Friday April 27 2018, Daily News Digest

Canada investments

News Comments Today’s main news: Kabbage buys Orchard.Ascentium Capital issues $330M securitization.LendingTree reports record Q1 results.Funding Circle issues second MPL deal.Revolut raises $250M, achieves unicorn status.BBVA issues first blockchain loan from a global bank.IOU Financial releases 2017 results. Today’s main analysis: Canadian fintech funding declines 60 percent in Q1. Today’s thought-provoking articles: Where the oldest […]

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United Kingdom

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United States

It’s Official: Kabbage To Acquire Orchard (Lend Academy) Rated: AAA

It was the worst kept secret in fintech. There were rumors flying around during LendIt Fintech earlier this month and then Bloomberg published this story a couple of weeks ago about the pending deal. Well, today it became official. In a press release this morning it was confirmed that Kabbage, the tech-focused small business lender, will acquire Orchard.

So, what will become of Matt Burton and his team? Some clues are provided in the press release:

Orchard’s CEO and co-founder, Matt Burton, as well as Chief Analytics Officer and co-founder, David Snitkof, will both join Kabbage in leadership roles upon the closing, helping oversee technology integrations and future innovations. In total, Kabbage will add more than twenty Orchard employees who are predominantly focused on advanced analytics, data science and engineering to its New York City office.

Kabbage plan in Orchard deal: Expand offerings to banks, small businesses (American Banker) Rated: A

Kathryn Petralia, president and co-founder of Kabbage, said the acquisition will help the company diversify its business and offer more data-driven services to small businesses and financial institutions. It currently works with ING, Santander and Scotia Bank. Kabbage’s U.S.-based loans are issued by Celtic Bank in Salt Lake City.

The Orchard name will not survive. “At closing we will be Kabbage,” Burton said.

Until now, Orchard has been providing loan and portfolio analysis to other online lenders. This business model will be discontinued and those relationships will most likely end. Orchard’s current clients are being told about its sale to Kabbage, Burton said.

Ascentium Capital Announces $ 330 Million Securitization (Ascentium) Rated: AAA

Ascentium Capital issued a $330 million small ticket equipment securitization of Ascentium Equipment Receivables 2018-1 Trust.

This represents the company’s ninth securitization since 2012 and the first time a non-investment grade, independent equipment finance company received triple AAA and Aaa ratings from both Standard & Poor’s and Moody’s.

LendingTree Reports Record 1Q 2018 Results (Markets Insider) Rated: AAA

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com today announced results for the quarter ended March 31, 2018.

First Quarter 2018 Business Highlights

  • Revenue from mortgage products of $73.5 million represents an increase of 17% over first quarter 2017 driven by strong growth in both purchase and refinance revenues at 13% and 18%, respectively.  According to Mortgage Bankers Association, originations industry-wide were projected down 4% in the comparable period.
  • Record revenue from non-mortgage products of $107.6 million in the first quarter represents an increase of 55% over the first quarter 2017.
  • Revenue from our credit card offerings continued its momentum, growing to $46.1 million in 1Q, up 36% over the first quarter 2017.
  • Personal loans revenue of $26.0 million grew 53% over first quarter 2017.
  • Home equity revenue continued to climb, growing 81% over first quarter 2017.
  • More than 8.0 million consumers have now signed up for free credit scores and savings alerts through My LendingTree.  Revenue contribution from MyLendingTree grew 76% in the first quarter compared to the prior year period as new features, such as Credit Analyzer and free credit monitoring, are driving increased engagement.

LendingTree Study Reveals Which Places Buy the Oldest Used Cars (PR Newswire) Rated: AAA

LendingTree today released the findings of its study on the places that buy the oldest used cars. LendingTree analyzed auto loan offers for borrowers in the top 50 U.S. metros (based on population) to find the average age of used cars financed in each metro, as well as which makes of used cars were most popular.

The national average age of a used car people sought to finance was six years old, but some parts of the country prefer older used cars more than others.

Source: Lending Tree

Mobile Banking One of Top Three Most Used Apps by Americans, 2018 Citi Mobile Banking Study Reveals (Citigroup) Rated: AAA

Apps for mobile banking have become some of the most widely used by Americans, according to Citi’s 2018 Mobile Banking Study, released today. The survey of 2,000 U.S. adults found that, measured by top two ranked responses, 31 percent of consumers use their mobile banking app the most, behind only apps for social media (55 percent) and the weather (33 percent).

“Over the past year we’ve witnessed this increase in engagement first-hand, with mobile usage in North America increasing by almost 25 percent, and we don’t see this trend slowing down any time soon.”

LendingClub was sued for the fees it charges — how you can avoid being overcharged (Market Watch) Rated: A

Pay attention to both the interest rate advertised, as well as the annual percentage rate (APR), Clements said. If they’re different, the lender is likely factoring additional fees into your annual percentage rate.

You may need to borrow more money than you expected if that’s the case, he said, because the total amount you would receive will be less than you asked for.

Research several lenders before choosing which one you want, he said. And if there are any unfamiliar terms, or any confusion about how much you’ll pay back monthly, ask.

Digital bank in a box: Fintech offers branding tool (American Banker) Rated: A

The core systems provider Nymbus is offering a new product for bank customers that want to get in on the burgeoning trend of having a stand-alone, digital brand.

Dubbed SmartLaunch, the offering enables financial institutions to create a digital brand under their existing charter in as little as 90 days, according to Nymbus. The product is built on Nymbus’ cloud-based SmartCore platform, and the company says it provides banks that use the service with all outsourced operational and technological requirements to run the digital bank. Also included are client support, digital marketing and website services.

Source: American Banker

RealtyMogul and Comunidad Realty Partners Close $ 30 Million in Texas Multifamily Properties (Citizen Tribune) Rated: A

RealtyMogul, a pioneer in providing private real estate to discerning investors, announced that MogulREIT II, its real estate investment trust or “REIT,” has completed investments in multifamily apartment complexes in Fort Worth, Texas and San Antonio, Texas, consisting of over 450 units.

The properties were acquired through a partnership with Comunidad Realty Partners, a dynamic real estate investment firm specializing in workforce housing communities in culturally diverse neighborhoods.

Scaling Real Estate Crowdfunding: PeerStreet Establishes a Culture of Excellence at the Top (Crowdfund Insider) Rated: A

Loans on PeerStreet are sourced and curated from vetted private lenders throughout the United States. These lenders have real estate expertise and established borrower relationships. To date, PeerStreet has helped to finance over $900 million in loans by using this partnership approach. The properties they help finance are typically smaller in value – a segment of the industry that is usually overlooked by big institutional money. Loans range from 6 to 24 months and are first lien so investors have a good degree of security.  Most of the loans are below a loan to value of 75%. About a year ago, PeerStreet announced having funded $300 million in loans. In less than 12 months, PeerStreet has funded double that number.

PeerStreet is doing small loans commercial, some multi family and mixed used properties. The largest loan size is around $5 million but there can be exceptions. The rate of return for investors during 2017 stood, on average, at 8% net of fees. As for defaults, so far only five loans have gone into foreclosure but they have not experienced any loss of principle – a positive metric.

Citizens Bank Taps Finastra and Infosys for Trade Finance Solution (Citizens Bank) Rated: A

Citizens Bank, working with Infosys as its implementation partner, has selected Finastra to power the trade finance solution it offers to its corporate clients. This new capability will enable Citizens’ corporate clients to digitize traditionally paper-based trade processes, leading to increased efficiencies and reduced costs.

The new trade finance offering will allow the bank to meet increased client demand. Citizens picked Finastra’s Fusion Trade Innovation for its end-user experience, ability to support all trade products, capacity to integrate with downstream systems through open APIs and its high level of configurability.

Consumers in Columbus less likely to put fraud alerts on their credit reports (The Columbus Dispatch) Rated: A

However, a new study finds that consumers in the biggest Midwest cities, including Columbus, are much less likely to put alerts on their credit reports than those in other cities, such as Las Vegas, Houston, Miami and New York. The study by online lender Lending Tree was based on a random sample.

US banks to get more freedom to offer unsecured loans (Financial Times) Rated: B

Joseph Otting, Comptroller of the Currency, said he believed standards should be relaxed to allow banks back into the small dollar loan market; loans would range from $500 to $5,000 and be paid back in 45 and 90 days; right now payday lenders dominate this space and typically take advantage of borrowers by charging high fees and rolling over the principal; allowing banks back into the market will help to bring more regulation and cut down on abuses.

Growth plans: Both big and small banks set to expand locally (Orlando Business Journal) Rated: B

David Stahl, senior vice president, SunTrust Bank: We acquired an online lender called LightStream two years ago, and that has been a huge opportunity for us. The days of people walking into a bank and applying for a loan are pretty much gone.

Free Research Reports on These Credit Services Stocks — MoneyGram, Navient, Oaktree Specialty Lending and On Deck Capital (PR Newswire) Rated: B

This morning, WallStEquities.com observes MoneyGram International Inc. (NASDAQ: MGI), Navient Corp. (NASDAQ: NAVI), Oaktree Specialty Lending Corp. (NASDAQ: OCSL), and On Deck Capital Inc. (NYSE: ONDK). Credit Services companies originate, acquire, and service loans to individuals and corporations. Their products include student loans, mortgages, lines of credit, private equity, and venture capital. All you have to do is sign up today for this free limited time offer by clicking www.wallstequities.com/registration

Covr Financial Technologies appoints Chris Growney to Board of Directors; Gregory Fleming and Robert Kerzner, join Covr’s Advisory Board (PR Newswire) Rated: B

Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, announced that Chris Growney, an advisor with venture capital and advisory firm Nyca Partners has joined Covr’s Board of Directors following Nyca’s role in Covr’s June, 2017 fundraising. Growney, a director, advisor and investor in a broad range of start-up and growth companies was most recently the founder of Clearwater Analytics, an investment analytics and accounting software company based in Boise, Idaho.

6th Avenue Capital Announces Promotion of Darren Schulman to President (deBanked) Rated: B

6th Avenue Capital, LLC (“6th Avenue Capital”) announced today the promotion of Darren Schulman to President, effective immediately. In his new position, Schulman has oversight over originations, underwriting, operations, collections and strategic initiatives. He previously served as Chief Operating Officer, and will continue to report directly to Chief Executive Officer Christine Chang.

The company also announced today that Chang and Schulman have been appointed to the company’s Board of Directors.

Best Egg Teams with Junior Achievement of Delaware on Financial Education Initiatives (Business Wire) Rated: B

Best Egg, the consumer lending brand of Marlette Funding, LLC, is providing both classroom education and other inspiring financially-related activities for Junior Achievement of Delaware (JA of DE). This announcement coincides with National Financial Literacy Month, being celebrated throughout the month of April.

United Kingdom

Funding Circle brings second marketplace loan deal (Global Capital) Rated: AAA

Sole arranger and lead manager Deutsche Bank announced Thursday a £207m UK SME securitization from Funding Circle, Small Business Loan Origination Trust 2018-1, the second ABS offering from the online lender.

In addition to being just the second deal from Funding Circle, and the third European marketplace loan ABS overall, SBOLT 2018-1 marks the first time Kroll Bond Rating Agency has assigned a public rating for a European securitization deal.

KBRA Europe Assigns Preliminary Ratings to Small Business Origination Loan Trust 2018-1 DAC (Business Wire) Rated: A

Kroll Bond Rating Agency Europe Limited (KBRA) has assigned preliminary ratings to four classes of notes (“Rated Notes”) issued by Small Business Origination Loan Trust 2018-1 DAC (“SBOLT 2018-1”). This is a £206.6 million ABS transaction collateralised by unsecured loans made to small and medium-sized enterprises (“SMEs”) incorporated in the United Kingdom (“UK”).

This transaction represents the second ABS securitisation collateralised by unsecured loans to SMEs originated through the online lending platform operated by Funding Circle Limited (“Funding Circle”), and the first European rated ABS securitisation for KBRA.

Source: Business Wire

Confirmation of that came on Thursday as Revolut became the first of Britain’s digital-only banks to achieve “unicorn” status – in other words, a privately held start-up company with a valuation of more than $1bn (£720m).

Revolut, which was only founded in July 2015, has been valued at $1.7bn (£1.22bn) in its latest funding round.

The bank, which started out as a currency exchange app but later moved into providing personal banking and cryptocurrency trading services, raised $250m (£180m) from backers including DST Global, an investment firm backed by the Russian billionaire Yuri Milner, whose previous early-stage tech investments have included Facebook, Twitter, Airbnb and Spotify.

Ranger Direct Lending rejects investor call to wind up (City Wire) Rated: A

Ranger Direct Lending (RDL) has criticised shareholder Oaktree Capital Management for trying to force the struggling alternative income fund to wind up.

Oaktree, the second largest shareholder in the fund that invests in and through lending platforms, has made public its correspondence with Ranger, which it described as a ‘sub-scale platform’ with shares ‘too illiquid to attract large institutional investors, especially in light of its persistent trading discount to net asset value (NAV)’.

Goji passes £50m in assets (Goji) Rated: A

Goji has now got more than £50m of assets on its platform a little over a year after opening its doors to investors.  With over 5,000 customer accounts, our hard earned growth is testament to the work the whole industry has done in selling the asset class to the UK public.

After campaigning hard to change the tax laws to open up the ISA rules so that non-lending platforms could also offer an IFISA, Goji was the first firm to offer investors diversification across a number of platforms through a single Innovative Finance ISA.  Goji’s Diversified Lending Bonds target 5%, whilst it’s Renewables Lending Bond targets returns in excess of 8%.

A lending site where you can rent anything just scored millions in venture capital (Business Insider) Rated: A

Fat Lama, which announced $10 million in its Series A on Wednesday in a round led by Blossom Capital, says it will use its latest funding to further its reach within the US and to create a mobile-first offering (so far, the site’s mobile app is only available in the UK).

Fat Lama lets users borrow everything from drones to camera equipment to printers.

The site insures any item listed on its site for up to $30,000, and Englander said his company has plans to raise that amount to $50,000 in the near future.

