Thursday January 11 2018, Daily News Digest

consumer loan mpl abs

News Comments Today’s main news: Vanguard’s robo-advisor passes $100B AUM. YieldStreet raises $113M. RateSetter, Funding Circle join FSB funding platform. Funding Circle looks at Autumn for flotation. ETHLend launches secondary blockchain partnership. Modalku hits $7.4M in total crowdfunding. Today’s main analysis: KBRA 2017 consumer loan marketplace lending year in review and 2018 outlook. Today’s thought-provoking articles: LendingTree survey: Survey takers […]

consumer loan mpl abs

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News Summary

United States

Vanguard’s Digital Advice Platform Is First to Pass $ 100B in AUM (Investopedia), Rated: AAA

Vanguard reached another milestone that should keep competing robo-advisors on their toes: it is the first firm to have a digital advice platform to surpass the $100 billion mark in terms of assets under management. And that comes with Vanguard having launched the service in 2015, just three years ago.

According to Stokes, 90% of the platform’s $101 billion in assets under management as of the end of 2017 are from existing clients. Vanguard’s assets under management beat those of Charles Schwab, which has $25 billion in assets under management for its Intelligent Portfolios, Institutional Intelligent Portfolios and Intelligent Advisory services, as well as Betterment’s $10 billion in assets, noted FinancialPlanning.

KBRA Releases 2017 Consumer Loan Marketplace Lending Year in Review and 2018 Outlook (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) released its 2017 Consumer Loan Marketplace Lending Year in Review and 2018 Outlook. The accompanying research report highlights the fact that 2017 was a notable year in the consumer loan marketplace lending (MPL) space in many respects. Total ABS issuance topped $7.8 billion in 2017, up from $4.6 billion in 2016, a year-over-year increase of 71%. SoFi led the way in 2017 in terms of number of ABS deals and total securitization volume, having completed six securitizations for $3.2 billion in total notes. Prosper completed three securitizations totaling $1.5 billion under their PMIT program followed by four deals from LendingClub’s prime and near prime shelves totaling $1.2 billion and three from Marlette’s MFT shelf totaling $919 million. Avant completed two securitizations totaling $480 million while Upstart issued its inaugural securitization in June 2017 followed by a subsequent deal in November. Investor demand strengthened with orders exceeded total deal size and a larger number of investors participated in the deals.

KBRA’s 2017 year in review and 2018 outlook provides:

  • KBRA’s outlook for 2018
  • Information behind the growth in the consumer MPL market
  • Detailed loan origination and ABS issuance volume by platform
  • Securitization performance and rating trends
  • Comparison of collateral characteristics, lending license arrangements platform servicing strategies and funding sources
  • Synopsis of legal and regulatory developments affecting the sector
  • Summary of significant equity raised by fintech companies

Read the full report here.

LendingTree Survey Reveals Optimistic Outlook for Personal Finances in 2018 (PR Newswire), Rated: AAA

LendingTree recently conducted an online survey among 1,025 Americans to gauge financial expectations, concerns and overall sentiment regarding personal finances for 2018. According to the results, two out of three Americans have an optimistic outlook for the year ahead, with millennials being even more optimistic.

According to the survey, almost half of Americans (45%) feel that 2017 was at least somewhat better than 2016 in terms of personal finances. Approximately one third (34%) earned more in 2017 than they did in 2016, 24 percent put more into savings in 2017 compared to 2016, and 21 percent improved their score over the past 12 months. However, only 16 percent reduced their total credit card debt, making debt reduction a priority in the year ahead.

Additional positive expectations for 2018 include:

  • 46% expect income to increase
  • 28% expect to pay off credit card debt
  • 35% plan to make and/or stick to a budget in 2018
  • 35% also expect to improve their credit score
  • 18% expect to save for a down payment on a house
  • 27% plan to build an emergency fund
  • 26% expect to save for a savings/purchase goal

To view the rest of the survey results, visit 

Spike in delinquency rate mars outlook for personal loans (American Banker), Rated: A

U.S. consumers are falling further behind on loans commonly used to consolidate debt, the latest sign that monthly payment burdens have become unsustainable for more households.

