Thursday November 21 2019, Weekly News Digest

LexinFintech Vintage Curve

News Comments Today’s main news: SoFi helps Pro.com make home improvement loans. BlueVine raises $102.5M. OCC, FDIC propose Madden fixes. Zopa gets banking license. Twino CEO stands down, platform hits 1B euro in loans issued. Today’s main analysis: LexinFintech lending business analysis (A MUST-READ). Today’s thought-provoking articles: Fed rate inversion. 10 cities that cost money […]

The post Thursday November 21 2019, Weekly News Digest appeared first on Lending Times.

LexinFintech Vintage Curve

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United Kingdom

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News Summary

United States

Pro.Com Partners with SoFi to Make Home Improvements Even Easier (PR Newswire), Rated: AAA

Pro.com, the premier digital platform focused exclusively on building custom homes and major remodels from start to finish, announced a new partnership Tuesday with online personal finance company SoFi, aimed at revolutionizing how homeowners finance and complete their remodels, renovations and upgrades.

BlueVine raises $ 102.5M more for banking services that target small businesses (TechCrunch), Rated: AAA

The startup, which offers financing and other banking services to SMBs, today is announcing that it has raised $102.5 million, a Series F round of equity funding that is coming from a mix of financial and notable strategic investors.

Led by ION Crossover Partners, the round also includes existing investors Lightspeed Venture Partners, Menlo Ventures, 83North, SVB Capital, Nationwide (a major financial services player in the UK), Citi Ventures, Microsoft’s venture fund M12, and private investors; as well as new investors MUFG Innovation Partners Co., Ltd, O.G. Tech (the VC connected to Israeli billionaire and property magnate Eyal Ofer), Vintage Investment Partners, ION Group, Maor Investments and additional private investors.

FT Partners Advises BlueVine on its $ 102,500,000 Series F Financing (FT Partners), Rated: B

FT Partners served as exclusive financial advisor to BlueVine and its board of directors on its $102.5 million Series F financing

The OCC and FDIC Both Propose a Madden Fix (Lend Academy), Rated: AAA

There is finally some real light at the end of the tunnel. In the last two days we have heard from both the OCC and the FDIC on the Madden issue, something they called unfathomable in a joint amicus brief in Colorado a couple of months ago. They have each given notice of their proposal that would clarify the “valid when made” doctrine once and for all.

At the core of the issue is the ambiguity created by the Madden decision. A loan can be valid when it is made but if it is sold or transferred can suddenly become invalid in the Second Circuit states of NY, CT and VT. This has led to reduced consumer lending to these states and also concern that, given no regulatory clarity, this could expand to other states.

Here are links to the OCC and FDIC proposals. There will be a 60-day comment period where interested parties can weigh in.

Big Tech Race to Own Digital Wallet; GS Robo-advisor on Launchpad (PeerIQ), Rated: AAA

Refinance demand increased by 13% from the previous week and was 188% higher than a year ago, when rates were 114 basis points higher.

First-time inversion driven by the long-end…

Source: PeerIQ, Blackstone, St. Louis Federal Reserve

In regulatory news, lawmakers are taking aim at payday loan rates. Congress members plan to introduce federal legislation that would cap interest rates at 36%.

The next move for Facebook would be to offer lending products most likely indirectly (e.g., via POS partnerships or via co-brand products such as Amazon Chase Visa, etc.).

Insurance startup Vouch tacks on growth funding to serve startups (Pitchbook), Rated: A

Just two months ago, the ink was barely dry on a more than $24 million Series A that Sam Hodges raised for his startup Vouch Insurance. Now he is back with an even larger funding, led by Y Combinator‘s Continuity Fund, as the company seeks to join a crop of startups that cater to the needs of other startups.

Fireblocks Is Now Securing The Biggest Crypto Lending Company In The US (PR Newswire), Rated: A

Fireblocks (www.fireblocks.com), an enterprise platform for securing digital assets in transit, announced today, Celsius Network, the largest provider of interest income and digital asset loans in over 150 jurisdictions worldwide is enlisting Fireblocks to help protect over $400 million assets and 53,000 active wallets, securing both retail and institutional divisions.

5 Ways to Invest in Real Estate Online (The Motley Fool), Rated: A

The primary difference between using a crowdfunding site versus flying solo on your investment journey is that your investment is managed by a team of real estate professionals. Of course, that is also the biggest risk as you are completely dependent on the project developer to deliver what they promised.

If you are not an accredited investor but want to be involved in real estate crowdfunding, companies such as Fundrise, stREITwise, and RealtyMogul are a great place to start.

ArborCrowd Investors Receive Strong Returns on the Sale of Quarry Station Apartments (BusinessWire), Rated: A

ArborCrowd (the “Company”), the first crowdfunding platform launched by a real estate institution, announced today that its Quarry Station Apartments investment (“Quarry Station”) has been realized in under two years, providing investors with returns quicker and higher than initial projections. The property’s $49.35 million sale price generated an internal rate of return (IRR) of 20.31%, surpassing the original return target of 16% to 19%.

