Wednesday January 17 2018, Daily News Digest

European alt SME lending

News Comments Today’s main news: Wells Fargo is closing branches left and right. Repeal  of payday lending rule under consideration. Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A-LLC. RateSetter leads in personal loans. Curve launches. Victory Park Capital looks overseas. Today’s main analysis: How Lendix blazes a trail in SME lending. Today’s thought-provoking articles: Why regulation is crucial. Wells […]

European alt SME lending

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United States

Wells Fargo is getting more aggressive with branch closures (Tearsheet), Rated: AAA

Wells Fargo is charging toward its goal to cut over 800 branches by the end of 2020, it said in a presentation of its fourth quarter earnings on Friday.

 

Wells, which has been struggling to cut costs while it continues getting hit with legal fees following its various scandals, expects to save $4 billion as a result of the plan.
Source: Tearsheet

Consumer Financial Protection Bureau considering repeal of payday lending rule (NBC News), Rated: AAA

The bureau, which came under control of the Trump administration late last year, said in a statement Tuesday that it plans to take a second look at the payday lending rules. While the bureau did not submit a proposal to repeal the rules outright, the statement opens the door for the bureau to start the process of revising or even repealing the regulations. The bureau also said it would grant waivers to companies as the first sets of regulations going into effect later this year.

Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A LLC (Moody’s), Rated: AAA

Moody’s Investors Service has assigned provisional ratings of (P)Aaa (sf) to Class A-1 Notes, the Class A-2A Notes and the Class A-2B Notes to be issued by SoFi Professional Loan Program 2018-A LLC (SoFi 2018-A). The collateral underlying the transaction consists of SoFi’s private student loans, which are loans the government does not guarantee. Our cumulative net loss expectation for SoFi 2018-A’s loan pool is approximately 2.0%.

Issuer: SoFi Professional Loan Program 2018-A LLC

  • $55,000,000 Floating Rate Post-Graduate Loan Asset-Backed Class A-1 Notes, Assigned (P)Aaa (sf)
  • $358,500,000 Fixed Rate Post-Graduate Loan Asset-Backed Class A-2A Notes, Assigned (P)Aaa (sf)
  • $236,800,000 Fixed Rate Post-Graduate Loan Asset-Backed Class A-2B Notes, Assigned (P)Aaa (sf)

Magilla Loans Platform Surpasses $ 4.5B Loan Origination Milestone (PR Newswire), Rated: A

Magilla Loans, a search engine for loans that connects borrowers to banks without requesting personal information, announced it has surpassed $4.5 billion in aggregated loans from top banks across the U.S. The Magilla platform provides business owners with access to multiple financing options, including access to business, home and real estate loans.

UpLift Closes Financings of $ 90M (FINSMES), Rated: A

UpLift, a Sunnyvale, CA-based travel financing company, closed financings of $90m.

The company received:
– a $75m credit facility in partnership with funds managed by affiliates of Fortress Investment Group, and
– a $15m equity round which includes participation from previous investors including PAR Capital with Draper Nexus, Highgate Ventures, and former Expedia CEO Erik Blachford.

NextCapital does $ 30-million VC round with a staggering objective that’s taking shape first with John Hancock (RIABiz), Rated: A

The shoot-the-moon robo strategy of NextCapital Advisers Inc. is looking up now that John Hancock Financial Services Inc. has come out of pilot and State Street Global Advisors became a partner in going after RIAs.

The Chicago-based digital advisor, founded in 2013, announced it more than doubled its backing with $30 million of venture round led this time led by Oak HC/FT of Greenwich, Conn. See: NextCapital raises $16 million as its founder goes where Financial Engines’ 401(k) robo strategy didn’t.

All told, the firm has raised $54 million: Six million dollars in August 2014, $18 million in 2015 and, just recently, this $30-million round.

Borrowers in the Lone Star State Can Now Get a Better Mortgage (Digital Journal), Rated: A

Better Mortgage, a digital mortgage company focused on improving access to home financing for a new generation of homeowners, is now available to Texas homebuyers. Better will now be able to serve more than half of Americans who are looking to own or currently own a home. In 2017, Better expanded its footprint in major real estate markets around the country, with Texas being the latest licensed states.

Texas is Better’s 14th market. In 2018, they expect to continue their expansion, focusing on geographies that help first-time homebuyers invest in their communities by putting down roots.

Gary Lieberman of Laurel Road (Lend Academy), Rated: A

In this podcast you will learn:

  • The history of Darien Rowayton Bank.
  • Why Gary decided to buy this small community bank in 2010.
  • How the bank has grown since Gary took it over.
  • How student loan refinancing first got on his radar decades ago.
  • When DRB originated their first student loan.
  • The advantages of being a bank and a fintech platform.
  • Some of the affiliate partnerships DRB has.
  • Other verticals where DRB has offerings today.
  • Why DRB rebranded to Laurel Road in 2017.
  • The scale they are at today with student loan refinancing.
  • Their approach to securitization.
  • How their loans have been performing to date.
  • The profile of their typical borrower.
  • How they market their offerings.
  • What the future holds for Laurel Road.

Refinancing Student Loans Gets Mixed Report (247WallSt), Rated: A

More than 45 million Americans have borrowed $1.45 trillion in student loans to help pay for their post-secondary educations. Repaying those loans can be tough, especially if the loan amount is high and pay for the first job after graduation is low.

Student loan marketplace and refinancing website LendEDU has just released its second annual report on the state of the student loan refinancing market. Here are several highlights from the report:

  • Average credit score of an approved refinance applicant is 764.
  • Just over 58% of 2017 applications are denied.
  • The average interest rate on a refinanced loan is 5.56%. The average rate rose 74 basis points year over year from 4.82% in 2016.
  • The average size of a refinance loan was $66,453. The 2017 average was more than 23% higher year over year.
  • Less than half of approved applicants actually end up refinancing their loans. In 2016, just over 33% of all applicants completed the loan process.

Reliamax’s Michael VanErdewyk: ‘We’re seeing a move towards more private student loans’ (Tearsheet), Rated: A

With all the excitement around online lending, there are still some spaces that have a long growth runway. One of the most persuasive growth opportunities is private student lending. Macroeconomic and policy changes are contributing to the growth thesis but so too are the number of local lending institutions that want to move into this asset class.

Rising costs of higher education
The cost of education continues to increase and the number of kids in school isn’t declining. So, it’s a big opportunity. Really, we have to talk about the cost of education. The cost of higher education in the U.S. today costs over $400 billion a year. About 25 percent of that is free money (grants and scholarships). Another 25 percent is federal student loans. The remainder — about $200 billion a year — is really family contributions.

The focus on private student loans
If you look at the total outstanding student debt, there’s about $1.4 trillion in federal student loans and $100 billion in private student loans, comprising only about 7 percent of total outstanding student debt.

CreditVest starts crowdfunding advisory firm (BizJournals.com), Rated: B

Jon Mauro founded Realty Mentors with Andrea Humphrey, who is president and owner of CreditVest, to focus on individual investors who want to participate in commercial real estate crowdfunding.

Zelle is now running TV ads (Tearsheet), Rated: A

Zelle is spending “tens of millions” of dollars on a television ad campaign featuring spoken word artist Daveed Diggs.

Early Warning, the bank-owned consortium behind the peer-to-peer payments platform, aired the first ad Saturday during the National Football League’s divisional round of playoff games and will continue to run them alongside unifying cultural events like the Grammy Awards, the NBA All-Star Game and the Super Bowl pre-game show. They’ll also run during popular shows on Bravo, Comedy Central, The Discovery Channel, ESPN and MTV.

Zelle is trying to build some brand recognition for itself among its target audience, mobile users, in an effort to compete with Venmo.

An investing platform founded by a 25-year-old went free — and now it’s facing a backlash from its rivals (Business Insider), Rated: A

M1, which was founded by CEO Brian Barnes when he was 25, originally charged users 25 to 40 basis points to use its platform, which allows users to buy fractional stocks and invest in pre-built portfolios. In December, it decided to go free, and make money strictly on the backend, by selling flow to trading firms and lending out non-invested funds sitting in users’ accounts to banks. The company also plans to offer margin trading to its users.

Since going free in December, M1 has seen daily inflows hit as high as $1 million, and a 10-fold increase in the number of new accounts each day.

Still,  M1’s robo rivals aren’t convinced the strategy will work for the small company.

Tipalti Launches Payables Automation Partner Program (BusinessWire), Rated: A

Tipalti, the leading global payables automation platform, today announced the launch of its Partner Program, which will offer accounting firms, financial institutions, system integrators, ERP resellers/VARs, consultants, and partners who work with the office of the CFO, the ability for their clients to leverage Tipalti’s software to eliminate the friction, risk, and time spent on manual accounts payable operations.

Key Features of Tipalti’s Partner Program:

  • Training and support for partners as they assist their clients
  • Option to pass exclusive savings on to their clients
  • Option to receive income stream through revenue-sharing
  • Low-impact engagement with minimal investment by partner

STOCKHOLDER INSPECTION RIGHTS SURVIVE CHALLENGE IN DELAWARE (AllAboutAlpha), Rated: A

On December 29, 2017, the last business day of the expiring year, the Delaware Chancery Court, in a memorandum of opinion by Vice Chancellor Slights, upheld stockholders’ statutory books-and-records inspection rights against a defendant corporation that sought to invoke and considerably to widen the scope of the Delaware Supreme Court’s Corwin decision of 2015.

The significance of this is that Delaware, some impressions to the contrary, is not a corporate-management-always-wins state. It was not so before the Corwin decision, nor did that decision make it so.  That ought to be good news for activist investors and their counsel. There may be alpha, or at least leverage toward alpha, lurking in the right to inspect books and records.

United Kingdom

RateSetter leading the way for personal loans (RateCity), Rated: AAA

Interest rates for personal loans listed on RateCity range from as low as 3.57 per cent to as high as 48.00 per cent.

The average personal loan interest rate was 11.89 per cent at the end of December, according to an analysis of the dozens of lenders listed on RateCity.

RateSetter, a peer-to-peer lender, has a one-year unsecured personal loan with an advertised rate of 3.57 per cent and a comparison rate of 3.92 per cent.

Curve, the fintech that connects all your cards to a single card and app, gets full consumer launch (TechCrunch), Rated: AAA

Curve, the London fintech startup that offers a platform that lets you consolidate all your bank cards into a single Curve card and app to make it easier to manage your spending, is finally launching to U.K. consumers. Up until now, the service remained in beta and was only officially available to business users.

In a call with Curve founder and CEO Shachar Bialick, he described the consumer launch as a major milestone for the company, noting that 50,000 people have signed up to its waitlist, in addition to the 100,000 or so users who joined Curve in its beta phase. It’s free to join, although a premium version of the Curve card is also available for £50 that offers additional perks.

How P2P could be a financial lifeline for UK landowners (Bridging&Commercial), Rated: A

A recent study of 172 farms by the Prince’s Farm Resilience Programme found that just 16% made a profit from their farming activities over the period assessed. The analysis found that instead many farms are now reliant on alternative income streams to turn a profit, such as tourism, renewable energy and selling their products directly to consumers.

But moving into alternative areas of business requires capital. And – with the average farm in the study making a loss of more than £20,000 from its farming activities – it may be capital that landowners require to invest in their business to prevent a loss.

Folk2Folk champions local lending because we believe in creating financially and socially sustainable communities by matching local businesses with local lenders.

Robo advice platform citing AI and machine learning raises £562k on Crowdcube (AltFi), Rated: A

Marketsflow, a new digital wealth management platform closed its fully funded investment round via equity crowdfunding.

Initially looking to raise £210k, the fundraise has seen more than £562k of commitments from nearly 800 investors giving Marketsflow a pre-money valuation of £2.4m.

What we learned about fintech from some of the biggest brains at Clifford Chance (Legal Cheek), Rated: A

What kind of financial technology has come across your desk at Clifford Chance, then? (Here comes the educational bit.) Chapman identified four technologies driving change:

Marketplace lending: crowdfunding or peer to peer lending, with the potential for “disintermediation” of the financial institution that used act as middleman for loans.
Big data and AI: you might just have seen it in the newspapers. But it’s closer than you think: if you’ve applied for a credit card, according to Chapman, chances are that a machine took part of the decision on whether or not to approve you.
Mobile payments: forget branches, even internet banking on a web browser is old hat. Some banks, indeed, exist only as apps (I instantly thought of my Revolut app, which started out offering as a slick currency exchange platform, but is now offering credit).
Blockchain and distributed ledger: different things, but often used in combination. These are “the pieces of technology that underpin the Bitcoin phenomenon”. It’s not just media hype, either: Clifford Chance is “seeing a lot of work in this space”.

