Friday January 13 2017, Daily News Digest

consumer credit

News Comments Today’s main news: dv01 – Experian enter partnership. Today’s main analysis: Equifax: 1.5M consumers to gain more credit access. Today’s thought-provoking articles: MLA tells Congress not to be an obstacle to FinTech. Chinese P2P platforms see decrease in overall risk. United States dv01, Experian collaborate on transparency in MPL. AT: “This looks like a […]

consumer credit

News Comments

United States

United Kingdom

China

India

Asia

Canada

United States

dv01 and Experian collaborate to bring additional transparency to marketplace lending (Yahoo! Finance), Rated: AAA

dv01, the reporting and analytics platform that brings transparency to lending markets, and Experian, the leading global information services company, today announced a strategic collaboration that will provide dv01 clients—including leading hedge funds, banks and asset managers—access to richer borrower credit attributes as they conduct performance analysis using dv01’s suite of built-in tools.

dv01 is in the process of mapping millions of borrower attributes from Experian’s database to installment loans in client portfolios. The Experian data is anonymized. which will allow dv01 clients to begin to isolate external trends that might affect their portfolios’ future performance or explain past behavior. Additionally, dv01 is acting as a data warehouse for select data sets that Experian offers investors for modeling purposes. By standardizing, streamlining and integrating these data sets into its platform, dv01 makes it easy for investors to model performance, as well as find fast answers around origination trends.

dv01 has aggregated performance data for more than $40 billion of loans from marketplace lenders including SoFi, Lending Club, Prosper, Marlette Funding, Avant, and CommonBond.

Equifax sees 1.5M consumers gaining more credit access (SubPrime), Rated: AAA

In what the credit bureau thinks can be positive for the auto finance space, Equifax highlighted that its December 2016 Consumer Credit Impact analysis found that trended credit data used alongside a consumer’s traditional credit report could improve access to credit and/or contract terms for up to 1.5 million consumers on an annual basis.

Analysts projected auto loans are expected to see the most significant impact with an anticipated 1.1 million more auto loans either being issued or receiving more favorable terms.

Equifax expects an increasing reliance on credit data insights like trended credit data particularly as some industries — like the auto finance sector — settle into what some analysts view as more of a post-recession norm.  For these finance companies, it will be vital to leverage as many insights about consumer debt behavior as possible to more confidently assess risk for a stable portfolio performance in support of a healthy loan marketplace, according to the credit bureau.

MLA to Congress: Please Ensure Fintech Can Flourish & Government is Not an Obstacle (Crowdfund Insider), Rated: A

The Marketplace Lending Association has called on Congress, and the incoming Trump Administration, to become a catalyst for Fintech innovation and not an obstacle.

In a letter addressed to House and Senate leaders, Nathaniel Hoopes, Executive Director of the MLA, asked Congress to move  away from an obstructionist approach and become a catalyst for financial innovation which benefits both consumers and businesses – most importantly smaller ones;

“…ensuring that America is a place where new ideas in finance can flourish and the federal government is a partner, rather than an obstacle, in promoting the innovation that will bring better products and services to all our citizens and businesses.”

The missive lists a serious (sic) of potential reforms including;

  • Reducing the burden of state and federal securities laws on retail investors who want to invest in small business loans. Creating a new category of security, a “crowdfunding debt security” or “marketplace debt security”.
  • Revisiting the current accredited investor requirements. Existing laws largely prohibit non-accredited investors from investing in a range of innovative financial products. Greater democracy in investing can help level the playing field at a time when inequality of opportunity in America remains a significant concern.
  • Recommending tax incentives to reduce the burden of student loans

Read the letter here.

LendingTree Launches $ 50,000 Small Business Grant Contest (Salem-News), Rated: A

Small business owners face a long list of challenges, and for many, the obstacle of securing financial resources needed to grow a business claims the top spot on the list.

That’s the driving force behind LendingTree’s inaugural $50,000 Small Business Grant Contest, where LendingTree will present the winning small business a $50,000 grant to help fund future growth.

Once the registration submission period closes (5:00pm EST on January 13, 2017), LendingTree’s team of small business experts will evaluate, select and notify the winning small business.

CSI Kick Start opens applications for fintech startup funding (Finextra), Rated: A

CSI Kick Start, Inc., a FinTech startup incubator founded by leading global payments innovator CSI globalVCard, today announced that its second annual application process for FinTech startup funding is now open.

Aspiring entrepreneurs seeking to radically transform key areas of B2B payments including virtual cards, FX, ACH, checks or security concerns may apply online. CSI Kick Start will be offering portfolio companies investments starting at $500,000, mentorship from an advisory board of industry experts, cross-selling opportunities and a host of additional resources.
Since CSI Kick Start first launched a year ago, all three of its funded startups have achieved significant success. Companies benefitting from CSI’s resources and mentorship include:
  • Yoke Payments is transforming the self-checkout and inventory management process and was awarded the Best POS Innovation by leading payments influencer PYMNTS.com earlier this year.
  • Delicious Nutritious Markets has installed its health-conscious markets in 75 business locations in 15 states since partnering with CSI.
  • Front Runner Films now has a full production crew and an impressive portfolio of award-winning corporate videos.
  • Spend Secure LLC makes controlling your mobile payments, travel expenses and accounts payable easy.

Marketplace Lending Association Announces 11 New Members (Yahoo! Finance), Rated: B

The Marketplace Lending Association (MLA) today announced the addition of eleven new companies to the Association. The new members join as the MLA works to expand its presence in Washington. The MLA was formed in 2016 by founding members Funding Circle, Lending Club, and Prosper Marketplace with the goal of promoting a transparent, efficient and customer-friendly financial system.

New Members include: Affirm, Upstart, CommonBond, Avant, PeerStreet, Marlette Funding, Sharestates, Able, and StreetShares. New Associate Members of the MLA include dv01 and LendIt.

This expansion represents a new chapter for the MLA, as it extends the group beyond consumer and small business lending to include platforms focused on student loan refinancing and real estate, as well as greater diversity of funding models, including lending platforms that hold loans on balance sheet.

United Kingdom

LendingCrowd prepares to launch IFISA (P2P Finance News), Rated: AAA

LENDINGCROWD has become the latest peer-to-peer lending platform preparing to offer an Innovative Finance ISA (IFISA) to investors.

Stuart Lunn (pictured), chief executive of LendingCrowd, said it plans to launch the tax-free wrapper around P2P investments during the first quarter of 2017.

Once approved, the LendingCrowd IFISA will work differently to the rest of the platform, so rather than investors selecting their own loans, the product will automatically allocate, invest and diversify a minimum of £1,000 and aim for a target rate of 6.5 per cent.

Buy-siders weigh virtues of P2P repo (Risk.net), Rated: A

  • Buy-siders are looking closely at peer-to-peer repo trading platforms as an alternative to bank-facilitated repo, which has come under strain in recent years due to regulation.
  • Elixium, the first peer-to-peer repo trading platform, is live and gaining interest from buy-side firms concerned about rising costs and shrinking capacity in repo markets. BNY Mellon is working towards launching a similar platform.
  • Doubts remain, though, about the long-term role of P2P given differences in the periods over which different buy-side firms typically wish to trade.

Inside The Daily Fitness Routines Of Branson, Zuckerberg And Other Time-Starved Founders (Forbes), Rated: B

A recent Funding Circle survey found that lots of entrepreneurs continue to struggle with getting exercise while maintaining an entrepreneur’s schedule.

  • More than 25% of small business owners say they don’t have time to do regular exercise.
  • Nearly 45 percent of respondents said they felt less stressed after a workout while 60 percent said that they generally felt better about themselves after exercising.
  • Over a four-week period, only 12.97 percent completed all of their planned workouts.
  • Two-thirds missed some or all of their planned workouts.
China

Chinese P2P platforms seeing decrease in overall risk (The Asset), Rated: AAA

Chinese P2P lenders are improving in quality as fewer platforms defaulted in 2016. According to a recent report from Diyiwangdai, a Chinese P2P company, 938 P2P platforms defaulted in 2016, 218 fewer than in 2015.

The Chinese P2P market is one of the largest in the world. The total transaction through Chinese P2P platforms in 2016 was 2.8 trillion yuan, 137.6% up from 2015. Ezubao, one of China’s highest-profile P2P lending sites, was involved in a $7.6 billion Ponzi scheme in early 2016.

China gets record bln in venture capital investment in 2016 despite global woes (Daily Mail), Rated: A

Megadeals in China helped bring a record $31 billion in venture capital investment into the country in 2016 despite a sluggish global economy and a sharp drop in the number of new deals, a report showed on Friday.

Venture capital investment in China rose 19 percent to account for around a quarter of the global total of $127 billion last year, even though the number of deals declined 42 percent to just 300, according to KPMG’s quarterly report on global VC trends.

China saw its two biggest deals for the year in the first half of 2016: $1.2 billion in funding for peer-to-peer lending platform Lufax and Apple’s $1 billion investment in taxi-hailing app Didi Chuxing.