How Crowdfunding Has Changed the Game for Real Estate Investing (The Motley Fool), Rated: A

Through real estate crowdfunding, the developer can utilize an online platform that enables a large group of people to invest small dollar amounts in the project. If the development company chooses to follow the crowdfunding option, here’s how that could work:

  • First, the developer identifies an online platform that is suited to the company or mixed-use development. Each platform is different and most real estate crowdfunding sites receive significantly more project applications than they select.
  • If the investment passes all the legal, physical, and financial due diligence requirements the platform requires, that platform will then allow the developer to solicit funds using their site.
  • An investor can then use that platform to contribute financially to the development.
  • The funds are then tied up until the investor delivers on the project.

The 10 worst US cities for commutes that cost you time and money (Business Insider), Rated: AAA

Online loan marketplace Lending Tree published a report on the most expensive commutes in the 100 largest cities in the US in October.

Consider a resident in New York, which Lending Tree ranked as the city with the fifth most expensive commute. Using Lending Tree’s findings via 2017 Census Bureau data, the median annual earnings for a full-time employee in New York is $51,573; their hourly wage is $26. Now, consider the mean time of commuting one way, 41.8 minutes. If you make $26 per hour at your job, and you spend 83.6 minutes daily on your round-trip commute, then your time wasted commuting is worth $37 of time you would have been working.

Five cities in California – Oakland, San Jose, Irvine, San Francisco, and Fremont – took top 10 spots in the ranking, with four of those cities being in the increasingly expensive San Francisco Bay Area.

Read the full report here.

Fintech: The Fourth Platform – Part One (Forbes), Rated: A

While the first generation of fintech companies created billions of dollars of value, because of new enablers like Plaid, Cross River Bank, Finix and Wisetack, we’re now moving past that phase to one where fintech moves from being a business model unto itself, to being the fourth layer in the stack or the “fourth platform,” wherein financial functions like payments, lending and insurance join connectivity, intelligence and ubiquity as layers of the stack upon which new companies can be built.

Source: Forbes

Balboa Survey: Small Business Owners Anticipate Robust Black Friday (Monitor Daily), Rated: A

Online lender Balboa Capital released the results of its 2019 Black Friday Survey, which was conducted to examine how small business owners are preparing for this historically busy shopping day, and to find out what their Black Friday sales expectations are.

The survey reveals that 70% of small business owners are preparing for Black Friday early, and 83% anticipate meeting or exceeding their Black Friday sales goals. Balboa Capital’s survey was sent to a sample of small business owners in a wide variety of industries during the first week of November 2019.

American Financial Exchange, LLC (AFX) Announces AMERIBOR on the Blockchain (Mondovisione), Rated: A

American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American banks and financial institutions, announced today the launch of its AMERIBOR on the blockchain. AFX now mints two ERC-721 non-fungible tokens for each AMERIBOR transaction on the AFX platform (for each counterparty to the transaction).  The pair of tokens is automatically minted when the transaction is repaid by the borrowing counterparty to the lending counterparty. Each token contains encrypted transaction data and encrypted counterparty data. The counterparty data is normalized prior to encryption to further preserve counterparty anonymity.

5 Best Alternatives to Traditional Savings Accounts (Nerdwallet), Rated: B

The pros. Peer-to-peer lending tends to be a win-win: Investors get a higher rate of return on their money than a lot of banking products offer, and borrowers get an interest rate on their loan that’s usually less than bank-offered loans and credit cards.

The cons. Peer-to-peer lending won’t give you quick access to your cash if you need liquidity.

Alchemy Partners with Plaid to Enhance Loan Decisioning and Fraud Detection Capabilities (PRWeb), Rated: B

Alchemy, one of the SaaS fintech lending infrastructure companies, has partnered with Plaid to support businesses in account and asset verification for improved lending decisioning.

United Kingdom

UK peer-to-peer lender Zopa gets banking license as it looks to compete with industry giants (Stock Daily Dish), Rated: AAA

British peer-to-peer lender Zopa has obtained a U.K. banking license, clearing a key hurdle in its bid to launch a digital bank and compete with industry giants.

Business Loans Marketplace Funding Xchange Raises $ 10.4 Million via Round Led By Downing Ventures, Gresham House Ventures (Crowdfund Insider), Rated: A

Funding Xchange (FXE), a company that helps people and organizations find suitable business loans and funding options from its marketplace of more than 45 established lenders, has raised £8 million (appr. $10.4 million) through an investment round.

London-based mobile credit card company Tymit secures £4m in funding (AltFi), Rated: A

Tymit, the London-based mobile-enabled credit card company, has secured £4m in a funding round, which it will use to develop its customer service offering.

Arbuthnot Commercial ABL supports EA-RS Fire Engineering’s acquisition of Circum with £2m facility (Business-Money), Rated: A

Arbuthnot Commercial ABL, the specialist asset based lending arm of Arbuthnot Latham, has completed a £2m asset based lending (ABL) transaction in support of the strategic acquisition of Circum Ltd, a fire protection services specialist, by EA-RS Fire Engineering Ltd. (“EA-RS”). The facility comprises a flexible confidential invoice discounting line and a term loan.

Crowd2Fund’s first EIS-approved funding round goes live (P2P Finance News), Rated: A

CROWD2FUND has launched its first funding round since being granted Enterprise Investment Scheme (EIS) approval from HMRC.

The platform has already raised 19 per cent of its target from current shareholders and has now opened the £1.2m fundraise to private investors.

