Monday February 13 2017, Daily News Digest

middle east africa alternative finance

News Comments Today’s main news: American Banking Association endorses digital lending solution by Akouba. LendingTree announces top customer-rated lenders for Q3, Q4 2016. Chinese manager of 8 P2P lenders disappears. Today’s main analysis: UK housing whitepaper: Government could boost online lending. Today’s thought-provoking articles: Australian P2P economy now worth over $15B/year. A speculative report to be taken with […]

middle east africa alternative finance

News Comments

United States

International

  • The economics of P2P lending. GP:” Forecast is for Saudi Arabia to have the 2nd largest p2p market at $10.3bn ahead of UK’s $4.3bn. Surprising, isn’t it? What about India? China? Mexico? France? I also get confused when the author uses an expression as p2p money transfer and then p2p lending. They are very different things. And last but not least what is p2p? Is Avant a p2p company in this report? I would take this report with a grain of salt. ”  AT: “This is an interesting read simply for the country comparisons of P2P transaction value.”

United Kingdom

Australia

  • The P2P economy now worth over $15B a year. GP:” P2P goes beyond lending into all kind of sharing markets from Uber to Airbnb. The internet disintermediates AT: “This goes well beyond P2P lending and into the sharing economy as a whole. Nevertheless, Australians are participating in huge numbers.”

Canada

China

Africa, Middle East

 

United States

LendingTree Announces Top Customer-Rated Lenders for Q3 & Q4 2016 (Yahoo! Finance), Rated: AAA

LendingTree®, the nation’s leading online loan marketplace, released today its quarterly list of the top customer-rated network lenders for the third and fourth quarters of 2016. Winners are based on a five-star quality review system for overall customer experience as determined by LendingTree account holders. The list features the top lenders in LendingTree’s core financial marketplace categories: Home Lending, Personal Loans, Auto Loans, and Business Loans.

Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

While it was officially launched last year, the Philadelphia Department of Commerce’s 29 member Capital Consortium appears to be up and running now.

RELATIONSHIP TROUBLES THIS VALENTINE’S DAY? YOU MAY WANT TO CHECK YOUR CREDIT SCORE (Elevate Email), Rated: A

If you’re having relationship troubles this Valentine’s Day, you may want to check your credit score. Nonprime Americans are 45 percent more likely to be divorced, according to new research by Elevate’s Center for the New Middle Class, a research institution that examines the everyday effects of being nonprime in America.

“This latest research raises an interesting question about cause and effect. Are people getting divorced because stressful finances put pressure on relationships, or are people becoming nonprime because divorce has negative financial consequences?” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Regardless of the cause, it’s clear that financial pressures are greater in nonprime couples, and that people experiencing financial difficulties are more likely to be nonprime.”

The study also found that 1 in 5 married nonprime Americans feel they have little control over the things that happen to them in general, and more than 50 percent run out of money every 2-3 months or more often. Additional key findings about married nonprime people include:

  • 4 out of 5 say they cannot regularly save money

  • They are 2x more likely to carry a credit card balance

  • They are 2x as likely to have lost a job in the prior 5 years

  • They are 1.4x as likely to have had their pay or work hours reduced in the prior 5 years

  • They are almost 3x more likely to worry over their monthly expenses

  • They are 1.5x more likely to admit that their finances cause significant stress

In nonprime households, uncertainty compounds with marriage rather than dissipates. In fact, married nonprimes are much less likely to feel they have control in their lives compared to prime people and even when compared to their single nonprime counterparts.

ABA Endorses Digital Lending Solution by Akouba (Yahoo! Finance), Rated: A

The American Bankers Association – through its subsidiary the Corporation for American Banking – has endorsed the digital lending solution provided by Akouba, which provides community and regional banks with an origination and underwriting platform for small business loans. ABA members will receive preferred pricing.

Akouba is transforming the way banks help business owners through a cloud-based, white-labeled technology that provides business lending quickly, accurately and profitably. Akouba’s business lending platform provides banks with leading edge technology that integrates the bank’s own unique credit policies into a convenient, online process—from application to documentation— all the way to closing and funding. The bank uses its own credit policies, originates its own loans and owns the entire brand and customer relationship.

Crowdfunding puts the mojo in flipping (News-Press), Rated: A

For the Landings penthouse, the partners decided to finance the flip with Atlanta-based Groundfloor.

Groundfloor underwrote the project as any bank would, by looking at the partners’ financials and evaluation of the project, then sending a local broker to do an independent appraisal. It considered the cost and scope of work estimated by Helm’s contractors — he works with three contractor teams — and factored it with what the penthouse could be bought and re-sold for.

Here’s Groundfloor’s breakdown:

  • Groundfloor financing: $372,090
  • Partners’ skin in the game: $41,344
  • Project cost $413,434
  • Value after repairs: $610,000
  • Loan-to-after repair value: 61 percent

P2P lending growth attracting regulation (Fort Wayne Business Weekly), Rated: B

Indiana’s securities commissioner encourages investors in the state to do their homework on any peer-to-peer lending they consider as federal officials weigh how they might regulate the new financial technology companies.