 

 

Artificial intelligence backed to reduce P2P defaults (Peer2Peer Finance) Rated: A

ARTIFICIAL intelligence (AI) could provide peer-to-peer lenders with greater lending security and less chance of defaults, a technology consultancy claims.

Nick Parham, technical pre-sales consultant at NashTech, said there is much P2P platforms can learn about AI from traditional lenders.

“The traditional lending market offers us a powerful insight into the potential for AI in P2P lending,” he said.

TURNING TO YOUR PEERS (BQ Live) Rated: A

They created ArchOver, a peer-to-peer (P2P) lending platform that allows firms that have been operating for more than two years to borrow money from lenders using its website. Companies borrow a minimum of £250,000, with interest rates starting at 7.7% a year.

Since it launched in the autumn of 2014, ArchOver has helped its lenders to inject more than £65m into British businesses, bringing in more than £2.5m in interest at an average return of 7.3%. In an age when bank savings accounts are paying less than 0.5%, it’s easy to see the attraction for investors who understand the risks as well as the rewards.

European Union

Klarna integrates with Magento for streamlined checkout (Payments Source) Rated: AAA

Commerce platform Magento is giving merchants the option to activate Klarna instant credit for online checkouts.

Sweden-based Klarna is built into the latest version of Magento Commerce, giving merchants a streamlined path to offer goods consumers may opt to pay for immediately, within 30 days, or longer via installments, Klarna said in a Thursday press release.

Taaleri increases its ownership in Fellow Finance by 7.3 per cent (Globe Newswire) Rated: A

Taaleri Plc has decided to exercise its option to acquire an additional 7.3% holding in Fellow Finance Oy, as outlined in the shareholders’ agreement signed in 2015. After the transaction Taaleri’s shareholding in Fellow Finance, which offers a crowdfunding platform for companies and for consumers, will increase to 45.7%. The transaction is scheduled to be realized in April-May.

International

BBVA and Indra deliver the world’s first blockchain-supported corporate loan (BBVA) Rated: AAA

BBVA has successfully completed the first global corporate loan transaction using blockchain technology from the negotiation of the deal to its signing, in line with their close collaboration to leverage cutting-edge technologies to streamline business processes.

The pilot enabled the closing of a €75 million loan using a solution developed by BBVA based on distributed ledger technology (DLT). This demonstrates how BBVA continues to incorporate innovative and disruptive technology into its customer solutions, including those products that up to now have seen limited digital innovation, as is the case with wholesale finance.

BANKS VS FINTECHS: THE WAR FOR TALENT (International Banker) Rated: A

Many of these start-ups, moreover, are equipped with enough cash to be able to compete with their banking counterparts on salaries. According to assessments by recruitment site Glassdoor, for example, a London-based software engineer at online lender Funding Circle will earn a base salary of £51,000 on average, which is equal to the salary paid at Goldman Sachs for a similar role. At UBS, that figure is £59,000, while at challenger Monzo Bank it is currently £64,000. Speaking recently to Bloomberg, co-founder and CEO of property lending platform LendInvest, Christian Faes, asserted that between 30 and 40 percent of the company’s hires are from major financial institutions, while banks also account for 100 percent of its small-risk and compliance team. Similar trends are also being reported by UK online lender MarketInvoice Ltd., where three-quarters of its 85 employees have come from either the financial-services or accountancy space.

Source: International Banker

Deserve Raises $ 50 Million in Debt Financing (Finovate) Rated: A

In rebranding his company from SelfScore to Deserve, CEO Kalpesh Kapadia explained “we believe that access is everything and everyone deserves a chance to build a positive credit history. So we are making our products available to all students, U.S., and international, and to all those who seek to build and/or maintain a good credit history.”

And now Deserve is $50 million closer to serving this broader population of potential customers. The Accel-backed fintech has just secured a $50 million debt facility from Keystone National Group to drive growth in account receivables and help “jumpstart” first-time credit owners’ financial journeys.

 

Fintech for the Financially Excluded? (Stanford Social Innovation Review) Rated: A

At Bamboo Capital Partners, we believe fintech can help low-income people reduce vulnerabilities, build assets, manage cash flow, and increase income, and we have invested as such: In the last couple of years, we have made four equity investments in fintech companies in Colombia, Mexico, Chile, and Tanzania, committing more than $16 million. Our investees are helping democratize access to finance through peer-to-peer lending platforms (KuboFinanciero), promoting access to insurance (ComparaOnline), enabling mobile payments and savings for low-income people through nano deposits (Movii), and providing a smart data platform for emerging market financial institutions (First Access).

APAC

Game-changing technologies at work in Asia Pacific’s real estate (JLL) Rated: AAA

Singapore-based mall operator Capitaland has a chatbot called Sparkle on its app that responds to shoppers’ queries and make reservations or hail a ride from its malls.  National Australia Bank is participating in a A$9 million investment round for real estate crowdfunding platform Brick X.

The rise of proptech, however, could be a cause for cybersecurity concerns, as highlighted in JLL’s report Clicks and Mortar: The Growing Influence of Proptech.

Source: Jill Real Views

 

Coast Labor MP Calls For Ban On Loan Machines (TripleM Network) Rated: A

There are calls for the Berejiklian Government to outright ban payday loan machines cropping up on the Central Coast.

There’s a Cash N Go kiosk at Wyoming offering up to $1000 at a time with minimal checks, while the devices, which look like ATMs, have also been spotted in the Hunter and Illawarra.

Latin America

Brazil’s Central Bank authorizes peer-to-peer lending (Rueters) Rated: AAA

Brazil’s Central Bank on Thursday released rules for credit start-ups that include authorization for peer-to-peer lending, as a way to increase competition in loans in a country with notoriously high interest rates for consumers.

Credit fintechs will be allowed to operate with a minimum capital of 1 million reais ($288,000), according to the new regulation. Peer-to peer lending had not yet been formally authorized in the country. The practice involves lending between individuals through online services.

Canada

Funding for Canadian Fintech Companies Declines 60 Percent in Q1 (Investing News) Rated: AAA

Canadian fintech companies received $88 million in investment over the first quarter of 2018, representing a 60-percent decline, says a new report from PwC.

Total investment in Canada in the first quarter of 2018 was over $1 billion, which is a 52-percent increase over the last quarter. A total of 105 deals were signed as compared to 81 in the previous quarter, representing a 30-percent increase.

Source: PwC

Read the full report here.

IOU Financial Inc. Releases Financial Results for the Year Ended December 31, 2017 (Benzinga) Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV:IOU) announced today its results for the year ended December 31, 2017.

  • Reached profitability during the year with positive adjusted net earnings of $0.1 millionin Q4.
  • Surpassed the half-billion loan origination mark with loan originations of $91.3 million(US) for the year.
  • Increased interest revenue of 8.1% to $14.4 million for the year ended December 31, 2017 vs 2016.
  • Reduced operating costs (excluding non-recurring costs) by 20.3% to $9.0 million for the year ended 2017.
  • Raised $3.5 million via a private placement.

BlackChain Solutions Signs LOI With DMG Blockchain Solutions to Bring P2P Lending to the Cryptocurrency Market (Investing News) Rated: B

Under the proposed license, BlackChain will retain exclusive rights for use of the technology for P2P Lending. DMG will be entitled to a royalty on commercial revenues generated by Blackchain using the technology. The parties intend to negotiate and finalize a definitive agreement by May 15th, 2018.

 

MENA

Global REIT’s crypto-powered real estate investment model will be first of it’s kind… (Global Cryptocurrency Press) Rated: AAA

Moving this structure onto the blockchain, and powering the investments with cryptocurrency now means the average cryptocurrency investor can easily access the real estate investment market. Global REIT will begin in their home of Dubai, a place where real estate is currently exploding, and acquire assets within the U.A.E, before branching out globally.

Authors:

George Popescu
Allen Taylor

Monday April 23 2018, Daily News Digest

Marcus lending

News Comments Today’s main news: Top customer-rated lenders by loan product. Kabbage, Ingo Money partner on SMB loan disbursements. RateSetter offers 100 GBP cash incentive to ISA investors. TransUnion to buy Callcredit in Europe for $1.4B. Today’s main analysis: Bank earnings. Today’s thought-provoking articles: P2P lending vs. stock markets. Using psychometry for loan disbursement. Don’t fear the robo-advisor. Bank earnings. Fintech leaders […]

Marcus lending

News Comments

United States

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China

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United States

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q1 2018 (Markets Insider) Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the first quarter of 2018.

The top lenders for the first quarter by product are:

Mortgage Category

#1 Winner:
Howard Bank

Personal Loans Category

#1 Winner:
First Midwest Bank

Top 3 Badge:
Lending Club
Upgrade

Business Loans Category

#1 Winner:
OnDeck

Auto Loans Category

#1 Winner:
iLendingDIRECT

Kabbage and Ingo Money Partner to Get Small Businesses their Loan Funds Faster (Small Business Trends) Rated: AAA

Kabbage and Ingo Money have teamed up to expedite the payout of loans into the accounts of small and medium-sized businesses in real time. The move is important news for small businesses in need of a fast loan payout to capitalize on new opportunities or continue operations.

Thanks to the new partnership, when businesses get a loan from Kabbage, the Ingo  Money technology will be used to deliver the funds to the applicant’s account right away. The loans are going to be paid out using Ingo Money’s push platform with push-payments-in-a-box technology.

The partnership was announced on pymnts.com at which time Kabbage President Kathryn Petralia explained the importance of accelerating the delivery of funds.

Strong Bank Earnings, The Copernican Revolution in Banking (PeerIQ), Rated: AAA

Goldman Sachs delivered its highest revenue in 3 years, also driven by a boost from its fixed income trading business. The bank continues to invest in Marcus and has originated $2.3 Bn in loans life-to-date and has $17 Bn in deposits. Marcus is only one part of GS’s broader lending strategy. We note in the slide below from GS’s earnings call that Goldman has substantially increased its loan book from $64 Bn at the end of 2016 to $81 Bn at the end of 2017 by expanding collateralized lending to high net-worth clients and securities-based lending.

Source: PeerIQ

Bank of America’s total revenue grew by 3.7% to $23.3 Bn driven by its Consumer business which saw profits grow by $0.8 Bn to $2.7 Bn, and 32 straight quarters of loan growth. Average loans increased by $22 Bn to $280 Bn driven by growth in mortgages and credit cards. Provision for credit losses increased by $97 Mn to $935 Mn, driven by credit card seasoning and loan growth. The net charge-off ratio increased slightly to 1.27%. Bank of America is the leader in mobile banking and active mobile banking users increased 12% YoY to 24.8 Mn.

 

DON’T FEAR THE ROBO! (All About Alpha) Rated: A

Technology advances have infiltrated every corner of finance, including the world of wealth management. While few can argue with the positives of automated, algorithm-based portfolio management platforms, the advent of the cost-efficient, dispassionate robo-advisor has struck fear into the heart of many a financial advisor and fund manager, who see these technology options as a threat to their business practice.

FIRST, WHAT ARE SOME BENEFITS OF A ROBO?

Lower fees. Most of these robo advisors charge less than 1%, with some south of .20%, versus the standard investment advisor fee range of 1-3% on a client’s portfolio.

Elimination of emotional trading. With a robo advisor executing a passively managed program, there is no chance of active management decision-making being affected by human emotional reaction to markets.

Index-like performance with tax efficiencies and global access. Most robo platforms feature ETFs that aim to produce results like an index, but with lower expense ratios than their equivalent counterparts found in mutual funds. For individuals focused on low cost but benchmark performance in a portfolio, a mix of ETFs can be a desirable option long term.

How Barclays US is using AI (Tearsheet) Rated: A

Barclays — the bank behind popular co-branded cards including Uber, American Airlines, JetBlue and a host of other retail partners — is using customer data to suggest products and understand the root causes of customer complaints. It’s an approach large banks like Capital One and JPMorgan Chase as well as startups like Credit Karma and MoneyLion are using to push insights and recommendations that are most relevant to the customer’s spending behavior and product preferences.

With all this data gathering, how do you avoid creeping out the customer?
We do a lot of testing, we are very thoughtful about products we develop and ways we communicate with customers. We don’t want to be in a situation where the customer is “creeped out”. We try to be very sensitive to that. We do a lot of data analysis and co-create experiences and products with customers to get a sense whether something will resonate or not. It’s an interesting time. It becomes straddling between convenience and relevance for the customer and going too far, [the sense of which] is different for each customer.

 

Lead Bank CEO: Tech, innovations help better clients, which makes a better bank (Kansas City Business Journal) Rated: A

Lead Bank CEO Josh Rowland is leaving no stone unturned on the technology front to help consumers gain financial strength and in turn create loyal, lifelong customers.

6th Avenue Capital Tips Off First “Merchant Madness” Promotion (AltFi), Rated: B

6th Avenue Capital, LLC (“6th Avenue Capital”) announced today the launch of its first “Merchant Madness” promotion. Throughout the month, and coinciding with the annual NCAA Men’s Basketball Tournament, 6th Avenue Capital will award points for all new ISOs, Merchant Cash Advance (MCA) submissions, approvals and funded deals.

In addition to the new Merchant Madness promotion, 6th Avenue Capital also recently announced competitive underwriting guidelines, buy rates and incentive programs for 2018.

United Kingdom

P2P lender RateSetter offers ISA investors £100 cash incentive (AltFi News) Rated: AAA

RateSetter is offering new investors up to £100 for opening a new Innovative Finance ISA with the p2p lending platform.

Lending Works set for further growth after passing £100m milestone (Financial & Business Insights) Rated: AAA

Peer-to-peer lender Lending Works has passed £100 million in terms of the amount of money lent, cementing its position as one of the biggest UK platforms of its type.

Some 20,000 customers – over 16,000 borrowers and nearly 4,000 lenders – have used the platform to date and every penny of capital and expected returns has been delivered to lenders on time.

Gone in 98 minutes! Blend Network sees surge in property loans (Peer2Peer Finance) Rated: A

A PEER-TO-PEER lending platform aiming to be “Goldman Sachs of P2P” has reached £2m of lending in less than four months, with its latest development loan getting backed within 98 minutes.

The platform launched in January and currently offers average returns of 12.11 per cent on property-backed development loans outside London.