Buzzy finance startup Starling Bank has lost another senior employee amid an exodus of executives (Business Insider), Rated: A

Starling’s head of banking compliance Rachel Coote has quit to join startup Paybase. Coote is the sixth senior employee to leave the buzzy finance company in 2019.The company’s chief financial officer Tony Ellingham has confirmed he will also depart within the next year.

Trading giant Robinhood makes its UK debut in Revolut challenge (City A.M.), Rated: A

US fintech Robinhood, a commission-free trading startup valued at $7.6bn (£5.9bn), has today arrived in the UK.

Users will be able to invest in more than 3,500 US-denominated stocks, including Apple, Amazon and Tesla. They will also be able to access foreign stocks that are available to trade in dollars through depository receipts, such as Barclays and Burberry.

OakNorth Bank completes GBP3.54m loan to fund aparthotel development in London (Property Funds World), Rated: B

The finance will be used to fund the acquisition of a mixed-use property at 68‐86 Clapham Road in Oval, and in its place, develop an aparthotel with between 120-175 units, subject to receiving planning permission. The site is located within walking distance of several Zone 1 underground stations – Oval, Stockwell and Vauxhall – as well as the South Western railway line, providing services to Clapham, Waterloo, Guildford, etc.

Crypto Lending Platform Nexo Joins FIO, As Usability Remains Top Priority (Chipin), Rated: B

Nexo, the dominant player in the crypto lending space, is joining the Foundation for Wallet Interoperability (FIO), the industry consortia bringing together leading companies in the blockchain ecosystem to solve the biggest problem faced by the industry — usability.

China

LexinFintech: A Rare Quality (Seeking Alpha), Rated: AAA

LexinFintech (LX) reported a solid set of Q3 results with loan origination growing 170% y/y that resulted in a beat on both revenue and EPS. More importantly, loan origination guidance was increased to RMB115-125b vs. the prior forecast of RMB115b.

Source: Seeking Alpha

Overall, asset quality remains stable at the end of Q3 with delinquency rate declining 9bps to 1.4% and the 6-month charge-off rate maintained at just above 2%.

Source: LexinFintech

Institutional funding has reached 75% of the total loan balance. In terms of origination, institutional accounts for 94% of the total loans originated, meaning that LX’s own P2P platform Juzi Licai is becoming less relevant going forward.

Source: LexinFintech
European Union

Twino CEO stands down, as Latvian lender swings into black (AltFi), Rated: AAA

Twino founder Armands Broks is to standing down as CEO and will now focus on new business opportunities and bringing talent on board.

The management change comes as Twino, which offers European investors investment opportunities in unsecured European consumer loans, reports pre-tax profits of €13m  (£11m) for 2018, compared to a €7.2m (£6.2m) loss the year previous.

Twino has also disclosed that it has also issued loans to the value of €1bn (£860m), since it was set up 10 years ago, half of the value of which have been issued in the past three years.

The Best Crowdlending Platforms (The African Exponent), Rated: A

Smart Lenders AM Launches New Investment Fund Specialized in Marketplace Lending (Crowdfund Insider), Rated: A

Smart Lenders AM announces the upcoming launch of a new fund dedicated to financing loans to European SMEs issued through marketplace lending platforms (crowdlending).

Real Estate Crowdfunding Platform EstateGuru Partners with Ober-Haus on Market Research (Crowdfund Insider), Rated: A

Real estate crowdfunding platform EstateGuru and OberHaus, real estate agency operating across the Baltic region, have joined together to produce shared real estate market research and analysis with a specialized focus on the needs of the crowdfunding platform.

International

Profits and Losses of P2P Lending Marketplaces 2017 and 2018 (P2P-Banking), Rated: AAA

Source: P2P-Banking
Australia

What does a competitive mortgage rate look like in November 2019? (finder), Rated: A

The lowest fixed rate in Finder’s database right now is 2.68%, a single basis point lower than the lowest variable. This is unusual (the lowest three year fixed rate this time last year was 3.74%).

Another online lender I spoke to was fine with apartments in the same suburb but didn’t offer pre-approval. This meant I would have to start a full application with them even before I had found a place to buy. For some borrowers, this can be a significant turn-off.

Asia

Ant Financial eyeing S’pore digital bank licence (The Straits Times), Rated: AAA

Billionaire Jack Ma’s Ant Financial Services Group said it may apply for a virtual banking licence in Singapore, a move that would add a heavyweight contender to the race.

OneConnect leads Southeast Asia’s sustainable financing with two smart lending platforms (Yahoo! Finance), Rated: A

OneConnect Financial Technology Co. Ltd. (OneConnect), today announced it is leading Southeast Asia’s sustainable financing with the launch of two smart lending platforms – SeekCap, the Philippines’ first lending platform that helps the underserved micro, small and medium enterprises (MSMEs) manage cashflow and grow their business, as well as a multi-finance platform that will empower millions of unbanked and underbanked Indonesians with easy access to loans to finance their purchase of vehicles essential for their daily transportation so as to improve mobility and their lives.

MSMEs form the backbone of any economy. In the Philippines, more than 99% of all businesses are MSMEs and they contribute to almost 63% of total employment. Yet, at present, only 9% of loans and financing from the country’s major banks go to MSMEs.

