Thursday October 10 2019, Weekly News Digest

Lend Academy

News Comments Today’s main news: Affirm debuts shopping app. Zopa profits tick upward. RateSetter recovering from loan scandal. PPDAI stock rises 7% with lift in institutional-funded loans. Oportun ends Nasdaq debut with 8% gain. Australia: RBA cuts interest rates, online lenders follow. Today’s main analysis: The Future of Finance: Marcus, Neobank, and fintech. (A MUST-READ) […]

The post Thursday October 10 2019, Weekly News Digest appeared first on Lending Times.

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News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA

OnDeck today announced the results of a national survey of U.S. small business owners that finds economic issues are the most important factors in determining their choice for president in 2020.

  • Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
  • Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
  • 57% of small businesses surveyed said they were either Very Optimistic or Somewhat Optimistic about the economic outlook for their businesses;
  • 93% of those surveyed said they plan to vote in the 2020 election.
  • 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.

Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA

The point-of-sale (POS) financing provider 

Source: Business Insider

Affirm ships new shopping and bill splitting app (Finextra), Rated: A

Affirm’s app also allows consumers to pay at any brick-and-mortar store that accepts Apple Pay or Google Pay, which is increasingly important as 24% of consumers want the flexibility to look online and shop in-store.

Those with Apple Pay or Google Pay enabled have also seen up to 14% of transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.

Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A

Since Affirm’s launch, the landscape in the POS space is radically different than it was when Affirm entered. It is, first and foremost, a much bigger and more populated space than it once was. Other startups have come to the field — AfterpayUplift and Sezzle for example — but also bigger and more established names in financial services. In the last 12 months alone SquareMastercardPayPal and Chase have all rolled out POS installment lending products or enhancements as the market continues to pick up popularity among consumers, particularly younger ones.

Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA

Q4 is off to a brisk start. The jobs report released this past Friday shows 114K in net new jobs (vs expectations of 120K), generally flat wages, and a drop in the unemployment rate to 3.5%.

On the one hand, the US economy is near ‘stall speed’ – around 1 to 1.5% growth rate.

Source: PeerIQ, The Daily Shot, Conference Board

House prices are expected to rise 5.8% over the next year due to low mortgage rates.

Two major financing announcements this week. FinTech lender, Oportun, led by CEO Raul Vazquez, ends its Nasdaq debut with an 8% gain. The debut is notable as it represents a positive shift in the sentiment to the reception of lenders to the IPO market.

My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA

The upward trend in my returns continued in Q2, making it the fifth quarter in a row with increasing returns. My preliminary return for the 12 months ending June 30, 2019 is 6.20% (one investment is still not final), the best I have achieved since Q3 2017.

Source: Lend Academy

The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA

Afterpay is one of a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop. In addition to it, there are Affirm, Sezzle, Klarna, and Quadpay. They are positioned as a more consumer-friendly option than credit cards, a whole host of services bent on—because this is 2019—disrupting the powers that be.

Globally, Afterpay, which launched in Australia, has over 4.6 million customers and 35,000 retail partners. In the U.S., where Afterpay only launched in May of last year, it has two million customers and is available at 6,500 retailers. Over three million people use Affirm, while another 500,000 have shopped with Sezzle.

Silicon Valley promises aside, Afterpay is, at best, a platform that allows you to take out what amounts to a small loan on an item. After an approval process—Afterpay does not check a credit score; others like Affirm do—the customer pays a fourth of the price upfront and the rest is paid off in three equal installments every two weeks.

Also new is the $1,500 limit, up from $500, that Afterpay raised after Hyde-McCormick proved himself a responsible shopper and the $87.50 payments currently due every two weeks.

What Happened to Borro? (deBanked), Rated: A

In 2013, Borro, an innovative online lending company that was poised to disrupt pawn shop lending forever, invited me to their stylish offices at 767 Third Avenue in Manhattan.

Borro made $50 million worth of such loans in 2013 and doubled that number in 2014.

Auto, home equity are soft spots in consumer lending (American Banker), Rated: A

In its quarterly report that tracks consumer delinquency trends, the American Bankers Association said that 30-day past-due rates ticked up in eight of 11 categories in the second quarter when compared with the first quarter, but stressed that delinquencies remain well below historic norms.

Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A

Maker DAO, the most active decentralized finance app on the Ethereum network, has announced a date for its long-awaited multi-collateral DAI generation. According to observers, November 18 may be the date MKR starts accepting other assets as collateral.

Multi-collateral DAI creation has the potential to be riskier in comparison to ETH-based models. Currently, Maker is deliberately over-collateralized at above 300%, with the minimum at 150%, due to the high volatility of crypto assets.

A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A

Loans tied to more than 50 companies have lost at least 10 percentage points of face value in just three months, according to data compiled by Bloomberg. Some have dropped a lot more, with lenders lucky to get back just two-thirds of their investment if they tried to sell.

It’s hardly a full-blown apocalypse for the junk-rated leveraged loan market, which totals $1.2 trillion.

Energy is the hardest-hit sector on the list, with more than $12 billion of loans falling more than 10 cents on the dollar. Consumer and health care follow, comprising around $8 billion and $5 billion of loans outstanding, respectively.

Source: Bloomberg

Ruling cuts short debt collectors’ victory lap over CFPB proposal (American Banker), Rated: B

Under the CFPB’s May proposal, debt collectors could have unlimited contact with debtors through email and text messages, though consumers could opt out of such communications. Additionally, collectors could satisfy disclosure requirements with a hyperlink embedded in an email that takes consumers to a description about how they can dispute a debt.

The SEC is hiring a chief data officer (Business Insider), Rated: B

The Securities and Exchange Commission is hiring its first chief data officer, according to a job posting for the role.

Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B

Voyager Digital, LLC, a subsidiary of publicly-traded Voyager Digital (Canada) Ltd (Ticker VYGR.CN), an industry-leading best execution crypto asset broker, today announced a partnership with Celsius Network, in which Celsius will manage a portion of Voyager’s digital assets.

United Kingdom

Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA

Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.

Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A

In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.

Ratesetter recovering from loan scandal (The Times), Rated: AAA

One of Britain’s largest peer-to-peer lenders appears to be recovering from a toxic loan scandal after its latest results showed it edging towards breaking even.

Accounts for Ratesetter, which links 56,000 ordinary investors with consumer and business borrowers, show that pre-tax losses narrowed by 69 per cent in the year to March.

Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A

Customers who were mis-sold loans by the collapsed payday lender Wonga are expected to receive less than 10% of what they are owed in compensation after administrators revealed that only £41m will be put aside for claimants.

Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A

Stockport and Wilmslow based fintech company Savvy.co.uk is to create 25 jobs after securing a £20 million investment.

The funding, from London-based Cairn Capital, will increase lending capacity for the company who provide an ethical alternative to pay-day loans.

MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A

WHY DID YOU START BLEND NETWORK?

I started working in the financial industry as an FX trader before moving to trading gold and copper, both much more inefficient markets than FX. I realised that the UK property market was a hugely inefficient market in the sense that lenders and borrowers are not meeting. On the one hand, you have very experienced property developers across the country who are trying to access funds to build homes but traditional lenders are no longer active in providing development finance.

Instead, we lend in places such as Coventry, East Anglia, Doncaster, Northern Ireland. Northern Ireland is a very good example of our strategic approach to lending. Last year, we did around 80-85% of our business in Northern Ireland.

Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A

Crowdfunding a start up brings to mind the statement ‘Nothing worth having comes easy’, never truer than in the case of launching a start-up. Getting a new business off the ground will often require capital. Something which a lot of people don’t know how to go about getting.

These are:

  • Reward based crowdfunding;
  • Equity based crowdfunding;
  • Debt based crowdfunding, and
  • Donation based crowdfunding.