In the third quarter of 2017, 1.9% of all bank-issued personal loans were at least 30 days delinquent, according to data released Tuesday by the American Bankers Association. That was a notable jump from the second quarter, when the delinquency rate was 1.52%.

YieldStreet Raises $ 113 Million Financing Round to Disrupt Alternative Investing (BusinessWire), Rated: AAA

YieldStreet, the alternative investment platform working to change the way wealth is created, today announced that it has closed a $113 million financing round. The round includes $12.8 million of Series A equity financing co-led by Greycroft and Raine Ventures, as well as a revolving credit facility of $100 million from a New York based family office (the “Family Office”). Additional equity investors include Saturn Ventures, Expansion Venture Capital, the Family Office and FJ Labs.

The equity capital will help enable YieldStreet to accelerate the transformation of wealth creation by investing in further product innovation and growing its loyal community of investors. The raise comes as YieldStreet reached a tipping point in 2017, almost tripling prior year originations and surpassing $250 million raised by retail investors at the end of the year.

Alan Patricof, co-founder of Greycroft and one of the pioneers of modern private equity as the founder of Apax Partners, will join the YieldStreet advisory board. Ian Sigalow of Greycroft, Gordon Rubenstein of Raine Ventures and a representative from the Family Office will join YieldStreet’s board.

It’s Time to Talk About Alternative Assets (ThinkAdvisor), Rated: A

While many high-net-worth investors get advice from friends, family and sources on the internet, the majority — 72% — rely on financial professionals such as their advisors for investment information, according to research by Millennium Trust. In fact, financial professionals are over three times more relied on and trusted than the next trusted investment source: 51% of HNW investors trust financial professionals more than competing sources, including family, which is the most trusted source for only 13% of investors.

When advisors discuss potential investments with clients, they often focus on traditional options like stocks, bonds and mutual funds. As our research shows, however, many HNW investors are interested in alternative investments, such as hedge funds, private equity, real estate, commodities, marketplace lending and crowdfunding.

For example, 63% are moderately or extremely interested in investing in real estate and 46% report the same level of interest in private equity. But when it comes to discussing those investments with their broker or advisor, the numbers are significantly lower: Just 25% have discussed residential rental properties, 20% commercial rental properties, 23% real estate investment trusts, and 27% real estate limited partnerships, whereas 38% have discussed private equity.

Ryan Feit, CEO of SeedInvest, Updates on 2017 Progress & Crowdcube Partnership (Crowdfund Insider), Rated: A

SeedInvest is one of the most selective investment crowdfunding platforms in the US.

Today, SeedInvest is a full stack platform allowing companies the ability to sell securities under each of these exemptions.

How were your numbers for 2017? Can you share some top line detail?

Ryan Feit: We had another record year at SeedInvest.  We invested around $50 million into startups during 2017 (more than in our prior four years combined).  By our calculations we did at least twice as much investment volume as the next largest US-based equity crowdfunding platform that is open to all investors.

During 2017, what were some of the highlights for SeedInvest?

Ryan Feit: Here are a few additional highlights for 2017:

  • HelloMD completed the largest Regulation CF Side-by-Side round fundraise in history, raising $3 million.
  • Knightscope completed the largest pure Equity Crowdfunding round in history, raising $20 million.
  • We launched Auto Invest to help investors easily diversify in up to 25 startups and so far, 470 investors have made 3,300 auto investments into startups.
  • We launched LIVE Fundraising at events around the world and through our partnerships with LAUNCH Festival/Scale and
  • TechCrunch Disrupt, $10 million was raised from 5,800 people on SeedInvest.
  • SeedInvest had 14,000 startups apply to raise capital (vs. 1,500 in 2015).
  • SeedInvest had 2.5 million site visitors (vs. 400k in 2015).
  • SeedInvest processed 20,000 investments (vs. just 275 in 2015!).

Petal Card Raises $ 13M Led by Thiel’s VC Firm (Bank Innovation), Rated: A

Petal, the card designed to serve the credit invisible, has raised $13 million in funding that it will use to double its employees as the young startup tries to meet the demand of its growing user-base.

The Series A funding round was led by Peter Thiel’s VC firm, Valar Ventures.

