News Comments Today’s main news: OnDeck prices $225M securitization. Prosper is looking for new whole loan contributors for securitizations. Funding Circle lends 123M GBP to businesses in March. Funding Circle SME considers new equity raise. Ant Financial to raise $9B. Today’s main analysis: Competition among lenders worth $27K to borrowers last week. The grad degrees that deliver more debt than […]
OnDeck Capital prices $225M securitization. AT: “It’s good to see OnDeck getting back in the game. I also think 2018 is shaping up to be the year of securitizations, which had a good year last year. It could shape up to be better this year.”
Prosper seeks new whole loan contributors for securitizations. AT: “As the big online lenders–like OnDeck, Prosper, and SoFi–continue to roll out securitizations, we could very well see new entrants in the alt lending securitization market in 2018.”
The grad degrees that deliver more debt than income. AT: “This is very interesting. Optometrists pay the more of their income to student loans than dentists, lawyers, scientists, engineers, and nurses. Actually, more than anyone. However, veterinarians have the highest median loan balance as a percentage of annual income. This is a must-read for lenders that offer student loans for graduate study, and for specialist loans based on professions.”
OnDeck announced today that it has priced $225 million initial principal amount of Series 2018-1 Fixed Rate Asset-Backed Notes (the “Notes”) in a private securitization transaction. The Notes, which will be issued in four classes, were priced with a weighted average fixed interest rate of 3.75% per annum. It is expected that DBRS, Inc., in satisfaction of one of the closing conditions, will rate the Notes at closing. The anticipated DBRS rating for the Class A Notes would be the highest rating ever for a class of notes in an asset-backed securitization of small business loans in the online lending industry.
The Notes will be issued by OnDeck Asset Securitization Trust II LLC (the “Issuer”), a wholly-owned subsidiary of OnDeck. The Notes will be secured by and payable from a revolving pool of OnDeck small business loans. The Issuer will be the sole obligor of the Notes; the Notes will not be obligations of or guaranteed by OnDeck or any of its other subsidiaries. OnDeck will act as the servicer of the loans securing the Notes.
The net proceeds from the Notes offering will be used by the Issuer together with other available funds to optionally prepay in full a prior notes issuance (the “Old Notes”) that had a weighted average interest rate of 4.7% at December 31, 2017.
Prosper will continue to issue ABS from its long standing PMIT shelf, but is looking for new whole loan contributors for its securitizations as it eyes the end of a loan consortium agreement inked last February.
Prosper’s securitizations will retain the multi-seller deal format, in which whole loan investors contribute collateral to the securitizations, said three people speaking with GlobalCapital on the sidelines at the LendIt Fintech USA 2018 event in San Francisco.
Former Twitter chief operating officer Anthony Noto just finished his first month on the job as CEO of SoFi, the “unicorn” financial services company whose former CEO was booted late last year after allegations of sexual misconduct.
Axios spoke to Noto about the new job, growth plans, recruitment and that long-rumored IPO. The quick read:
He had always wanted to be a CEO, and felt he had accomplished what he set out to do at Twitter.
He believes SoFi is a cultural reclamation project, but that the core business is strong.
SoFi wants to launch a membership-type credit card.
The firm has no plans to either IPO or fundraise in 2018.
On joining SoFi as CEO, after stops at Twitter and Goldman Sachs:
“This opportunity leverages all of my professional background as a tech person, as a consumer-facing person and from a financial industry perspective.
“A reckoning is coming. The US is ground zero.There is a 37 trillion dollar shortfall in the retirement sector. This is coming and we cant just think we have 32 years to solve this problem.”
Omer Ismail, Chief Commercial Officer of Marcus:
“Since we launched 18 months ago we have done $3 billion in loans and we have $20 billion in deposits and about 500,000 in customers.”
Max Levchin, CEO and founder of Affirm:
“There are 10 to 15 million people in this country who need money and can probably borrow responsibly yet they end up at payday lending.”
Jay Farner, CEO of Quicken Loans:
“If a mortgage can be done in 10 [days] a personal loan can be done in 1 [day]”
Coming off one of the worst months in recent memory, March saw big declines in the public equity markets. The SCP SMB Index was the least impacted, retreating 4.1% compared to all other major indices, which declined more than 5% during the month.
The SCP SMB Index declined 4.1% in March. The S&P 500, Nasdaq, and Dow Jones all experienced losses during the month of 5.1%,5.2%, and 6.1%, respectively.
Returns since inception (indexed at Jan 4, 2016)
Since the inception of the SCP SMB Index in January 4, 2016 (where 100% is no change), here are the returns through March 29, 2018:
We calculate the Mortgage Rate Competition Index weekly as the median spread between the lowest and highest APR offered by lenders in our marketplace. By calculating this spread, we hope to show consumers how much they stand to save by comparing rates during the lending shopping process.
Purchase loans
Across all purchase loan applications on LendingTree for the week ending April 8, the index was 0.59, up 0.03 from the previous week.
How big of a deal is it to nab a mortgage rate that’s 0.59% lower than the competition? Over 30 years, that could translate to $27,339 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
Refinances
The index was wider in the refinance market at 0.65, up from 0.63 the prior week.
Borrowers shopping for refi loans could have saved $30,329 by shopping for the lowest rate.
Credible’s analysis of student loan debt levels and salaries across 16 graduate school majors shows that the most important consideration isn’t how much debt you’ll take on to obtain an advanced degree — or how much you’ll earn after graduation — but achieving the right balance between the two.
Key highlights
A Credible analysis of more than 91,000 graduate degree holders with student loans found significant debt and income differences across 16 graduate degree majors.
Dentists, optometrists, and veterinarians tend to have student loan debt that’s the most out of balance with their earnings soon after graduation.
Even years out of school, optometrists, veterinarians, physician assistants, dentists and pharmacists devote more than 10 percent of their monthly income to their student loan payments.
Computer scientists, MBA holders, people with masters in finance degrees (not MBA) and nurses allocate the smallest proportion of their monthly earnings to pay down their student loan debt (between 6.4 and 7.1 percent).
AutoGravity, a FinTech pioneer that empowers car shoppers to buy and finance any new or used car in minutes from their smartphone, today announced a partnership with Westbon, the first lending platform for international students in the U.S. Through this unique partnership, Westbon financing options are now accessible to international students who use AutoGravity to finance their vehicle in the United States.
Finitive LLC (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today the launch of its zero-fee platform.
Finitive, which commenced operations in August 2017, has received commitments for transactions with an aggregate capacity of $1.3 billion. Several asset managers and banks have committed capital for transactions in the consumer, renewable energy and commercial real estate lending sectors.
Lend Core Inc., parent company to NSR Invest and LendingRobot, announced today the close of its first external financing round with FinSight Ventures. The investment will help the company expand its investor outreach, accelerate product development and strategic partnerships. FinSight Ventures General Partner, Alexey Garyunov, and Investment Director, Maxim Nazarov, will join Lend Core’s Board of Directors.
The company’s core technologies drive innovation through interactive analytics, custom modeling, algorithmic investing, order execution, portfolio management, and transparency through blockchain application.
One blockchain startup, Alchemy, is using the technology to create a peer-to-peer (P2P) lending system that ensures transparency and guarantees security to its participants.