Landlords wary of tax changes (Money International), Rated: A

Half of the 200 landlords approached agreed tax changes and tougher mortgage borrowing criteria have thwarted their plans to buy more properties, while 15% admitted they had been put off buying homes to rent.

A third who still wanted to invest are considering a switch from buy to let to peer-to-peer lending secured against property, while 8% have already done so.

China

PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA

The stock in PPDAI Group Inc (NYSE: PPDF) closed 7% higher on Wednesday, at $2.83 per American depositary share, after it announced a positive trend in funding of loans by its institutional partners and increased loan origination volume.

For the third quarter, the Shanghai-based company, which operates an online consumer finance marketplace, said in a statement on Wednesday that the volume of loans facilitated by its institutional funding partners jumped to $2.64 billion, up 91% from the second quarter. Total loan origination volume was above PPDAI’s guidance, it said, as it reached $3.51 billion, up 14% from the previous quarter.

European Union

What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA

At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks’ sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK’s P2P lenders.

  • CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG’s B customers.
  • Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays’ SMB clients access to MarkeInvoice’s solutions. 
  • French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market.
Source: Business Insider

Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A

The new 18-month loan period will allow borrowers to access working capital facilities of up to €300,000 (approximately £265,194) in just 24 hours.

ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A

ID Finance, the fintech operating in Europe and Latin America, saw revenue growth of over 100% in the first 9 months of 2019 and is on track to double its revenues to €90m revenue this year. The data science, credit scoring and digital finance company is now planning its first equity crowdfunding round via Crowdcube as it targets €300m+ of revenue within 2 years.

Binance Launches New Lending Program Phase (CoinCodex), Rated: A

The Binance cryptocurrency exchange has launched the latest phase of its relatively new lending program. For the program’s eighth installment, Binance is sticking with the model of short-term loans, as users only have to commit their crypto for 14 days.

International

A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA

These underbanked markets, led by countries in Asia and Africa, have inspired fintech innovation that’s leapfrogging the technology available in the developed world. Ant Financial Services Group’s Alipay and Tencent Holdings’ WeChat Pay in China, Paytm in India, and Safaricom’s M-Pesa in Kenya are some well-known examples.

Source: Bloomberg

Take Facebook Inc.’s plan to launch a digital currency called Libra in 2020. The social network’s gigantic reach—more than 2.4 billion active monthly users—could draw a much wider audience to Libra than has used previous cryptocurrencies. For instance, global remittances by migrants reached a record $689 billion last year, according to the World Bank.

Source: Bloomberg

San Francisco-based 500 Startups staked 43 such companies in the 12 months ended June 30.

Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA

Goldman is losing $1.3 billion on Marcus, trying to build a Fintech leader. Etrade is going to lose $75 million from cutting trading fees to $0 to keep up with Robinhood. Revolut is losing £35 million on £60 million in revenue, with another £140 million burned by Atom, Monzo, Tandem, and the rest.

Source FT Research and Future of Finance

Generally speaking, from a deposit point of view, these are still all small businesses at £1 billion in assets (e.g., Betterment manages $20 billion).

Source: ARK Invest and Future of Finance

The first is that the Robinhoods and Monzos of the world are 10x overpriced relative to the payments apps. I can sort of buy this — though money in motion is way easier to capture than money at rest. The second is that venture investors think a finance user is worth $1,500 in a digital bank.

Source: Future of Finance

Blockchain: the future of finance (Financier Worldwide), Rated: A

Recent examples of blockchain’s impact on financial markets go well beyond these initial applications or P2P lending or crowdfunding.

The first wave of applications in finance and banking is being driven by easily achievable gains in actively traded assets.

MasterCard incorporated a blockchain payment system providing vendors real time, lower cost settlements on cross-border transactions. Representing a consortium of more than 40 of the world’s largest banks, fintech firm R3 launched a payment system built on DLT platform Corda, to expedite intra-bank transfers.

St. Regis Aspen, a Colorado resort, is a partnership formed with a crowdfunding site, Indiegogo, that in lieu of a traditional IPO completed a private placement via DLT financing real estate. This sale of ‘tokens’ – fractional interests in the underlying property – raised $18m, compliant with securities laws.

Australia

Hot home loan rates starting with a 2 (mozo), Rated: AAA

The RBA has cut official interest rates for the third time this year, and already a handful of lenders have responded by slashing rates across their range of variable rate home loans. Right now, if your home loan doesn’t have a ‘2’ in front of it, you’re missing out.

loans.com.au jumps on October RBA home loan rate cut party (mozo), Rated: AAA

The online lender has announced its response to the 0.25% drop in the official cash rate though, with loans.com.au taking 0.15% off a number of variable rate home loan offers for both owner occupiers and investors.

The changes, which come into effect on October 17, will have an impact on a number of  loans.com.au home loan offers including:

• Essentials Variable loan – reduced by 0.15% with rates now as low as 3.04% (3.06% comparison rate*).

• Smart Home Loan – reduced by 0.15% with rates now as low as 2.88% (2.90% comparison rate*).

• ZIP Home Loan – reduced by 0.15% with rates now as low as 3.08% (3.10% comparison rate*).

• Offset Variable loan – reduced by 0.15% with rates now as low as 3.12% (3.14% comparison rate*).

OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B

Online SME lender OnDeck Australia has appointed experienced commercial lending operator Robbie Fidler as its national broker channel manager.

Asia

SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A

The growth and success of peer-to-peer (P2P) lending is a testament of the viability of risk-sharing contracts, where the investors take on some risks (for higher return) from the ventures they are financing. This way, finance will be grounded in the real economy, which is another core principle of Islamic finance.

MENA

Beehive funds first SME in Bahrain (Arabian Business), Rated: AAA

Dubai-based Beehive, the region’s first regulated peer-to-peer lending platform, has funded its first SME in Bahrain.

Canada

BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B

BFS Capital, a leader in small business lending, has officially launched a data science and engineering hub in Toronto as the company accelerates its plans to develop best-in-class digital financial products for small businesses across the globe.

Authors:

George Popescu
Allen Taylor

The post Thursday October 10 2019, Weekly News Digest appeared first on Lending Times.

Tuesday November 6 2018, Daily News Digest

Data from Bank of America, Wells Fargo, JP morgan and US Bank shows unbanked us online and mobile banking when banked

News Comments Today’s main news: Preview of OnDeck’s Q3 earnings. Credit Karma acquires Noddle from TransUnion, expands into UK. Lufax to move P2P lending to the blockchain. WeBank hits $21B valuation. Linked Finance loans up 63%. Nubank now worth $4B. Today’s main analysis: The unbanked approaches banking like everyone else. Today’s thought-provoking articles: HSBC, Barclays bucking the trend. International P2P lending […]

Data from Bank of America, Wells Fargo, JP morgan and US Bank shows unbanked us online and mobile banking when banked

News Comments

United States

United Kingdom

China/Hong Kong

International

Other

News Summary

United States

On Deck Capital’s Q3 Earnings Preview (Benzinga) Rated: AAA

On Deck Capital ONDK 26.01% releases its next round of earnings this Tuesday, Nov. 6. Get the latest predictions in Benzinga’s essential guide to the company’s Q3 earnings report.

Earnings and Revenue

Based on On Deck Capital management projections, analysts predict EPS of 12 cents on revenue of $97.33 million.

On Deck Capital EPS in the same period a year ago totaled 1 cent. Sales were $83.66 million. Revenue would be up 16.33 percent on a year-over-year basis.

Source: Benzinga

Strong Wage Growth, HSBC / Barclays Bucking the Trend (Peer IQ) Rated: AAA

QED Investors has raised its largest fund to-date. QED raised $175 Mn in its fifth fund which is focused on early-stage FinTech. QED also released their first quarterly newsletter. (Subscribe here) Matt Burton, the founder and CEO of the Orchard platform, joined as a partner and will lead QED Belay, the newly formalized founding stage investment platform.