Latin America

Brazilian Digital Bank Neon Raises $ 95 Million (Crowdfund Insider), Rated: AAA

Brazilian Digital bank Neon has reportedly raised $95.27 million in a funding round led by Banco Votorantim and the General Atlantic fund. This is according to a write up in Estado.

Neon claims a customer base of 2 million users. The additional funding will help the digital bank grow with expectations to triple that number by 2020.

How Brazil is leading Latin America’s fintech revolution (Business Insider), Rated: A

There were 380 fintechs operating in the country in May 2019, per Finnovista, and around two-thirds (64%) of Brazilian consumers are defined as fintech adopters by EY — a rate that’s level with the global average and higher than the majority of G7 countries’.

  • Smartphone and internet penetration: Three-quarters of Brazilians used smartphones in 2017, which is expected to tick up to 86% by 2025 — and both figures are the highest across the region.
  • High fees charged by incumbentsBrazil’s four largest banks control almost 80% of the country’s deposits, with similar concentrations in credit and assets.
  • A large underserved population: Around 45 million people in the country don’t have access to or have not used a bank account in the past six months.

Why Mexico’s Fintech Sector Will Be One to Watch in 2020 (Next Billion), Rated: A

The economy in Mexico remains largely informal and cash dependent. An estimated 44% of the adult population in Mexico owns no financial products. This largely unbanked population, coupled with the new fintech legislation, has created immense opportunities for Mexico’s fintech sector to grow. In fact, roughly 100 new Mexican fintechs were established in 2018 alone, representing 52% growth for the industry. Mexico has become a regional leader with more than 273 fintech ventures operating in the country. When combined with Brazil’s 380 fintech ventures, the two countries make up 56% of the region’s total fintech activity.

Authors:

George Popescu
Allen Taylor

The post Thursday November 21 2019, Weekly News Digest appeared first on Lending Times.

Friday December 22 2017, Daily News Digest

LendingClub charge offs

News Comments Today’s main news: DV01 finishes year with $7.9B in consumer unsecured bonds. PayPal invests in Raisin. Affirm CEO affirms its product is a personal loan. LexinFintech share price surges. The state of P2P lending in New Zealand. InvestUp considers cryptocurrency investing. Today’s main analysis: Why bitcoin is a threat to LendingClub. Today’s thought-provoking articles: High-tech lenders go after […]

LendingClub charge offs

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United States

United Kingdom

China

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Australia/New Zealand

India

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United States

High-tech lenders target the decades-old store credit card (Reuters), Rated: AAA

The once-hot online lending industry has been battered by scandal and losses since last year, but one of the oldest forms of lending – store credit – is increasingly attracting tech companies aiming to supplant a retailer’s credit card.

One such lender, San Francisco startup Affirm, is attracting investment and large customers by using a new approach to underwriting that allows it to approve more borrowers than traditional store credit cards.

Max Levchin, Affirm’s founder who also co-founded one of the earliest digital payments companies, PayPal, boasts that Affirm approves 126 percent more borrowers than Synchrony Financial, the largest issuer of private-label credit cards.

Startup Affirm CEO Clarifies that Product Is a Personal Loan – Not a Credit Card (LendEDU), Rated: AAA

Consumers looking for a personal loan option have another one to consider in Affirm, which is a startup from PayPal co-founder Max Levchin. With Affirm, consumers can access a loan, a form of credit, to buy items at a store, which was originally interpreted to be similar to how a credit card works.

But Levchin has pointed out there are important differences between an Affirm loan and credit cards.

Who Uses Affirm?

Generation X and Millennials are the customers who most frequently use Affirm. Younger consumers have seen how carrying high credit card balances affected their older relatives, and they are less likely to want to have much credit card debt.

The annual percentage rate can be steep, going from as low as 10 percent to as high as 30 percent. But, unlike credit cards, the interest isn’t compounded.

Why Bitcoin Frenzy Is Terrible News For LendingClub (SeekingAlpha), Rated: AAA

LendingClub (LC) has had plenty of troubles over the years. Back in 2015, you could throw a dart at a list of financial stocks and hit a double if you held it through today. LC stock, by contrast, has destroyed shareholder value since its IPO. Even the recent Trump financials rally did next to nothing for LC stock, and now shares are back to near new all-time lows after a downbeat earnings report:

Source: SeekingAlpha

In a booming economy, the G-rated loans did so badly that they jacked up interest rates almost 3% on consumers while also reducing expected returns by more than 3%. This suggests that the G-rated loans were fully 6% short of expectations. This speaks to massive problems with the company’s underwriting, and leaves you to wonder just how badly internet-originated subprime loans will fare when a recession hits and the unemployment rate goes up again.

Source: SeekingAlpha

Bitcoin Losses Ahead?

If you are someone with a low income and a challenging financial position, you have an almost no-lose proposition (if ethics don’t get in the way). You borrow money on a credit card or from LendingClub, “invest” it in Bitcoin or Ethereum, and then hope it keeps going to the moon. If it does, you make many multiples of your interest expense, and have hit the lottery.