Despite cautious investor sentiment shown in a 9.4 percent drop in global investment value and a 24 percent slide in deal count in 2016, average investments in China are getting bigger and bigger.

India

Loan Frame raises Rs 15 crore in seed round (India Times), Rated: A

Small and medium enterprise-focused online lending platform Loan Frame Technologies has raised a seed round of $2.25 million (about Rs 15 crore), the latest venture-backed transaction in the country’s web-based lending space.

The investors in the round include Parag Saxena, co-founder of Vedanta Capital, William Campbell, former chairman of Visa International and Toos Daruvala, co-chief executive of MIO Partners, an internal investment arm of global consultancy McKinsey and Co.

Asia

Indonesia issues new fintech law for lending firms (banking technology), Rated: A

The financial services authority (Otoritas Jasa Keuangan or OJK) of Indonesia has issued a new law affecting all fintech P2P lending firms in the country.

The new law stipulates that such business units must be registered and have the right licence to continue to do business.

Canada

Toronto ranks fourth in leading fintech centre of future (EconoTimes), Rated: AAA

The Toronto Financial Services Alliance (TFSA) and a leading U.K. think tank Z/Yen conducted a global survey on trends and innovations in financial services that ranked Toronto as one of the leading fintech centres in the world.

The survey titled ‘Trends and Innovations in Financial Services’ has listed the current leading fintech centres worldwide where London tops, followed by San Francisco, New York, Singapore, and Toronto. While in the list of leading fintech centres of the future, Toronto stands fourth after San Francisco, New York, and London.

The factors that make Toronto a leading fintech centre include very strong government support, low cost of accommodation, great cultural diversity and plenty of available capital.

Canadian Small Business Owners Enter the New Year with Optimism (The Province), Rated: A

A significant majority of Canadian small business owners (81%) are optimistic about growth opportunities heading into the new year, citing key resolutions for 2017 as increasing profitability (29%), acquiring more customers (26%), and increasing cash flow (24%), according to a survey* conducted by Leger, The Research Intelligence Group on behalf of OnDeck Canada, a leading online lender to small businesses in Canada.

The new survey results reveal that small business owners are savvy and specific about evaluating and obtaining capital in 2017.  49% of small business owners consider the total cost of the loan over time, 48% consider the annual interest rates, and 46% consider flexible repayment options as the main determining factors when selecting a lending option for their business. The majority expect a 2:1 return on investment.

Authors:

George Popescu
Allen Taylor

Tuesday November 8 2016, Daily News Digest

fintech

News Comments Today’s main news: Lending Club Q3 results and $1.3 bil deal with Credigy. The Forbes FinTech 50. Today’s main analysis : The size of the UK FinTech market by transaction value. Today’s thought-provoking articles: States take action on FinTech rules. A warning for FinTech. Regulators in Australia, Canada sign co-op agreement. China tops global FinTech. […]

fintech

News Comments

United States

  • Good Q3 for Lending Club. GP : “Lending Club’s Q3 origination at practically $2bil is very close to Q3 2015 which was $2.24bil. As mentioned before, the crisis put LC back about 1 year and unless there are other surprises on the way, it is back on track. My main concerns are the lack of emphasis on the p2p aspect. P2P is what built Lending Club, nothing else. And of course the need to find the next borrower pipeline beyond credit card refinancing via direct mail.”
  • Lending Club gets a big investment. GP:”Lending Club lands an investment deal from Credigy, a subsidiary of the National Bank of Canada, for $1.3bil. Well done. ” AT: “Following on the heals of the OnDeck news from yesterday, Lending Club’s status proves there’s nothing wrong with online lending as a sector.”
  • The Forbes FinTech 50. AT: “This is a list to look forward to every year. This year, there are the usual mainstays, but you’ll see some new names too.”
  • States eye their own FinTech regulations. AT: “Most of these are go after digital currencies or blockchain technology. The significance is that states consider FinTech worth of regulating, which could lead to a power play between Washington and some states as more interest in taken in the FinTech sector regarding regulation.”
  • Commercial real estate crowdfunding. GP: ” The online real-estate flip loan market is getting crowded. I really believe in the online real estate market, I just wish they would be able to offer different products. If a yield of 10% is needed why not look at offering Real Estate investments with leverage ?”
  • A former Bear Stearns trader takes an interest in MPL. GP: “An interview with DV01 whom we covered as well previously. A very interesting firm. “
  • FinTech in the capital markets. GP : ” This was news in 2007. Right now I am not sure how interesting it is.”
  • Square Capital hits $1 billion mark. GP: ” This is interesting compared with Lending Club’s volumes to date , about $20bil, and OnDeck’s volumes
  • Developers return to RealtyShares. GP: ” I am glad to hear however this PR sounds rather bad. It is expected they would return. Why is this news? This makes people think: was there a doubt they will return ? I am not sure this is good PR. Just to be clear: I have absolutely no information either way about any return rate for Realty Shares borrowers/developers. “
  • InAuth wins FinTech award. GP:

United Kingdom

Australia

Canada

China

  • China at the top of global FinTech. GP: “China numbers, as far as we can trust them, are gigantic in comparison with the fintech industries in other geographies. Chinese Fintech is however still tiny in comparison to what it could become. London, Tokyo, Singapore, New York , Sydney, etc. have established financial industries which are lacking in China. This , combined with the internet, the Chinese government controls of institutions, has encouraged and will continue encouraging the growth of an internet based, decenrtalized, unregulated, fast and innovative financial sector, which we came to call Fintech. “
  • SuperCharger announces 8 new startups.

India

Asia

News Summary

United States

Investors shrug off more losses at Lending Club, (Financial Times), Rated: AAA

In the third quarter, net losses came to $36.5m. Scott Sanborn, chief executive, said that while the company had made “incredible progress”, noting a slight quarter-on-quarter rise in loan originations to $1.97bn, there was still work to be done. In the same quarter last year the company originated $2.24bn, short of the peak of $2.75bn in the first quarter this year.

Last month, Lending Club tightened its credit policies for the third time in six months.

Mark Palmer at BTIG said that $800m of cash at the end of the quarter, down $32m from June, should be “more than ample to provide the company with the time it will need to fully regain its footing”.

The Fintech 50: The Complete List 2016 (Forbes), Rated: AAA

Mobile app allows worker to get a portion of his paycheck, for hours already worked, deposited into his bank account before payday, with the fee for this advance set by the user.

Bona fides: Workers from more than 10,000 companies, including Apple, Wal-Mart and Starbucks have gotten advances.

Lending Club Gets Big Investment; No Incentives Needed In September (Investor’s Business Daily), Rated: AAA

Shares of Lending Club (LC) spiked Monday after the online lending platform reported Q3 results that beat estimates, said it didn’t need investor incentives in September, and landed an investment deal worth up to $1.3 billion.

That investment, from Credigy, a U.S. subsidiary of the National Bank of Canada, comes as Lending Club tries to diversify its funding after a difficult year. The money will be invested over the next twelve months, Lending Club said.

The company said that it entered September without the need for investor incentives, after offering them earlier this year in an attempt to prevent financial firms that buy Lending Club’s loans from fleeing. Lending Club had said earlier that it hoped to end the incentives by year-end.

States Take Action on Fintech Rules While Awaiting Guidance From Washington (Morning Consult), Rated: AAA

As federal regulators contemplate a new regulatory framework for financial technology firms, some states have taken their own approach to the burgeoning sector.

Many state fintech priorities center on digital currencies or the blockchain technology underlying them.

In North Carolina, a law enacted in July exempts virtual currency users and blockchain software providers from licensing requirements, a move that garnered praise from organizations such as the Chamber of Digital Commerce.

A Connecticut law “leaves substantial legal choices to the discretion of regulators,” said Peter Van Valkenburgh, Coin Center’s director of research, who compiled the state regulation tracker.

New York uses state-by-state licensing requirements, an approach the Chamber of Digital Commerce says is burdensome to companies using blockchain.

New Hampshire lawmakers introduced three bills on digital currency in 2015, but a Nov. 1 report from a legislative study commission recommended no legislative action on the matter in 2017.

Crowdfunding in commercial real estate (i2e), Rated: A

I had the opportunity to visit this week with Ashley Smith, who along with Tim and Marylee Strange, is adding convenience and efficiency to the fragmented commercial real estate crowdfunding platforms with their new company called CrowdSeekr.

Crowdseekr’s proprietary technology customizes searches of deals from multiple platforms revealing investment opportunities that match the investor’s desired results. We can be proud that a technology company right here in Oklahoma City is making its mark in this rapidly growing and maturing industry.

How An Ex-Bear Stearns Trader Is Helping Marketplace Lenders Avoid The Sins Of The Mortgage Bubble (Forbes), Rated: A

Rahbar’s startup currently tracks the loans of Lending Club and eight other originators and counts 55 institutions as clients. All told it has logged in some $34 billion in loans. DV01 is backed by $7.5 million in capital from Leucadia National (Jefferies’ parent), Pivot Investment Partners and a fund controlled by George Soros.