SoFi and Marlette are issuing their fourth Consumer Unsecured deals of 2018. SCLP 2018-4 is a $549 Mn securitization. KBRA has rated the tranches A to D AAA, AA+, A+ and BBB respectively. SCLP 2018-4 is the first consumer unsecured deal to receive a AAA rating. MFT 2018-4 is a $266 Mn securitization. KBRA has rated the tranches A to C AA, A, and BBB- respectively.

HSBC and Barclays Leaning In, Marcus and Discover Pulling Back

HSBC and Barclays are launching new unsecured personal loan products. These products will complement the banks’ existing US credit card offerings while competing head-on with Marcus on its home turf. HSBC and Barclays are looking to capture a piece of the $140 Bn personal loan market, that is growing at an annualized rate of eighteen percent.

Discover and Marcus are cautious about the growth in personal loans and the potential for higher lossesGS will temper Marcus’s origination growth and not “chase volume targets”. We note that GS is the only bank whose provision for loan losses increased in Q3 – GS provisions rose by 172% YoY to $174 Mn, while loans grew by 72% – far outpacing loan growth (and what might be expected from loan seasoning).

There’s no excuse for ignoring the unbanked, big banks’ own data shows (American Banker) Rated: AAA

When community advocates ask banks to provide accounts for the estimated 63 million people in the U.S. who are unbanked, bankers typically raised two concerns.

Both arguments appear to be shot down by a new trove of data collected from four of the largest banks: Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo.

Seventy-four percent of the 3 million previously unbanked people who opened accounts at the four banks in the past year are digitally active. In fact, they are heavy users of online and mobile banking. They are statistically no more likely to call or walk into a branch than existing bank customers.

Source: American Banker

Credit Karma expands into insurance with auto policy service (Reuters) Rated: A

Financial technology startup Credit Karma said on Tuesday it is expanding into insurance through a new service that makes it easier for users to find cheaper auto insurance policies.

The tool generates suggestions by analyzing government information on drivers and vehicles together with data from credit bureaus and public insurance rate filings, bypassing the need for users to manually input information into long forms, the company said.

Kathryn Petralia of Kabbage (Lend Academy) Rated: A

In this podcast you will learn:

  • How Kabbage has changed since they launched 10 years ago.
  • The biggest challenge they have found as they have grown.
  • Their approach to data analytics and the different data sources they use.
  • Why it is important to have a complete picture when a business seems to be struggling.
  • Why they have not pursued direct lending outside of the U.S.
  • Why their banking clients have been outside the U.S.
  • How Kathryn views the competitive business lending environment today.
  • Why banks are not going head to head against Kabbage yet.
  • What Kabbage is doing to foster more gender balance throughout the organization.

ForwardLine Accelerates Growth and Achieves a 350% Increase in Loan Originations (PR Newswire) Rated: A

ForwardLine, a nationwide direct lender providing affordable loans to small businesses, has announced strong results for third quarter 2018, achieving a 350% increase in loan originations over third quarter 2017. The company attributes its growth trajectory to strategic investments in technology, enhanced analytics, and an improved overall customer experience.

Majority of Americans Expect to Use a Robo Adviser (Plan Advisor) Rated: A

Fifty-eight percent of Americans expect to use a robo adviser by 2025, Charles Schwab learned in a survey, summarized in its report, “The Rise of the Robo: Americans’ Perspectives and Predictions on the Use of Digital Advice.” In addition, 45% say robo advice will be the technology that will have the biggest impact on financial services.

In addition, by the year 2025, 57% expect to use robotics, 55% artificial intelligence, 54% virtual reality, 53% big data, 43% augmented reality, 36% blockchain and 36% cryptocurrency.

However, when it comes to financial advice, people still want the human touch, with 71% of people wanting a robo adviser that also gives them access to human advice. Among Millennials, this jumps to 79%. This is true for 73% of Gen Xers and 64% of Baby Boomers.

Forty-six percent of Baby Boomers using a robo adviser say it is perfect for their life stage, and 45% of this demographic group expect to use a robo adviser by 2025.

Is This Community Bank’s Bold Digital Play The Model Of The Future? (The Financial Brand) Rated: A

Online mortgage lending has been a very large part of NBKC Bank’s business model, and remains so.

Now, people in all 50 states can apply online for a mortgage from NBKC. Its originations run between $2.5 and 3 billion annually, and the bank is one of eight mortgage lenders on Costco’s nationwide platform.

AGORA Announces Release of First-Ever Loan Validation Report for Seasoned Loans (PR Newswire) Rated: A

AGORA Data, Inc., a secondary loan marketplace based in Arlington, Texas, announced today, the release of the first-ever Loan Validation Report for seasoned loans. AGORA’s proprietary technology enables car dealers and finance companies to avoid compliance issues with the Truth in Lending Act (Regulation Z), by assessing in real-time any issues with the terms of a loan, either at the portfolio or individual loan level. This includes assessment of the loan APR, Finance Charges, Principal Balance, Total of Payments, Unearned Interest and Gross Balance. Violation of Regulation Z can lead to significant penalties and other legal issues.

Roostify Names Courtney Keating Chakarun as New Chief Marketing Officer (Business Wire) Rated: B

Roostify, a leading digital lending platform provider, announced today that Courtney Keating Chakarun has joined the company as Chief Marketing Officer. Chakarun comes to Roostify from CoreLogic, where she served as Senior Vice President, Marketing & Innovation.

PeerIQ Announces Agreement with Liberty Lending (Globe Newswire) Rated: B

PeerIQ, the leading provider of risk analytics for consumer credit, today announced that Liberty Lending, a leading online platform that provides innovative borrowing solutions to deserving consumers, has entered into an agreement to license two PeerIQ products: Consumer Credit Suite and Analytics Platform.

United Kingdom

Credit Karma acquires Noddle from TransUnion and expands to the UK (Tech Crunch) Rated: AAA

Credit Karma, the US startup with 85 million users that offers credit reports and a platform to browse and buy other financial services, has made an acquisition to help it kick-start its first overseas expansion beyond the US and Canada: it has acquired Noddle, a UK-based credit reporting service with 4 million users, from TransUnion.

Financial terms of the deal are not being disclosed, but Valerie Wagoner, Credit Karma’s VP of International (who had previously been at Twitter), said that it will be a full acquisition of tech and employees — 35 in all — and TransUnion is not taking any stake in Credit Karma as part of this deal, although the two will continue to work together with TransUnion providing data to Credit Karma, as it had done before.

As a point of reference — and a sign of the consolidation and competition in the market — earlier this year Experian acquired another credit scoring service in the UK, ClearScore, for the equivalent of $385 million. That service has 6 million users compared to Noddle’s 4 million. Competition authorities are still investigating that deal, and Credit Karma’s will also have to get the pass from regulators before closing.

Experian to Offer a New Trended Data ‘Multi-Dimensional View’ of UK Consumer Finances with the Launch of Credit 3D (Business Wire) Rated: A

Experian is launching a new range of services to help lenders evolve their approach to making consumer credit decisions, so businesses can make more informed decisions and deliver fairer, more affordable outcomes for their customers. It’s now possible to take a multi-dimensional view of a borrower’s financial health with Experian Credit 3D.

Knowing a consumer’s credit information at a single point in time only offers a snapshot of their financial behaviour. However, by using innovative trended and alternative data sources via Experian Credit 3D, businesses can access an unparalleled set of insights, enabling faster decisions based on a more rounded picture of affordability.

Insolvency reforms may hinder P2P loan recoveries (Peer2Peer Finance News) Rated: A

REFORMS to the way HMRC is treated as a creditor will make it harder for some peer-to-peer lending platforms to recover bad debts, an insolvency practitioner has warned.