Now if the trade goes bad, and Bitcoin plummets, what is your debtor going to do? Since there is little consequence to defaulting on unsecured debt (and LendingClub has a reputation for being a lax debt collector), you simply stop paying on the note. The borrower has a win/win situation – essentially the lender is financing purchase of lottery tickets. I don’t know about you, but I’d need a much higher interest rate than even the 15 or 20% you might get off a low-end LendingClub note to justify that risk.

Source: SeekingAlpha

DV01 to Finish 2017 With $ 7.9 Billion in Consumer Unsecured Bonds (Crowdfund Insider), Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Thursday it is set to close 2017 with $7.9 billion of consumer unsecured bonds. This news comes just a few months after the company launched its Cashflows for Securitizations feature.

The company revealed that it has launched a redesigned Securitizations homepage to celebrate the $7.9 billion of consumer unsecured bonds.

SoFi Vs. Earnest Student Loan Product Comparison (StudentLoans.net), Rated: AAA

SoFi offers their clients an option. You can choose variable refinancing rates which currently range 2.75 to 6.84 percent if you enroll in the company’s autopay option. Fixed rates range from 3.25 to 7.24 percent.

Earnest offers their clients both variable and fixed rate options. For the variable option, the rates currently start at 2.57 percent APR while fixed rates start at 3.35 percent APR with their autopay options.

Both SoFi and Earnest do not have a maximum within their loan amounts, but the amount a client owes will affect the interest rates that are offered.

Repayment Options

SoFi offers a number of repayment options for their refinancing product. This includes flexible rates, terms, and an ability to set automatic payments that drop your rate by 0.25 percent. Repayment terms range from 5 to 20 years.

Earnest refinance loans offers the flexibility in the way of terms that range from 5 to 20 years. With their loans, you will be able to increase payments, pay lump sums, provide bi-weekly payments, skip a payment to pay later, and offers an interest break for those who set up automated payments.

American Financial Exchange (AFX) Announces Two-Year Anniversary Highlights (PR Newswire), Rated: A

American Financial Exchange (AFX), an electronic interbank lending market focused on U.S. small and mid-sized banks, announced today the second anniversary of its electronic trading platform. AFX facilitates the determination of Ameribor®, a transaction-based interest rate benchmark for small- to mid-sized banks via its electronic trading platform.

Since opening, more than $100 billion cumulative has been successful transacted. Recently, daily volumes have averaged approximately $350 million with several days of volume highs over $500 million principal traded.

Is Peer to Peer Lending the Best Option for Small Company Financing? (Newswire), Rated: A

If your small company needs a borrowing arrangement but does not have a credit rating that benefits instant endorsement from the banking institutions, you need to sign up for an alternative solution of capital such as peer to peer lending.

Rather than signing up to a recognized traditional bank for a financial loan, you create a proposal to be lent from people who, (if they are interested in your offer), sign up for the loan request in amounts as low as $25.

Unsecured business loans and where to get the best ones if you have bad credit (Las Vegas Informer), Rated: A

Kabbage

Kabbage offers loans that go between $2000 and $150,000, and the APR goes between 24% and 99%. They ask for no minimum credit score but you need to have been in business for at least one year in order to qualify, and have annual revenue of over $50,000.

Fundbox

With Funbox you’re looking at a loan amount of $1000 that can go all the way up to $100,000. The APR goes between 15% and 59%, and they also cater to the needs of people with bad personal credit.

OnDeck

With OnDeck you’re looking at loans that go up to $100,000 and an APR that can go from 14% to 40%. Unlike the other two, here you need good personal credit and also you need to be good at managing your cash flow. You will need a personal credit score of at least 600, not to mention an annual revenue of at least $100,000.

LendingClub

At LendingClub you can get a loan of up to $100,000, from a minimum of $5,000, with an APR that goes between 9.8% and 35.7%.

New Real Estate Investing Resource Platform is Changing the Landscape (Benzinga), Rated: A

Think Realty is a membership-based resource platform developed exclusively for real estate investors. Since launching in 2016, investors across the nation and around the globe have signed up at ThinkRealty.com to become Think Realty Members, with an 81 percent increase in membership in the past six months.

Think Realty’s reach continues to expand with its national talk radio show, Think Realty Radio, which will begin airing January 1, 2018 on Wall Street Radio. Think Realty is presenting four national conferences for investors in 2018, beginning with the Think Realty Conference & Expo in Dallas, Texas, February 24 and 25. The other locations are Baltimore, Maryland, April 14 and 15; Irvine, California, July 14 and 15; and Atlanta, Georgia, September 22 and 23.

The 10 biggest real estate tech deals of 2017 (The Real Deal), Rated: A

WeWork is now worth $20 billion. Compass is valued at $2.2 billion following a December funding round. Have you heard of Placester? Well, investors think it’s worth $202 million. The Jared Kushner-backed real estate crowdfunding startup Cadre now has a $800 million price tag.

