2.1% at the end of the first quarter. Credit-card delinquencies have also dropped, with the current level of 7.6% nearly half the 13.7% recorded in the first quarter of 2010. Low interest rates made it easier for consumers to either refinance or stay current on their debt obligations.
Meanwhile, after little change over the past few years, auto- loan delinquencies have edged higher, as competition among underwriters led to an increase in subprime auto loans. While we expect to see an uptick in auto delinquencies given the larger subprime component, overall auto-loan delinquency rates remain at relatively low levels. If unemployment remains in check, those auto-loan delinquency gains should be within reason, while we expect credit-card and mortgage delinquency rates to remain low.
New data that has been released since publishing solidifies the trend of consumer spending improving after a typical slow start of the year, with 1Q16 GDP growth at 1.1%. In addition, consumer confidence has strengthened.
Eye on the Road: Student and Auto Loans Bear Watching Consumers are adding to their household debt levels, with student-loan debt leading the way behind mortgages. Postcrisis, students enrolled in for-profit colleges in record numbers, with dreams of a future career. For many, those dreams never materialized, and they were left saddled with heavy student-debt obligations that they were unable to meet. This pool of nonpaying indebted students contributed to the student loan delinquency rate rising steadily since the end of 2012. While the pace of student-loan delinquencies has slowed, Morningstar Credit Ratings views the sector as vulnerable to declines in employment as the delinquency rate remains near record levels despite a generally healthy job market.
Fintech Investment is Exploding — 5 Ways Governments & Ecosystem Builders Can Help, (500 Startups), Rated: AAA
Quarterly financing to VC-backed fintech companies has been growing immensely:
But investment is not flowing freely everywhere. For example, in 1Q2016, Chinese fintech companies received $2.4 billion in funding (albeit primarily from two mega-deals), while the rest of Asia received only $0.2 billion. Meanwhile in Europe, deal count increased but the amount of capital invested did not. Even when the investment flows, the performance often does not.
Fintech’s 3 Ecosystem Challenges
1. Regulatory regimes are often ill-suited for fintech. Regulations in the finance sector are often unclear or highly complex, and regulatory processes and agencies may be slow.
2. Traditional financial institutions may hold down fintech startups, intentionally or unintentionally. Not long ago in the U.S., many banks did not even entertain meetings with or extend invitations to fintech startup founders.
3. Customer preferences may not be ready for certain fintech solutions. Customer acquisition is very difficult in fintech. Banks in the US spend over $500 to acquire a single user, and over time many startups will get there as well.
5 Ways Goverments Can Help
1. Create a “regulatory sandbox” that provides startups the opportunity to test new ideas without immediate threat of regulation.
2. Offer fast and transparent regulatory review of potential new fintech products or services.
3. Create a support system or kit to help fintech startups meet regulatory requirements.
4. Roll out consumer awareness initiatives to increase demand.
5. Encourage traditional financial institutions to invest in or partner with fintech startups — preferably non-exclusively.
The Lending Club Predicament & The Lessons Learned, (Crowdfund Insider), Rated: AAA
Lending Club’s problems should make the sector reflect on the governance issues that arise from the mixed business models that some crowdfunding platforms have evolved into.
Banks lend their own money and take risk on their balance sheet; hence, they must meet regulatory requirements such as Basel III. Asset managers manage other people’s money and invest on their behalf; hence, they are regulated as financial advisers. Platforms must clearly choose their business model because it has regulatory consequences. It also has an impact on the market valuation of the company. Marketplaces are currently much more highly valued by investors than banks. Even before the scandal, Lending Club’s stock was valued rather like a bank’s stock. Eventually, mixed business models potentially lead to conflicts of interest of the type observed at Lending Club.
Lending Club lost its way a long time before the scandal and the subsequent dismissal of Renaud Laplanche. By progressively marginalizing retail investors and letting investment funds securitize Lending Club’s loans on their own terms, Lending Club de facto surrendered the control of the platform to the very same established finance that P2P Lending was supposed to present an alternative to. This change of course created a detrimental layer of complexity, and potentially of systemic risk, in what was supposed to be a simple and direct relationship between private lenders and borrowers.
Beyond the image problem, the impact of the incidents has been small. European institutional investors are still very much interested in marketplace lending, as can be seen from two recent announcements: a$100 million loan program through Funding Circle by the European Investment Bank and €70 million multiplatform crowdlending fund by Eiffel Investment and French insurers Aviva and AG2R La Mondiale.
Marketplace Lending Securitization Tracker, (PeerIQ), Rated: AAA
Marketplace lending securitization volume topped $1.7 billion this quarter, up 14.8% from Q1, with cumulative issuance reaching $10.3 billion. YTD issuance of the sector stands at $3.2 billion as compared to $1.8 billion from prior year, a 77% increase. Q2 saw a total of 6 deals: 3 are backed by student loans, 2 by unsecured consumer loans, and 1 by SME loans. SoFi issued its first rated unsecured consumer loan deal and received an industry first ever AAA rating from Moody’s on its recent student loan transaction.