Chancellor Philip Hammond announced in his 2018 Budget last week that HMRC would be given preferred creditor status in business insolvencies to ensure tax is collected.

Simon Bonney, a partner at Quantuma, told Peer2Peer Finance News this would impact any P2P platforms accepting floating charges, such as stock, receivables or cash at the bank, as security on loans.

Goji launches SIPP wrapper for direct lending bonds (Peer2Peer Finance News) Rated: A

GOJI has made its direct lending bonds available in a self-invested personal pension (SIPP) wrapper.

Investors can now access the specialist investment manager’s direct lending bond through both an Innovative Finance ISA (IFISA) and a SIPP.

Its diversified lending bond targets returns of more than five per cent by investing in loans sourced by alternative finance providers in the property, small business and education sector.

Lloyds Banking Group to add 2,000 jobs in digital shake-up (The Guardian) Rated: A

Lloyds Banking Group is planning a major restructuring of its workforce, adding 2,000 jobs as it refocuses its operations on digital technology.

Britain’s biggest high street lender will cut 6,000 jobs but create another 8,000 as part of a £3bn reorganisation over the course of the next two years.

The job losses will be spread across the group transformation division, corporate banking, retail and community banking, Sky News reported. New roles will be oriented towards digital technology.

Alternative Airlines: “Spread the cost of a flight over monthly instalments” (Travel Daily) Rated: A

UK based flight search site Alternative Airlines, has put the cat amongst the pigeons with an announcement of a new deal with Affirm to roll out what the American company describes as its “fair and honest alternatives” to traditional payment options.

The new partnership will see customers pay for their flights in instalments, instead of one single tranche. Giving them the opportunity to plan ahead and even open up a travellers horizons by giving them a chance to experience more wide-ranging trips, with the US customers able to divide fees over three, six and 12 months instalments.

China/Hong Kong

Chinese Wealth Manager Lufax Eyeing P2P Lending with Blockchain (Blockchain Reporter) Rated: AAA

Lufax is transferring its entire peer-to-peer (P2P) lending portfolio worth “tens of billions US dollars” onto the blockchain platform, according to a post on South China Morning Post.

Tencent-Backed WeBank Hits $ 21 Billion Valuation (Caixin Global) Rated: AAA

Tencent-backed online lender WeBank Co. Ltd. has reached a sky-high valuation of 147 billion yuan ($21 billion) after less than four years in operation, becoming one of the world’s largest “unicorn” companies.

The new valuation is based on a legal document  attached to an auction notice on Taobao.com, which described the upcoming auction of a minor stake in WeBank.

WeBank’s latest valuation makes it the fifth most valuable privately-held company in the world, based on the CB Insights list.

Hong Kong’s appeal as a virtual banking hub is about to be put to the test as first online lenders arrive (South China Morning Post) Rated: A

Of the 29 virtual bank licence applications before the HKMA, submissions have been made by WeLab, HKT, Standard Chartered Bank, as well as an alliance between Australia’s Airwallex, Bank of East Asia (BEA), and mainland firm Sequoia Capital China.

There are 21.43 bank branches and 50.09 ATMs for every 100,000 residents in Hong Kong, higher than the global city average of 12.6 and 47.55 respectively in 2016, according to World Bank data.

European Union

Linked Finance’s loans up 63% in first nine months of 2018 (RTE) Rated: AAA

Peer-to-peer lending platform Linked Finance has facilitated loans of over €28m in the first nine months of this year, an increase of 63% on the same time last year.

The lender said it was on track for record growth this year.

It also noted that loans in the quieter third quarter covering the summer holiday months were up more than 62% to €9.3m, while average loan size also rose significantly – up 33% to €62,000.

International

Nubank is now worth $ 4 billion after Tencent’s $ 180 million investment (Tech Crunch) Rated: AAA

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.

With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.

International P2P Lending Volumes October 2018 (P2P Banking) Rated: AAA

Zopa leads ahead of Mintosand Ratesetter. The total volume for the reported marketplaces in the table adds up to 481 million Euro. This month I added Crowdproperty.

Dofinance crossed 50M EUR total volume lent since launch.

Source: P2P Banking

The Fintech 250: The Top Fintech Startups Of 2018 (CB Insights) Rated: AAA

12 QED portfolio companies named to CB Insights’ Fintech 250 list of the most promising financial services start-ups: Shout outs to AvidXchange, blooom, CircleUp, Credit Karma, Creditas, Flywire, Klarna, LendUp, Nubank, Roofstock, Signifyd, and SoFi! (Credit: QED inaugural newsletter)

Source: CB Insights

Credit Karma

The company provides individuals with credit scores and reports and makes recommendations based on data accordingly

Klarna

Klarna offers safe and easy-to-use payment solutions to e-stores with the ambition to make e-commerce safer, simpler, and more fun.

LendUp

LendUp’s mission is to provide anyone with a path to better financial health. Through its proprietary software, it designs safe, transparent products that expand access, lower costs, and provide credit building opportunities for the population of Americans who currently have limited options within the traditional banking system because of low credit scores and income volatility.

Roofstock

Roofstock runs an online marketplace where retail and institutional investors can buy and sell homes in the United States occuped by renters.

The entire Fintech 250 list and report is available here.

Australia

New giants Afterpay and Revolut are redefining trust for the fintech generation (Australian Financial Review) Rated: AAA

More than 500 fintech aficionados hit the swanky Peninsula event space in Melbourne’s Docklands last week for the third annual Intersekt festival.

The three-day shindig, organised by FinTech Australia, debated topics such as how start-ups can capitalise on the loss of trust in incumbent institutions (exacerbated by the banking royal commission); and the extraordinary rise of “neobanks” around the world.

Anthony Eisen, co-founder of local payments star Afterpay, and Chad West, the marketing head of globally focused neobank Revolut, explained how they have lured customers by reinventing traditional fee models.

Unexpected expenses hit many of us, so here’s how to handle them (News) Rated: A

LARGE unexpected expenses are hitting the household budgets of two-thirds of Australians, and many are resorting to dangerously expensive credit cards to get themselves out of a financial jam.

Cars are the biggest cause of unpleasant financial surprises, according to new research by marketplace lender SocietyOne, followed by travel costs and medical bills.

The lender’s When ‘It’ Happens report reveals that 40 per cent of people would cover unexpected costs by borrowing money from family and friends, almost 20 per cent would add the expense to their mortgage, 31 per cent would sell stuff, and 28 per cent would take on extra credit card debt.

Asia

21 Remarkable Fintech Founders Under 35 in Southeast Asia (Fintech Singapore) Rated: AAA

Iwan Kurniawan, 28, Indonesia; Reynold Wijaya, 29, Indonesia Co-Founder, Modalku

Together with Kelvin Teo, Iwan Kurniawan and Reynold Wijaya founded Indonesia-based Modalku, called Funding Societies in its sister operations in Singapore and Malaysia, a peer-to-peer (P2P) digital lending platform that connects cash-strapped SMEs with lenders. The startup is backed by Sequoia, Softbank Ventures Korea, and Alpha JWC Ventures, and recently passed the US$110 million mark through more 3,000 loans to businesses in the region.

Rachel De Villa, 25, Philippines  Founder and CTO, Cropital

Rachel De Villa is the co-founder and CTO of Cropital, a crowdfunding platform that helps finance local Filipino farmers. Established in 2015, Cropital aims to improve the income and productivity of farmers through crowdfunding, providing scalable and sustainable financing. Through Cropital’s online platform, investors choose a farm or farms to invest in. Cropital manages the fund for the farmer making sure it goes to the right resources, assuring as well that investors will get a return on investment.