A new challenge for business banking (Money Week) Rated: A

There are a few providers already in business. CountingUp is a new service that integrates a business account with automated bookkeeping. Income and expenses are automatically categorised, and it can produce profit-and-loss accounts, raise invoices and file taxes. Sole traders will pay £9.95 a month; limited companies £19.95. Cash can be deposited via the Post Office for a £1 fee or via Paypoint for a 2.5% commission. Cash withdrawals cost £1.

Also in the works is CivilisedBank, which gained its banking licence in May last year, but released it earlier this month to give itself more time to develop its technology platform. CivilisedBank proposes a branch-free service for more established companies, and will focus on customer service by employing up to 80 “local bankers” for businesses with a turnover of more than £1m. It hopes to provide savings, loans, current accounts with overdrafts, and foreign exchange. It will also offer savings products to non-business customers.

Meet Andrea Linehan, commercial director with Grid Finance… (Business Irish) Rated: A

The recent warning that banks are no longer making the effort to get to know small- and medium-sized businesses when they apply for a loan, struck a chord with Andrea Linehan.

Linehan, the commercial director with Grid Finance, is keen to stress that Grid’s model is much more business friendly, with staff around the country eager to dig into the fine details of a business hungry for capital.

China

LexinFintech to Invest RMB1 Billion in Partner Cooperation over Next Three Years (Benzinga) Rated: AAA

LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ:LX) announced that it expects to invest RMB1 billion in cooperation with its partners over the next three years, to better serve its customers and to expand the use of credit services.

European Union

TransUnion expands into Europe with $ 1.4 billion Callcredit deal (Reuters) Rated: AAA

U.S. credit reporting agency TransUnion (TRU.N) on Friday said it will buy UK consumer data provider Callcredit for 1 billion pounds ($1.4 billion) from private equity firm GTCR, expanding its operations into Europe for the first time.

The deal comes at a time when credit-checking services are growing, in response to the proliferation of non-traditional lenders to consumers, such as payday loan providers and online lenders.

Fintech in Germany (Lexology) Rated: AAA

As the largest economy in the European Economic Area, the German market offers many opportunities for fintech innovation. Although some of the initial disruptive energy has been mitigated by regulatory challenges and a soft trend towards consolidation, a second phase of solid and mature business development is on the horizon.

Important players in the market include:

  • N26 – an app-based direct bank;
  • Kreditech – offers data-based bank lending;
  • Raisin – offers a pan-European marketplace for savings products;
  • Spotcap – offers loans for small and medium-sized enterprises;
  • Auxmoney – operates an online platform for peer-to-peer money lending services;
  • Smava – offers a loan comparison platform;
  • Liqid and Scalable – both offer online portfolio management to retail customers;
  • Exporo – offers an equity crowdfunding platform for real estate investment and bitbond, a bitcoin-based peer-to-peer lending platform; and
  • Finleap – while not a fintech company itself, it offers a fintech company builder ecosystem.
International

SPRING MEETINGS 2018 GLOBAL VOICES: INTERVIEW WITH IMAD MALHAS (World Bank Live) Rated: A

As part of our Spring Meetings 2018 Interview Series, we will be talking with Imad Malhas, ​CEO, IrisGuard, on how technology can help in the financial inclusion of displaced people.

Australia

“It was clear the loan products for small businesses were just not good enough,” says Moshal. He, and joint CEO Beau Bertoli, 34, set out to solve that problem in 2011 with Prospa, their Sydney-based online lender. Last year, Prospa provided over A$500m (£273m) in small-business loans, which are funded by bundling the loans together and selling them on to institutional investors. Interest rates start at around 12%, stretching into the mid-20s depending on risk.

Prospa’s draw is its speed in processing applications, with funding coming the same day. “We aren’t necessarily cheaper than a bank, but we offer speed, convenience and more access to credit,” says Bertoli. A A$25m funding round last year valued the business at A$235m, and the lender is now testing the waters for a stockmarket listing.

India

SoftBank-backed fintech firm True Balance raises $ 23m bridge round (Deal Street Asia) Rated: AAA

Gurgaon-based digital payments firm True Balance has reportedly raised $23 million in a bridge round from a clutch of foreign institutional investors.

According to a report in The Economic Times, Japan-based Line Ventures Corporation, Korean search engine Naver, Korean lender Shinhan Bank, TS Investment and other investors participated in this latest round.

P2P Lending Vs Stock Markets: The ideal Investment for you (Money Control) Rated: AAA

Investment in Financial Assets has been increasing in India. High return assets such as stocks and Peer to Peer (P2P) lending are increasingly sought after by investors.

It depends on the knowledge and risk profile of the person. While P2P lending is simple, stocks are pretty complex and require a lot of knowledge. However, both have the potential to provide good returns.

Indian households tend to have the highest savings in the world – at about 30 percent of income. Surprisingly, this does not translate into investments in the same proportion. Only about 3.2 crore people invest in the country’s stock markets – that is less than 3 percent of the population.

Africa

Using Psychometry In Its Loan Disbursement Process, Nigeria’s P2P Lender KiaKia Is Bringing Down The Loan Default Rate (Wee Tracker) Rated: AAA

Although news reports from the Q4 2017 show that banks are increasingly becoming open to lending more money even as lenders are expected to loosen credit scoring criteria in Q1 2018, they recorded an 8 percent increase in bad loans recorded in 2017.

Indeed the market is vast for Kiakia and other competing online loan services. Statistics from Nigeria interbank settlement system shows that there are over 31 million verified bank accounts in Nigerian banks.

For Kiakia about 75% of this number has never accessed any form of consumer or business credit from any financial institutions.

Asia

Robo-advisors offer low-cost growth opportunities, says GlobalData (Fintech Finance) Rated: A

Nomura Asset Management, a wholly owned subsidiary of Japan-based Nomura Holdings, has recently agreed to buy majority stake in Tokyo-based robo-advisory services provider 8 Securities Inc and a minority stake in Hong Kong headquartered parent company 8 Limited for JPY2.7bn ($25m). Expect major international asset managers to build similar distribution channels via the purchase of other established robo-advice FinTechs, says leading data and analytics company GlobalData.

Compared to most robo-advisers, 8 Securities has been in the market for a while. Chloe, its robo-advice platform, was the first in Asia to be offered via a mobile app and it currently has a presence in Hong Kong and Japan.

Latin America

Brazil Fintech Nubank Launches Facial Biometrics “AccessoBio” (Crowdfund Insider) Rated: AAA

Brazilian fintech startup Nubank announced earlier this week the launch of its new facial biometrics feature, AccessoBio. According to various reports, the fintech firm will now use the AccessoBio tool to help prevent identity fraud in credit card transactions.

ZDNet noted that Nubank believes the introduction of biometrics to its technology is a positive for customers due to the fact it does improve the mobile-based experience around the credit card requests and reduces the possibility of false rejects while reducing identity fraud possibility.

Authors:

George Popescu
Allen Taylor

Thursday March 8 2018, Daily News Digest

Purchase APR

News Comments Today’s main news: CommonBond receives AAA securitization rating. Ranger Direct returns suffer. Victory Park Capital posts record returns from balance sheet investments. Today’s main analysis: LendingTree mortgage offers report for February 2018. Today’s thought-provoking articles: Can big tech stop the compensation bubble? What’s driving venture capitalist’s attention to B2B fintech? The evolution of modern fintech. United States […]

Purchase APR

News Comments

United States

United Kingdom

China

European Union

International

India

News Summary

United States

Online Lender CommonBond Receives First AAA Rated Securitization (Crowdfund Insider), Rated: AAA

CommonBond, an online lending platform servicing the student loan market, has received its first triple A rating for securitization. Moody’s has assigned provisional ratings of (P)Aaa (sf) to Class A-1 and A-2 notes to be issued by CommonBond Student Loan Trust 2018-A-GS (CBSLT 2018-A-GS). DBRS rated the loans AAA as well. The transaction was CommonBond’s sixth securitization at $233.75 million bringing the total to $1.22 billion.

LendingTree Mortgage Offers Report – February 2018 (LendingTree), Rated: AAA

  • February’s best offers for borrowers with the best profiles had an average APR of 4.22% for conforming 30-year fixed purchase loans, up from 3.93% in December. Refinance loan offers were up 38 bps to 4.13%.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 25 bps to 4.80%. The loan note rate hit the highest since March 2016 at 4.70% and was also up 25 bps from January. We prefer to emphasize the APR as lenders often make changes to other fees in response to changing interest rates.
  • Consumers with the highest credit scores (760+) saw offered APRs of 4.68% in February, vs 4.95% for consumers with scores of 680-719.
Source: LendingTree

The $ 5.7 trillion question: Can big tech stop the comp bubble? (INTL FCStone), Rated: AAA

INTL FCStone Global Macro Strategist Vincent Deluard:  “The $5.7 trillion question: Can big tech stop the comp bubble, resist higher yields, and deliver the growth?”  

  • Compensation, especially stock-based comp, is exploding at large tech companies
  • The tech rally rests on a foundation of low interest rates, rising stock prices, and quick revenue growth
  • Many big tech companies are becoming too big to grow
  • Rising interest rates and, God forbids, lower stock valuations could cause the entire edifice to crumble
Source: INTL FCStone

Millennials are seeking non-traditional banking (Digital Journal), Rated: A

A wake-up message for banks: if you want to remain competitive you need to embrace digital multi-channels and appeal to tech-savvy millennials.

A generational change is happening, and businesses have to accept that ‘millennials’ are expecting most products and services to be offered digitally. Financial products, including banking, are not immune from this trend. Two separate reports highlight this tendency.

review by Intelligent Finance has found that the biggest factor that attracts millennials to select one bank over another is an easy-to-use smartphone app, with most wishing to use online banking via a smartphone. In contrast, Baby Boomers stated that face-to-face customer service was the key determinant (with rude service being highlighted as the main reason why this generation might take their money to another bank). In contrast, millennials are most likely to exit from a bank if they did not like the smartphone app or if the bank suffered from a cyber breach.

19 of the top ex-bankers in fintech (efinancialcareers), Rated: A

It’s becoming more common for bankers to quit the traditional financial services in favor of financial technology, either co-founding a startup or landing at an established fintech firm. Some crash and burn and come crawling back to banking with their tail between their legs, but many have found great success in the fintech space.

The following are 19 of the top former bankers working in fintech today (in no particular order).

John Mack, a member of Lending Club’s board of directors

Mack stepped down as chairman/CEO of Morgan Stanley in 2011. Since then, he has invested in various fintech companies, including Lending Club (on whose board he sits), Orchard and Dataminr, which sends social media-based alerts to traders. He also participated in a $10m initial funding round for New England Funding Technologies (NEFT), which created the mPowerCredit credit-rating platform.

Dominic Gamble, founder of Findawealthmanager.com

After starting out as a sales-trader at Credit Agricole, Gamble worked at Credit Suisse for seven years before he moved to Deutsche Bank in 2010. However, a year later Gamble left to set up his website, Findawealthmanager.com, which helps high-net-worth investors to research and evaluate financial advisers.

Points awarded for new ISOs and more; Prizes include a Nintendo Switch (6th Avenue Capital), Rated: A

6th Avenue Capital, LLC (“6th Avenue Capital”), a leading provider of small business financing solutions, announced today the launch of its first “Merchant Madness” promotion. Throughout the month, and coinciding with the annual NCAA Men’s Basketball Tournament, 6th Avenue Capital will award points for all new ISOs, Merchant Cash Advance (MCA) submissions, approvals and funded deals.

  • The breakdown of points* awarded per category is as follows:
  • New ISOs/ISOs submitting first MCA application – 1 point
  • New MCA submissions – 1 point
  • Approved submissions – 2 points
  • Funded deals – 3 points
  • *California submissions excluded.

Points will be awarded from March 1, 2018 to March 30, 2018 and tallied at the end of the month. Prizes will be awarded to the top nine finishers as follows:

  • 5th through 8th place – Amazon Echo Dots (4)
  • 1st through 4th place – Parrot Mambo Drones (4)
  • 1st place – Nintendo Switc and Parrot Mambo Drone

Kabbage CEO Rob Frohwein On Their #FinTechForChange Call Against Assault-Style Rifles (Hypepotamus), Rated: A

How did you decide as a company to take a public stand on this issue?

As a technology leader and financial services company, we believe we have a unique responsibility and opportunity to help prevent future tragedies from occurring. Doing nothing is still a choice. We choose to do something to drive positive change and be an example to others.

How data analytics drives better real estate investing (Housing Wire) Rated: A

For Auction.com, the largest real estate marketplace, innovative technology enables us to provide a superior level of functionality and data analytics on a host of different types of real estate in the 3,000+ counties we serve — helping build stronger relationships with our buyers and sellers, and making us a trusted partner throughout the auction process.

Buyers and sellers demand greater data capabilities

In a world increasingly driven by big data, the real estate professionals who effectively utilize robust data analytics to make more informed decisions typically realize greater levels of success. Just as stock market investors conduct due diligence and use varied data sources prior to purchasing a company’s stock, real estate investors should do the same when buying property. Likewise, sellers come to the marketplace with one goal in mind – selling a property at market-price in the least amount of time. Data analytics serves as a catalyst to ensure that both of these needs are met.

World Economic Forum leads creation of fintech cyber security consortium (The Star), Rated: A

The World Economic Forum has led the creation of an industry consortium focused on improving the cybersecurity of financial technology companies, as collaboration between fintechs and financial institutions grows.

The consortium’s founding members include Citigroup Inc, online lender Kabbage, the Depository Trust & Clearing Corporation, Zurich Insurance Group and Hewlett Packard Enterprise, the companies said on Tuesday.

The mortgage market risk no one’s talking about (BROOKINGS), Rated: A

After the crisis, Congress and financial regulators increased regulation of the credit risk associated with mortgage lending, including the enforcement of stronger underwriting standards. But according to new research published in the Spring 2018 edition of the Brookings Papers on Economic Activity, a boom in nonbank mortgage lending means the mortgage market is still exposed to liquidity risk that very few people are talking about.