International

The Economics Of Peer-to-peer Lending (The Market Mogul), Rated: AAA

This type of lending has been growing ever since, and last year, the total transaction value of peer-to-peer money transfers reached $50.7bn. According to estimations, it should grow to $75.3bn this year, with the US accounting for a $23bn chunk of the amount.

The forecasts put Saudi Arabia as the country with the second highest value worldwide, with $10.3bn and the UK in third with a $4.3bn chunk of the total.

By the end of last year, peer-to-peer lending platforms based in the UK had already lent a total of £7.3bn. Estimations are that this could equate to half of what the entire P2P lending market has already provided since it was established.

TrustBuddy, a lending platform, went bankrupt in October 2015 and until now none of the lenders has seen their money back at all.

Lending Club had a rough first quarter last year as its stock price had dropped 50% from December 2015 to March. The business volume largely increased, so why did it fall?

When peer-to-peer lending moved into the mortgage business, banks finally started taking it seriously.

But the biggest opportunities are probably related to the potential future market for peer-to-peer lending. PwC forecasts that the market now has the opportunity to reach “vast new segments of untapped market potential”.

United Kingdom

Housing Whitepaper: Government Actions May Boost Online Lenders (Crowdfund Insider), Rated: AAA

So what does the UK government do? How do you boost housing supply in a market that is struggling to meet demand? The white paper states that “since 1998, the ratio of average house prices to average earnings has more than doubled.”

In brief, the UK government plan is as follows:

  • For local authorities, the Government is offering higher fees and capacity funding. They want to make it easier for local authorities to move projects along
  • For private developers, the Government is offering a planning framework that is more supportive of development
  • For housing associations, the Government has announced funding of £7.1 billion
  • For utilities the government expects infrastructure providers to move things along
  • For lenders, the Government is offering a clear and stable long-term framework for investment, including products for rent. In return. they call upon lenders and investors to back developers and social landlords in building more homes.

Stuart Law, CEO and co-founder of Assetz Capital commented on the Housing white paper saying;

“Putting pressure on local authorities is a step in the right direction. It’s time for the alternative finance sector to step up.”

Law believes the role of funding many of these projects could end up being financed by the alternative lending sector.

LendInvest is another platform that may gain with added business.

While Property Partner may have been underwhelmed, the real estate platform stated;

“It is both fairer and wiser that the government has moved to a more balanced view of the property market, which must work for those renting, as well as those who aspire to homeownership. Encouragement of institutional investment is a recognition of the important role that investors can play in providing high quality accommodation and a quality experience for renters.”

Kuflink Aims to Be UK Market’s Leading P2P Brand (Crowdfund Insider), Rated: A

Crowdfund Insider had a chance to interview CEO of Kuflink Tarlochan Garcha to learn more about his company’s platform.

Chan Garcha: Our niche is that our sister company Kuflink Bridging retains 20% in every deal on Kuflink’s peer-to-peer platform. All deals are secured against UK property which means the maximum LTV for our lenders is 56% against an auction value of 90 days.

CG:  Investing 20% in every deal demonstrates to our lenders that we have full confidence in all our deals.

CG:  We have an independent credit committee of three independent non-executive directors. All deals are vetted by them before they go onto the platform. We also use credit reference agencies, independent professional valuations along with internal checks and verifications before a proposal goes to the credit committee.

CG:  We feel it is very important to work with the regulator. Unfortunately, they are under-resourced and the knowledge seems to be fairly low. The process takes much longer than it really needs to. We also feel that Treasury could do more to protect lenders. For example, allow the FSCS to cover peer-to-peer.

Meet Anil Stocker: Boss of peer-to-peer outfit MarketInvoice that’s taking on City lenders (IB Times), Rated: A

After overseeing his peer-to-peer finance outfit cap £1bn in lending over the last four years, Anil Stocker is a man in a hurry to get to his next billion mark “by the end of 2017”.

To the outside world, the Fintech sphere might appear cluttered and competitive, and all about going after big banks, but Stocker says that is an oversimplified interpretation of the market dynamic.

“We’re still the flies around the big elephant, so peers and competitors are on the same side. All of us are small compared to HSBC, Lloyds, Barclays, and other legacy finance players whose market and scope is very, very big. Our goal is trying to convince people looking for invoice finance not to just run to their bank for funding needs, but rather consider talking to us.”

MarketInvoice’s lending has increased four-fold over the last 12 months, providing on average £2,196 every minute to UK businesses.

Furthermore, the appetite for asset-based finance is roaring and MarketInvoice is busy carving its own niche in this £20bn industry, a billion at a time.