DV01 is paid two basis points on the principal amount for its services as a loan data agent, and buy-side investors pay a bit more for access to its analytics platform. Demand is brisk. Rahbar expects DV01 will serve as a data agent on three more deals by the end of the year. “When an investor tells a marketplace that they won’t invest without the data going to DV01, there’s no decision to be made,” says Ron Suber, president of Prosper.

Fintech in Capital Markets: A Land of Opportunity (BCG Perspectives), Rated: A

The financial technology (fintech) phenomenon first started to evolve in the capital markets (CM) industry more than 40 years ago. Today, accelerated both by the electronification of trading in the 1990s and the subsequent thrust of the entire financial services industry toward digitization, fintechs—which we define as firms that use innovative technology at scale to either enable or compete with other financial institutions—have experienced exponential growth in the CM domain.

Simply put, fintechs focus on creating new value propositions or improving existing ones. They help build capabilities that can enhance client relationships, reduce costs through automation and simplification, and facilitate regulatory compliance. They also enable disaggregation of the value chain as they become more embedded in the supply chain.

Square Capital Has Loaned Over $ 1 Billion To Small Businesses (Fortune), Rated: B

In addition to processing payments for merchants, Silicon Valley payments company Square has another growing business—lending. Square’s two-year-old lending arm, Square Capital, has lent $1 billion in cash advances and loans to more than 100,000 businesses, the company said Monday.

RealtyShares Reports: Several Developers Return to the Real Estate Crowdfunding Platform (Crowdfund Insider), Rated: B

On Monday, RealtyShares announced several developers have returned to its real estate crowdfunding platform for additional projects.

InAuth Dubbed Winner of Corporate LiveWire’s 2016 Fintech Excellence Awards (Crowdfund Insider), Rated: B

InAuth, a digital device intelligence company, announced on Monday its products received recognition for “Excellence in Providing Mobile-First Products for Authentication” at Corporate LiveWire’s Fintech Excellence Awards for the second year in a row. The company stated its products deliver intelligence capabilities to authenticate, reduce risk, remove customer friction, and help organizations around the global to maximize their digital transactions through mobile apps, mobile browser, and desktop browser.

United Kingdom

The Size of UK Fintech Market by Transaction Value (TechBullion), Rated: AAA

This year, the size of UK fintech market by transaction value is US$168,522m. According toStatista,transaction value will show an annual growth rate of 20.4 percent resulting in US$353,667m in 2020. “Digital Payments” is the largest market segment, with a transaction value of US$151,682m.

While determining the size of fintech market by transaction value, Statista takes into account digital financial services, digital payments, marketplace lending, Robo-advisors, online crowdfunding and venture financial.  The online research firm does not consider insurance related services, lead-generation business models/meta-search engines, B2B payments, API management, credit scoring, and blockchain technology.

A Warning for Fintech (Bloomberg), Rated: A

U.K. grocer Tesco shares took a hit after customer fraud forced its bank to suspend online transactions.

But the financial damage could spread far beyond Tesco. It’s easy to imagine how the rising financial cost of cybercrime could damage the big selling point for fintech firms and challenger banks: being able to acquire customers and operate at a lower cost than established rivals.

Wake me up when online lenders are done turning into banks (FT Alphaville), Rated: A

The new solution is basically this: Ratesetter will have the explicit right to divert interest payments and capital away from investors and into the provision fund:

We will update our Lender Terms in order to make it explicit that in times of severe stress the interest buffer would be available to the Provision Fund. This will allow for the interest received by every investor to be reduced equally and for this foregone interest to accrue to the Provision Fund.

So, for example, if the reduction was 20%, the total interest due to all our investors would reduce by 20% and this amount would instead flow into the Provision Fund. This period would be kept to a minimum duration and as soon as the Provision Fund Coverage Ratio was sufficiently strong, it would stop and return to normal.

If the outlook got worse and investors’ capital was at risk – not just their interest (in other words, the Capital Coverage Ratio was in danger of dropping below 100%) – then all investors’ capital would be reduced equally, as well as all of the interest. This capital and all interest would go into the Provision Fund to strengthen it.

Machine learning being scrutinised by Financial Stability Board (Out-Law), Rated: A

Svein Andresen, secretary general of the Financial Stability Board, announced that the FSB is “beginning work to understand the financial applications of machine learning” in a recent speech (4-page /157KB PDF) at the Chatham House Banking Revolution Conference.

“Much hype surrounds the development of fintech and for regulators it is essential to understand what developments are going to change the way financial markets operate and those that won’t,” Andresen said. “We have been explicit in our desire to look at both financial stability benefits and risks, so as not to bias our work against fintech. Regulators are acutely aware of the need to balance these issues and of the need to be proportionate. We need to monitor and act on risks as they emerge but we need to balance this against the need to allow the development of technologies that can provide real benefits for society.”

Battle between fintechs and banks a nonsense (Finextra), Rated: A

Daniel Marovitz, COO and President for Europe, Earthport, talks about how the trumped up story of conflict between banks and fintechs is resolving into a partnership approach, and discusses the regulatory, cultural and practical challenges for banks in implementing blockchain.

Watch the video.

London fintech startup Soldo launches multi-user spending account for families (TechCrunch), Rated: A

London fintech startup Soldo — founded by tech veteran Carlo Gualandri who previously helped create Italy’s first online bank — is launching a multi-user spending account. The cloud-based service, which has been 18 months in the making and is currently available in the U.K. and Italy, is designed to enable and control the flow of money inside organisations with multiple users.

Initially targeting families for things like dishing out pocket money to your kids, splitting household bills, or giving a domestic worker an expense allowance, Soldo also plans to launch for businesses too.

Addleshaws jumps on fintech bandwagon with £500k fund (The Lawyer), Rated: B

Addleshaw Goddard will provide £500,000 in free legal advice to support UK fintech companies.

It is the latest in a series of similar moves by law firms to attract young fintech businesses as clients.

Addleshaws’ programme is called AG Elevate and will provide 16 fintech companies access to free legal advice. The successful companies will also be assigned a mentor from Addleshaws’ fintech practice.

Elevate will launch on 17 November and is split into two programmes designed to target different levels of the market.

Australia

REGULATORS IN AUSTRALIA AND ONTARIO SIGN CO-OPERATION AGREEMENT (FinTech Law Watch), Rated: AAA

The Australian Securities and Investments Commission (ASIC) and the Ontario Securities Commission (OSC) have signed a co-operation agreement to promote FinTech innovation. The agreement will make expansion into the Australian and Ontarian markets easier for growing FinTech businesses.

A referral mechanism has been created under the new agreement which allows ASIC to refer Australian FinTech businesses wanting to enter the Ontarian market to OSC and vice versa.

Both ASIC and OSC have established internal teams to assist FinTech businesses with their regulatory obligations and encourage development of the FinTech industry. ASIC’s Innovation Hub was established in April 2015 and OSC recently established LaunchPad in October 2016.

Canada

Katipult is Named Canada’s Most Innovative Fintech Company (Crowdfund Insider), Rated: A

Katipult, cloud-based software infrastructure that allows firms to design, setup, and manage an Investment Crowdfunding, Peer 2 Peer Lending, or Investor Management platform has been recognized as Canada’s most innovative fintech company.

From debt to equity, from real estate to early stage investing and peer to peer lending, Katipult wants to ensure that “secure, flexible and legally compliant software infrastructure” is also in place, especially for businesses that need to safeguard their information.

China

China tops global fintech rankings: report (Xinhuanet News), Rated: AAA

China’s financial technology (fintech) firms continue to lead globally, securing four positions in the top five in a recent industrial ranking.

Alibaba’s third-party payment platform Ant Financial tops the global ranking for the 100 best performing fintech companies, with micro-loan firm Qudian, wealth management company Lufax and insurance enterprise Zhong An entering the top five, according to a report by international accounting firm KPMG and investment firm H2 Ventures.

A total of eight Chinese fintech companies are on the list, a remarkable rise from just one company in the top 100 in the 2014 ranking.

SuperCharger Fintech Accelerator Announces 8 New Startups as Hong Kong Fintech Week Starts (Crowdfund Insider), Rated: A

SuperCharger Fintech Accelerator 2.0 has kicked off Hong Kong Fintech Week with the announcement of 8 finalists for their program. For a second year in a row, SuperCharger, which aims to help the most promising Fintech start-ups and scale-ups grow in Asia, states it has surpassed other Hong Kong Fintech accelerators with almost 200 applicants from 33 countries.

SuperCharger has focused on the rising tide of Fintech innovation in Asia.  Wealth management, regulatory technology (RegTech), artificial intelligence, cybersecurity and blockchain are the areas with the most compelling submissions for the 2017 SuperCharger FinTech Accelerator 2.0 program.

India

P2P lending startups like Faircent eye product partnerships with auto loans (Economic Times, India Times), Rated: A

P2P players are increasingly looking at more secure product partnerships, aiming to introduce asset-based investment products with Faircent being the first to do so.

The platform has tied up with Mumbai-based on demand bike taxi service Baxi to provide two wheeler loans to drivers.