5 Top Alternative Investments in the UK (What Investment), Rated: B

1. Crowdfunding

Rather than rely on venture capital trusts and angel investors, many new businesses are using crowdfunding to get off the ground. In fact, UK platforms such as CrowdCube and Angels Den have raised over £72 million from investors this year.

5. Peer-to-peer lending

Peer-to-peer lending allows you to loan money to people through online platforms, without a bank. These agreements are arranged through peer-to-peer lending platforms such as Zopa, Prosper and Lending Works. These peer-to-peer companies are typically FCA regulated and they organise credit and ID checks as well as set interest rates, collect payments and pay your returns.

After PSD2 and GDPR, what Wayfinding Signs will guide visitors through an Open Bank? (LinkedIn), Rated: A

When branch banking was the mainstream method of service distribution in financial services, both a bank’s customers and potential business partners could follow clear signs that directed them where to go and who to contact. The first sign that a bank sent its customers and potential business partners was the geographic location of a bank branch.

One in four very-low income households are struggling to pay bills or debt, with 10 per cent spending more than a quarter of their salary on credit card repayments, a report has found.

Data from the Institute for Fiscal Studies (IFS) showed one-sixth of the poorest households in Britain were in arrears on repayments and bills.

A further 10 per cent were spending at least a quarter of their monthly income on unsecured debts, such as credit cards and payday loans.

China

‘Freedom at a Price’: Why Regulation Is Crucial to Fintech’s Future (Wharton), Rated: AAA

In recent years, financial technology, or fintech, has dramatically expanded financial inclusion in China and elsewhere in Asia. Small and midsized businesses that have been underserved by banks now have access to capital, as fintech enterprises use the internet and mobile technology to reach those borrowers; leverage data analytics to build credible and innovative risk profiles to gauge creditworthiness, and are able to scale their reach exponentially with 24/7 customer windows and without the baggage of fixed-cost overheads that typically shackle traditional banks. Not surprisingly, the unmet needs of the underserved have provided huge market potential for fintechs.

Credit China FinTech, which is listed on the Hong Kong Stock Exchange as Chong Sing Holdings FinTech Group Ltd., or CSF, provides third party payments, online investment, technology-enabled lending, and traditional loans and financing services. Today, it has more than 51 million users who generated transactions worth RMB 868 billion ($130 billion) in the first half of 2017.

At the same time, both have proved massively popular in China which accounts for roughly half of the world’s digital payments and three-quarters of global, online P2P lending volume, according to Pricewaterhouse Coopers.

For one, default rates are higher than anticipated on peer-to-peer lending platforms. Also, instead of being disrupted by the fintechs, traditional banks have entered the peer-to-peer lending space to become the dominant players, he added.

China regulator says fintech must serve real economy (Finextra), Rated: A

Jiang Yang, vice chairman of China’s Securities Regulatory Commission (CSRC) was speaking at the Asian Financial Forum to an audience of fintech entrepreneurs. The development of fintechs should benefit the real economy and not “a small group of people”, he said in comments reported by the Nikkei Financial Review.

European Union

Lendix Raises €200 Million Institutional Financing to Trailblaze European Alternative SME Finance (Crowdfund Insider), Rated: AAA

The European Investment Bank Group (EIB), CNP Assurances, Eiffel IM, Groupama, Zencap AM, Matmut and Decaux Frères Investissements are among the first investors joining to finance Lendix’s latest investment vehicle to fund unsecured loans to SMEs in France, Spain and Italy. New institutional investors from banks and asset management firms in Spain and Italy are joining. As of now, €120 million of the planned €200 million are already committed and the first loans from this fund will start rolling out as soon as February.

Source: Crowdfund Insider

As of December 2017, Lendix originated a cumulated worth of €143 million of SME loans, a 90% increase from 2016.

Online Lender Robo.Cash Shares Insight into Investor Activity (Crowdfund Insider), Rated: A

Peer to peer lender Robo.cash has shared a “financial portrait of a Robo.cash investor.”

According to their results, investors from a younger age group, 18-24 years old, usually deposit circa €200 at a time and rarely withdrew  any funds. The maximum funding size is characteristic of the older age groups: the average deposit of investors of 35-44 years old is equal to €879 and for those who are older than 45 years old is €838.

Millennials of 25-34 years of age invest about €679 on average making frequent deposits in comparison to the younger age group.

Approaching energy crowdfunding with eyes wide open (YourIS.com), Rated: A

youris.com met Sissy Windisch, from the German company Green Crowding, who published a guide for new small investors, to allow them to make the best decisions. The document was released under the EU project CrowdFundRES.

This is a different kind of crowdfunding, unlike what platforms such as Kickstarter do?
With Kickstarter you donate money, so a comic book for example can be published, or you just want an artist to keep on creating art. Instead, the type of crowdfunding we are interested in is debt-based, which means that you get your money back plus interest. If you finance a solar roof on a school for five years, you get 3% every year and at the end of five years you get your money back.

Could you tell us more about debt-based crowdfunding?
Debt-based funding is already one of the largest types of crowdfunding. I would say one of the biggest areas in terms of funding volume at the moment is real estate. I think for 2016 alone the funding was estimated at around 3.5 billion dollars.

Why can’t the traditional financial institutions, such as banks or investment firms, offer these services?
What we’ve often seen, particularly for renewables, is that banks and other traditional financial institutions often look for large projects to invest in. They prefer investing in one 50-million wind park than in 500 small photovoltaic installations.

Swaper Offers One-Click Portfolio Investing (Benzinga), Rated: B

What does your company do? What unique problem does it solve?

Swaper CEO Peteris Kisis: Swaper is a loan marketplace offering an easy investing in pre-funded consumer loans originated by its parent company Wandoo Finance Group in Poland, Georgia, Spain, Denmark and Russia. All investments offered on our marketplace start from 12 percent annual interest and are BuyBack guaranteed, meaning Swaper will compensate investors both for the invested principal and accrued interest in case the borrower is late with payments.

International

Top backer of US subprime lenders eyes overseas opportunities (Financial Times), Rated: AAA

Victory Park Capital, a Chicago-based investment firm, has been a vital source of debt capital for a string of online lenders, including Avant, Elevate and LendUp, all of which focus on borrowers in the subprime segment. Total commitments and investments come to about $6.5bn from more than 90 deals, mostly in the US.

The firm, which was founded 10 years ago, is seeking to add to a portfolio including zip Money in Australia, Kreditech in Germany and Oakam in the UK.

(The Merkle), Rated: A

Vitalik Buterin, the creator of the Ethereum Network, recently proposed a new method for decentralized fundraising called the “DAICO”. Incorporating elements of Decentralized Autonomous Organizations, or DAOs, the new model is designed to minimize the complexity and risk associated with ICOs.

Buterin outlined the new model in a post on the Ethereum Research Forum entitled “Explanation of DAICOs”. In the exposition, the Russian-Canadian programmer outlines a new model that integrates characteristics of DAOs into ICOs to create a new model he refers to as the “DAICO”.

Source: The Merkle
Asia

New Crypto Exchange and 1000 Percent Revenue Growth Could Make KPAY The Crypto Stock To Own In 2018 (Baystreet), Rated: AAA

The little-known Indonesian digital payments company KinerjaPay (KPAY) reported another blowout quarter in December with sales that topped the previous 3 month period by a whopping 1,100%!

Revenue and User-Base Growing Parabolically? +1100% in Q3

KinerjaPay is a digital payments platform in Indonesia and South Asia, and the company ha been growing at an astronomical rate in the last year. In the third fiscal quarter of 2017 ended September 30, 2017, the company posted quarterly transactional revenue of $1.76 million, an 1,183% increase over $149K in the second quarter.

User growth is accelerating as the company brings on more partners for digital payments and bill pay capabilities in a region of the world where a fraction of people have a bank account or credit/debit card. The rate at which KinerjaPay is adding customers grew 58% in the 3rd quarter; the company reported 10,962 new users compared to 6,904 new users in the same quarter of last year, demonstrating just how fast they’re adding users for a small emerging company.

Asian stocks bounce back, with Hang Seng closing at a record (MarketWatch), Rated: A

Asian equity markets on Tuesday found their footing after some initial softness, leaving Hong Kong’s benchmark at a record closing high.

The Hang Seng rose 1.8% to 31,904.75, topping the previous high set on Oct. 30, 2007.

Japanese stocks rebounded from Monday’s selloff, with a weaker yen helping the country’s exporters. The dollar gained 0.2% to ¥110.7200, pushing the Nikkei to finish up 1% at a fresh 26-year high.

Africa

Fintech startups took nearly a third of all African venture funding in 2017 (Quartz), Rated: AAA

Almost a third of funding raised by African startups in 2017 was in the fintech sector as investors bet on consumers turning to more formal financial services in a region where just 17% of the population have banking accounts. Venture funding for African startups jumped by 51% to $195 million in 2017, according to a report from Disrupt Africa.

The success of mobile money technology like M-Pesa in Kenya and across East Africa has long shown the potential for other underserved markets. M-Pesa’s success is likely also behind for the increasing presence of mobile networks in the African financial sector and the convergence of the two sectors (pdf page 11).

Nigeria, South Africa and Kenya remained the countries with highest funding raised, consistent with their record from previous years.

Canada

Still a market for short-term loans (Edmonton Journal), Rated: A

Payday loan licences in Alberta have fallen by more than one-quarter, to 165 from 230, and industry officials predict even more payday loan stores will be shuttering their doors this year.

Before then, rules around payday loans in Alberta allowed for the second-highest interest rates in Canada, with lenders being allowed to charge up to $23 for every $100 borrowed, up to a maximum of $1,500. Now, the rate is $15 per $100 — touted to be the lowest in Canada — and borrowers are allowed to repay the the loans in instalments over two months. Lenders are also no longer allowed to penalize customers for paying back loans early and must restrict the number of times a lender can make preauthorized withdrawals.

Authors:

George Popescu
Allen Taylor

Tuesday December 5 2017, Daily News Digest

credit-to-cash ratio

News Comments Today’s main news: Prosper’s top concern next year is liquidity. Affirm seeks new funding at $1.5B valuation. LendingHome surpasses $2B in loan originations. ThinCats delays IFIsa launch. Funding Circle hits 3B GBP in lending. Dianrong planning $500M IPO. Today’s main analysis: Acorns puts up a fight to upscale. Mobile credit and financial inclusion. Today’s thought-provoking articles: Is Lending Club […]

credit-to-cash ratio

News Comments

United States

United Kingdom

China

International

India

APAC

News Summary

United States

Prosper’s Top Concern in 2018 is Liquidity, CEO Says (Bank Innovation), Rated: AAA

Marketplace lender Prosper will make liquidity a top priority as the company moves into 2018, company CEO David Kimball said during a lending conference that took place last week.

“Our main concern… it’s always liquidity, and I think most people in this room understand that the best way to get to liquidity is to have a lot of different options,” Kimball said to attendees of the Investors Conference in Marketplace Lending on Friday, December 1st. “And so I think you’ll see our toolkit expand [in 2018] versus where it is now.”

Is Lending Club Misleading New Investors About Past Performance? (deBanked), Rated: AAA

New retail investors interested in the Lending Club platform are greeted with a friendly statistic, that “99% of portfolios with 100+ Notes have seen positive returns.” That’s a slippery statement, which is probably why they footnoted it.

Affirm Is Said to Be Raising Funding at $ 1.5 Billion Valuation (Bloomberg), Rated: AAA

Affirm Inc., an online lender run by PayPal co-founder Max Levchin, is in advanced talks for a financing round that would earn it a place in the unicorn startup club.

The San Francisco-based startup is discussing an investment of about $150 million, said people familiar with the matter. The deal would value the company at $1.5 billion, about double the valuation from the last round in April 2016, said the people, who asked not to be identified because the terms aren’t finalized. Affirm declined to comment.

Acorns Teardown: The Most Popular Robo-Advisor Faces A Fierce Fight As It Goes ‘Upmarket’ (CB Insights), Rated: AAA

The micro-investing app has grown an of army of 2.2M accounts. But making money off these first-time, lower-income investors won’t be easy. To do so, Acorns is building out higher-tier investment services and moving into the highly saturated $40T retirement planning market.

