Friday May 18 2018, Daily News Digest

Seedinvest returns vs traditional

News Comments Today’s main news: PayPal to buy iZettle. LendInvest integrates with Stripe. KBRA assigns preliminary ratings to Avant Loans Funding Trust 2018-A. Ant Financial extends dominance. Today’s main analysis: SeedInvest delivers 17.4% IRR. Today’s thought-provoking articles: UK tech expanding faster than the rest of the economy. Why spreading fiber optic cable in Africa offers hope. Digital transformation is key […]

Seedinvest returns vs traditional

News Comments

United States

United Kingdom

European Union

International

  • PayPal to acquire iZettle for about $2.2 billion. AT: “This is huge news. If PayPal becomes a regular option in retail stores alongside Visa and Mastercard, it could become the defacto payment option for the majority of consumers. Of course, it will still have to compete with Square, Affirm, and Klarna. It’s bright spot is the massive head start is has over all of the above.”
  • Bitcoin boosts fintechs. AT: “I just can’t see any way that lenders and othe fintech companies to lose by offering crypto alternatives to their current products.”

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2018-A (Business Wire) Rated: AAA

-Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2018-A (“AVNT 2018-A”). This is a $221.935 million consumer loan ABS transaction that is expected to close on May 31, 2018.

Preliminary Ratings Assigned: Avant Loans Funding Trust 2018-A

Class Preliminary Rating Expected Initial

Class Principal

A A- (sf) $149,010,000
B BBB- (sf) $47,500,000
C BB- (sf) $25,425,000

SeedInvest Publishes Report on Investor Returns, Delivers IRR of 17.4% (Crowdfund Insider) Rated: AAA

SeedInvest, one of the largest investment crowdfunding platforms in the US, has released a performance report on investor returns. SeedInvest has been in operation since 2013 following the creation of accredited crowdfunding under Title II of the JOBS Act (Reg D 506c). Since that date, SeedInvest has become a full stack crowdfunding platform offering investments in the three different crowdfunding exemptions to both accredited and non-accredited investors.

Source: Crowdfund Insider

According to SeedInvest, investors on their platform have generated an unrealized Internal Rate of Return (IRR) of 17.4%1 since 2013. In comparison, this number is 1.5x greater than the 11.7% median return calculated by research firm Cambridge Associates for U.S. venture capital funds of the same vintage. The term of the report was up to the end of 2017.

SeedInvest said that the top 10% of their listed investors generated an a whopping 76.86% IRR while the bottom 10% delivered a negative 7.4% IRR. SeedInvest estimated that only 1.3% of their platform investors who have invested in three or more companies have generated negative unrealized IRR.

Check out the full report here.

Study Details Why Women Entrepreneurs Have Greater Crowdfunding Success (Entrepreneur) Rated: A

Crowdsourcing has emerged as a positive platform for women. The National Women’s Business Council released a report — Crowdfunding as a Capital Source for Women Entrepreneurs — based on exclusive and original data from the two leading crowdsourcing platforms, Kickstarter and Kiva. The goal was to determine various predictors of success on crowdsourcing platforms for women business owners, and if those predictors of success were different than their male counterparts.

Real Estate Crowdfunding Platform Small Change Lists Side by Side Reg CF – Reg D 506c Offer (Crowdfund Insider) Rated: A

Recently, Small Change has listed their first side-by-side Reg D 506c / Reg CF offering thus leveraging a work around other securities crowdfunding platforms in the early stage space have incorporated.

 

The SEC Just Launched a Fake ICO Website to Educate Investors (CoinDesk) Rated: A

The regulator announced Wednesday it has launched a mock ICO called HoweyCoin, presumably named after the Howey Test, which “touts an all too good to be true investment opportunity.”

However, the company notes, “the offer isn’t real.” Users who try to invest in the token sale will instead be redirected to the regulator’s education tools, which are aimed at pointing out the signs of fraudulent token sales.

BlackRock’s bet on Acorns is a bet on tomorrow’s investor (Financial Planning) Rated: A

BlackRock’s investment in microinvesting app Acorns underscores an evolution occurring in financial services in its shift toward digital — that gaining scale early will be essential to amassing future client assets.

The world’s largest asset manager is leading a $50 million funding round that will build out the startup’s portfolio stack with new investment options. It also gives BlackRock an inside look into the behavior of next generation investors, which it says will help fine-tune future releases and broaden its appeal beyond large institutions and pension funds.

Fundation grabs $ 120 mln from SunTrust (PE Hub) Rated: A

Fundation Group LLC, a lender and credit solutions provider, has secured a $120 million credit facility from SunTrust Bank. Fundation is also backed by Waterfall Asset Management and is majority-owned by Garrison Investment Group.

TransUnion Announces Agreement to Acquire iovation to Strengthen Fraud and Identity Solutions (Omaha World-Herald) Rated: A

TransUnion (NYSE:TRU) has agreed to acquire iovation, one of the most advanced providers of device-based information in the world, strengthening its leadership position in fraud and identity management.

PR Mortgage & Investments Selects SS&C Precision LM to Support Its Agency Lending Operations (SS&C Technologies) Rated: B

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced that PR Mortgage & Investment Corp. (“PR Mortgage”) has selected SS&C Precision LM to support loan servicing and origination for HUD/Ginnie Mae, Fannie Mae, Freddie Mac and its banking programs. SS&C Precision LM will also enhance PR Mortgage’s asset management and investor reporting, and provide secure web-based portals for borrower self-service and document workflow automation.

United Kingdom

LendInvest Announces Integration With Payments Platform Stripe To Streamline Loan Application Process (Crowdfund Insider) Rated: AAA

On Thursday, specialist property finance lender LendInvest announced it has expanded on its long-term partnership with Stripe by integrated the payments platform in order to streamline its loan application process. According to the online lender, the new integration will be embedded in the primary stages of the buy-to-let loan application process. LendInvest reported:

“Stripe allows the broker to pay the valuation fee through LendInvest’s online buy-to-let portal immediately after the borrower’s application forms have been signed. This process was previously handled manually, with the case manager having to call the broker and then the borrower to arrange payment. Managing these payments centrally through LendInvest’s self-service online portal cuts down the overall time taken to complete the application, whilst providing a transparent way to track this stage of the application process.”

Tech Nation 2018 report: UK tech expanding faster than the rest of the economy (Information Age) Rated: AAA

Tech is expanding 2.6 times faster than the rest of the UK economy, according to Tech Nation’s 2018 report. The digital tech sector is worth nearly £184 billion to UK economy, up from £170 billion in 2016.

London ranks as second most connected place for tech in the world, after Silicon Valley. But, when it comes to proportion of overseas customers, the UK capital trumps the self-appointed tech capital of the world.

The UK’s digital tech sector continues to accelerate faster than the rest of the economy, according to Tech Nation 2018. Turnover of digital tech companies grew by 4.5% between 2016-17 compared to UK GDP which grew by 1.7% over the same period, according to the figures.

HSBC to tap Open Banking potential through new partnership (AltFi News) Rated: A

HSBC UK is set to capitalise on the opportunities presented by Open Banking after agreeing to a partnership with consents.online, an Account Information Service Provider (AISP).

Under the deal, HSBC can access consumer transaction data held by other organisations. The bank plans to use this information to launch new consumer products.

It will also use consents.online’s consent management architecture, which allows consumers to view and control how their data is used. The platform gives consumers and small businesses the ability to see who is accessing their data and to control access – with the power to revoke it at any time.

Peer to Peer (P2P) Lending – Withholding Tax Obligations – Borrowers (and Lenders) Beware (Lexology) Rated: A

Borrowers and lenders should be aware that currently Ireland’s withholding tax regime has not been amended for P2P Lending (aside the ability in certain circumstances to group payments together to the same lender in a calendar year) and in that regard the Irish Revenue Commissioners have issued a timely Revenue eBrief reminding Irish corporate borrowers (as well as lenders) of their Irish tax obligations. In particular the general obligation on an Irish corporate borrower2 to, amongst other things, withhold tax on interest payments made on the finance raised, at the standard rate (currently 20%) subject to certain exceptions, most of which will not apply where the lender is an individual, regardless of where resident.

Ablrate takes equity stake in Huddle (Peer2Peer Finance) Rated: A

ABLRATE has taken an equity stake in fellow peer-to-peer lender Huddle, as part of a wider strategic partnership between the two platforms.

Under the new deal, Ablrate has taken a minority holding in the business lender and the two platforms will share their investor bases.

 

Atom Bank launches mortgages for first-time buyers (AltFi News) Rated: A

Digital banking app Atom has launched first-time buyer products on its standalone Digital Mortgages platform.

The new loans will offer first-time home-buyers £500 cashback, along with a free valuation and no product fee. The newly-launched range will be available for mortgages between 80-95 per cent loan-to-value (LTV). The range consists of two, three and five-year fixed rates mortgages, with rates starting at 2.24 per cent.

The platform has also extended its existing range by adding 95 per cent LTV products for its purchase and remortgage products.

Furthermore, Atom has removed the £300,000 limit on first-time buyer applications and increased its maximum mortgage term from 35 to 40 years – changes meant to increase its flexibility and in line with broker feedback.

BitBose ICO (BOSE Token): Crypto Lending & Investment Platform (Bitcoin Exchange Guide) Rated: B

  • The platform will also have the Bitbose crypto loans program that will allow users to be able to receive real cash by holding to their crypto assets in a secured platform. The program offers an easy way for users to get money without having to sell their crypto assets. The program will have an easy to borrow and lend application, almost instant approval of loans and the borrower will get their cash instantly since it will be credited to borrower’s bank account. The interest rates are also competitive and do not have advance payment requirements. Another significant feature of the program is the lack of a capital block. Users of the program can withdraw their assets back anytime.
China

Ant Financial extends dominance in Chinese online finance (Financial Times) Rated: AAA

In documents reviewed by the FT Ant Financial says they now have more than 620 million users and their wealth management business has $345bn in assets under management; the information was put together for investors as the fintech company looks to raise $10bn of new capital; reports say the round is already oversubscribed and would value Ant Financial at more than $160bn

European Union

Hermes launches European Direct Lending Fund (AltFi News) Rated: A

Hermes Investment Management has launched the Hermes European Direct Lending following on from the launch of a UK direct lending fund in 2016.

Also headed by Patrick Marshall, Hermes head of private debt & CLOs, the European focused direct lending fund aims to offer institutional investors access to stable, low-correlated returns from high-quality, senior-secured loans.

These loans are typically to middle-market businesses in the UK and Europe, with a focus on Scandinavia, Germany, Benelux and Ireland.

Lendix Appoints Luuc Mannaerts As New CEO of Lender Nederland (Crowdfund Insider) Rated: B

Earlier this week, France-based online lending platform Lendix announced it has appointed Luuc Mannaerts as the new CEO of Lender Nederland, Lendix’s Dutch subsidiary. According to the online lender, Mannaerts has more than 20 years of experience in the Dutch and European banking sector.

Prior to joining Lendix, Mannaerts was CEO of ABN AMRO Commercial Finance, an ABN AMRO subsidiary with over 500 employees and specializing in SME finance in the Netherlands, the UK, France, and Germany. Lendix also revealed that thanks to his background, Mannaerts has specialized knowledge of the Dutch SME fabric

International

PayPal Agrees to Buy European Fintech Startup iZettle for About $ 2.2 Billion (Wall Street Journal) Rated: AAA

PayPal Holdings Inc. has agreed to buy European financial-technology startup iZettle AB for about $2.2 billion, a move that would catapult the U.S. digital-payments giant into hundreds of thousands of brick-and-mortar retailers around the world.

The acquisition, the largest in PayPal’s history, sets up a showdown between the San Jose, Calif., company and Jack Dorsey’s Square Inc.

Bitcoin is steroids for fintech startups that big banks are afraid to touch (Quartz) Rated: AAA

Making money by trading bitcoin, whose price has fallen by about 40%this year, has been difficult lately. But startups that provide services supporting crypto markets are faring much better. Companies like Revolut, a payment app, and Robinhood, a mobile broker, scoredlegions of new customers after they added buying and selling of digital tokens to their services.

TransferGo, a remittance company, is another fintech upstart that plans to offer crypto trading to customers. CEO Daumantas Dvilinskas says users were asking for ways to buy digital assets—about 4,000 people pre-registered for the service in just a few hours. The London-based firm, which announced today that it raised an additional $10 million from venture capital investors, will soon allow customers to buy and sell bitcoin, ethereum, XRP, litecoin, and bitcoin cash.

India

Fintech Startup Open Raises Pre-Series A Funding (Inc42) Rated: AAA

Bengaluru-based fintech startup Open Financial Technologies has raised an undisclosed amount of pre-series A funding led by Unicorn India Ventures and Recruit Co. Ltd, through its investment subsidiary RSP India Fund LLC.

Existing investors ISME-ACE and Vaibhav Domkundwar’s BetterCapital AngelList syndicate also participated in the round.

How has lending Money to SME evolved in India? (The Indian Wire) Rated: A

According to a report by Planning Commission of India, the MSME sector comprises 30 million establishments. It generates employment for 70 million people, manufactures over 6000 products, and contributes 45% to manufacturing output and 40% to exports. These statistics validate the fact that MSME sector is the backbone of the Indian economy.

There are several reasons why small and medium-size enterprises are unable to secure easy and quick business loans in India:

  • They do not have hard assets to mortgage, which disqualifies them from loans offered by most credit channels.
  • They do not have documented credit scores to assess their creditworthiness.
  • The loan application process in banks and other mainstream financial institutions is very tedious.

 

Asia

Validus, Lighthouse Canton launch S$ 20m SME financing fund (The Business Times) Rated: A

VALIDUS Capital and Lighthouse Canton Group launched a S$20 million fund to finance small and medium enterprises (SMEs) in Singapore on Friday, and hope to grow the fund to S$200 million in the next three years.

The LCV Trade Finance Fund will invest in loans that originate from Validus’ peer-to-peer lending platform.

Africa

Why the Spreading Network of Fibre Optic Cables Carries So Much Hope for Africa (Equities) Rated: AAA

The growing fibre infrastructure also has a direct impact on labour markets across the continent as the demand for specialized technicians and engineers increases. Plus, because fibre gives users and businesses access to more bandwidth, this technology is helping spur growth for small businesses directly and indirectly.

To illustrate, online P2P lending platforms such as Kiva and Lending Club have become quite popular with small businesses around the continent that now maintain an online presence. As a result, small business owners have ready access to unsecured business lines of credit, which helps them grow outside the confines of traditional financial systems.

Latin America

Why Digital Transformation Is Key to Argentina’s Future (Knowledge@Wharton) Rated: AAA

A surging U.S. dollar is playing havoc with its interest rates and the central bank pushed the key rate from 27.25% to a stunning 40% recently to support the peso. Even that was not enough to stem the run on the currency, and last week the government requested aid from the International Monetary Fund in the form of a $30 billion credit line.

In a country that has one of the smallest financial systems in the world as a percentage of GDP (14%), some of the world’s highest interest rates, and where nearly half of the population is unbanked, the opportunities presented by digital technologies are tremendous.

These include 123Seguro, the largest online insurance broker in Argentina, Mexico and Colombia, which is growing over 50% per year with an admittedly simple offering, and Afluenta, a peer-to-peer lending platform serving Mexico, Peru, Colombia and Argentina, and now expanding into Brazil, Chile and Uruguay.

Authors:

George Popescu
Allen Taylor

Friday March 9 2018, Daily News Digest

Friday March 9 2018, Daily News Digest

News Comments Today’s main news: What SoFi pays for prime customer acquisition. Funding Circle investors lent over 113M GBP in February. Landbay hit 100M GBP lending milestone. Atom Bank secures 149M GBP, BBVA ups stakes. Today’s main analysis: LendingTree personal loan offers report – February 2018. Americans owe more than $1T in credit card debt. Today’s thought-provoking articles: Americans […]

Friday March 9 2018, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

India

Africa

News Summary

United States

SoFi Is Paying Top Dollar To Acquire Its Prime Customers (Fast Company), Rated: AAA

Last year, even as a sex scandal engulfed the six-year-old company, SoFi originated $12.9 billion in loans, added 225,000 customers, and turned a profit.

All told, SoFi spent $170 million on marketing in 2017, or $756 to acquire each new customer, according to data obtained by Fast Company and confirmed by the company. This year, SoFi plans to spend $200 million.

Other online lenders targeting prime borrowers, like Lending Club and Prosper, typically spend $350-$450 to acquire each customer, industry experts say.

Judge ‘Shocked’ By $ 16M Atty Fee Bid In LendingClub Deal, (Law 360), Rated: A

A California federal judge said he was “shocked” attorneys want $16 million for representing LendingClub Corp. investors in two securities class actions against the peer-to-peer lending company, telling the plaintiffs’ lawyers at a hearing Thursday they “may be being greedy” by asking for that much of the $125 million settlement.

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

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.44% in February.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.44%, an increase of 3 basis points from the prior month, but down 19 basis points from the same period one year ago.
  • At $23,689, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above was down 2.23% ($528) from January, but up over 21.44% ($5,078) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 4.97% on average, and loan amounts of $33,050. A borrower with this APR and loan amount would save $2,748 by consolidating debt with a 10% APR over a three-year term.
Source: LendingTree

Good credit (680 – 719 score): Offered APRs to consumers with a credit score between 680 and 719 averaged 15.69% in February.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.69%, down 10 basis points from last month, but up almost 126 basis points from a year earlier.
  • At $16,272, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs increase by almost 4% ($644) in the last month and by almost 5% ($795) from February 2017.
  • The top 10% of offers, presented to borrowers with the best profiles within the 680 – 719 credit score range, had an average best APR of 6.75%, offered with an average loan amount of $24,484. A borrower with this APR and loan amount would save $3,440 by consolidating debt from a 15% APR over a three-year term.
Source: LendingTree

Credit Card Debt Study: Trends & Insights (WalletHub), Rated: AAA

Americans now owe more than $1 trillion in credit card debt for the first time ever, after adding a post-Great Recession record $92.2 billion to our tab in 2017. Only four times in the past 30 years have we spent so much in a year. And in each of those prior cases, the charge-off rate – currently hovering near historical lows – rose the following year.

Source: WalletHub

The $67.6 billion in credit card debt that we added in Q4 2017 is the highest quarterly accumulation in the last 30 years – 68% higher than the post-Great Recession average.

Source: WalletHub
Source: WalletHub

 

 

Fintechs on Bank of Amazon: It’d be a net plus (American Banker), Rated: A

When Chris Britt, founder and CEO of the challenger bank Chime, heard that 

Brett King — founder of Moven, which is on its way to becoming a U.S. challenger bank — had a similar reaction.

“I’m frankly surprised it took them this long, given Alibaba’s massive success with Yue Bao,” he said, referring to the money market fund the online retailer formed that now has more than 370 million investors.

Kathryn Petralia, co-founder and president of the small-business lending fintech Kabbage, also liked the idea of Amazon offering checking with a large bank partner.

“It made perfect sense to me,” she said. “It seems like Amazon is doing this to enhance the customer experience, and they have a really strong focus on customer experience and customer service.”

Kabbage already competes with Amazon for small-business loans. Amazon began making loans of $1,000 to $750,000 in 2011. Last June, the company said it had issued more than $1 billion in loans during the previous 12 months and $1.5 billion in loans in the four years prior. Kabbage has made $4 billion in loans since it started in 2009.

Small-bank contract negotiators expand from core systems to fintech (American Banker), Rated: B

The consulting firm Paladin fs announced on Tuesday that Alex Lopatine, who founded the cloud-based core systems provider Nymbus, will be the managing director of its new “FinTech Advantage,” a unit dedicated to helping banks buy financial technology “needed to remain competitive and successful in the fast-evolving industry,” according to a press release.

St. Vincent de Paul Society’s alternative to payday loans (The Arlington Catholic Herald), Rated: A

 

In 2014, the Arlington District Council of St. Vincent de Paul Society began looking into the issue. In February, the group launched the Alternative Loan Program. People who qualify will be eligible for a loan of up to $1,000 to escape debt due to a payday loan. For people who need help with housing utilities, or medical bills, “we’ll still administer our assistance program,” said George Degnon, chairman of the loan committee.

To help run the program, the council partnered with Apple Federal Credit Union, which has several branches around Northern Virginia. “(The society) will maintain deposits at Apple Federal to serve as security for loans to borrowers whom the society recommends,” the group said in a press release. An interest rate of 3.1 percent will be retained by Apple Federal to cover administrative costs of the program.

Borrowers are required to take a budgeting class before qualifying for a loan, and can repay at a rate of just $25 a month, said Degnon.

Will 2018 Be the Year the Mortgage Industry Finally Bridges the Digital Divide? (JD Power Email), Rated: A

It should come as little surprise to those familiar with the mortgage industry that attendees at the recent Mortgage Bankers Association Annual Servicing Conference overwhelmingly selected Technology & Innovation when asked what their priorities were for 2018.