Abraham Viktor, 25, Indonesia  Co-Founder and CEO, Taralite

Abraham Viktor is the co-founder and CEO of Taralite, a P2P lending platform. Taralite’s loans are issued by financial institutions other than banks, also known as multi-financers, which allows it to reduce the interest rate up to 2% and extend the loan period of up to three years. The platform accepts houses, cars or motorcycles as collateral. Founded in January 2015 as Wedlite, Taralite graduated from startup incubator program Global Entrepreneurship Programme Indonesia (GEPI) in November 2015. Previously, Viktor was an investment banking analyst, first with Boston Consulting Group and later at Nomura investment banking.

Mohamed Abbas, 27, Singapore Co-Founder, Rely

Mohamed Abbas is a tech entrepreneur and the co-founder of Rely, a startup that enables online shoppers to shop and pay for their purchases by splitting their cost into manageable monthly payments, interest-free. Abbas is also the co-founder of Onelyst, an online marketplace that helps users from lower-income brackets compare loan rates across different licensed moneylenders. The website allows users to find loans for different purposes, such as medical or rental expenses, and produces a list of personalized options in minutes.

Gov’t To Launch Crowdfunding Platform To Help Home Buyers (Property Guru) Rated: A

The federal government announced during the tabling of Budget 2019 on Friday (2 November) that it will introduce a “property crowdfunding” platform by Q1 2019 to help Malaysians buying their first homes, reported Bernama.

On Sunday (4 November), Prime Minister Tun Dr Mahathir Mohamad said the scheme is the first of its kind in the world, and will enable people to buy a home as long as they can a pay the 20 percent down payment, which can be financed via savings, debts or withdrawals from their Employee Provident Fund (EPF) account. The remaining 80 percent will be funded by investors via peer-to-peer lending supervised by the Securities Commission.

Dubbed as FundMyHome.com, the property crowdfunding platform is expected to help the Pakatan Harapan administration fulfil its election promise of one million low-cost housing within 10 years.

Malaysia teams up with The Edge on property financing portal (Tech in Asia) Rated: B

CIMB and Maybank are the participating institutions that will contribute towards the externally funded 80-percent portion of the house price, with more expected to sign up in the future.

The site – developed by finance and real estate media platform The Edge – will list about 1,000 homes costing less than US$120,000 during the first phase of its rollout. All properties listed will be completed or near completion, and buyers looking for rental income will be allowed to “buy to rent” through the portal.

Authors:

George Popescu
Allen Taylor

Thursday May 25 2017, Daily News Digest

P2P global investments

News Comments Today’s main news: Investors pressure OnDeck to make bigger expense cuts. LendingClub celebrates 10 years in business. Zopa launches ISA. Earnest is not for sale, after all. Orca to launch new P2P rating service. Moody’ downgrades China on debt risk. The first ETF for ABS. Today’s main analysis: Orchard Platform reports Q1 results. Today’s thought-provoking articles: 10 years of excellence […]

P2P global investments

News Comments

United States

United Kingdom

China

  • Moody’s downgrades China on debt risk. GP:”Unclear if this will have a real effect on the capital markets but it will certainly anger the Chinese government. If I were the Chinese government I would setup my own rating agency and build it into a real credible agency and not a government puppet so that the day when I need my own rating agency to maybe skew a little bit the ratings it will be credible enough.”
  • Chinese investors among majority of EB-5 visa recipients. AT: “It’s not surprising. One reason cited in this story is the harsh treatment offered to Christians by the Chinese government, so many of these families are using financial concerns as a cover up for religious oppression concerns. Both are legitimate.”

European Union

International

Australia

India

Asia

Middle East

News Summary

United States

OnDeck under pressure to make bigger cuts to cost base (Financial Times), Rated: AAA

Activist investors are turning up the heat on OnDeck, the online lender, which said this month it would curb originations and cut costs in an attempt to turn a profit by the end of the year.

The company still needed to think bigger, according to Mario Cibelli, managing partner at Marathon Partners Equity Management, who wrote to board members in April urging them to take an axe to the $194m annual cost base and explore a sale of the business. Net revenues, after loan-loss provisions and funding costs, came to $109m last year.

Pressure on OnDeck is likely to come from other quarters too. EJF Capital, an activist investor, has built a stake equivalent to about 9 per cent of the shares outstanding since the turn of the year, according to disclosures tallied by Bloomberg. In February the Arlington, Virginia-based group, which ranks as OnDeck’s second-largest shareholder with more than 9 per cent, said it may seek talks with management.

LendingClub Celebrates Ten Years of Online Lending (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC), the largest marketplace lender in the US, is celebrating its tenth anniversary. It is pretty hard to believe that LendingClub is now ten years old.

To paraphrase the LendingClub history:

  • Within the first 100 days of its existence, LendingClub originated its first $1 million in loan. The average interest rate, at that time, stood at 12.6%. By the end of 2007,  LendingClub had originated about 500 loans for a total of $3.5 million.
  • In 2010, LendingClub originated $10 million in a single month.
  • By 2012, LendingClub has originated $1 billion loans as institutional money becomes more interested in the Fintech platform. The following year, the first banks start investing on the LendingClub platform.
  • In 2014 Lending Club launched its IPO – the second largest for the year.
  • By 2017, LendingClub has originated more than $26 billion in loans as it enters the next decade of financial innovation.

10 Years of Excellence & Innovation (LendingClub), Rated: AAA

  • 2007 By August, the LendingClub website launches. By year’s end, approximately 500 loans worth over $3.5 million are made. 
  • 2008 The subprime mortgage crisis spreads; global markets sell off and the Great Recession takes hold. Despite the chaos and potential risk of halting its burgeoning business, LendingClub demonstrates its commitment to working with regulators, entering a six-month quiet period to register with the SEC and prepare to issue a security (the Note) that can be offered and sold to investors through its website.
  • 2009 LendingClub continues to stay focused on the opportunity to deliver investment alternatives to investors and introduces LendingClub IRAs to allow investors to use the platform to work toward their retirement goals.
  • 2010 Propelled by its SEC registered Notes and a robust investor base, LendingClub crosses $100 million in loans and 10,000 borrowers in the first quarter. By March, the company captures 79% of the U.S. marketplace lending market after facilitating $8,664,750 in monthly loan originations.
  • 2011 LendingClub continues to innovate on its borrower and investor offerings, surpassing $200 million in loans for borrowers at the beginning of the year. 
  • 2012 In 2012 alone, U.S. banks close 2,267 branches and approve a record-low 14.8% of small business loan requests. LendingClub is named to the World Economic Forum’s Technology Pioneers 2012 list and originations top $1 billion.
  • 2013 LendingClub welcomes its first bank investor partners to the platform – Titan Bank and Congressional Bank.
  • 2014 A big year for tech IPOs, LendingClub is one of the biggest of the year, coming in second to Alibaba and listed on the NYSE alongside others, including Virgin America and GoPro.
  • 2015 Big banks continue to cut back on loans to small businesses, making it difficult for them to get access to credit. LendingClub becomes a founding member of the Small Business Borrower’s Bill of Rights and expands small business products to include a small business line of credit. 
  • 2016 LendingClub launches its auto refinance product, delivering a lower-cost alternative to car owners. 
  • 2017 LendingClub looks toward a new decade of financial innovation, leveraging the power of its marketplace model to deliver more value to both borrowers and investors. An investor mobile application is launched, making it easier than ever for retail investors to track their progress.

Thank you for 10 years (LendingClub Email), Rated: AAA

From the LendingClub newsletter:

Over the past 10 years, you have helped power the loans facilitated by LendingClub’s platform for borrowers looking to finance their financial lives. Together, we have helped nearly 2 million borrowers access affordable credit. That means we’ve helped finance debt consolidation, home improvement projects, medical expenses and weddings for millions of people in the United States.