  • 1) WeWork, $4.4 billion fundraising round
  • 2 & 3) Compass, $100M and $450M fundraising rounds
  • 4) Cadre, $65 million fundraising round
  • 5) Placester, $50 million fundraising round
  • 6) Common, $40 million fundraising round
  • 7) HomeLight, $40 million fundraising round
  • 8) Roofstock, $35 million fundraising round
  • 9) Knock, $32.5 million fundraising round
  • 10) Opcity, $28.77 million fundraising round

Congress: Hands off new rule protecting families from payday lenders (Herald Sun), Rated: A

Ignoring the voices of families and communities who have worked for many years for relief from the harms of predatory payday lending, a handful of members of Congress have introduced legislation that would nullify the Consumer Financial Protection Bureau’s national rule to rein in payday-lending abuses. Their legislation uses Congressional Review Act authority to repeal the rule and prevent the Consumer Bureau from issuing a similar rule in the future, giving predatory payday and car title lenders a free pass.

Why Amazon won’t buy a bank in 2018 (Tearsheet), Rated: A

Forget the speculation about Amazon buying a bank next year. But don’t count it out from adding banking to its near endless line of offerings.

For Amazon, providing financial services is just a means to an end: making more money by selling more things. Other retailers are still its main competition — not banks.

Why banks want to collaborate now on open banking standards (Tearsheet), Rated: A

Every U.S. banker is watching their European counterparts react to the looming Payment Services Directive, or PSD2, which will come into effect in 2018. When that happens, banks will lose their monopoly on customer data as merchants and retailers like Amazon will be allowed to retrieve customer account data from the banks (with customers’ permission).

Now, U.S. banks want to get ahead of their own regulators when it comes to creating data exchange standards. It can take 18 to 36 months to get a framework in place, Courbe said, but banks know they need to start exchanging data with other companies today.

LendingTree Adopts the RevJet Marketing Creative Platform (Sys-Con Media), Rated: A

RevJet, the first smart marketing creative platform, today announced that LendingTree has adopted RevJet’s system for producing, approving, personalizing, serving and automatically optimizing all formats of digital ad creative. Using RevJet to take a methodical approach to experimentation, LendingTree is able to deliver a higher volume of leads to their business partners while optimizing for revenue.

 

United Kingdom

December’s Lending Impact and Borrower Stories (Funding Circle), Rated: AAA

Whatever the season, small businesses work harder on any given day than Mr Claus on Christmas Eve. To celebrate their hard work and determination, we’ve created our very own Christmas Carol, looking at the past, present and future of small businesses. We begin with the small business past, looking at the history of small businesses, and how they adapted during the industrial revolution. Next up, dive into the small business present and learn about the impact they have on today’s world and the trends that have helped them along the way. Finally, discover what the landscape might look like for businesses in years to come in our small business future.

In our latest case study video, meet David, founder of The Creative Whisky Company.

Peer to Peer Robo-Lending Platform InvestUp Sizes Up Cryptocurrency Investing (Crowdfund Insider), Rated: AAA

FCA authorised crowdfunding aggregation platform InvestUp may be going crypto. The UK based Fintech has so far focused on the peer to peer lending space but management is currently looking at adding algorithm driven cryptocurrency investing.

InvestUp shares that 2017 has been another good year for P2P lending having delivered, on average, 10.74% to investors.

Protecting the future of peer-to-peer lending (Gov.uk), Rated: A

Today the peer-to-peer lending industry was given a boost of confidence as the government began legislating to clarify that no business borrowing through a peer-to-peer platform needs to be regulated as a ‘deposit taker’ (often referred to as a ‘banking licence’) unless that is their core business. The legislation will ensure that the industry can continue to thrive and innovate while still benefiting from the UK’s high quality regulatory standards.

The Committee on Exiting Europe Publishes Sector Reports Including Document on Fintech (Crowdfund Insider), Rated: A

The Exiting the European Union Committee, appointed by the House of Commons to examine the process of the Department for Exiting the European Union , released a grouping of documents from the Department today. As one may expect, the slew of reports addressed certain aspects regarding ramifications of the UK’s departure from Europe.

The Fintech Sector Report highlights the current regulatory regime in the EU and how cross border transactions take place between continental Europe and the UK. The document describes Fintech as covering four different categories:

  • Investment, advice (including Robo-Advisors) and  neo or challenger banks
  • Regtech for compaliance
  • Payments including digital currencies such as Bitcoin
  • Alternative finance including crowdfunding and peer to peer lending

Read the full UK Fintech Report here.

Bank of England approves Tandem’s Harrods Bank takeover (AltFi), Rated: A

Tandem can now end the year on a high note after the Bank of England today gave regulatory approval for the challenger’s purchase of Harrods Bank.

The deal will now give Tandem access to a full banking license and the 10,000 customers attached to Harrods Bank, as well as the bank’s mortgage and savings books. According to Tandem, the purchase will also come with a “significant capital injection”.

UBS and EPAM Win Best Use of IT Private Banking/Wealth Management for SmartWealth App at Banking Technology Awards (NASDAQ), Rated: B

EPAM Systems (NYSE:EPAM), a global provider of digital platform engineering and software development services, and UBS AG, the world’s largest wealth manager, have been awarded for Best Use of IT Private Banking/Wealth Management at the Banking Technology Awards held on December 13, 2017 in London.

China

Chinese online lender LexinFintech surges in U.S. market debut (Reuters), Rated: AAA

Chinese online lender LexinFintech Holdings Ltd’s (LX.O) shares surged in their U.S. market debut on Thursday, brushing aside worries related to Beijing’s recent crackdown on the booming micro-credit industry.