With over 2.2M investment accounts in the US since launch, the company has proved there is a clear niche for its product. It is already the largest robo-advisor by client accounts.

Acorns’ service isn’t free, but it is cheap — the company charges $1 a month or .25% for accounts over $500. At $12 annually for many accounts, that’s not a lot of revenue.

Acorns is making a number of important moves:

  • It is launching its own retirement savings plan in 2018 called Acorns Later, which could help it reach new users and push up current users’ account size.
  • It has formed a strategic partnership with investor Paypal to extend its product to Paypal’s huge user base. In addition, its partnership with Paypal could ultimately help Acorns get into bank account services, a move similar to what low-income investing competitor Stash has done.
  • A B2B offering may also be in the works, based on recent acquisition activity. B2B products have helped other robo-advisors see big jumps in AUM.
Source: CB Insights

Acorns manages approximately $528M in AUM and approximately $407 per account as of September 2017. Compare that to Betterment which manages approximately $28.5K per client account and Wealthfront which averages $42.3K.

Source: CB Insights

Mortgage Marketplace Lender LendingHome Surpasses $ 2 Billion in Loan Originations (Crowdfund Insider), Rated: AAA

On Monday, mortgage marketplace lender LendingHome announced it has originated more than $2 billion in mortgage loans for homeowners and real estate investors. The online lender revealed that the first billion of originations occurred over the course of 30 months, while it took just 12 months for the company to originate its second billion. In the process, LendingHome crossed the major milestone of financing more than 10,000 homes nationwide.

How Cross River Bank plans to bring mobile payments to business customers (Tearsheet), Rated: A

How and when employees get paid should be their choice, Isaacson said. The technology to make that happen is already in the market — Uber and Lyft drivers are taking advantage of it, for example — but the systems aren’t in place at most companies, and there’s a mental barrier for businesses to overcome to begin creating mobile payout experiences.

It’s also too inflexible for some businesses, like a restaurant or store that may need more or fewer cases of Coca Cola than the originally ordered 10. They need to be able to make adjustments like that in real time, Isaacson said. With a mobile device, people can manage and initiate payments in real time and remotely.

Cross River Bank is a business bank, whose clients are some of the biggest fintech companies. Behind the scenes, CRB has developed payments solutions for faster, more secure and lower-cost transfers that have been integrated by TransferWise and the bitcoin wallet Coinbase, as well as Google Wallet and Stripe — which counts Lyft as a customer.

Morgan Stanley is getting in on the hottest trend in investing (Business Insider), Rated: A

The New York-based investment bank announced Monday the launch of Access Investing, an online roboadviser designed to capture a younger clientele.

The goal of Morgan Stanley’s new offering is to serve as a stepping stone, so to speak, for younger savers who one day might want to tap into the bank’s broader suite of wealth-management services when they are wealthier and older.

2017’s Best & Worst Cities for Wallet Fitness (WalletHub), Rated: AAA

Wallet Fitness levels vary widely across the U.S. As we prepare to make resolutions for self-improvement, it’s fair to wonder who’s best positioned for financial success and who has the most work to do. To find out, we compared more than 180 U.S. cities based on 29 key indicators of Wallet Fitness.

Source: WalletHub
10 Best Cities for Wallet Fitness 10 Worst Cities for Wallet Fitness
1 Fremont, CA 173 Oxnard, CA
2 San Francisco, CA 174 Miami, FL
3 Madison, WI 175 New Orleans, LA
4 Columbia, MD 176 Gulfport, MS
5 San Jose, CA 177 Santa Ana, CA
6 Seattle, WA 178 Brownsville, TX
7 Minneapolis, MN 179 San Bernardino, CA
8 Sioux Falls, SD 180 North Las Vegas, NV
9 Bismarck, ND 181 Newark, NJ
10 Warwick, RI 182 Hialeah, FL
Source: WalletHub

See the rest of the results here.

Rich Uncles Announces New CFO, COO, and Corporate Headquarters (Business Insider), Rated: A

Leading crowdfunding real estate investment platform, Rich Uncles, LLC, today announced the appointment of John H. Davis as its new chief financial officer and Jean Ho as its new chief operating officer and chief compliance officer.

Mr. Davis comes to Rich Uncles after more than four decades with KPMG LLP, one of the world’s four largest accounting firms, where he had served as a partner since 1988.

Ms. Ho joined Rich Uncles, LLC in 2016 as the company’s chief financial officer, where she has helped lead the acquisitions of 29 commercial properties across two Rich Uncles-sponsored REITs: Rich Uncles Real Estate Investment Trust I and Rich Uncles NNN REIT, Inc. Prior to joining Rich Uncles, LLC, Ms. Ho held positions as chief operating officer and chief financial officer of Soteira Capital, LLC, chief financial officer of MKA Capital Advisors, LLC, and with KPMG LLP, where she specialized in real estate, financial services, and high net wealth personal financial and estate planning.

Perkins Coie Law Firm Boosts Fintech Bench with SEC Attorney Hire (Crowdfund Insider), Rated: A

Perkins Coie, a law firm that is very active in the Fintech / Blockchain space, has announced the hiring of a former SEC attorney. Michael S. Didiuk has joined the firm’s Investment Management practice group as a partner in the San Francisco office where he will represent clients on various federal securities laws and complex regulatory issues raised by Blockchain technology and with the emergence of digital asset sales and digital securities.

Barclaycard building digital bank in US (Banking Technology), Rated: A

Barclaycard is rebranding itself to Barclays in the US as part of its retail digital banking strategy in 2018.

According to Tearsheet, Barclaycard says since last November it has been targeting prime and super-prime borrowers with an online personal loan offering on a test-and-learn basis to a small group of customers. Barclaycard plans to launch the same offering publicly by the middle of 2018.

Mass firings at top digital currency investment bank (New York Post), Rated: A

The largest investment bank catering to the red-hot cryptocurrency sector was in total disarray on Friday after management fired nine employees — including the entire tech team, The Post has learned.

The Argon Group had been battling internal turmoil recently as many of its investment bankers had grown disenchanted over the direction of the company, sources said.

Atlantic Capital Bank expands into Fintech Banking with strategic new hire (GlobeNewswire), Rated: A

Chris Stanley joins Atlantic Capital Bank as Vice President of Fintech Industry Banking, to lead Atlantic Capital’s Fintech Banking practice.

Expanding on a successful payments industry line of business, the new fintech banking practice will focus on emerging growth and growth-stage companies in this evolving technology segment. This will bolster Atlantic Capital’s core deposit gathering strategy.

Want to Learn 8 Secrets for Getting a Business Loan? Here are 2 (Small Biz Trends), Rated: B

Secret #1:  Yes, You CAN Improve Your Personal Credit Score

  • Pay down your credit cards. As a yardstick, you’ll want all your cards under 50 percent  of their limits. This means no more maxing out cards — for personal or business.
  • Lower your debt compared to your income. A good benchmark is keeping debt to 30 percent of less of your income. Rather than taking a second mortgage on your home and increasing your debt load, you might be better served to apply for a business loan.
  • Monitor your credit score. Errors are more common than most people realize. Besides you’ll learn which creditors report to credit agencies and what they report on.

Secret #2:  Your Business Credit History May Be Incomplete, But It’s Not Hard to Change That

  • Establish free profiles with the three major business credit bureaus: D&B, Experian, Equifax
  • Apply for a business credit card and use it to establish a timely repayment history.
  • Do business with vendors (“trades”) that report to credit bureaus regularly.
United Kingdom

ThinCats delays IFIsa launch (Bridging&Commercial), Rated: AAA

ThinCats has announced that it will now be launching its Innovative Finance Isa (IFIsa) early next year.

The peer-to-peer lending platform had hoped to launch its IFIsa by the end of this year and thanked investors for their patience.

It is currently building the new systems needed to handle the different aspects of accepting and administering Isa investments safely.

Funding Circle hits £3bn lending milestone (P2P Finance News), Rated: AAA

FUNDING Circle has become the first UK peer-to-peer platform to reach the £3bn cumulative lending milestone.

The business finance provider said on its website that “30,948 UK businesses have financed their goals by borrowing £3bn through Funding Circle”.

Zopa, which lent out a record £100m last month, said it expects to reach the £3bn mark in January.

Micro-lender Oakam secures £35 million debt facility from Victory Park Capital (Finextra), Rated: A

Digital micro-lender, Oakam today announced that it has secured a £35 million debt investment from Victory Park Capital Advisors, LLC (VPC), an investment firm focused on private middle market debt and equity investments.

LandlordInvest publishes loan book (P2P Finance News), Rated: A

LANDLORDINVEST, a peer-to-peer lending platform for residential and commercial real estate mortgages, has published its entire loan book to mark its one-year anniversary.

It reveals that LandlordInvest lent a total of £2.7m between December 2016 and December 2017, with an average loan amount of £210,535.

The average loan term was 7.6 months, the average LTV was 63.7 per cent and the average annual gross return to investors was 11.1 per cent.

Welendus launches beta platform for investors (P2P Finance News), Rated: A

WELENDUS, the peer-to-peer payday lender, has launched a beta version of its platform for investors after its latest funding round exceeded its target in under 24 hours.

The fully-authorised platform, which aims to re-define the short-term lending market with cheaper rates and no hidden costs, is now inviting investors to create an account.

Six ways fintech startups could hurt incumbent banks (Econsultancy), Rated: A

For years, there has been much talk about the impact of fintech startups like Mondo and Atom Bank on incumbent banks but little has been done to quantify the actual effects fintechs are having on big banks.

New data from The Bank of England (BoE), published as part of its 2017 stress test of the UK banking system, however, is shedding light on this subject.

  • Reduced overdraft revenue
  • Reduced fees from payment services
  • Higher customer acquisition and retention costs
  • More difficulty cross-selling
  • Increased liquidity risk
  • Increased cyber security risk

Five (more) UK startups to watch: Were we right? | Fintech Recap 2017 (Bob’s Guide), Rated: B

Where they were then: Trussle, the online mortgage trading company, is a rising star in the fintech industry. The start-up company provides solutions and answers to those looking to invest with a hassle-free process.

Where they are now: Following their funding round in early February to raise £4.5m ($5.68m) backed by Orange and Growth Capital, and existing investors LocalGlobe, Zoopla and Seedcamp, Trussle went on to join forces with Revolut in April to give users direct access to their mortgage brokering services.

Total equity funding: $7.38m (now $7.6m) +2.98%*

Where they were then: Iwoca was created to help make credit and loans of up to £100,000 available to small businesses.

Where they are now: 8 days after the time of writing the previous bio, Iwoca partnered with NatWest through Capital Connections to provide SMB loans, a significant collaboration for the six year-old startup.

Total equity funding: $58.5m (now $90m) +54%*

Where they are now: They currently boast a 6.6% annual return for investors and have earned £156m in interest for investors. They’ve lent £3 billion to UK businesses in a total of 43,251 loans (since 2010).

Total equity funding: $373.2m (now flat) –%*

Where they were then: Crowdcube is an investment crowdfunding platform that lets customers hand pick the businesses they want to back and invest in.

Where they are now: In the third quarter of 2017, Crowdcube registered £1m in company revenue, with 70 pitches.

Funds raised to date: $18.69m (now $28.3m) +51.42%*

Where they were then: Based in the heart of the UK capital, LendInvest is the UK’s leading online property lending and investing businesses.

Where they are now: In September, LendInvest announced the strategic partnership with Clever Lending, a specialist lending solution.

Total equity funding: $58.6m (now $393m) +570%*

China

Chinese Online Lender Dianrong Eyes 2018 IPO, Could Raise at Least $ 500 Million (WSJ), Rated: AAA

Dianrong.com, a Chinese online lending platform started and run by a co-founder of LendingClub Corp. , is planning an initial public offering as soon as next year that could raise at least $500 million, according to people familiar with the matter.

China Is Set to Implement a System of Ranking Its Citizens (Interesting Engineering), Rated: AAA

China is set to implement a social credit system that will rate each of its citizens on a publicly available scale. Officially known as the Social Credit Score or SCS, the system is likely to be implemented by 2020.

It works by giving each citizen a score based on their daily interactions and financial decisions, the score can be affected by debt, spending habits and even social interactions. Obviously, to get this kind of score that will be somewhat compared to a person’s trustworthiness, there will need to be a huge amount of individual monitoring and data collection. The SCS is expected to be rolled out in 2020, but there will be a large scale trial period from now until then so the system can be at optimal functionality when it goes live on its 1.3 billion citizens.