Australia

Peer to peer economy now worth over $ 15 billion a year (Mozo), Rated: AAA

The bi-annual Sharing Economy Trust Index, produced by peer-to-peer lender RateSetter, showed that trust in ride sharing platforms such as Uber and online marketplaces like eBay have grown the most.

With the sharing economy now worth over $15 billion a year, the study revealed that over two thirds of Australians actively participate in the market – whether by spending or earning.

Online marketplaces such as Ebay and Etsy remained by far the most popular way to make money through the sharing economy, while ride sharing, online outsourcing, peep-to-peer lending, and accommodation sharing also proved popular with Australians.

Aside from earning money, consumers can also use the sharing economy to save on goods and services. If we take peer to peer lending as an example, Mozo’s database shows a borrower with a good credit score could secure a rate of just 8.90% by taking out a personal loan with peer to peer lender RateSetter. That compares to the average 12.21% rate offered by the big banks.

Canada

WAVE LAUNCHES SMALL BUSINESS LENDING WITH ONDECK PARTNERSHIP (Betakit), Rated: A

Toronto-based Wave, which provides entrepreneurs with accounting, payroll, and invoice software to run their small businesses, has officially stepped into the lending space.

Wave is partnering with US-based OnDeck, which provides small business lending. Lending by Wave will use OnDeck’s platform to streamline and automate the lending process within Wave’s platform.

China

Manager of 8 P2P lenders disappears, $ 145m in investors funds locked up (Global Times), Rated: AAA

Eight peer-to-peer (P2P) lending platforms announced that their manager disappeared in January, leaving investors unable to withdraw at least 1 billion yuan ($145 million) in funds, domestic media has reported.

The platforms, cmtouzi.com, naipinglicai.com, zaodianlicai.com, wanerjialicai.com, qianguan360.com, lexinglicai.com, xjinfu.com, huoniu360.com, simultaneously announced on January 18 that their manager Fang Fan’s mismanagement of funds had left investors unable to withdraw their money, according to a report on chinatimes.cc.

The platforms are all controlled by Beijing Qiyuan Fortune Network Technology Co, according to the report. As of January, cmtouzi.com users had invested 170 million yuan on the platform. The figure was 350 million yuan for zaodianlicai.com and 428 million yuan for naipinglicai.com. In total, the three platforms controlled nearly 1 billion yuan in user funds.

At present, cmtouzi.com continues to operate. On Friday, the platform issued a statement that denied the incident was caused by inappropriate management. It also issued a plan that would allow investors to withdraw their money.

Africa, Middle East

Cambridge Centre for Alternative Finance Publishes Africa & Middle East Alternative Finance Report (Crowdfund Insider), Rated: AAA

The Cambridge Centre for Alternative Finance (CCAF) has published its first benchmarking report covering alternative finance in the African and Middle East markets. Growth was said to be at 59% during 2015 with a total pegged at $242 million. Much of the alternative finance came via equity crowdfunding and online microfinancing. This is in contrast to more developed markets where peer to peer lending (online lending) tends to dominate.

In Africa, the market was nearly $190 million between 2013-2015, and grew 36% in 2015 to $83 million. Most African activity was through online microfinance as well as donation and rewards-based crowdfunding. Investment-based equity and debt models are yet to really make their mark on the African market. CCAF said 2016 may be the year that investment crowdfunding emerges in these markets.

As for the Middle East, about $286 million was raised in 2013-15, including an increase of 75% in 2015 to $159 million. Equity-based crowdfunding accounted for two-thirds of market activity in the Middle East – with the vast majority occurring within Israel. Donation and reward-based crowdfunding, online microfinance, peer-to-peer business and consumer lending and real estate crowdfunding accounted for similar proportions of market activity of 5% to 6% in the Middle East.

Israel was by far the largest market across the surveyed regions, with a total of nearly $125 million in 2015, followed by the United Arab Emirates (UAE) with over $17 million, Kenya with more than $16 million and South Africa with $15 million.

Other findings of note from the CCAF report include:

  • In 2015, well over 75% of the total online alternative finance raised from Africa and the Middle East regions was funding for start-ups and SMEs, with $62 million raised across Africa and $132 million raised across the Middle East. 
  • In Africa, 90% of online alternative finance originated from platforms headquartered outside of the continent, while in the Middle East the reverse is true with 93% of online funding originating from home-grown platforms in the region.
  • Both the African and Middle Eastern online alternative finance markets are showing signs of decelerating growth, particularly in the Middle East. The Middle East experienced an annual growth rate of 152% from 2013-2014, but that rate fell to 75 per cent from 2014-2015. The African market grew 38 per cent from 2013-14 and 36 per cent between 2014-2015.