Digital Interaction Improves Mortgage Customer Satisfaction
For the first time, the 2017 J.D. Power U.S. Primary Mortgage Origination StudySM found both refinance and purchase customers cite online/website as the most frequent method of submitting a mortgage application. A total of 43% of mortgage customers report applying digitally in 2017, up from just 28% in 2016. Customers applying digitally also report substantially higher overall satisfaction with the mortgage origination process.

Still Need a Human Touch – Balancing Self-Service with Live Support Presents Challenges
The J.D. Power 2017 U.S. Retail Banking Satisfaction Study was the first to introduce
the idea of the “rise of the retail banking omnivore,” a financial services consumer that flips seamlessly through multiple interaction channels. Specifically, the study found that more customers than ever are using mobile banking (49% of Millennials, 31% of Gen X and 16% of Boomers). Despite this widespread adoption of the digital channel, 71% of all bank customers visited the branch an average of 14 times over the past year. Among Millennials, 71% used the branch, averaging 11 visits in the past year.

Source: J.D. Power

View the full report here.

HomeUnion Launches Investimate to Determine a Home’s Value as an Investment Property (Business Wire), Rated: A

HomeUnion, the leader in online residential real estate investing, has launched Investimate, a tool that enables consumers to see the potential value of a house as an investment using AI and machine learning. Investimate predicts a property’s investment value by estimating three factors: its price, rent, and operating expenses. Investimate is powered by big data on 110 million homes, institutional-quality research and on-the-ground experts with deep insight into local real estate market conditions.

With the launch of Investimate, HomeUnion is the only website that forecasts the performance of residential properties over a period of 15 years. After entering the address of a house, a consumer views comprehensive information on that property, including yields, appreciation and total returns. HomeUnion’s Investimate also displays in-depth information about the physical characteristics of each property, surrounding neighborhoods, historic price and rent trends, sales comps and other detailed information.

Real estate tech company Qualia closes $ 33M Series B (Bankless Times), Rated: A

Qualia, a real estate technology company streamlining the home closing process, today announced the closing of a $33M Series B led by Menlo Ventures with participation from 8VC, Bienville Capital, and Barry Sternlicht. With this new capital, Qualia will expand its engineering and product teams and accelerate their growth into additional markets across the U.S.

BBX Capital Corporation Reports Financial Results For the Fourth Quarter and Full Year, 2017 (MarketWired), Rated: A

Fourth Quarter 2017 Compared to Fourth Quarter 2016:

  • Total consolidated revenues of $214.7 million vs. $198.5 million, an increase of 8.2%
  • Net income attributable to shareholders of $44.0 million vs. $4.9 million
  • Diluted earnings per share of $0.43 vs. $0.05
  • Benefit for income taxes of $37.3 million vs. a provision for income taxes of $12.5 million due to a decrease in net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act (2)
  • Free cash flow of $19.6 million vs. $16.0 million (1)

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016:

  • Total consolidated revenues of $815.8 million vs. $767.3 million, an increase of 6.3%
  • Net income attributable to shareholders of $82.2 million vs. $28.4 million
  • Diluted earnings per share of $0.79 vs. $0.32
  • Benefit for income taxes of $7.2 million vs. a provision for income taxes of $36.4 million primarily due to a decrease in net deferred tax liabilities (2)
  • Free cash flow of $43.6 million vs. $68.2 million (1)

Balance Sheet as of December 31, 2017 Compared to December 31, 2016:

  • Total consolidated assets of $1.6 billion vs. $1.4 billion
  • Total shareholders’ equity of $573.2 million vs. $454.6 million
  • Fully diluted book value per share of $5.52 vs. $4.22

Three equity crowdfunding platforms you should consider (Born2Invest),  Rated: A

Indiegogo

Founded in 2007, Indiegogo remains to be one of the most popular and easy-to-access crowdfunding platforms to date. The website is home to countless crowdfunding projects, most of which are gadgets and technological innovations. Some of the successful campaigns out of Indiegogo are the ONAGOfly smart droneSondors THIN electric bike, and popSLATE2, which serves as a second screen for iPhones.

Other than a huge selection of startups to invest on, Indiegogo is also one of the few crowdfunding platforms that provide initial coin offerings (ICO) for new cryptocurrencies, according to Black Enterprise.

SeedInvest

The minimum investment to be made at SeedInvest is $500. Also, since the projects on the website are highly vetted and promising, chances of success are bigger. The platform offers a customizable auto invest program that allows people to diversify their investments in up to 25 startups as well.

StraightUp

For New Yorkers, StraightUp is going to be of great help. Coming straight out of the incubation of HAP Ventures, the company carries a deep knowledge of property crowdfunding and The Big Apple’s real estate market.

What StraightUp does differently from other competitors in its field is that it invests along with its clients. Whatever project their client finds interesting, StraightUp also supports by being a part of its crowdfunding. In doing so, the interest between StraightUp and its clients are in line with each other.

Lendio adds Gainesville-Ocala franchise (Bankless Times), Rated: B

Small business loan marketplace Lendio today announced the opening of a new Lendio franchise in the Gainesville-Ocala, Florida region. Through the Lendio franchise program, Luis Salazar will help local businesses in the community apply for loans, review their options and secure funding, easing the financial hurdles for small business owners.

Lendio is an online service helping business owners find the working capital they need to grow their business through the company’s network of more than 75 lenders. Funding options include SBA loans, startup loans, equipment loans, and commercial real estate loans. In the last fiscal year alone, Lendio facilitated more than $300 million in funding.

 

HR Buzz: March Madness, Taxes and Mobility, Disappointing HiPos (Bloomberg), Rated: B

More than seven in 10 (71.4 percent) student debtors consider benefits covering their loans to be an important or very important factor when pondering job offers, a survey commissioned by student loan consolidation and refinancing service LendEDU and online lender Laurel Road found.

More than half (53.1 percent) would stay in a job they disliked if it was helping them pay off their student debt, and 58.4 percent would take a loan repayment benefit instead of additional vacation days. The survey was done Feb. 8-9 among 1,000 student borrowers who graduated between 2012 and 2017.

EnTrustPermal Expands Alternative Investment Capabilities With Dedicated Aviation Financing Team (PRNewswire), Rated: B

EnTrustPermal, a global alternative asset manager, today announced the expansion of its private debt opportunities investment platform with the addition of John Morabito, a veteran aviation investor from the CIT Group.  EnTrustPermal’s private debt opportunities capabilities now include direct leasing and financing vehicles in the maritime and aviation industries.

Commercial Real Estate Veteran Joins PeerStreet to Lead Commercial Real Estate Team (BusinessWire), Rated: B

PeerStreet is excited to announce the appointment of Greg Galusha as Head of Commercial Real Estate. He will be based in the firm’s headquarters in Los Angeles, California.

Galusha is responsible for leading PeerStreet’s growing commercial real estate division, which will help PeerStreet expand and enhance the current spectrum of commercial real estate investments offered through its marketplace.

 

Elevate Named as Finalist for LendIt Fintech 2018’s Financial Inclusion Award (Business Wire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2018. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

United Kingdom

Landbay Milestone: Hits £100 Million in Lending (Crowd Fund Insider), Rated: AAA

UK-based peer-to-peer lender Landbay announced this week it has hit its £100 million in lending milestone. The online lending platform achieved its half-way point in lending this past September and revealed that since then momentum has accelerated to result in near-on double of lending volumes in just six months. The lender also noted that the amount to more than £4 million in interest was earned by its investors from loans originated by its platform.

Landbay also confirmed that while lending volumes are always increasing, its focus remains on ensuring that all the lending it does is responsible and it is proud to affirm that its track-record of zero defaults or arrears is still intact.

Founded in 2013, Landbay describes itself as a fast-growing UK peer-to-peer lending platform that enables retail investors, institutions, and local governments to invest in UK’s private rented sector through the funding of residential buy-to-let mortgages.

Landbay is fully authorized and regulated by the FCA, but peer-to-peer lending platforms are not covered by the FSCS. Since its founding, Landbay has launched six other Seedrs campaigns, with the previous initiative attracting more than £1.6 million, which includes an investment from tennis star, Andy Murray.

 

Funding Circle Investors Lent More Than £113 Million to Over 1,700 UK Businesses in February 2018 (Crowdfund Insider), Rated: AAA

Source: Crowdfund Insider

On Wednesday, online lender Funding Circle announced investors lent more than £113 million to over 1,700 UK businesses throughout the month of February. Funding Circle also reported that over the last six months investors have helped more than 10,200 small businesses be able to gain access to financing. More than 678 million has been lent through its platform from August 2017 to February 2018. Breakdowns of February 2018 included the following:

Source: Crowdfund Insider

 

Woodford-backed Atom Bank grabs £149m as Spanish bank BBVA ups its stake (City A.M.), Rated: AAA

Challenger bank Atom, which counts rapper Will.i.am as a board adviser, has today grabbed £149m in its latest capital raising.

BBVA, which invested £85.4m and has ploughed in a total of £167m so far, upped its stake to 39 per cent and said the new investment signalled its “confidence in both the business strategy and management team”.

Augmentum’s fintech fund exceeds crowdfunding target to raise £695,000 (Peer2Peer Finance News). Rated: A

A VENTURE capital firm that has a stake in Zopa has breezed through its crowdfunding target to hit £695,000 before closing to new investments, and now looks set to raise £100m from a London flotation.

The initial £500,000 crowdfunding target was hit within 24 hours.

LendInvest Funds £5.5 million Development Deal on Historical Glaswegian Location (CrowdFund Insider), Rated: A

LendInvest also reported that construction is expected to be completed by late October 2018. The total GDV is forecast at just under £8.5 million.

Ablrate considers buying Collateral’s loan book (Peer2Peer Finance News), Rated: A

BUSINESS lender Ablrate is considering buying the loan book of Collateral, the peer-to-peer lending platform that recently went into administration.

Ablrate’s chief executive David Bradley-Ward said he has contacted Collateral’s administrators to find out how it can help.

LATTICE80 opens New Global Headquarters in London (LATTICE80), Rated: B

Global Fintech Hub LATTICE80 strategically relocates its global headquarters from Singapore to London.

LATTICE80 announced its plan to expand into several cities globally including London, New York and Seoul. By relocating its global hub to London, it can better support its global expansion plans in Europe, Asia and US this year. LATTICE80 will still keep the operations in Singapore to cover Southeast Asia.

European Union

Business Borrowers Should Think Outside the Bank (Payments Journal), Rated: A

Peer-to-Peer lending for small businesses is not new, as those of us on this side of the pond can recall from Lending Club and Prosper, and surely not without lender risk. One of the points made in this piece is that SMEs in Scotland account for ‘more than half’ of all private sector employment.  This is not dissimilar to the world in general, although SME definitions vary widely. In the U.S. for example, there are about 102 million people employed and we would estimate that roughly 60% work for businesses with less than 100 employees. Among these are about 24 million businesses with no employees (sole-proprietors).

They key to this business space however is to help fill a liquidity gap in the market that banks are either unwilling or unable to accommodate, given capital regulations, asset risk ratings, liquidity ratios and so forth.

Real estate crowdfunding company Housers teams up with Redpiso (PropertyPortalWatch), Rated A

The participative real estate financing platform Housers has signed a collaboration agreement with Redpiso so that its promoters appear on the website of this real estate company, the two companies reported today.

 

Capital Markets Union (European Commission), Rated: B

Commission presents Action Plans on sustainable finance and financial technology and adopts legislative proposal on crowdfunding

Action Plan on Financial Technology

The Action Plan sets out 23 steps to enable innovative business models to scale up, support the uptake of new technologies, increase cybersecurity and the integrity of the financial system.

Legislative proposal on crowdfunding

The Commission also put forward new rules that will help crowdfunding platforms to grow across the EU’s single market.

 

International

Is a new and better culture evolving in the credit market? (AltFi), Rated: AAA

The promise of direct lending 2.0

The fastest-growing and potentially huge segment of private credit is being brought about by tech and data powered lending platforms – Direct Lending 2.0. These groups have evolved from their P2P roots. Business models are being re-examined, which is healthy. Several, such as Auxmoney, Funding Circle and Lending Club are now large originators and servicers of SME and consumer credits direct for institutional investors. Just one UK-based platform lender originating SME credits of around 100,000 Euros per clip made more loans of that size to UK companies than the entire UK banking system managed in Q4. This potentially vast capital market has the potential to be a sustainable alternative to the banking system.

The arrival of credit culture 2.0?

In this context it was interesting to see Patty McCord, world-beating Netflix’s ‘Chief Talent Officer’ (we don’t see many of those in the credit market) recently join Lending Club.

Meeting the Fintech Challenge in Digital Consumer Lending: Strategies and Technologies for Innovation (Celent), Rated: A

Digital lending is not limited to fintechs; banks and credit unions have many strengths which, when combined with digital technology, will enable them to thrive long after the Fintech Era ends.

Source: Celent

Finastra, Microsoft form strategic alliance to shape future of financial services software (RealWire), Rated: A

Finastra and Microsoft have formed a strategic alliance to deliver secure, flexible and cost effective financial services cloud solutions. As part of the alliance, Microsoft Azure, Microsoft’s enterprise-ready trusted cloud platform, will underpin FusionFabric.cloud as Finastra’s strategic cloud platform. In addition, Finastra will launch a selection of its global payments and retail banking products on Azure over the course of this year.

India

This husband-wife duo makes AnyTimeLoan a reality (Your Story), Rated: AAA

Keerthi is an engineering graduate and an alumnus of IIM and ISB with over 14 years of experience across financial service and infrastructure sectors. He co-founded the AnyTimeLoan along with his wife Neha Jain, 32, who is a Chartered Accountant by profession and has over nine years of experience in taxation, compliance, and audit. She was associated as Partner in a CA firm before she took over ATL as co-founder wherein she handles entire finance, compliance, etc.

ATL has also applied to the RBI and is in the process of seeking NBFC P2P license.

For the financial year 2017-18, it is clocking revenues worth Rs 300 lakh, with total loans disbursed around Rs 39.8 crores. It also claims to have a default rate of less than 0.23 percent.

Africa

Africa’s banks lag behind on innovation in financial services (Financial Times), Rated: AAA

African central banks are stifling development by failing to keep up with financial services innovation, according to the head of a UN economic agency and industry executives.
Penetration of mobile money is more than 90 per cent in countries such as Kenya, where Safaricom, a telecoms provider, developed the Mpesa platform in 2007. But it is only 1 per cent in Nigeria.

Meanwhile, some central banks, such as in Tanzania, allowed innovations such as payments between different telecoms operators three years ago while others still ban them.

Many financial services companies, such as mobile-based micro-loan companies, have escaped formal regulation in most African countries as central banks and telecoms regulators struggle to categorise them.

Authors:

George Popescu
Allen Taylor

Monday December 18 2017, Daily News Digest

Chinese share prices

News Comments Today’s main news: Investors are losing big on Chinese IPOs in the U.S. Funding Circle’s projected returns. Ablrate funds 30M GBP, launches portfolio loans product. Cash Suvidha raises $2.7M in debt funding. SimplyFi challenges banks in Russia. Goldman Sachs secures majority stake in Financeit. Today’s main analysis: Sharpe ratios for ex-ante forecasts of credit models. Today’s thought-provoking articles: What makes […]

Chinese share prices

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

MENA

Canada

News Summary

United States

Chinese IPOs in the U.S. Are Saddling Investors With Big Losses (WSJ), Rated: AAA

Sixteen companies from China have debuted on the New York Stock Exchange or Nasdaq so far in 2017, making this year one of the busiest of the past decade for Chinese IPOs in the U.S., according to data provider Dealogic. Ten of the newly issued stocks this year are trading below their IPO prices, with some plunging within weeks of listing.

The worst performer is Qudian Inc., a three-year-old online lender whose shares have slumped 46% through Friday since the company raised $900 million in October in one of the larger U.S. IPOs this year.

Chinese companies have raised a total of $3.7 billion by listing their shares in the U.S. in 2017, representing about 8% of the total U.S. IPO funds raised, according to Dealogic. Firms from China broadly have also powered a global surge in IPOs this year, driven in part by investors who bought into expectations of robust growth in China’s economy.

Source: The Wall Street Journal

During a period of big stock market gains, shares of all companies that raised at least $50 million in U.S. IPO proceeds this year are up an average of 18.3% since their listings through Friday, according to Dealogic. But Chinese companies in this category have fallen by an average 5.7% through Friday, with more than half of them down by double-digit percentage terms.

Source: The Wall Street Journal

Introducing Sharpe Ratios (PeerIQ), Rated: AAA

Over the last few months, we have received investor inquiry on how to incorporate both expectations and uncertainty in expectations to manage risk. The motivation is two-fold—expected returns are an insufficient statistic to drive investment decision making. For example, an investment with a 5% expected return but a higher range of outcomes may be less attractive than an investment with an expectation of 4% that has a tighter distribution of outcomes.

The Sharpe ratio is designed to measure riskiness while controlling for risk-free rates and volatility. The ratio, introduced by Nobel Laureate Bill Sharpe, measure return per unit of total risk taken above the risk-free rate.

[ Quant Note: The Sharpe ratio is typically used for assessing performance on liquid traded instruments (such as equities), and should not be used to evaluate ex-postperformance for illiquid collateral – including whole loans. However, the Sharpe ratiocan be a useful tool to analyze ex-ante forecasts are drawn from a credit model that generates independent and identically distributed draws (such as a monte carloprocess drawing from a roll-rate model). ]

Source: PeerIQ

What is a good FICO score? (The Mortgage Reports), Rated: AAA

Credit scores do not reflect income – it’s entirely common for people with big earnings to have weak credit, and for people with small wages to have great credit.

Source: The Mortgage Reports

Credit scores may not include all of your bills. For example, if you rent a home from a private owner, he or she will probably not report your payment history to credit bureaus.

Incorrect or out-of-date information on your credit report can reduce your score. And that can cost you when you shop for a mortgage. Fannie Mae’s Loan Level Pricing Adjustment Matrix, pictured below, shows just how much extra a lower score can cost you.

Source: The Mortgage Reports

According to Ellie Mae, the typical closed mortgage in October had a credit score of 724. However, you can get mortgage financing with lower scores.

HUD, the Department of Housing and Urban Development, allows FHA borrowers to purchase with 3.5 percent down with a credit score of 580 or better. Those with credit scores between 500 and 580 must put at least 10 percent down.

How technology giants are using their reach and digital prowess to take on traditional banks (Business Insider), Rated: AAA

As headlines like “Amazon Is Secretly Becoming a Bank” and “Google Wants to Be a Bank Now” increasingly crop up in the news, tech giants are coming into the spotlight as the next potential payments disruptors.

Google, Apple, Facebook, Amazon, and Microsoft, collectively known as GAFAM, are already active investors in the payments industry, and they’re slowly encroaching on legacy providers’ core offerings. Each of these five companies has introduced features and offerings that have the potential to disrupt specific parts of the banking system. And we expect a plethora of additional offerings to hit the market as these companies look to build out their ecosystems.

Source: Business Insider

Lendio Announces New Franchise in Detroit (Crowdfund Insider), Rated: A

Lendio, an online lending marketplace for small business loans, announced on Thursday the opening of its new franchise in the Detroit Metro area.

Walmart employees should use the new early pay policy as a last resort (Yahoo! Finance), Rated: A

Walmart, the largest private employer in the U.S., will begin allowing its 1.44 million employees to access their paychecks before payday.

After two years of talks with Even, a fintech startup that helps users budget by accessing upcoming pay early, Walmart (WMT) is rolling out the app to its entire workforce. In conjunction with PayActiv, Even lets employees take up to 50% of the amount they have earned up to that point, prior to the standard 2-week pay period. Individuals can do this interest-free up to eight times annually.

“I think this is a great perk for employees to have, provided they are able to use it responsibly.  The key is to treat it the same as an interest-bearing payday loan,” said Corey Sunstrom, director at Hobart Financial Planning and founder of thepocketadvisor.com.

Bitcoin surge spawns startup lenders willing to accept crypto-collateral (American Banker), Rated: A

The woes of an early bitcoin investor. Until recently, people who paid virtually nothing for the virtual currency and watched it soar had only one way to enjoy their new wealth — sell. And many weren’t ready.

Lenders on the fringe of the financial industry are now pitching a solution: loans using a digital hoard as collateral.

While banks hang back, startups with names like Salt Lending, Nebeus, CoinLoan and EthLend are diving into the breach. Some lend — or plan to lend — directly, while others help borrowers get financing from third parties. Terms can be onerous compared with traditional loans. But the market is potentially huge.

Human vs. machine: The rise of the bionic advisor (FinancialPlanning), Rated: A

As technological innovations continue to revamp the way business is conducted in the industry, the human element of financial advice is more important than ever. Clients now demand an experience as convenient and advanced as the robo advice platforms but will also look to advisors who add value beyond the numbers and calculations, create a deep connection, and consider both financial and non-financial assets.