Micro-lender China Rapid Finance spots opportunity in new rules (Reuters), Rated: AAA

China Rapid Finance will make any adjustments needed to its business practices and the fees it charges in response to Bejing’s new requirements to clean up fast-growing online micro-lenders, its chief executive Zane Wang said on Monday.

Online micro-lenders have come under scrutiny as “problems such as over-lending, repeat borrowing, improper collection, abnormally high interest rates, and privacy violations have become prominent”, Chinese financial regulators said last week.

Banks’ robo-advisers are facing increasing scrutiny (China Daily), Rated: A

With financial institutions increasingly employing roboadvisers, China’s central bank and financial regulators issued draft regulations for comment recently, requiring financial institutions to receive regulatory approval for offering such services.

The regulatory authorities said financial institutions should create rational investment strategies and algorithm models, as well as remind investors of the flaws and risks associated with algorithm-based robo-advisory models.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

The project that Pinganfang.com was caught up in is a sharing working place project called Bar Works. Every work place was sold at $25,000 and the minimum purchase quota per investor was two each. The expected annual rate of return was between 12% to 15%.  On June 30th 2017, the SEC charged Renwick Haddow (the planner of Bar Works project) with multiple counts, including illegal fundraising $36 million from the Bar Works investors. 

On November 30th, JD Finance and China UnionPay co-launched a Blockchain-based risk information sharing mechanism.

On December 1st, Alibaba officially set up a poverty alleviation fund. As planned, the fund will invest 10-billion-yuan in the next five years to establish a comprehensive security system and help people fight against poverty. At the fund launch ceremony, Jack Ma, the executive chairman of Alibaba Group, told the media that Ant Financial would suspend plans for an initial public offering.

Change of pace ahead for fintech (China Daily), Rated: A

China has emerged as a leading fintech market globally, with analysts estimating the market size to have exceeded $243 billion by the end of last year, accounting for about 85 percent of the global market share.

The sector’s fast and furious growth was also illustrated by the surge of fintech investment in the country, which attracted capital of $8.8 billion between July 2015 to June 2016, equivalent to an increase of 252 percent since 2010, according to a report by Singaporean banking giant DBS Group and global accounting firm Ernst & Young.

International

Why Mobile Credit Can Be the Entry Ticket to Financial Inclusion (Let’s Talk Payments), Rated: AAA

Think for a moment of what your life would be like with no access to credit. Chances are you wouldn’t own a home or a car. Most of us could not have afforded our college education. The entrepreneurs among us would be hard-pressed to build successful businesses. And what about the ways we take advantage of credit cards – basically small-time loans that exist to allow us to pay for emergencies and unexpected expenses? Our financial identity is tied up in our access to these credit opportunities.

The good news, however, is that mobile devices – along with the existence of the cloud – are providing an entirely new landscape for the developing world. This landscape involves assigning a financial identity to those who have largely remained anonymous, reaching these populations through their smartphones. There are scores of creditworthy people on the planet, and we’ve proven before through data science that worthiness has little to do with income or wealth, but instead with the opportunity to demonstrate responsibility.

With this understanding in mind, we reviewed activity in the wake of recent hurricanes that rocked the Caribbean and observed a spike in prepaid mobile users topping up their phone allowances via on-demand credit extensions prior to hurricanes making landfall.

Source: Let’s Talk Payments

The following image shows the ratio of airtime credit extensions to cash top-ups as the eye of Hurricane Irma hit the Leeward Islands as well as Turks & Caicos.

Source: Let’s Talk Payments

As Irma made landfall, purchasing airtime from shops become extremely difficult, if not impossible. The graph above shows what happens when cash based-top ups are not possible.

For these reasons, creating a mobile financial identity in order to provide mobile credit remains the best place to start to address financial exclusion in many parts of the world and smartphones are the most logical vehicle for providing it. Nearly 80% of people all across the globe have prepaid phones, and there are nearly $1 trillion in transactions taking place every day.

Anger and confusion as crypto traders lose thousands in ‘flash crash’ on $ 54 billion exchange (Business Insider), Rated: A

A “flash crash” on the world’s biggest cryptocurrency exchange has left customers demanding answers and refunds, with many claiming to have lost thousands of dollars.

The price of cryptocurrencies NEO, OMG, and ETP crashed as much as 90% in minutes on the Bitfinex exchange on Wednesday before quickly bouncing back to former levels.

The price crash led Bitfinex, the world’s largest cryptocurrency exchange by daily volume, to close the positions of many traders who had placed leveraged bets on these digital currencies. Leveraged trading involves borrowing money to increase exposure.

Brett Kruger, a Bitfinex user affected by the “flash crash”, told Business Insider he is unhappy with Bitfinex because he claims the website was “lagging, unresponsive” at the time of the crash. He said he was also repeatedly logged out of the website, blaming recent DDoS attacks. Bitfinex announced last Sunday that it had been hit by a distributed denial of service (DDoS) attack, a malicious attack meant to bring down the service.

Etherecash Provides Lawyer-backed Platform to Secure Loans Against Your Own Cryptocurrency (Coinspeaker), Rated: B

EthereCash, is a three prong financial platform, wants to eliminate borders, intermediaries and prejudices, providing access to bank services for everybody. It makes all the tedious and lengthy bank operations simple, transparent and secure.

ID Finance strengthens board with ex-CEO of 4finance (ID Finance Email), Rated: A

ID Finance, the emerging markets fintech company, has strengthened its board with the appointment of Kieran Donnelly, ex-CEO of, 4finance, as a board advisor. The appointment will support ID Finance as it continues rapid expansion and further diversification of its business.

Kieran Donnelly served as CEO at 4finance, the European online and mobile consumer lending group for three years. He brings over 30 years of management experience to ID Finance having also held senior roles at Standard Bank Group, MDM Bank and Renaissance Group.

India

India’s Small Businesses Are Ready To Boom, Thanks To Fintech (Forbes), Rated: AAA

In 2017, India ranked second in the growth rate of fintech adoptionamong digitally active consumers across the globe; this surge was paralleled by the rise in fintech funding — receiving over $200 million in the first half of the year.

The financial services market in India is primarily untapped, with 40% of the population having no association with any bank, and more than 80% of the transactions carried out through cash.

Economic analysts predict that the next impetus for growth in the Indian economy will come from SMBs and startups.This is a great opportunity for the fintech industry, especially startups, to make it easier for SMBs, including kirana and mom-and-pop stores that are looking to gain access to capital and grow their business, by providing services where traditional banks and lenders have failed to reach, or have done so at a far higher cost. For example, Mumbai-based online loan platform, SMECorner.com, offers business loans to SMBs with virtually zero collateral.

Online lifestyle renting firm Rentickle.com raises $ 4 M in equity and debt (YourStory), Rated: A

Delhi-NCR-based lifestyle products rental portal Rentickle.com today announced it has raised $4 million in a fresh funding round. The fundraising is a combination of equity and debt.

The equity portion was led by Ajay Relan, Founder and Chairman, CX Partners, and ThinKuvate, a Singapore-based VC firm, with participation from existing investors. Delhi-based NBFC, DMI Finance Pvt Ltd, extended the company a debt line. Rentickle.com had raised $250,000 seed funding in early 2016.

P2P Easy Extends Services As The Fastest Growing Peer-to-Peer Money Lending Platform In India (Digital Journal), Rated: B

‘P2P Easy’ is a recently founded online platform that works hand in hand with borrowers and lenders for fast loan processing & acceptance.

Although the idea of loaning money dates back to the time when the first bank was established, the core issues are more or less the same to date – i.e. 90% borrowers are rejected, and lenders are skeptic due to a lack of any reasonably acceptable guarantee.

APAC

Culum Capital launches online platform for alternative investment (HedgeWeek), Rated: A

Culum Capital, a Singapore-based receivables and supply chain financing provider, has launched a new investor platform, which is aimed at accredited and institutional investors around the globe, and provides invoice financing to SMEs as an alternative to traditional financing sources.

The platform uses its proprietary credit scoring and on-going risk measurement to identify optimum investment opportunities and provide transparency. The transactions carry a short tenor of maximum 120 days, with the average transaction at 70 days. Annualised gross returns are between 10 and 25 per cent, with a strong SME diversification.

Fintech versus financial inclusion: What’s the difference? (DevEx), Rated: A

Mobile phones have introduced a sea of opportunities in every sector imaginable, and that includes in finance. Today, anyone with a cellphone can engage in one form or another of cashless transaction, be it paying bills, sending phone credit, transferring cash, or buying goods and services — even in flea markets.

But what makes this a game changer in the financial sector is how it has penetrated different levels of society. This applies particularly to the unbanked, who are unable to access formal financial institutions and often borrow money from informal lenders who may charge high interest rates and where there is no guarantee of consumer protection.

In recent years, new technologies have emerged that are being used to complement and further what mobile money has achieved: machine learning, peer-to-peer lending, biometric technology, cloud computing, and blockchain, among others.

A conscious effort to ensure all these innovations work for the unbanked

But just because it’s fintech doesn’t necessarily mean it covers financial inclusion.

In fact, a number of the technologies being adopted in the sector are largely aimed at consumer convenience instead of the unbanked.

Authors:

George Popescu
Allen Taylor

Thursday August 3 2017, Daily News Digest

earning multiples

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

earning multiples

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

Philippines

News Summary

United States

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

We are pleased to announce our role advising 

Source: FT Partners

Read the full analysis here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The judges for the Startup Innovation Spotlight are:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Presales

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

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

Crowdfunding

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

 

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

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

But who will be first to £3bn?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The platform now incorporates 120 different business funding products.

China

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

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

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

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

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

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

European Union

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

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

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

International

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

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

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

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

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

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

Milestones reached this month are:

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

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

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

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

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

India

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

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

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

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

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

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

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

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

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

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

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

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

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

Asia

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

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

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

Canada

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

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

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

Africa

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

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

Philippines

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

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

Authors:

George Popescu
Allen Taylor

Thursday August 3 2017, Daily News Digest

earning multiples

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

earning multiples

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

Philippines

News Summary

United States

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

We are pleased to announce our role advising 

Source: FT Partners

Read the full analysis here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The judges for the Startup Innovation Spotlight are:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Presales

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

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

Crowdfunding

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

 

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

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

But who will be first to £3bn?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The platform now incorporates 120 different business funding products.

China

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

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

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

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

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

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

European Union

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

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

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

International

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

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

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

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

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

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

Milestones reached this month are:

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

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

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

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

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

India

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

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

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

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

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

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

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

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

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

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

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

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

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

Asia

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

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

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

Canada

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

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

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

Africa

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

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

Philippines

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

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

Authors:

George Popescu
Allen Taylor

Monday July 17 2017, Daily News Digest

FICO score

News Comments Today’s main news: CreditEase Wealth Management approved by SEC to be RIA. RateSetter sees decline in net lending volumes. Fluid expands into 32 states with no-interest student loans. Landbay loans achieve AAA rating. Funding Circle fund on track despite Brexit risks. BBVA rated best mobile banking service in the world. Today’s main analysis: Squaring all-time high credit scores […]

FICO score

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Middle East

News Summary

United States

CreditEase Wealth Management Became an SEC Registered Investment Advisor (PR Newswire), Rated: AAA

CreditEase Wealth Management has recently been approved by U.S. Securities and Exchange Commission (SEC) as a registered investment advisor (RIA). At its first stop overseas, the firm can start providing advice to investors in the U.S., representing a globalization milestone to better serve especially Chinese investors around the world.

Squaring All-Time High Credit Scores With Higher Delinquencies (PeerIQ), Rated: AAA

Citigroup, J.P. Morgan and Wells Fargo reported Q2 bank earnings last week as earnings season kicked off. All three banks beat analyst expectations for earnings, but also posted declines in trading revenue:

 

Source: WSJ, PeerIQ

J.P. Morgan reported better than expected second quarter earnings, beating on the top and bottom line due to the company’s strong loan growth, partly due to the success of Chase Sapphire Reserve product.

In this week’s newsletter, we illustrate the flaw of FICO as a forward-looking credit score.