 

Authors:

George Popescu
Allen Taylor

Monday January 30 2017, Daily News Digest

price & yield table for SCLP 2017-1

News Comments Today’s main news: ABA Banks seeks MPL partnership. Zopa passes 2bil GBP milestone. Today’s main analysis: SoFi Unsecured Consumer 2017-1. Today’s thought-provoking articles: Orchard Online Lending Snapshot. Five mistakes to avoid when starting a FinTech company. Spanish banks lead FinTech VC in Europe. Tyro, RateSetter, Stockspot and Westpac on past and future. United States ABA seeks MPL partnership. […]

price & yield table for SCLP 2017-1

News Comments

United States

United Kingdom

European Union

Australia

India

Asia

News Summary

United States

U.S. bank trade group seeks marketplace lending partnership (Reuters), Rated: AAA

The American Bankers Association, a trade group for U.S. banks, has been hunting for a marketplace lending platform to help its members ramp up their digital offerings.

The ABA has run a formal bidding process to secure a marketplace lending partner, spokesman John Hall confirmed on Friday. He could not say which companies were under consideration because the information was confidential.

Weekly Industry Update: January 29, 2017 (PeerIQ), Rated: AAA

The ABS market finished January on a high note with strong buyer interest. SoFi and Mosaic priced their first and inaugural transactions respectively in 2017, which were both heavily oversubscribed.
FinTech financings continue apace. Nyca announced the successful closing of a

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

It was reported this week that LendingRobot launched a robo-advisor hedge fund for accredited investors that will invest in loans from LendingClub, Prosper, Funding Circle, and Lending Home. loanDepot announced that they have funded $100 billion in home, personal, and home equity loans since their inception in 2010. In yet another sign that positive sentiment seems to be returning to the industry, BorrowersFirst, an online consumer lending platform, announced last week that it has secured an additional $100 million in debt financing to accelerate loan originations and fund continued growth of its balance sheet. The Office of the Comptroller of the Currency issued OCC Bulletin 2017-7 as a supplement to OCC Bulletin 2013-29, which “governs the risk management frameworks maintained by OCC- regulated banks in establishing, monitoring and concluding third party relationships (including relationships with bank affiliates).” On Monday, we announced that LendIt has partnered with us for our 2017 Meetups–as a way to enrich the events–strengthening the depth and breadth of ourrelationships in the industry.

DiversyFund Takes Crowdfunding Real Estate Investment Giants Head On (Military Technologies), Rated: A

DiversyFund, Inc., announces the launching of its new full-service online crowdfunding real estate investment platform. DiversyFund principals, Craig Cecilio and Alan Lewis, have been delivering exclusive investment opportunities that generate high returns for their investors for over a decade. The company has planned to offer some unique features to its investors in the upcoming months. These are aimed to disrupt the current status quo of the industry.

With their new online crowdsourcing platform, DiversyFund is planning to become the key sponsor and lead developer to the majority of their projects, if not all of them. This is a key difference in their crowdfunding real estate investment platform. It makes them stand out since many of their competitors work with third-party sponsored projects and act only as mediators by providing technology to implement funding for outsourced deals.

AirBnb’s Fintech Future (The Financial Revolutionist), Rated: A

This week, word “leaked” that Airbnb is in advanced talks to acquire Tilt, a group payments/social network hybrid start-up that helps people split the cost of rent, dinners and events. Whether or not this deal happens (it probably will), the rumors support our view that of all the next-wave tech giants known as WASSUPPs (WeWork, AirBnb, Slack, Snap, Uber, Pinterest and Palantir), AirBnb is the most aggressive in embracing fintech as core to its business.

Crowdfunding takes aim at commercial real estate (Westfair Online), Rated: A

Despite a lack of data on the exact size of the real estate crowdfunding market in the U.S. – no federal agency or national trade association tracks those deals – the investment vehicle apparently is attracting a particular class of investor.

“This investor is typically younger,” said Ben Sayles, director in the Boston office of real estate brokerage HFF. “From what I am seeing, this person is high-earning, usually in the tech world – though maybe in the financial world – and doesn’t have a lot of expenses. They probably rent their apartment, do not have a car and have an extra income that they want to put to work.”

Among real estate professionals, the use of crowdfunding to raise capital also appears to be concentrated within a particular demographic.

“For a smaller commercial real estate developer or investor, the non-Donald Trump type, this can be a cheaper source of financing for a $10 million to $30 million project,” said professor Anthony Macari, executive director of graduate programs at Sacred Heart University in Fairfield.

Three Crowdfunding Sectors to Watch in in the US in 2017 (Crowdfunding), Rated: A

With investors becoming increasingly more comfortable with new Fintech platforms, the amount of money invested in crowdfunding in the Americas jumped from $11.4 billion in 2014 to $36.49 billion in 2015 — and Technavio market research analysts predict the overall industry will grow at a compounded average annual rate of 27% through 2020.

Since the first provisions of the JOBS Act went into effect, real estate has remained one of the most popular crowdfunding investment classes. The physical nature of buildings and land lends real estate more security than higher risk startups. And with a self-proclaimed real estate mogul now in the White House, many leading experts are predicting a record year for real estate. We are also seeing increasing issuer adoption — more real estate firms are launching their own crowdfunding platforms, and a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack.