What is Blockchain Technology? A Beginner’s Guide (Invest in Blockchain)

The very primitive form of the blockchain was the hash tree, also known as a Merkle tree. This data structure was patented by Ralph Merkle in 1979, and functioned by verifying and handling data between computer systems. In a peer-to-peer network of computers, validating data was important to make sure nothing was altered or changed during transfer. It also helped to ensure that false data was not sent. In essence, it is used to maintain and prove the integrity of data being shared.

Source: Invest in Blockchain

Women in NYC Tech: Angela Galardi Ceresnie of Climb Credit (Alley Watch), Rated: A

Today we speak with Angela Galardi Ceresnie, COO of Climb Credit, the smart student-lending platform. After undergrad and roles at Citi and American Express, Angela took her financial acumen to the startup world in 2013 to cofound Orchard Platform, an investment platform for the peer-to-peer and online direct lender, with Matt Burton, Jonathan Kelfer and David Snitkof. During Angela’s time at Orchard, the company had raised over $40M in funding, backed by some notable investors including John Mack, Thrive Capital, and Spark Capital. In 2016, Angela transitioned to Climb Credit to work alongside the founding team to help it scale. Angela is an active member of the NYC tech ecosystem and continues to give back to the community through her involvement.

 

What are the advantages of being a woman in tech?

We have a unique perspective that we can bring to the table, what has historically been, a primarily male-dominated field, and that allows us to make useful observations and a significant impact as long as we stand behind our ideas. There is also no shortage of support from other women in the industry.

iintoo Returns Net 15.95 Percent on Exited Deals (PR Newswire), Rated: A

Real estate investment management company iintoo investments Ltd. (“iintoo”) announced a 15.95 percent average annual return on investment, net fees, and $3 million in regular distributions to investors since its founding in 2015. The returns are based on iintoo’s six exited investments to date, with a total asset value of $50 million, all of which exited ahead of schedule. With assets totaling $560 million and a global community of 32,000 members, New York-based iintoo opens up access to real estate investments that were once exclusive to professional funders and high net worth individuals.

Unlike a crowdfunding platform, iintoo works directly with project developers to vet and create business plans to maximize the chances for success.

RealtyShares Survey Shows Many Americans Believe Commercial Real Estate is Critical to Improving Local Communities (Business Wire), Rated: A

RealtyShares, a leading online marketplace for real estate investing, today announced the results from its Commercial Real Estate Investing Survey.

The survey found that a quarter of U.S. adults (25%) felt commercial real estate investment has the biggest impact on enhancing the reputation of a community. Roughly 1 in 5 of those who have or are currently investing in commercial real estate have done so for reasons that may support their community, like helping a friend or family member with capital for a commercial real estate investment (20%) or needing a facility for their own business (17%).

While some are already involved, the survey revealed fifty-three percent of Americans would invest in commercial real estate within their communities if given a chance. For those who have never invested in commercial real estate, affordability and access were the major roadblocks. Sixty-one percent believe they lack the necessary funds, while 19 percent don’t know how to invest. This may be creating an investing gap, as nearly 9 out of 10 Americans (89%) have never invested in commercial real estate, according to the report.

A Guide to Commercial Real Estate Crowdfunding (Commercial Property Executive), Rated A

Charles Clinton, co-founder & CEO of investing platform EQUITYMULTIPLE, delves into the mechanism behind commercial real estate crowdfunding and underlines the most important factors an investor must consider for long-term success.

What opportunities does real estate crowdfunding offer investors?

Clinton: By moving real estate syndication online, real estate crowdfunding has begun to change that old paradigm. Individual investors can now invest in private market real estate transactions at low minimums (our investment minimum at is typically $10,000 per offering) and start allocating a portion of their portfolio into real estate without taking on the burdens of direct ownership.

Investors have full transparency into what properties they’re investing in and the low minimums help facilitate diversification. The best platforms also pre-screen the real estate companies and investments that they present, easing the selection burden on investors.

What are the benefits of crowdfunding investment compared to traditional instruments?

Clinton: Strong yield—after years of near-zero interest rates, investors have been forced to look for yield in new places. Less volatility—these investments are illiquid and non-traded, as opposed to public stocks, traded REITs or cryptocurrencies (a topic on everyone’s mind). While illiquidity has its drawback, it also reduces market correlation, making direct real estate investing less subject to market swings and, in aggregate, exhibit less volatility.

Potential for outsized returns—because private real estate markets are inefficient, there is potential for market-beating returns by investing in markets and submarkets that are underserved by traditional sources of capital, and in properties with untapped potential. Downside protection is also an advantage. Real estate—as an irreplaceable resource with tangible value—is also less vulnerable to recessions. The economy will expand and contract cyclically, but a growing number of humans will always need places to live and work.

Then we have tax advantages. Real estate investing platforms allow individual investors to share in the same unique tax advantages as institutional real estate investors—namely write-offs for depreciation, and a new 20 percent deduction for investments made through an LLC, courtesy of the recently-signed tax bill.

QuantumReverse Expands Its Team (PR Newswire), Rated: B

QuantumReverse, the technology company that is building an advanced reverse mortgage LOS, announced the addition of four industry veterans to its team. QuantumReverse’s team now boasts over 50 years of combined experiences in the reverse mortgage technology space.

Triad ranks among the best places for new small businesses (Tiad Business Journal), Rated: B

The Triad area ranks among the 50 best places for new small businesses, according to a new study by online loan marketplace LendingTree.

Interview with Yann Murciano, CEO of Blend Network (P2P-Banking), Rated: A

Blend Network has already lend £1.5 million GBP to 6 project across Northern Ireland, Scotland and Norfolk with an average fixed return of 12.2% p.a.

What are the three main advantages for investors?

  1. Access to niche markets
  2. High returns
  3. Strong due diligence and credit risk assessment

What are the three main advantages for borrowers?

  1. Access to finance
  2. We bring knowledge and understanding of developers’ true requirements
  3. No exit fee for early repayments
United Kingdom

Ranger Direct’s returns still suffering from Princeton proceedings (Peer2Peer Finance News), Rated: AAA

RANGER Direct Lending’s (RDL) ongoing legal dispute with its Princeton holding pushed its net asset value (NAV) return down to 0.43 per cent in January, the investment trust has revealed.

RDL has been locked in arbitration proceedings with Princeton since last year over its exposure to bankrupt lender Argon Credit, and without these costs it said its returns would have been 0.68 per cent.

The update shows its NAV is down from 0.48 per cent in December.

VPC posts record returns from balance sheet investments (Peer2Peer Finance News), Rated: AAA

VICTORY Park Capital (VPC) Specialty Lending Investments has reported that gross revenue return from its balance sheet investments hit an all-time high in January.

Its balance sheet loans produced returns of 1.08 per cent in January, compared to its marketplace loans which produced 0.04 per cent.

80 per cent of its portfolio was in balance sheet loans as of 31 January, the company said.

Fintech lender iwoca pledges £100m for Northern SMEs by 2020 (AltFi), Rated: A

European small business lender iwoca has announced today its intention to pledge £100m in lending to micro and small businesses in the UK’s Northern regions by 2020, as it fights to counteract the withdrawal of credit by UK banks.

The UK neobank market has reached a critical juncture (Business Insider), Rated: A

Starling Bank and Monzo became the top two banks in terms of customer satisfaction, according to consumer finance site Smart Money People, knocking incumbent first direct out of the number one spot for the first time. Additionally, the percentage of UK consumers willing to use a digital-only startup bank fell during 2017, from 78% in the first half of the year to 54% by the end of the year, according to a survey by RFi Group.

Do SMEs favour equity and alternative finance over debt? (Specialist Banking), Rated: A

At the beginning of 2017, SMEs in the UK accounted for 99.3% of all private sector businesses and 60% of all private sector employment in the UK.

Last year saw a substantial increase in the value and number of SME equity deals (up 79% and 12% respectively) in the UK, as well as continued growth in the value of SME asset finance deals (up 12%) and P2P lending (up 51%).

This was at the same time that traditional bank net lending declined to £700m – down from £3bn the year before.

Forget the Lifetime ISA, we need an ‘Everything ISA’ (City Wire),  Rated: A

A report by the Association of Taxation Technicians (AAT) has criticised the number of ISAs available that brings ‘unnecessary complexity, bureaucracy, and confusion’, said chief executive Mark Farrer.

‘Some ISAs have age limits, some do not, some have a maximum savings limit of £20,000 per annum, one has a £4,128 limit, another £4,000, and the Help to Buy ISA offers a £50 bonus for every £200 saved, up to a maximum of £3,000,’ he said.

Farrar also pointed out the ‘mind-boggling interaction’ between different types of ISAs that means the total saved into a Lifetime ISA (Lisa) – a maximum of £4,000 a year – has to be deducted from the total (currently £20,000) that can be saved into a cash or stocks and shares ISA.

Checkout.com Secures a Place on Tech City’s Future Fifty, (PRNEWSWIRE), Rated: B

Checkout.com, a leading international online payment solutions provider, has been included in Tech City’s renowned Future Fifty programme for 2018.

China

Property Tax In China By 2019? (supchina), Rated: A

Meanwhile, there is no tax on real estate. If you buy an apartment — even if it sits empty — it does not cost anything. Although there has been talk of a property tax for many years, there has been little action aside from a few experiments in local markets. That might be about to change, judging by this Sohu report (in Chinese):

  • At this morning’s press conference at the annual political gathering known as the Two Sessions, Vice Finance Minister Shi Yaobin 史耀斌 told reporters that his ministry and other government departments were “drafting and improving the real estate tax law,” while former Finance Minister Lou Jiwei 楼继伟 said that a draft bill may be reviewed by the legislature this year.
  • One important detail that has not yet been worked out: How will the value of property be assessed — based on appraisal, market value, or some other indicator?
  • Local governments will collect and have the benefit of property taxes.
  • The Party’s biggest worry is, I believe, that a property tax will be an excessive new burden on ordinary households whose only major investments are in real estate.
  • A possible solution mentioned in the Sohu article is leaving the first 160 square meters of a person’s property tax-free, but placing a levy on floor space in excess of that and on additional real estate owned by the same person.
  • “A property tax is a potential game-changer for a real estate industry sometimes called too big to fail for the Chinese and world economies,” says Bloomberg.
European Union

EU proposes crowdfunding ‘passports’ in boost for fintech (Reuters), Rated: AAA

The European Commission has proposed crowdfunding “passports” for the European Union in a draft law that forms part of efforts to boost growth in the financial technology sector.

“An EU crowdfunding license would help crowdfunding platforms scale up in Europe,” the EU’s financial services commissioner Valdis Dombrovskis said in a statement.

International

What’s Driving VCs’ Attention To B2B FinTech (PYMNTS), Rated: AAA

According to the analysis, which was released last week, an 18 percent increase in FinTech funding in 2017 led the industry to see $27.4 billion worth of investments. FinTech funding spiked 31 percent to $11.3 billion in the U.S. alone, and the U.K. market’s funding deals nearly quadrupled in value to $3.4 billion.

The volume of deals increased, too, with nearly 2,700 investment rounds closing last year.

B2B FinTechs are playing an especially prominent role in this trend, analysts noted. Anecdotally, these firms have been talking for years about the industry’s potential to make significant disruptions in areas like corporate finance, small and medium-sized business (SMB) lending and more.

The alternative finance market saw a sudden boom, and a similarly sudden period of volatility as big industry names like Lending ClubOnDeck and Kabbage struggled to continue growth momentum. Kabbage was hit with a lawsuit last year initiated by an SMB borrower, and Lending Club’s CEO resigned in 2016 following an investigation into improper loan sale practices.

Fintech – The Evolution Of Modern Financial Technology In The 21st Century (Valuewalk), Rated: AAA

Financial procedures have evolved 

India

Nirav Modi fallout: As banks tighten purse strings, fintech can fill the void (India Times) Rated: AAA

As banks scramble to tighten their credit disbursal process, the ones most affected would surely be the small businesses. The now oft quoted figure from the Economic Survey this year has revealed that the amount of credit or loans disbursed by banks amounted to Rs 26,041 billion as on November 2017, but 82.6% of this was cornered by large enterprises. There is, however, now a robust alternate source of finance for small businesses to tap into.

“Non-Bank Finance Companies (NBFCs) stepped up financing of MSMEs after demonetization. NBFCs can be a very powerful vehicle for delivering loans under MUDRA. Refinancing policy and eligibility criteria set by MUDRA will be reviewed for better refinancing of NBFCs,” said Finance Minister Arun Jaitley while presenting the Union Budget for 2018-19.

Digital lenders call for easing of regulations (The Times of India), Rated: A

The Digital Lenders’ Association of India (DLAI) has presented a set of policy recommendations to the finance ministry, including easing of funding sources for digital lenders, expanding access to the micro and small enterprises (MSMEs), easing paperless transactions, and opening up lending data.

DLAI, formed in late 2016, comprises of 42 alternative lending startups including CapitalFloat, Lendingkart, Indifi, and KredX. It was formed to develop and promote the needs of these players.

Authors:

George Popescu
Allen Taylor

Wednesday February 7 2018, Daily News Digest

MONEY-LAUNDERING-BY-ACTIVITY

News Comments Today’s main news: SoFi named official sponsor of Big Ten. Equifax supports SME lending with new data sharing solution. UK fintech venture investment rises 150%. Klarna partners with London College of Fashion. Revolut ditches Wirecard, takes card issuances in-house. Today’s main analysis: The most wanted for anti-money laundering cases in Asia. Today’s thought-provoking articles: Banks close 1,700 […]

MONEY-LAUNDERING-BY-ACTIVITY

News Comments

United States

United Kingdom

China

European Union

International

Australia

MENA

News Summary

United States

SoFi Named Official Presenting Sponsor of the Big Ten Men’s Basketball Tournament (BigTen.org), Rated: AAA

The Big Ten Conference and Big Ten Network announced a multi-year agreement naming SoFi as the presenting sponsor of the Big Ten Men’s Basketball Tournament. SoFi, a modern finance company taking an unprecedented approach to lending and wealth management, will not only be the on-site tournament sponsor, but also present the on-air coverage of all 10 tournament games televised on BTN.