LexinFintech’s shares touched a session high of $14.88, a 53 percent jump from its IPO price that valued the Shenzhen-based company at $4.51 billion.

China online lending IPO meets tepid demand as fintech zeal wanes (Financial Times), Rated: AAA

LexinFintech, the latest Chinese online consumer lender to complete a US initial public offering, has met with muted investor demand amid concerns over Beijing’s regulatory clampdown on dubious lending practices.

Lexin scaled back its planned $500m IPO on Nasdaq to $109m, and final pricing was at the bottom end of the price range initially marketed to investors.

Qudian, which is backed by Alibaba affiliate Ant Financial, raised $900m on the New York Stock Exchange in October — the largest US IPO by a Chinese fintech group. After hitting that high point investor interest quickly slid: last month PPDAI raised $221m in a deal that priced below the initial price range.

Since their IPOs, both Qudian and PPDAI have faced allegations of issuing misleading financial disclosures. Qudian closed at 48 per cent below its IPO price on Thursday, while PPDAI was down 44 per cent.

Source: Financial Times

Is Qudian A Bargain Or A Falling Knife? (SeekingAlpha), Rated: A

QD’s stock price has taken a nosedive, plummeting from its $24 IPO price to $12.9 as of 12/19/2017. Given QD’s strong earnings and fast growth rates in the past, the current price may appear to be a great bargain. Is that true?

QD’s strong past operating performance is mainly driven by its online cash-loan business, which brings in 83.3% of its total revenue.

The regulations can be distilled into three key rules: (1) cap the interest rates at 36% (2) limit the leverage of cash-loan companies at 3 or lower, and (3) forbid commercial banks, insurance companies, P2P, etc from investing in cash loans. These rules will put QD’s extraordinary profits to an end, as discussed below.

  • Rule #1: The interest rate caps may turn QD’s strong profits into negative. While QD may have already compiled to the 36% interest cap by the time of its IPO, QD’s revenue will still take a nearly 1/3 cut, holding all else equal.
  • Rule #2: The leverage limit will bring QD’s entire cash-loan business to a halt. According to QD’s 3Q report (Qudian Inc. Reports Third Quarter 2017 Unaudited Financial Results), as of 09/30/2017, its capital structure consists of Liability: 11.18 billion; Mezzanine equity/convertible preferred shares: 5.94 billion;Total Shareholders’ deficit: 1.78 billion. However, the national regulation limits the maximum leverage at 3, or even at 1 according to some regional regulations (21jingji news). It is clear that with 1.78 billion shareholders’ deficit, QD has to raise literally billions of additional funds to satisfy this rule, which is “mission impossible” given the third rule as discussed below.
  • Rule #3: restricting the financing sources will shut the door for QD to raise additional capital.
QD PPDF
Market Cap 4,243 2,175
Total Transactions 3,938 3,231
Revenue 223 192
Net Income 100 83

Brett Diment: 2018 Will be China Fintech’s Breakout Year (FiNews), Rated: A

Fintech will increasingly be associated with Beijing, Shenzhen and Hangzhou in 2018 instead of Silicon Valley, Aberdeen Standard’s Brett Diment details in a contribution for finews.asia.

The Chinese online-payment industry already accounts for around half of global transactions. Alipay, operated by Alibaba’s financial arm, is the market leader.

But Tencent’s Tenpay has been catching up fast. Tenpay’s stroke of genius was to allow its users to send electronic hongbao – the red envelopes of money traditionally given as a Chinese New Year gift. Some 16 million online hongbao were sent in 2014 – rising to a billion in 2015. This helped Tenpay’s share of the online-payment market to reach around 40 percent in just three years.

The University of Hong Kong Online Fintech Course Now Open for Registration (Crowdfund Insider), Rated: B

The Fintech MOOC is a six-week online course on innovations in finance and is designed to provide a foundational understanding of the global changes impacting all financial services.

European Union

Mayo businesses raise almost €800,000 through Linked Finance (The Connaught Telegraph), Rated: A

LINKED Finance, Ireland’s leading peer-to-peer (P2P) lending company, has raised almost €800,000 for Mayo-based businesses.

Eighteen Mayo businesses, including Doherty for Men, Main Street, Castlebar, and Electric Escapes, based in Westport, have raised funds through Linked Finance’s online lending platform (www.linkedfinance.com) to facilitate business growth.

Electric Escapes has raised €50,000 over two separate funding rounds, facilitated through the platform.

PayPal backs fintech deposit marketplace Raisin (AltFi), Rated: AAA

Raisin has secured an undisclosed sum of investment from digital payments platform PayPal. The money will be used to accelerate the growth of Raisin across its core European geographies.

International

Blockchain is “no longer in proof of concept” phase (Global Trade Review), Rated: AAA

Sin has just helped launch the world’s first cross-border bancassurance distributed ledger technology (DLT) platform, working with China Life Insurance and Guangfa Bank in Macau.

In another sign that the technology may be fit for commercial purpose, SME lending platform ModulTrade has settled its first blockchain-based export transaction out of China.

This transaction was small –  just over US$1,000 – but again shows that the technology is beginning to be used outside of the laboratory.

The company teamed up with Rabobank to complete an inventory financing transaction on the blockchain that resulted in a real-time payment for farmers.