Alchemy works by matching lenders and borrowers for the requested amount of capital. Because of the instant, global, and secure peer-to-peer interactions that blockchain facilitates, costs of service are kept incredibly low. Interest rates are kept as close to a free market determination as possible, ensuring a fair consumer experience that often eludes customers of big banks.
Quovo, a data platform that provides connectivity to consumer financial accounts, announced today at LendIt Fintech USA, new products that equip lenders with insights to streamline and improve key processes in the lending value chain, adding to Quovo’s ability to assist with underwriting, funding, and ongoing servicing workflows.
Income + Expense analyzes and summarizes recurring and irregular income and expense streams, creating a fuller picture of cash flow in linked accounts. Balance Estimator uses historical cash flows to predict future account balances up to 30 days in advance, giving loan servicers a key perspective on when customers can most
effectively meet their payment obligations.
Income + Expense and Balance Estimator provide valuable cash-flow-based insights that can be combined with Quovo’s core data products—such as Aggregation and Authentication—to create end-to-end solutions for lending, from the first loan application to the last servicing event.
MoneyLion today announced that it will be expanding its popular MoneyLion Plus membership with a full suite of checking and savings capabilities. With these additions, the new MoneyLion Plus membership will provide a comprehensive banking option for anyone with access to a smartphone, becoming the one and only financial membership consumers need to build wealth, improve credit and manage day-to-day spending.
DebtBench: We are creating an Open Banking marketplace structure where business borrowers can connect and gain access to capital at lower rates, in far less time, than they would by going to a brick-and mortar institution. According to our estimates, banks, credit cards and other lending institutions generate $870B+ each year in fees and interest from over $3.2 trillion in lending activity. The interest rate spreads gained by financial institutions can be minimized.
Intrinio, a fintech company providing access to over 200 financial data feeds, will be releasing their API v2 this quarter.
Intrinio’s API v2 is built on the OpenAPI specification, which is a community-driven, open source, standardized API spec within the OpenAPI Initiative (OAI), a Linux Foundation Collaborative Project. This allows both humans and computers to discover and understand the capabilities of a service without requiring access to source code, additional documentation, or inspection of network traffic.
The Office of the Comptroller of the Currency (OCC) is getting ready to release its position on a proposed charter for online lenders and other FinTech companies in the next three months.
An Aite Group study finding has the answer. More than 75 percent of 22- to 49-year-old consumers are interested in this kind of advice and guidance around reducing debt, achieving savings goals, and tracking their finances, as well as optimizing their overall financial health.
Companies like the Lending Club, make it easy for you to apply for small business loans online. You can receive several thousand dollars towards your business expenses.
Although many people turn to credit cards to help them build credit, there are other tools individuals can use to improve their credit scores. Since some people have trouble managing credit card debt and do not want to pay high-interest rates, they often turn to alternatives to help them build a solid credit history. Here are a few of those alternatives.
Loans to Help Build Credit
Some banks and credit unions will offer their members what are known as credit builder loans. The goal is to pay off the loan before the maturity date.
Peer-to-Peer Lending
Instead of going through a traditional financial institution, borrowers can apply for loans offered by individual investors. Known as peer-to-peer loans, consumers can apply using a reputable P2P lending website or service. The loans typically offer reasonable interest rates, and this type of financing is completely legitimate.
The company announced in its monthly review that in March it provided 1,831 businesses with access to finance and created 4,670 jobs (directly and indirectly) via its platform.
Funding Circle lent over £701m from September 2017 to March 2018 and more than 10,500 small businesses accessed finance through the platform in the same period.
THE FUNDING Circle SME Income Fund is considering a potential equity raise as it assesses its growth options.
Any issue of shares or sale from treasury would be priced at NAV plus a premium to cover all issue costs, the fund said in a stock exchange announcement on Monday.
NatWest has added invoice finance platform MarketInvoice to its Capital Connections panel, which helps SMEs unable to borrow from banks get access to alternative sources of money.
Liberis, the London-based fintech that provides finance for small businesses, has raised £57.5 million in new funding to help support the company’s growth. The alternative finance provider makes loans against a company’s future credit and debit card sales.
The majority of the new capital being raised by Liberis is debt, which in turn will enable it to issue more loans. The facility is being provided by British Business Investments (the commercial arm of the tax payer-funded British Business Bank), Paragon Bank, and BCI Finance.
In addition, Blenheim Chalcot has made an equity investment into Liberis. The so-called “digital venture builder” also previously backed Clearscore, the credit scoring startup recently acquired by Experian.
■ Peer-to-peer lending is becoming popular in low interest times, but it’s controversial
Peer-to-peer remains controversial, especially since the government approved a new type of Isa, the Innovative Finance Isa (Ifisa), in April 2016 that allows customers to receive income from the peer-to-peer loans they make free of tax.
There are many questions you will need to ask before lending your cash. Here are some of the most important:
What returns can I really get?
When faced with the best-buy rate on an instant access current account (around 1.3 per cent according to Moneyfacts), or on a five-year, fixed- rate bond (2.75 per cent), it’s hard not to find the headline rate you would receive from a peer-to-peer lending site very attractive.
Is the platform a member of a reputable association?
The Peer-to-Peer Finance Association is the main trade body, though not all companies involved are members. Check membership at p2pfa.org.uk. Robert Pettigrew, director of the association, says: ‘Investors should understand the nature and level of risk to which they are exposed, so that they can ensure that it is commensurate with their individual risk appetite.
Ant Financial Services Group, carved out of his e-commerce giant Alibaba Group HoldingLtd.BABA -0.52%seven years ago, is preparing to raise $9 billion in a private funding round, according to people familiar with the matter. That ups a previous fundraising target of $5 billion.
Ant, which owns popular mobile payments network Alipay and is one of China’s largest non-bank lenders, is currently in talks with potential investors and demand for its shares has so far been strong, the people familiar said.
The latest funding round could value Ant at close to $150 billion, according to the people, making it by far the world’s largest unicorn—a term used to describe private companies valued at over $1 billion.
“Fintech is playing animportant role in China. Given the demands for consumer finance are not yet fully satisfied and credit system is not perfect, financial technology has a golden development opportunity in China, which leads the world in data mining and processing capabilitiesin the mobile Internet market.” said Simon Cheng, President of X Financial, a leading fintech company in China at LendIt USA recently.
The popularity of blockchain technology has grown over the last several years as the hype surrounding the cryptocurrency market has thrived. Nearly every industry is currently exploring options on how they can use this disruptive technology to make a difference in the market. Its impact on various sectors has attracted big technology companies like Microsoft Corp. (NASDAQ:MSFT) and International Business Machines Corp. (NYSE:IBM). They ventured into distributed ledger technology architecture to augment their existing businesses while simultaneously trying to exploit emerging opportunities in the industry.
Over the last two decades, the financial services sector has experienced a major technological shake-up, with emerging industries like fintech playing a vital role. PayPal Inc. (NASDAQ:PYPL) disrupted the payments industry by introducing online methods of payment. While some said credit cards and checks would be phased out in due time, they are still crucial products. It remains to be seen how long they will last, though.
On the other hand, peer-to-peer lending platforms like LendingClub Corp. (NYSE:LC) and Zorpa reinvented lending and, in the process, sparked debates on whether they could eventually overtake traditional lending in the credit market. Nothing of the sort has come to pass, yet. In fact, after peaking in the first half of the current decade, peer-to-peer lending may have started to experience a slowdown in growth.