Equifax launches data sharing solution to support SME lending (AltFi), Rated: AAA

Information solutions company Equifax has launched a new solution that provides back up for the government’s Commercial Credit Data Sharing (CCDS) initiative, which is seeking to boost the economy by encouraging new entrants into the SME lending sector.

According to the platform, the new solution “gives lenders a comprehensive picture of a business’ financial health to facilitate faster and more informed lending decisions”.

Equifax was designated as a credit reference agency under the CCDS initiative, giving it access to new data sets from leading business banks, including cash flow activity and debit and credit turnover. The data will be provided to lenders through Equifax Business Insights.

Banks Shutter 1,700 Branches in Fastest Decline on Record (WSJ), Rated: AAA

The number of branches in the U.S. shrank by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record, according to a Wall Street Journal analysis of federal data.

Source: The Wall Street Journal

Branch numbers fell again in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression.

Many of the closings were in big cities and surrounding suburbs, where branches were consolidated largely because of falling foot traffic. Others were in rural areas, where some large regional lenders are leaving town altogether.

From mid-2012 to mid-2017, Capital One Financial Corp. cut 32% of its branches, SunTrust Banks Inc. 22% and Regions Financial Corp. 12%.

Source: The Wall Street Journal

What a scrappy Oklahoma bank can teach the industry about branch strategy (Tearsheet), Rated: A

Citizens Bank of Edmond is trying to get closer to small business customers by providing space, guidance and almost anything else they might need — besides, of course, a loan.

The one-branch community bank in Edmond, Oklahoma once had another branch, 12,000 square feet located one block away from the main space, with a drive-thru window and some executive offices. But recently the bank decided to consolidate it into a single location and has now turned it into a “business social” co-working environment, called Vault 405, for its small business customers that includes wireless charging stations, conference rooms and a podcast studio.

Ideally, by creating an environment that would bring customer and community relationship returns, as well as grow deposits and loan volume. Citizens currently charges monthly rates between $400 and $1,000 for offices and $175 to $275 for desks and shared spaces. It also offers day passes.

Citizens is also addressing cash pickups for small business customers, one of the most compelling cases for banks thinking of repurposing their branches, using as much readily available technology as possible.

Why Digit is over chatbots (American Banker), Rated: A

Now, Ethan Bloch, founder and CEO of the San Francisco startup, believes his company has been offering the wrong primary user interface. “We think [chatbots] haven’t lived up to their promise,” he said. “So we are done believing they will.”

While the premise of Digit is still the same — use the service to automatically transfer funds from checking to savings every few days in amounts its algorithms believe a person can afford — Bloch believed the chatbot model is terribly flawed in its inefficiency to find out information.

Lendio Franchise Announced in Seacoast Region (Lendio Email), Rated: B

6th Avenue Capital adds trio to executive ranks (Bankless Times), Rated: B

6th Avenue Capital, a provider of small business financing solutions, announced the appointment of three senior members to their business development team. Mitchell (Mitch) Levy, Marc Seidel and Gary Lockwood were named to lead the sales teams. The new hires follow last year’s appointments of Christine Chang as CEO and Darren Schulman as COO and a $60 million commitment in capital from a large institutional investor.

US states team up to streamline fintech licensing (Finextra), Rated: A

Currently, firms offering services such as money transfers and cryptocurrency trading have to apply individually to operate in each of the 50 US states.

Under the new compact, if one of Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington reviews key elements of licensing – IT, cybersecurity, business plan, background check and Bank Secrecy Act compliance – the other six will accept the findings.

Wela Partners with In-Fi to Bring AI-Powered Bot to Insurance Agency Platform Website (GlobeNewswire), Rated: A

Wela, a fintech company that blends artificial intelligence (AI) with human advisors, today announces a partnership with In-Fi, an insurance agency management company specifically for financial institutions. Wela’s AI-powered chatbot, personified as Benjamin, is now fully integrated into In-Fi’s website, with the function of creating a more cohesive and engaging experience for their customers. Integration into In-Fi’s website is a pivotal step for Wela, which aims to place Benjamin at the center of financial decisions for families by integrating across a variety of financial service providers.

How the payday lending industry shapes academic research (American Banker), Rated: A

The hotly contested question of how to regulate payday lending is partly about ideology. How far should the government go to save repeat borrowers from their own worst habits? Your answer will depend on your political beliefs.

But this debate, like a lot of fights involving financial regulation, is also about facts. Do payday customers indeed suffer economic harm when they get into a cycle of repeat borrowing? That is an empirical question that unbiased researchers should be able to answer.

Inside Aspiration’s ‘values-based’ marketing strategy (Tearsheet), Rated: A

SoFi, whose earliest ads told people, “Don’t Bank. SoFi” has softened its marketing efforts, realizing the smart thing is for it to become a bank itself. Transferwise once ran provocative anti-bank ads but now advertises its own borderless account. But Aspiration isn’t shy about ruffling the feathers of the big banks. When Bank of America yanked its “free” checking accounts last month, moving them to its core checking account product that comes with a monthly $12 fee, Aspiration used it as a rallying point to get customers to bring their business to Aspiration, offering a $12 credit if they did. It claims its marketing has influenced “tens of thousands” of customers to leave B of A for Aspiration. Bank of America declined to comment for this story.

A fruitful journey from the attic to an angel investor (domain-b.com), Rated: A

Pear venture capital has helped some aspiring entrepreneurs build their foundations from scratch. How did the idea behind Pear fructify and what is the significance behind its name?
We actually started out as an angel investor. Around 2009-2010, I felt that there was no institution to help founders from ground zero. Given my background and network, I thought I could build an institution, which would help founders in their early stages to work on their ideas, which would stay in the business for generations.

Today Pear is an early stage seed fund and we invest in founders who are building category defined companies and that which focus on solving a big problem in the market.

As a venture capitalist, how do you identify potential entrepreneurs before signing them a cheque? What sectors and businesses do you look at? Considering the humongous number of aspirants, how do you identify a viable idea and that which is worth your support and funding?
If I look back at the last 18 years, there are some traits which are quite common among exceptional founders. We like those individuals who are looking to solve big problems in the market. They should either be close to the problem that they are trying to solve or they should have lived through their problem.

We also like those who have ability to track talents, are paranoid in a healthy way, have a vision and tend to question themselves every day. I also like CEOs who are captains of the ship,. the ones who usually stay till the end when the ship is sinking. Overall, we also look at size of the market. It’s fine if things don’t work out today as long as it’s going to be massive when it works. If you look at our portfolio companies, some of them have started in the unconventional space. As VCs, you live for those moments where you want to break the rule and partner with outliers.

LendingTree Releases Monthly Mortgage Offer Report for January (Guru Focus), Rated: A

LendingTree, the nation’s leading online loan marketplace, today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.

Purchase Mortgage Offers by Credit Score

Purchase

FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans

4.55%

$63,411

$238,518

82%

$199,109

760+

4.41%

$84,354

$262,661

79%

$191,975

720-759

4.45%

$59,193

$239,111

83%

$194,007

680-719

4.70%

$39,883

$217,590

86%

$206,818

640-679

5.04%

$63,301

$203,176

76%

$224,533

620-639

5.12%

$57,566

$191,642

76%

$228,749

*To enable comparison, lifetime interest is calculated for the average loan amount for all loans using the rates for each credit score bucket.

Refinance Mortgage Offers by Credit Score

Refinance

FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans

4.46%

$2,739

$244,540

62%

$199,427

760+

4.33%

$4,014

$250,651

59%

$192,669

720-759

4.38%

$3,073

$249,678

64%

$195,262

680-719

4.58%

$1,294

$238,579

64%

$205,712

640-679

4.79%

$907

$223,812

60%

$216,814

620-639

4.89%

$212,813

59%

$222,147

*To enable comparison, lifetime interest is calculated for the average loan amount for all loans using the rates for each credit score bucket.

The hottest cities where it’s good to be a home seller but not so much a buyer (The Washington Post), Rated: A

LendingTree, an online loan marketplace, recently analyzed 1.5 million purchase mortgage loan requests that came in through its system from the 100 largest cities in 2017. The study identifies the locations where buyer competition is the toughest based on three criteria:

The top 10 cities with the most competitive buyers based on those criteria include:

  • San Francisco
  • San Jose
  • Denver
  • San Diego
  • Ventura, Calif.
  • Los Angeles
  • Seattle
  • Honolulu
  • Portland, Oregon
  • Sacramento

The three cities on the bottom of the list, where homes are more accessible to buyers and competition is less aggressive, are Youngstown, Ohio; McAllen, Tex.; and Scranton, Pa.

For the full report, click here.

CBC National Bank Among LendingTree’s Top 10 Highest Customer-Rated Mortgage Lenders in Fourth Quarter (PR Newswire), Rated: B

CBC National Bank, headquartered in Fernandina Beach and with branches in Fernandina BeachOcala and The Villages, Fla., and Beaufort and Port Royal, S.C., today announced that it has been named by LendingTree as among the Top 10 highest customer-rated mortgage lenders in the fourth quarter of 2017. It also achieved this prestigious designation in the first quarter of 2017.

rateGenius Awarded Top 3 in Auto Customer Satisfaction by LendingTree for 7th Consecutive Quarter (PR Newswire), Rated: B

rateGenius is pleased to announce that it has once again been named Top 3 in Auto Customer Satisfaction by LendingTree.

M Financial Group Partners with Plug and Play Insurtech to Enhance Client Experience in Life Insurance Space (PR Newswire), Rated: B

Plug and Play Insurtech welcomes M Financial as its 55th partner. Headquartered in Portland, Oregon and comprised of 155 Member Firms across the U.S., as well as the U.K. and U.A.E., M Financial is searching for startups to transform the life insurance industry for the clients they serve. Startups accepted into Plug and Play’s platform will have the opportunity to pilot their technology with M Financial and the other partners in the program. M Financial is the first Plug and Play partner that is both a distributor and reinsurer of life insurance products.

5 Passive Income Ideas That Still Work In 2018 (SavingAdvice), Rated: B

Peer to peer lending: The demand for credit is sure to continue for centuries to come. There is always someone in need of some quick business loan or a personal loan and this gives a quick opportunity if there is another person with the capital and risk appetite to back it up. With the current boom in crypto currency usage, you can take advantage and set up a peer-to-peer lending service. Alternative funding can very well give traditional banking a run for the money because some people need quick loans but cannot have the convenience of applying through the mainstream banking system. Peer-to-peer lending offers the keys to unlock instant liquidity to a wide online community and offers attractive rewards to those who supply the capital.

A great advantage to the lender is that once a peer to peer lending platform has been selected, the popularity of the wallet will ensure that there is exposure to a wider target of borrowers. Most banks often get restricted to lending to people within a certain country or state. Since peer-to-peer lending is blockchain-backed, anyone around the globe with access to the platform can lend money to another peer and start earning money over the duration of the loan contract.

United Kingdom

LendInvest completes £16m development deal in three weeks (Mortgage Introducer), Rated: AAA

Property finance lender LendInvest has completed a £16m financing deal with established development finance borrower, Yogo Group, in just three weeks.

Taking a Deeper Look into the Moving Average For Funding Circle Sme Income Fund Limited (Stock Press Daily), Rated: AAA

Funding Circle Sme Income Fund Limited (FCIF.L) are in focus today as the charts are revealing that the Mesa Adaptive Moving Average (MAMA) is holding steady above the FAMA, or Fractional Moving Average.  This environment typically indicates that there might be a buying opportunity aligning in technicals.  When there are crossovers between the FAMA and MAMA, the shares are often widely traded.  When the MAMA crosses above the FAMA, it means that the shares are likely to move higher.  Conversely the opposite occurs when the MAMA crosses below the FAMA.  The Mesa Moving Average was first mentioned by John Ehlers in a paper published in a 2001 edition of Technical Analysis of Stocks and Commodities Magazine.

Venture investment in UK fintech more than doubles (Financial Times), Rated: AAA

Fintech companies, such as TransferWise and OakNorth, raised $1.8bn of venture capital investment last year, up more than 150 per cent from $704m in 2016, the year of the UK’s vote to leave the EU, the data show.

The surge in UK funding contrasted with an 18 per cent drop in global fintech investments to $14.4bn, according to the report by Innovate Finance, the British fintech trade body.

The UK industry was boosted by handful of large fundraisings of more than $90m. The biggest was by TransferWise, a cross-border payments provider, which raised $280m. OakNorth, a digital lender to small businesses, raised $203m.

Banks divided on cryptocurrencies card purchases (Financial Times), Rated: AAA

British banks are debating whether to ban their customers from buying cryptocurrencies using their credit cards after Lloyds Banking Group and Virgin Money said they had imposed such a ban.

Barclays, the UK’s leading credit card issuer through its Barclaycard business, said it was “keeping this matter under close review” after holding a meeting to discuss whether to follow the lead of Lloyds on Monday.

Last week MasterCard said that cross-border volumes on its network were up 22 per cent, driven in part by customers using their credit cards to buy cryptocurrencies.

British banks are also shunning companies that handle cryptocurrencies by refusing to let them open bank accounts or closing their accounts, which has forced many of them to open accounts in Gibraltar, Poland and Bulgaria.

Lloyds Bank cutting 930 jobs (Fintech Futures), Rated: B

Lloyds is axing 930 jobs within its commercial banking, chief information office, community banking, insurance, and wealth and risk management.

Looking beyond traditional banks (Specialist Banking), Rated: A

I recently came across an article headlined: “8 in 10 SMEs still prefer traditional bank loans over alternative finance.”

It noted that 83% of financial directors preferred to go to their bank as their first port of call when seeking a loan, rather than finding an alternative, such as P2P lending or equity crowdfunding.

It claimed that a lack of understanding could be the reason for this, but pointed out that almost three-quarters of finance directors (74%) believed their knowledge of alternative finance was either “average or above average”.

Challenger Bank Tandem Partners with Cognitive Banking Company Personetics (Crowdfund Insider), Rated: A

UK Challenger bank Tandem has announced a partnership with cognitive banking company Personetics to provide users personalised insights on their spending across all of their bank accounts in one place, as well as warning people about unexpected fees and unusual activity on their accounts.