Below is a histogram showing the distribution of FICO credit scores for Avant’s 2017 deal:

Source: PeerIQ

The distribution is relatively similar across historical ABS deals suggesting the credit risk across deals is similar. However, Avant has substantially tightened and improve credit quality in recent vintages. The FICO credit score is not able to capture this. For instance, as compared to AVNT 2016-C, the collateral in the AVNT 2017-A contains loans made to borrowers with a much smaller balance ($5,348 vs $6,589) and a shorter weighted-average remaining term of 33 months vs. 40 months in AVNT 2016-C. Also, AVNT 2017-A has 93.9% of loans under 36 month term, a significantly different collateral pool mix than that of AVNT 2016-C, which has only 47% 36-month loans. Shorter term 36-month loans carry less credit risk than 60-month loans all things being equal.

PayPal Holdings Invests in LendUp — What Investors Need to Know (The Motley Fool), Rated: AAA

On LendUp’s website, the company states that more than half of the U.S. population has a credit score under 680, meaning they cannot be approved for credit at most financial institutions. The site explains that consumers in this segment will pay more than $250,000 over the course of their lifetimes for basic financial services. LendUp believes it can make a profit by offering affordable financial products to these consumers, which will simultaneously help them build their credit.

Regular users of PayPal probably know that PayPal offers credit to its customers through its PayPal Credit platform. PayPal normally offers credit to customers at checkout, offering account holders no-interest payments on purchases greater than $99 if the loan is paid off within six months. PayPal also offers credit to small- and medium-sized businesses through its PayPal Working Capital program, which is then paid back through small amounts from each transaction going back to PayPal. Schulman believes both services are important to PayPal’s future.

In its most recently reported quarter, PayPal CFO John Rainey stated that loan losses for its consumer and retailer credit programs totaled $129 million, or approximately 4.3% of revenue. The net charge-off rate was 6.9%.

Fluid Expands into 32 States Providing No Interest Credit to Students (Crowdfund Insider), Rated: AAA

Fluid, a Fintech and Adtech startup has expanded its service to US students into 32 different states. The App based lender is available on iTunes allowing up to $500 in credit without any additional interest payments.  The description on iTunes explains it is exclusively designed for 22 million college students in the United States.  Fluid not only allows for an interest free loan but it empowers uses to build a credit profile. Fluid’s target market is Generation Zs (Age 7 to 21 as of 2017. Fluid notes there are 75 million and 1.8 billion Generation Zs that will start shaping this world in the coming years.

How To Find The Best Student Loan Refinancing Options (Forbes), Rated: A

Student loan debt now stands at a whopping $1.3 trillion. There are more than 44 million borrowers. And we’re coming up on the season when many recent graduates start paying down their student loans.

1. SoFi – SoFi only refinances loans for graduates with at least a Bachelor’s degree from a Title IV accredited university or program. Its credit and income requirements are also fairly strict, putting SoFi refinancing out of reach for many recent graduates.

2. CommonBond – CommonBond offers somewhat broader refinancing services since it refinances student loans and Parent PLUS Loans. It also offers borrowing services, if you’re considering consolidating your undergraduate loans and then going to graduate school.

Like SoFi, CommonBond expects borrowers to have a fairly high credit score (here are ways to check your score for free). Borrowers have a median income in the low six figures, as well.

3. Earnest – Earnest has a unique way of qualifying borrowers. Instead of looking at your income and credit score solely, it looks at how easily you can afford your expenses, how regularly you save, and whether you have a retirement account. It also allows you to choose your own monthly payment, and then it builds your interest rate and terms around that.

6. Purefy – Purefy allows married couples to refinance their loans together, which may or may not be a good idea for you. But if you decide to go this route, it will use the higher of your two credit scores to determine the interest rate.

Laurence Kotlikoff: Conventional banking is not the only game in town (Denton Record-Chronicle), Rated: A

Where do we see LPB taking hold? For starters, consider Bitcoin and other electronic currency vaults. They are essentially LPB cash mutual funds — mutual funds that hold only cash. They provide a safe payment system that can never collapse, barring technical disasters. Next, consider peer-to-peer lending. These are closed-end mutual funds that purchase the loans of small- to medium-sized enterprises. The investors have equity stakes and they can go online and check out their investments in real time. That’s a form of disclosure you will never get from, say, JPMorgan Chase.

What about mortgage lending? LPB mortgage mutual funds could materialize overnight, via either peer-to-peer lending or by slightly transforming the centuries-old Northern European covered-bond market by forcing investors to take on the default risk of the mortgages that cover the bonds.

In the information age, we don’t need trust-me banks that take our money and give us no clue where it’s invested. In this Bitcoin era, we don’t need trust-me banks to guarantee our holdings of cash. In this block chain world, we don’t need trust-me banks to assure us they will square up our bets. And we don’t need an enormous army of government bureaucrats to watch over trust-me banks gambling at the taxpayer’s expense.

LendingTree announces senior appointment (Mortgage Professional America), Rated: B

LendingTree has announced Brad Wilson as its new chief marketing officer. He will oversee the company’s brand strategy, marketing operations and consumer engagement as LendingTree continues to expand into new financial service categories.

Hybrid Advice Priced at 25 to 50 Basis Points (Insurancenewsnet.com), Rated: A

Nearly half – 48 percent – of managed account sponsors price their hybrid advice at between 25 and 50 basis points, or between $250 and $500 on a $100,000 account, according to a recent survey conducted by Cerulli Associates.

Another 28 percent of sponsors believe an internet algorithm backed by a flesh-and-blood advisor should be priced at between 50 and 75 basis points, or between $500 and $750 on a $100,000 account, the survey found.

‘New York doesn’t allow that’: Maria Vullo stares down fintechs, OCC (American Banker), Rated: A

Maria Vullo, the head of the New York State Department of Financial Services, is a skeptic of the so-called fintech revolution.

While some policymakers are eager to accommodate online lenders with regulatory oversight that is looser than what applies to banks, Vullo believes the word “fintech” is misleading.

TOP 10 CONSIDERATIONS FOR INTERNATIONAL INVESTORS INVESTING IN U.S. MARKETPLACE LENDING (dv01), Rated: B

We are now starting to see large inflows and investments into the leading U.S. based marketplace lenders. This growth has been driven primarily by investors from Asia, Europe, and Middle East (primarily Israel) who have started to provide their clients with more options to invest in MPL assets outside their home countries.

What are best practices for investing in the MPL asset class in the U.S.?

Jeremy has compiled his answers into this free report.

United Kingdom

P2P lender RateSetter sees decline in net lending volumes (AltFi), Rated: AAA

Two of the UK’s “big three” peer-to-peer lenders are authorised, and will soon launch their Innovative Finance ISAs. The other, RateSetter, is not yet authorised, and has had to make a few changes to suit the requirements of the regulator in recent months. Mostly notably it has had to put a stop to its wholesale lending business.

Whether or not RateSetter continues to make changes at the behest of the regulator is unclear. But what is clear, using the latest figures from AltFi Data, is that its lending is slowing down significantly. RateSetter posted its first negative month of net lending (new loans net of repayments and defaults) in April, and continued in the same direction in May, with a net lending figure of around -£5m for the month. In June, its net lending fell to almost -£15m.

UK peer-to-peer loans score AAA securitization (AltFi), Rated: AAA

Landbay originated loans have been included in a highly rated pool of mortgages. 

More than £30m of loans originated by UK peer-to-peer platform Landbay have been included in a larger securitization of buy-to-let loans awarded an AAA rating.

UK fintech shrugging off Brexit in 3 charts (AltFi), Rated: AAA

While the unfolding Brexit process has added to a list of summer worries for UK investors, those with a stake in the disruptive end of financial services have more reasons to cheer.

The rapidly growing sector is seeing resilient growth, according to data provider Fintech Global, who has found that growth is robust.

The firm’s research found UK fintech had seen growth of CAGR of 18.1 per cent between 2014 and 2016. In 2017 this trend has continued with fintech firms receiving funding of £769m.

Funding Circle fund on track but warns of Brexit risks (P2P Finance News), Rated: AAA

FUNDING Circle’s listed fund performed in line with expectations in its first full year of operation, which saw its net asset value increase by 11 per cent to £164.8m.

The Funding Circle SME Income Fund, which is quoted on the main market of the London Stock Exchange, launched in November 2015 to give a wider range of investors access to the peer-to-peer platform’s loans.

In its annual report for the year to 31 March 2017, released on Friday, it said that investors received dividends of 6.5p per share over the last four quarters, in line with the target of 6-7p per share.

Why I’m backing peer-to-peer lending (RateSetter), Rated: A

In finance we tend to seek an edge, a marginal advantage that inches a company ahead of its competitors.

What attracts me to RateSetter is the simplicity of the business. The primary function of finance is to connect those who want to invest money with those who can put that money to productive use. The peer-to-peer sector is solving this age-old challenge in a refreshingly simple and innovative way. A good example of this innovation is the Provision Fund, which spreads risk across the entire portfolio and allows even the smallest investor to achieve diversification.

FundingKnight, Part of GLI Finance, Receives Full FCA Authorisation (Crowdfund Insider), Rated: A

GLI Finance (AIM: GLIF) has announced that FundingKnight has been granted full Authorisation from the Financial Conduct Authority (FCA). FundingKnight is an online / P2P Lender providing access to capital for UK SMEs. FundingKnight has been operating under interim permissions since 2014, when the FCA commenced the process of regulating the peer-to-peer lending industry.

A new altfin investment aggregator has launched (P2P Finance News), Rated: A

A NEW platform connecting investors with alternative finance opportunities from around the world has launched.

Amsterdam-based Yieldport acts as a community and search engine, crawling the web for new projects using a custom search algorithm. It currently offers more than 2,000 opportunities – such as business loans, mini-bonds and equity start-up investments – from 30 different countries.

UK Marketplace Lender Growth Street CEO Greg Carter Talks Transparency, Brexit and Fintech Innovation (Crowdfund Insider), Rated: A

Growth Street, an FCA-authorized UK business finance platform focusing on SME loans, has aimed to become a flexible working capital solution since launching in 2014. Greg Carter founded Growth Street while still working at Arts Alliance Ventures, a venture capital firm that was founded in 1996 and has since backed over 40 companies, including Growth Street, which it incubated. Carter recently became the CEO of the platform.

Erin: Could you please share Growth Street stats? Milestones?

Greg: I’m very proud of the fact that six months since launching our first product for individual investors, we now have over 1,000 lenders signed up to use our platform. This includes small businesses, who are also taking advantage of our platform to lend themselves. Another key milestone was attaining Appointed Representative status, allowing us to accept individual investors; the next goal for us is to be fully regulated ourselves.

Erin: Please talk about Growth Street’s How to Improve Cash Flow tool.  How is it addressing UK SME cash flow ‘pain points’? Which other tools set Growth Street apart from its peers?

Many businesses could optimise cash flow better, but the tactics and strategies often vary from business to business. So, our How to Improve Cash Flow tool asks a series of questions to diagnose any cash flow problems within the business: respondents then get a bespoke, tailored assessment of their position from Growth Street, for free. How to Improve Cash Flow is the first in a series of tools we’ll be launching in the coming months to give businesses more data about their cash flow, helping them make better decisions and hopefully improving their access to capital.

Erin: What are your thoughts on transparency in the sector?  How much is too little, too much? Or is there ever enough?

Greg: I believe the most important goal for the sector is to achieve clarity for our customers about the risks and returns of marketplace lending. Transparency is important, but the way information is presented matters a great deal. I don’t think it is enough, for example, to just publish loan book statistics; we also need to explain in plain language how we use this data to manage risk. As the industry matures and looks to grow beyond a base of early adopters, I believe a focus on clarity will best help us to attract new investors.

One to One: John Goodall, chief executive, Landbay (Mortgage Strategy), Rated: A

Is Landbay ready for the PRA underwriting standards coming in from October?

Yes, we are. We introduced our broker portal in Q4 2016. It was built with PRA changes in mind and was designed to capture the additional information this would require from day one.

The buy-to-let sector has been buffeted by significant regulatory winds recently. What are the prospects for the sector?What have been some of your biggest professional challenges?

We are seeing a big uptick in applications from limited companies and we expect this to grow further from 1 October.

What have been some of your biggest professional challenges?

For investors, one of the key things that we needed to do was build trust. As a start-up lender with no record, you cannot do that overnight, so getting the credit function right was crucial. Now that we have been lending for three years, I think we have reassured investors and built that trust.

Which one change would you like to see in the market overall?

A greater focus on technology to improve the service for brokers and borrowers.

Emotional intelligence needed to win over next generation of shoppers (Internet Retailing), Rated: A

Payment company Klarna questioned 2,000 UK consumers, in a survey carried out by Censuswide, and found that members of the millennial generation, aged between 16 and 34, were three times more likely to feel excitement while adding items to their online basket, compared to older shoppers. Millennials are also more likely (68%) than shoppers aged 55 and over (24%) to feel anxiety and guilt at the point of payment.