All payments were made in real time, using a Rabobank-backed digital dollar, pegged to the Aussie dollar. The digital dollar was issued and cleared by a central issuing and settlement institution.

BENCHMARKING DISTRIBUTED LEDGER TECHNOLOGY (All About Alpha), Rated: A

Two scholars affiliated with the Cambridge Centre for Alternative Finance, in Great Britain, have prepared a fascinating overview of the present state of blockchain and distributed ledger technology (DLT).

  • The protocol layer of this ecosystem is only slowly maturing, and the limit of this maturation is one of the key challenges for the broader adoption of DLT;
  • Most users experiment with only small-scale, isolated layers, with live applications allowed only as “permissioned” layers;
  • There is an increasing focus on creating common standards of enterprise DLT frameworks that will allow for interoperability, but this effort to overcome fragmentation is itself fragmented into “a variety of consortia”;
  • Ethereum in particular has been tested at 57% of central banks, either via the public network or a permissioned version.

Nearly half of the surveyed DLT start-ups are in North America (47%). The second largest group by continent is that which hails from Europe (28%), then 19% (Asia Pacific).

But employment isn’t precisely aligned with the number of enterprises on each continent. A full 61% of employees working in this field are in North America, and only 13% are in Europe.

RCN ANNOUNCES DECENTRALAND PARTNERSHIP (Bitcoinist), Rated: A

Earlier this week, RCNannounced their new partnership with Decentraland, the blockchain-based virtual reality platform where users can acquire virtual land to create and monetize their content.

Under the new partnership, RCN will be able to integrate its credit protocol with the Decentraland platform. This will enable users who own plots of land, content, or businesses created in the 3D world to issue and receive loans.

The Top FinTech Trends of 2017 … were they? (The Finanser), Rated: B

Rise of InsurTech

True. I’ve seen a lot of InsurTech movement this year with a number of standout start-ups like BackmeupBrollyBuzzmoveCuvvaInmybagLuther and Neos.

Rise of RegTech

Yep, I’ve heard more about RegTech this year than ever before, although that’s unsurprising when most banks have at least two staff checking the work of each employee (Citibank has 40,000 compliance people!). Consultancy picks out 100 of the most innovative firms in this space.

Platforms, APIs and Open Banking are the key

I feel like I’ve been talking platforms all year and, with PSD2 and Open Banking coming into play in January 2018, it is certainly true that platforms, APIs and Open Banking have definitely been the theme of 2017.

China and emerging markets focus

Ah yes, I definitely think this year has been a big year for financial inclusion and discussions of Ant Financial and Tencent.

Australia/New Zealand

Banking without the banks: the state of peer-to-peer lending three years on (The Spinoff), Rated: AAA

In 2014, New Zealand was one of the first countries to legalise peer-to-peer lending.

For the latter, Snowball Effect and PledgeMe led the way with the FMA awarding its first equity crowdfunding licences to the two firms. For the former, the first licence for P2P lending was granted to Auckland-based platform Harmoney, which was founded by Neil Roberts that very same year.

To date, there are eight licensed P2P lending services currently operating in New Zealand with more than 20,000 investors currently registered with P2P lending intermediaries. When it comes to borrowers, there are more than 200,000 individuals currently registered with P2P services.

Source: The Spinoff

Since launching in September 2014, it’s lent more than $655 million via 37,000+ loans and paid more than $87 million interest in total. In the most recent financial year, Harmoney saw over more than 830,000 investments made in loans by almost 5,400 unique investors.

Source: The Spinoff
India

Want Good Financial Advice? Ask a Digital Lending Platform (BW Disrupt), Rated: A

The need for credit can come for a variety of reasons, and can be catered to by a vast plethora of different loan products.

Clearly, if you had to get good financial advice, AI-leveraging algorithms are a better bet than humans. So why not use the same technology to help individuals and SMEs find the right credit options for their needs?

Asia

NewsBTC Interviews the Crowd-genie Team (NewsBTC), Rated: A

NewsBTC: Why is licensing so important? How difficult is it to get in Singapore? 

Crowd-genie: Being registered and licensed are two different stories. As peer to peer lending platform involves enormous monetary transactions, a securities license is crucial for regulated lending activities.

NewsBTC: Can you please explanation of how reputations coin work?

Crowd-genie: For each repayment, from the borrower to lenders, we will incentivise on-time payment by adding CGCOIN “Credits” to the borrowers’ wallets. This will be a spendable asset that will be tracked separately in the Digital Passport. The more CGCOIN Credits earned, the higher their reputation, and that in turn, will increase their chances of getting higher investments from more lenders and/or a lower interest rate.

 

Source: NewsBTC
Cayman Islands

Robot to speak at Cayman Alternative Investment Summit (Cayman Compass), Rated: B

Sophia, the world’s first robot to be granted citizenship of a country, will be one of the speakers at the Cayman Alternative Investment Summit on Feb. 8 to 9, 2018, organizers announced Thursday.

At the Cayman Alternative Investment Summit, Sophia will be interviewed on stage by a representative from event sponsor KPMG.

Organizers say the robot’s appearance complements the theme of the investment conference, “Wired: the rise of alternative investments in a digital age,” which targets opportunities at the intersection of alternative investing and technology.

Authors:

George Popescu
Allen Taylor