  • More than 160,000 retail investors have gotten unprecedented access to invest in consumer credit through LendingClub’s platform
  • Nearly 2 million borrowers have gotten access to affordable credit through LendingClub’s marketplace
  • 98% of investors who invest in 100+ Notes of relatively equal size have seen positive returns
  • 1,700 loans are reviewed per day, and more than 50,800 loans per month
  • Loans receive full commitment in 3-4 days on average
  • Auto refinance customers saved an average of $1,500
  • Borrowers pay 24% lower in interest than they were paying on their outstanding debt or credit cards
  • 73% of borrowers experience a FICO score increase three months after obtaining their loan–with an average score increase of 28 points!

Consumer Unsecured Q1 2017 (Orchard Platform), Rated: AAA

Key Insights

  • Origination volume increased in Q1, continuing the trend that began last quarter. Q1 origination volume was up 4.6% from Q4, though still down 44% from Q4 2015, when the market reached its highest originations. Early indications in 2017 are that investor sentiment is improving, and we believe we’re likely to see increased investment over the next quarter.
  • 2014 and 2015 vintage charge-offs have increased more steeply than in prior years. We believe there are two main sources driving this increase. First, individual platforms have shown increasing charge-offs during these years. We do not have strong evidence of the reasons for this deterioration, but in recent months, some of the larger platforms have reworked their credit models which they believe should address the increases they have seen. Second, and also important to note, is that 2014 and 2015 vintages experienced substantial growth in subprime originations, which tend to charge-off at higher rates. The increase in subprime loans as a percentage of the overall market skews the results for recent years upward when compared with the originations from previous years that had a smaller percentage of subprime loans.
  • Borrower rates rose slightly in Q1, increasing 24bps from Q4 levels. The long-term trend over the last three years has been decreasing interest rates, in part driven by the decline of subprime originations in the past year. This will be an interesting statistic to monitor in the coming year as the Fed continues to raise interest rates in line with their tightening policy.
Source: Orchard Platform Quarterly Industry Report
Source: Orchard Platform Quarterly Industry Report
Source: Orchard Platform Quarterly Industry Report

With an Asset-Backed Debt ETF, the Bet Is If You Can Pay What You Owe (Bloomberg), Rated: AAA

BlackRock Inc.’s planned iShares Consumer Asset-Backed Securities ETF will invest in notes supported by consumer loans, such as student debt and credit cards, according to a regulatory filing on Friday. If approved, it will be the first ETF to target the ABS market.

Consumer debt has ballooned in recent years as Americans ramp up borrowing and capitalize on historically low interest rates. Household debt topped $12.7 trillion in the first quarter, up 1.2 percent from the end of 2016. Signs of trouble are however brewing, with suspicions of fraud in some auto loan applications, a decline in credit-card recovery rates and an increase in late payments on private student loans.

The iShares MBS ETF has $10.6 billion under management while the iShares CMBS ETF oversees $240 million, data compiled by Bloomberg show.

Futuristic Fintech, With a Female Focus (WSJ), Rated: A

SCOTT SAUNDERS, CEO of the online lending company Payoff, did not set out to build a personalized financial coaching app for women. In 2014, he began assembling a team that eventually included a cognitive neuroscientist, a marketer, an advertising executive and the data scientist behind eHarmony’s match algorithm. The goal: to build an app that used psychological testing to match users of both genders with artificially intelligent financial coaches. By focusing on the intersection of money and psychology, Saunders hoped to minimize financial stress and maximize the pleasure users get from spending and saving.

Earnest Not for Sale. Securitization is Moving Forward (Crowdfund Insider), Rated: A

Last week, Crowdfund Insider referenced a report in Bloomberg that Earnest was looking for buyers as it struggled to raise new funds. A company representative has now stated that Earnest is not looking to sell the company.

Zibby Announces $ 13.5 Million Investment led by CURO Financial Technologies Corp. and MissionOG (LendIt), Rated: A

Zibby, the omnichannel lease‐to‐own payment option for online and in‐store shopping, today announced a $13.5 million investment led by CURO and MissionOG, with participation from Blumberg Capital, Tribeca Venture Partners and other institutional investors. This brings Zibby’stotal capital raised to more than $150 million. With the investment, Zibby will further expand its presence among retailers to offer non‐prime and near‐prime customers a monthly payment option for furniture, appliances, electronics and other consumer durables.

Baltimore fintech startup Blispay raises $ 12 million (Baltimore Sun), Rated: A

Blispay, a Baltimore-based financial technology company, has raised $12 million to accelerate the marketing and sales outreach for its financing platform.

The Series A round was led by FirstMark, Accomplice and NEA. New investors included Camden Partners and F-Prime Capital. The round brings the company’s total funding to just under $25 million.

Frost & Sullivan Commends AutoGravity for Transforming Automotive Financing Industry (Frost & Sullivan), Rated: A

Based on its recent analysis of the automotive financing industry, Frost & Sullivan recognizes AutoGravity with the 2017 North American Frost & Sullivan Entrepreneurial Company of the Year Award. AutoGravity’s first-of-its-kind FinTech platform empowers car buyers to browse any new or used car, get multiple binding financing offers in minutes and select the deal and lender that’s right for them. Just months after launching its native mobile app in the summer of 2016, AutoGravity introduced new car leasing and used car loan features with the aim of transforming the auto financing industry.

While simplifying the financing process for customers, AutoGravity’s app also saves dealers the effort of educating customers on various models and financing options. Additionally, it saves time by eliminating the need to apply for financing at the dealership and process pages of paperwork. Most significantly, it supports dealers by providing them with qualified, enthusiastic car buyers.

Currently, AutoGravity has 60+ employees, and has recorded 350,000 app downloads in just one year. It has expanded to 48 states in the United States and has on-boarded many of the nation’s top-20 automotive lenders, as well as 1,500+ dealers. Due to these successes and its ability to break new ground in the auto financing industry, Frost & Sullivan is pleased to present AutoGravity with the 2017 North American Entrepreneurial Company of the Year Award.

Fintech Tools That Can Change The World Of Finance (Forbes), Rated: A

According to an EY study last year, fintech is growing in popularity, with roughly 15.5% of digitally active consumers using financial tech products — a figure that was likely to double within 12 months. The United States had the second-highest adoption rate of fintech tools (16.5%), following Hong Kong with 29.1%.

  • 1. Artificial Intelligence – Fenergo deploys A.I. to analyze unstructured data, including social media, intracompany communication and linguistics in order to more effectively satisfy Know-Your-Customer and Anti-Money-Laundering requirements. – Jason LeeDailyPay
  • 2. Peer-To-Peer And Apple Pay 
  • 5. Riskalyze, RetireUp and Asset-Map – Riskalyze provides a user-friendly and client-facing software that allows us to tell the story of risk, which we believe is crucial for an investor to understand in order to have success. RetireUp, a user-friendly income planning tool, and Asset-Map offer very visual understandings to clients on where they stand when it comes to their finances. – Lance ScottBay Harbor Wealth Management
  • 7. PeerStreet And WorldRemit – Services like WorldRemit are empowering immigrants with better choice, security and transparency in sending money back home to their loved ones. – Binna KimVested
  • 8. Faster Payment Rails – Our old ACH network is improving. Instead of settling payments once per day, as it has for decades, it will start to settle multiple times per day. This will improve settlement success rates and prevent e-check kiting. Coming right behind this improvement are a number of real-time payment initiatives. – Charlie YouakimSezzle
  • 9. Decision Logic – I’m excited about Decision Logic because it provides lenders the ability to verify a borrower’s sensitive information and understand their borrower’s financial history. – Chad OtarExcel Capital Management, Inc.
  • 10. Peer-To-Peer Lending
  • 11. Robo-Advisers
  • 12. Greenlight – I just got my ten-year-old daughter a Greenlight card. It allows me to automate her allowance and potentially control the spaces where she spends money. – Matthew MayAcuity 

Fintech reinvents lottery bonds (Financial Times), Rated: A

Silicon Valley entrepreneurs have a knack for taking old things and making them look new. The latest example of which is Long Game, which TechCrunch tells us is “a bank account, with a twist”:

The personal finance app allows users to play games and win cash prizes up to $1 million. It may sound like a gimmick, but these are FDIC-insured accounts backed by Blue Ridge Bank in Virginia.