Are you holding too much cash in your ISA? (WhatInvestmen), Rated: A

In a survey of financial advisers by Octopus Investments, three-quarters of respondents said they believe their clients hold too much in their cash ISA relative to the rest of their portfolio.

The majority (83 per cent) feel their clients are put off investing in stock and shares due to the risk of losing money, followed by concerns of an overstretched (49 per cent) and volatile (46 per cent) market.

The Differences Between Short Term Loans and Payday Loans (SWNS.com), Rated: A

If you need to borrow money, a variety of options are available. Two of the most common short term borrowing options are payday loans and short-term personal loans, both of which provide immediate access to cash to help you pay bills, purchase items and run your financial life.

One of these borrowing options — payday lending — has been in the news a lot over the last few years, as new regulations make the industry more borrower friendly.

Short-Term Personal Loans

Most people use short-term loans for purchasing certain items or covering other major expenses.

From a borrower’s perspective, the advantages of short-term loans include lower overall costs than payday loans. However, the credit check process and approval period mean that loans of this type often aren’t instant enough to help borrowers deal with urgent financial needs.

Payday Loans

Most payday loans are for relatively small amounts of money, such as £200 to £500, and are aimed at providing cash until you get paid again.

Payday loans form a major part of the UK lending industry, with an estimated market value of approximately £2 billion.

Folk2Folk appoints chapter development manager (Bridging&Commercial), Rated: B

P2P lending platform Folk2Folk has appointed Claire Thayers as its chapter development manager.

In the newly created role, Claire will be responsible for raising Folk2Folk’s profile across the South West and Three Counties regions and improving awareness of its products to both borrowers and brokers.

China

The key to surviving in China’s P2P marketplace? Understanding regulations (Nikkei Asian Review), Rated: AAA

China’s increasingly competitive peer-to-peer marketplace requires players to understand government regulations and align their strategies accordingly, said Kevin Guo, co-founder and co-chairman of Dianrong, which specializes in making small loans over the internet.

European Union

Klarna partners with London College of Fashion (LeapRate), Rated: AAA

European payments provider, Klarna, has announced a UK partnership with London College of Fashion, UAL, in an exciting initiative to support the next generation of talent at the intersection of fashion and technology.

Fashion is now the UK’s largest online retail market segment, worth around £10.1bn, and this growth is only set to continue. By 2020, fashion will represent 28.8% of UK online spend.

With Klarna research showing 94% of retailers are investing in new technology to meet the needs of younger customers, opportunity for innovation in the sector has never been greater.

German digital business bank Penta raises €2.2m in seed funding (AltFi), Rated: A

Penta, a German digital bank for start-ups and small businesses, has secured €2.2m in seed funding, led by the UK-based and fintech-focused Inception Venture Capital .

Founded in May last year, Penta moved out of its private beta in December to a waitlist of over 3,000 local businesses. The platform has now opened its waitlist up to new users, and hopes to reach 10,000 businesses by the end of 2018.

P2P investors risk losses by lending to just one borrower (P2P Finance News), Rated: A

PEER-TO-PEER analysis firm 4th Way is urging investors to diversify after stress testing revealed the odds of losing money in a severe recession can be 10 times higher in some cases when lending to just one borrower on a P2P platform.

The research, released on Tuesday, applied international banking stress tests to P2P platforms it assesses such as Zopa, Funding Circle and RateSetter, and found when lending to 100 borrowers, investors have just a 0.1 per cent chance of losing 20 per cent or more of their original money.

Acquisition of 85% of Telenor Banka fails to win Serbia’s c-bank approval (SeeNews), Rated: A

Serbian online lender Telenor Banka said on Tuesday that Bulgaria-based investment fund River Styxx Capital has not received the consent of Serbia’s central bank for the acquisition of 85% of its share capital from Norwegian telecommunications group Telenor.

Telenor will support any further step that will contribute to the positive closure of the transaction, Ingeborg Ofsthus, CEO of Telenor Serbia and chair of the Telenor Banka board of directors said in a statement issued by Telenor Banka.

International

Revolut ditches Wirecard for in-house card issuing (Fintech Futures), Rated: AAA

Revolut will no longer be relying on Wirecard for card issuing as it has now brought this function in-house.

Asia Most Wanted Top Ten AML Cases (Fintech News), Rated: AAA

Over the last decade, the quantity of money laundered has been steadily increasing. According to The United Nations Office on Drugs and Crime, it is estimated that approximately USD $1.6 trillion or 2.7 percent of global GDP was laundered in 2009.

Even worse, less than 1 percent of this global illicit financial flow is ever seized and frozen, meaning that the criminals are winning.

Effective anti-money laundering (AML) regulations and processes are essential to countering such criminal activity. Yet due to tighter anti-money laundering regulations in the US and Europe, money laundering activity is moving into the Asia Pacific as a way to avoid detection.

Source: Fintech News

In December 2012, Standard Chartered was ordered to pay USD $330m to settle claims by United States government agencies that it had moved hundreds of billions of dollars on behalf of Iran. It was suggested that this practice exposed the international financial system to exploitation by to “terrorists” and “drug kingpins”.

Open banking role models: Fidor, Rabobank and BBVA (American Banker), Rated: A


Google accelerator focuses on emerging markets (IT Web), Rated: A

In its fifth year, Google Launchpad Accelerator is taking place in San Francisco this week. It focuses on start-ups that already have a product, with a good market fit, and are ready to scale.

OneFi has created Paylater, an online provider of digital financial services for the underbanked in West Africa.

Nubank is a financial technology company offering a fully digital and branchless experience, and Viva Real is an online real estate marketplace that connects buyers, sellers and renters with properties in Brazil. There is one other Brazilian start-up, Loggi, which creates new-wave logistics.

Kubo.financiero, a P2P lending platform, from Mexico.

Ayannah from the Philippines enables affordable and accessible digital financial services to be delivered to the world’s emerging middle-class.

Australia

Banks are exploiting loyal customers, warns Productivity Commission (The Guardian), Rated: AAA

The Australian financial system is uncompetitive, allowing banks and insurers to boost profits by exploiting loyal customers and adding up to $87 a month to the average mortgage repayment.

That is the conclusion of the Productivity Commission’s highly critical draft report into the sector, which finds it is “unquestionably strong” but calls for greater transparency to compare financial products and for regulators to gain powers to promote competition.

Australia gives regulator sweeping powers over bank bosses’ pay (Reuters), Rated: A

Australia has given its financial regulator sweeping powers to cap bank bosses’ pays, delay their bonuses and even ban them from the industry if found guilty of non-compliance, as it scrambles to restore trust in the scandal-hit sector.

MENA

ADGM is region’s 1st Fintech regulator, says Al Sayegh (WAM.ae), Rated: AAA

In the future, Fintech will be the most important aspect of financial services in the world, according to Ahmed Ali Al Sayegh, the Chairman of Abu Dhabi Global Market, ADGM.

Authors:

George Popescu
Allen Taylor

Friday November 3 2017, Daily News Digest

p2p lending volumes

News Comments Today’s main news: Kabbage sued over true lender doctrine. Orchard to launch online lending industry page on Bloomberg terminal. KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-6. DBRS assigns provisional ratings to SoFi Consumer Loan Program 2017-6. RateSetter changes approach to property loan defaults. Lendy breaks another record. MarketInvoice enters business loan market. Today’s main analysis: FT Partners’ […]

p2p lending volumes

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

News Summary

United States

Small Business Borrower Sues Kabbage (PYMNTS), Rated: AAA

A small business (SMB) in Massachusetts borrowing funds via marketplace lender Kabbage has sued the platform, igniting new debate in the conversation over the definition of a “true lender,” according to reports in the National Law Review on Tuesday (Oct. 31).

The small business that sued the parties is reportedly arguing that Celtic let Kabbage “rent” that bank charter to originate loans with excessive interest rates, despite Kabbage being the “true lender,” because Kabbage, not Celtic, bears the risk of loss. The plaintiffs are using state usury and consumer protection statutes, the publication said, as well as the federal RICO statute and Lanham Act.

Orchard to Launch Online Lending Industry Page on the Bloomberg Terminal (PR Newswire), Rated: AAA

Orchard Platform’s online lending industry data and insights will be made available to Bloomberg terminal subscribers, providing a wealth of information on an asset class that offers a number of potential investment opportunities.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-6 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”). This is a $591 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-6

Class Preliminary Rating Initial Class Principal
A-1 AA+ (sf) $315,000,000
A-2 AA+ (sf) $175,000,000
B A (sf) $75,000,000
C BBB (sf) $26,000,000

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-6 LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-6 LLC (SCLP 2017-6):

— $315,000,000 Class A-1 Notes at AA (sf)
— $175,000,000 Class A-2 Notes at AA (sf)
— $75,000,000 Class B Notes at A (sf)
— $26,000,000 Class C Notes at BBB (sf)

FinTechs Taking Larger Share of Personal Loan Market While Increasing Portfolio Risk-Return Performance (Globe Newswire), Rated: AAA

FinTech lenders continue to gain market share in the personal loan space while maintaining their portfolio risk-return performance. Results from TransUnion’s “Fact versus Fiction: FinTech Lenders” study were released today during the Digital Lending + Investing Conference in New York.

To better understand the personal loan market, TransUnion studied unsecured personal loan originations over the past several years, as well as more detailed portfolio performance between 2014 and 2016. The analysis differentiated between those loans issued by banks, credit unions, FinTechs and traditional finance companies to compare performance across lender types. The study found that the balance share of these loans originated by FinTechs had dramatically risen in recent years. At the end of 2016, FinTechs represented 30% of all personal loan balances, up from about 4% in 2012 and less than 1% in 2010. This trend continued through the first six months of 2017, with FinTechs now representing 32% of personal loan balances.

Share of Originated Personal Loan Balances

Timeframe/Lender Banks Credit Unions FinTechs Traditional Finance
2017 (Through June) 29 % 24 % 32 % 15 %
Full year 2016 26 % 23 % 30 % 21 %
Full year 2015 27 % 22 % 28 % 23 %
Full year 2012 35 % 32 % 4 % 29 %

As part of this study, TransUnion developed a coarse risk-return metric*. While loans provided by FinTechs experienced higher delinquencies than competitors, specifically within the lower credit risk tiers, TransUnion’s study found that they generated effective portfolio risk-return ratios that exceeded those of banks and credit unions. As of Q2 2017, FinTechs averaged an 8.7% return compared to 6.7% for banks and 6.3% for credit unions. Traditional finance companies average the highest return at 11.5%.

The study demonstrated how FinTechs focus their originations in the near prime and prime risk tiers.  As of Q4 2016, 59% of FinTech balances originated were in those two risk tiers. This is slightly higher than the 57% rate in Q1 2014.

Personal Loans Continue to Grow

The study also observed general personal loan trends. Personal loan total balances and consumer participation have both grown considerably. As of Q2 2017, 16.1 million consumers possessed a personal loan, compared to 14.8 million in Q2 2016 and 13.1 million in Q2 2015. Just five years ago in Q2 2012, approximately 9.8 million consumers had a personal loan. Total outstanding balances have risen from about $45 billion in Q2 2012 to $106 billion in Q2 2017.

While conventional wisdom holds that personal loan borrowers fall in the subprime risk bucket, TransUnion data through Q2 2017 show that personal loan adoption is greatest in the near prime (26%) and prime and above (49%) risk levels. Subprime constituted only 25% of such loans.

The most recent TransUnion data show that the number of lenders issuing personal loans has decreased in recent years from 7,245 in 2012 to 6,896 in 2015 and 6,680 in 2016. However, the number of lenders issuing large volumes of personal loans (at least 10,000 annually) has nearly doubled in the last 5 years from 68 in 2012 to 128 in 2016.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

October was another very active month for the FT Partners team as we announced seven significant FinTech transactions. We are pleased to announce our role advising:

  • Source: FT Partners

    Download the full report here.

    6th Avenue Capital Secures $ 60 Million Commitment For Merchant Cash Advance Funding (AltFi), Rated: A

    6th Avenue Capital, LLC (“6th Avenue Capital”), a provider of small business financing solutions, announced today its securement of a $60 million commitment from a large institutional investor. The investor made their commitment based on 6th Avenue Capital’s industry-leading underwriting, compliance standards and processes. 6th Avenue Capital will draw from this commitment to offer merchant cash advances to small businesses through its nationwide network of Independent Sales Organizations (“ISOs”) and other strategic partnerships, such as banks and small business associations.

    Success of CFPB data-sharing guidance relies on how it is enforced (American Banker), Rated: A

    This month, the Consumer Financial Protection Bureau took an important step toward making that potential a reality with its release of consumer-authorized data-sharing and aggregation principles. In the principles, the bureau reiterated consumers’ right to share data, recognizing that connectivity is the underlying magic fueling the consumer fintech revolution. The guidelines will promote innovation, competition and consumer control.

    Data sharing often requires consumers to provide their bank account usernames and passwords to third parties. In the guidance, the CFPB clarified that granting consumers access to their data does not necessarily mean sharing login credentials. At the same time, the bureau made it equally clear that if banks and others want to prevent the sharing of credentials, they need to find another, more secure way to provide access. Both banks and data aggregators should have an incentive to eliminate the use of credentials.

    Third, banking regulators could update their third-party vendor risk management guidelines to clarify the kinds of due diligence banks are required to conduct on parties with whom they share data.

    Elevate Credit Third Quarter 2017 Earnings Release Available on Its Investor Relations Website (CNBC), Rated: A

    Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”), today announced financial results for the third quarter ended September 30, 2017. Elevate has posted its third quarter earnings release to its Investor Relations webpage at 

    Fintech Brokerage Robinhood Launches Spotify-Like Web Platform (Benzinga), Rated: A

    Robinhood, the fintech brokerage that offers commission-free trading through a mobile app, announced Wednesday it’s launching a web platform.

    Bhatt says the web trading platform is primarily geared towards informing people who are interested in investing about the stock market. However, the company faces an interesting product design challenge, in that about half of its users have invested previously on another platform.

    LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q3 2017 (Business Insider), Rated: A

    LendingTree®, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the third quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

    Mortgage Category

    #1 Winner:
    Busey Bank

    Personal Loans Category

    #1 Winner:
    Best Egg

    Auto Loans Category

    #1 Winner:
    RefiJet

    Online lenders shrug off scandals to increase US market share (Financial Times), Rated: A

    The online lenders set up to upend US retail banking in the wake of the financial crisis are still expanding in spite of scandals and setbacks at some of the biggest names in the business.

    Financial technology groups originated $15bn of personal loans in the first half of the year, according to figures published on Thursday by TransUnion, the credit bureau whose database covers the borrowing habits of 220m consumers.

    That was almost a third of the total US market for new personal loans — a bigger share than banks or credit unions or other traditional consumer finance companies — and compares with just 4 per cent in 2012 and 28 per cent in 2015.

    R3 to take on Ripple with cross-border payments blockchain (American Banker), Rated: A

    R3 is working with 22 of its member banks to build a real-time, cross-border payments solution on Corda, the consortium’s “blockchain inspired” distributed ledger.

    The banks include U.S. Bank, TD Bank, Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank and Woori Bank, R3 said Tuesday.

    What type of data is fair in credit models? (American Banker), Rated: A

    It’s long been a mantra in the fintech community: Traditional underwriting models that rely heavily on conventional credit scores leave out people who haven’t built up a credit history. A percentage of these people are creditworthy, but without a history to go on, the credit bureaus haven’t created profiles of them yet.

    To assess whether unscored people can repay loans, lenders are increasingly looking at “alternative data” — information that comes from someplace besides a traditional credit bureau that can help predict how a potential ….

    Foundation Capital Leads CoverWallet Series B Financing (Foundation Capital), Rated: A

    Which is why we’re excited to have led the Series B for CoverWallet, an online insurance broker for small businesses which is upending the industry.

    Small-to-medium business (SMB) insurance is a profitable, but highly fragmented $100 billion/year market. At the present, SMB insurance is sold through 40k+ brick-and-mortar insurance brokers, which employ 500k+ agents and move 99% of premiums. The typical SMB insurance application has 27 pages, and is completed while having “the talk” with the agent, which will include many upsell & cross-sell attempts. The typical SMB insurance quote takes 7-10 days. For SMB owners, this process is time consuming and painful.

    Affirm Now on Apple and Android (NewsCenter.io), Rated: A

    Affirm, a popular web service that allows users to buy online and pay off their purchases in fixed monthly payments, has launched their Android and iPhone app.

    Remitly Raises up to $ 115M in Series D Funding (FINSMES), Rated: A

    Remitly, a Seattle, WA-based independent digital remittance company, is to raise up to $115m in Series D funding.

    The financing – subject to applicable third party and regulatory approvals – will be led by Naspers’ fintech investment division PayU, a global online payment service provider, with participation from existing investors Stripes Group, DFJ, and DN Capital. In conjunction with the funding, Laurent le Moal, PayU CEO, will join Remitly’s board of directors.

    New, New Real Estate Crowdfunding Platform (Business Insider), Rated: A

    When you see prominent investors such as George SorosLarry Silverstein and Goldman Sachs participating in the real estate crowdfunding business – it means something. So, let’s follow the smart money. The real estate crowdfunder that everyone is talking about now is CityVest, which claims a top pedigree of founders and investors. And CityVest.com is living up to its mission – Smarter Real Estate Investing.

    CityVest provides wealthy individuals with online access to institutional real estate funds and the higher rates of return they generate.

    Which States Do Home Buyers Want to Move to—and From? (Realtor.com), Rated: A

    Prospective home buyers overwhelmingly want to head south, according to a recent LendingTree analysis. The online loan marketplace looked at the 1.5 million mortgage requests it received from October 2016 to October 2017 to come up with the results.

    Which state do home buyers most want to move to?

    But of all the Southern states, which was the most desirable? Drumroll please … that would be Florida. The Sunshine State was the top destination for folks from 18 states, or about 9.14% of those looking at loans on LendingTree.

    Which state do home buyers most want to leave?

    Vermont residents were the most likely to want to hightail it out of the Green Mountain State. Despite its popular ski resorts, only about 76% of locals were looking for in-state mortgages.

    Which state do home buyers most want to stay in?

    Texans were the most happy of any state’s residents to stay put. About 92.5% of folks looking for potential mortgages wanted to stay within Texas, according to LendingTree’s report.

    Real Estate Investing For The Tech-Minded (Forbes), Rated: A

    So as a techie, how does one go about evaluating not just the real estate but also the platform offering the investment?

    That’s why it’s critical for real estate investing platforms to be willing and able to answer questions from prospective investors — even those would-be investors without a ton of prior real estate knowledge. These companies should take a page out of Amazon’s book and develop a customer obsession.

    Be leery of any cliché claims of leveraging big data to automate underwriting. Underwriting is as much science as it is intuition/experience, and the best commercial real estate professionals have a carefully tailored mix of both.

    In the long run, the track records of the platforms will speak loudest.

    Steven Dupree was SoFi’s first marketing executive and VP of marketing for 3 years. He and his growth-oriented team took SoFi from originating 10 loans a day to over 1000.

    The three most basic ingredients for being able to succeed in FinTech are:

    1) “Good enough” technology

    2) Tremendous capital markets expertise

    3) Some sort of customer acquisition strategy

    Companies like Experian and Equifax know if you have loan balances, and specifically they know if you have student loan balances. We sent pre-screened offers to prospects with outstanding student loan debt through physical mail about how SoFi could help them with those loans.

    Plan Would Take Payday Lending Interest Rates From As High As 600% to 28% (StateNews.org), Rated: A

    Several community groups rallied to show their support for a bipartisan bill they think is needed reform against predatory lending.

    The bill would cap the interest rate of payday lenders at 28% and close any loopholes around that cap.
    <

    Filene, QCash Financial, CFSI Offer Free Webinar on the Benefits of Small-Dollar Lending (BusinessWire), Rated: A

    QCash Financial, a CUSO providing automated, cloud-based, omni-channel small-dollar lending technology for financial institutions, announces it will co-host a free webinar with Filene Research Institute and the Center for Financial Services Innovation to discuss the opportunities for credit unions in offering small-dollar lending on November 14.

    During the webinar, QCash Financial will address our industry’s impact and opportunity to deliver small dollar loans. QCash Financial, the Center for Financial Services Innovation and Filene will collaborate to discuss the omni-channel lending solution that serves members in search of small, short-term unsecured loans.

    Registration information can be found at filene.com. The webinar is scheduled from 2 p.m. CST / 12 p.m. PST until 3 p.m. CST / 1 p.m. PST.

    Ken Rees, CEO of Elevate, to Speak at Dallas Techweek Conference (BusinessWire), Rated: A

    Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will speak on a panel session at Dallas Techweek on Thursday, November 2, at 9:15am CT. The panel will focus on data intelligence, breaking down the hype around data science, and exploring ways companies can turn that hype into actionable business intelligence.

    Rees will be joined by local tech talent and founders, including Clarisa Lindenmeyer, Chief of Strategy/Partnerships at Launch DFW; Sravan Ankaraju, President of Divergence.Academy, CEO of Divergence.AI; Dave Copps, CEO of Brainspace; and Steve Hebert, Co-Founder & CEO of Nimbix, Inc.

    Elizabeth Warren Warns: Navient Deal A Danger To Student Loan Borrowers (International Business Times), Rated: A

    U.S. Sen. Elizabeth Warren warned Wednesday that the nation’s largest student loan servicer has positioned itself to stealthily strip consumer protections from unwitting borrowers across the country. In an interview with International Business Times, she also said the loan servicer, Navient, should not be permitted to be a government contractor handling student loans on behalf of the U.S. Department of Education.

    The Massachusetts Democrat was sounding an alarm about Navient’s recent acquisition of online lender Earnest. She said the transaction opened up the possibility that the company will try to boost its profits by selling debtors on refinancing their current federal student loans with the company’s own private loans — the kind that she said to do not necessarily permit income-based repayment options.

    BrightPlan Launches ‘Hybrid-Robo’ Advisory Service (Plan Adviser), Rated: B

    A new robo-advisory platform has hit the market, under the moniker BrightPlan.

    Important to note, according to the firm, clients are not required to invest through BrightPlan in order to receive financial planning advice. They can manually input external account balances or link external accounts from more than 10,000 financial institutions to BrightPlan, which will monitor goal progress and provide advice to stay on track.

    Will a robot take your job? These startups hope so (PitchBook), Rated: B

    Avant wants to replace loan officers

    Avant has created an online lending platform that uses Big Data and machine learning algorithms to streamline the loan decision process helping borrowers consolidate debt through personal loans. The company, led by CEO and co-founder Al Goldstein (pictured), raised $325 million in Series E financing back in September 2015, with General Atlantic leading a round at a $2 billion valuation.

    Avant isn’t alone, with competitors like publicly traded Lending Club (NYSE: LC) and VC-backed Kabbage using a similar strategy: automating the credit creation process.

    Dreiling and Stamets join Attune (Royal Gazette), Rated: B

    Two new appointments have been made at data-enabled platform Attune, the company jointly created last year by American International Group, Hamilton Insurance Group and Two Sigma Investments.

    Martha Dreiling takes on the role of head of analytics and corporate operations, while Richard Stamets has been appointed head of underwriting strategy.

    United Kingdom

    RateSetter changes approach to property loan defaults (P2P Finance News), Rated: AAA

    RATESETTER is changing the way it deals with defaulted property development loans, which could involve taking control of the project and completing it itself.

    The peer-to-peer lender said on Wednesday that if a property development is only partially completed and has gone into default, it will now examine whether maximum value would be delivered via an immediate sale or by completing the development and then selling it.

    Lendy Update: Breaks Previous Monthly Loan Repayment Record; Recovers £20 Million in October 2017 (Crowdfund Insider), Rated: AAA

    UK-based peer-to-peer property platform Lendy announced on Thursday it has broken all previous records for loan repayments generated in any one month, recovering £20 million in total in October 2017 alone. The online lender reported that this exceeds its previous September 2016 high of £14.5 million. The record figure includes repayments on P2P loans on three caravan parks in Christchurch, Dorset, totaling £7.6 million and a Manchester mill of £1.35 million.

    This UK fintech is taking on big banks with business loans — and one key EU law is driving it (CNBC), Rated: AAA

    A digital invoice finance platform in the U.K. will provide business loans to its customers for the first time, it was announced Wednesday.

    The firm said it would expand into the business lending market, pitting it against established players such as U.S. listed peer-to-peer lender LendingClub and Britain’s Funding Circle. The latter raised £82 million ($100 million) in funding from venture capital investors earlier this year.

    CEO and co-founder Anil Stocker told CNBC that MarketInvoice will take advantage of an incoming European Union regulation called the Second Payment Services Directive (PSD2), which forces banks to open up data about their customers to third party companies.

    Citigroup Bets Millions on U.K. Mortgage Lender (Bloomberg), Rated: A

    Brexit may be roiling Westminster and inflating prices on supermarket shelves, but don’t tell that to financial institutions eyeing the U.K.’s burgeoning online-lending industry.

    In the latest sign of confidence in the sector, Citigroup Inc. has agreed to provide a fintech firm called LendInvest Ltd. with funding for mortgages, the startup said in a statement Wednesday.

    Citi Provides Warehouse Facility to LendInvest in Buy to Let Expansion (Crowdfund Insider), Rated: A

    LendInvest, a Fintech marketplace platform for property finance, has agreed a long-term warehouse facility with Citi boosting its entry into the UK’s £40 billion buy-to-let (BTL) market.

    The perils and profits of of peer-to-peer lending (The Spectator), Rated: AAA

    ‘We’re taking business from the banks, from the invoice discounters and from the traditional suppliers of finance, in ever larger amounts,’ says Angus Dent, chief executive of ArchOver, a P2P lender that launched in September 2014. ‘We only lend to companies with strong balance sheets and we only lend against accounts receivable (ARs). We will loan up to 80 per cent of the value of the ARs. Once the loan is made the ARs must be maintained at 125 per cent of the value of the loan, monitored by us on a monthly basis. This provides a quickly realisable asset for our investors in case the borrower gets into difficulties over repaying for the loan.’ The minimum amount that ArchOver expects clients to invest is £1,000 per project.

    For Anil Stocker, chief executive and co-founder of MarketInvoice, P2P lending against receivables (amounts owed to a business) offers a particularly interesting investment class ‘because it’s of short duration, a liquid product, with invoices typically taking 45 to 50 days to be paid.

    Source: The Spectator

    Lenders must help brokers meet specialist challenge – LendInvest (Mortgage Solutions), Rated: A

    IMLA found that lending by specialists has grown by an average of 19% each year from 2009 to 2016, with a total of almost £17bn lent last year. That’s enormous growth from a sector that was particularly badly dented by the effects of the financial crisis.

    Even with these enormous annual increases in lending, the market share of these specialists remains modest. According to IMLA it has grown from 3.5% in 2009 to 6.8% in 2016, and that still lags significantly below the levels seen before the onset of the financial crisis.

    UK fintechs take market share from dominant high-street banks (Financial Times), Rated: A

    Britain’s leading financial technology start-ups are celebrating a record-setting week as they accelerate their push to take market share from high-street banks in areas such as payments and lending.

    TransferWise will on Thursday announce that it has collected $280m from investors, a record fundraising round for a UK fintech, to finance expansion of its cross-border payments service into more countries around the world.

    Meanwhile, Funding Circle has for the first time outstripped net new lending by the major high-street banks to UK small businesses, according to figures released by the Bank of England this week and data provided by Europe’s largest peer-to-peer lender to SMEs.

    Britain’s small businesses bank on alternative finance options (Finextra), Rated: A

    Of 1000 small biz owners quizzed by WorldPay, more than half say that they are planning for growth in 2018, yet 52% admit to being concerned that the traditional routes to finance, such as bank loans, are not going to be as easily available in the coming year.

    While 21% of business owners aged 44 or under say they’re still most likely to apply for a bank loan when looking for funding, nearly as many respondents (17%) say they’re more likely to look at crowd-funding, while 11% prefer P2P lending, and six per cent say they favour business cash advance.