In addition to standard real estate crowdfunding platforms, we think we will see an influx of hybrid platforms that allow users to not only invest but to solve other problems as well.

Last year’s announcement from OPEC to cut production in combination with President-elect Trump’s oil friendly appointments has oil and gas prices on the rise. Oil prices have already climbed 17.5 percent as of December 27 and show no signs of slowing. And investors are taking notice. EnergyFunders, a crowdfunding marketplace that allows investors to directly invest in U.S. oil and gas wells, reported a 45 percent increase in signups after OPEC’s announcement.

Impact investing, or investing in companies that bring about positive change in the world, is growing in popularity as more millennials enter the market. A recent survey from U.S. Trust states 93% of millennials believe that social impact is key to their investing decisions. Ryan Ràfols, CEO of Newchip.co an aggregation platform that uses Robo-advising to showcase impact investing crowdfunding offering, explains;

“Millennials want to invest in companies that can make a return while making a difference in the world.”

Elon Law dean addresses poor SoFi ranking (Biz Journals), Rated: A

Social Finance Inc. (commonly known as SoFi) ranks Elon among the bottom 10 law schools in the nation in its Return on Education Law School Rankings. It ranked Elon eighth out of the 10 worse schools. Elon’s graduates, SoFi said, average $87,680 in salary and $145,610 in debt.

Luke Bierman, dean of Elon Law, which is based in Greensboro, said he doesn’t argue that a law school degree requires a sizeable investment from a student in terms of both time and money. But he said Elon adopted a new curriculum two years ago intended to make it quicker and less expensive for a student to earn a law degree. He said the school’s current tuition is 20 percent below the national average for private law schools and said the new curriculum allows a student to graduate in 2.5 years as opposed to the three years required through a traditional curriculum.

He said the study released by SoFi doesn’t reflect students who have enrolled at Elon since the adoption of the new curriculum. The first group enrolled solely under the new curriculum, he said, will be graduating in December. He said it’s Elon’s hope that those students will be graduating with less debt.

Bitcoin P2P Lending Remains A Risky Business (Live Bitcoin News), Rated: A

On paper, the service provided by companies such as BTCJam is an excellent way to use Bitcoin. Extending loans to people from all over the world is a great solution to promote Bitcoin usage. Unfortunately, this concept still needs a lot of work, as there are a lot of caveats to using services such as BTCJam right now. In most cases, a lot of the loans are never repaid in full.

It is evident a lot of BTCJam users are losing money unless they are the borrowers for a specific amount of Bitcoin. In fact, some Reddit users argue the only people who benefit from using BTCJam are the ones who borrow money, and everyone else is losing money left, right, and center. BTCJam has been dealing with these issues for quite some time, yet it seems very little has changed over the past year or so.

Global Debt Registry Successfully Completes SOC 1 and 2 Attestation (Global Debt Registry Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced receipt of its Service Organization Control [SOC] 1 and SOC 2 Type 1 attestation engagement report, providing independent validation that the Company’s internal security controls are in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) applicable Trust Services Principles and Criteria. Just days after International Data Privacy Day on January 28, this attestation showcases GDR’s continued dedication to meeting the highest industry standards for protecting confidential consumer information.

GDR’s SOC 1 and 2 Report demonstrates that the Company has the necessary internal controls and processes in place to protect consumer data, maintain operational integrity, and comply with industry standards and regulations.  The SOC 2 engagement included evaluating GDR in accordance with the trust principles of security, availability, processing integrity, and confidentiality. The AICPA created the SOC guidelines to provide an authoritative benchmark for service organizations to demonstrate implementation of proper policies, operational practices and controls.

As a partner to online lenders, investors, warehouse lenders and other industry stakeholders, GDR delivers real validation and helps ensure asset certainty including protection against double pledging and double selling of assets with its suite of digital due diligence solutions. The Company contracted with KirkpatrickPrice for its SOC 1 and 2 engagement to meet the ongoing public and private reporting requirements of its financial institution clients.

GDR is also compliant with a number of additional industry standards, including PCI DSS (Payment Card Industry Data Security Standard), the GLBA (Gramm Leach Bliley Act) Safeguards Rule, and ISO 27002 (International Organization for Standardization 27002). As evidenced by the SOC 1 and 2 Report, the Company is continuing its focus on meeting the highest standards of data and information protection and operational integrity for its clients.

The 4 Best P2P Lending Platforms For Investors In 2017 — Detailed Analysis (Forbes), Rated: A

With interest rates at all-time lows since 2008 and many historically “safe” investments like government bonds carrying negative yields, investing in P2P loans in 2017 is a no-brainer.

Founded in 2007, Lending Club is the world’s largest P2P lending platform with over $20 billion in loan issuance. Lending Club has grown exponentially and currently has a 45% market share. It raised over $900 million from its IPO in 2014, but its share price has since fallen 72%.