In this article, we explore two areas that have attracted significant interest by FinTech innovators:
Marketplace lenders (MPLs) that are disrupting traditional credit-underwriting models with lower overhead, higher transparency, faster loan approval and higher returns on capital.
Blockchain-based supply chains with the potential to disrupt entrenched payments and credit processes by managing the physical and financial flows associated with commerce. In addition, we discuss approaches to IT spending and innovation that banks can take in response.
Ezira will utilize the delegated proof of stake decentralized consensus algorithm used by Bitshares, EOS, and Steem. Ezira will operate on a new public blockchain, will provide a flagship user application, and a multi-token circular economic model. It will have a fairer token distribution and will share drop 10% of the EZIRA asset onto the cryptocurrency community.
The Ezira network will offer users access to a suite of cryptocurrency and social media features during its release.
Content Rewards
Users will receive content rewards for posting according to the number of votes and views that each post receives. Once per day, a content reward payment will be distributed according to the stake weight of the accounts that upvoted and viewed the content.
Ezira Cryptocurrencies
Payments using Ezira currencies will have zero transaction fees and will receive confirmation within the 3 second block time. Users send EziraCoin to a stealth address and send payments using a ring signature, and use ring confidential transactions to conceal the payment amount.
Decentralized Exchange
Users will be able to use peer to peer lending to earn interest by lending their funds to other users, based on collateral, independent verification processes, and established creditworthiness.
Last year Prospa passed a milestone of providing more than A$500m ($385m) in loans to 12,000 businesses.
The company offers loans of between A$5,000 and A$250,000, over a term of three to 24 months, with no security required for amounts of up to A$100,000. Its platform enables business owners to apply within 10 minutes, receive approval on the same day and funding within 24 hours.
Annual interest rates on Prospa loans vary depending on risk but typically start at roughly 12 per cent and stretch into the mid-20s.
Prospa’s growth has been supported by venture capital backers, with AirTree leading a A$25m funding round last year that valued Prospa at A$235m. The funds enabled the lender to boost its staff to 165, build a direct distribution channel and sign up 7,000 intermediary partners.
New survey results from US technology firm Oracle suggest Australians are less open, compared with consumers in other large economies, to engaging with the fintech revolution.
The survey, released on Wednesday, shows only 6.25 per cent of Australians regularly use a “fintech” bank, compared with 10 per cent in the United States, 12 per cent in Britain, and 40.5 per cent in India.
Despite a growing number of digital “robo advisers”, 9.75 per cent of local respondents said they used fintech wealth advisers services frequently, compared with 16 per cent in Britain and 21.5 per cent in United States.
P2P lending firm Faircent.com will soon be opening its API platform for developers. The move will enable new fintech entrants and offline businesses to leverage the company’s technological infrastructure to build new digital lending products, as well as to integrate existing solutions into their offerings.
Faircent.com’s technology stack offers a wide range of solutions pertaining to online lending such as borrower and lender verification, credit evaluation and underwriting, and payment collection and recovery, among others.
Loanzen, a peer to peer business loan marketplace startup, has raised an undisclosed amount of sum from Kae Capital. The Bengaluru-based digital lending platform had earlier raised an undisclosed seed funding from Angels through TracxnSyndicate.
The fintech firm will deploy fresh funds to expand operations. It also holds NBFC licence by RBI.
Fintech firms have exploded onto the financial scene in Singapore and other mature markets in Asia in recent times. Focusing on disruptive technologies like peer-to-peer lending, affordable digital payment solutions, and more accurate risk analysis among other things, these startups are winning over customers by replacing the service delivery model used by traditional banks with user-friendly technologies.
Fintech Companies Are Changing the Process of Loan Offtake
Have you ever heard about Crowdo, Capital Springboard, FundedHere, or MoolahSense? These are peer-to-peer online lending sites through which you can raise funds by sharing your story. These crowdfunding sites are revolutionising the alternative lending space through disintermediation, cost optimisation, quicker delivery, and technology modernisation.
Players like Skolafund provide deserving students a chance to get funded by potential funders for pursuing education in an affordable manner. They can match profiles and ensure that the right student meets the right funder.
SMEs, often ignored by traditional banking channels, have found their go-to source for funds. Crowd Genie, which started in 2016, is helping SMEs get loans through crowdfunding.
After witnessing the 2011 Egyptian revolution, former journalist Ahmed Moor decided to launch Liwwa, a peer-to-peer funding platform that would address the MENA region’s $240bn SME funding gap by lending money to growing businesses.
Together with co-founder and CTO Samer Atiani (former senior software developer at New York-based online retailer Etsy), Moor has managed to lend over $8m to SMEs across the region since the establishment of the Amman-based firm in 2013.
News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2018-2. dv01’s Q1 securitization volume hits $2.58B. Revolut releases open API. RainFin acquires stake in 4AX. Today’s main analysis: International P2P lending volumes for March 2018. Today’s thought-provoking articles: Trends on millennials and money. A tale of two fintech sectors. Amazon could become the third largest […]
Trends regarding millennials and money. “Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college.”
Amazon could become the third biggest U.S. bank. AT: “Amazon would have to spend a lot of money to become a bank. They’d do better acquiring one. But I’m still not convinced they have no aspirations.”
P2P lending volumes. AT: “Assetz Capital is one of the biggest growth stories, and so is Folk2Folk. Landbay hits 100M GBP, and Estateguru hits 50M Euro. Congratulations to all the winners.”
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-2 (“SCLP 2018-2”). This is a $544.6 million consumer loan ABS transaction.
This transaction represents SoFi Lending Corp.’s (“SoFi” or the “Company”) 14th rated securitization collateralized by a portfolio of unsecured consumer loans. SoFi currently originates personal loans through its state licenses or complies with certain requirements where a state lending license is not required.
Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-2
dv01 closed out Q1 with nine new securitizations, totaling $2.58 billion in total issuance. This represents a 141% increase from last year’s Q1 volume, which totaled $1.07 billion.
Deals were originated by six different lenders, including Prosper, Upgrade, LendingClub, CommmonBond, SoFi, and Marlette. Three of the deals (UPT I 2018-1, UPT I 2018-2, and CLUBC 2018-2) were trust certificates. dv01 was loan data agent on eight of the nine deals; loan level data and reporting tools for all the deals are accessible through dv01’s Securitizations portal.
Here are over 30 facts, statistics and insights about Millennials banks and credit unions need to know to serve this essential market segment more effectively.
Millennials want to learn how to feel financially empowered. Nearly three quarters say they feel confident in their ability to make financial decisions, but they still want to learn more. 92% believe that being educated on personal finances is important. (Source: CSpace)
Millennials are so serious about their financial health that more than a third (34%) have a written financial plan, much higher than the 21% of Gen X and 18% of Baby Boomers who have done the same. However, 78% rarely or never make spreadsheets for their finances, and 35% say they’d rather vomit than make a spreadsheet to help them manage their finances. (Sources: Schwab, Varo Money)
Maybe Millennials don’t need help from real human beings. With 85% saying artificial intelligence could help them better manage their finances, banks and credit unions should use digital tools and AI to deliver the financial insights they crave. Nearly half of Millennials say they want their bank to be able to anticipate their financial needs and offer them timely advice (Sources: Varo Money, Segmint).