U.S. News & World Report Names LendingPoint One of 2017’s Best Personal Loan Companies (BusinessWire), Rated: A

LendingPoint, the company working to revolutionize access to consumer credit, was named one of nation’s six best personal loan companies by U.S. News & World Report.

The media company evaluated personal loan companies in five key areas, reviewing data on eligibility, loan terms, fees, repayment methods and additional features. LendingPoint was cited as 2017’s top lender for people with fair to good credit, who have merit-based qualifications beyond FICO scores that make them worthy loan candidates.

Alkami raises $ 70 million for mobile banking software (TechCrunch), Rated: A

Plano-based Alkami has developed a white label service that credit unions and banks use across digital platforms.

And Alkami’s 4.5 million users have generated enough revenue for the company to justify a $70 million Series D round, led by General Atlantic, with participation from MissionOG. Existing investors include S3 Ventures and Argonaut Private Equity.

Chase Partners with AutoFi to Deliver Digital Car-Buying for Dealerships across the Country (BusinessWire), Rated: A

Chase announced today a partnership with AutoFi, a financial technology company that helps customers select and finance vehicles through their automotive dealers’ website and reduce the time it takes to complete the sale. Chase is the first national bank on the AutoFi platform.

The AutoFi digital retailing platform connects dealers with buyers and lenders. Chase will deliver financing terms online through the AutoFi platform, often within seconds.

Nearly half of consumers want to purchase and finance vehicles online, Chase’s research has found.

CECL compliance dragging small banks toward automation (American Banker), Rated: A

Like many small-to-midsize banks, Bank Independent in Sheffield, Ala., calculated its monthly allowance for loan and lease losses the hard way: setting aside a week every month to complete a largely manual, Excel-based model.

Download Your Guide to LendItFintech USA (LendIt), Rated: B

Discover who attends, why you should attend, andmore.

Ascentium Capital Exceeds $ 1 Billion in Funded Volume During Fiscal Year 2017 (Ascentium Capital), Rated: B

Ascentium Capital LLC, the nation’s largest private-independent finance company, announced it surpassed $1 billion in annual funded volume for the first time in the organization’s history.

 

Real estate investing startup Cadre partners with Goldman Sachs (Reuters), Rated: A

New York-based real estate investment company Cadre has partnered with Goldman Sachs Group Inc (GS.N) to allow the bank’s private wealth management clients to invest through the startup’s platform.

Goldman Sachs clients have committed to investing $250 million in properties through Cadre’s platform so far, the companies said on Wednesday.

Better Saves Homeowners $ 2.7 Million in Mortgage Refinancing Costs in 2017 (Better Email), Rated: A

PeerStreet: A Group Of Surfers Out To Revolutionize Real Estate Investing (Benzinga), Rated: A

PeerStreet is an investment platform that enables accredited investors to easily invest in high-yield, short term, real estate backed loans. PeerStreet sources its loans from non-bank lenders across the nation. They underwrite both the lenders and the loans using advanced algorithms, big-data analytics, manual processes and on-the-ground due diligence to filter and select high quality loans.

Who are your investors, if any?

Our investors include: Andreessen Horowitz, Felicis Ventures, Rembrandt Venture Partners, Montage Ventures, ThomVest, The Kaiser Family Foundation, Colchis Capital, Toba Capital, Le Frak, and many notable individual investors including Dr. Michael Burry, Adam Nash, Ron Suber, D. A. Wallach, etc.

Is there anything else Benzinga should know about your company?

PeerStreet is entrenched in the financial technology and lending industries at large. PeerStreet has been named by American Banker as one of the “Best Places to Work in Financial Technology” in 2018 and one of the “10 Best Startups in Los Angeles” in 2017 by Zippia. PeerStreet is a member of the Marketplace Lending Association and has partnerships with over 150 private residential real estate lenders in over 30 states.

Q&A With Chief Investment Officer Chris Fraley (RealtyMogul), Rated: A

Q: How do you intend to translate your experience from Rockwood Capital to your role at RealtyMogul?