But one important question remains: Is the middleman between investors and markets still important?

JPMorgan Chase, Barclays join IBM quantum computing network (American Banker), Rated: A

Two major banks have become charter members of a quantum computing network established by IBM, another sign of how far financial services companies are going to make themselves more competitive and to steel themselves against security threats.

PMorgan is looking at using IBM’s quantum computing systems for trading, portfolio optimization, asset pricing and risk analysis, among other things. Barclays is just beginning to investigate potential uses for the financial industry.

New frontiers of investing (Centre Daily Times), Rated: A

Another investment practice that is gaining popularity — and has had a longer history than cryptocurrencies — is peer-to-peer lending. Depending on the credit worthiness of the person borrowing, the interest earned by a lender can vary from 5 to almost 20 percent.

Notice how in both cryptocurrency and peer-to-peer lending, an attempt is made to remove the central entity that acts as the source of trust in the transaction. The central entity is then replaced by a large number of people. While a great concept, I’m not convinced that the central entity — which benefits most from the transaction — is actually removed. What I think is taking place is actually an attempt to reshuffle power.

In the case of peer-to-peer lending, the central power may not technically be a bank, but for all intents and purposes performs the same functions as the bank. The facilitator’s duties may have changed and the process may be simpler, but there’s still someone charging a fee to set the loan parameters.

Private Equity, Hedge Funds Are Supercharging Payday Lending (ValueWalk), Rated: A

Private equity moguls have invested heavily in the payday and installment lending, putting additional resources, tangible and intangible, at the disposal of these often-predatory businesses, according to a new report by Americans for Financial Reform and the Private Equity Stakeholder Project.

The report, available here, documents 23 payday and installment companies in which private equity firms have invested, sometimes to acquire ownership stakes, other times to fund actual lending.

Using Bitcoin as Loan Collateral (BTCManager), Rated: A

Bitcoin’s current market value, with the price around the $18,300 level, is nearly $315 billion. And, just like in “real” currencies, nearly 40 percent of that wealth is held by around 1,000 users.

Someone looking to take $100,000 in cash would be giving the lender $200,000 in bitcoin as collateral, with about a 12 to 20 percent interest rate.

 Coinbase is now the No. 1 iPhone app in the U.S. (recode), Rated: A

The crazy spike in the value of a bitcoin — from around $1,000 at the beginning of this year to more than $18,000 today, according to CoinMarketCap — has made Coinbase, an app that lets you buy, sell and store bitcoin, a winner. As of this afternoon, it is now the most-downloaded iPhone app in Apple’s U.S. app store.

Source: recode

 

Firms clamp down on brokers taking clients when they leave (StarTribune), Rated: A

Recently, Morgan Stanley and UBS Financial Services pulled out of a private “cease fire” agreement among brokerage houses that has made it easy for brokers to move from firm to firm. By withdrawing, the two are signaling to brokers considering a move at the two firms that they and their new employer face the threat of lawsuits if they take client contact information with them, a practice allowed under the pact.

The defections by two of the largest players, employing more than 18,000 brokers between them, raises the prospect that the industry may return to the era when the client-adviser relationship was treated as the property of the firm.

Marlette Funding Appoints Sabrina Basht Chief Strategy Officer for Best Egg (Marlette Funding), Rated: B

Marlette Funding, LLC, the parent company of , today announced the promotion of Sabrina Basht to the position of chief strategy officer (CSO), effective immediately. In this role, Basht will continue to report to Josh Tonderys, President.

As part of her new role, Sabrina will also lead the company’s communication efforts for Marlette Funding and Best Egg.

How Much Would it Cost to Travel to Every Star Wars Filming Location? (OppLoans), Rated: B

The cost of traveling to the filming locations for every Star Wars movie prior to The Last Jedi (excluding studio lots) would be just a hair over $10,900.

Source: OppLoans

 

Modo Announces Brian Billingsley, Former CEO of Klarna North America, to Join Team (PR Newswire), Rated: B

Modo, the company that creates interoperability for payments, today announced Brian Billingsley, Former CEO of Klarna North America, as the latest to join their team. Billingsley has an extensive payments background that will play an integral role in continuing the expansion of Modo’s capabilities for their clients. Billingsley will be joining as Modo’s Chief Revenue Officer.

BFS Capital Names Former BankUnited Executive, Mary Harris, as Chief Marketing Officer (BusinessWire), Rated: B

BFS Capital, a leading small business financing platform, announced today the hiring of Mary Harris as its Chief Marketing Officer. Harris formerly led marketing and public relations for BankUnited, a leading U.S. business bank headquartered in Miami-Lakes, Florida. Harris will join the BFS Capital senior leadership team and report to the company’s Chief Executive Officer, Michael Marrache.

Harris brings over 25 years of experience to BFS Capital across financial services and retail sectors. For BankUnited, she helped to rebrand and position the company as a national commercial bank now listed as one of Forbes magazine’s “Best Banks in America.” At BFS Capital, Harris will be responsible for marketing, branding, advertising and public relations strategies as well as customer acquisition and loyalty.

MPOWER Financing Named “Growth Tech Company of the Year” (PR Newswire), Rated: B

Continuing its impressive momentum as a market-leading provider of student loans, MPOWER Financing has been named Growth Tech Company of the Year by Technical.ly DC.

United Kingdom

Funding Circle refines projected returns calculations (P2P Finance News), Rated: AAA

FUNDING Circle has changed the way its projected returns are calculated, so that the data applies to a larger proportion of its investors.

Funding Circle said on Friday that its projections will now show the minimum rate that 65 per cent of investors could achieve.

The target rate on the Balanced return portfolio is now 7.2 per cent rather than 7.5 per cent, while the Conservative product remains at 4.8 per cent.

Assetz Capital Announces New Website & Refresh Branding While Prepping For Upcoming ISA Debut (Crowdfund Insider), Rated: AAA

On Thursday, online lending platform Assetz Capital announced the launch of its new website and “refreshed” brand just ahead of its upcoming Assetz Capital ISA.

Ablrate Launches Portfolio Loans Product After Topping £30 Million in Total Funding & Securing £3 Million in IFISA Funds (Crowdfund Insider), Rated: AAA

Asset-backed lending platform Ablrate announced on Thursday it launching a new range of portfolio loan lending products. This news comes just after the platform topped £30 million in total funding and achieved £3 million in IFISA funds.

Squirrel Announces Partnership With HM Government & Nesta While Crowdcube Campaign Nears £450,000 (Crowdcube Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, announced on Friday it has formed a partnership with the HM Government and Nesta.

SBDA Group Closes Series A Investment Round (Finovate), Rated: A

Banking personalization company SBDA Group has landed a Series A investment today. FinSight Ventures and Digital Space Ventures contributed to the round, the amount of which was undisclosed. This marks the company’s first ever VC funding round.

Alternative Finance Boom Continues With 43% Growth (Forbes), Rated: A

The UK’s booming alternative finance market shows little sign of slowing down, with the value of funding for small and medium-size enterprises growing by well over a third last year, new research shows. Data from the Cambridge Centre for Alternative Finance (CCAF) suggests new funding models ranging from loan- and equity-based crowdfunding to invoice finance offer an increasingly important alternative to conventional SME funding such as bank support.

Overall, the UK’s alternative finance market grew by 43 per cent in 2016, to £4.6bn from £3.2bn in 2015, the CCAF said. The growth means that over the six years to the end of 2016, alternative finance has provided an additional £11bn of funding.

The research found that peer-to-peer business lending was the single largest market segment in 2016, growing by 36 per cent last year to reach £1.23bn, followed by peer-to-peer consumer lending at £1.17bn (up 47 per cent), and peer-to-peer property lending at £1.15bn (up 88 per cent).

Fintech startup Loot raises £2.2 million for its digital banking app (Tech.eu), Rated: A

UK fintech startup Loot has raised £2.2 million in funding from Portag3, the VC division of Power Corporation, and Speedinvest.

Nottingham fintech firm secures Open Banking investment (The Business Deck), Rated: A

Handle, based at the Accelerate Places tech hub, enables businesses to take control of their digital profile all the way from managing their credit score to optimising their online presence and presenting a professional face to the world.

Now, it’s been selected by the UK’s innovation foundation, Nesta, to help drive a revolution in small business banking opened up by the arrival in 2018 of the Open Banking initiative.

It’s been given £100,000 by Nesta to help it further develop its dashboard into a single app which makes it easier for small business owners to keep control of their cash position, grow top line sales, compare and save money on their key expenses and keep their credit score finance-friendly.

Rebuilding Trust In Money (MinuteHack), Rated: A

The credit crunch led to widespread job losses, loss of disposable income and a drought in available capital, all exacerbated by what is generally agreed upon as long-term irresponsible lending practices from some financial institutions.

In my opinion, we’re heading for even further mistrust with the trouble currently brewing in the peer-to-peer lending sector. Yield hungry investors are drifting into peer-to-peer (P2P) investing via the new Innovative Finance ISA, without being fully aware of the risks – the FCA have already identified this as an issue.

So how can the financial services industry, and the institutions and professionals who work within it, start to rebuild the bridges that have been burnt over the last 10 years and re-establish a trusting relationship with consumers?

Protect yourself against rising rates (The Times), Rated: B

A report by Lendy, the peer-to-peer lending platform, found a substantial drop in “bad debt” with £72 million worth of residential loans written off by banks and building societies in the 12 months to September, compared with £348 million in the previous year.

China

China Futures (Seeking Alpha), Rated: AAA

And of course, over 1.4 billion people live there, the most populous nation on the planet. It imports and exports over $3.7 trillion of products every year. China’s growth over the past 30 years has been truly astounding, a miracle of modern development.

Total debt – government, corporate, and household – has grown in recent years to over 200% of the Chinese economy.

China Total Debt to GDP. Source: Bloomberg

Despite Being World’s Largest Fund, Ant Financial’s Yu’E Bao Is Risky (China Money Network), Rated: A

Technology is both revolutionizing and super-sizing China’s financial services sector. But it’s not making it any safer, according to a report by Fitch Ratings that compares the world’s two largest money management funds, Ant Financial’s Yu’e Bao and JP Morgan U.S. Government Money Market Fund.

The report notes that in just four years, Yu’e Bao has ridden the fintech wave to become the world’s largest money market fund with RMB1.56 trillion (US$233 billion) in assets under management. Since its 2013 launch, Yu’E Bao has been growing at a CAGR of 125%, thanks to technological development and its links with Alibaba Group Holding Limited’s online payment platform, Alipay.

A Bonanza Awaits China’s Surviving Fintech Lenders (Bloomberg), Rated: A

China’s whac-a-mole approach to risk — hit it everywhere it pops up — is set to hand control of the surging $121 billion technology-driven lending market to a small group of leaders such as Lufax Holding and the finance affiliate of Jack Ma’s Alibaba Group Holding Ltd.

The survivors are in for a bonanza in coming years: Macquarie estimates credit extended by China’s fintech firms will jump more than seven-fold by 2022 to 6.2 trillion yuan ($940 billion) to pay for things like luxury and household goods or training and education. About half that market is micro-lending — typically small, short-term loans with high interest rates, Macquarie says.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Zhima Credit, the credit services and rating agencies of Ant Financial, used to offer two types of credit report inquiries. The one in collaboration with SHULIDATA.com offers users access to individual credit reports issued by the PBoC and the other with CreditKarma, presents the channel for oversea credit inquiries (at present only available to users’ credit records in the U.S.).

On December 8th, a task force specially set up by China Banking Regulatory Commission (CBRC) released a rectification document towards micro lending, signaling a period of tightening oversight of the unregulated lending activities and related financial risks. This round of rectification will focus on 11 key areas: Source: Sina

  1. Tighter management of micro lending approval authority;
  2. Re-examination of micro lending enterprise qualification;
  3. Equity management;
  4. Balance sheet financing;
  5. Asset securitization financing;
  6. Real interest rates;
  7. Loan management and debt collection;
  8. Product category;
  9. Business cooperation;
  10. Information security;
  11. Illegal operation.

On December 13th, the NYSE-listed micro lender PPDAI released the unaudited financial performance report for Q3 of 2017. According to the report, in compliance with the recently issued cash loan regulations, PPDAI will

  1. Replace the one-time charges of fees into monthly fees;
  2. Reduce the overall fees and interests of its loan products to lower than 36%;
  3. Cancel the investor reserve funds from the year of 2018.

Here is the List of the Fintech 50 in China as Ranked by KPMG (Crowdfund Insider), Rated: B

Source: Crowdfund Insider

Figuratively Speaking (Global Times), Rated: B

0.78%

Nonperforming loan ratio as of end-November of Chinese online lender MYbank, backed by Chinese e-commerce giant Alibaba Group Holding.

European Union

Wealth Migrate Launches WEALTHE Coin to Democratize Access to Global Real Estate Investing (Euro Investor), Rated: A

Global online real estate marketplace Wealth Migrate today launched the WEALTHE Coin, a digital currency created to democratize access to wealth through international commercial and residential real estate ownership. Wealth Migrate allows for investment in real estate investment opportunities previously accessible only to high net worth individuals or institutional investors. While almost half of the world’s wealth is held in real estate, fewer than 13 percent of people have access or the resources to invest in and benefit from this lucrative market. Wealth Migrate aims to transform the real estate investment landscape and bridge the global wealth gap with its investment platform and WEALTHE Coin, with the vision of enabling anyone to invest with as little as $1.

WEALTHE Coin will be available in a token presale launching on the 15 December 2017, with the Public Crowdsale scheduled for February 1, 2018.

International

Three Blockchain Companies That Could Change Everything in Traditional Lending (Observer), Rated: AAA

More than $3.3 billion was raised with Initial Coin Offerings (ICO) this year alone.

SALT delivers an alternative route to make money from cryptocurrency assets without giving up your position. It’s a lending platform which uses blockchain to back loans. In simple terms, SALT brings the ability to list your blockchain assets as collaterals for a cash loan. Every crypto asset holder can lend them to anyone else, receive interests and regain their crypto asset as soon as the loan is paid back.

Another disrupting crypto lending project is Jibrel Network. It’s a place where users, brokers and investors can tokenize their financial assets and sell them on blockchain for profit. Even though the platform is still in development, it receives strong support from cryptocurrency enthusiasts and ICO investors. Moreover, its pre-sale ICO was more than success and raised over $3 million and attracted funds from both individual investors as well as institutions, such as TaaS Fund, Tech Squared, Aurora Partners and others.

ETHLend is a facilitating platform for both borrowers and lenders. Here, lenders and borrowers can meet up and decide everything from loan duration to the interest rate. Like Jibrel, the platform runs on Ehtereum network and uses ERC20 tokens act as a deposit on the loan.

Datarius Cryptobank Has Reached SoftCap in a Few Hours After Start of Pre-ITO (Digital Journal), Rated: A

Datarius Cryptobank has opened the doors to participate in the project to all comers and has gone to the pre-ITO stage. A SoftCap of $125,000 has been reached within just a few hours from the start of the campaign, as stated by information now available on the official website of the project.

ETHEREUM CO-CREATOR STEVEN NERAYOFF JOINS RCN ADVISORY BOARD AS THEIR GLOBAL LENDING ECOSYSTEM EXPANDS TOWARDS ASIA (Bitcoinist), Rated: B

Entrepreneur and venture capitalist Steven Nerayoffhas joined the RCN global lending project as a lead advisor.

RCN is a peer-to-peer credit protocol based on cosigned smart contracts that connect lenders and borrowers anywhere in the world and in any currency through the use of RCN tokens, the platform’s native cryptocurrency. Having successfully raised over $40 million during their recent token sale, the RCN network has the potential to democratize digital economy by increasing credit access for borrowers, eliminating the risk of default for lenders, and reducing asymmetric information between network agents.

Israel and Singapore fintech hubs sign MoU (Finextra), Rated: B

The Singapore FinTech Association (SFA) and the Israeli City TLV association have inked a Memorandum of Understanding (MOU) to foster greater FinTech co-operation between the two communities.

The Challenge Of Delivering Relevant Content To Educate Customers (Forbes), Rated: B

According to advisory firm KMPG, there was a total of $3.2 billion invested globallyin fintech companies in Q1 of 2017. What’s even more interesting is that a PwC report on fintech’s growing influence on financial services showed that 82% of financial services companies want to increase fintech partnerships in the next three to five years.

India

Fintech Startup Cash Suvidha Raises $ 2.7 Mn In Debt Funding (Inc42), Rated: AAA

Just a few days after fintech platform Finbucketannounced its $1.87 Mn funding, Delhi-based online lending startup Cash Suvidha has raised an institutional debt of $2.7 Mn from various financial institutions.

The funds have been raised from six financial institutions and will be primarily used to facilitate further lending to Small and Medium Enterprises (SMEs).

Amazon to strengthen fintech space with stake in Capital Float (Economic Times), Rated: A

Online retail giant Amazon is looking to expand its footprint in the financial technology space and is in talks to invest in digital lending startup Capital Float, two persons aware of the development said.

Bengaluru-based Capital Float, which has so far focused on small businesses, is also set to start consumer financing on Amazon’s platform, apart from the ecommerce seller financing it already does, they said.

Deal or no deal – 2017: transaction trends and regulatory reforms (YourStory), Rated: A

Online retail giant Amazon is looking to expand its footprint in the financial technology space and is in talks to invest in digital lending startup Capital Float, two persons aware of the development said.

 

Statistically speaking, at the close of the third quarter of 2017, FDI inflow was $25 million, with a growth of approximately 17 percent over the corresponding period last financial year.  Mauritius, Singapore and Japan topped the list of countries investing in India as of September, 2017.

From a VC-PE activity perspective, 2017 also recorded a six-year high in deal values, with deals worth approximately $48 billion, up 34 percent over 2016. According to data published by Venture Intelligence, ‘private equity firms invested about $17.6 billion in Indian companies in the first nine months of 2017, sailing past the previous high of $17.3 billion in 2015.’

The sectors that remained bullish in 2017 were fintech, digital innovation, IT e-commerce, logistics, infrastructure and life sciences. Within e-commerce, fintech, mobile gaming, and health apps contributed a significant pie in the growth trajectory.

Now, score high marks in exams to get low interest rates on loans (Times of India), Rated: A

Can 90% in your college exam get you an iPhone? It could as a number of online student lenders are scrutinising marksheets to assess credit worthiness, and hand out loans for consumer durables.

Nagaraju T, a 21-year-old student at Malla Reddy College of Engineering in Hyderabad bought a Lenovo i5 laptop for Rs 36,000 in 2016. “I got my dad to make the down payment of Rs 10,000, and I paid the EMIs of Rs 2,000. I closed the loan in 13 months, and then bought a MINote 4 for Rs 14,000 and paid monthly installments of Rs 850,” says Nagaraju.

KrazyBee places a cap of Rs 15,000 for consumer durable loans, Rs 50,000 for two-wheeler loans and Rs 3.5 lakh-Rs 4.5 lakh for educational loans.

KrazyBee, Faircent and Buddy.com say their non-performing asset (NPA) levels are under 3%, which is below the industry norm. The low default rate, they say, is due to risk assessment and screening of applicants.

Online lender Deal4Loans’ Rishi Mehra says the use of proxies such as marksheets instead of CIBIL scores needs to be viewed with caution. In the early 2000s, a rash of NBFCs lent based on such proxies for credit scores, he says.

FinTech startup Cash Suvidha raises USD 2.7 mn for expansion (Outlook India), Rated: A

Delhi-based FinTech startup Cash Suvidha, the trade name of Usha Financial Services Pvt. Ltd., raised an institutional debt of USD 2.7 million from various financial institutions towards driving growth.

Sort your loan application issues with these fintech apps (Outlook India), Rated: B

Every borrower registered on Faircent is identity-checked, credit-checked and risk-assessed by our system as well as an experienced team. Its tech-enabled credit evaluation algorithms reject over 90 percent of the borrowers who apply for loans.

OHMY Technologies Private Limited is the owner and operator of OMLP2P, an online Peer-to-Peer (P2P) lending platform. The platform assesses creditworthiness of a prospective borrower using its proprietary algorithm developed in consultation with CRIF HighMark, one of the leading Credit Bureau.

CoinTribe is a leading online loan disbursement platform that provides quick and easy collateral-free loans to small businesses and individuals. It is the only online lending platform which has back-tested its credit model with large banks.

Aye Finance differentiates itself by creating a technically enabled process that builds credit insights through a variety of available business and behavioral data. This effective credit appraisal coupled with the use of modern workflow automation, and a small but engaged workforce is helping bridge the gap between the MSMEs and organized lending.

CreditMantri is a multi-services platform that helps borrowers secure loans from its partner financers.

Asia

Uber rival Go-Jek drives payments push with acquisition of three fintech start-ups (CNBC), Rated: A

Ride-hailing start-up Go-Jek has acquired three financial technology (fintech) start-ups as it looks to dominate Indonesia’s digital payments space.