Launched in 2006, Prosper was the first P2P platform in the US. It has since funded over $6 billion in loans and serviced over 2 million customers. Prosper grades borrowers through its Prosper Score. This proprietary system focuses on criteria such as debt-to-income ratio and other “soft checks” conducted by credit bureaus.

Launched in 2014 by a bunch of ex-Googlers, Upstart has originated more than $300 million worth of loans. Upstart uses unique grading criteria. It looks at FICO scores but also considers educational background. The firm has the lowest default rates across the industry thus far. Over 94% of loans are on track to be repaid in full. The company makes its money solely on origination fees from the borrower.

Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands. Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands.

Why More Consumers Are Seeking Alternative Investments (Newswire.net), Rated: A

However, modern consumers are starting to look at alternative investments, which stray from “conventional” standards either because they’re riskier, newer, less tested, or involve unknown variables. What you need to know about alternative investing is this: it’s on the rise, and there may be a benefit in jumping in early.

Types of Alternative Investments

  • Private lending. Private lending has grown in popularity in recent years, thanks to peer-to-peer apps that make it possible, such as Lending Club. Here, you may lend some of your own money to one or more private borrowers, who pay you back with interest.
  • Currencies. Currencies are constantly shifting in value against each other as various countries grow or shrink economically. Investing in a country’s currency when they’re poised for growth with an app like XE could result in a major gain.
  • Other tech-based solutions. There is also a rising number of new apps and technological solutions opening the doors to new investment possibilities. The rise of machine learning and automated investing solutions, like Wealthfront, is an example of this.

Manhattan Beach’s PeerStreet opens real estate investing to individuals (TBR News), Rated: B

Headquartered in Manhattan Beach just across the street from the town’s iconic 24-hour diner, The Kettle, PeerStreet may be located in a small beach town, but the reach of this real estate investment firm is national.

Crosby describes PeerStreet as an eTrade for real estate investing.

The business began right in the heart of Manhattan Beach, and currently has 50 employees. According to Johnson, they’ve recently received funding from venture capitalist Andreesen Horowitz and investor Michael Burry.

United Kingdom

Peer-to-peer lender Zopa passes £2 billion loans milestone (Business Insider), Rated: AAA

Zopa, the fintech businesses credited with inventing peer-to-peer lending, has passed £2 billion ($2.5 billion) in loans over its online platform.

The milestone means Zopa is still just about Britain’s biggest peer-to-peer lender by historical loan book. Funding Circle, which lends to small businesses, has lent £1.92 billion since its launch in 2010.

Zopa says in a release on Monday that the £2 billion in lending represents 300,000 loans made to 246,000 borrowers since its founding in 2005. 75,000 investors funded the lending over the platform.

Five mistakes to avoid when starting a fintech company (Banking Technology), Rated: AAA

However, what I feel very comfortable doing is pointing out some things that failed companies do, based on my experience in Startupbootcamp as well as building a number of successful companies. Here it goes:

  1. They forget to validate

Intuition, experience and opinions are important and helpful. However, building a fintech start-up based only on these three is very risky. A business can’t be built on limited data. Without really understanding if there is a real pain you are solving, a need you are fulfilling or knowing how many people would pay for your product or service you are multiplying the possibility of going after the wrong market, building the wrong solution or having the wrong commercial model or doing the wrong thing.

  1. They lose focus

 

Successful entrepreneurs focus on one thing at a time and they are very good at saying “No” to anything that would distract their real focus. This does not mean that they are not aware of what is going on around them or blindsided to changes or competition but they just know how to use their time efficiently.

  1. They focus too much on being “investable” and forget to build a sustainable business

It is easy to fall trapped to the chants of investors. It can be easy to believe that you have a sustainable business when an investor says that the company you started working on 12 months ago is worth £2 million. That does not mean that you have a business. It means that you can build a viable business. The criterion that investors use is not normally sustainability but potential for a large payout. Sometimes, those two factors are contradictory. Investors have to go for big money and some of these attempts fail.

  1. They don’t invest enough in team and culture

Building a fintech company is hard. The pressure is incredibly strong and never stops. Under continuous pressure, it is very easy for teams to crack and fall apart which in many occasions kill the company. A start-up’s biggest challenge is getting the team right and having the different skill sets covered to succeed. Complementing each other’s strengths and weaknesses is extremely important in small teams, especially with co-founders.

  1. They underestimate what it takes

The journey of an entrepreneur is incredibly hard and requires grit, execution and a lot of patience. In many cases, entrepreneurs get caught in the “fintech celebrity” hype and think that being on panels, and ranking high in different top lists and Twitter means success. Building a real business takes a lot of hours “in the basement”. Once the reality hits, many founders get bored and quit or fade.

Welendus – One Week on Seedrs (Welendus Email), Rated: A

One week has passed since the release of our Seedrs fundraise campaign with significant results.