Millennials’ top savings priorities are emergency funds (64%), retirement (49%), and buying a house (33%). Nearly half already have $15,000 or more in savings, and 16% have a whopping $100,000 or more in savings. (Source: Bank of America)
When it comes to saving, Millennials still have significant headwinds: three in four college graduates today will have a heavy student debt load. (Source: ABA)
The average graduate from the university class of 2016 has $37,172 in student loan debt, up 6% from the prior year. (Source: Student Loan Hero)
Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college. (Source: Harvard)
Since inception in June 2016, the index has returned 46%, outperforming the broad market S&P 500 by a whopping 24%, and even the tech-heavy NASDAQ by a meaningful 9%.
Amazon could rival the nation’s big banks in as few as five years, capitalizing off its digital prowess and massive consumer base, according to a Bain & Company report.
Pushing customers toward a co-branded banking account also allows Amazon to cut down on transaction costs, Bain said.
Amazon could – according to Bain calculations – avoid more than $250,000,000 in credit card interchange fees every year if finds a bank willing to partner on checking accounts.
Despite what many see as the inevitability of tech giants entering the financial advice business, the economics of doing so — as well as the intensely regulated nature of the business — make their entry unlikely, according to a new report from Cerulli.
The Boston-based research firm says that “companies like Facebook, Amazon, Apple, Netflix and Google (FAANGs) have the tools and data to excel, but face significant obstacles that will likely preclude their entry,”
One major obstacle, Cerulli says, is the relatively small size of the market. The firm estimates that the “digital advice opportunity segment” represents only about 12% of investors, or a segment “that would be difficult to scale to be of strategic interest to the world’s largest technology providers.”
The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $150 million credit facility from MidCap Financial, a leading capital provider to the middle market specialty finance industry. The facility strengthens and expands The Credit Junction’s ability to deliver comprehensive capital solutions to businesses across the United States.
The Credit Junction combines traditional credit metrics with data intelligence and partners with business owners to deliver asset-based financing alternatives unique to the needs of each borrower. Since its launch in May 2015, The Credit Junction has helped businesses across the country achieve their growth objectives while supporting job creation and development in the communities they serve.
Sharestates, an online real estate investment platform, announced today the launch of new online user portals that fully optimize the real estate investment process from beginning to end, providing investors with the first ever UX solutions in the real estate investment industry.
Sharestates’ unique solution was designed by the company’s development team alongside CEO and Co-Founder Allen Shayanfekr with UX and functionality in mind – now offering investors a streamlined “one stop shop” in real estate financing.
Peer-to-peer lending platforms such as Prosper and LendingClub(NYSE:LC) have changed the way people can borrow money, and apps such as Venmo and Zelle have made it easier and cheaper to send money.
In this segment from Industry Focus: Financials, analyst Michael Douglass and Motley Fool contributor Matt Frankel talk about the ways that technology is disrupting big banks, and what this trend could mean to the banking industry.
The average student loan payment is $351. Between such a high monthly payment and rent, finding the money to furnish your home or buy a new computer can seem daunting.
If approved, you can now shop. When you’re ready to make a purchase, you can enter the total from your online shopping cart on Affirm’s site. You then choose an amount between $50 and $10,000. You’ll be provided virtual card information to complete the purchase. With some partner retailers, you might select Affirm at checkout instead.
LendingTree, the nation’s leading online loan marketplace, today announced the launch of its Credit Analyzer, a free credit and debt analyzer tool, which was created to help consumers avoid common credit mistakes, improve debt management skills and find the right financial products for their needs.
Credit Analyzer is a free tool that provides a deeper, instant analysis of consumers’ credit and debt situations and offers personalized recommendations based on individuals’ financial goals. The user experience is designed to make it easier for consumers to understand the most important factors that impact credit scores.
This article briefly touches on many of the themes being explored at our LendIt Fintech USA 2018 conference, which is now just days away:
Audits Will Go the Way of the Dodo Bird
The protocol of trust is here to stay, and it’s going to disrupt everything.
While the blockchain has not rendered audits unnecessary yet, I believe we’ll see it happen within the next five years.
Smart Contracts Are In, Long, Paper-Intensive Financial Processes Are Out
As I write this, Lending Robot is raising a private round of growth capital. The closing process, called “papering” for very obvious reasons, is just as onerous and Microsoft Word-oriented as I remember it back in the early 2000s when I was a young VC.
Fintech is Everywhere
Fintechs are enhancing the customer experience along four axes: choice, price, convenience, and predictability. They are meeting the needs of educated, aware, demanding consumers and they are attacking traditional financial institutions at every angle.
Here are five things the winners nailed that newcomers must do to compete:
Build a seamless digital customer experience (CX) customized to each set of eyeballs, across platforms — plus, make financial services ubiquitous, instead of an unfortunate necessity.
Streamline their lead generation and nurturing through automation, machine learning and AI, plus intelligent CRM throughout the customer journey. This powers faster, more accurate processes like loan origination, mortgage underwriting and credit application decisions, among others.
Instead of being scared of increased regulation, embrace it as a driver of innovation.
Upend an established Wall Street business model both by undercutting fees and over-delivering on performance.
Find novel, values-driven ways to increase millennial participation in financial services.
Online business loans are a popular option for financing small businesses. Over the years more small business owners have been turning to online lenders as banks have cut down on loans to smaller businesses.
With the assistance of technology and algorithm, online lenders are able to assess conventional credit standards like cash flow and personal credit score.
The San Diego-based company filed documents with the Securities and Exchange Commission on Monday for Mosaic Solar Loans 2018-1. The ABS-15G forms name Deutsche Bank and BNP Paribas as banks on the deal.
The transaction, Mosaic Solar Loans 2017-2, was priced at 185bp over interpolated swaps for the senior class, yielding 3.854%. Energy related ABS such as solar and Property Assessed Clean Energy (Pace) deals were heavily subscribed throughout last year, with strong issuance of residential Pace bonds and the first ever issuance of commercial Pace ABS from Greenworks Lending.
Laurel Road, an online lender and FDIC-insured bank, officially announced today that Darien Rowayton Bank and its national online lending division will rebrand under the integrated national Laurel Road brand. The new, unified Laurel Road brand represents a deep understanding of its customer base, best-in-class technology and industry-leading compliance and risk management.
Think Finance LLC, a financial technology firm that critics say uses Native American tribes to skirt payday lending laws, failed to convince a Pennsylvania federal judge on Tuesday to move an action brought by the state’s attorney general to Texas, where it has filed for bankruptcy.
The company has been hit with lawsuits over its alleged role in several “rent-a-tribe” schemes, where a high-interest lender affiliates itself with a Native American tribe to shield itself from legal challenges.
Millennials rank as the key target in the economic development world setting sights on future prosperity. A new study casts a pall over efforts to build the Sarasota and Manatee population of this prized demographic. Out of the largest 100 U.S. metropolitan statistical areas in the country, Sarasota-Manatee ranked dead last among cities favored by millennial homebuyers.
The study, conducted by LendingTree, focused on the percentages of all loan requests to the online loan marketplace that came from millennials. That figure for Sarasota fell far from top-ranked Des Moines, Iowa — 17.9 percent versus 42.4 percent. Fort Myers ranked just above Sarasota, with 19.8 percent.