Go-Jek said Friday it had bought offline payments service Kartuku, payment gateway Midtrans and saving and lending firm Mapan for undisclosed amounts.

MENA

Fintech News from the Middle East and North Africa (MENA) (Finovate), Rated: B

  • Al Baraka Banking Group partners with Path Solutions to deploy iMAL Islamic core banking system.
  • UAE Exchange to launch gocash card and mobile app courtesy of partnership with online travel firm, Cleartrip
  • Online real estate marketplace and KPMG Global Fintech Top 50 member Wealth Migrate opens office in UAE, announces new country CEO, Lee-Ann Rush.
Russia

Russian fintech company challenges banks (Banks.am), Rated: AAA

According to the press service of the company, SimplyFi’s new product gives Russian company the opportunity to apply and receive loans up to RUR 300 000 (around USD 5000) from private investors completely remotely through a fully-electronic application process, transferred to any bank account.

Through a scoring system developed on the basis of technological analysis of big data, decisions on applications are made automatically within two hours. The company will only need tax ID and a statement of turnover in the settlement account. SimplyFi provides a 100% guarantee for the raising of funds once an application is placed on the market.

Canada

Financeit Recapitalizaton Gives Goldman Sachs Majority Stake (Finovate), Rated: AAA

Point-of-sale financing provider Financeit completed an investment round today with existing shareholder Goldman Sachs. The round gives the firm a majority stake in the Toronto-based fintech.

Financeit helps merchants increase closing rates and transaction sizes by enabling them to offer customers affordable monthly or bi-weekly payment plans.

Authors:

George Popescu
Allen Taylor

Monday August 14 2017, Daily News Digest

OnDeck net interest margin

News Comments Today’s main news: Varo Money applies for a bank charter. This news could blight SoFi for a time. MPOWER Financing launches $100M debt funding round. Zopa updates on IT glitch, disappearing money. JD Finance opens VC fund for early-stage projects.SoftBank invests in Flipkart.Money Forward to IPO in Tokyo. Today’s main analysis: PeerIQ on PayPal, LendingClub, and OnDeck. Today’s […]

OnDeck net interest margin

News Comments

United States

United Kingdom

China

European Union

International

India

APAC

Middle East

News Summary

United States

Fintech Firm Backed by Warburg Pincus Files for Bank Charter (WSJ), Rated: AAA

Varo Money Inc., a digital banking startup backed by private-equity firm Warburg Pincus LLC, last week formally applied for a national banking charter and deposit insurance, the company said. The filings aren’t public yet.

Taking those steps could put Varo—which now partners with banks to provide services for its mobile banking application—on the path to becoming a full-fledged, regulated bank. That means it would take deposits, pay interest, make loans in any state, and issue cards, all through smartphone apps.

Social Finance Inc., known as SoFi, is seeking to become a Utah industrial bank. A group of Silicon Valley venture-capital firms recently bought stakes in a New Jersey bank, CRB Group Inc., that partners with fintech software firms.

Varo is going a step further, seeking a national banking charter from the Office of the Comptroller of the Currency, as well as the ability to take deposits from the Federal Deposit Insurance Corp.

Another Silicon Valley Start-Up Faces Sexual Harassment Claims (The New York Times), Rated: AAA

Social Finance, a hot financial start-up, is the latest prominent Silicon Valley company to face accusations that it turned a blind eye to sexual harassment.

The former employee who filed the suit, Brandon Charles, worked at SoFi for only a few months this year. But the lawyer handling the case, Robert Ottinger, said that he expected to file another lawsuit next week claiming broader mistreatment of other SoFi employees and seek class-action status.

A spokesman for SoFi, Jim Prosser, said that the claims by Mr. Charles were “investigated in depth by the company and found to have no merit. We will vigorously defend ourselves against any claims otherwise.”

PayPal acquires Swift; Lending Club and OnDeck Q2 Earnings (PeerIQ), Rated: AAA

PayPal acquired Swift Capital, a provider of working capital to small business owners. PayPal cited Swift’s talent and capabilities as rationale for the transaction, as well as a desire to strengthen PayPal’s overall merchant value proposition. We note that PayPal invested in LendUp just a few weeks ago. The payment processor appears keen on bulking up its lending footprint to compete with rivals Square, Affirm, and Amazon Lending.

On Thursday, it was announced that KKR agreed to buy Australian non-bank lender Pepper Group for $518 Mn. Vyze, which offers a tech solution for point-of-sale financing, announced a $13 Mn investment led by Austin Ventures. Lastly, Coinbase, the cryptocurrency brokerage and exchange, has raised $100 Mn at a $1.5 Bn valuation.

Lending Club Beats Estimates

After a rough 2016, Lending Club has regained investor confidence with net revenue and originations at their highest levels since Q1 2016. As of Friday’s close, Lending Club’s share price was at $5.90, up 20% from its recent low of $4.92. A key success in Lending Club exceeding expectations was the CLUB securitization which netted $3.7 Mn–a key driver of Lending Club’s $4.5 Mn in Adjusted EBITDA this past quarter.

  • New revenue stream: Lending Club plans to continue with one securitization per quarter, with expectations of a prime deal in Q3. They plan to contribute approximately $100 Mn in prime loans off the balance sheet for Q3’s deal. 
  • The CLUB securitization netted $3.7 Mn and was highly oversubscribed: Through sponsoring the security, Lending Club earned ~$600k, via a combination of selling servicing rights, pricing above book value, and netting out costs. The other $3.1 Mn came from $4.6 Mn in interest income earned while accumulating near-prime loans, less $1.4 Mn in write downs as principal was paid off.
  • Increased bank participation: Lending Club saw 44% participation from banks in Q2 which decreases its “effective funding cost” and shows confidence in their loans.

OnDeck

OnDeck moved to a positive adjusted Net Income ($1.5 Mn) and generated gross revenue of $86.7 Mn (up 25% year-over-year). OnDeck has focused on tightening credit underwriting and cost rationalization; consequently, originations were down for the quarter to $464 Mn (from $590 Mn last year). OnDeck has successfully executed its $45 Mn cost rationalization plan and expects operating expenses of ~$40 Mn for each of the next two quarters.  

Net Interest Margin and Net Interest Margin after Losses have fallen to their lowest points in recent times. A large contributing factor to this is Net Charge-Offs by quarter which has hit a recent high of 18.5%. We would expect charge-offs to decline in future quarters and NIM to expand due to management actions to tighten credit underwriting and cost rationalization.

Source: PeerIQ, Bloomberg
Source: PeerIQ, Bloomberg

MPOWER Financing Launches $ 100 Million Debt Funding Round (Markets Insider), Rated: AAA

MPOWER Financing (www.mpowerfinancing.com), an innovative fintech company and provider of educational loans to high-potential, international students, has launched a $100 million debt financing round to meet its growing pipeline of loan applications.

MPOWER Financing also announced that Mike Davis, the company’s co-founder, has assumed the position of chief investment officer, replacing Alonso Garza, who will become a member of the company’s board of advisors and will serve as consultant for LATAM business and capital development out of Mexico City.

Initial coin offerings have raised $ 1.2 billion and now surpass early stage VC funding (CNBC), Rated: AAA

The amount of money raised by cryptocurrency and blockchain start-ups via so-called initial coin offerings (ICOs) has surpassed early stage venture capital (VC) funding for internet companies for the past two months.

The total amount of money raised via ICOs in April was just under $100 million, but by May this had more than doubled to almost $250 million, according to Coinschedule, a website that tracks such data. In June, ICO funding had hit over $550 million and it was the first month ever that it surpassed angel and seed VC funding.

Angel and early VC funding in June was just under $300 million, Goldman noted, according to CB Insights data. In July, ICOs were just over $300 million, while angel and early VC funding was just over $200 million.

 

Fundrise Adds National For Sale Housing eFund to Growing List of Investment Options (Crowdfund Insider), Rated: A

Fundrise, an online investment platform for real estate, has filed for a National For Sale House eFund. Fundrise has previously announced targeted eFunds dedicated to specific metro markets. Fundrise will be offering up to $50 million in common shares to the public at $10.00 per share. The minimum investment in our common shares for initial purchases is 100 shares, or $1,000 based on the current per share price. The offering circular has all the information you may want to review and this specific eFund is not yet available on the Fundrise real estate investing platform.

Fundrise National For-Sale Housing eFund, LLC was formed to acquire property for the development of for-sale housing in metro areas other than Los Angeles and Washington, DC – where Fundrise currently has targeted eFunds.

LendingClub CIO: Delinquencies Decline as Marketplace Lending Model Continues to Improve (Crowdfund Insider), Rated: A

The executive explains that part of the power of the marketplace lending model is the iterative nature of the loan making process. Over time, data generated from lending provides a Kaizen like process of continuous improvement. This allows LendingClub to anticipate and adapt faster on behalf of both borrowers and lenders.

Projected investor returns are also largely unchanged from the first quarter ranging from approximately 4% to 9%.

Source: Crowdfund Insider

RealtyMogul Update: Over $ 290 Million has Been Invested via the Real Estate Crowdfunding Platform (Crowdfund Insider), Rated: A

RealtyMogul has now raised over $290 million online from over 135,000 investors.  RealtyMogul has returned more than $65 million to investors with zero principle lost, according to management. RealtyMogul also operates a 1031 exchange that allows current investors in real estate to defer capital gains tax on the sale of a property if they reinvest the proceeds in another qualifying property.

Jilliene Helman: The are currently 11 investments in MogulREIT I, which recently declared its twelfth consecutive month of 8% annualized returns on investment.

Jilliene Helman: With increasing demand for housing across the country, we see a huge opportunity in the multifamily marketplace. As millennials and Gen Z enter the workforce, they are of prime age and income for renting, and their preference to maintain a flexible lifestyle supports renting instead of buying a home.

Opportunities exist in many geographies around the country, and while the underwriting process is very complicated, some factors we look for are favorable business climates, an upward trending influx of young people and strong job growth in key industries. Markets that meet these criteria include Atlanta, Dallas, Nashville, Raleigh and Salt Lake City.

Application fraud continues to escalate, causing more and more companies to seek biometric solutions (PR Newswire), Rated: A

LexisNexis® Risk Solutions, a part of RELX Group, and BioCatch, the behavioral biometrics industry leader, announced today that they are working together to help companies in all industries bolster efforts to stymie fraud scenarios, like application fraud, a rapidly-growing issue. According to the LexisNexis Risk Solutions card issuer fraud study, application and account takeover fraud represents 40 percent of total fraud losses.

As a result of this new relationship, companies will receive additional risk scores through the LexisNexis® Risk Defense Platform that expand on the data typically provided by the customer (which can be compromised) by analyzing how the user behaves (which is innate). During the application process, this solution monitors behavior and is able to discern between a real user and an impostor. This approach is achieved by recognizing normal user behavior and fraudster behavior, which includes Application Fluency, how well a user knows the site; Navigational Fluency, how well a user knows various computer functions, and Data Familiarity, how well a user knows the information they are entering.

Integrating behavioral biometrics to detect criminal behavior has proven to be very successful and has already prevented major financial losses. For example, BioCatch was able to save a major Latin American e-commerce retailer more than $200,000 a month against new account fraud, with nearly $2 million saved in the last Black Friday weekend alone.

Online lender expanding into Utah, plans to hire 500 in 5 years (KSL.com), Rated: A

In a move announced Thursday, San Francisco-based financial-tech company Earnest will expand into Utah, with plans to spend $5.6 million on a new office and hire 500 employees over the next five years.

Marketplace lending sobering needs more time. (The Financial Revolutionist), Rated: A

The fact that OnDeck and Lending Club posted upbeat Q2 earnings this past week is a constructive step. But in the wake of Goldman’s growing Marcus juggernaut, Affirm’s point-of-sale traction, Softbank’s $250-million infusion into Kabbage and ongoing rescue financings courtesy of Asian conglomerates and US credit hedge funds, it’s premature to suggest that the good times are back for the publicly traded former wunderkinds. And for that, we blame the 2014-15 fintech hype machine, which led the consumer and small business marketplace lending sector to achieve skyscraper technology multiples in the first place. Cleaning up after a wild party is never fun, and given the former frenzy of online lending start-ups, it’ll take more than a decent quarter to make things right.

A road map for reclaiming the digital customer experience (American Banker), Rated: A

The rapid pace of upheaval in banking and payments today is leading to many innovative non-banking customer experience ecosystems, with banks largely serving a utility function.

The payments process is increasingly a minor, hidden step in the chain. With ongoing digital innovations, nonbanks could take over more of the payments space, too, as well as other financial services. But more importantly, banks stand to lose the all-important customer engagement layer entirely unless they reinsert themselves into the customer experience.

Not only can banks easily orchestrate and field transactions across various industries that the customer interacts with, but banks are best-positioned to provide insights that help customers move closer to their overall goal of financial wellness. For example, in addition to offering card-linked retail promotions, banks can help customers control or channel their spending in the context of their financial status and goals.

Customer experiences pertaining to payments, retail and financial health still operate to a large degree independently of each other. Each interaction in these ecosystems builds on a distinct silo from the customer’s overall financial profile. A fragmented customer experience means that our financial goals are fragmented, our shopping wish lists are fragmented and our planning is fragmented. As a result, customers have unmet needs in terms of maximizing their financial well-being, and must regularly look for reinforcement from external sources to validate the personal finance recommendations of walled-off ecosystems.

Meet Brittany Laughlin, ‎Partner at Lattice Ventures (Vator.TV), Rated: A

Brittany Laughlin is a ‎Partner at Lattice Ventures.

Laughlin served as General Manager at Union Square Ventures, an early stage venture capital firm with $1B+ under management. Some portfolio companies include Etsy, Twitter, SoundCloud, Tumblr, Lending Club, and Kickstarter.

VatorNews: What is your investment philosophy or methodology?

Brittany Laughlin: So my perspective, even before staring Lattice, which was over a year ago, was just on how companies can successfully scale and grow.

The philosophy at Lattice is making sure that the early stage entrepreneurs get the support, the connections, the talent, and the long-term perspective that they need to be successful over a long period of time.

VN: What do you look for in companies that you put money in? What are the most important qualities?

BL: In terms of the entrepreneurs, we look for people who have some attachment to the problem. We look for a kind of obsession with the problem because it’s going to be a long road ahead and if they don’t have that passion early on for what they’re solving then it’s really hard to keep them motivated as times get harder as they grow.

We look for entrepreneurs that are able to build a team, because that’s such a key component: no business grows without a team. If the entrepreneur doesn’t have a certain skill, they can show that there are people around the table that do. We want them to be smart, hardworking, passionate, things that are required in any entrepreneur, but those are things we specifically hone in on and make sure they have.

VN: These days a seed round is yesterday’s Series A, meaning today a company raises a $3M seed and no one blinks. But 10 years ago, $3M was a Series A. So what are the attributes of a seed round vs a Series A round?

BL: That’s a question we’ve been asking ourselves too. As seed investors, we’re speaking to our companies about what they need to raise the next round.

If you’re a SaaS-based business, they’re going to compare your revenue multiples to try to come up with a valuation that way. The rumored metrics for SaaS business, it used to be $100,000 MRR and now that’s creeping to $200,000. I think the reason you’re seeing the larger A rounds is that the businesses have a lot more traction than they did a few years ago so the bar is higher to meet those traction goals, and that’s why the funding reflects that.

I think sometimes taking on too much money too early creates an artificial hurdle for that company where, if they don’t need it, they’re in a worse place than if they took less money, proved some traction, and then returned to market. They can always raise more if they had good growth versus trying to get a big lump sum at the beginning and then, only when they’re out of runway, really looking hard at where their numbers are or where they’re going. They can sometimes get stuck in between.

Can Investors Profit From Peer-To-Peer Lending? (Stock Investor), Rated: A

The question is whether LC could become a buying opportunity for investors anytime soon.

As a result, P2P lenders are able to provide their services more cheaply than banks and other traditional financial institutions. P2P lenders therefore have the ability to achieve higher returns compared to what might be offered by banks. Borrowers can borrow at reduced interest rates even when a P2P lending company’s fee is included.

However, P2P lending is not without its risks. There is a greater risk that the borrower defaults on his loan, since the lower interest rates of P2P lending appeal greatly to those who have low credit scores.

PolicyGenius’ road to traction. (The Financial Revolutionist), Rated: A

Today, Fitzgerald doesn’t get shown the door so abruptly by investors or major insurance incumbents, now that PolicyGenius has become a significant force in introducing life and other types of insurance to consumers eager to comparison shop. However, the “Kayak for insurance” metaphor that is sometimes attributed to PolicyGenius isn’t welcomed by Fitzgerald. That’s because shopping for insurance can be a complicated process with no hard and fast rules.

Alternative Investing Platforms Partner with VIA Folio to Gain Access to Investors and Online Brokerage, Clearing and Custody (PR Newswire), Rated: A

Alternative investing platforms now use VIA Folio’s fully integrated, online offering and brokerage platform to improve investor engagement and access to alternative assets, such as Reg A+ IPOs, Reg D private debt and equity and unlisted REITs.

The alternative investing platforms working with VIA Folio include:

  • ALTZ Investment Strategies – enables access to alternative equity and debt investments, with offerings for Reg D-accredited investors that include real estate, renewable energy, private equity, Reg A+ IPOs and liquid alternative investment opportunities.
  • BANQ® – an electronic investment banking platform for small cap IPOs, public offerings and Reg A+ offerings and placements. It gives advisors exposure to rapidly growing sectors and new technologies, and provides investors with liquidity through dividends or the public markets.
  • Boustead Securities, LLC – an investment banking firm that executes and advises on IPOs, mergers and acquisitions, capital raises and restructuring assignments in a wide array of industries, geographies and transactions, for a broad client base.
  • Cambria Capital – a technology-driven investment bank that uses its institutional investor relationships, and high-net-worth and retail investor accounts, to raise capital for growth-stage companies throughReg A+ and other types of public and private offerings.

Marketplace Lending News Roundup – August 12 (Lend Academy), Rated: A

Lending Startup Earnest Is Working With Barclays to Find Buyer from Bloomberg – It will be very interesting to see who ends up buying online lending platform Earnest.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal from Bloomberg – Emily Chang interviews LendingClub CEO Scott Sanborn to discuss credit card debt, the economic cycle and more.

Big banks kick small-business lending into high gear from American Banker – Banks have been steadily increasing their approval rates for small business loans.

What JPMorgan’s latest moves reveal about online lending’s future from American Banker – Good piece by Kevin Wack giving more details of the Chase OnDeck partnership.

ETHLend preparing for ICO (Bankless Times), Rated: A

A decentralized peer-to-peer lending application built on top of the Ethereum Network is preparing for its initial coin offering.

ETHLend uses blockchain technology to provide secure and transparent lending for people across the world, with the goal of eliminating interest rate differences by injecting liquidity into local markets by using blockchain technology to enable secure and transparent lending.

Best Fintech Reports of 2017 (Crowd Valley), Rated: A

According to Bloomberg, more than $8 Billion has been raised in Fintech so far in 2017. Also, 5 companies have already joined the “Unicorn” status with values over $1 Billion. We have compiled a list of best Fintech reports for 2017, from some of the leading names in the industry.

  1. Capgemini – The World Fintech Report 2017
  2. PwC – Global Fintech Report 2017
  3. EY – Fintech Adoption Index
  4. KPMG – The Pulse of Fintech Q1 2017 | The Pulse of Fintech Q2 2017
  5. CBInsights – Global Fintech Report Q1 2017 | Global Fintech Report Q2 2017

Insurtech Reports:

  1. PwC – Global Insurtech Report 2017
  2. Capgemini – Top Ten Trends in Insurance 2017
  3. Accenture – The Rise of Insurtech 

Payments Reports:

  1. Capgemini – World Payments Report 2017
  2. Nordea – Future of Payments 

Peer to Peer Roundtables can help your small business grow (The Shreveport Times), Rated: A

LED’s Peer to Peer Roundtable is a 10-month series of roundtable sessions where 15-18 small business owners meet to share their experiences and learn from one another in a supportive environment. Each roundtable is a problem-solving session that addresses the issues impacting your business right now.

Applications are currently open for small businesses and we invite your business to apply today.

Robo advisors look beyond wealth creation to automated personal financial advice (AITopics.org), Rated: B

In addition to building an investment strategy based upon investment and risk preferences, the next generation of automated financial advisor would need to fully understand customers’ goals and how they prioritise some over others; an emotional dislike of being in debt may see the client seek to pay off cheaper debt and eschew potentially higher yielding investment opportunities, just to get it off their back.

Introducing… Fintech Insider News (LinkedIn), Rated: B

We at 11:FS and Fintech Insider have launched Fintech Insider News – a dedicated news and commentary platform for our people to come together and discuss what’s new and interesting in the financial services industry.