Klarna suggests that allowing shoppers to try before they buy would be an easy way to build brand loyalty. Deferred payment options would also reduce anxiety among 20% of millenials, making one in five more likely to finish their purchase.

The consumer research judges a myth the idea that items added to a basket show a clear intention to purchase. It found that a significant 89% of millennials used the basket as a tool to review costs, while more than three quarters used their basket as a wishlist, compared with only 29% of over-55s. Meanwhile, nearly three quarters (74%) admit to “buzz browsing” – adding items to a basket with no clear intention to buy.

Selling to silver surfers: how e-tailers can develop emotional intelligence to appeal to an older demographic (Net Imperative), Rated: A

Luke Griffiths, General Manager at Klarna UK, looks at the psychological factors that come into play when older consumers embark on the online shopping journey.

The flip side of this excitement is lows caused by anxiety and guilt, with 52% of millennials saying that they worry that they can’t afford the purchase during checkout. That’s compared to 16% of over 55s, who in many cases will have more disposable income than their younger counterparts – showing there’s a sizeable prize for retailers who get the customer experience for older generations right.

While the millennial customer journey is full of twists and pitfalls, baby boomers are patient, calm, and rational shoppers. They experience low emotional responses, with only 3% of those surveyed feeling guilty when adding things to their basket, and only 5% feeling impatient.

The over 55s buy things because they need them – only 21% are more likely to make a spontaneous purchase online because they deserve a treat – so tapping into necessity is key. And over half (52%) of those surveyed said they would reconsider an online purchase due to high delivery charge, so retailers with costly fees should reconsider their charges or face losing custom.

Just Eat and fintech startup Funding Circle are partnering on a recipe for takeaway success (City A.M.), Rated: A

The peer-to-peer lender will offer the nearly 30,000 restaurants which use Just Eat to get takeaways into people’s laps a deal on loans.

“Our partners Just Eat directed us to Funding Circle who arranged the loan for us in a matter of days. By not spending months speaking with the banks I was able to get the finance I needed and focus on running the business and planning for the future.”

Gas fires firm lost £300k to online hack before going bust (Leicester Mercury), Rated: B

Gas Superstore lost hundreds of thousands of pounds in an online hack prior to going into administration, new documents reveal.

The Leicestershire retailer – which sold electrical goods and gas fires to the public – collapsed in April with debts of about £2.7 million.

FRP said trade creditors were owed more than £1.2 million when the business went bust – including the Google Adwords service, which was owed almost £50,000, and peer-to-peer business loan company Funding Circle, which was owed £275,000.

China

Blockchain sharpens Dianrong’s edge in P2P lending to small businesses (SCMP), Rated: AAA

Blockchains, the distributed databases conceptualised in 2008 as core components of the digital currency bitcoin, are increasingly finding their way into financial technology and helping to redefine the boundaries of traditional banking. They can be used as open, distributed digital ledger systems that can record transactions efficiently.

Dianrong and Foxconn are currently working together to apply the Chained Platform for Foxconn’s suppliers.

Dianrong is expanding its team in preparation for the increase in supply chain finance loans through Chained Finance. The company has plans to hire 500 more staff in Shenzhen in addition to the 60 they already employ, Htite said.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

By 2020, 60% of systems in China’s banking industry will be deployed in the cloud, most with the approval of the China Banking Regulatory Commission. According to the report, China Banking Regulatory Commission (CBRC) has been seeking to partner with 19 Chinese banks to establish a Fintech cloud stack, and the investment amount of each bank should not be less than CNY 20 million.

Online Market Lender Dashu Finance Raises CNY 800 million for Series C Round

On July 7th, Dashu Finance, a Shenzhen-based provider of online small and micro loan services, received CNY 800 million (USD 118 million) for its Series C financing round.

China’s Central Bank Issues Report on Financial Stability

On July 4th, The People’s Bank of China (PBOC), the central bank of China, released a financial stability report, warning China should redouble its efforts to regulate key risk (such as Bitcoin) in the financial sector to ensure financial stability.

China’s P2P Lending Industry Financing Drastically Decreases in the First Half of 2017

Statistics show, by the end of June, only 15 P2P online lending platforms received financing in China, and the total amount was just about CNY 4 billion (USD 5,987.1 million). Tuandaiwang.com completed the largest round of financing with CNY 1.8 billion, followed by xiaoying.com’s CNY 1 billion.

Alipay Makes Tuition Payments Easier

Thanks to a new cooperative effort between Hangzhou-based Alipay and other 30 banking financial institutions, Chinese students enrolled in primary and secondary schools are now able to pay their tuition online.

China’s Online Insurance Company Zhong An Introduces Flight Delay Insurance

Last week, Zhong An Insurance launched a WeChat-based fight delay insurance. Passengers can just buy the insurance on the Wechat platform 15 minutes before fights take off, rather than one day before departure as termed by the traditional delay insurance. The insurance pays a traveler RMB 10 if a departing or connecting flight is delayed by half an hour, and the compensation is up to RMB 120.

2017 LendIt Summit China was Held in Shanghai  (Xing Ping She), Rated: A

On 15th July, LendIt, the world’s largest and most high-profile summit of fintech was held at Kerry Hotel in Pudong, Shanghai. Including keynote speech, seminar and group discussion, the summit covered all the frontier topics of internet finance. Fintech, online lending, block chain, bank & technology, inclusive finance, Asia-pacific and global vision are the fileds discussed.

LendIt is known as the largest fintech summit around the world. It was founded in 2013 by Bo Brustkern, Jason Jones and Peter Renton. The original intention of the summit was to provide social networking and communicating opportunities for the entire online lending and financial technology community. So far, the annual summit has been held for several times in the US, Europe and China, and it is the second time for LendIt held in China.

Over 2000 elites from global fintech and traditional finance participated in the summit, including decision makers, institutional investors, and regulators. It worth mentioning that both Dr. Yang Li, the CEO of Xeenho and CSO of Xing Ping She, and Sherry Yang, the vice president of Xeenho, were invited to attend LendIt China, discussing the development and trend of global internet finance. On April 2017, Xeenho and Xing Ping She have officially reached strategic cooperation with LendIt.

LendIt China July 9th 2017 – Journal Entry: AMTD + LendIt: Fintech, The 4th Industrial Revolution. (Crowdfund Insider), Rated: B

AMTD-LendIt Conference officially kicked off today in one of the most metropolitan cities in the world, Hong Kong, China.

The 2nd annual AMTD and LendIt FinTech Summit is well attended by heads of state from PwC, FuTu Securities (Wealth Management and Robo Advisor), AMTD and many of the leading industry heavyweights giving the audience a preview of what’s to come.

PwC Global FinTech Survey

PwC unveiled their latest Fintech survey from hundreds of financial institution’s CEO and found that more than 60% of the CEOs are making investments into Fintech and some have dedicated 15% of their top line revenue into Fintech R&D.

Futu Securities

I was most impressed with Futu Securities Robo advisor chatbot. Leveraging artificial intelligence, Futu’s clients can pose a question to the A.I. assistant on what’s causing a particular stock in their portfolio to fall. The A.I. algorithm then mines social media sites, news sites and the internet, in general, trying to establish whether there was a press release, news articles that may have caused the drop in stock price.

European Union

BBVA, the best mobile banking service in the world (BBVA Compass), Rated: AAA

BBVA has the best mobile banking app in the world, according to Forrester Research’s latest report “2017 Global Mobile Banking Benchmark.” The study, which was published today, analyzed 53 apps from large retail banks in 18 countries, including the U.S., the U.K., FranceBrazilTurkeyChina and Australia.

BBVA Spain’s mobile banking services received a final score of 87 out of 100 – the highest score since Forrester began the global rankings in 2013.

Digital banks must diversify or die (VentureBeat), Rated: AAA

Across Europe the 10 largest digital bank financings have totalled $500 million so far, with Atom alone raising more than half that amount.

However, look more closely and it’s clear the era of digital-only challenger banks may actually be coming to a close. Systemic difficulties in turning profits with pure digital-only banking will drive more businesses to adopt a broad-based approach focusing on digital financial services, of which banking is part.

Customer acquisition costs (CAC) for pure digital banking businesses are rising – fast. The fundamental problem, in Europe as well as in the U.S., is one of demographics: Dozens of fintechs are chasing a small, well-defined target customer base. These customers need to have enough disposable income, be digitally-savvy, and usually live in key urban areas. It can easily cost $100-250 to acquire customers in certain segments, and it takes an awful lot of $5-10 transaction fees for single-use services to generate a return on these customers. It boils down to a supply and demand issue: The number of high-value prospects is static, but there is a glut of well-funded and aggressive fintechs chasing them.

 

International

Study says women are better at crowdfunding (Reuters), Rated: A

Consultancy firm PwC, together with The Crowdfunding Center, analyzed 450,000 crowdfunding campaigns across the globe over the past two years and found that those led by women were 32 percent more successful at reaching their target than those carried out by men.

The results of the study, which were published on Thursday, also found that female-led projects are able to attract an average $87 pledge per funder, while men received $83 on average.

IFSB view on Islamic Crowdfunding (Islamic Finance), Rated: A

To identify relevant crowdfunding platforms with a focus on equity- and loan-based platforms located in the Muslim world, the database of Crowdsurfer was consulted. It lists in 32 of the 57 member states of the Organisation of Islamic Cooperation (OIC) a total of 108 crowdfunding platforms.

The findings were somewhat surprising:

  • The platform that was characterised in its Crowdsurfer profile as a “Sharīʻah-compliant equity platform for SMEs and start-ups in Malaysia” (AtaPlus) did not mention the Sharīʻah compliance on its website. The only hint of Sharīʻah compliance was the list of activities in which a fund-seeking entrepreneur must not be involved.
  • Only one loan-based crowdfunding platform – Liwwa (Lebanon) – outlines the importance of Sharīʻah compliance and gives a brief explanation of its business model (based primarily on murābaḥah) in the FAQ section of its website.
  • A loan-based platform in the UAE – Beehive – applies a dual approach: it offers both conventional as well as Sharīʻah-compliant lending techniques. The Islamic option is explained in a rather detailed manner on the website.
  • One of the oldest equity crowdfunding platforms in Egypt – Shekra – quotes several previous Islamic awards on its website. It does not explain how it assures Sharīʻah compliance, but the founders have propagated their approach in journals and conference papers. The platform operates as a “closed investors network”, which is quite unusual for a crowdfunding platform.
  • Finally, an Indonesian platform for student loans – Danadidik – applies a profit- (or income-) sharing model to calculate the returns for investors. Although this is vaguely reminiscent of Islamic financing techniques and the platform claims to adhere to Islamic principles, the Sharīʻah compliance is uncertain.
Australia/New Zealand

Rivalry between banks expected to ramp up after launch of new reforms (Mozo), Rated: AAA

Federal Treasurer Scott Morrison has today announced new banking reforms that will allow credit unions and building societies to legally call themselves banks, in a move aimed at increasing competition between home loan providers.

Morrison and MP Kelly O’Dwyer said in a joint statement that the government will axe the restrictions deposit-taking institutions currently face, which mean they can only attain “bank” status with $50 million or more worth in capital.

Nearmap hires VP of marketing to support rapid growth (CMO.com.au), Rated: A

Aussie aerial mapping business, Nearmap, has appointed a new VP of marketing among two senior executive hires aimed at driving its next phase of international growth.

Silvia Arrigoni will be Nearmap’s new VP of marketing and Shane Preston will be vice-president of sales.

Arrigoni, who previously held positions as head of brand marketing at online lender, SocietyOne, and as group business director for marketing agencies such as Havas and Arnold Furnace, brings decades of experience to Nearmap.

India

YES Bank hunts for global partnership to develop fintech landscape (The Hindu Business Line), Rated: AAA

YES Bank, which runs a start-up accelerator programme called Yes Fintech, is looking at exclusive global exchange programme partnerships to help Indian start-ups gain access to developed markets in terms of business and investments.

Towards this end, the bank has already tied up with MaGIC (Malaysian Global Innovation & Creativity Center), a Malaysian government initiative. It is also looking for similar partnerships with the US, Sweden, Norway, Singapore, the UK and Israel over the next few years.