Robert J. (Bob) Mullenbach, CRCM, Managing Director – Compliance Division Deputy at ProBank Austin – has been appointed as the Online Lending Policy Institute’s (OLPI) new Deputy Director. Mr. Mullenbach brings 25 years of regulatory compliance experience in billion-dollar financial institutions, regional and community banks, fintech’s, and leading consulting firms. In his current position, Bob audits clients on the myriad of regulatory requirements associated with consumer/commercial lending, bank secrecy act/anti-money laundering, privacy, and non-deposit investment products.
Central Ohio chapters of the St. Vincent dePaul Society, an international charity run by Roman Catholic volunteers, give needy folks a better option through the society’s microloan program. Information is available through the organization’s website at svdpcolumbus.org.
Anyone of any faith who needs up to $500 for car repairs, school, home repairs or medical bills, can apply for a quick loan with a low interest rate and 12 to 15 months to pay it off.
Contrast that with the typical payday-loan operation, which loans a couple-hundred dollars and demands payment in two weeks. Many borrowers who are strapped enough to go to such a lender in the first place can’t pay it back that quickly. This leads to loans on top of loans, with tacked-on fees that can lead to an effective interest rate of nearly 600 percent.
SunTrust Banks in Atlanta is teaming up with another fintech upstart to expand its reach in consumer lending.
The $202 billion-asset company said Wednesday that it has struck a partnership with the online lender Microf to offer point-of-sale loans to homeowners looking to replace aging residential heating, ventilation and air conditioning systems.
SunTrust will hold the loans on its books and a pay a fee to Microf for the referrals. Microf, based in Albany, Ga., offers the loans through its nationwide network of HVAC contractors.
APIs and open banking are hotter than a freshly tarmacked road in summer, and Revolut joins the mad-for-it crowd.
On its blog, the bank, which was launched in mid-2015 and offers a money transfer app, says account owners can generate sandbox and production keys, and set whitelisted IPs as an “extra layer of security”.
Away from these API days, the firm adds that over the last few months it’s been making updates to its business accounts.
Augmentum Fintech was launched by Augmentum Capital, a venture capital (VC) firm backed by Lord Rothschild’s RIT Capital Partners, last month. The VC firm already had a 7.4 per cent holding in P2P giant Zopa worth £18.5m that has been transferred into the investment company portfolio and its founder Tim Levene, who is acting as investment adviser to Augmentum Fintech, said that the firm is well geared to the P2P sector.
THE FINANCIAL Conduct Authority (FCA) has revealed that it intervened in the administration of Collateral because the peer-to-peer lender failed to seek its approval when it appointed an insolvency practitioner.
March saw the introduction of tax wrappers from peer-to-peer property platforms The House Crowd and Safe as Houses, while EasyMoney, part of Sir Stelios Haji-Ioannou’s easy family of brands, launched its second IFISA offering.
Safe as Houses
The Safe As Houses ISA, which invests in loans made to Safe as Houses Group to develop, regenerate and sell on distressed properties, offers investors a return of six per cent.
The IFISA has a five-year term and requires a minimum investment of £5,000.
The House Crowd
The House Crowd’s IFISA invests in secured P2P loans and property development investments and offers a target return of seven per cent.
The House Crowd requires a minimum investment of £1,000, and new investments can be added to the IFISA in £1,000 increments, up to a maximum of £20,000 across an investor’s entire ISA portfolio.
Investors will get a fixed return paid in twice a year in October and April.
EasyMoney
The latest IFISA to hit the market before the deadline came from EasyMoney, offering target returns of 7.28 per cent. This eclipses the 4.03 per cent returns offered by its first product that launched in February.
The P2P lending platform said its new ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, limited to 75 per cent loan-to-value (LTV).
Only the peer to peer lending element can be included in an innovative Isa, not the equity version where investors take a stake in a company.
Obviously, innovative Isas don’t qualify for the savings element of the Financial Services Compensation Scheme that protects up to £85,000 per licensed bank.
Crucially, however, neither do they get the FSCS investing element that covers up to £50,000 in case your investing platform goes bust and hasn’t done what it is meant to with your money.
With just a month to go until the General Data Protection Regulation (GDPR) is implemented throughout Europe in May. We look at how the new regulatory regime will affect the nascent Digital Advice industry. Some of the upcoming regulatory changes issued from the EU and its commissioners should be positive for fintech asset managers.
With a clear focus on transparency, robo-advisors should look forward to the new era of information portability and openness.
The digital advice sector has from inception attempted to gain a competitive edge with clear transparent product engineering and pricing, but it won’t all be plain sailing and there may be headwinds ahead.
2017 was once again characterized by the significant growth of Banco BNI Europa’s activity, increasing 41% in assets (from € 362M in 2016 to € 509M in 2017), 16% in customer deposits (from € 262M in 2016 to € 305M in 2017) and 379% in banking income (€ 2,8M in 2016 to € 13,2M in 2017).
Net income reached € 2.3M, increasing regulatory capital to € 23.3M and the solvency ratio comfortably above the statutory limit at 13%.
According to Citigroup consumer banking currently generates around $870bn in revenues across Europe and North America, with digital innovators accounting for just 5% of that total. But if the report’s predictions are correct, by 2023, disruption by fintech companies will account for 17% of a total earnings pot of $1.200bn
Follow the Money
CitiGroup cites figures showing that global investment has risen from around $0.5bn in 2019 to just under $20bn today. And most of that investment – Citigroup puts it at 70% is focused on the key areas of personal and SME banking.
ROSCAcoin is a new decentralised autonomous and self-regulating platform built on the Ethereum blockchain. The project aims to develop an innovative financial infrastructure that allows creating solutions for people with little or no access to financial services. ROSCAcoin is set upon an ancient model of borrowing very popular in third world countries.
ROSCA, or Rotating and Saving Credit Association, is defined by a method of borrowing where a group of individuals agree to cooperate for saving and borrowing purposes within a pre-established period; is also a form of peer-to-peer banking and peer-to-peer lending. ROSCAcoin strives to introduce this method using the blockchain technology.
The platform is powered by its own currency RCA, which will be the engine of the whole ecosystem. By using smart contracts, ROSCAcoin is trying to build the ultimate financial solution for the unbanked.
The Dollar has risen 4.4% versus the Swiss Franc since mid-February and could be about to accelarate the move suggest analysts; this despite the sizeable global stock market sell-off which would normally be expected to support the safe-haven Franc.
Safe-haven currencies usually strengthen in times of fear, such as the present, however this does not appear to be the case with USD/CHF which has risen due to the USD outperforming CHF – not the other way round.
White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that White Oak has agreed to expand its asset-based lending platform to serve clients in the U.K. and Europe through the acquisition of LDF Group (“LDF”), a U.K.-based finance company providing asset finance, business loans, commercial mortgages and education leases to small and middle-market companies. Established in 1986, LDF is an industry leader and one of the largest independent finance providers for small businesses in the U.K.
Leading Peer-to-peer (P2P) lending company Faircent on Thursday announced that the company has hired Shalabh Gupta as national sales head – lending.
As an industry veteran with over 17 years of extensive sales experience with brands like the Times Group, Reliance Capital, HDFC Bank, and ITC Limited, Shalabh will play a crucial role in furthering the company’s impressive growth plans and vision as a part of its leadership team.
Since the Supreme Court extended the deadline for linking of Aadhaar to host of services, the fintech segment has been riddled with burdens of limited Aadhaar-based eKYC. The companies have been unable to access Aadhaar database for verification of their customers.