Over the past week, Welendus attracted over 50 investors and raised over 25% of our target which only proves the level of interest people have in Welendus. The level of engagement and the discussion is another indication of how much people love Welendus.

We are raising £300k for equity in our company and would like to invite you to be one of our first investors and shareholders. You can access our Seedrs campaign at

Assetz Capital CEO Stuart Law Shares His 2017 P2P Lending Predictions (Crowdfund Insider), Rated: A

Nearly one month after ringing in the new year, Stuart Law, CEO and co-founder of peer-to-peer lending platform Assetz Capitalprovided his alternative finance predictions for 2017. 

Law stated:

“Brexit has already had a very positive effect on the peer-to-peer (P2P) market, and all indications signal that it will grow further in 2017 whilst bank lending remains subdued. With the larger platforms announcing record second half results in the six-month period after the Brexit vote, they are also attracting increasing amounts of capital in the form of equity.  Smaller P2P players however will likely struggle to lure the necessary lending or growth capital to survive independently, so we expect a degree of consolidation and some to drop out of the market altogether.

Alternative finance has certainly started to make its mark with savvy investors, but the biggest attraction to date will be the Innovative Finance (IF) ISA.  We predict that this will attract a huge amount of capital onto the main platforms and represent as much as 30% of all capital inflows to P2P platforms this year, assuming all large P2P lenders such as Assetz Capital get approved before the end of March 2016, and perhaps as much as 50% in 2018.

“The desire to invest in secured loans will increase amongst lenders and professionals.”

P2P Lender Flender Closes Successful Seedrs Campaign (Crowdfund Insider), Rated: A

P2P lending platform Flender has officially closed its successful equity crowdfunding campaign on Seedrs. Originally seeking £500,000, the initiative secured a total of £501,700 from more than 230 investors.

Flender stated it does not consider itself a traditional P2P platform with an anonymous marketplace. Instead, its team believes that it will help businesses create lasting bonds with customers, and for consumers to reach through their existing networks and be part of each other’s success. And at the same time, underpinned with legal contracts created by the platform between borrowers and lenders.

ArchOver Announces P2P Business Lending Services Expansion (Crowdfund Insider), Rated: A

On Friday, peer-to-peer business lending platform ArchOver announced it is expanding its current “Secure & Insured” lending model by launching “Secure & Assigned” business loans.

According to the lender, the first Secured & Assigned loan will be for Ergowealth, a firm of chartered financial planners based in Marlow, Buckinghamshire.

The loan announcement comes just a couple of months after ArchOver revealed it was extending its exclusive partnership with international credit insurer and collections company Coface by a further three years.

Banks and lenders face clampdown from the Bank of England on household borrowing (This is Money), Rated: A

The Bank is due to release figures this week showing that the growth in personal loans and credit cards is running at more than 10 per cent a year.

Lenders have been slashing rates in the past six weeks and banks including TSB are offering unsecured personal loans at less than 3 per cent.

The rock bottom rates come alongside cheap loans by peer-to-peer lenders which bypass the banks by allowing loans between private individuals. Ratesetter and Zopa are offering loans at just 3.1 per cent and 3.2 per cent respectively.

Funding Circle welcomes new BDM (Bridging & Commercial), Rated: B

Funding Circle has announced the appointment of Sarah Beard as its new business development manager.

Prior to joining Funding Circle, Sarah spent three years at Lease Plan as an account manager and three-and-a-half years at Hitachi Capital Business Finance, where she managed a portfolio of 30 introducers.

Sarah, who will be based in Bristol, said she was very excited about joining the company.

European Union

Spanish Banks Lead FinTech VC Investments Against Their European Peers (The Corner), Rated: AAA

Citi’s analysts also take a look at how different the FinTech evolution has been in the West: (1) the U.S. pivoted to InsurTech in 2016; and (2) two of the largest U.S. FinTech VC funding rounds in 2016 were in the health insurance space. Big data, the Internet of Things (IoT), and wearable devices, among other trends, will help insurance companies use FinTech to be more creative and customized.

Europe remains a laggard for start-ups/VC investing at about 10% of global FinTech VC investment in 2015-16. This is not a big surprise as Europe has a smaller VC market versus the U.S., it has none of the large technology/Internet companies that exist in the U.S. or China and its banking system (despite the sector’s weak stock prices, earnings and capital challenges of the past decade) offers more of a full-service provision versus U.S. or Chinese peers.

As reported by Citi:

European banks are increasingly interested in FinTech and with more bank investors and affiliates, we will see more of a shift to business-to-business (B2B). In 2017 we expect more focus on B2B FinTech topics, such as Artificial Intelligence, especially in London which is a hotspot with DeepMind and its concentration of universities; regulatory tech both in the U.K. and the U.S.; and cybersecurity primarily in the U.S. and Israel.