Funding dreams: Get a collateral-free education loan with just a click of a button (The News Minute), Rated: B

The cost of education has skyrocketed over the past decade by 160%, be it colleges or even elementary and secondary school. This has become a major setback for middle class families in India to provide their children with quality education.

Quiklo offers collateral-free loans to students with relatively smaller ticket size. Its biggest USP is that the loan is approved in a day and the amount is disbursed in the next few days

It runs on both a B2B and B2C model.

Quiklo offers collateral-free loans to students with relatively smaller ticket size. Its biggest USP is that the loan is approved in a day and the amount is disbursed in the next few days

It runs on both a B2B and B2C model.

Under the B2C model, parents can go to its website or download the app, enter their details, the student’s details, their financial problems, the course fees and submit the application. There is an algorithm that runs to check their credit worthiness depending on a few parameters like salary, etc.

Under the B2B model, Quiklo ties up with colleges and test prep companies. When a student goes there for admission, the college pitches Quiklo to them in case they are in the need of financing.

How new age investors are opting for alternative investment (Daily News & Analysis), Rated: A

Fixed Deposits, investment in gold, and many other traditional options are losing grounds when trying to woo the new age investors.

Digital gold currencies are issued by a number of companies like now Paytm as well, each of which provides a system that enables users to pay each other in units that hold the same value as gold bullion.

Peer-to-peer (P2P) lending in India currently gives a net return of 18-22 percent to lenders.

Asia

Online-only Chinese retail investment platform to launch in Singapore in third quarter (The Straits Times), Rated: AAA

An online-only platform for retail investors will launch here in the third quarter, China’s Ping An Group announced on Monday (July 17).

Lu International (Singapore) Financial Asset Exchange, a spin-off from the Shanghai-based Lufax, has received an in-principle approval from the Monetary Authority of Singapore for its capital markets services (CMS) licence.

The company, which will offer investments via mobile devices with no face-to-face encounters, hopes to attract customers who may have less wealth than those served by private banks.

ANGIN’s startup-investor site Connector.id to launch full version soon (Deal Street Asia), Rated: A

Connector – powered by Indonesian angel investor network (ANGIN) and the UNDP – has garnered over 400 startup applications since its beta version was introduced two weeks ago.

The idea is to help startup founders find the right investors for their ventures. Often, founders waste resources chasing the wrong investors, or even don’t have the channels nor the experience to source funding.

So far, Connector team has received more than 420 applicants, of which 70 per cent are technology companies. About 50 per cent have requested further connection (eg. pitch deck, call or meeting). Most applicants (38 per cent) are looking for equity, while the rest are looking for grants (14 per cent), collateralised loan (13 per cent), bridge loan (9 per cent), non-collateral loan (7 per cent), trade financing (5 per cent), and invoice financing (3 per cent).

Read more at:

Modalku launches new app (Deal Street Asia), Rated: A

P2P lending platform Modalku has announced that it will launch a new app next week. The app will be a “new innovation for lenders and debtors alike”, and is hoped to further bolster Modalku’s mission to support the small and medium enterprises in Indonesia.

Africa

SA fintech startup Yoco announces it has hit 10 000 SMEs users milestone (Ventureburn), Rated: AAA

South African payments company Yoco today announced that it now has 10 000 small and medium-sized enterprises (SME) clients in South Africa using its point-of-sale payments platform to accept card payments.

Maphai said the company is adding over 1 000 new SMEs to its base every month. This makes it the largest independent mobile point-of-sale player in South Africa by number of merchants, he claimed.

Yoco has in the past two years of operation, raised $7-million in funding from international investors and employs over 70 people in Cape Town and Johannesburg.

Middle East

Central Bank to Finalize Fintech Regulations (Financial Tribune), Rated: AAA

In light of the importance of regulating fintech firms to prevent any problem in the monetary market, the Center for E-Commerce Development’s deputy has announced that the Central Bank of Iran will define the framework of fintech operations by the end of summer.

According to CBI regulations, innovative financial services are allowed to operate as long as they are not involved in money creation, currency exchange and offering payment tools (like cards) and attract deposits.

Payment aggregators allow sellers to quickly launch a payment gateway on their website, without getting involved in the demanding process imposed by banks and other PSPs.

According to Oskouei, currently 50 fintech firms have announced their commitment to continue their operations until CBI regulations are ready for implementation.

Authors:

George Popescu
Allen Taylor

Tuesday January 24 2017, Daily News Digest

SMB loan borrower satisfaction

News Comments Today’s main news: Trigger breaches may magnify reputational risk for originators. LendingTree announces top customer-rated lenders for Q3 2016. Landbay, Octopus Choice receive HMRC ISA approval. Ppdai.com plans US IPO. Today’s main analysis: The state of online SMB lending. Is China’s FinTech sector just another knockoff? Today’s thought-provoking articles: Risk assets enter short-term […]

SMB loan borrower satisfaction

News Comments

United States

United Kingdom

European Union

Australia

China

News Summary

United States

Trigger Breaches May Magnify Reputational Risk for Originators (PeerIQ Email), Rated: AAA

Triggers are a structural feature that provide senior bondholders with protection against a reduction in credit support. Triggers applying pre-defined tests (e.g., minimum excess spread, cumulative loss levels, delinquency rates, violations of reps & warranties, etc.) and may re-direct cashflows to senior noteholders if one or more tests are violated.

A trigger breach may force originators/sponsors to divert capital to repay noteholders rather than re-invest precious capital into revenue-generating origination activities. Such a “double whammy” is associated with headline risk, which can leader to reputation damage, and negatively impact future financing activities, either in a warehouse facility setting or during ABS transactions.

Trigger breaches are a manifestation of unexpected credit performance, poor credit modeling, or unguarded structuring practice.

The average time to breach performance triggers for consumer MPL ABS deals was approximately 11 months as collateral losses ramped up within the deal.

The negative headlines associated with trigger breaches increases the cost of capital for originators, and reduces the availability of funding.

If an early amortization trigger is violated, excess spread (e.g., collateral cashflows less financing costs payable to noteholders) are diverted from equity investors to senior noteholders with the goal de-risking the senior noteholders as quickly as possible. Therefore, although senior noteholders may be structurally insulated from first loss-risk, senior noteholders are nevertheless exposed to high levels of prepayment and reinvestment risk.

From the equity investor’s perspective, tighter triggers allow higher potential equity returns in the absence of any collateral losses. However, if losses exceed the available cushion before the triggers are breached, cashflows to the equity investors will be cut off faster and cause a reduction in the expected equity returns.

Conversely, less restrictive triggers allow more cushion for losses before the coverage tests are breached.

Cumulative Net Loss (CNL) Rate Trigger Example: This prevalent trigger can be defined in a number of ways as issuers and originators work together in the deal structuring phase. Exhibit 2 illustrates a contrived trigger threshold profile. The trigger breach level is defined and increases with respect to the deal age. A trigger event occurs if the realized cumulative net loss rate exceeds the trigger threshold of the collateral.

The state of online SMB lending in 4 charts (Tradestreaming), Rated: AAA

It’s no wonder that SMBs aren’t optimistic about their futures. The median SMB holds 27 buffer days of cash in reserve, according to the JPMorgan Chase and Co. Institute. And when they look to access small working capital loans to improve their cash flows, they aren’t finding a lot of lenders willing to work with them.

It’s not like the average SMB has a major appetite for cash, either. 76 percent of loans that SMBs apply for are less than $250,000 and amost half of them are under $50,000, according to a paper co-written by authors at the Harvard Business School and business loan marketplace, Fundera.

As more SMBs turn to online lenders, they’re not always coming back happy. That’s mostly due to the high costs of some of these early loans.

Approximately one-in-six small businesses considering a loan will apply to an online lender this year. But because there’s a lack of data collection on overall loan originations in the U.S., it’s tough to accurately size the effect of new entrants in the SMB lending space.

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

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

The top lenders of Q3 2016 by rank are:

Home Lending Category

1.    Veterans United Home Loans
2.    Triumph Lending
3.    Royal United Mortgage
4.    HomePlus Mortgage
5.    Wyndham Capital Mortgage
6.    North American Savings Bank
7.    Pulaski Bank Home Lending
8.    AmeriSave Mortgage Corporation
9.    ConsumerDirect Mortgage, A Division of FirstBank
10.  Insight Loans (tie)
10.  Seckel Capital, LLC (tie)

Personal Loans Category

1.    Lending Club
2.    OppLoans
3.    First Midwest Bank

Auto Loans Category

1.    rateGenius
2.    up2drive – a division of BMW of North America
3.    iLendingDIRECT

Business Loans Category

1.    Credibly
2.    RapidAdvance

Risk Assets Enter a Short-Term Holding Pattern (Morningstar Email), Rated: A

Between the uncertainty driven by the change in the administration and the arrival of fourth-quarter earnings season, risk assets entered into a short-term holding pattern last week. The average corporate credit spread of the Morningstar Corporate Bond Index, our proxy for the investment-grade bond market, was unchanged at +127 last week. In the high-yield market, the credit spread of the Bank of America Merrill Lynch High Yield Master Index was also unchanged at +402. In the equity markets, the S&P 500 was essentially unchanged for the week, declining 0.10%. Price action in the commodity markets was mixed, but overall price changes were modest.

A significant portion of investors’ caution toward the corporate bond market is the acknowledgment that corporate credit spreads are trading at very tight levels compared with recent and historical averages. The current level is the tightest that credit spreads have registered since late 2014 and significantly tighter than long-term averages. The average spread of the Morningstar Corporate Bond Index is 41 basis points tighter than the long-term average of +168 since the end of 1998. The average spread of the Bank of America Merrill Lynch High Yield Master Index is currently 178 basis points tighter than its longterm average of +580 basis points since the end of 1996.

In addition to the volatility that earnings can generate, with the change in the administration, many investors are treading cautiously in the market until there is greater clarity regarding the policies that President Donald Trump will pursue in the near term. As such, defensive issuers generally traded better last week, although there did not appear to be a significant sector rotation toward a defensive portfolio posture.

Diversification Strategies for Investors of P2P Lending (Equities.com), Rated: A

Peer-to-peer lending is gaining a momentum among investors. P2P loans have less volatility, a low correlation, and yield much higher returns compared to other fixed-yield investments. Median adjusted returns average 7% on a 36-month loan.

And this is not an asset basket into which you put too many of your investment eggs.

The low minimum investment at these services makes diversification easy. However, loan selection takes time, and speed is key to getting the best loans.

Although default rates are higher on grades D–G at Lending Club, and grades D–HR at Prosper, the ROI is higher too. Loan filtering can mean successful investing in these lower grades.

Beyond robo-compliance: How bots will soon permeate banking (American Banker), Rated: A

As banks become more comfortable with the relying on software robots to replicate the actions of a human interacting with machines to handle rote tasks, experts say they will be quick to deploy the technology companywide as a way to trim expenses and redirect employees to more crucial tasks.

This could include areas in finance departments that are heavily manual, such as accruals and managing and clearing payments. Human resources and administrative functions is also an area where robotics can be deployed.

Austria’s Raiffeisen Bank International AG is among the first to work with Accenture and Blue Prism to automate various business functions. Additionally, it is in the process of creating an in-house robotics center dedicated to experimenting with how the technology can be used in different functions at the bank.

The bank started out with four pilots implementing robotic process automation in tasks that had “low-to-medium complexity; rule-based processes with a logical order of steps, repetitive process patterns with clearly defined process options,” said Markus Stanek, head of group efficiency management at the bank.

With the center, Raiffeisen will experiment with how to implement robotics in in a whole host of banking functions.

FORD CREDIT, AUTOFI DEBUT PLATFORM FOR DIGITAL VEHICLE BUYING AND FINANCING (Ford), Rated: A

There’s a new way for customers to purchase or finance a new Ford vehicle in minutes – right from a dealership website from anywhere, on any device – through a new platform from Ford Motor Credit Company and financial technology company AutoFi.

In addition, Ford Credit has made an investment in AutoFi as Ford Credit continues pursuing technological advances to make the financing experience better.

The AutoFi platform can be used now at Ricart Ford in Groveport, Ohio, and will roll out over time to more Ford and Lincoln dealerships across the United States. The introduction comes as 83 percent of Americans say they would like to spend as little time at the dealership as possible when shopping for or buying a car, according to a new survey of more than 1,000 U.S. adults conducted online by Harris Poll on behalf of Ford Motor Company. Many of those same people, however, still want to touch and feel their new vehicle before signing on the dotted line. The new platform provides the best of both worlds.