Asia

P2P lending platform Funding Societies receives CMS license, launches in Malaysia (The Tech Portal), Rated: A

Last week equity crowdfunding platform Fundnel received a provisional Capital Markets Services (CMS) license and now it’s peer-to-business online lender Funding Societies which has received an “in-principle approval” of CMS in Singapore. The license will enable the platform to conduct regulated activities of dealing in securities for lending-based crowdfunding to all classes of investors in the nation. The company said it will commence crowdfunding for both accredited and non-accredited investors once it clears some requirements set by MAS.

Not only this, Funding Societies has upped its game by expanding itself to Malaysia, shortly after its launch in Indonesia as Modalku earlier this year.

Incorporated as Modalku Ventures, the platform was one of the 50 firms which had applied and, will be one of the six registered operators in the country to offer crowd-lending services to SMEs. It plans to fully begin its operations in Malaysia in first-half of 2017.

Authors:

George Popescu
Allen Taylor

Wednesday October 19 2016, Daily News Digest

consumer perception of p2p lending

News Comments Today’s main news: International real estate investing platform integrates with blockchain. Today’s main analysis : Don’t fear the reaper (I mean, robo-advisor). What will it take to make marketplace lending simple and transparent? Today’s thought-provoking articles: It’s been a tough year for Lending Club, and not so great for marketplace lending on the whole. Banks […]

consumer perception of p2p lending

News Comments

International

United States

Canada

United Kingdom

European Union

India

Phillipines

News Summary

International

Wealth Migrate Launches Real Estate Investment Marketplace with Integrated Blockchain (Blockchain News), Rated: AAA

Wealth Migrate has became one of the first real estate online investment marketplaces to integrate Blockchain technology in a move that significantly enhances security and privacy protections for investors around the globe.

Wealth Migrate Chief Information Officer Jaco Maritz said that while many financial services providers are experimenting with the transformative power of Blockchain and distributed databases, few have successfully integrated the technology in a way that benefits global investors looking for enhanced security and assurance when investing across borders or locally.

Going beyond Blockchain’s offerings, the enhanced Wealth Migrate marketplace adds an additional level of security within its Blockchain as a “one-way hash code.” This is an extra, highly secure encryption applied to investment transactions in the Blockchain, providing an unprecedented level of privacy and cybersecurity protection.

Investors domiciled in developing and emerging markets will be especially advantaged by the software enhancements, as they are often exposed to greater risks when attempting cross-border transactions.

In addition to the Blockchain integration, the marketplace has a number of other cutting edge features coming, including automated investment advice and specialized investment products depending on investment goals.

United States

New regulation may impact millions of retirement plans (Jax Daily Record), Rated: A

The U.S. Department of Labor has enacted a set of regulations that will go into effect in April and likely impact retirement plans owned by millions of Americans.

The “Fiduciary Rule” was the subject of a panel discussion hosted Monday by the Rotary Club of Jacksonville.

The rule will require those who administer — or even give advice concerning — retirement plans to take only actions that are for the benefit of their clients and that do not create conflicts of interest that might cause financial gain for the adviser at the expense of the client.

About $7.3 trillion of the total is invested in Individual Retirement Accounts (IRAs), which are regulated by the U.S. Treasury through the IRS.

He said at least $95 million, and possibly as much as $159 million, is lost from retirement plans annually due to “conflicted” financial advice.

Don’t be afraid of robo advisers (Financial Planning), Rated: A

The number of Wall Street firms jumping on the automated advice bandwagon seems to be growing by the day. For instance, California-based SigFig Wealth Management partnered with UBS Group and other investors to develop new online management tools. BlackRock bought FutureAdvisor. Charles Schwab launched a robo adviser after Vanguard’s introduction of an online wealth management tool. In addition, Wells Fargo, JPMorgan Chase, Bank of America and Citigroup have all said they plan to offer low-cost, automated investment services either on their own or by joining with a private-label robo adviser.

Amazingly, the financial services research firm Cerulli Associates predicts assets managed by robo advisers will rise 2,500% by 2020, to $489 billion.

This growing focus on automation certainly has registered with individual investors. In a 2014 survey, State Street Center for Applied Research asked more than 1,600 investors: “In the future, do you think that technological advances in providing financial advice will better serve individuals with regard to value and cost than financial advisers?” More than three-fourths (76%) of millennials, 67% of Generation X and even a majority of baby boomers (54%) answered in the affirmative.

In the wake of the financial crisis and the Bernie Madoff scandal and with the DoL extending the fiduciary standard to all retirement plans, I believe that today’s investors want and deserve more from their financial advisers.

In fact, investors themselves seem to believe that embracing technology should not mean replacing human advisers. In a 2014 survey, 95% or more respondents listed these key characteristics of advisers they would like to work with: understanding their financial needs and goals, a high level of integrity, having their best interests at heart and welcoming open and honest communication. Obviously, these are the characteristics of a human adviser, not an algorithm.

For me, this calls into question the validity of the robos’ risk-tolerance questionnaires. As the authors conclude, “By attempting to lower near-term volatility, robo adviser portfolios sacrifice both long-term expected and downside performance for time horizons typically relevant to these clients.”

InvestmentNews names the financial advice industry’s 2016 “Best Practices” (Investment News), Rated: B

InvestmentNews today named the winners of the 2016 Best Practices Awards, an important initiative that recognizes the top-performing and most innovative firms in the financial advice industry.

The 12 winners of the InvestmentNews Best Practices Awards were identified through their participation in the 2016 Financial Performance Study of Advisory Firms, and recognized today at The Best Practices Award and Workshop, hosted at the New York Athletic Club.

The 2016 Best Practices Award Winners are:

  • Balentine LLC
  • Berman Mcaleer LLC
  • Botsford Financial Group
  • Capital Advisors, Ltd.
  • Financial Development Systems, LLC
  • HTG Investment Advisors Inc.
  • LBMC Investment Advisors
  • Rinvelt & David, LLC
  • Sage Financial Group
  • Singer Xenos Wealth Management
  • Tolleson Wealth Management
  • WMS Partners, LLC

Regulator wants New York banks to launch online lending services (Reuters), Rated: A

Oct 18 New York’s brick-and-mortar banks should pursue business opportunities in online lending, an industry now dominated by many out-of-state startup companies, the head of the state’s financial regulator said on Tuesday.

The NYDFS, which oversees New York’s state-chartered banks, has held discussions with several banks that are considering online lending. The niche could help serve lower-income New Yorkers who have little or no access to banking, Vullo said.

Lending Club’s Tough Fall (PYMNTS.com), Rated: A

In early May, news broke that Lending Club had played fast and loose with its documents and disclosures, including the fact that then-CEO Renaud Laplanche had failed to disclose a personal stake in a firm Lending Club had an investment relationship with. The revelations were shocking. Within a week of the results of an independent audit, Laplanche was out, and the share price was in virtual freefall.

The glass-half-full interpretation of the news from last week was that Lending Club is working hard to get its investors better returns on the loan packages they buy. But the way it is doing it raised some eyebrows. Interest rates are going up, and credit standards will be getting tighter.

Translation: Riskier borrowers — particularly those carrying more debt — are defaulting at a higher-than-expected rate, which means borrowing on the platform is increasing.

Lending Club will charge a weighted average of 0.26 percentage points more to take out a loan, with the biggest increases going to borrowers who receive its lowest credit scores.

And some borrowers will not make the grade at all, as Lending Club has also announced that it will no longer extend loans to borrowers with high levels of revolving debt and multiple recent installment loans.

While the upping of standards — and the increased cost of borrowing — may please investors buying on the platform, Lending Club’s Wall Street investors, as of yesterday (Oct. 17), were clearly a bit disturbed by the revelation that defaults are on an upswing and that Lending Club’s borrower base could well be shrinking.

Lending Club is by no means alone in the difficulties it is facing. Marketplace lenders nearly across the board have faced mounting headwinds this year as investors have notably cooled in the public stock and private equity markets this year as marketplace lending has come to look rather risky as 2016 has worn on.

There is also the remaining unknown around the Federal Reserve and whether or not an increase in interest rates will be coming before the end of 2016, as many suspect. That changes the math on the profitability of lending to consumers and small businesses, which could make the competitive landscape more crowded as more traditional lenders consider moving more in the space.

3 Ways Fintech Has Improved the Customer Experience in Banking (Finance Magnates), Rated: B

Whether it’s applying for loans through traditional means via a bank or the U.S. Small Business Administration (SBA), setting up a bank account for your small business or even entering a bank to make deposits, poor technology (or an complete lack of) has damaged the customer experience.