FHA Slips a Little With Millennials (National Mortgage Professional), Rated: B

Several months ago Ellie Mae started tracking loans made by millennials.  When they started, 36% of millennials chose an FHA loan.  That has dipped to 32% in the latest survey.  Conventional loans are now at 63% for that age group.  When one considers the skimpy loan limits in many areas and the cost of FHA insurance vs. PMI when you have a high score, this is not surprising.

United Kingdom

Zopa provides update on ‘disappearing money’ IT glitch (P2P Finance News), Rated: AAA

OPA has said that it has fixed a technical issue that resulted in a small amount of money seeming to have disappeared from some investors’ accounts.

The peer-to-peer consumer lender said in a blog post on its website on Friday that the glitch had occurred due to recent changes to how they value loans on the secondary market.

Update on loan sale pricing (Zopa), Rated: AAA

One of the ways investors can access their money early is by selling active loans to other investors on the secondary market. When investors sell their loans we work out their value, and compare them to new loans.  If the loans being sold are worth less than new loans, the seller compensates the buyer for the difference, which is reflected in the loan’s price. This happens as part of the loan sale process, which we manage for you.

Due to a technical issue, some investors may have paid too much when buying or selling loans.

Positive Lending to join Landbay’s panel of distribution partners (LendIt), Rated: AAA

Landbay, the specialist buy to let mortgage lender, is today announcing a new partnership with Positive Lending, the latest specialist distributor to join its panel of distribution partners.

Landbay will help Positive Lending service its professional buy-to-let landlord clients with bespoke mortgage offers, including products for HMOs, Multi Unit Freehold Blocks and expat borrowers.

The partnership will also give Positive Lending access to Landbay’s online intermediary portal. This includes features such as case tracking and a property portfolio key, which will allow brokers to enter detailed analysis of a landlord’s full portfolio in advance of September’s PRA portfolio landlord changes. Once brokers have completed the online application process, Landbay issues an Offer in Principle within 48 hours and typically completes loans within 21 days.

Flender looks to raise £2m from institutional friends (P2P Finance News), Rated: A

SOCIAL lending peer-to-peer platform Flender is planning a funding round to prepare for its launch in the UK.

The business and consumer lender, which lets borrowers share their fundraising campaigns on social media, is raising £2M in equity funding and looking for more in debt funding.

Borrowers can create and share a personalised link to their campaigns on social networks, or invite selected individuals to contribute to their loans directly by email.

Ablrate Receives Rapid Response to Recently Launched IFISA (Crowdfund Insider), Rated: A

Asset-backed lending platform Ablrate announced it has received a rapid response following the launch of its new flexible IFISA. The online lender revealed the exciting news on Twitter.

The launch of Ablrate’s flexible IFISA comes less than six months after the online lender received full authorisation from the Financial Conduct Authority (FCA).

Prior to the IFISA, the company revealed it saw an 850% increase in loan volume within the last year.

Mandatory bank referral scheme has delivered £4m to small businesses so far (AltFi), Rated: A

At inception, the mandatory bank referral scheme was terribly exciting. The plan was simple enough. Big banks would direct small business loan applicants which they had rejected to neutral finance platforms, which would then find a more suitable funding solution for the applicant, using matchmaking technology. Those solutions were to come from a whole host of potential providers: from peer-to-peer lenders, to building societies, to challenger banks.

The scheme took a long time to put together. Announced by government in August 2014, it wasn’t until November last year that the scheme finally went live. Initially there were three designated finance platforms: Funding Options, Funding Xchange and Bizfitech.

New opportunities in P2P buy-to-let (MoneyWeek), Rated: A

The big story for the UK’s alternative-finance sector is how many platforms are beginning to look less than “alternative”: Zopa is getting a banking licence, while Funding Circle’s deal with fast-food titan JustEat – to supply lending capital to takeaway food businesses – feels very much like the commercial banking relationships of old. But what has most caught my eye is peer-to-peer (P2P)  property-lender Landbay: more than £30m of its buy-to-let mortgages have been included in a large securitisation of loans with an AAA rating. 

Digital Micro-Lender Oakam Announces Julie Haugen as Chief Product & Marketing Officer (CCR Magazine), Rated: B

Oakam, a digital micro-lender for the UK’s unbanked and underbanked consumers, has appointed Julie Haugen to Chief Product & Marketing Officer. Most recently, she was Oakam’s Head of Digital Strategy & Customer Experience, playing an instrumental role in the digital transformation of the business. In her new position, Julie will drive customer-led digital product innovation through closer alignment of Oakam’s marketing and product teams.

Julie has played a central role in Oakam’s digital growth over the past two years, including the launch of its award-winning mobile app in 2015, and the subsequent rollout of Oakam Grow in 2017.

Firm advises on significant retail bond issuance by LendInvest (Simmons&Simmons), Rated: B

International law firm Simmons & Simmons has advised LendInvest Limited on the establishment of a £500m Euro Medium Term Note Programme for its subsidiary LendInvest Secured Income plc, and on the issuance of £50 million 5.25 per cent Notes due 2022.

China

Jingdong Finance also do the investment? Grilled a Pa “1000 tree capital” past lives (Huxun), Rated: AAA

On the Thousand Tree Capital, Jingdong Financial said, Thousand-tree capital investment target for the angel turn round A start-up company, the core idea is the data for the investment decision-making engine to the public ecological and financial technology for the post-support, through investment A small proportion of the shares, not too much in the strategic and operational restrictions and interference with the investment enterprises, and ultimately to be invested with enterprises to grow together to share the long-term growth in China’s consumption of the purpose of the dividend.

Online lenders limit the withdrawals in the name of rectification, Is that normal? (Xing Ping She), Rated: A

Recently, there have been a number of online lenders having long-term restrictions on withdrawals in the name of wed site upgrades and the bank depository connection. Many industry insiders said that it is abnormal , and investors need to be vigilant.

Industry insiders also warned that the centralized release of compliance pressure lead the industry to the “detonation” risk period. If the period of delay in payment is over one week, you should be extremely vigilant about the risk of running.

51 announced the launch of one billion credit card industry investment funds (epaper), Rated: A

The new 51 billion credit card industry investment fund, will continue to focus on the Internet financial industry chain data, assets, traffic and other high-quality companies (51 credit card industry investment funds), will continue to focus on the Internet financial industry chain data, assets, traffic and other high-quality companies Expand the layout of ecological investment. As early as the beginning of 2016, 51 credit card has been in the Internet financial industry upstream and downstream layout of a number of projects. As of the press conference, has accumulated 15 investment projects, of which three in the investment projects have been recognized by other capital, access to follow-up financing.

China preps central clearing house for mobile payments providers (Finextra), Rated: A

The People’s Bank of China is set to make digital payment firms such as Ant Financial and Tencent use a new central clearing house, a move which will see companies forced to share transaction data with rivals.

China has become the world’s mobile payments leader, with non-bank providers handling nearly $15 trillion in transactions last year, according to a central bank unit.

China Sets up Centralized Clearing Platform for Online Payments (Crowdfund Insider), Rated: A

The People’s Bank of China, the country’s central bank, has required all banks and third-party payment institutions to connect to a unified platform by June 30 of 2018 to ensure effective regulation and transaction security.

The new platform, dubbed Nets Union Clearing Corp., is aimed at enhancing supervision of the country’s expanding online payment market. The platform was set up by 45 companies, including the PBOC which own a 12% stake in the platform.

European Union

German Fintech Startup Acquires Rival as Dealmaking Heats Up (Bloomberg), Rated: AAA

Deposit Solutions GmbH, a Hamburg-based company that enables consumers to move their savings around a network of 15 European banks to find the best interest rate, today acquired Savedo GmbH, a Berlin startup in the same field. The terms of the deal, which Deposit Solutions announced in a statement, were not disclosed.

Lenders and other corporations participated in almost a third of the funding rounds for European financial technology startups in the second quarter, a 31 percent jump from the same period in 2016, according to CB Insights, a New York-based research firm.

In an April report produced by PricewaterhouseCoopers, half the banks surveyed worldwide said they’re planning outright acquisitions of fintech firms. That same month, BNP Paribas SA purchased Compte Nickel, a digital bank in France, for 200 million euros ($236 million).

EU FINTECH REGULATION, MOBIZ PRESIDENT & OLAMOBILE (Delano), Rated: B

  • The European Banking Authority (EBA) has called for fintech regulation to be harmonised across Europe. A report published on its website from an analysis exercise carried out on 282 fintech operators in 24 member states in spring found 31% of companies reviewed were not subject to any regulatory regime.
International

10 MOST DEMANDED SECTORS FOR A FINTECH DEVELOPER (Mobil Unity), Rated: AAA

In 2015, fintech hit $19 billion in total, and by mid-August 2016 global fintech funding had already reached $15 billion. Later, by September 2016, there were over 1,000 fintech firms worldwide and their value made $867 billion. PaymentGenes predicts that already by 2019, 5 billion people will be making digital payments. Moreover, 72% of the consumers of the financial services already use digital channels to open checking accounts, so banking technology in this case plays a major role. The article on Business Insider outlines that major fintech startups on modern market appear in such areas as investment and financial management, banking payments, currency and exchange, insurance, financing and lending.

According to PaymentGenes, at the moment the most popular and in-demand fintech sectors are the following:

  • Mobile banking
  • Internet banking
  • Blockchain
  • Insurtech
  • Predictive analytics
  • Crowdfunding
  • Peer-to-peer landing
  • Smart finance management
  • Innovative payments
  • Robo-advisors

At the same time, Efinancial Careers outlines seven most demanded skills fintech developers should have:

  • Machine learning expertise
  • Target data analysis
  • Domain (industry) expertise
  • Cyber-security
  • Business and sales expertise
  • Blockchain and distributed ledger expertise

India

SoftBank Fund Is Said to Invest $ 2.5 Billion in Flipkart (Bloomberg Quint), Rated: AAA

SoftBank Vision Fund will invest about $2.5 billion in Flipkart Group, swelling the Indian e-commerce players’ cash hoard as it vies with Amazon.com Inc., people familiar familiar with the matter said.

The investment includes approximately $1.5 billion directly into Flipkart and $1 billion for part of Tiger Global Management’s stake, the people said, asking not to be identified discussing the details. The deal will make the fund created by SoftBank Group Corp. Chairman Masayoshi Son the biggest shareholder of Flipkart, the people said.

Fintech firm Payworld focuses on insurance, loans for growth (DNA India), Rated: A

Digital transaction facilitator Payworld is now focusing on insurance and small ticket loan disbursal as next phase of growth story and has tied-up with a few insurers and NBFCs to tap potential customers, a company official said.

Payworld, a nine-year old fintech firm, provides digital transaction services like mobile recharge, e-payment, railway reservation and remittances facilities.

It aims to bring about 10 lakh lives under insurance cover in next one year through this tie-up.

FinTech Impacts Financial Services: Journey of Fintech from Present to the Future (BW Disrupt), Rated: A

Whether it is the portfolio management process or offering individual financial advice, digital disruption has impacted across every part of the industry. For example, a digital financial services company can now provide investment recommendations while leveraging machine learning to conduct on-going portfolio performance updates sent to customers via a smartphone. The impact of this will be felt increasingly as millennials gives way to even more tech-savvy generations in future for which digital will become the norm.

Many banks will attempt to remodel themselves as technology companies, ȧ la Goldman Sachs, in an attempt to conduct “capital lite” activities that are more reliant on a technological or intellectual competitive advantage and less impacted by regulatory capital and size of balance sheet. For example, UBS Prime Brokerage claims to have a return on assets twice as a high as some of its competitors by using technology to reduce its costs to serve hedge fund clients.

As a consequence of FinTech’s impact we will see the emergence of commercially viable digital businesses that have a sustainable economic advantage. They will not need to extract economic rents due to their privileged position as market intermediaries, providers of capital or holders of an asymmetric informational advantage.

APAC

Fintech startup Money Forward IPO expected September (Nikkei), Rated: AAA

Fintech startup Money Forward could go public on the Tokyo Stock Exchange’s Mothers market by September.

The funds raised from the initial public offering will be spent on boosting sales offices and expanding operations and the company’s market capitalization is expected to be between 10 billion yen to 20 billion yen.

Philippines’ PBCOM participation in Lendr affirms FINTQ regional ambitions (EnterpriseInnovation.net), Rated: A

Philippine Bank of Communications (PBCOM) will make available its consumer lending business including home, auto and personal loan products on the Lendr platform following the bank’s signing the agreement with FINTQ in late July 2017.

By offering these products via a seamless, telco-agnostic digital platform like Lendr, PBCOM is extending the reach of its financial products and offering potential borrowers the convenience of applying for a loan, submitting their requirements, and getting notified about the status of their application all at the tap of their smartphones.

PBCOM’s 2016 earnings grew on the back of a 28% expansion of its loan book to P44.3 billion, with focus on secured consumer loans as well as bankable large and middle market corporate accounts. It also provided credit worth P9.6 billion to clients in the same period, resulting in an 11.61% increase in net interest income.

Middle East

New FinTech Partnership in Abu Dhabi (The National Law Review), Rated: AAA

On 7 August, Abu Dhabi Global Market (ADGM), the International Financial Centre (IFC) in Abu Dhabi, and the Responsible Finance & Investment Foundation (RFI), a think tank for responsible finance, announced their entry into a partnership to help the growth and sustainability of the FinTech ecosystem through financial inclusion and ethical and responsible finance practices.

They will highlight emerging FinTech trends and support the development of innovative Shari’ah-compliant FinTech companies seeking to participate in the Middle East and African markets.

Bahrain woos Indian fintech startups (The Hindu Business Line), Rated: A

Bahrain plans to set up a Fintech Centre next year to provide accelerators and co-working spaces for fintech companies, Simon Galpin, Managing Director, Bahrain Economic Development Board (EDB) has said.

The Fintech Centre, which is likely to be opened in February or March 2018, would also provide networking opportunities for both startups and big banks interested in the fintech area, Galpin told BusinessLine.

Authors:

George Popescu
Allen Taylor

Thursday August 3 2017, Daily News Digest

earning multiples

News Comments Today’s main news: SoFi funds over $3.1 billion in Q2. Bread raises $126M to offer white label solution for major online purchases. RateSetter offers summer prize draw. Thomson Reuters adds alt finance data to Eikon. OnDeck partners with Payment Source in Canada. Today’s main analysis: FT Partners’ CEO monthly alternative lending market analysis for August 2017. International P2P […]

earning multiples

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

Philippines

News Summary

United States

FT Partners’ CEO Monthly Alternative Lending Market Analysis (August ’17) (FT Partners), Rated: AAA

We are pleased to announce our role advising 

Source: FT Partners

Read the full analysis here.

SoFi letter to investors (SoFi Email), Rated: AAA

Fintech Startup Bread Raises $ 126 Million In Bid To Finance Big Online Purchases (Forbes), Rated: AAA

When you buy something online, chances are you use your credit card. If it’s a bigger purchase, like a mattress or a washing machine, you might decide to pay it off over time. Bread is among the financial technology start-ups attempting to get you to ditch your plastic and instead opt to finance your purchase with a loan that has lower rates and predictable monthly payments.

Bread said on Wednesday it has raised $126 million through a Series B funding round to expand the number of retailers that offer its financing. Menlo Ventures led the equity portion of the investment, with participation from Bessemer Venture Partners, RRE Ventures and others. A debt facility was also provided by Victory Park Capital.

The New York-based company was founded in 2014 and offers white-label solutions for retailers who wish to offer convenient financing to their customers.

You can now use PayPal through Skype’s mobile app (TechCrunch), Rated: A

The still growing payments giant today announced a new deal with Skype that will allow users in 22 countries worldwide to send money to other Skype users through an updated version of the Skype mobile app. This extends PayPal’s potential reach by a sizable amount – the Skype app has been downloaded over a billion times to date, and has approximately 300 million monthly active users, according to Skype parent company Microsoft, as of last year.

To be clear, the feature is designed for sending money between friends and family – not payments for goods or services from a business.

How Two Brothers Turned Seven Lines of Code Into a $ 9.2 Billion Startup (Bloomberg), Rated: A

Every day, Americans spend about $1.2 billion online. That figure has roughly doubled in the past five years, according to the Department of Commerce, and it’s likely to double again in the next five as the internet continues to devour traditional retail.

In 2010, Patrick and John Collison, brothers from rural Ireland, began to debug this process. Their company, Stripe Inc., built software that businesses could plug into websites and apps to instantly connect with credit card and banking systems and receive payments.

The company now handles tens of billions of dollars in internet transactions annually, making money by charging a small fee on each one. Half of Americans who bought something online in the past year did so, probably unknowingly, via Stripe. This has given it a $9.2 billion valuation, several times larger than those of its nearest competitors, and made Patrick, 28, and John, 26, two of the world’s youngest billionaires.

One way to justify the number: Stripe’s new partnership with Amazon. com Inc., the largest and most sought-­after customer on the internet. Over the past couple of weeks, Stripe began handling a large, though undisclosed, portion of Amazon’s transactions. Neither company will address the scope of the deal—which was only revealed by Stripe’s addition of Amazon’s logo to its website—but it could help Stripe greatly increase its trans­action volume.

Seven years in, however, Stripe’s mission is less to send more books, vacuums, and grooming kits into the world than to “increase the GDP of the internet,” Patrick says. To do this, the company is beginning to move beyond payments by writing software that helps companies retool the way they incorporate, pay workers, and detect fraud. It’s part of an ambitious bid to revamp how online business has been conducted for 20 years and to give anyone with a bright idea a chance to compete.

Real Estate Lender Zeus CrowdFunding More Than Doubles Its U.S. Service Area (PR.com), Rated: A

Zeus CrowdFunding will now provide fast funding to more of America than ever before. The company more than doubled its service area this month, expanding to eight new states as well as Washington, D.C.

The full list of territories in which Zeus CrowdFunding will provide real estate listings for investment are as follows: Colorado, Connecticut, Florida, Georgia, Massachusetts, Mississippi, Nebraska, Nevada, New Hampshire, North Carolina, Rhode Island, Texas, Virginia, Washington, D.C. and West Virginia.

KPMG: ALTERNATIVE INVESTMENT INDUSTRY DEAL MOMENTUM CONTINUES (All About Alpha), Rated: A

The auditing giant KPMG says in a recent report on merger and acquisition activityin the alternative asset management world that there was a dip in activity in this space in 2015, that there was a rebound “to more normalized levels” in 2016, and that the momentum off of that rebound continues in 2017, which saw 18 M&A transactions in the first quarter alone.

Stepping back a bit, the report observes that asset managers that have been focused for a long time on the long-only segment of the market are turning to M&A as one good way of capitalizing on the growing retailization of alternative strategies, “the increasing availability of liquid alternative investments to retail investors through registered investment (mutual) funds and retirement accounts.”

Another Big Picture point – various segments of the AI industry want to merge with one another. Private equity firms in particular want to “expand into adjacent asset classes such as real estate, infrastructure and hedge fund.”

RIA headcount, AUM on the rise as more firms embrace robo model (Financial-Planning), Rated: A

The RIA sector is enjoying brisk growth in both personnel and assets under management, but remains dominated by small businesses that cater to specialized sets of clients, including a growing number of firms that are rolling out interactive digital advice services.

Those are among the findings from a new report by the Investment Adviser Association, the group’s annual industry snapshot.

By the numbers, the RIA sector reached an all-time high with 12,172 SEC-registered advisers as of April 2017, up 2.7% from a year ago. Those advisers serve 35.6 million clients and manage $70.7 trillion in assets, according to the IAA’s analysis.

The data show that there are only a handful of mega-advisers serving a vast portfolio of clients, suggesting a heavy reliance on an automated advice platform. Just eight registrants report that they have more than 1 million clients.

Far more common are firms that have fewer than 100 clients, the analysis finds.

By far the largest segment of firms are those with AUMs between $100 million and $1 billion (56% of all registrants), and 87% of all registrants count fewer than 50 employees. Just 1% of registered advisers — only 124 — boast an AUM of $100 billion or more, yet those shops manage 54% of the total assets in the industry.

LendingTree, LeadsCon Announce Judges for First-Ever $ 25,000 Startup Innovation Spotlight (Markets Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, and Access Intelligence, a leading business information and marketing company, today announced the judges for its new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The judges for the Startup Innovation Spotlight are:

  • Doug Lebda, Founder and CEO of LendingTree
  • Matt Coffin, Founder of Coffin Capital & Ventures
  • AJ Agrawal, Founder of Verma Media and Marketing Consultant to Fortune 500 companies
  • Chris Fralic, Partner at First Round
  • Shawn Colo – Shawn is the Co-Founder & Managing Partner of 3L Capital as well as a senior advisor with Spectrum Equity Investors.

Beware the return of the ILC (American Banker), Rated: A

Recent remarks by acting Comptroller of the Currency Keith Noreika and the industrial bank application submitted by Social Finance have raised significant policy questions about the mixing of banking and commerce, really for the first time since Walmart’s and Home Depot’s failed banking bids prior to the financial crisis.