Through the dealer website, customers have a transparent and seamless purchase and finance experience from anywhere on their mobile phone, tablet or computer. Once the online part of the transaction is complete, all customers need to do is sign the paperwork when they collect their new Ford.

Consumers may shop for a new Ford in the showroom or from anywhere via the Ricart Ford website. After selecting a vehicle, they can apply for credit and receive a decision, choose the financing terms that make sense for them, and then review and select optional vehicle protection products – completely online on their own time. Customers then can review a final summary of the financing terms and schedule time to complete the transaction and pick up the vehicle.

Why Banks and Alternative Lenders Will Play Ball in 2017 (deBanked), Rated: A

According to the Wall Street Journal last year, big banks have decreased the number of loans to small businesses by more than 38 percent since 2006.

But the recession helped pave way for another industry – alternative lending – which has significantly improved access to capital for small businesses. According to the Small Business Administration (SBA), the 2016 fiscal year was a record setting year for loans, with more than 70,000 approved that totaled $28.9 billion and supported nearly 694,000 jobs.

More and more headlines show that banks are shifting their strategies to keep up with America’s technology and alternative lending habits, making 2017 the year banks finally get back into the fray and play ball with alternative lenders to improve the lending process.

No longer content to be sidelined, banks are starting to play ball, and they will continue to do so at an even faster pace. The fact that banks are moving in now and increasing small business loans validates alternative lending.

Real Estate as an Alternative Investment for Non-Accredited Investors (Crowdfund Insider), Rated: A

So what are some of the options for both non-accredited, as well as accredited, investors today. Below we have highlighted several opportunities to invest in real estate assets online.

Today Fundrise has moved away from single property crowdfunding having trailblazed a new fund structure labeled the eREIT.  Using Title IV of the JOBS Act which updated old Reg to a more flexible security exemption called Reg A+, their eREITs have grown from one to now five (2 of them are sold out).

Small Change is on a mission to become the first real estate funding portal to utilize Reg CF. Created by Title III of the JOBS Act, Reg CF allows issuers the ability to raise up to $1 million online from both accredited and non-accredited investors.

Originally only for accredited investors, this changed when RealtyMogul.com created their MogulREIT (using Reg A+) to offer non-accredited investors the chance to join in on the real estate offers listed on their platform. Minimum investments used to be $2500 but have since been lowered to $1000 to facilitated a wider audience.

American Home Preservation or AHP purchases distressed mortgages at a discount. The platform reports the discount can be up to 50%. They then try to work out a sustainable solution for the home-owners in a win-win scenario.  The people keep their home and investors earn some income. AHP strives to pay a return 12% per year on invested capital in the fund (Reg A+). AHP not only has a unique approach to real estate investing but also has probably the lowest investment minimum at just $100.

2017 Americas Alternative Finance Industry Study (Crowdfund Insider), Rated: B

The Polsky Center and the Booth School of Business at the University of Chicago and the University of Cambridge Judge Business School are working together once again on their benchmark research on alternative finance.  The America’s study, first completed in 2016, will be reviewing sector growth in North, Central and South America.  Widely cited as the very best data available on the growth of Fintech, the study will quantify marketplace/peer to peer lending, crowdfunding and other forms of alternative finance.

While the research has been described as industry leading, there is a question as to how policymakers are using the data. Ziegler believes that regulators have recognized the value in academic and evidence based research that is unbiased.

Last year’s alternative finance report found that the Americas online alternative finance industry grew to $36.49 billion, a 212% annual increase from the $11.68 billion in 2014.

United Kingdom

Landbay and Octopus Choice Receive HMRC ISA Approval (Invezz), Rated: AAA

On Monday, the buy-to-let mortgage specialist Landbay announced that it had passed the 2nd step in regulatory proceedings allowing the P2P lender to offer IFISAs to its investors. Landbay was granted full FCA authorisation in December, making it a member of a niche, but growing, group of peer-to-peer platforms with full permissions – a necessity if a platform wishes to offer the IFISA. The P2P platform has facilitated over £42million worth of investments, in over 421 loans to UK property borrowers, since its inception.

Octopus Choice, a recent entrant into the UK P2P market (early 2016 launch), announced that it’s also been approved as an ISA manager by the Board of HM Revenue and Customs (HMRC).The product of Octopus Investments, the Choice platform has made waves in the P2P lending industry since inception, facilitating more than £45m worth of loans to asset-backed property borrowers, inside one year.

Goji Selected to Launch IFISA for Landbay, Downing, Peer Funding and UK Bond Network (Crowdfund Insider), Rated: A

Specialist provider of P2P and marketplace lending products and services, Goji, has announced that Landbay, bond investment platform UK Bond Network, crowd bond provider Downing, and SME-focused P2P platform Peer Funding have each selected their platform to offer the Innovative Finance ISA (IFISA). Goji said expectations were to launch the IFISAs before tax year deadline.

In an increasingly competitive crowdfunding market, Goji says that firms offering the new investment vehicle are finding themselves a step ahead of the competition as the IFISA quickly becomes an easy differentiator in the eyes of investors.

A peer-to-peer puzzle (Financial Times), Rated: A

Saving Stream is a “peer-to-peer” lending startup that provides “short-term bridging loans, secured against UK property” and is waiting to be fully authorised by the Financial Conduct Authority*.

Late last year, the P2P lender started to borrow money by issuing unsecured mini-bonds with three or five year fixed terms. The proceeds of the mini-bonds are used to fund the same loans that P2P investors snap up through its marketplace. But while P2P investors earn 12 per cent per year, mini-bond investors earn half that, six per cent.

But the question is still bothering us: why would anyone buy the bond? After all, passive management is meant to be cheaper, not more expensive.

A Whole Generation May Never Be Able To Retire From Work (Voice Online), Rated: A

Peer-to-peer lending platform Lending Works surveyed 1,500 non-retired adults in the UK (YouGov) and made some worrying discoveries.

Firstly, over 1 in 5 of those who aren’t yet retired – 22% – gloomily believe that they’ll never be financially secure enough to retire. This suggests they have visions of working until they drop, as they won’t be able to afford to stop earning money. This pessimistic view is highest in the 35-44 year old category, with 25% of them not seeing themselves as ever being financially secure enough to retire, although only 17% of 18-24 year olds, who technically have more time to start saving, agree. Countrywide, the outlook is bleakest in the West Midlands (27%), perhaps due to relatively high unemployment, compared to only 19% in London, where there are, theoretically, more jobs.

The main reason, of course, that we can’t see ourselves retiring is because we can’t afford to. Over a third of non-retired adults – 34% – don’t save a single penny towards retirement each month. Women are proving to be worse at saving than men, with 41% of non-retired females not saving towards retirement, compared to 26% of men.

Why investors are likely to see more robo-input from their financial adviser (Money Observer), Rated: A

The Treasury consultation highlighted that many people rely on digital services for information and guidance on key financial decisions and the new body will have a ‘well optimised’ website as well as telephone, webchat and face-to-face guidance.

We strongly believe that digital communications can help streamline the financial advice process and allow people to choose how they consume information, and are pleased to hear that the new guidance body will recognise this.

There is no question that there is a role for automated advice. To make advice more inclusive the industry needs to develop alternative distribution channels that potentially appeal to a new generation of customers.

In its current guise automated advice is perfectly positioned for those people who have simple investment needs, or who are not looking for a holistic financial review. It can offer a personal recommendation, which differentiates it from self-select or execution-only strategies.

European Union

ASOS partners with Klarna to launch pay after delivery in Nordics (Retail Times), Rated: A

Klarna’s pay after delivery allows retailers to bridge the gap between the online and offline shopping experience. When making a purchase on desktop or mobile, customers in the Nordics will now have the option to pay for their products up to 14 days after delivery – giving them the chance to try on their purchases before paying.

Australia

New Year’s gift for SMEs: Lending to small business in Australia looks set to improve (Australian Anthill), Rated: A

Until relatively recently, a bank rejection meant a business had to forsake growth, stretch its own payments or extend terms to the ATO. But more recently, business owners are being referred to a bank’s lending “partner” of choice, which typically charge interest rates of at least 20 per cent, and in some cases can even reach triple digits.

Luckily a new group of non-bank intermediaries is emerging to provide direct access to the extremely profitable asset classes that have long been solely the domain of banks. The combination of huge volumes of new data, virtually unlimited computing power, and omnipresent networks is enabling innovations like robo-advisers and marketplace lenders to provide lower cost, highly diversified investments for generating reliable, robust and lower capital risk returns.

Business owners and investors are beginning to take notice of the opportunity this represents. In 2014, there was $0 marketplace lending for business conducted in Australia, but according to Morgan Stanley, in 2015 the market reached $25million, and by 2020 it is forecast to grow to $11.4billion, representing 12 per cent of the total addressable market.

Marketplace lending addresses the concerns small business has with banks, and the needs for investors for stable fixed-income returns. Businesses can gain access to funding without the need for collateral, being subject to outdated models of risk, or enduring application processes spanning weeks. Sophisticated investors are empowered to take control of their own portfolios, choose the risks they are willing to take, and effectively “be the bank”.

China

Chinese Peer-to-peer lender Ppdai.com plans US IPO (South China Morning Post), Rated: AAA

Ppdai.com, one of the mainland’s largest online lending platforms, is reportedly planning to raise US$200 million in a US initial public offering (IPO) ahead of Beijing’s tightened regulation on the peer-to-peer (P2P) lending sector.

It would become the second mainland P2P firm to go public in the United States, following Yirendai.com’s US$75 million IPO in late 2015.

Is China’s FinTech Sector Just Another Knockoff? (TheStreet), Rated: AAA

The number of counterfeit products pumped out of China is unprecedented. Their total value adds up to $1.2 trillion, which accounts for 63.2% of the world’s total. Chinese make fake Gucci clothing and Cartier watches, open Apple stores that aren’t authorized retailers and have even duplicated global investment bank Goldman Sachs.

So whether China’s technology sector is another pirated import is a fair question. And the answer isn’t black and white.

Eight of the 27 fintech outliers in the world are located in China and are valued at more than $96 billion combined. The four largest outliers are Chinese. Antfinancial, which operates the payment affiliate of Chinese online retailer Alibaba, is the largest by a big margin. Meanwhile, the U.S. is home to 14 fintech outliers that are collectively worth $31 billion.

What’s Driving China’s Rise?

First, over the past few years, central banks have worked to develop digital finance in China by providing a supportive regulatory framework.

Surpassing the U.S. in 2013, China now makes up 47% of the world’s digital retail sales, and demographics suggest that share will continue to rise. The country has 721 million internet users (around 52% of the population). In comparison, 89% of the U.S. population uses the internet.

Third, a large segment of China’s population remains underserved by traditional banks.

Two Groups Are Accelerating the Process

As we can see below, 20% of Chinese adults do not have access to banking services. China has 8.1 commercial bank branches (and 55 ATMs) per 100,000 people. This is much less than the 28.2 branches (222 ATMs) in the U.S. and Canada, and the 28 branches (81 ATMs) in Europe.

Despite accounting for 60% of GDP and 80% of employment in urban areas, small and medium-sized enterprises (SMEs) get less than one-quarter of loans in China. In growing numbers they are seeking online finance solutions for their payments, credit, investments and insurance needs. Peer-to-peer lending networks make it possible for businesses to receive loans far faster than they could through a bank.

China’s fintech sector is particularly dependent on payment solutions. Currently, about 40% of China’s banking services customers use fintech platforms for domestic and international payments. Almost 58% of all internet users use fintech payment applications, meaning that 380 million Chinese people shop on the internet with their phones. Slightly less than 200 million people substitute their phones for a wallet for in-store payments.

China Rapid Finance Named a Finalist for LendIt “Innovator of the Year” Award (Yahoo! Finance), Rated: B

China Rapid Finance Limited (“CRF” or “the company”), China’s largest consumer lending marketplace in terms of number of loans facilitated, was named a finalist for “Innovator of the Year” honor at the first annual LendIt Industry Awards.

CRF is the only Chinese company nominated in this top category, which will honor the company that has demonstrated a strong culture of innovation, producing groundbreaking changes in the industry. CRF was selected as one of seven finalists, out of hundreds of applicants worldwide, by more than 30 industry experts who judged finalists representing innovation, emerging talent and top performers.

The company will compete for the honor at the LendIt Awards Ceremony on March 7, 2017, at the LendIt conference in New York City. LendIt is the world’s largest show in lending and fintech.

Authors:

George Popescu
Allen Taylor