Below are three ways in which fintech has helped to redefine the way the world conducts business:

  1. Responsive Design and Rich UX
  2. Drive-Thru Video Tellers
  3. Fast Funding

Chinese Peer-to-Peer Lender Ppdai.com Plans U.S. IPO (The Wall Street Journal), Rated: A

Shanghai Paipaidai Financial Information Service Co., known as Ppdai.com, is in discussions with bankers to launch an IPO in the U.S. as early as the second half of next year, according to people familiar with the matter.
The company, which was founded in 2007 and claims to be among the first online platforms in China to offer P2P unsecured loans, could hire banks to work on the offering by the end of this year, one of the people said.
Ppdai, whose venture-capital investors include Sequoia Capital China and Lightspeed China Partners, is considering a listing in the U.S. partly because of the logjam of more than 800 companies planning IPOs in mainland China, according to a person familiar with the matter. It is also hoping to capitalize on the strong stock performance of Beijing-based Yirendai Ltd., which listed in New York in December 2015. Yirendai became

OnDeck’s Annual Seal Of Approval Contest Opens For Entries (PR Newswire), Rated: A

OnDeck® (NYSE: ONDK), the leader in online lending for small business, today announced that its annual Seal of Approval Contest is now open for entries. Small businesses in the United States can now submit entries in hopes of being one of three lucky winners to take home a$10,000 prize and a one-on-one personal coaching session with Shark Tank investor and real estate mogul Barbara Corcoran.

Fairway America’s online marketplace SBREfunds.com Lists First Ever Real Estate Syndications (PR Web), Rated: B

Fairway America, the market leader in the non-institutional Small Balance Real Estate (SBRE) space, has announced that it will periodically include real estate syndications on its site, SBREfunds.com.

According to Burk, he regularly encounters a broad spectrum of real estate fund managers, sponsors and syndicators around the United States seeking to improve the way they operate and capitalize their SBRE businesses and deals. Over the past two years, SBREfunds.com has listed a multitude of SBRE funds around the United States with various strategies totaling more than $2B in total offerings.

Burk will be in the San Francisco Bay Area this coming week talking with SBRE entrepreneurs and promoting SBREfunds.com.

The new market environment created by real estate crowdfunding and the availability of investment opportunities via the internet is very congested. When asked, Burk readily acknowledge the challenges posed for people trying to understand and participate in this new environment. “There is a huge variety of strategies, approaches and level of quality out there”, said Burk. “My experience is that it is very hard for many people to discern the differences from one to another and therefore it is a dangerous landscape. We offer a variety of tools intended to educate and inform both sponsors and investors about the space in a way that helps them meet their goals.”

Survey On Consumer Attitudes Toward Fintech Spells Trouble For Banks (Forbes), Rated: A

A new survey by Blumberg Capital, a San Francisco-based early-stage venture capital firm that has invested in a number of such companies including Able Lending,Addepar, Lendio, Fundbox, FeeX, EarnUp,CoverHound and more, shows that three in five Americans say banks are failing to keep up with their needs and that 57% believe that traditional financial institutions will cease to exist in their current state within their lifetime.

The survey further found that 75% of respondents say that fintech gives them more power over their finances, 65% say that fintech gives consumers access to services previously available only to the wealthy and 69% say that such tech will help everyone be better off financially.

Still, the Blumberg survey found three in ten are unsure of what to think about fintech, echoing a report by market research firm Mintel in March that found that significant percentages of consumers still lack awareness of some popular areas of fintech.

Querying 2,000 adults age 18 and older who agreed to participate (which meant no sampling error could be calculated), it found that 62% of Americans feel they pay too much interest on debt, 72% say it would be helpful to have a customized, automated way to never miss a payment and minimize the total interest on their loans; and 76% of Americans believe that the financially underserved, such as those with low credit scores or bad employment histories, need access to loans and credit outside of the traditional banking system.

Though two-thirds of those surveyed say fintech makes solutions previously only available to the wealthy accessible to everyone and three-quarters say it helps democratize financial services, the highest-income bracket in the survey, $75k+ was actually most likely (75%) to say that fintech helps more Americans be better off financially — by six to 12 percentage points compared to the other income groups.

In other evidence that fintech firms could do a better job of supporting lower-income households, those in the lowest bracket — less than $25k a year — were two to five times more likely to be unsure of how important it was to have access to the latest technology, and the least likely to believe that fintech could help democratize services.

As for a takeaway for banks, Blumberg says, “Banks need to adapt, adopt or hasta la vista, baby. Banks cannot continue to do what has made them successful for the last 50 or 100 years.”

Credit scoring with an eye to the future (Wain Street), Rated: A

Question: How do you choose between two borrowers both of whom have a 720 credit score? Answer: Can’t; need additional information.
How about, the first borrower is from an economically stagnant region and the second borrower from an area that is in the midst of an economic boom? Now we can choose. How? Broadly speaking, the first borrower’s future income prospects are not as bright as the second borrower’s. True, both borrowers have identical credit scores –an assessment of their credit risk based on past individual behavior. But again, broadly speaking, borrowers make good on their financial obligations from future income—a factor that is not easily controlled by the individual and not captured in credit scores. Final answer: The second borrower from the economically booming area presents a better credit risk.

Charge-off rates are an objective, quantifiable assessment of credit quality.

Local Economic Vitality is new information that is relevant to credit performance and complementary to what’s captured by traditional credit scores. Credit scores reflect past borrower behavior such as payment history, credit utilization, length of history, etc. that is predictive of future behavior. Local Economic Vitality is a subnational ranking derived from macroeconomic factors including labor market conditions, industrial production, sales, housing market conditions, and financial conditions. It summarizes the macroeconomic context of a borrower and is a gauge of the borrower’s future economic prospects.

There is a very weak association between credit score and Local Economic Vitality.

The association between debt to income (DTI) and Local Economic Vitality is intuitive. Indebtedness amongst borrowers from economically stronger locations is higher likely because of greater access to credit and higher homeownership.

There is measurable variation in charge-off rates by Local Economic Vitality. The pattern is intuitive— charge-off rates are lower (better) in areas where the economy is stronger. The “unexpectedly” larger value for charge-off rate in the economically strongest areas (labeled as “Booming” in the chart) is likely a reflection of “adverse selection” in the originator’s data.

Credit score accuracy can be improved by incorporating macroeconomic factors that are not used in score construction yet influence consumer credit performance. Derived from macroeconomic factors, WAIN Street’s Local Economic Vitality is a subnational ranking that provides new information about borrower economic well-being.

Canada

Portag3 Ventures Fintech Fund Aims to Reshape Canadian Fintech (Crowdfund Insider), Rated: B

Adam Felesky and Paul Desmarais III today announced the closing of a new fund, Portag3 Ventures (“Portag3”), focused on the fintech sector. Felesky, a co-founder and former CEO of Horizons ETFs, has been named President and will run day-to-day operations at the fund. Paul Desmarais III, a Vice President of Power Corporation of Canada and of Power Financial Corporation, will serve as Executive Chairman of Portag3 and will work closely with Felesky.

Portag3 aims to find creative entrepreneurs who will help reshape Canadian FinTech by making early stage investments in promising companies that have the potential for innovative change and global impact.

Portag3 is backed by a corporate partnership between Power Financial Corporation (PWF.TO), IGM Financial Inc. (IGM.TO) and Great-West Lifeco Inc. (GWO.TO). Members of the group have already invested in one or more platforms including Wealthsimple, Borrowell, Clearbanc, Koho and League.

United Kingdom

Marketplace Lending: The Challenge of Keeping It Simple And Transparent (Crowdfund Insider), Rated: AAA

LendIt Europe gathered over 900 attendees from 50 countries on the banks of the Thames river to network and hear about the latest trends in online direct lending. The tone of the conference was clearly set by the UK keynote speakers. The UK being 4 times bigger than the sum of all Continental European markets taken together, everybody was keen to hear these forerunners’ thoughts about where the market is going.

Samir Desai, co-founder and CEO ofFunding Circle, and Jaidev Janardana, CEO of Zopa, referred to the past twelve months as challenging. The Lending Club tarnish, issues such as fraud cases in China and Sweden, and, finally, the Brexit, have temporarily slowed down the growth of marketplace lending in the first half of 2016.

The UK financial services regulator, the Financial Conduct Authority (FCA) is preparing a review of the P2P sector’s performance under the current regulatory framework. That prospect probably influenced many speakers to spend time contrasting marketplaces with banks. Margaret Doyle, Partner at Deloitte and author of the report “Marketplace Lending, A Temporary Phenomenon?” was one of the few critics of the marketplace model on stage. She argued that lending marketplaces lack sustainable competitive advantages over banks as they, among others, do not have a lower cost of funding and use the same risk analysis tools as banks. Cormac Leech, Partner at Victory Park Capital, later retorted that marketplaces will gain these advantage as they grow and reach the economies of scale and experience curve – that banks currently have.

Transparency is hard work, but it seems to pay off, as seen from the success of the members of the UK P2PFA.

Five reasons to consider peer-to-peer lending (Moneywise), Rated: A

In the low interest rate world we find ourselves in today, the interest rates on offer from savings accounts continue to disappoint.

In contrast, P2P lending can generate inflation-beating returns of between 5% and 9% – depending on the type of lending that is undertaken. It is a good idea to invest across a number of P2P platforms, so you have exposure to different types of loans and borrowers.

P2P also provides investors with an opportunity to diversify away from traditional asset classes, such as equities and bonds.

P2P sits somewhere between savings and shares in terms of the risks and rewards on offer, according to Andrew Lawson, chief product officer at P2P platform Zopa.