MPL securitizations are moving towards rated and larger transactions. The second quarter was the first to have all deals rated by one or more rating agencies. Further, the growth in average deal size continued, the average deal size grew to $267 million in 2016 as compared to $64 million in 2013.
New issuance and secondary spread tightened by quarter end, a good sign for the industry. Across all segments in MPL, Q2 2016 saw moderate spread compression in senior tranches of newly issued deals and widening in junior tranches as compared to Q1 2016.
Numerous factors, including lending platform rate increases, and spread tightening in both primary and secondary markets, look to improve future deal economics. The increase in rates from platforms increases excess spread and improves the economics of securitization for residual holders. The demand for
The demand for higher standard of due diligence, transparency and analytics will be the norm. With the recent Lending Club headlines, ABS investors are demanding greater transparency and validation to enhance trust.
A total of 6 deals were done in Q2 and spanned several marketplace lenders and categories. Here is the breakdown from Q2 2016:
- 3 student loan securitizations (Earnest, SoFi, CommonBond)
- 2 unsecured consumer loan securitizations (Avant, SoFi)
- 1 SME securitization (OnDeck)
Despite Citi stopping the securitization of Prosper loans, they continue to be the leader in marketplace lending securitizations followed closely by Morgan Stanley and Credit Suisse.
Cited as factors for an improving securitization market are increasing platform rates and spread tightening in both primary and secondary markets. A detailed analysis of specific securitizations are outlined in PeerIQ’s report.
Why mobile point of sale (MPOS) Is Gaining Ground in FinTech, (Tech.co), Rated: AAA
Comment: in our market context I would think that lenders would like to acquire/partner/sign up with Point of Sales solutions to extend credit in physical stores.
One such story goes of Swedish payments giant Klarna that recently announced that they were moving beyond its online services into physical stores, which it will accomplish by partnering up with mobile point of sale (MPOS) and e-commerce company Sitoo.
We are approaching a near future where the value chain for payments as we know it will be forever altered and new constellations will surface. More specifically, we expect to see more payment providers partnering up with POS companies to add value to their services and to diversify their position. There’s also a strong possibility that we’re likely to see some of the more aggressive payment providers outright acquiring POS-companies to accelerate growth and control a larger chunk of the value chain.
Royal Bank Of Canada Sold A Lot More LendingClub Corporation Common (LC) Stock, (Fidaily), Rated: A
Royal Bank Of Canada says it sold 35,334 shares last quarter decreasing its holdings in LendingClub Corporation Common by 99.5%. Its investment stood at $1,000 a decrease of 99.7% as of the end of the quarter.
The average RateSetter business loan, (Finder), Rated: AAA
If Funding Knight went bust how safe is peer-to-peer lending?, (The Telegraph), Rated: AAA
A peer-to-peer website has been rescued after falling into administration, offering a lifeline to 900 savers who faced being unable to get their cash back.
Funding Knight was promising investors returns of up to 12pc for lending cash to small businesses.
Many feared that they would lose their money when the company ran out of cash and went into administration last month.
However, last week the firm was rescued by GLI Finance, an investment firm, which said savers cash was safe and could be withdrawn at anytime. GLI has also invested a further £1m in the business.
Despite Funding Knight savers being assured that their cash is safe by the new owners, the incident has raised concerns over the safety of peer-to-peer lending.
Any funds they lend through a peer-to- peer website are not covered by the government-backed Financial Services Compensation Scheme (FSCS), which protects bank savers up to £75,000.
A spokesman for the Peer-to-Peer Association, a trade body of which Funding Knight is not a member, said:
He said: “We have been consistent in calling for, and embracing, regulation of the sector and requires robust adherence to its published operating principles, including the publication of platform loan books in full and clear information on all fees and charges to investors and borrowers.”
“Peer-to-peer lending offers overall a lower risk profile than some other forms of investment with less volatility, but it is not entirely without risk.
“Within the peer-to-peer lending sector, there are a number of different asset classes each with their own risk-return profile.”
Why Funding SMEs Within The EU Capital Markets Union Action Plan Is Challenging, (Seeking Alpha), Rated: A
European banks are caught in a conundrum because they still have to clear up their bad loan portfolios, which their US counterparts have largely dealt with. This situation, together with stricter capital requirements, and a challenging policy environment with low or negative interest rates, has led to a double whammy affecting both banks and SMEs. Additionally, credit information is still very fragmented in the EU, as shown by our CFA Institute member survey on the Capital Markets Union from May 2015.