[…]

In addition to the possibilities of cash rewards, users accrue .1 percent interest. She hopes that participants will take saving seriously and view the games as a bonus.

While Long Game touts the $1 million prize possibility, so far the largest check they’ve written is $1,000. Like the actual lottery, it’s an odds-based game and the chances of the app making you a millionaire are 1 in 227 million.

Here is the GAO Report on Fintech that was Delivered to Congress (Crowdfund Insider), Rated: B

This one falls under recently discovered. The Government Accountability Office (GAO) published a report on Financial Technology, or Fintech, for Congress this past April.

The GAO explained;

“You asked us to provide information on the fintech industry, including the marketplace lending subsector, such as its structure and development over the last several years, as well as how federal regulators supervise fintech firms. This report, the first in a series of planned reports on fintech, describes four commonly referenced subsectors of fintech: marketplace lending; mobile payments; digital wealth management; and distributed ledger technology and their regulatory oversight.”

Ann Fulmer Joins FormFree as Chief Strategy and Industry Relations Officer (PR Newswire), Rated: A

FormFree today announced that it has hired mortgage loan quality subject matter expert and analyst Ann Fulmer as its chief strategy and industry relations officer. FormFree’s flagship product, AccountChek, is an asset verification app that streamlines the loan underwriting process for both borrowers and lenders, resulting in higher borrower satisfaction and shaving more than a week off the time it takes to close a loan.

In her role, Fulmer will drive FormFree’s strategic planning and implementation, manage the firm’s institutional relationships and interactions with federal and state regulators and oversee outreach to industry associations and advocacy groups. In addition, she will spearhead the firm’s long-term development of a comprehensive mortgage compliance solution.

New fiduciary rule for financial advisers expected to go into effect in June (Pittsburgh Post-Gazette), Rated: B

Secretary of Labor Alexander Acosta on Tuesday made it clear that the U.S. Department of Labor would not delay the implementation of the rule,  announcing the agency’s intentions in a Wall Street Journal opinion column.

Tuesday’s announcement that the rule is going forward may not be the end of the discussion.

How Small Businesses Can Benefit from Loyalty Programs (Kabbage), Rated: B

Almost all companies find that they have to spend less money to keep customers than they have to spend to attract new people through the door or to their shopping website. Some companies may access small business loans for their initial investment. They understand that they can benefit from this investment because it provides them with an efficient way to market. The extra profits will allow them to pay the loan back and keep more for themselves.

United Kingdom

Zopa announces ISA launch (Finextra), Rated: AAA

Zopa, the pioneering financial services company, announces today that it will launch its Innovative Finance ISAs in June (pending HMRC approval). With demand expected to be high, existing customers will be given priority access ahead of new customers.

In preparation for the Innovative Finance ISA, Zopa is also revamping its investor products by introducing Zopa Core and announcing the retirement of Zopa Access and Classic. Investors in Zopa Core will lend in the same risk markets as Access and Classic (A*-C) but will not be covered by the Safeguard fund. Zopa Core will offer a higher target return of 3.9% after fees and expected credit losses, as compared to 3.7% and 2.9% for Classic and Access.

The Innovative Finance ISA will be launched in four phases:
1. The first stage (from 15th June) will be focused on existing customers who want to open a new IFISA (limit of £20,000) and lend through Core and Plus.
2. The second stage (1st July 2017 to 31st July 2017) will enable existing customers to sell their current loans and re-purchase similar loans in an IFISA wrapper. This will allow investors to retain Safeguarded loans in the IFISA. Any investing through new lending, or relending as capital is returned, will be onto Plus or Core only.
3. The third stage (from August 2017, but dependent on meeting demand for new IFISAs) will allow existing customers to transfer existing ISA investments with other providers to Zopa.
4. And finally, once we have met demands of existing customers, we will welcome investments from new customers.

UK P2P Lending Market Researcher Orca Dives into P2P Provider Rating Services (Crowdfund Insider), Rated: AAA

Orca, an independent data, research and analysis providers on the UK P2P lending market has announced its plans to launch its own four-factor rating service for individual P2P providers, the Orca Rating. The rating will be designed in partnership with Dublin City University’s Irish Centre for Cloud Computing and Commerce research team, to respond to the growth of the asset class and the demand for more independent analysis and information on P2P lending.

The Orca rating will individually analyze four factors — performance, liquidity, operator health and security — aiming to go beyond existing single platform ratings and enable advisers and investors to assess all fundamental criteria at once when comparing and choosing P2P lending platforms.

According to Orca data, the P2P market has now surpassed £9B cumulative total lent with 2016 alone seeing a 40% increase in investment in the asset class.

P2P lender ArchOver granted full FCA authorisation (Finextra), Rated: A

ArchOver, the peer-to-peer (P2P) business lending platform, has secured full authorisation from the Financial Conduct Authority (FCA) to operate as a P2P lending platform (Article 36H).

Since launching in September 2014, ArchOver has facilitated over £35 million of investment over its platform, operating under interim permissions granted by the FCA. Full authorisation will support ArchOver in attracting new lenders to the platform and allow it to continue working with businesses to make access to funding as easy and simple as possible.

M&A hits Alternative Credit: MW Eaglewood to merge with Pollen Street Capital (AltFi), Rated: A

The respective managers of the £822m P2P Global Investments and the £200m HoneyComb investment trusts will merge, creating one of the largest specialist asset management  firms focused on non-bank lending.

MW Eaglewood and Pollen Street Capital, the respective two parties, are under discussion as to adjustments to their mandates but Lindsey McMurray, managing partner of Pollen Street, will become head of the new firm which will be called Pollen Street Capital.

P2P Global Investments is the largest closed-ended fund investing in non-bank lending in the UK, having launched three years ago. While, as its name suggests, it originally was a vehicle for exposure to the P2P and marketplace lending market it has moved more into niches within the alternative Credit spectrum in recent months.

Should more bridging lenders launch mobile apps? (Bridging&Commercial), Rated: A

Moving to an app-based approach is something that many players in the bridging industry would like to do sooner rather than later, according to LendInvest.

The comments follow the news that bridging lender Henley Finance will be releasing its first app on 1st June in order to make applying for finance easier.

Are FinTech brands a real alternative to traditional banking? (The River Group), Rated: A

Now, mobile banking has been a ‘thing’ for more than a decade and, according to research by ING, 55 per cent of us in the UK are managing our finances this way, with a further rise of 12 per cent expected this year.

Atom pitches itself as so customer-centric that you can personalise the app and actually choose the colours of the logo and how the name of your bank appears on your phone. Its tone is highly conversational, quirky without seeming unprofessional.

Atom pitches itself as so customer-centric that you can personalise the app and actually choose the colours of the logo and how the name of your bank appears on your phone. Its tone is highly conversational, quirky without seeming unprofessional.

Whereas traditional banks are still perceived as slow, Monzo demonstrates the speed of its technology.

Both businesses are inviting collaboration to help develop their services – Monzo through sharing its API so customers can build apps using their own data, and Atom through inviting members to join its community.

China

China Hit by First Moody’s Downgrade Since 1989 on Debt Risk (Bloomberg), Rated: AAA

Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth.

Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative.