Between 2005 and the end of June 2016, 150,000 people had lent close to £5.8 billion via P2P platforms, according to the Peer-to-Peer Finance Association.

In an environment where banks have withdrawn funding for small businesses, property developers and entrepreneurs, P2P lenders play an important role.

European Union

European Fintech Alliance has first outing at Deutsche Bourse (Finextra), Rated: A

The European Fintech Alliance, established in Berlin early this summer, has been set up with the aim of represent the interests of startups in the political arena and to build bridges between policy-makers and regulators at European level.

Speaking at the kick-off event in Frankfurt, co-founder Marc Tenbücken says: “It is important to foster mutual understanding between decision-makers and the fintech sector by establishing a sustained dialogue and a regular exchange of information.”

Trading Insights on the Finbee Secondary Market (P2P-Banking), Rated: A

Finbee is a small p2p lending marketplace for consumer loans in Lithuania (see earlier coverage).
I mostly invest in ‘D’ loans (that is the most risky rating) with long loan durations (>36 months) and high interest rates. The average interest rate in my portfolio is 32%, the maximum 35%. My reasoning for this choice is that these loans allow high markups and still offer an attractive buyer yield (XIRR value).

I try to sell all my loans that are late or in arrears. Naturally I need to list them at a discount, to make them attractive for buyers. You’d assume that I make a loss selling at discount, but since even these overdue loans sell with all accrued interest that means I can sell even these loans at a profit.

Since at least one repayment is required before a loan can be put on sale, any loan that goes late on the very first repayment is cannot be sold. If that happens I might have to hold the loan to maturity unless it catches up and becomes current again and I sell it then(EDIT: Another investor informed me that it is not possible to sell loans, once they received at least one payment from the compensation fund – another useful information I did not know yet).

I succeeded in selling many parts at premium. The average premium achieved is about 6% (which roughly equals 2 month interest if I had alternately kept the loan), the maximum so far is 12.2%.

PwC study finds 4.3m Germans unjustly denied access to credit (altficredit), Rated: A

A new study from PwC has attempted to gauge the impact of alternative lenders in opening up access to credit in Germany. The study found that €66bn of credit applications do not get serviced by the banks each year, due to “supposedly” poor credit ratings. But according to auxmoney’s credit assessment model, 30 to 35 per cent (or €19-22bn) of this outstanding demand is unjustly rejected. Auxmoney says that this amounts to around 4.3m people in Germany.

But is this divergence in acceptance metrics the result of a superior underwriting model, or simply the product of a bigger risk appetite?

PwC expects to see an uptick in marketplace lending volumes due to increasingly restrictive traditional lending guidelines in mainland Europe. Similarly, the German Federal Bank anticipates continued growth from the marketplace lending sector, as it outlined in a paper in August.

India

Global network of accelerators look to cash in on India’s fintech goldrush (Economic Times), Rated: A

Accelerators and incubators specialising on financial technology startups are increasingly coming to India, with 2016 witnessing the launch of several of them, from Startupbootcamp’s local edition and a Swiss Re programme to Zone Startups and Rainmatter.

They expect to see global products emerging out of the Indian financial services and insurance industry.

Startupbootcamp, which has fintech accelerators in cities like New York and London, entered India after setting up its Singapore chapter.

It expects to short-list 10 fintech players for a three-month programme beginning in December. Companies and banks usually provide an annual fee to the accelerators for managing such programmes, while aiming to either acquire the participating startups at the end of the session or turn them into business partners.

Zone Startups India recently partnered with Barclays and Axis BankBSE 0.57 % to start accelerator programmes, and expects the ideas that come out to have a global market.

Rainmatter, a fintech incubator launched by Nithin Kamath, founder of discount brokerage firm Zerodha, is open to receiving applications 365 days a year, unlike traditional incubators. But it has a stringent admit policy. It has admitted just half adozen startups so far since starting operations in 2015.

Phillipines

Filipino FinTech startup First Circle raises record-breaking .2 million seed round (Geektime), Rated: A

First Circle, a Philippines-based company with Irish leadership, announced a strong $1.2 million seed investment Tuesday led by Dublin-and-London-based Key Capital with money also coming from 500 Startups and Singapore-based IMJ Investment Partners.

The Philippines is a small tech market, particularly in FinTech, though it hasn’t been completely unwatered in terms of seed funding this year.

Authors:

George Popescu
Allen Taylor

Tuesday October 18 2016, Daily News Digest

Tuesday October 18 2016, Daily News Digest

News Comments Today’s main news: Korean company Hanwha Life Insurance acquires 4% stake in Lending Club. American Bankers Association partners with Accenture to publish a playbook for banks who want to partner with FinTech companies. Today’s main analysis : Insurance technology is the next FinTech frontier.  The African financial services industry is making great strides in changing […]

Tuesday October 18 2016, Daily News Digest

News Comments

United States

United Kingdom

Australia

China

India

Africa

  • Africa is undergoing some interesting FinTech changes. In fact, technology is revolutionizing how money is handled and business is conducted in one of the most unexpected places of the world. AT: “It will interesting to see how FinTech transforms banking in Africa and whether it could lead to an increase in power and posture for a part of the world that has long been on the underside of the global power structure. This analysis is a must-read.”

News Summary

 

United States

ABA, Accenture Release ‘Playbook’ for Banks on Fintech Strategy (Banking Journal), Rated: AAA

As banks continue to grapple with a rapidly evolving technological environment and the massive growth of fintech startups — and with billions of dollars in revenues at stake — the American Bankers Association and Accenture today released a members-only Fintech Playbook to help banks understand how and when they can most profitably partner with fintech companies. ABA also launched ABA Fintech as an online hub for all the association’s resources on fintech.

According to Accenture, banks that invest in fintech stand to gain up to $20 billion collectively in operating income by 2020, while those that don’t could lose as much as $15 billion in revenues during the same period.

The playbook offers a four-phase approach — establish a baseline, close gaps, focus on the customer and drive transformational change — that addresses channels, lines of business and bank platforms and processes. It also includes sample worksheets to help identify strategic priorities, identify top IT investment priorities and select potential fintech partners.

How to win in the game of odds in the next fintech frontier — insurance (TechCrunch), Rated: AAA

Insurance technology is getting very popular among founders and investors, yet, as a category, is little understood.

Insurance is one of the most difficult businesses to start, because, well, the regulators don’t actually want new players in the market. The reason for this is risk — insurance is all about having a strong system and balance sheet to manage risk. However, as a result of its difficulty, insurance is now behind the times in terms of technology. This leads to a perfect storm to disrupt the industry.

Oftentimes product development cycles can be 3-5 years. In startup world, that’s an eternity and back. Meanwhile, there is $1.2 trillion in insurance premium written every year in the U.S.

The key to unlocking the insurance industry is understanding behavioral economics. Behavioral economics is the study of behavior and how it impacts purchasing.

Given the size of the market you clearly can create a win-win situation. For example, in auto insurance, even out of those who shop for carriers, more than 71 percent of people stayed with their carrier in 2015.

The most successful players in insurance tech will win by rounding the edges on existing products.

Hanwha Life acquires 4% stake in US loan company Lending Club (Korea Herald), Rated: A

Hanwha Life Insurance has acquired 4.1 percent stake in Lending Club, a US peer-to-peer lending company for 75 billion won (US$66.24 million), it reported on Oct. 17.

The insurance arm of Hanwha Group has a strategic partnership with Lending Club and “thought that its stocks were undervalued after its stock price was slashed due to the recent scandal involving its CEO, and purchased the stake,” said an official.

The distinct advantage of utilizing section 1031: The taxes could be deferred indefinitely (New York Real Estate Journal), Rated: A

A real estate investor, if fortunate comes to a point where they want to sell a property at a profit. Many investors know they may be able to utilize Internal Revenue Code Section 1031 and exchange their property for a replacement property, in turn deferring the capital gains. This has been one of the cornerstones of real estate investing because the deductions taken to make income tax deferred while owning a property also reduces cost basis. Distinct advantage of utilizing section 1031:  As long as the rules are followed each time an investor sells and subsequently buys a property, the taxes can potentially be deferred indefinitely. At the time of death, your heirs will generally receive a stepped up cost basis to the current market value of owned property, regardless of how many exchanges the investor may have done in the past (depending on the total market value of the estate).

Now, while most real estate investors know how to take advantage of a 1031 exchange in the traditional sense, there is an option to invest in an alternative structure and still defer the gains.  This is called the Delaware Statutory Trust or (DST). A DST gives investors another avenue to take advantage of the tax code while still staying within the parameters of the 1031 requirements.

The underlying real estate in a DST may be any asset class including, multifamily, office, retail, self-storage or industrial properties.

FTC Announces Agenda, Panelists for Oct. 26 FinTech Forum on Peer-to-peer Payments and Crowdfunding (FTC), Rated: A

The Federal Trade Commission has announced the agenda for its upcoming FinTech forum examining peer-to-peer payments and crowdfunding. The forum, which is the second in an ongoing event series, will take place from 1:00 p.m. to 4:30 p.m. on Oct. 26 in Washington, DC.