Impact Of Aadhaar KYC On Fintech Startups
According to reports, fintech startups across the insurance, lending and broking sectors are being denied access to authentication agencies for eKYC to verify customer antecedents on the Aadhaar database amidst rising concern over data privacy.
In a move that seems to have left fintech players scrambling, the Unique Identification Authority of India (UIDAI) revoked on Tuesday their access to a dozen agencies that provide e-KYC verification and authentication services. Some of these agencies – KUAs (e-KYC user agencies) and AUAs (authorised user agencies) – will no longer be able to provide e-KYC verification to onboard new customers or authenticate financial transactions affecting e-wallets, online lenders, NFBCs and smaller fintech players.
Fintech company RainFin has announced the conclusion of a transaction with 4 Africa Exchange Proprietary Limited (4AX), which will see the company sell to 4AX its corporate debt marketplace, in exchange for a strategic shareholding in 4AX.
RainFin’s credit marketplace technology has been utilised by companies to raise debt funding from both tradition and non-traditional sources since its formation in 2002.
Accra, Ghana’s capital city will host the forthcoming Startupbootcamp (SBC) Africa Accelerator program. The SBC sponsors include the Old Mutual, BNP Paribas, RCS, PwC, and Nedbank. During the event, startups present to the panelists for about two hours.
News Comments Today’s main news: Prosper changes pricing. Revolut launches disposable virtual cards. OakNorth reports annual profit. Lufax delays IPO. eToro raises $100M for blockchain development. Today’s main analysis: Isas that pay up to 16%. Today’s thought-provoking articles: Is personal service getting lost in digital? What makes big data BIG? How quantum computing can change financial services. Can the blockchain prevent bank […]
Is personal service getting lost in the digital mindset? AT: “This is worth thinking about. While technology allows alternative lenders to do what they do affordably, efficiently, and at scale, it’s the personal touch that gives companies in this space an edge over big financial institutions.”
Earlier this week in anticipation of the Fed Rate hike, we discussed Prosper’s approach to portfolio pricing in a rising rate environment. Our goal with rate-setting is to deliver value for both sides of the Prosper platform by providing a fair price for borrowers and a reasonable return for investors.
In order to deliver on this objective, the borrower rates offered in our marketplace must react to rate changes in the economy at large. Today, the Federal Reserve announced a 25 basis point (bps) increase in the Fed Funds rate. In light of this development, the rates offered to borrowers through the Prosper platform are being modified.
Pricing Change Impact Simulation
The table below summarizes the simulated impact of the rate increase on the portfolio originated through the Prosper platform in March month-to-date (MTD) 2018. Overall borrower rates on the platform are increasing by 26 bps.
Profitability of digital-only businesses can be astounding because the model is so cost-efficient. Some just don’t want customers with “high maintenance” needs such as human customer support.
The best overall answer is to offer all options. Enable customers to interact solely in a digital way or with live support to guide through the process, answer questions and solve problems. Make it easy to use both, such as Amazon does. Online ordering is usually a breeze. But when a problem or concern arises, they have caring and competent live human beings to help.
Ways To Show That You’re Invested (Or Want To Be) In Human Caring
The paper argues that due to Big Data, “the innovation seen in systematic trading models over the past decade could accelerate” and (a closely related point) the “differences between what used to represent quantitative versus qualitative research” could disappear.
Not all Roses and Plush Toys, Though
The process by which the new data capabilities and principles get internalized by the swifter funds, those that want to be on the winning side of the arb plays, isn’t a painless one. There are “integration and cultural challenges” that have to be overcome. After all, the experts that an aspiring arbitrageur would hire come from “internet firms, gaming companies, the military” and consumer research. The world of asset management will be new to them, so everyone on the developing teams can “work effectively together.”
The explosive adoption of the digital channel is changing the nature of lending. Consumers are coming to expect the kind of convenience and speed that a digital experience can deliver, and lenders are increasingly looking to oblige. Although many of the consumer benefits of digital lending are clear, certain complications related to fraud arise when lending goes digital. This is a function of the degree of separation and anonymity in the digital lending process. Building on these factors, today’s fraudsters are relying on a diversified playbook of schemes and techniques to commit loan fraud in digital channels, including the use of synthetic identities, volumetric attacks, and technology designed to disguise their digital footprint. In this report, Javelin explores how these issues have come to unfold and the steps that lenders must take if they want to effectively resist this growing epidemic of digital lending fraud.
Key questions discussed in this report:
What effect has the use of digital channels had on the lending space?
How has fraud changed as a result of lending going digital?
What are the technology factors affecting the risk of lending fraud in digital channels?
What are the fraud risks specific to each type of loan product?
How are different segments of consumers affected by digital lending fraud?
What are the steps that FIs and other lenders can take to effectively prevent new account fraud?
A recent decision from a federal district court in Colorado, Colorado ex rel. Meade v. Avant, strikes another blow against many of the financial technology firms that are revolutionizing the way consumers and businesses access credit. Joining what is now a line of decisions, the court limited the valid-when-made doctrine, which provides that a loan that is valid when it is made does not become invalid (i.e., usurious) when it is sold or assigned to a third party.
A Colorado federal judge ruled Wednesday that the Federal Deposit Insurance Act doesn’t so completely preempt a state financial regulator’s claims against nonbank lender Marlette Funding LLC that they have to be heard in federal court.
U.S. District Judge Philip A. Brimmer remanded the case from Julie Ann Meade, the administrator of Colorado’s Uniform Consumer Credit Code, making it the second such “true lender” action to get kicked back to Denver state court this month.
In a joint annual report to Congress released Tuesday with the Federal Trade Commission about debt collection practices, the CFPB said it had initiated four enforcement actions last year, had resolved one case and has five others pending related to unlawful debt collection practices.
Acting CFPB Director Mick Mulvaney has indicated that debt collection will be a top priority for the agency. About 26% of consumers with a credit file have debt that is being collected by a third party, the CFPB said.
The CFPB recovered $577,000 in consumer relief from its enforcement actions while $78,800 was paid into the civil penalty fund, which is used to provide relief to eligible consumers who otherwise would not be compensated.
On March 14, Governor Jay Inslee of Washington signed the Washington Student Education Loan Bill of Rights. This law had been in the works since 2017 when a report, released by Attorney General Bob Ferguson in December, documented significant disparities across gender, income, age, and race in student loan borrowing and highlighted a handful of the hundreds of complaints the office received from student loan borrowers about their student loan servicers. Providing strong protections for Washington’s more than 730,000 student loan borrowers, whose debt now totals $22.9 billion, the law changes Washington’s regulatory schematic for lenders and servicers operating in the student loan marketplace in the following ways:
It creates the position of “Advocate” within the Washington Student Achievement Council to assist student education loan borrowers with student loans, akin to the position off “ombudsman” under proposed and enacted servicing bills in other states.
It requires servicers to obtain a license from the DFI.
Per this law, all student loan servicers, except those entirely exempt from the statute, are made newly subject to sundry statutory duties.
It imposes several requirements on third-parties providing student education and loan modification services.
It compels institutions of higher education to send borrower notices regarding financial aid.
It calls for the establishment, by rule, of fees sufficient to cover the costs of administering the program that it itself creates.
Lastly, the statute provides for a complete exemption for “any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions.”