SoFi’s application, meanwhile, indicates that there may be greater interest in the last viable type of FDIC-insured bank charter still legally available to commercial firms. To be sure, the fintech-powered marketplace lender is not a commercial entity like Walmart. As a financial services provider, SoFi could apply for a mainstream bank holding company license. But SoFi’s industrial bank bid could be seen as a stalking horse, potentially opening the door for more companies — including commercial and industrial firms — that want banking powers. In addition, we should question the wisdom of granting SoFi an FDIC-insured banking license without requiring SoFI to accept regulation by the Federal Reserve as a bank holding company, as other financial owners of banks must do.

Ripple’s Product Suite is Growing (Ripple), Rated: A

And now, Ripple’s growing global payments network has 90+ customers, 75+ commercial deployments in progress and a common set of payment standards governing all transactions on the network.

Based on customer feedback, we’ve given our global payments network a name, RippleNet. This is not new – but simply an evolution of the growing network that has been building significant momentum. RippleNet is the world’s only enterprise blockchain solution for global payments.

Cloud Lending Solutions Announces Major Expansion of the CL Solution Suite With New Product: CL Portal (BusinessWire), Rated: A

Cloud Lending Solutions, a leader in cloud-based loan and leasing software, announced upgrades to its end-to-end suite of lending products for its commercial banks, retail banks and credit union clients with the expansion of its latest product CL Portal™ already in production at a Fortune Global 500 Bank.

The new CL Portal provides a differentiated borrowing experience for commercial, small business and consumer loans for borrowers, investors, and stakeholders by seamlessly integrating with loan product workflows and document management to create a personalized, unique experience for loans ranging from fully automated consumer loans to multi-entity, collaborative commercial loans. The CL Portal supports multiple borrower types including:

  • Commercial Loan Origination Portal: financial institutions can now design a commercial loan portal and enable borrowers to log on and securely upload required documents and check the status of a loan in progress. The CL Portal extends existing document management functionality already in CL Originate, to display a list of document requirements associated with the borrower and facilitate the document upload process and review process.
  • Small Business Loan Application Portal: facilitates a cost-effective, online small business loan origination process leveraging automated scoring criteria and third-party data. Designed to integrate with borrower and back office lending workflows, 3rd party data collections, document collections, and review from CL Originate.
  • Consumer Loan Application Portal: providing a multi-channel personalized and differentiated borrowing experience for consumer loan products. Configurable workflows allow banks to manage the complete consumer loan application including acknowledgments, credit, document delivery, offer, and acceptance.
  • Investor Portal works in conjunction with CL Marketplace, enables financial institutions to extend investment opportunities to their customers by making portions of loans available for investment. CL Portal enables investors to view investment opportunities, bid on applicable loans and manage existing investments.

15 Creative Ways Large Real Estate & Infrastructure Developers – Raise Millions Outside of Traditional Debt and Equity (Part I) (JDSupra), Rated: A

We know one developer who invested only $10,000 by utilizing just two of these strategies and made $35,000,000 by selling to a national homebuilder, and saving substantial within a tax preferred vehicle that his attorney helped him devise.

  1. Forward Sale Funding
  2. Overriding Royalty Interests
  3. Sponsorships
  4. Presales
  5. Crowdfunding
  6. Options Contracts
  7. Pay upon Completion Contracting
  8. Corporate Bond Funding
  9. Municipality Bonds
  10. Private Transfer Fees
  11. Sales/Leaseback
  12. 3rd Party Subordination & Cross-collateralizations
  13. Joint Ventures
  14. Subdividing
  15. Tax

Presales

Lenders typically require developers to presale or pre-lease a certain percentage (e.g. 50%) of their project before providing construction financing.

This requires that developers have the considerable skills and resources to generate presales.  While a typical sales and marketing budget may represent 5% of sales, the ability to achieve these presales makes the difference between getting funding and not.

Crowdfunding

Real estate crowdfunding continues to be a dynamic and ever-evolving industry, growing to an estimated $3.5 billion in 2016. By 2025, the crowdfunding industry as a whole is anticipated to be valued at more than $300 billion and online real estate marketplaces are primed to capitalize on that explosive growth.

 

Why young women today have a gloomier financial outlook than men (CNBC), Rated: B

Millennial women still trail their male peers when it comes to financial satisfaction, according to a new report from online loan marketplace LendingTree. Other elements point to why: The survey found women earn less, carry almost 30 percent more in outstanding debt, and are less confident about their ability to pay it off.

  • 57 percent of millennial men have an annual income of $50,000 or greater, compared to 42 percent of their female counterparts.
  • LendingTree, an online loan marketplace, says millennial women also carry almost 30 percent more outstanding total debt.
  • The top financial priority for millennial women was increasing savings while their male peers said increasing income.

Somewhat Favorable Media Coverage Somewhat Unlikely to Impact Elevate Credit (NYSE:ELVT) Share Price (Community Financial News), Rated: B

News stories about Elevate Credit (NYSE:ELVT) have trended somewhat positive recently, according to Accern. Elevate Credit earned a news sentiment score of 0.14 on Accern’s scale. Accern also gave media headlines about the company an impact score of 46.2609752435269 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the company’s share price in the immediate future.

Fund That Flip plans to expand in Cleveland (Crain’s Cleveland Business), Rated: B

A New York City real estate services company, Fund That Flip, is bringing its sales and back-office operations to Northeast Ohio.

The three-year-old company currently has a small presence here at 1382 W. Ninth Street, and it intends to add 25 employees.

The convergence of fund administration and FinTech (Hedgeweek), Rated: A

The forces shaping industry change demand that the role of the fund administrator increasingly needs to also be that of a technology services firm, rather than simply a provider of financial services. The influence that FinTech is having on the fund administration industry is growing and the long-term demands will be even greater.

United Kingdom

RateSetter spurs on business brokers with summer prize draw (P2P Finance News), Rated: AAA

RATESETTER is giving its business finance brokers an extra incentive to find borrowers over the typically slow summer months, with a “six weeks of summer” prize draw.

The peer-to-peer lender, which originates both consumer and business loans, has previously expressed its intentions to boost its business finance segment.

RateSetter will automatically enter its business loan brokers into the draw, which started on 24 July and ends on 1 September. There is a different prize for each week within this timeframe.

Who will be the first £3bn P2P lender? (P2P Finance News), Rated: AAA

IT HAS been a busy quarter for the “big three” peer-to-peer lenders with Zopa, Funding Circle and RateSetter all reaching the £2bn lending milestone.

But who will be first to £3bn?

Zopa’s loanbook reached £2bn in January and was at £2.4bn as of the end of the second quarter of 2017, P2PFA figures show.

Funding Circle, which hit £2bn in February and was at £2.4bn by the end of the second quarter, saw 12 per cent growth since the first quarter and 45 per cent annually.

Meanwhile, RateSetter, which hit £2bn last week, had £1.9bn at the end of quarter two, up 9.6 per cent since the first quarter and up 35.9 per cent annually.

Going by growth rates, Funding Circle appears to be growing fastest so could hit the £3bn the quickest.

Meet the company behind Nutmeg’s ISA (AltFi), Rated: A

When Nutmeg launched its Lifetime ISA in April, it was through a partnership with digital wealth platform InvestCloud. The cloud computing and API-based technology allowed Nutmeg to quickly on-board clients while complying with regulators.

Asset-backed peer-to-peer lender launches IFISA (AltFi), Rated: A

There’s a new peer-to-peer ISA on the market. Asset-backed lending platform Ablrate has just launched its own take on the Innovative Finance ISA, after receiving full authorisation from the FCA in April.

Chinese investment powering regeneration of the North (Bridging&Commercial), Rated: A

One city that is often overlooked is Sheffield. There are already encouraging signs that Sheffield is a city on the up, however, and a big part of that is down to Chinese investment.

Last year it was announced that Chinese company Sichuan Guodong Construction had tied up a 60-year partnership with Sheffield City Council, with an initial commitment to spend £220m on up to five projects in the city centre over the next three years. It’s the largest Chinese investment deal in a UK city outside of London.

Folk2Folk launches Three Counties Hub (Bridging&Commercial), Rated: B

Folk2Folk has expanded its presence into Worcestershire, Herefordshire and Gloucestershire.
The peer-to-peer lending platform has repurposed its Tewkesbury office in Gloucestershire into a regional hub and, as a result, it is now active in these three counties.

When bank lenders say no, where does a business go? (RealBusiness), Rated: B

When bank lenders turn business owners away, they should refer them to alternative finance lenders instead. But how does it work?

However, accessing finance is still a bug-bear for many SME owners. Despite the increasing variety of options available, raising awareness is still crucial to the uptake of funding with many business owners still turning to bank lenders.

Tavener suggested aggregating all the funders into one place and creating a market comparison site. This is exactly what happened – pretty much every alternative funder was incorporated into Clifton’s Alternative Business Funding portal.

The platform now incorporates 120 different business funding products.

China

Intelligent finance new trend: UP Financial sets sail with “AI+big data” (PR Newswire), Rated: A

As the root of multiple industries, the financial industry’s evolution will make a significant contribution to the growth of the economy. On July 16Steven Yuan, CEO of UP Financial, at the LendIT Summit in Shanghai, presented to the whole world at the commercial application of shared AI- geometric stock, which marked the growth and imagination of China’s intelligent finance. In a speech under the title of “technology-driven new finance”, he predicted that wealth management and investment decisions will become highly intelligent for the economyIt can promote financial assets growing in a geometrical progression, and be able todrive the real economy’s development, and create unlimited value. The ultimate goal of the transformation of technological finance is to break the boundary of industrial innovations and increase the social value to the economy. New intelligent finance marks this improving direction.

What’s in a name? Everything, when it comes to China’s stock market (SCMP), Rated: A

You could be forgiven for assuming that a company with a name like Shanghai P2P Financial Information Service might be in the business of, well, peer-to-peer financial information services.

But names can be misleading, particularly when it comes to the Chinese stock market.

As of last Friday, shares of P2P Financial Information traded at 6.66 yuan, more than 72 per cent shy of its close of 23.4 yuan on June 11, 2015.

European Union

Fintech funding on the rebound as Irish start-ups play part (Irish Times), Rated: A

Ireland played its part, recording fintech investments of more than $230 million (€194 million) in the three-month period, led by Plynkwhich raised €25 million in a Series A round from Swiss Privée in June.

Total global funding to fintech firms rose to $8.4 billion (€7.1 billion) from $3.6 billion (€3 billion) with European fintech investment jumping to over $2 billion (€1.7 billion). This is well below the peak investment high of $5.8 billion (€4.9 billion) seen in the fourth quarter of 2015, but up on the $880 million (€741 million) reported in the first three months of 2017.

International

Thomson Reuters adds alternative finance data to Eikon with TAB Dashboard (Finextra), Rated: AAA

Created by Cambridge-based TAB U.K., TAB Dashboard is the world’s most comprehensive source of intelligence on the global alternative finance market, and its deployment on Eikon opens up a significant new asset class for its users.

Data on the alternative finance market is difficult to obtain, with financial professionals forced to gather information on a piecemeal basis, or direct from individual platforms, which is inconsistent between services, languages and definitions and therefore extremely hard to extract insight from. The addition of TAB Dashboard to Eikon allows customers to use extensive data in a format and environment they are comfortable with and which is consistent, shaping their strategy and keeping them aware of regulatory and policy changes.

TAB Dashboard analytics shows that in 2016 an average of $40.9M was raised every single day, more than double the daily average of $18.4M in 2014, with signs that that growth is continuing along the same path.

TAB U.K. analyses data from more than 900 different alternative finance platforms, including equity, bonds, SME debt, P2P and more, and has mapped more than ten million transactions.

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

Milestones reached this month are:

  • Zopa crosses 2.5 billion GBP originated since launch
  • Ratesetter crosses 2 billion GBP originated since launch
  • Mintos loan volume since launch now over 250 million Euro
  • Lendix reaches 100 million Euro in financed loans since launch
Source: P2P-Banking

Today in Data: Mobile App News Breakdown (PYMNTS), Rated: A

225 million | Current amount of Paytm users prior to new messaging service launch at the end of August

$250 | Amount of coupons offered through grocery operator Food Lion’s new mobile app

31 | Number of European markets P2P payment service Klarna Bank’s new mobile app Wavy enables for mobile money transfers

India

Will RBI Regulations Facilitate Or Inhibit The P2P Lending Market? (Inc42), Rated: AAA

In the absence of proper regulations, people are often hesitant to use P2P platforms for lending and borrowing. To that end, the RBI has highlighted three main reasons peer-to-peer lending should be regulated in India.

In the 2016 paper, the RBI talked at great length about the risks of money laundering associated with peer-to-peer lending. To minimise these risks, the RBI is looking to cap the interest rates charged by P2P lending companies at the same level as NBFCs and microfinance institutions (MFIs). It also raised concerns regarding the lack of transparency in KYC and loan recovery practices.

  • The P2P companies would serve only as intermediaries, responsible for matching lenders and borrowers on the platform. The portal would act as the loan originator, without the lending and borrowing actually getting reflected on its balance sheet.
  • The platform will be prohibited from giving any assured return either directly or indirectly. It will, however, be allowed to opine on lender suitability and borrower creditworthiness.
  • Advertisements should contain adequate mention of P2P lending regulations.
  • The funds will have to move directly from the lender’s bank account to the borrower’s bank account to reduce the threat of money laundering.
  • Peer-to-peer lending platforms will also be prohibited from participating in cross-border transactions, under the FEMA guidelines for transactions between residents and nonresidents.

Fintech startups like Lendingkart, KredX move towards hybrid lending model  (India Times), Rated: A

Lendingkart, which has been lending through its own books as a nonbanking financial company, is set to start co-lending with banks and other financial firms through a marketplace platform in six-nine months, chief executive Harshvardhan Lunia said.

On the other hand, KredX, an invoice discounting marketplace platform for small and medium enterprises, has applied for an NBFC licence. Consumer lending company ZestMoney is also seeking to become a non-banking financial company.

Capital Float, which started its marketplace model last year and currently co-lends with five financial institutions, is set to scale up loans disbursed through its partners to 50% of its total disbursals by the end of this fiscal year. Currently, that’s at 40%.

Some digital lending companies such as BankBazaar, which runs a marketplace, and LoanTap, which lends on its books, do not see the need for a hybrid model.

Sebi forms panel to study fintech impact on securities market (Livemint), Rated: A

The Securities and Exchange Board of India (Sebi) on Wednesday formed a 10-member committee on financial and regulatory technologies, headed by Manipal Global Education chairman T.V. Mohandas Pai.

Sebi said the panel will recommend to the regulator the utilization of fintech solutions for further widening and deepening of the Indian securities market. For this, the committee has to advise Sebi on better usage of existing financing platforms, both traditional and alternative (e.g. peer to peer lending and equity crowd-funding).

The panel will also advise Sebi on how to enhance market access and improve mobilization of household savings through new delivery channels of financial products, Robo Finance, investment advisory and portfolio management services.

Asia

Polytechnics in Singapore to add fintech courses in banking and IT diplomas (Tech in Asia), Rated: A

Polytechnics in Singapore are about to start teaching fintech with the help of Germany-headquartered Fidor Bank.

The bank is working with the Monetary Authority of Singapore to insert the Fidor Student Academy Singapore program into the curriculum of banking and IT-related diplomas offered by five polytechnics in the city-state.

Canada

OnDeck partners with Payment Source in Canada (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today a partnership with Payment Source, the largest retail distribution network for prepaid products in Canada, to offer Payment Source’s Now Prepay customers access to the OnDeck online small business lending platform.

Payment Source operates the Now Prepay brand and provides prepaid mobile top ups, gift cards and financial products and services to more than 15,000 retailers throughout Canada.

Africa

Synthesis named as one of top ten fintech firms to watch (Synthesis), Rated: A

Synthesis, founded in 1997, offers highly specialised software development, consulting and integration services and technology based product solutions to banking and financial institutions in South Africa and other emerging markets.

Philippines

JG Summit diversifies into digital financing (The Standard), Rated: AAA

Conglomerate JG Summit Holdings Inc. said a unit teamed up with the founders of internet giants Skype and LU.com to form digital financial services marketplace to address the financial needs of underbanked consumers and micro and small and medium enterprises in the Philippines.

Authors:

George Popescu
Allen Taylor

Thursday August 3 2017, Daily News Digest

earning multiples

News Comments Today’s main news: SoFi funds over $3.1 billion in Q2. Bread raises $126M to offer white label solution for major online purchases. RateSetter offers summer prize draw. Thomson Reuters adds alt finance data to Eikon. OnDeck partners with Payment Source in Canada. Today’s main analysis: FT Partners’ CEO monthly alternative lending market analysis for August 2017. International P2P […]

earning multiples

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

Philippines

News Summary

United States

FT Partners’ CEO Monthly Alternative Lending Market Analysis (August ’17) (FT Partners), Rated: AAA

We are pleased to announce our role advising 

Source: FT Partners

Read the full analysis here.

SoFi letter to investors (SoFi Email), Rated: AAA

Fintech Startup Bread Raises $ 126 Million In Bid To Finance Big Online Purchases (Forbes), Rated: AAA

When you buy something online, chances are you use your credit card. If it’s a bigger purchase, like a mattress or a washing machine, you might decide to pay it off over time. Bread is among the financial technology start-ups attempting to get you to ditch your plastic and instead opt to finance your purchase with a loan that has lower rates and predictable monthly payments.

Bread said on Wednesday it has raised $126 million through a Series B funding round to expand the number of retailers that offer its financing. Menlo Ventures led the equity portion of the investment, with participation from Bessemer Venture Partners, RRE Ventures and others. A debt facility was also provided by Victory Park Capital.

The New York-based company was founded in 2014 and offers white-label solutions for retailers who wish to offer convenient financing to their customers.

You can now use PayPal through Skype’s mobile app (TechCrunch), Rated: A

The still growing payments giant today announced a new deal with Skype that will allow users in 22 countries worldwide to send money to other Skype users through an updated version of the Skype mobile app. This extends PayPal’s potential reach by a sizable amount – the Skype app has been downloaded over a billion times to date, and has approximately 300 million monthly active users, according to Skype parent company Microsoft, as of last year.

To be clear, the feature is designed for sending money between friends and family – not payments for goods or services from a business.

How Two Brothers Turned Seven Lines of Code Into a $ 9.2 Billion Startup (Bloomberg), Rated: A

Every day, Americans spend about $1.2 billion online. That figure has roughly doubled in the past five years, according to the Department of Commerce, and it’s likely to double again in the next five as the internet continues to devour traditional retail.

In 2010, Patrick and John Collison, brothers from rural Ireland, began to debug this process. Their company, Stripe Inc., built software that businesses could plug into websites and apps to instantly connect with credit card and banking systems and receive payments.

The company now handles tens of billions of dollars in internet transactions annually, making money by charging a small fee on each one. Half of Americans who bought something online in the past year did so, probably unknowingly, via Stripe. This has given it a $9.2 billion valuation, several times larger than those of its nearest competitors, and made Patrick, 28, and John, 26, two of the world’s youngest billionaires.

One way to justify the number: Stripe’s new partnership with Amazon. com Inc., the largest and most sought-­after customer on the internet. Over the past couple of weeks, Stripe began handling a large, though undisclosed, portion of Amazon’s transactions. Neither company will address the scope of the deal—which was only revealed by Stripe’s addition of Amazon’s logo to its website—but it could help Stripe greatly increase its trans­action volume.

Seven years in, however, Stripe’s mission is less to send more books, vacuums, and grooming kits into the world than to “increase the GDP of the internet,” Patrick says. To do this, the company is beginning to move beyond payments by writing software that helps companies retool the way they incorporate, pay workers, and detect fraud. It’s part of an ambitious bid to revamp how online business has been conducted for 20 years and to give anyone with a bright idea a chance to compete.

Real Estate Lender Zeus CrowdFunding More Than Doubles Its U.S. Service Area (PR.com), Rated: A

Zeus CrowdFunding will now provide fast funding to more of America than ever before. The company more than doubled its service area this month, expanding to eight new states as well as Washington, D.C.

The full list of territories in which Zeus CrowdFunding will provide real estate listings for investment are as follows: Colorado, Connecticut, Florida, Georgia, Massachusetts, Mississippi, Nebraska, Nevada, New Hampshire, North Carolina, Rhode Island, Texas, Virginia, Washington, D.C. and West Virginia.

KPMG: ALTERNATIVE INVESTMENT INDUSTRY DEAL MOMENTUM CONTINUES (All About Alpha), Rated: A

The auditing giant KPMG says in a recent report on merger and acquisition activityin the alternative asset management world that there was a dip in activity in this space in 2015, that there was a rebound “to more normalized levels” in 2016, and that the momentum off of that rebound continues in 2017, which saw 18 M&A transactions in the first quarter alone.

Stepping back a bit, the report observes that asset managers that have been focused for a long time on the long-only segment of the market are turning to M&A as one good way of capitalizing on the growing retailization of alternative strategies, “the increasing availability of liquid alternative investments to retail investors through registered investment (mutual) funds and retirement accounts.”