European Crowdfunding Networks Calls for Members to Assist with EU Crowdfunding Regulatory Review (Crowdfund Insider), Rated: AAA

The European Crowdfunding Network (ECN), a pan-European alternative finance advocacy group, is asking members to participate regarding input on the Capital Markets Union.  Specifically, the ECN will be working with the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) regarding input on obstacles to cross-border

The ECN will also launch an open survey to all EU securities and lending crowdfunding platforms with will deliver input for the European Commission’s review of the Capital Market Union and which will be followed up by individual interviews with interested parties.crowdfunding for both online lending (peer to peer lending) and equity crowdfunding.

Australia

Tyro, RateSetter, Stockspot and Westpac on 2016 and the year ahead (The Mitchel Lake Group), Rated: AAA

CK: The transferability of information is huge with a growing number of middleware, SaaS applications and APIs. Sharing data and improving collaboration in the market is continually on the improve, benefiting the customer.

DF: Investors are much more discerning in the businesses they back. This will be better in the medium term, but it’s been difficult for some businesses locally.

CB: This year Stockspot became the first robo-adviser in the world to give clients the flexibility to personalise their portfolio with the launch of Stockspot Themes. We’ve already managed to generate some fantastic net returns for early adopters (6.2% and 9.2% per year) while charging clients less.

DF: For RateSetter, expanding our offering from consumer lending to business lending was a significant development. In Australia there’s been a real lack of business financing options outside residential property-secured bank finance and expensive short-term working capital finance, so we’re excited that RateSetter now offers Australian businesses a low-rate funding alternative to help them grow and prosper.

JS: My biggest highlight has been Tyro receiving a bank license. We are the only tech company to have achieved this so far. This was such a massive win for us and the sector. Following this, we were then able to deliver next-gen banking, a cloud-based, totally mobile & totally integrated banking solution for SMEs and growth companies.

JS: The FinTech community has limited potential if banking is not opened up. In a way, Australia is cursed by the entrenched bank oligopoly. If we don’t get our act together and open up banking, the next-gen banking providers will not be Australian.

CB: There are two things the Government could do to improve fairness for consumers when it comes to investing and superannuation. One is to require all superannuation and managed funds to provide fee and performance data to comparison websites so consumers can easily compare fund options. The second is to implement a public tender for the right to manage default super funds as outlined by the [Grattan Institute]( Chile established public tenders for the right to manage default super funds and it has reduced average annual super fees by 50%.

John Cummins Appointed New CIO for Australian Marketplace Lender SocietyOne (Crowdfund Insider), Rated: A

The Australian largest marketplace lending platform SocietyOne announced John Cummins has joined the group as CIO, according to The Advisor. Reporting to SocietyOne CEO and MD Jason Yetton, Cummins will be responsible for SocietyOne’s funding requirements to support demand from an expanding number of borrower customers, including building on SocietyOne’s existing network of investor funders which features large financial institutions, mutual banks, credit unions, high net worth individuals and SMSFs.

India

India Money Mart Serves as a P2P Lending Platform (Military Technologies), Rated: A

With India Money Mart serving as a P2P lending platform, borrowers and lenders find transactions easy. This online market place provides a reliable platform for both lenders and borrowers in India with a minimal operational cost.Lenders and borrowers can avail loan facilities at their own will. Borrowers can choose single or multiple lenders at the same time. IMM ensures that these transactions are carried forward without any hassles or meeting one another personally.

Through an easy lending process, Kissht helps consumers avail quick loans (YourStory), Rated: A

There is an entire population that has the money to repay loans, yet mainstream banks reject their loan applications. This does not favour consumer spending, although consumption has grown in this country. According to data available with the RBI there are only around 27 million credit cards in the country, and 300 million bank accounts. In 2016, although personal loans were 22 percent of all bank credit disbursed, several Indians remained without personal credit.

With this as the backdrop, Krishnan Vishwanathan, a consultant from McKinsey, wanted to find a fix to help people consume. Giving up his lucrative career, he set up Kissht, which means EMI  in Hindi, to provide collateral-free loans for products that consumers want to purchase. The total loans disbursed so far are to the tune of Rs 17 crore, with over 9,000 customers.

Asia

Peer-to-peer lending platform awaits BOT nod (The Nation), Rated: A

VORAPOL PHORNVANICH, chief executive of PeerPower, a financial-technology start-up, aims to create a new online peer-to-peer lending platform for investors and borrowers.

“At present, investors and savers in Thailand earn a relatively low return on their funds, averaging 0.5 per cent for savings accounts, 2-2.5 per cent for fixed deposits and 4-4.5 per cent for corporate bonds.

“On the other hand, if you are a borrower, you have to pay a relatively high interest rate on consumer loans, which have no collateral. Interest rates are currently as high as 15-36 per cent per annum. The interest-rate spread is huge, so we think this new online platform can help narrow the gap between deposit and lending rates as happens in other countries.”

Authors:

George Popescu
Allen Taylor