Upstate New York is a popular place for millennials to buy houses, according to a national survey by online lender Lending Tree. For home buyers 35 and under, Rochester ranks 16th among the nation’s 100 largest cities for home mortgage requests and offers from borrowers between Feb. 1, 2017, and Feb. 1, 2018.
LendingTree, an online lending exchange company, released a study listing the best and worst cities for a new small business, and Fresno ranked ninth for best cities to start a new small business.
Ranking at first is Sacramento.
To conduct the study, LendingTree used data from over 80,000 queries submitted by new small-business owners seeking loan offers through their small business loan marketplace to find out where businesses tend to perform the best.
The change will allow Credit.com users to get matched with personal loan offerings that can be pre-approved in real-time without leaving the site thanks to Even’s technology. Previously, users looking for personal loans on the site were referred to individual lender websites.
Roostify today announced the addition of Mark McLaughlin as the company’s Senior Vice President of Business Development. McLaughlin will be responsible for formulating the company’s overall partner strategy, creating a scalable operational model, and further developing an ecosystem of technology partners and strategic alliances.
Citigroup Inc added restrictions on firearms sales for new retail-sector clients, the Wall Street bank said on Thursday, the strongest move to date by a major U.S. lender following last month’s high school shooting in Florida.
In an emailed statement Citi said it will require those clients only sell firearms to customers who have passed a background check, restrict firearms sales for buyers under 21, and not sell so-called “bump stocks” or high-capacity magazines.
In an effort to stay one step ahead of the game at all times, digital banking app Revolut is set to launch disposable virtual cards next week to help users of its Premium service protect themselves against online card fraud.
Revolut users will be able to create disposable virtual cards for online purchases in seconds, with card details that automatically regenerate after each transaction. This will also protect users from inconveniences like chargebacks from sites on one-off purchases, as well as preventing fraudsters from tracking bank account information.
The virtual cards will work alongside existing Revolut security features, such as location-based transaction security, the familiar “freeze/unfreeze” physical card ability, as well as being able to disable swipe and contactless payments.
UK based digital bank OakNorth reported an annual profit of $149mn, becoming the first digital bank to do so; in their second year of full operations the bank has seen their loan book triple in size and deposits double in size; Rishi Khosla, OakNorth chief executive, told the Financial Times, “we build them for profit and on strong foundations so as you grow you’re scaling a real business rather than what happens to a lot of fintech where you just keep building for top-line or number of customers, but don’t necessarily have the strongest business model.”
See the table below to see what Ifisas are on the market, what industry they invest into, the minimum investment amount and what kind of returns you can expect.
Source: Which? News
Among the highest rates, FundingSecure offers up to 16% on investments from £25. However, as a peer-to-peer ‘pawnbroking platform’ borrowers are looking for urgent loans to be given within 24 hours, which are secured against their assets. Borrowers are not required to pass any credit checks. Ablrate offers variable rates up to 16%, but they’re set by the borrower and you have to decide if the return is worth the risk. Past funded loans include units for a film studio, a waste management company and a modular building company.
Where else can I find high interest rates? They may not offer 16% interest, but there are a number of current accounts that pay up to 5% – and they don’t come with the associated risks of a Ifisa.
Nationwide’s FlexDirect account offers 5% AER on balances up to £2,500 when you pay in at least £1,000 a month. This is only for the first 12 months, however.
The TSB Plus account offers 3% AER on funds up to £1,500 as long as £500 is paid in each month and you register for online and paperless banking. There’s also the opportunity to earn up to £10 cashback a month, for a limited time.
The Tesco Bank current account also offers 3% AER on balances up to £3,000. You need to pay in £750 a month and set up at least three direct debits.
From today, digital business bank Tide has been authorised by the Financial Conduct Authority (FCA) as an electronic money institution (EMI), which according to Bevis will give Tide “the option to access the same banking infrastructure as older banks”. Since the bank launched last January, 1 in 12 of all business accounts opened in the UK has been with Tide.
Now managing the accounts of over 30,000 businesses, Tide has today also launched a new vertical card and updated app design, and an integration with online accounting provider FreeAgent, which will automatically upload Tide transaction data into the software for easy expenses tracking.
Tide’s recent partnership with iwoca for business lending is also proving fruitful, with the fastest rate of service from first click to credit in the user’s account sitting at 6 minutes and 1 second.
Mark Tucker, chairman of HSBC, Britain’s largest bank, and Nigel Wilson, chief executive of Legal & General, the insurer, said that there was no room for complacency in Britain’s so-called fintech industry.
Philip Hammond, the chancellor, told an industry conference yesterday that the UK was the “global capital of fintech” and that the emerging industry contributes £7 billion to the economy.
One of China’s largest online lenders has shelved their IPO because of the regulatory crackdown on online lending; the FT reports that Lufax is waiting until the China Banking Regulatory Commission (CBRC) required online lenders to apply for a license; the current thinking is the government will approve licenses in April, though the time frame could be a bit longer; Lufax wants to ensure they get it right instead of rushing to be first.
Seventy-eight per cent of small businesses in Mainland China expect to grow in 2018 and 97.5 per cent of small business are confident that the local economy will remain the same or improve in the next 12 months. These are the best survey results for MainlandChina since 2014.
“The high rates of technology use among Mainland China’s small businesses is one of the key drivers of growth, with over 80 per cent of businesses in Mainland China earning more than 10 per cent of revenue from online sales — ranking MainlandChina at the top of the surveyed markets.
This referenced posted blog is a good question and likely the answer is ‘yes’, but also we need to wait and see how effective. Since PSD2 is a legal imperative, one key question posed by the author is whether or not end user companies (the client buying or using a particular financial services product) wishes to share actual bank or account data with the 3rd party vendors for which API-based sharing was designed to assist.
‘When it comes to new services around B2B and working capital, I believe like any good market hypotheses to test, we need to understand a basic question when it comes to corporates – will they provide third party vendors this access? I don’t know the answer to that question, but I do know it comes down to trust and value proposition. Certainly making sure vendors have the security around your bank data will be important in this age of constant hacking threats’.
Cerberus Capital Management, L.P. and its affiliates (“Cerberus”), a global leader in alternative investing, announced today that Roberto Nicastro has become a Senior Advisor to the firm. In this role, Mr. Nicastro will consult with Cerberus as it continues its focus on investment opportunities and strategic partnerships in the European financial services sector.
The raise is set to support eToro’s expansion as it heads into new markets, and continued research and development of blockchain technology and digital assets. The round brings the platform’s total capital raised to $162m, following a signficant period of growth for the business driven in part by its foray into cryptocurrency investments.
eToro added Stellar as its eighth cryptocurrency asset listed on its Crypto Copyfund in February, joining fellow cryptos Bitcoin, Bitcoin Cash, Litecoin, Ethereuem and Ripple amongst others. The trader launched its Crypto Copyfund in July 2017, which uses CFDs to enable investors to diversify across all available cryptocurrencies (weighted by market cap) with just one click.
Basically, a quantum computer doesn’t work with bits but with qubits using particles that can be in superposition (two or more quantum states added together to create another state). This is why particles can take on the value 0, or 1, or both simultaneously. The reason that this is important is that it will allow computers to process and store far more information with far less energy and far more speed than current state computers. For example, in 2016, a team of Google and Nasa scientists found a quantum computer was 100 million times faster than a conventional computer. Elsewhere, in a step towards quantum computing, researchers have guided electrons through semiconductors using incredibly short pulses of light. These extremely short, configurable pulses of light could lead to computers that operate 100,000 times faster than they do today.