In 2018, I see RealtyMogul expanding the size of its investment transactions, something I have direct experience in managing and find very exciting. I believe RealtyMogul is entering its third phase of growth as a business, evidenced by its recent acquisition of Serendipity Apartments this past September. Due to the ability to invest larger amounts of equity, we were able to maintain a majority, controlling interest in a $24M apartment community. While providing opportunities in preferred equity, mezzanine debt and smaller, passive limited partner interests will still be a critical aspect of our business, I’m hopeful that our real estate team’s substantial institutional background will help us acquire and successfully manage properties with larger transaction values.

Q: Do you think RealtyMogul will impact the traditional institutional investing model?

Absolutely. The institutional world is already starting to sign on to the concept of direct investing because the typical closed end fund model is broken, inefficient and fraught with possibility of misalignment of interests.

Surprisingly, most institutional investors do not want to invest in value add real estate investments in the bottom of a cycle until there is clear evidence of a market recovery. This was evident in the last downturn by the paucity of institutional allocations to value add strategies in the 2008-2012 timeframe. When the market starts to recover, institutional investors should start to make allocations. This may take a year or two. They lock up allocations with 3-4 year investment periods, oftentimes at the peak of cycle. Now is a perfect example of this disconnect.

Direct investment platforms allow investors to move in and out of market more efficiently and avoid an extra layer of fees to the investor. I believe this is the future of our industry and RealtyMogul is poised to lead.

RealtyMogul Hires New Chief People Officer (RealtyMogul), Rated: B

RealtyMogul, a unique commercial real estate private markets investing platform, today announced the addition of Soley Van Lokeren as Chief People Officer.

Stressing About When And How To Pay Your Debts? Pefin’s AI Assistant Is Here To Help (Benzinga), Rated: A

Pefin is the world’s first Artificial Intelligence (AI) financial advisor. The platform provides intelligent, unbiased and personalized financial planning and advice. Pefin’s mission is to look after the financial best interests of users in a way that embraces the unique individuality of their lives.

The platform offers:

  • 1. Long-term Financial Planning services, including a complete Financial Plan
  • 2. Financial Advice, including savings and debt management strategies
  • 3. Investment Advice and Portfolio Management Services
  • 4. Real-time monitoring, updates, and curated financial literacy content for each user

Tech advances force advisers to adjust — or else (ROI-NJ), Rated: A

There’s a machine-versus-human calculus that’s going on in the world of money management.

It may not yet be that more financial advice is provided by machines than humans, but to say the industry is on that path isn’t hyperbole. Investors themselves — particularly those of a younger demographic — have shown they are willing to trust a robot for advice.

John Babcock, president of Peapack-Gladstone Bank’s private wealth management division, sides with the humans, but understands automation is quickly changing the face of his business.

ProShares and VanEck are withdrawing their requests for bitcoin ETFs (Business Insider), Rated: A

Two financial services giants — ProShares and VanEck — are withdrawing requests to the Securities and Exchange Commission to list bitcoin ETFs.

 

US Banks Rely on Fintech Firms to Overcome Legacy Systems (Payments Journal), Rated: A

Legacy systems are preventing nearly two thirds (64%) of US commercial banks from developing Fintech applications, research commissioned by Fintech provider Fraedom has revealed.

Interestingly, 82% of the respondents that highlighted this concern were shareholders. Over half of those polled also noted a lack of expertise within banks as an important concern (56%), just ahead of limited resources (53%).

Commercial banks outsourcing services to a Fintech provider is clearly a trend on the rise, with only 22% of US banks revealing that they do not outsource any payment services compared to 30% of their UK counterparts.

How a Fintech Startup Aims to Take the Fear Out of Investing (Wharton), Rated: A

Riskalyze CEO Aaron Klein talks to former Wharton visiting professor Vinay Nair about his startup’s business model and path to growth.

Nair: Can you give us a sense of what your Risk Number model is and why advisors are attracted to it?

Klein: We built the technology on top of the academic framework that won the Nobel Prize for economics in 2002 — Daniel Kahneman and Amos Tversky’s work on prospect theory. We had a team of academics do a deep dive into the methodology and they said, ‘On the one hand, there are a lot of novel things in what you’ve done. On the other hand, a lot of what you’ve done is taken stuff that we’ve been working on in the labs for 15 years to 20 years and figured out a way to make it commercially viable and understandable by the average human.’