Total outstanding credit climbed to about 260 percent of GDP by the end of 2016, up from 160 percent in 2008, according to Bloomberg Intelligence. At the same time, China’s external debt is low by international standards, at around 12 percent of gross domestic product, according to the International Monetary Fund, meaning that a downgrade isn’t likely to be as disruptive as it would be for nations more reliant on international funding.

While China’s debt risks have been swelling for years, the cut by Moody’s comes as some of those pressures ease. Nominal economic growth in the first quarter rose at the fastest pace since 2012 — 11.8 percent in current-price terms — making the problem of excess leverage a little more manageable, while the return of factory price inflation is beefing up profits for indebted state-owned industries, helping them service and repay loans.

Moody’s lowered China’s credit-rating outlook to negative from stable in March 2016, citing rising debt, falling currency reserves and uncertainty over authorities’ ability to carry out reforms. About a month later, S&P Global Ratings also warned that rising local debt was pressuring the nation’s rating.

S&P currently rates China’s foreign and local-currency long-term debt at AA- with a negative outlook, and Fitch places an A+ rating on both foreign and local currency long-term debt with a stable outlook.

Chinese Investors Among Majority Of EB-5 Visa Recipients (NPR), Rated: A

The EB-5 visa grants permanent U.S. residence to anyone investing a half million dollars in a U.S.-based development project. Eighty percent of EB-5 recipients are Chinese.

WANG: (Through interpreter) Actually, everyone I know has applied for EB-5s. We’re just ordinary people. We’re not wealthy.

WANG: (Through interpreter) I’m only doing this for my son’s education. He is in a good local school, but all they do is study for tests. The Chinese education system turns everyone into the same type of person.

European Union

Narrow Escape for German RECF, Green Crowdinvesting Now in Legislator’s Crosshairs (Crowdfund Insider), Rated: AAA

The Financial Committee therefore rejected the proposal to extend the prospectus exemption of crowdinvesting ‒which currently applies only to the suboptimal shareholder loans, to all securities, including equity shares. The committee also concluded against raising the threshold of fundraising requiring a prospectus from €2.5 million to €5 million, and in favor of keeping the crowdinvesting ceiling per project per retail investor at €1,000 (€10,000, if qualified investor).

On one issue, however, the German crowdfunding sector breathed a sigh of relief: the proposal made by credit institutions to exclude real estate crowdfunding from the KASG has been taken off the table.

The opponents to real estate crowdfunding had alleged that real estate should be excluded from the crowdfunding exemptions because real estate projects did not foster innovation, as projects in crowdfunding should, and because crowdfunding them could trigger to a real estate bubble. These arguments were successfully rebuffed.

Next to real estate, green Crowdinvesting is also a very successful branch of German crowdinvesting. Its most common form is the refinancing of existing renewable energy (photovoltaic, wind and bioenergy) plants through platforms such as fairzinsung, Greenvesting, GreenXmoney LeihDeinerUmweltGeld und Wiwin. The yield is guaranteed by feed-in tariffs. Other platforms, such as Bettervest, specialize in energy-efficiency projects. Several, such as ecoligo facilitate investments in renewable energy in developing countries. Many of the platforms are not only financial brokers between issuers and investors, they are also expert advisors, shareholders, or service operators for the issuers.

In the eyes of the legislator, human or capital ties between issuers and platforms pose a risk of conflict of interest and should be forbidden. According to the committee, a platform tied to an issuer would not be able to vet its projects with the necessary objectivity, hence would not properly defend the interests of the investors.

International

Ant Financial close to buying MoneyGram (New York Post), Rated: AAA

Chinese billionaire Jack Ma’s Ant Financial is moving closer to getting regulatory approval to buy MoneyGram, The Post has learned — despite concerns in Washington about money laundering.

“Ant and its advisers are working very constructively with [federal regulators]” to close the $1.2 billion MoneyGram acquisition, a source close to the situation said, referring to the Congressional Committee on Foreign Investment in the United States, or CFIUS, which must approve the transaction as it involves a major foreign investment in a company in a key business sector.

Shareholders of Dallas-based MoneyGram, a money-transfer company, approved the sale to Ant for $18 a share on May 16.

How to Make it as a Woman in FinTech: “Don’t Wait to Become a Leader” (Finovate), Rated: A

Adding to our stellar line up of leading women in FinTech, we speak to Alex Foster about how she has become Head of Insurance & Finance Sector & Post Trade Services at BT, and what she would suggest if you were just starting out as a woman in tech.

What was your light bulb moment?

My light bulb moment came about four to five years ago, when I began working with bankers, some who were friends, leaving their traditional roles on the trading floor to create new and exciting FinTech, RegTech, and InsurTech companies. As we know, these start-ups are a growing source of innovation in the financial markets industry.  But their small size can create challenges around market adoption, delivery and meeting the stringent contractual or compliance expectations of large financial institutions. We started to work with these companies to help them scale-up to obtain a global reach. I realised the monumental impact that these technologies and FinTech firms could achieve when the right partnerships are in place.

Peter Leonidou Parts Ways with Leverate to Head Early-Stage Fintech Firm (Finance Magnates), Rated: B

Leverate, a technology provider specializing in brokerage solutions for the financial services industry, has parted ways with its Head of B2B Sales Peter Leonidou, who ends a two-year tenure with the technology provider, Finance Magnates has learned.

Peter leaves Leverate to join PROTECHFX LTD, a fintech startup, which according to its website is just starting out on its journey, or at best still operating in its early stages.

Australia

FinTechs Afterpay, Ratesetter and Society One pick up Finnie awards (Mozo), Rated: AAA

The winners of FinTech Australia’s inaugural Finnie Awards have been announced, with familiar names Afterpay, Ratesetter and SocietyOne among them.

The awards were handed out across 17 categories, including workplace diversity, insurtech and peer-to-peer lending, to recognise innovation and excellence in the FinTech space.

Online lender RateSetter was a finalist for the FinTech of the Year award, and also successfully took out two spots, for Excellence in both consumer and business lending. These awards were both focused on “outstanding B2B lending results through innovative yet stable, sustainable operations.”

SocietyOne, another online challenger to the big banks, won for Excellence in Peer-to-peer Lending. The award recognised a peer-to-peer platform that showed stringent security measures, a strong market reputation, ease of application and competitive interest rates and loan terms.

India

Startup Insurance Company Acko General Insurance Raises $ 30M (IndianWeb2), Rated: A

Set-up by Varun Dua, previously founder of Coverfox, Acko General Insurance  has received it’s in principle regulatory clearance to launch a General Insurance business in India.

In a regulated business, Acko has raised $30mn, which in effect makes it one of the largest seed rounds for a startup in India.

Asia

The first Internet life insurance company and Thai life opened (STCN), Rated: AAA

Recently, the first domestic Internet life insurance company and Thai life officially opened. It is understood that the original vice president of insurance and property insurance Li Yuquan in the life of the ceremony was held. In August 2016 the Insurance Regulatory Commission to the peace and life of the preparation and approval, the general manager is the former deputy general manager of the sea life Wang Hao.

In January this year, Hetai Life Insurance was approved by the China Insurance Regulatory Commission. Registered capital of 1.5 billion yuan, registered in Jinan City, Shandong Province. The legal representative of the company Liu Xin.

Middle East

Dubai Regulator Launches Special Testing Licensing for Fintech Startups (Finance Magnates), Rated: A

The Dubai Financial Services Authority (DFSA) today released the details of its Innovation Testing Licence (ITL) which allows fintech firms to go through a special testing stage prior to their approval as fully operational firms.

Fintech operators will be able to use the ITL licence to test their products for a period of 6 to 12 months, which could be extended upon DFSA’s discretion.

Successful applicants will then be required to obtain a full financial services licence to continue formally operating. By contrast, fintech firms that fail to meet the outcomes detailed in the regulatory test plan will have to cease activities.

Authors:

George Popescu
Allen Taylor