The half-day forum will feature two panel discussions. The first panel will explore peer-to-peer payment systems, the online services – often mobile apps – that allow consumers to exchange money electronically. The second panel will examine crowdfunding, the use of online platforms to fund a project or venture by raising money from a large number of people. Both panels will discuss the important trends in these industries, as well as their benefits and potential risks for consumers.

In addition to these panel discussions, the FTC’s Office of Technology Research and Investigation will give a presentation examining crowdfunding practices and the types of information available to consumers about crowdfunding campaigns.

Full details are available on the workshop’s webpage. The workshop will be webcast live on the FTC’s website.

Fintech Trends: Collaboration (FinLeap), Rated: A

With Fintechs growing stronger every day by taking a bigger part of the financial market, banks have become more open to collaborations with these young companies. Those collaborations present a great opportunity for banks not only resulting in increase of revenue, but most importantly innovation.

Studies show that many banks have already established partnerships with Fintechs. According to the UBS bank management survey of 61 big banks, 38% have a partnership already – a number that’s only going to rise in the upcoming year.

Not only do Fintechs gain benefits from collaboration, but also banks. The first benefit is simple: revenue.

Collaborations between banks and Fintechs can be very beneficial, but they are also very challenging as the organizational cultures between the two differ greatly.[5] This means that culturally, banks and fintechs will have to adapt to each other while trying to avoid unnecessary dependence.

How To Value Boston’s Faneuil Hall And Other Questions Fintech Could Answer (Forbes), Rated: A

Ryan Williams surveys the room: how many people could put a price tag on this building?

His question, it turns out, is a bit of trick. This building is Boston’s historic Faneuil Hall, which will never come up for sale.

On Monday, the market building constructed in 1742 was host to the Forbes’ Under 30 Summit where Williams spoke on a panel about how financial technology is shaking up stodgy industries. Williams’ co-panelists hail from different segments of fintech, but each touched on variations of  his broader point: technology is expanding access to financial information and in turn broadening financial opportunity.

Vlad Tenev argues that Robinhood, the free mobile stock trading app he co-founded, exists to get people investing as young as high school. This way they won’t be so clueless when it comes time to invest for retirement. Daniel Aisen, head of quantitative strategy at stock exchange IEX Group, notes that his company is pushing institutional investors to look closer at what is happening behind the scenes of their trades with the ultimate goal of making buying and selling stocks fairer for everyone. And SoFi, where Michael Tannenbaum is senior vice president of mortgages, is part of a group of new lenders using expanded data sets to broaden who they can give money to.

While financial technology has gained clients, accolades and venture capital dollars in recent years, high stakes separate these young financial leaders from many other young technology stars. If they get it wrong real peoples’ livelihoods, retirements and homes could be at stake. This is why all four panelists agreed that gaining domain expertise is key before starting a fintech business. They also largely agree that the evolution of finance will not come from throwing out everything that came before.

Class is Back in Session at Fintech University (BBVA), Rated: B

Some of the best-known names working on finance’s new frontiers come together this Monday in one of technology’s most important cities for the second edition of Fintech University.

The one-day gathering at San Francisco’s Bently Reserve is hosted by BBVA’s Open Innovation team, and features fintech entrepreneurs from around the globe.

Some of the hottest topics in fintech will be discussed at the second edition of Fintech University, including payments, lending, Know Your Customer (KYC) and authentication, and regulation. Fintech luminaries such as Socure’s Johnny Ayers, Prosper’s Ron Suber and Coinbase’s Fred Ehrsam will be leading and participating in the discussions.

While Fintech University has sold out, interested parties can follow along by checking out #FintechUniversity on Twitter.

United Kingdom

Amazon Echo and the future of financial advice technology (Professional Adviser), Rated: A

Amazon Echo is a hands-free speaker you control with your voice. In case you missed the news, having been available in the US for two years, its long anticipated UK launch took place at the end of last month to much fanfare and excitement.

So what does a speaker have to do with financial advice?

Today, an adviser business may need to enter the same data 21 times into 21 different systems. This sounds mad but, worryingly, it is not that unusual.

In drawing together multiple systems and tools, Echo demonstrates the potential of a connected advisory world. A single system, for example, that links to multiple investment platforms, keeps you informed about tasks and diary events, provides client information, manages business finances – and all though a single interface.

Can we expect a financial adviser version of Echo any time soon? The concept of integrated technology is available in the adviser world already.

Robo-advice would have flourished without RDR (FT Adviser), Rated: A

Robo-advice and the drive to automation would still have happened even without the catalyst of the Retail Distribution Review, experts have claimed.

Steve Thomas, professor at Cass Business School, said the disrupting advance of technology would have still forced a change in the financial services sector, even if the RDR had not taken place.

He highlighted how the advisory marketplace had shrunk from approximately 200,000 advisers in the UK in 1990 to approximately 25,000 qualified regulated financial advisers today.

Landbay launches new range of lending products for professional landlords (Property Wire), Rated: B

Peer to pear lending platform Landbay which specialises in buy to let mortgages has launched a new range of limited edition lending products aimed primarily at professional landlords.

The new tracker products have a competitive rate, no Early Redemption Charges (ERCs) and will be available exclusively via Landbay’s approved broker partners, in addition to the existing suite of both Fixed and Tracker rate products.

Landbay champions a bespoke, flexible and fast lending process, which it believes benefits borrowers in its speed of service and its competitive pricing. To date, Landbay has lent over £42 million since 2014, over 241 loans with 0% facing repayment difficulties.

Established in 2013, Landbay was the fastest growing online peer to peer lending platform in 2015.

Rebuilding the financial services industry takes the best of both (Real Business), Rated: A

The financial services sector is broken. However, it is not broke. It still generates enormous revenue, but it does so within a system that is quickly becoming unsustainable.

From Santander referring businesses to peer-to-peer lending platforms, to Zurich’s creation of a digital workplace – established players are looking to create new efficiencies, and provide greater convenience, customisation and reduced costs.

For something to become truly, disruptively innovative, it must be embraced by the mass market. And although fintech is booming, I’d argue that it still remains the province of early adopters. Many promising fintech startups have already failed due to the big gap between those early adopters and the mainstream market, and the gulf in behaviours between the two.

How come? Well, in financial services, probably more than in any other sector, it’s especially difficult to overcome the forces of inertia and trust. After all, there are few things in life more serious than money – and if someone’s going to place their savings or investments in the hands of a company, they’ll want to have confidence that the company they choose has the scale and longevity to keep their hard-earned cash safe.

SME’s beginning to rely on alternative finance in post financial crisis Britain (Huddled), Rated: A

Recent studies have shown that the Alternative Finance industry is providing SME’s with more flexible funding opportunities and much better terms for businesses. Back in 2015 Nesta revealed that the market had grown by £3.2 billion, highlighting its rapid expansion, and things look set to continue in a similar fashion.

A lot of SME’s struggle with having their invoices tied up for up to 90 days. This can create a problematic cash flow gap which can hinder businesses on a day-to-day basis. Market Invoice is becoming one of the main providers enabling businesses to release up to 90% of their invoices before the typical 90-day period.

The UK government has invested in a variety of different recent schemes and programmes to support SMEs financially. There are now a variety of different options available, from loans to investment schemes and development programmes, which businesses can take advantage of to help them out.

Short term business loans offer a much more flexible alternative for businesses, giving SME’s the opportunity to draw the funds as and when needed as opposed to taking a lump sum in one go. This proves to be a handy resource and quick fix for SME’s experiencing unexpected cash flow problems.

Crowdfunding platforms are more popular than ever before. With so many different online platforms available for donation crowdfunding SME’s can reach out to people around them and other via the power of social media to ask for any donations towards their cause.

With interest rates set to stay low and so many different types of alternative finance now available, there is a huge potential for new businesses to establish themselves in 2016.

Oinky focuses on ways to automate and simplify saving (Pensions & Investments), Rated: B

Conrad Holmboe left his position at U.K. investment consultant Redington over the summer, where he was a director in the investment consulting business, to work on Oinky, a digital piggy bank. Oinky connects to an existing bank account, determines how much a user can safely afford to save every week, and automatically transfers those savings to the piggy bank.

Mr. Holmboe is chief operating officer, chief financial officer and co-founder of Oinky alongside Ivan Soto-Wright, who also is CEO. Mr. Soto-Wright left Redington last year, where he was an investment consultant.

Oinky also has a “discover” feature, which lets savers explore peer-to-peer lending opportunities, investment platforms and other savings products.

Australia

Banks, AMP baulk at cost of financial advice watchdog (The Australian), Rated: A

The big four banks and AMP will contribute nearly $16 million to fund the creation of the federal government’s professional standards body for financial advisers, part of reforms unveiled yesterday by Financial Services Minister Kelly O’Dwyer.

The $15.6m bill to cover the first four years of the program has ­already faced resistance from the banking industry, which constitutes only 25 per cent of the financial advice market.