    HSBC unveils robo-advisor plans (Business Insider), Rated: A

    HSBC’s head of retail wealth, Dean Butler, provided his perspective on automated advice, and the bank’s plans for new products in the area, at the UK Robo-Advice Innovation Forum on Wednesday, attended by BI Intelligence.

    Source: Business Insider

    Landbay & Buy to Let Club Complete Lending to New Southgate Building in Less Than Two Months (Crowdfund Insider), Rated: A

    Earlier this week, Landbay and Buy to Let Club completed lending to a new building in Southgate, a suburban area of north London, in under two months. The initial case was reportedly submitted on the broker portal by Buy to Let Club on August 24th.

    Fintech firm MarketInvoice enters business loans market (Asset Finance International), Rated: A

    Fast-growing fintech firm MarketInvoice has launched a new business loans service that expands its solutions beyond invoice finance.

    Businesses will now be able to obtain unsecured business loans from £10,000 to £100,000 over a 12-month term, with no early repayment fees.

    By expanding into the £35 billion business loans sector, MarketInvoice aims to increase support for businesses which need working capital around their invoice finance requirements.

    Natural evolution (P2P Finance News), Rated: A

    Stuart Lunn, co-founder and chief executive of Edinburgh-based P2P business lender LendingCrowd, sees the benefits of both.

    “For P2P investing to become truly mainstream, it’s essential to simplify the products on offer and enable greater comparability between opportunities,” he asserts.

    “Passive products force greater diversification and I think that will benefit the sector as a whole.”

    Funding Circle and RateSetter make LinkedIn’s ‘Top 25’ companies list (P2P Finance News), Rated: A

    Funding Circle and RateSetter have been placed at number eight and number 21, respectively, in the ‘LinkedIn Top 25 Companies – Startups’ list, which was released on Thursday morning.

    Funding Circle was the highest-ranking P2P platform, and it was praised for funding more than 28,800 companies over the past seven years, with more than £2.8bn allocated to borrowers.

    CEO switch for online lender Patch of Land (AltFi), Rated: A

    Jason Fritton returns to his former post as CEO, as Paul Deitch steps down.

    P2P firm Assetz continues profitability (AltFi), Rated: A

    Assetz Capital notches seven figure pre-tax profit during the six months from April to September 2017.

    Durham’s Atom Bank named by LinkedIn as one of UK’s top 25 start-ups (ChroncleLive), Rated: A

    A North East company has been named by social media site LinkedIn as one of the country’s 25 most disruptive companies.

    Durham ’s Atom Bank, which is shaking up the banking world with its mobile-based app and personalised services, is named alongside companies including Deliveroo, Uber and Airbnb, on a list of start-ups which LinkedIn says are changing the UK business landscape.

    Online retailer Asos offers buy now pay later option with Klarna (Finextra), Rated: B

    Today, leading European payments provider Klarna has announced a UK partnership with ASOS – one of the world’s leading destinations for fashion loving 20-somethings.

    The news means that UK customers with the iOS or Android ASOS app can now use Klarna’s ‘Pay later’ solution to pay for their items up to 30 days later – with no interest or fees.

    Alternative lender Sancus announces new managing director (AltFi), Rated: B

    The alternative finance services firm has announced that Dan Walker will take over from current MD Caroline Langron in January 2018.

    The group is part of GLI Finance, which acquired peer-to-peer lending platform FundingKnight in 2016. Earlier this year, FundingKnight was moved into Sancus BMS Group, was awarded full FCA authorisation in July.

    China

    Chinese Listed Banks still create more profits than BAT (Xing Ping She), Rated: AAA

    In recent years, with the rise of Internet financial and the change of macroeconomic environment, the traditional commercial banks did go through a “severe winter”. Since 2011, banking climate index has been down all the way. It is not until 2017 that the new season of spring is coming.We selected 38 listed Chinese Banks in exchange of Shanghai, Hong Kong and Shenzhen as the performance comparison samples, and analyzed their comprehensive profitability based on the financial data of the first half of 2017.During this time, the total net profit of the 38 banks selected in this paper was 823.93 billion RMB, up 4.14 percent from the same period last year. The chart below described the profit data of all the 38 banks in the first half of 2017.


    Profitability Banks Ranking
    Among the 38 listed banks, we can also find the Top10 earning banks as follows, including 5 large-scale commercial banks and 5 joint-equity commercial banks. In addition, the net profit of Ping An Bank and Beijing Bank has reached the threshold of 10 billion RMB.


    Chinese listed banks VS internet giants in profitability
    According to the total value and earning data of the selected 38 listed banks as follow, their total market capitalization is about 10 trillion RMB, and the total net profit was 823.93 billion RMB. That means the net profit ratio was about 0.082.

    As for the BAT giants which are closely watched in the Internet industry, the three Internet companies are worth about 6.5 trillion RMB in total for the first half of 2017, and the net profit reached 52 billion RMB. That means their net profit ratio was just 0.008, much lower than the listed banks. Obviously, Banks still have an advantage over emerging Internet companies in terms of profit creation.

    In fact, research shows that the rise of the Internet financial companies has little impact on the profitability of large commercial Banks and rural commercial Banks, while has a great influence on city commercial Banks, and Joint-stock commercial Banks have been promoted instead because they can seize the Internet financial opportunities. In general, though the development of Internet finance has brought adverse effects on the profitability of commercial Banks, and also forced it to actively adjust the profit model and promote the diversified development of the profit structure.

    Data resource: Wind Database

    Another Chinese P2P lender! Senmiao Technology files for a $ 20 million IPO (NASDAQ), Rated: A

    Senmiao Technology, a early-stage Chinese marketplace for peer-to-peer lending, filed on Monday with the SEC to raise up to $20 million in an initial public offering.

    China pours millions into facial recognition start-up Face++ (Financial Times), Rated: A

    Chinese facial recognition start-up Megvii Face++ has raised $460m in an investment round led by a government fund, as the country pours money into efforts to become an artificial intelligence superpower to rival the US.

    The Beijing-based Face++ said on Wednesday that it had raised money from China State-Owned Venture Capital Fund and the China-Russian Investment Fund, which is backed by the sovereign wealth funds of both countries. Private investors including Alibaba’s payments affiliate Ant Financial also participated.

    Chinese listed company transferred shares of Wei Dai Network, making over 1B RMB (Xing Ping She), Rated: A

    On October 17, Handing Yuyou(300300.SZ), a listed company that was suspended from trading, began to transfer its assets of internet finance continuously. On October 30th, the company announced that it would transfer a 2 percent stake in the Wei Dai Network for 170m RMB, and then they announced to transfer a 1.5 percent stake in the Wei Dai Network for 127.5 million RMB. Through the two deals, Handing Yuyou(300300.SZ) will receive nearly 300 million RMB in cash. Deducting the previous investment costs, Handing Yuyou(300300.SZ) won over 100 million RMB in less than half a year. In the past three years, according to the company’s history of the investment in Wei Dai Network, we can find that the company has earned at least 10 times to the original investment.

    The transferee of this transaction is Beijing Qianshan Xinyuan Investment Management co., LTD. According to the public information, Beijing Qianshan Xinyuan Investment Management co., LTD. was established in 2015 with the registered capital of 10 million RMB. Its parent company, Qianshan Capital Management co., LTD is a private company registered in 2016. The parent company also have the other several subsidiary corporations, including Qianshan Venture Investment Management co., LTD., Beijing Qianshan Wealth Management co., LTD., etc. Currently, the parent company has a total capital size of 1 billion RMB.

    European Union

    Mintos Scraps Secondary Market Fees (P2P-Banking), Rated: AAA

    Starting from today, November 1, 2017, we have removed the 1% fee for selling loans on the secondary market of the Mintos marketplace. This means from now on, there are absolutely no fees for investing through Mintos.

    Source: P2P-Banking

    Orange is the new bank? Telecoms giant ventures into lending (Business Insider), Rated: A

    Telecoms giant Orange launches its own bank on Thursday, aiming to win 25 percent of France’s online banking market by capitalizing on the rising use of smartphones to steal share from established lenders with inferior technology.

    Orange is starting from a small base – Coisne says it has 25,000 customers have expressed interest ahead of the launch, a tiny fraction of the company’s 21 million mobile clients. But the timing of its entry gives some room for optimism.

    In France, 793.4 million online banking e-payments were made last year according to the European Central Bank, up from 586.2 million in 2014.

    INFOGRAPHIC: FINTECH AND THE FUTURE (Irish Tech News), Rated: A

    The GetLine Network  a decentralized P2P lending platform, recently reached out to us with one of their infographics on FinTech, and we thought it was appropriate and timely for our audience.

    Financing and loans are even being re-thought of with new forms of capital raising, such as ICOs, crowdsourcing/crowdfunding, and P2P lending, making banks and legacy financial institutions even less needed.

    Source: Irish Tech News
    International

    Lendio Gives supports Kiva borrowers (Bankless Times), Rated: AAA

    Small business loan marketplace Lendio announced it has provided more than $25,000 in loans to over 1,200 small business owners in 75 countries around the world through its employee-based Lendio Gives program in partnership with Kiva.

    The top five sectors supported by Lendio’s funding are agriculture, food, retail, clothing, and services. Of the loans Lendio has funded, 86 percent have gone to women or women’s groups. The top countries Lendio has supplied funding to include Zimbabwe, Peru, Haiti, the Democratic Republic of Congo, Ecuador, the Philippines, Kenya, El Salvador, and Senegal.

    International P2P Lending Volumes October 2017 (P2P-Banking), Rated: AAA

    Thincats reached the milestone of 250 million GBP loans originated since launch.

    This month I added Bolden.

    Source: P2P-Banking

    Fintech and Cross-Border Payments (IMF), Rated: AAA

    To gauge the IMF’s most recent analysis: A speech last month, at the Bank of England, by the IMF’s Managing Director—Christine Lagarde—analyzed potential challenges posed by fintech innovations to central banking.

    In my remarks here today—focusing on implications of fintech for cross-border payments—I’ll explore three broad areas: [1]

    • First, a sketch of the economic framework on how fintech applications will affect financial services and the market structure.
    • Second, the current landscape of cross-border payments, and the possible evolution of cross-border payment systems; and
    • Third, the role of central banks, themselves, and the possible reasons for them to issue their own digital currencies.

    Alternatives assets such as P2P loans to double in volume by 2025 (AltFi), Rated: B

    Alternative asset classes – in particular, real assets, private equity and private debt – will more than double in size, reaching $21.1trn by 2025, accounting for 15 per cent of global AuM as investors diversify to reduce volatility and target specific return and risk outcomes, according to research by PwC.

    Zelle adds major tech partners to roster (Banless Times), Rated: B

    Zelle – a new, real-time payments network from bank-owned Early Warning Services – has added ACI Worldwide, CGI, D3 Banking Technology, and IBM to its growing list of technology partners.

    India

    One Size Fits All? Regulating Peer-To-Peer Lending Platforms (India Corporate Law), Rated: A

    Briefly, as per the Master Directions:

    • It is now mandatory for entities proposing to undertake this business to be registered as ‘NBFC-P2P Lending Platforms’ with the RBI (NBFC-P2P). To ensure business continuity, existing players have been given a period of three months to apply for this licence. Applicants will be scrutinised for scalable and secure technological capabilities, financial standing as well as fit and proper management.
    • Fundamentally, the NBFC-P2P is expected to operate only as an intermediary and not undertake any lending activities itself or hold any funds of its participants (lenders or borrowers) on its books. Towards this end, an escrow mechanism for movement of funds has also been envisaged.
    • The exposure of each lender and loans (not exceeding a three year maturity period) availed by each borrower across all NBFC-P2Ps has also been capped at INR 10 lakhs, with each borrower not permitted to avail more than INR 50,000 per lender.
    • In addition, directions also prescribe that NBFC-P2Ps adopt minimum standards of transparency, disclosure requirements and fair practices.

    Impact on Aggregators

    • To the extent P2P lending platforms are servicing individuals and/or unregulated entities, there is merit in regulating such operators to contain any systemic risks. However, there are existing players in the market who primarily service regulated financial institutions (viz. banks and NBFCs) as lenders. The Master Directions fail to recognise this distinction.
    • Separately, banks and NBFCs today use distribution channels including web-based loan aggregators.

    SBI partners with Primechain Technologies and Intel to adopt blockchain-driven KYC (The Times of India), Rated: A

    PrimechainTechnologies announced on Wednesday that the country’s largest bank, State Bank of India (SBI), will adopt blockchain technology to manage the mandatory Know Your Customer (KYC) details in its system. Intel Corporation will act as a technology provider to facilitate the implementation.

    Asia

    P2P lender PeopleFund aims to change landscape (The Investor), Rated: A

    Korea’s accumulated peer-to-peer lending reached 1.47 trillion won (US$1.31 billion) by end-September as more and more borrowers are embracing the new, more convenient platforms for connecting with investors.

    Considering that the figure accounts for only 60 members of the Korea P2P Finance Association among the industry estimates of 130 lenders, the market is actually bigger. It also reflects a sharp upward trend; back in June 2016, when the association first began compiling data, accumulated loans granted by 22 members stood at just 152 billion won.

    Against this background, Kim founded PeopleFund in March 2015. Since then, the bank has been on a roll. On Nov. 1, its accumulated loans stood at 121 billion won, compared to 19 billion won in February. It’s the No. 3 player in the local industry.

    Africa

    SME failure rate set to spike unless funding issue is addressed (Engineering News), Rated: AAA

    The South African SME sector is set for a major crisis unless access to adequate business funding can be ensured as a matter of urgency. This was the key takeout from the just-released Key Funding Challenges for South African SMEs 2017 report developed by online lenderLulalend.

    “76% of respondents to our national survey of SMEs said they had undergone a tedious months-long paperwork-heavy process in applying for businessfunding from traditional lenders, only to have their applications denied.

    Considering access to credit was the #1 business challenge for nearly three out of every five SMEs surveyed, this disconnect between the needs of business owners and the lenders that have traditionally supported them is creating conditions of high risk and volatility.”

    Authors:

    George Popescu
    Allen Taylor