Another Big Picture point – various segments of the AI industry want to merge with one another. Private equity firms in particular want to “expand into adjacent asset classes such as real estate, infrastructure and hedge fund.”

RIA headcount, AUM on the rise as more firms embrace robo model (Financial-Planning), Rated: A

The RIA sector is enjoying brisk growth in both personnel and assets under management, but remains dominated by small businesses that cater to specialized sets of clients, including a growing number of firms that are rolling out interactive digital advice services.

Those are among the findings from a new report by the Investment Adviser Association, the group’s annual industry snapshot.

By the numbers, the RIA sector reached an all-time high with 12,172 SEC-registered advisers as of April 2017, up 2.7% from a year ago. Those advisers serve 35.6 million clients and manage $70.7 trillion in assets, according to the IAA’s analysis.

The data show that there are only a handful of mega-advisers serving a vast portfolio of clients, suggesting a heavy reliance on an automated advice platform. Just eight registrants report that they have more than 1 million clients.

Far more common are firms that have fewer than 100 clients, the analysis finds.

By far the largest segment of firms are those with AUMs between $100 million and $1 billion (56% of all registrants), and 87% of all registrants count fewer than 50 employees. Just 1% of registered advisers — only 124 — boast an AUM of $100 billion or more, yet those shops manage 54% of the total assets in the industry.

LendingTree, LeadsCon Announce Judges for First-Ever $ 25,000 Startup Innovation Spotlight (Markets Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, and Access Intelligence, a leading business information and marketing company, today announced the judges for its new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The judges for the Startup Innovation Spotlight are:

  • Doug Lebda, Founder and CEO of LendingTree
  • Matt Coffin, Founder of Coffin Capital & Ventures
  • AJ Agrawal, Founder of Verma Media and Marketing Consultant to Fortune 500 companies
  • Chris Fralic, Partner at First Round
  • Shawn Colo – Shawn is the Co-Founder & Managing Partner of 3L Capital as well as a senior advisor with Spectrum Equity Investors.

Beware the return of the ILC (American Banker), Rated: A

Recent remarks by acting Comptroller of the Currency Keith Noreika and the industrial bank application submitted by Social Finance have raised significant policy questions about the mixing of banking and commerce, really for the first time since Walmart’s and Home Depot’s failed banking bids prior to the financial crisis.

SoFi’s application, meanwhile, indicates that there may be greater interest in the last viable type of FDIC-insured bank charter still legally available to commercial firms. To be sure, the fintech-powered marketplace lender is not a commercial entity like Walmart. As a financial services provider, SoFi could apply for a mainstream bank holding company license. But SoFi’s industrial bank bid could be seen as a stalking horse, potentially opening the door for more companies — including commercial and industrial firms — that want banking powers. In addition, we should question the wisdom of granting SoFi an FDIC-insured banking license without requiring SoFI to accept regulation by the Federal Reserve as a bank holding company, as other financial owners of banks must do.

Ripple’s Product Suite is Growing (Ripple), Rated: A

And now, Ripple’s growing global payments network has 90+ customers, 75+ commercial deployments in progress and a common set of payment standards governing all transactions on the network.

Based on customer feedback, we’ve given our global payments network a name, RippleNet. This is not new – but simply an evolution of the growing network that has been building significant momentum. RippleNet is the world’s only enterprise blockchain solution for global payments.

Cloud Lending Solutions Announces Major Expansion of the CL Solution Suite With New Product: CL Portal (BusinessWire), Rated: A

Cloud Lending Solutions, a leader in cloud-based loan and leasing software, announced upgrades to its end-to-end suite of lending products for its commercial banks, retail banks and credit union clients with the expansion of its latest product CL Portal™ already in production at a Fortune Global 500 Bank.

The new CL Portal provides a differentiated borrowing experience for commercial, small business and consumer loans for borrowers, investors, and stakeholders by seamlessly integrating with loan product workflows and document management to create a personalized, unique experience for loans ranging from fully automated consumer loans to multi-entity, collaborative commercial loans. The CL Portal supports multiple borrower types including:

  • Commercial Loan Origination Portal: financial institutions can now design a commercial loan portal and enable borrowers to log on and securely upload required documents and check the status of a loan in progress. The CL Portal extends existing document management functionality already in CL Originate, to display a list of document requirements associated with the borrower and facilitate the document upload process and review process.
  • Small Business Loan Application Portal: facilitates a cost-effective, online small business loan origination process leveraging automated scoring criteria and third-party data. Designed to integrate with borrower and back office lending workflows, 3rd party data collections, document collections, and review from CL Originate.
  • Consumer Loan Application Portal: providing a multi-channel personalized and differentiated borrowing experience for consumer loan products. Configurable workflows allow banks to manage the complete consumer loan application including acknowledgments, credit, document delivery, offer, and acceptance.
  • Investor Portal works in conjunction with CL Marketplace, enables financial institutions to extend investment opportunities to their customers by making portions of loans available for investment. CL Portal enables investors to view investment opportunities, bid on applicable loans and manage existing investments.

15 Creative Ways Large Real Estate & Infrastructure Developers – Raise Millions Outside of Traditional Debt and Equity (Part I) (JDSupra), Rated: A

We know one developer who invested only $10,000 by utilizing just two of these strategies and made $35,000,000 by selling to a national homebuilder, and saving substantial within a tax preferred vehicle that his attorney helped him devise.

  1. Forward Sale Funding
  2. Overriding Royalty Interests
  3. Sponsorships
  4. Presales
  5. Crowdfunding
  6. Options Contracts
  7. Pay upon Completion Contracting
  8. Corporate Bond Funding
  9. Municipality Bonds
  10. Private Transfer Fees
  11. Sales/Leaseback
  12. 3rd Party Subordination & Cross-collateralizations
  13. Joint Ventures
  14. Subdividing
  15. Tax

Presales

Lenders typically require developers to presale or pre-lease a certain percentage (e.g. 50%) of their project before providing construction financing.

This requires that developers have the considerable skills and resources to generate presales.  While a typical sales and marketing budget may represent 5% of sales, the ability to achieve these presales makes the difference between getting funding and not.

Crowdfunding

Real estate crowdfunding continues to be a dynamic and ever-evolving industry, growing to an estimated $3.5 billion in 2016. By 2025, the crowdfunding industry as a whole is anticipated to be valued at more than $300 billion and online real estate marketplaces are primed to capitalize on that explosive growth.

 

Why young women today have a gloomier financial outlook than men (CNBC), Rated: B

Millennial women still trail their male peers when it comes to financial satisfaction, according to a new report from online loan marketplace LendingTree. Other elements point to why: The survey found women earn less, carry almost 30 percent more in outstanding debt, and are less confident about their ability to pay it off.

  • 57 percent of millennial men have an annual income of $50,000 or greater, compared to 42 percent of their female counterparts.
  • LendingTree, an online loan marketplace, says millennial women also carry almost 30 percent more outstanding total debt.
  • The top financial priority for millennial women was increasing savings while their male peers said increasing income.

Somewhat Favorable Media Coverage Somewhat Unlikely to Impact Elevate Credit (NYSE:ELVT) Share Price (Community Financial News), Rated: B

News stories about Elevate Credit (NYSE:ELVT) have trended somewhat positive recently, according to Accern. Elevate Credit earned a news sentiment score of 0.14 on Accern’s scale. Accern also gave media headlines about the company an impact score of 46.2609752435269 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the company’s share price in the immediate future.

Fund That Flip plans to expand in Cleveland (Crain’s Cleveland Business), Rated: B

A New York City real estate services company, Fund That Flip, is bringing its sales and back-office operations to Northeast Ohio.

The three-year-old company currently has a small presence here at 1382 W. Ninth Street, and it intends to add 25 employees.

The convergence of fund administration and FinTech (Hedgeweek), Rated: A

The forces shaping industry change demand that the role of the fund administrator increasingly needs to also be that of a technology services firm, rather than simply a provider of financial services. The influence that FinTech is having on the fund administration industry is growing and the long-term demands will be even greater.

United Kingdom

RateSetter spurs on business brokers with summer prize draw (P2P Finance News), Rated: AAA

RATESETTER is giving its business finance brokers an extra incentive to find borrowers over the typically slow summer months, with a “six weeks of summer” prize draw.

The peer-to-peer lender, which originates both consumer and business loans, has previously expressed its intentions to boost its business finance segment.

RateSetter will automatically enter its business loan brokers into the draw, which started on 24 July and ends on 1 September. There is a different prize for each week within this timeframe.

Who will be the first £3bn P2P lender? (P2P Finance News), Rated: AAA

IT HAS been a busy quarter for the “big three” peer-to-peer lenders with Zopa, Funding Circle and RateSetter all reaching the £2bn lending milestone.

But who will be first to £3bn?

Zopa’s loanbook reached £2bn in January and was at £2.4bn as of the end of the second quarter of 2017, P2PFA figures show.

Funding Circle, which hit £2bn in February and was at £2.4bn by the end of the second quarter, saw 12 per cent growth since the first quarter and 45 per cent annually.

Meanwhile, RateSetter, which hit £2bn last week, had £1.9bn at the end of quarter two, up 9.6 per cent since the first quarter and up 35.9 per cent annually.

Going by growth rates, Funding Circle appears to be growing fastest so could hit the £3bn the quickest.

Meet the company behind Nutmeg’s ISA (AltFi), Rated: A

When Nutmeg launched its Lifetime ISA in April, it was through a partnership with digital wealth platform InvestCloud. The cloud computing and API-based technology allowed Nutmeg to quickly on-board clients while complying with regulators.

Asset-backed peer-to-peer lender launches IFISA (AltFi), Rated: A

There’s a new peer-to-peer ISA on the market. Asset-backed lending platform Ablrate has just launched its own take on the Innovative Finance ISA, after receiving full authorisation from the FCA in April.

Chinese investment powering regeneration of the North (Bridging&Commercial), Rated: A

One city that is often overlooked is Sheffield. There are already encouraging signs that Sheffield is a city on the up, however, and a big part of that is down to Chinese investment.

Last year it was announced that Chinese company Sichuan Guodong Construction had tied up a 60-year partnership with Sheffield City Council, with an initial commitment to spend £220m on up to five projects in the city centre over the next three years. It’s the largest Chinese investment deal in a UK city outside of London.

Folk2Folk launches Three Counties Hub (Bridging&Commercial), Rated: B

Folk2Folk has expanded its presence into Worcestershire, Herefordshire and Gloucestershire.
The peer-to-peer lending platform has repurposed its Tewkesbury office in Gloucestershire into a regional hub and, as a result, it is now active in these three counties.

When bank lenders say no, where does a business go? (RealBusiness), Rated: B

When bank lenders turn business owners away, they should refer them to alternative finance lenders instead. But how does it work?

However, accessing finance is still a bug-bear for many SME owners. Despite the increasing variety of options available, raising awareness is still crucial to the uptake of funding with many business owners still turning to bank lenders.

Tavener suggested aggregating all the funders into one place and creating a market comparison site. This is exactly what happened – pretty much every alternative funder was incorporated into Clifton’s Alternative Business Funding portal.

The platform now incorporates 120 different business funding products.

China

Intelligent finance new trend: UP Financial sets sail with “AI+big data” (PR Newswire), Rated: A

As the root of multiple industries, the financial industry’s evolution will make a significant contribution to the growth of the economy. On July 16Steven Yuan, CEO of UP Financial, at the LendIT Summit in Shanghai, presented to the whole world at the commercial application of shared AI- geometric stock, which marked the growth and imagination of China’s intelligent finance. In a speech under the title of “technology-driven new finance”, he predicted that wealth management and investment decisions will become highly intelligent for the economyIt can promote financial assets growing in a geometrical progression, and be able todrive the real economy’s development, and create unlimited value. The ultimate goal of the transformation of technological finance is to break the boundary of industrial innovations and increase the social value to the economy. New intelligent finance marks this improving direction.

What’s in a name? Everything, when it comes to China’s stock market (SCMP), Rated: A

You could be forgiven for assuming that a company with a name like Shanghai P2P Financial Information Service might be in the business of, well, peer-to-peer financial information services.

But names can be misleading, particularly when it comes to the Chinese stock market.

As of last Friday, shares of P2P Financial Information traded at 6.66 yuan, more than 72 per cent shy of its close of 23.4 yuan on June 11, 2015.

European Union

Fintech funding on the rebound as Irish start-ups play part (Irish Times), Rated: A

Ireland played its part, recording fintech investments of more than $230 million (€194 million) in the three-month period, led by Plynkwhich raised €25 million in a Series A round from Swiss Privée in June.

Total global funding to fintech firms rose to $8.4 billion (€7.1 billion) from $3.6 billion (€3 billion) with European fintech investment jumping to over $2 billion (€1.7 billion). This is well below the peak investment high of $5.8 billion (€4.9 billion) seen in the fourth quarter of 2015, but up on the $880 million (€741 million) reported in the first three months of 2017.

International

Thomson Reuters adds alternative finance data to Eikon with TAB Dashboard (Finextra), Rated: AAA

Created by Cambridge-based TAB U.K., TAB Dashboard is the world’s most comprehensive source of intelligence on the global alternative finance market, and its deployment on Eikon opens up a significant new asset class for its users.

Data on the alternative finance market is difficult to obtain, with financial professionals forced to gather information on a piecemeal basis, or direct from individual platforms, which is inconsistent between services, languages and definitions and therefore extremely hard to extract insight from. The addition of TAB Dashboard to Eikon allows customers to use extensive data in a format and environment they are comfortable with and which is consistent, shaping their strategy and keeping them aware of regulatory and policy changes.

TAB Dashboard analytics shows that in 2016 an average of $40.9M was raised every single day, more than double the daily average of $18.4M in 2014, with signs that that growth is continuing along the same path.

TAB U.K. analyses data from more than 900 different alternative finance platforms, including equity, bonds, SME debt, P2P and more, and has mapped more than ten million transactions.

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

Milestones reached this month are:

  • Zopa crosses 2.5 billion GBP originated since launch
  • Ratesetter crosses 2 billion GBP originated since launch
  • Mintos loan volume since launch now over 250 million Euro
  • Lendix reaches 100 million Euro in financed loans since launch
Source: P2P-Banking

Today in Data: Mobile App News Breakdown (PYMNTS), Rated: A

225 million | Current amount of Paytm users prior to new messaging service launch at the end of August

$250 | Amount of coupons offered through grocery operator Food Lion’s new mobile app

31 | Number of European markets P2P payment service Klarna Bank’s new mobile app Wavy enables for mobile money transfers

India

Will RBI Regulations Facilitate Or Inhibit The P2P Lending Market? (Inc42), Rated: AAA

In the absence of proper regulations, people are often hesitant to use P2P platforms for lending and borrowing. To that end, the RBI has highlighted three main reasons peer-to-peer lending should be regulated in India.

In the 2016 paper, the RBI talked at great length about the risks of money laundering associated with peer-to-peer lending. To minimise these risks, the RBI is looking to cap the interest rates charged by P2P lending companies at the same level as NBFCs and microfinance institutions (MFIs). It also raised concerns regarding the lack of transparency in KYC and loan recovery practices.

  • The P2P companies would serve only as intermediaries, responsible for matching lenders and borrowers on the platform. The portal would act as the loan originator, without the lending and borrowing actually getting reflected on its balance sheet.
  • The platform will be prohibited from giving any assured return either directly or indirectly. It will, however, be allowed to opine on lender suitability and borrower creditworthiness.
  • Advertisements should contain adequate mention of P2P lending regulations.
  • The funds will have to move directly from the lender’s bank account to the borrower’s bank account to reduce the threat of money laundering.
  • Peer-to-peer lending platforms will also be prohibited from participating in cross-border transactions, under the FEMA guidelines for transactions between residents and nonresidents.

Fintech startups like Lendingkart, KredX move towards hybrid lending model  (India Times), Rated: A

Lendingkart, which has been lending through its own books as a nonbanking financial company, is set to start co-lending with banks and other financial firms through a marketplace platform in six-nine months, chief executive Harshvardhan Lunia said.

On the other hand, KredX, an invoice discounting marketplace platform for small and medium enterprises, has applied for an NBFC licence. Consumer lending company ZestMoney is also seeking to become a non-banking financial company.

Capital Float, which started its marketplace model last year and currently co-lends with five financial institutions, is set to scale up loans disbursed through its partners to 50% of its total disbursals by the end of this fiscal year. Currently, that’s at 40%.

Some digital lending companies such as BankBazaar, which runs a marketplace, and LoanTap, which lends on its books, do not see the need for a hybrid model.

Sebi forms panel to study fintech impact on securities market (Livemint), Rated: A

The Securities and Exchange Board of India (Sebi) on Wednesday formed a 10-member committee on financial and regulatory technologies, headed by Manipal Global Education chairman T.V. Mohandas Pai.

Sebi said the panel will recommend to the regulator the utilization of fintech solutions for further widening and deepening of the Indian securities market. For this, the committee has to advise Sebi on better usage of existing financing platforms, both traditional and alternative (e.g. peer to peer lending and equity crowd-funding).

The panel will also advise Sebi on how to enhance market access and improve mobilization of household savings through new delivery channels of financial products, Robo Finance, investment advisory and portfolio management services.

Asia

Polytechnics in Singapore to add fintech courses in banking and IT diplomas (Tech in Asia), Rated: A

Polytechnics in Singapore are about to start teaching fintech with the help of Germany-headquartered Fidor Bank.

The bank is working with the Monetary Authority of Singapore to insert the Fidor Student Academy Singapore program into the curriculum of banking and IT-related diplomas offered by five polytechnics in the city-state.

Canada

OnDeck partners with Payment Source in Canada (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today a partnership with Payment Source, the largest retail distribution network for prepaid products in Canada, to offer Payment Source’s Now Prepay customers access to the OnDeck online small business lending platform.

Payment Source operates the Now Prepay brand and provides prepaid mobile top ups, gift cards and financial products and services to more than 15,000 retailers throughout Canada.

Africa

Synthesis named as one of top ten fintech firms to watch (Synthesis), Rated: A

Synthesis, founded in 1997, offers highly specialised software development, consulting and integration services and technology based product solutions to banking and financial institutions in South Africa and other emerging markets.

Philippines

JG Summit diversifies into digital financing (The Standard), Rated: AAA

Conglomerate JG Summit Holdings Inc. said a unit teamed up with the founders of internet giants Skype and LU.com to form digital financial services marketplace to address the financial needs of underbanked consumers and micro and small and medium enterprises in the Philippines.

Authors:

George Popescu
Allen Taylor

Monday May 1 2017, Daily News Digest

Upstart

News Comments Today’s main news: Funding Circle US to bolster capital markets team. US investors in Yirendai try to preserve lawsuit. Fed wants a say in fintech rules. Ablrate gains ISA manager status. Mizuho commits to fintech partnerships. Today’s main analysis: AI fintech startups offer loans on new credit. Global fintech report from CB Insights. Today’s thought-provoking articles: Multi-seller ABS […]

Upstart

News Comments

United States

United Kingdom

European Union

China

International

Australia

Asia

Africa

News Summary

United States

Funding Circle US to bolster capital markets team (AltFi), Rated: AAA

Funding Circle US is currently advertising for a number of capital markets jobs, all based in San Francisco. Among the listed jobs is a newly created Head of US Capital Markets role.

A Funding Circle spokesperson told us that Sachin Patel is now running capital markets for the firm globally.

There are currently five capital markets jobs listed in the US.

US Investors In Chinese Online Lender Fight To Preserve Suit (Law360), Rated: AAA

Shareholders in Chinese peer-to-peer lending company Yirendai Ltd. asked a California federal judge on Thursday to keep their securities fraud suit against the company and its executives alive, saying their request to dismiss the case rested on mischaracterizations and factual arguments the court couldn’t consider.

The investors sued Yirendai in 2016 after news that Chinese regulators were cracking down on the peer-to-peer lending business sent its stock tanking.

AI Fintech Startups Offer Loans on New Credit (Nanalyze), Rated: AAA

We’ve found more than a dozen AI fintech firms through our friends at CB Insights that claim their machine-learning algorithms can evaluate loan applications in milliseconds while minimizing defaults.

Many of these companies target so-called thin-file borrowers—people with little credit history—who are usually trying to consolidate debt from high-interest credit cards.

CB Insights reported in its 2016 Global Fintech report that investments dropped from an all-time high of $14.6 billion in 2015 to $12.7 billion last year. Online loan companies, in particular, took something of a hit in 2016. The last quarter was particularly tough, with a 31 percent tumble in loan originations. (However, overall, the top online loan sharks companies tracked by S&P Global Market Intelligence improved their bottom-dollar on loan originations by 15 percent from year-to-year, mostly on the backs of small businesses and students.)