Listen to the podcast here.

Can taking out a loan be a good experience? (WGN Radio), Rated: A

Kabbage has enough experience with small businesses to say providing loans to small businesses can make for a good experience. John Parise is the Head of Customer and Partner Marketing and has been following company journeys for years now. His way of making loans a positive experience is by offering flexibility.

Listen to the podcast.

Fintech Startup Apruve Partners With MSTS For Credit Card Alternative (Benzinga), Rated: B

B2B fintech companies MSTS and Apruve announced Wednesday a payment process obviating the need to leverage capital and resources to provide credit and payment terms.

The new service enables automated instant credit approval, buyer onboarding, billing, customer service and collections services while allowing business clients to eschew the high transaction fees of credit cards.

4 of the 5 Biggest IPOs in 2017 Bombed. Here’s Who Won (Madison), Rated: B

The number of companies going public in 2017 surged 52% over the year ago period, hitting 160 deals, with the proceeds from the IPOs reaching $35.6 billion, double the amount in 2016, according to an analysis by Renaissance Capital.

5. Qudian (down 47.8%)

United Kingdom

RateSetter and Funding Circle added to FSB Funding Platform (P2P Finance News), Rated: AAA

RATESETTER, Funding Circle and Assetz Capital are some of the peer-to-peer lenders that have been included on the Federation of Small Businesses’ (FSB) new business funding platform.

The FSB Funding Platform, developed by Finpoint, matches potential borrowers with more than 100 lenders through the use of Artificial Intelligence (AI).

FSB launches AI-led business finance aggregator (P2P Finance News), Rated: A

THE FEDERATION of Small Businesses (FSB) has launched a new business finance aggregator that uses Artificial Intelligence (AI) to match potential borrowers with more than 100 lenders.

The trade body unveiled the FSB Funding Platform on Wednesday, after it was trialled on FSB members in three UK regions.

The new platform has been developed for the FSB by Finpoint and is regulated by the Financial Conduct Authority.

Funding Circle eyes autumn flotation, report claims (The Digital Banking Club), Rated: AAA

UK peer-to-peer lender Funding Circle is set to hire investment advisers as part of preparations to float on the London Stock Exchange.

UK Businesses Enter 2018 Vulnerable to Economic Shocks (CL News), Rated: A

These are unpredictable times for the UK economy. The great financial crisis remains fresh in the memory of business owners and its effects are still being seen in the form of relatively low wages growth and lagging productivity. Meanwhile, the ongoing talks on Britain’s future relationship with the European Union are a reminder that the future too is uncertain. Against this backdrop, a significant number of Britain’s SMEs are acutely vulnerable to any downturn in trade, according to a survey by the business lender, Nucleus Commercial Finance.

Small business owners were more or less evenly split on the question of whether the UK should remain in Europe, but as the survey indicates, the possibility that current trade talks will lead to a poor outcome is now a major concern,  trumping both the possibility of another major financial crash or the threat of digital attack by hackers.

And almost half of the businesses taking part in the survey said they are financially exposed to any event that impacts on trade, with 47% admitting they wouldn’t last a month on the basis of their current cash reserves. 30% said they wouldn’t last two weeks.

After 2017’s European Brexodus companies want to know the UK is open for business (Verdict), Rated: A

The first Morgan McKinley London employment monitor of the new year has revealed a 37 percent decrease in jobs available year-on-year while there are 30 percent fewer people seeking jobs in the capital.

Month-on-month there was a 52 percent decrease in jobs available, while the number of people seeking jobs in London fell by 40 percent.

China

WeChat shows messaging is the future of financial services ‘platforms’ (Tearsheet), Rated: AAA

WeChat could be the next big broker-dealer among high-net-worth Chinese investors.

Its parent company, Tencent, now has a license that allows it to sell mutual funds on WeChat and give the popular messaging app’s 980 million users more options to help boost funds sold on the platform. It also gives Tencent more sway in deciding which financial products third-party companies can sell on its different platforms.

WeChat is showing that messaging channels, at least in China, are where people like making financial transactions.