AMP, which represents Australia’s largest network of financial advisers, is also pushing to expand the financial burden of the standards body to be shared by the rest of the industry.

An independent standards body will be established as a commonwealth company and a nine-member board will seat three consumer advocates, three industry members, an ethicist, an education specialist and a chair. The professional associations, such as the Financial Planners Association, will compete to run the body, which will oversee the country’s 22,500 advisers.

FPA head of policy Ben Marshan said the reforms provided ­financial planners with an appropriate amount of time to adjust to the new system. The education and professional standards regime will come into force at the start of 2019.

Australians are using peer-to-peer loans to consolidate their debt (Finder), Rated: A

Peer-to-peer (P2P) lending, while having first been introduced in 2012, is still a new concept to many Australians. However, the idea seems to be catching on. The P2P lending space is becoming more competitive, with new lenders being announced all the time, and more Australians are starting to take advantage of the competitive rates on offer. According to new data, these rates are being utilised by borrowers looking to reduce the interest they’re paying on current debts.

RateSetter customers that are using their loans to consolidate debt:

  • $20,666 – Average loan amount for debt consolidation
  • 8.23% – Average annual rate for debt consolidation loans
  • 725 – The number of people earning between $50,000 and $100,000 that held debt consolidation loans
  • 64.5% – Percentage of males applying for debt consolidation loans

Move to lift professional standards of financial advisors backed (Professional Planner), Rated: B

The SMSF Association strongly endorses the Federal Government’s decision to legislate to improve the professional standards of financial advisors.

Association Head of Policy Jordan George says improving the educational and ethical standards of financial advisors has been a long-term policy of the organisation, especially as it relates to the $622 billion self-managed super fund (SMSF) sector.

China

Stored Value Facilities : Changing the fintech landscape in Hong Kong (Bryan Cave), Rated: AAA

Last November the Clearing and Settlement Systems Ordinance was amended and renamed as the Payment Systems and Stored Value Facilities (SFV) Ordinance (“Ordinance”). The Ordinance sees the implementation of a mandatory licensing system for stored value facilities, and was subject to a one year transition period. This grace period will end on 13th November 2016, after which any stored value operator not holding a licence will have to exit the market or face heavy penalties.

In general, a SFV involves the pre-payment to or storage of the value of money (or money’s worth) on a payment facility, which may be used for paying for goods or services or to another party. This includes smartcards, such as gift cards or top-up cards, through to wearable technology such as watches to non-device based SVFs that store the value of money on mobile and internet based accounts, such as e-wallets.

The Ordinance requires all multi-purpose SVFs to be licensed. Single-purpose SVFs do not have to adhere to the Ordinance, so you may rest assured your pre-paid coffee card will still work after 13th November.

The implementation of the Ordinance sees a significant shift in Hong Kong’s payment’s landscape.

More than 20 companies have applied to the HKMA for SVF licenses with 50% Hong Kong-domiciled companies and 68% engaged in the prepaid card business. Howard Lee, senior executive director at the HKMA, advised that the decision to include only five operators at this point did not mean the remaining applicants had been rejected. We expect to see more licences granted before or after 13th November.

SuperCharger FinTech Accelerator Renews Partnership with Hong Kong Exchange & Clearing (Crowdfund Insider), Rated: A

Hong Kong-based SuperCharger FinTech Accelerator has renewed its partnership with Hong Kong Exchange and Clearing (HKEX).

SuperCharger FinTech Accelerator was launched in January 2016 with big success seeing a USD $71 million capital investment in accelerator participant MicroCred secured for its expansion in China and the development of their internet finance strategy.

Applications for SuperCharger FinTech Accelerator 2.0 are open until 20 October 2016 both early stage and later stage Fintech firms may apply.

India

Barclays launches fintech accelerator programme with 10 fintech startups (The Economic Times, India Times), Rated: AAA

Rise Accelerator, a FinTech- focussed accelerator programme started by Barclays announced its first cohort today, comprising 10 FinTech startups.

The fintech accelerator will provide the selected startups with access to the bank’s technology, insight and expertise via onsite mentors and advisors. It will also enable them to access the international markets.

The 10 shortlisted startups included 4 from Bangalore, 2 each from Mumbai and Delhi and 1 each from Chennai and Hyderabad. The startups focussed on a host of areas like Artificial Intelligence, Data Integration, Predictive Lending etc to solve real time problems associated with the banking and financial sectors.

The London headquartered lender is also planning to support these nascent financial technology companies as an early stage investment which can reap them big returns if they go on to make it big in the emerging fintech space both in India as well as globally.

Online P2P lending marketplace Rupaiya Exchange fast emerging as a game changer in India (The Hindu Business Line), Rated: A

Putting an end to redundant lending processes in India, Rupaiya Exchange, a leading online peer-to-peer lending platform, is changing the face of the money lending industry. With its pan-India presence, Rupaiya Exchange serves as a marketplace for a wide range of peer to peer (P2P) lending activity including Consumer-to-Consumer loans, Business-to-Consumer loans, and Business-to-Business loans. The service portfolio of the company includes short-term as well as long-term loan instruments which can be either be secured or collateral-free, as per the user requirement.

The platform also holds the distinction of being the first company to introduce a lender’s protection scheme in India.

Fintech companies like BankBazaar promise smarter profits from mutual funds (The Economic Times, India Times), Rated: A

Investing in a mutual fund is considered a smart option, especially for first-time investors, and several fintech startups are looking to make the process simpler and attractive for individuals.

BankBazaar, which has a Sebi-registered investment-adviser licence, is set to use robo-advisory technology, which entails minimal human intervention in financial advice, to help customers invest in the right mutual funds. The feature will be live internally on October 30 and can be used by the public from November 17, CEO Adhil Shetty told ET.

Digital payments startup Trupay will launch a feature this month for real-time investment in mutual funds using its UPI integration.

Zerodha offers a choice of the bestperforming mutual funds, which Nithin Kamath, CEO of Zerodha, said the company is allowed to do using its stockbroker licence, and also uses a simulated systematic investment plan (SIP) to let users customise their investments based on markets instead of fixed periodical investments.

Fintech firm Lendingkart acqui-hires loans marketplace KountMoney (Tech Circle), Rated: B

Fintech startup Lendingkart Group has acqui-hired KountMoney, an online lending marketplace for personal loans, to boost its technology and data analytics capabilities.

Acqui-hire refers to the buyout of a company primarily for the skills and expertise of its staff, rather than for its products or services.

KountMoney connects borrowers and lenders, besides vetting loan applications through an algorithm. It forwards the vetted loan applications to suitable lenders in its network, who take the final call. It also helps borrowers in choosing lenders and submission of documents.

Africa

NFC FinTech Banking Technology and Speed (Finextra), Rated: AAA

Abstract – African financial services industry is in the midst of extraordinary change more and more of the population is becoming part of the formal financial system with mobile technology driven inclusion but still large portion of the market still remains untapped. The race/efforts by nonbank organization’s are still on to find innovative ways to get excluded customers on board. Included consumers are looking for everyday convenience, while businesses are looking for a competitive edge thus resulting in a new breed of products and next-generation payment options. At the same time many consumers still needs to answer for their questions like what do I do on Internet banking, with NFC sticker on back of my $10 mobile phone, with easy solution, open and integrated design technologies?

Introduction- With NFC any device can be a payment device.

NFC or any similar technologies are neither new nor a revolutionary innovation its in existence on this planet since decades, but not all of us are aware to make use of this for payments (Ok I agree most of us are). Mobile payment using NFC has been around for a long time but banks and retailers are hesitant to participate due to fear of low adoption rate.

Main Story – Using combination of technologies like mobile device, bitcoin, blockchain, fintech companies are building Internet of value. The question then is what does this means for financial institutions, governments and citizens.

The challenge to NFC is the cost of devices (Handsets & Receiving devices). Some brands do not take time to invest fully as Apple does.

Security is an integral component of all payments, as sensitive data need to be protected from any fraudulent parties. The card associations have created a set of rules and security standards, which must be followed by anyone with access to card information including gateways. This set of rules and security standards is called the Payment Card Industry Data Security Standard. To add security for both subscriber and merchant (Yes at business cost), as in any financial transaction that’s the golden Key.

Banks will certainly have to judge whether the massive investment they could make, in order to challenge the spreading popularity of payment systems such as PayPal, will be worthwhile, given that PayPal has gained ‘first mover’ advantage and that as highly-regulated financial service companies with duties to both national and continental authorities, they have to abide by stricter rules and security protocols. They must also judge whether their customers will move with them into a new more agile, flexible and electronic future, or whether a majority of people actively prefer the new, low cost (or free) services that have sprung up as part of the digital revolution.

Conclusions- Although we have made great strides to expand access to financial services through new technologies and innovative business models, the gender divide stubbornly persists in most emerging markets.

Time has now come for banks and other entities with an interest in financial service provision, to step up as one single team, exploit technology and leverage on existing MNO infrastructure to acquire customers, enrich use cases, lower costs and increase revenue especially in markets where regulators (such as reserve banks) play a dominant role.

Authors:

George Popescu
Allen Taylor