Avant offers direct unsecured personal loans ranging from $1,000-$35,000 with funding delivered as soon as the next business day. It has served more than 500,000 customers worldwide, though last year’s downturn for digital lenders also hit Avant. Its year-to-year loan originations were down 12 percent to about $1.7 billion.

Led by a bevy of former Google-ites, including former Google CIO and ZestFinance CEO and founder Douglass Merrill, ZestFinance has raised $62 million in equity financing, including an undisclosed amount last July. Total funding is $262 million thanks to a couple of additional rounds of debt financing. Peter Thiel’s name again appears on the long list of investors.

Key VC tech investors like Andreessen Horowitz and Khosla Ventures have helped pour $320 million of equity into Affirm, bringing total funding to $420 million after a $100 million round of debt financing from Morgan Stanley. The company is led by PayPal co-founder Max Levchin.

Upstart is an AI fintech version of Lending Club. Meaning it provides peer-to-peer lending. Like ZestFinance, it particularly markets to the skinny jeans crowd, offering loans of up to $50,000 to help consolidate debt, pay off student loans and build credit history for those living in hipster cities like Portland and Brooklyn. The machine learning bit involves taking less tangible variables like education, college major and astrological sign into account.

Upstart CEO (and former president of Google Enterprise) Dave Girouard told TechCrunch he expects his company to become profitable this year. He predicts Upstart will originate about $1 billion in loans this year after doing about $650 million in loans in its first 2½ years.

Federal Reserve wants a say on U.S. fintech rules -Brainard (NASDAQ), Rated: AAA

The Federal Reserve wants to give input on future rules governing how technology companies move into consumer lending markets, Fed Governor Lael Brainard said on Friday.

Policymakers will have to determine whether financial technology, or fintech, companies may tap the Fed for services that large, traditional banks enjoy.

“The OCC’s proposal raises interpretive and policy issues for the Federal Reserve regarding whether charter recipients would become Federal Reserve members or have access to Federal Reserve accounts and services,” Brainard told a conference at Northwestern University in Evanston, Illinois.

Ten Marketplace Lending Options for Accredited Investors (Lend Academy), Rated: A

LendingHome launched in 2014 but quickly established themselves as the leader in the category. They are the only real estate crowdfunding platform to have reached $1 billion in total loans issued, a milestone they crossed in December, 2016 just two and half years after launching.

PeerStreet were founded just 18 months ago but they are already making a name for themselves. They are also focused on the fix & flip market providing loans ranging from 6-24 months in length. They target 6-12% returns and they maintain a conservative maximum LTV (loan-to-value) of 75%.

Sharestates has offered both debt and equity investments, although the vast majority of their deals are for debt. These deals are similar to other platforms with loan terms typically 6-24 months targeting 8-12% returns.

RealtyMogul is one of the most established players in the space having launched in 2013. They have done around $260 million in deals and today they focus primarily on commercial property.

Patch of Land is 100% focused on debt deals tied to mainly residential properties but with a small number of commercial properties as well.

RealtyShares is a “full stack” capital provider, meaning they offer both debt and equity deals on a single project for borrowers. They have done some large deals including this $5.9 million deal for a 132-unit apartment complex in Ohio.

The world leader in marketplace lending for small business loans offers US accredited investors a solid option. Loan terms range from 12 – 60 months and interest rates from 5.49% – 27.79%. Loans are rated from A+ for least risky down to D grade. They have a marketplace where you can browse the loans on offer or you can setup automated investing strategies based on loan grade. As I wrote this there were 12 loans available on their marketplace. Funding Circle provides financials and other details about each company although they don’t provide the company name.

Streetshares is a relatively new small business lender, they launched in 2014, and they are focused primarily on providing funding for military and veteran community businesses. Run by two veterans they provide three different products: term loans (3 – 36 months), lines of credit ($5,000 – $100,000) and government contract financing (for companies dealing with federal or state government contracts).

P2Binvestor, or P2Bi for short, is an asset backed lender providing revolving lines of credit typically backed by accounts receivables. These lines of credit range from $250,000 to as much as $10 million.

Upstart has been something of a quiet achiever when compared to some of their well-established competitors. Founded by ex-Googlers they have a very data-centric approach to their business. One of the things that makes Upstart unique is they were the first platform to look at a borrower’s education and factor that into the lending decision. Interest rates range from 6.37% – 29.99% APR, loan terms are three or five years and amounts range from $1,000 – $50,000.

Could Facial Recognition Technology Transform Insurance? (FA Magazine), Rated: A

In Wilmington, N.C., a high-tech company called Lapetus Solutions has developed a technology it calls Chronos that interprets facial characteristics such as baggy eyes, rosy cheeks and double chins to estimate a person’s life expectancy. One purported use of this futuristic-sounding software is to help insurance companies assess risk quickly and inexpensively. Customers could then purchase life insurance online in record time, perhaps circumventing the usual medical examination altogether.

In theory at least, insurance carriers want to provide coverage only to those less likely to need it. The better the carriers understand and predict risks, the better they can manage their liabilities. So if facial recognition technology identifies risks that were previously unknown or unknowable, it could render some consumers uninsurable, an advantage perhaps for the insurance company but not the consumer.

But Erin Ardleigh, president and founder of Dynama Insurance, an independent insurance brokerage based in New York City, isn’t so sure. “How would facial recognition technology help underwriters? I suppose if it could identify clients [who were] engaging in risky behavior, such as smoking or skydiving,” she says.

Rodgers, though, contends that the decision of whether to try this or any other new technology may ultimately come down to dollars and cents.

McHenry Working With Senate Democrat on New Fintech Bill (Bloomberg BNA), Rated: A

A leading House Republican on financial technology issues said April 25 he is working with a Senate Democrat on a revised “permanent beta test” bill to prod regulators to foster fintech innovation.

“You must have a default ‘yes’ to new innovation,” Rep. Patrick McHenry (R-N.C.) said in a speech at the American Action Forum in Washington.

McHenry said the 2017 version of the act would include “significant changes and revisions,” but he declined to discuss those. He also declined to identify the Democratic senator with whom he is working. He said he hopes to introduce the new bill in two months.

Global Debt Registry Wins FinTech Breakthrough Award (GDR Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it has won the FinTech Breakthrough Award for ‘Best Business Lending Product’. The 

Female Fintech Founder On Series F And The Future Of Payments (Forbes), Rated: A

Karla Friede was first an executive with depth in sales and marketing and a passion for innovating. As the president and CEO of a company who had developed a new offering, a B2B payment technology, she was excited about getting to market.

Friede, now the CEO along with co-founders, Tana Law and Shaun McAravey, bought the rights to the idea from Zevez Corporation and in 2009 launched Nvoicepay.

Friede admits it wasn’t easy launching and scaling at that time. But, it taught them to be very smart with every penny. And, they had to prove their business case as they went along because investors weren’t throwing money at every shiny object.

Many B2B organizations don’t accept credit cards. And, managing ACH transfers require a lot of manual processes and the collection of sensitive financial data.

Friede says she was a little naïve in tackling the launch because the B2B payments space was so large. It’s one thing tackling Billion Dollar industries, it’s another thing dipping your toe into a market in the tens of Trillions.

Friede encourages founders to partner with people that think differently but complement your skills.

As Friede puts it, investors are looking for reasons not to invest in you…rather than reasons to invest in you. Don’t give them those reasons, give them a proven business model and secure set of customers.

Only 9% of VC-backed companies have woman CEOs so you won’t ‘look and feel like them.’ Instead, look and feel like someone who knows what they are doing and has proven it. That’s a shorthand all investors respond to.

If you are a female founder and you’re concerned about bias, she has this advice:

  • Target women-lead VCs or those with a woman partner.
  • Make it easy for the VC to relate to you.
  • Talk like the men around you.

She considers it a point of pride that they’ve raised $25M and it’s taken them to Series F to do it.

Small Change Announces Pittsburgh’s Liberty Bank Building Real Estate Offering (Crowdfund Insider), Rated: A

Real estate crowdfunding platform Small Change announced this week the launch of Pittsburgh’s Liberty Bank Building real estate offering. The funding portal noted that the project is seeking $300,000 to fund development of the building into co-working operator Beauty Shoppe’s flagship location.

Picker also noted that the next reincarnation of the Liberty Bank Building is having difficulty getting funds because it is considered to be the first full co-working building in Pittsburgh:

“Why is it so difficult to finance projects that bring innovation and new life to neighborhoods and cities? Must we rely on traditional financial institutions that are not very innovative at their core?”

Small Change added there is a 10% projected return on debt instrument. A full return of interest and capital is anticipated in 36 months. This is not an offer to sell securities.

State Bank Regulators Sue to Stop the OCC’s Fintech Charter (National Law Review), Rated: A

As we reported last fall, New York Department of Financial Services Superintendent Maria T. Vullo stated that she was “ardently opposed” to the Office of the Comptroller of the Currency’s (OCC’s) intention to process applications for a new financial technology (fintech) company charter. We now see just how much her counterparts in other states share that view, as the state bank regulators recently came together under the Conference of State Bank Supervisors (CSBS) banner to ask the federal courts to stop the OCC’s fintech charter initiative.

In turn, we believe that the CSBS action will act as a further disincentive for at least some fintech companies to pursue a national bank charter at this time.

Are Robo-Advisers in Your Future (My Prime Time News), Rated: A

Rather than having a “real” human being as your financial adviser, you can now hire a robot, or robo-adviser. The automated adviser will then manage your investment funds through the use of mathematical rules called algorithms. There is almost no human interaction.

While there may be cost savings, it is important to understand their risks and limitations before using them. First, what level of human interaction is important to you? While limited human interaction may result in reduced fees, many people feel more comfortable having often complex investment decisions explained by a person they trust. Before you decide to create an account with a robo-adviser, it’s important that you understand how the system works. Robo-adviser systems are limited to the information provided, and do not seek out new information or research potential options in the same way that a human adviser would.

Therefore, remember that even if you are not dealing with a human, you still need to verify the license of the service and the registration of the product or offering with the proper authorities.

FinTech Fireside Chat with PayJoy (Center for Digital Strategies), Rated: B

PayJoy is a FinTech company based in San Francisco, CA. PayJoy is bringing consumer finance to people who otherwise could not afford modern electronics such as smartphones. Today, PayJoy’s unique locking technology enables us to offer monthly installment payment plans to millions who otherwise would be unable to afford a quality smartphone. PayJoy’s ambition is to deliver affordable consumer finance to 1B+ people worldwide to obtain a smartphone and join the modern digital, mobile economy.

Poloniex Lending Bot vs Manual Poloniex Lending (The Merkle), Rated: B

Unfortunately, Poloniex Lending Bot cannot do much about issuing loans at very low rates when the market spikes. Additionally, the bot negates any opportunity to benefit from high long-term rates. Moreover, there is a 10% fee for using the bot, which can negate some of the profits earned rather quickly. It is a convenient lending bot, granted, but it should not necessarily replace manual, lending activities for anyone who knows what they are doing.

This also means one needs to buy small amounts of said coin to effectively issue the loan. If the coin suddenly plummets in value, that can cause losses in a cryptocurrency portfolio. Then again, a lending bot would not be able to protect users from falling currency values either by any means.

United Kingdom

Ablrate Gains ISA Manager Status and Passes £20 Million in Loans (EIN News), Rated: AAA

David Bradley-Ward, CEO at Ablrate, said: “Following our successful application for full authorisation from the FCA we now have the necessary approvals from HMRC to offer an Innovative Finance ISA. We hope to be able announce the launch of our IFISA soon after integrating the necessary technology.”

However, the asset backed lender is taking a cautious attitude towards the new product.

Multi-seller ABS approach to flourish (Structured Credit Investor), Rated: AAA

Marketplace loan ABS involving a multi-seller approach is expected to become more commonplace, due to the extra control that online lending platforms can exert over the securitisation process. Investors and loan sellers also benefit from a consistent securitisation programme, but a degree of expertise is required to handle the greater complexity involved in executing such transactions effectively.

VPC Specialty Lending Net Asset Value Rises As Dividend Is Lifted (Alliance News), Rated: A

VPC Specialty Lending Investments PLC on Friday said its net asset value increased significantly over the course of 2016 but said its NAV per share declined after its share capital swelled, while it reported negative total return in the period.

VPC said its net asset value at the end of 2016 stood at GBP363.1 million versus GBP201.8 million at the close of 2015, but the NAV per share fell to 95.26 pence from 100.90 pence after 182.6 million new shares were issued throughout the year.

Total shareholder return in the period was -17% versus the total return in 2015 of -5.5%. Revenue return was 6.0% versus 4.3% the year before.

Funding Circle to shut down forum amid property loan debate (P2P Finance News), Rated: A

FUNDING Circle is closing its community forum on Tuesday, as it says that some investors are “asking questions about a narrow range of technical topics” that would be better dealt with through its investor support team.

A thread on short-term property loans has now attracted 1,300 replies and more than 59,000 views. Lenders on the platform expressed their concerns around a tranche of London-based property loans that are going into default.

The platform suggested that its investors share their views on another website called the P2P Independent Forum instead.

How will your career evolve as the fintech sector grows? (Silicon Republic), Rated: A

For a start, you are probably wondering what future jobs will be available in fintech, as banking as we know it transforms into an online entity and long-standing financial institutions are shapeshifting for a new era.

If you want to work in this sector, you’ll need to brush up on the latest goings-on in the industry, and what better way to do that than to follow the experts online? To save you some trouble, we’ve provided you with a list of 10 people to follow on Twitter if you want to work in the fintech sector.

European Union

Tradeplus24 CHF100m Fintech raise in Switzerland signals Insurance move into SME Lending (Daily Fintech), Rated: AAA

Note: the deal was done in CHF which is about parity with USD, so you can read that as $100m.

A $100m Fintech raise in Switzerland in 2014 would have been inconceivable. In 2017 it is noteworthy as another sign of a rapidly maturing Fintech community in Switzerland.

I could only find the Tradeplus24 news on German language sites, so if that is an issue for you, here are the key facts:

– they raised CHF100m debt

– The debt is for lending to Swiss SME (note: they refer to KMU which translates to SME). This makes them a balance sheet lender, like Avant, not a marketplace lender like Lending Club. This means they have assured capital to offer rather than simply matching on a best efforts basis (our take is the latter is the better model long term but that you need balance sheet based lending to get a market going).

The Tradeplus24 approach is different. It brings Insurance into the mix. AsOceanoOne put it “An insurance or equal protection of investment grade quality against credit loss and fraud is in place for all pre-financed receivables. The purchase of the receivables occurs only when a credit insurance or an equal protection is in place and confirmed by the relevant protection provider.”

China

26 on trial over China P2P fraud (XinhuaNet), Rated: AAA

Twenty-six executives of a Chinese online peer-to-peer lender stood trial in Beijing on Wednesday and Thursday after allegedly cheating the public out of a huge amount of money.

The local procuratorate charged that the defendants had used two online P2P platforms, Ezubao and Sesame Financial, to illegally raise funds and then spent lavishly on luxury gifts and salaries between June 2014 and December 2015.

International

THE GLOBAL FINTECH REPORT: Q1’17 (CB Insights), Rated: AAA

While fintech covers a diverse array of companies, business models, and technologies, companies generally fall into several key verticals, including:

  • Lending tech: Lending companies on the list include primarily peer-to-peer lending platforms as well as underwriter and lending platforms using machine learning technologies and algorithms to assess creditworthiness.
  • Payments/billing tech: Payments and billing tech companies span from solutions to facilitate payments processing to payment card developers to subscription billing software tools.
  • Personal finance/wealth management: Tech companies that help individuals manage their personal bills, accounts and/or credit, as well as manage their personal assets and investments.
  • Money transfer/remittance: Money transfer companies include primarily peer-to-peer platforms to transfer money between individuals across countries.
  • Blockchain/bitcoin: Companies here span key software or technology firms in the distributed ledger space, ranging from bitcoin wallets to security providers to sidechains.
  • Institutional/capital markets tech: Companies either providing tools to financial institutions such as banks, hedge funds, mutual funds, or other institutional investors. These range from alternative trading systems to financial modeling and analysis software.
  • Equity crowdfunding: Platforms that allow a collection of individuals to provide monetary contributions for projects or companies provisioned in the form of equity.
  • Insurance tech: Companies creating new underwriting, claims, distribution and brokerage platforms, enhanced customer experience offerings, and software-as-a-service to help insurers deal with legacy IT issues.

Read the full report here.

Australia

The Australian Securities and Investments Commission (ASIC) anticipates getting over $200 million returned to consumers out of its so-called “fee for no service” remediation projects plus $30 million out of quality-of-advice work with the large institutions.

It said that in the financial advice space in the last 12 months it had extracted six enforceable undertakings; banned 41 individuals from providing financial advice; had four infringement notices and had undertaken seven criminal actions.

“In our fee-for-no-service remediations, we have got up to just over $60 million, and we anticipate getting over $200 million returned to consumers out of that project. We will have about $30 million in the backward-looking quality-of-advice work that we have done with the large institutions,” Bird said.

Kristen Lunman: Taking a chance on financial technology (NZ Herald), Rated: A

As the programme director for New Zealand’s first fintech-focused business accelerator programme, the pressure is on in the countdown to demo day. That’s when the teams will pitch their business plans and – they hope – attract the crucial dollars that will enable them to forge ahead.

The 39-year-old expat Canadian moved to Wellington six years ago with her husband and two pre-school children after falling in love with the country when the couple honeymooned here.

Asia

Japanese Megabank Mizuho Commits to Fintech in Series of Partnerships (Crowdfund Insider), Rated: AAA

One of the largest banks in Japan, Mizuho Financial Group, has been in the news recently for several partnerships involving fintech. According to Nikkei Asian Review, the bank is in talks to co-develop a fintech incubator that will be focused on virtual currencies, like bitcoin, and AI-based loan screening ventures. The discussions are with World Innovation Labs (WiL), a firm based out of Silicon Valley that helps US and Japanese startups raise capital, to co-found the incubator by as early as June of this year.

The creation of an incubator is not Mizuho’s first foray into fintech. Just last week, it was reported that Mizuho partnered with Cognizant (one of the world’s leading professional services companies, a member of the Nasdaq-100, and Fortune 500 company) to develop a distributed ledger solution for more efficient and secure trade financing.

Just two days after the partnership with Cognizant was reported, it was announced that Mizuho had also partnered with IBM to create a blockchain-based trading platform.

OJK’s regulation on financial technology-based lending services (Lexology), Rated: AAA

Both agreements must be drawn up in an electronic form. Providers are restricted by the following rules:

  • Providers must be established as a legal entity in the form of a limited-liability company as meant by Law No. 40 of 2007, or in the form of a cooperative as meant by Law No. 25 of 1992.
  • The maximum direct or indirect foreign share ownership in Providers in the form of a limited-liability company which are established and owned by foreign citizens and/or legal entities is 85% of the total issued capital.
  • Providers are required to have IDR 1 billion in capital (i.e. paid-up capital for a limited-liability company and self-capital for a cooperative) at the time they apply for registration and IDR 2.5 billion at the time they apply for the license. Limited-liability companies or cooperatives intending to engage in the P2P Lending Services business are required to register with and subsequently apply for a license to the OJK.
  • Providers are prohibited from conducting other businesses outside the P2P Lending Services, such as acting as lender or borrower, providing security or guarantee for other parties’ debt and issuing bonds.

Vietnamese fintechs and the $ 35 billion dream (VietnamNet), Rated: A

According to Boston Consulting Group (BCG), roughly $53 billion has been reserved for fintech firms and there are over 3,500 fintech firms all over the world.

According to PwC, online payment and mobile money transfer services are becoming the gateway to approach a fraction of the population which have not yet transacted with banks.

It forecasts that mobile technology will help many new customers access financial services and open up a new market worth $3 trillion in global payments.

Vietnam has 90 million people, most of whom are young, 50 percent of whom have internet access and 70 percent use smartphone.

These factors, according to Nielsen, a market survey firm, are the important reasons for experts to believe Vietnam is a potential fintech market.

Are crowdfunding and P2P lending good investments? (The Star), Rated: A

However, there is also “equity-based” crowdfunding, which is smaller, but more interesting from an investment point of view.

Peer-to-peer lending, on the other hand, is not concerned with equity, but with debt.

In Malaysia, it will still take a few years before these alternatives really take off, either as a way to obtain debt or equity for entrepreneurs or as an investment vehicle for investors.

But some fintech crowdfunding start-ups already exist, such as pitchIN, Mystartr and CrowdPlus.asia.

For those of us looking to obtain unsecured loans for personal consumption, the bank still seems the best option. For now.

Africa

World Bank offers African FinTech startups better odds (IT Web Africa), Rated: AAA

An exclusive pan-African post-acceleration programme, XL Africa has been launched by the World Bank Group for African digital startups.

XL Africa aims at supporting enterprises in any sector that are making smart use of digital solutions and connect these businesses with angel investors and venture capital firms in a bid to raise growth capital estimated at US$1.5 million.

Authors:

George Popescu
Allen Taylor