European Union

Berlin-based FinTech startup Penta accuses TransferWise to have stolen its debit card branding (EU Startups), Rated: A

The London-based FinTech giant TransferWise just announced its borderless current account, which enables users to spend money in a choice of up to 28 foreign currrencies with a debit card. Tranferwise’s choice of a neon green colour for its first debit card was met with anger by Berlin-based SME challenger bank Penta, which turned to Twitter to express its anger at the striking resemblance to its own neon green card.

Looking at the two card designs, you’ll notice that it’s really just about the colour, and chances are high, that TransferWise picked the similar colour “by accident”.

International

Crypto P2P lender ETHLend launches secondary blockchain partnership (P2P Finance News), Rated: AAA

CRYPTO-BACKED peer-to-peer lending platform ETHLend has partnered with a technology provider to help record and store transactions more securely.

ETHLend, founded by Finland-based Stani Kulechov, is a P2P lending platform funding business and personal loans in the Ethereum digital currency.

Central banks are experimenting with blockchain technology — here’s why (Business Insider), Rated: A

So, blockchain can be quite resilient, it can also be a way to create greater transparency into central banking, more credibility because of the rules a blockchain-based system enforces.

Blockchain based BABB Kicks Off Initial Coin Offering to Create the “World Bank for the Micro Economy” (Crowdfund Insider), Rated: A

BABB, a banking platform based on Blockchain based in London, is launching its initial coin offering (ICO) on January 15th with a pre-sale. The general token sale of BAX will commence immediately following the pre-sale seeking to raise a hard cap of USD $20 million. Once their app is live, BAX will be used to pay for services, fees and licensing costs; so if an individual or business wants to use a BABB account, they will use BAX to pay for it. BAX tokens can also be used for other services.

The money raised by the ICO will be used for BABB to deliver: a smartphone app with bank account capability and international money transfer functionality; a European banking license in the appropriate jurisdiction for their go-to market strategy; and a partnership with a leading retail or central bank in an emerging market, to open corridors for international transactions.

Finova’s FNVA to Become the First Equity-linked Token (BTCManager), Rated: A

Finova Financial is growing as a trusted online lender enabling people to access affordable loans quickly. The platform is recognized as part of the “Fintech 100 list of the world’s leading financial technology innovators for 2016.”

Finova’s FNVA tokens are unique because these tokens are linked with a share of equity in Finova Financial itself. Also, it utilizes the ERC-20 Ethereum token standard that will be traded on cryptocurrency exchanges that are SEC approved and has the backing of assets of a US corporation. Therefore, the token sale is like a hybrid between an ICO and IPO.

These tokens will soon be available through FrontFundr investment platform.

The token price structure of the sale is displayed below, where the price will increase over time. A total of $18.5 million worth of tokens will be sold, on a sliding scale between $0.75 and $1.56 as the supply of FNVA increases.

 

Source: BTCManager
Australia/New Zealand

Auswide Bank sells stake in MoneyPlace, only two years after investing in online lender (The Courier Mail), Rated: AAA

BUNDABERG-based bank Auswide is offloading its 62 per cent stake in online lender MoneyPlace only two years after making an investment to “take a position” in the hi-tech sector.

Mom and pop investors fleeing property rental business (Scoop), Rated: A

Increasing numbers of mom and pop landlords are contemplating giving up on property investment and exploring alternative investments due to reasons such as the increasing pressure they feel from what can be a capital-intensive investment, changes to the legal environment (such as the Healthy Homes Guarantee Act 2017) and fears of how methamphetamine contamination could ruin their retirement planning.

CEO of New Zealand’s largest peer-to-peer mortgage lender Southern Cross Partners, Luke Jackson, says a string of inquiries about alternative investment options that don’t stray too far from property have been received by his team in recent weeks.

India

Existing NBFC cannot operate as peer-to-peer lender (IIFL), Rated: AAA

The Reserve Bank of India (RBI) notified that existing non-banking financial companies cannot operate as peer-to-peer lenders. Further, new applicants for peer-to-peer lending license will need to provide the list of promoters and the source of funds for the minimum capital requirement of Rs20mn, the regulator said.

RBI further clarified that electronic platforms that assist only banks, non-banking financial companies and other regulated financial institutions to identify borrowers for lending will not be classified as peer-to-peer lending platforms. Only electronic platforms that also cater to retail lenders can register separately as such platforms, the central bank said.

The future of online financial advice and mutual funds (hubbis), Rated: A

Kunal Bajaj points out India is a large country without sufficient financial advisors to serve the population’s needs. With most people simply finding a financial advisor close to their home or place of employment, financial advice in India is primarily limited by geography which is not an ideal situation. As an added problem, many people find that their advisor has persuaded them into choosing a product which did not meet their needs. “Clearfunds eliminates this issue by delivering a bespoke solution for each customer which uses our internet platform.” Bajaj explains.

Traditional financial advisors try to channel every client into one of 21 possible portfolios (0-100 Debt-Equity or 100-0 Equity-Debt, in five-percent steps) or outcomes, often through first impressions or physical factors. With an online financial advisor, this is not possible, and therefore more work is put into finding out more about the person themselves and their individual requirements by asking periodic psychometric questions about the stability of their employment and income stream.

Bajaj has seen Clearfunds go from strength to strength in the 12 months since the platform has been online. “We have customers across 400 cities and around $10 million in assets under management.” He says. “Betterment and WealthFront took over a year to gather their first $10 million in the USA but now they both have billions in assets. Nutmeg has been in business for 7 years and has around 40,000 accounts and a billion dollars of assets under management.”

APAC

Indonesia P2P Startup Modalku Milestone: Hits $ 74 Million in Total Crowdfunded MSME Loans (Crowdfund Insider), Rated: AAA

Modalku, an Indonesia-based peer-to-peer lending fintech startup, successfully surpassed $74 million (Rp 1 trillion) in total crowdfunded MSME loans.

Canada

Mike Novogratz is planning a crypto version of Goldman Sachs (Business Insider), Rated: A

In a statement out Tuesday, Novogratz said he is looking to raise $200 million for Galaxy Digital LP, a “best-in-class, full service, institutional quality merchant banking business” for the crypto market. Novogratz also plans to list the company on TSX Venture Exchange, a Canada-based exchange for small cap companies.

The new bank will be born out of Canadian-based First Coin Capital, which Novogratz plans to buy and then merge with Bradmer Pharmaceuticals. Its main businesses will include trading, advisory services, asset management, and private equity-like investing.

Authors:

George Popescu
Allen Taylor

Friday November 3 2017, Daily News Digest

p2p lending volumes

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

p2p lending volumes

News Comments

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International

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News Summary

United States

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

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

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

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

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

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

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

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-6

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

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

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

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

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

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

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

Share of Originated Personal Loan Balances

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

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

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

Personal Loans Continue to Grow

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

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

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

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

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

  • Source: FT Partners

    Download the full report here.

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

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

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

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

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

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

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

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

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

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

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

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

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

    Mortgage Category

    #1 Winner:
    Busey Bank

    Personal Loans Category

    #1 Winner:
    Best Egg

    Auto Loans Category

    #1 Winner:
    RefiJet

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Which state do home buyers most want to move to?

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

    Which state do home buyers most want to leave?

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

    Which state do home buyers most want to stay in?

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

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

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

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

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

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

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

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

    1) “Good enough” technology

    2) Tremendous capital markets expertise

    3) Some sort of customer acquisition strategy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Avant wants to replace loan officers

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

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

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

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

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

    United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Source: The Spectator

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

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

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

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

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

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

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

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

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

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

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

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

    Source: Business Insider

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

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

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

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

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

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

    Natural evolution (P2P Finance News), Rated: A

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    China

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

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


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


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

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

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

    Data resource: Wind Database

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

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

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

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

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

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

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

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

    European Union

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

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

    Source: P2P-Banking

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

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

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

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

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

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

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

    Source: Irish Tech News
    International

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

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

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

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

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

    This month I added Bolden.

    Source: P2P-Banking

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

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

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

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

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

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

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

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

    India

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

    Briefly, as per the Master Directions:

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

    Impact on Aggregators

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

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

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

    Asia

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

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

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

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

    Africa

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

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

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

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

    Authors:

    George Popescu
    Allen Taylor