This is important in banking because it could displace blockchain, ledger and digital identity developments within a decade. This is because the quantum internet would excel at sending information securely through what is known as quantum encryption. This technology enables banks and businesses to be able to send “unhackable” data over a quantum network. This is because quantum cryptography uses a mechanic called quantum key distribution (QKD), which means an encrypted message and its keys are sent separately. Tampering with such a message causes it to be automatically destroyed, with both the sender and the receiver notified of the situation.
It’s this hassle that Hnry (pronounced ‘Henry’) wants to help resolve, doing away with the need for spreadsheets, software and even costly accountants. Whether it’s income tax, GST, ACC or student loan repayments, Hnry will calculate and pay all of these for you. Same goes for your tax returns, which Hnry will complete on your behalf. It’ll also handle all your invoices, regardless of whether you work for a single client or multiple clients at the same time.
Source: the Spinoff
Jrny
Born from a desire to change how enterprise companies and individuals interact with one another, Jrny uses AI and conversational interfaces to create more relevant, two-way channels of communication. Jrny allows businesses to handle thousands of messages instantly in an effort to build a closer relationship between company and customer.
A massive fraud that cost India’s second-largest bank at least $2 billion is highlighting concerns about vulnerabilities in institutions’ internal controls and spurring some to claim that blockchain could have prevented the crime.
In a recent incident at Punjab National Bank, a deputy branch manager and his subordinate allegedly falsified 150 letters of undertaking directing other banks to give loans to a group of jewelry companies, with PNB providing surety for those letters. Virtually all of them defaulted, causing PNB to be on the hook.
What made the fraud so difficult to detect was that, as far as its internal systems were concerned, the transactions didn’t exist. The letters of undertaking were sent using the Swift network, but none were recorded on PNB’s internal record-keeping software, which wasn’t linked to the Swift system.
Source: American Banker
That’s why some are arguing that bockchain, or distributed ledger technology, could have prevented the fraud. Because immutable records are kept on a decentralized database that multiple parties can view, it’s possible that the fraud either wouldn’t have happened or could have been detected sooner.
In this virtual bank, your savings are stored in crypto format on a blockchain, and instead of interest on your savings, you get a virtual share in the revenue of the bank.
This is an unconventional concept developed by Mumbai-based entrepreneurs Varun Deshpande, Ratnesh Ray and Siddharth Verma, whose product Nuo Bank went live this week.
Naspers, the most valuable listed company in Africa, will be selling $10-billion of its shares of Chinese messaging giant Tencent to invest in fintech, classified and online food delivery businesses.
Naspers announced it will sell up to 190-million Tencent Holdings Limited shares, or 2% of Tencent’s total issued share capital. Naspers is reducing its stake in the maker of WeChat and QQ – which is worth an estimated $545-billion – from 33,2% to 31,2%.
On Tuesday, the Royal Bank of Canada (RBC) announced it has opened its very own API developer platform. According to the bank, the RBC Developers platform will allow eligible external software developers, industry “innovators,” and clients to access select RBC APIs. While sharing more details about the platform, Sumit Oberai, Senior Vice President of Digital Technology at RBC, stated: “Across other industries we’ve seen the transformational effects of APIs. By providing external developers, industry innovators, and clients with access to select RBC APIs, we have the opportunity to increase connectivity, create new tools and experience for clients, and enable open and innovative collaboration to improve the future of banking.”
There are multiple fintech lenders and marketplaces in the UK dealing in mortgages and other financial products. What sets Nuvo apart is it’s claim to be the first artificial intelligence (AI)-powered digital broker. Launched by Nick Sherratt (heads oversees operations and finance) and Richard Hayes (CEO) 18 months ago, Nuvo fills the gap between traditional […]
There are multiple fintech lenders and marketplaces in the UK dealing in mortgages and other financial products. What sets Nuvo apart is it’s claim to be the first artificial intelligence (AI)-powered digital broker.
Launched by Nick Sherratt (heads oversees operations and finance) and Richard Hayes (CEO) 18 months ago, Nuvo fills the gap between traditional brokers and established price comparison websites. They had been running their own mortgage brokerage in Macclesfield, Cheshire for a decade, also selling life insurance and income protection. Their experience as a traditional broker helped them understand what was missing in the market. As a result, they’ve made it easier for customers to access the best mortgage offers in less than a minute, once they’ve gained some basic information from the user.
Now Nuvo Works
The focus was on user accessibility and speed of providing quotes. But the platform’s USP is its AI-powered chatbot technology, which helps users chat in real time and suggests the best mortgage products suited to their finances. The platform was established with 1 million GBP in a seed round, and it recently raised 1 million GBP in a second round of funding.
Historically, if a customer wanted advice on mortgages, he would rush toward a broker or any other independent financial advisor and, in turn, the advisor charged a fees for their advice. However, recent research conducted by Nuvo revealed that nearly 40% of Britons rely on their own research once they get a list of prices from comparison websites. But the problem is most comparison sites don’t give the full picture and can’t answer queries accurately. This passive information overload did not really solve the user problem. Thus, Nuvo was born of the need to marry the traditional mortgage broker experience with the convenient of free comparison websites.
Nuvo has digitalized large parts of the mortgage application process through incorporating real-time sourcing. With an emphasis on transparency, customers can put their queries online with the help of a laptop or other mobile device and get an instant response. Instead of collecting data from the customer through a lengthy form, Nuvo provides a platform that allows the customer to provide details to a chatbot. Customers can also opt to chat with a qualified human financial advisor via the website or by booking a telephonic interview. It means the process is a two-way process, so the customer can ask specific questions at any point if there is something they do not understand.
What Artificial Intelligence Brings to the Table
Artificial intelligence and machine learning add substantial value by bridging the data, information, and context gap so that the virtual assistant and its human counterparts can deliver a seamless customer experience. If the platform lacks data, or the customer provides insufficient data, then it implements sentiment analysis to ascertain intent. Sentiment analysis identifies the customer attitude, emotions, and opinions. If the platform feels like customers are unhappy and/or confused, they can quickly add it to their processing and allow the virtual assistant to interact without sacrificing user experience. There is no need on the part of the customer to wait for a response if the virtual assistant is unable to answer a complex question. Nuvo removes the uncertainty and interjects with a human being.
The first version of the product launched was a Facebook chatbot with some basic functionality that helped people find the best deals on mortgages. Soon, Nuvo will launch the new version integrated on their site with a state-of-the-art user interface, better communication technology, and a next-gen interaction process. Nuvo utilizes its access to endpoints for a better user experience. It also ensures that APIs match the products the platform is offering to users.
The platform launched after the review by UK’s regulator, The Competition and Market Authority (CMA), which recommended that customers use a variety of sites for comparing the best deals. But there are no other companies giving real insight into the market and products.
The UK Mortgage Market Has Not Caught Up With Technology
Most digital brokers are startups and not evolved from traditional brokers. Products and prices are changing constantly. Nuvo allows customer to find the most suitable offer by updating information on a daily basis. Customers can see and compare all the options to make sure they are getting the best deal, eliminating the need for a traditional broker. Also, the founders’ traditional brokers’ practice became a competitive advantage for Nuvo as it enables the company to combine domain expertise and knowledge in their aim to better serve customers.
The UK is one of the largest marketplaces for mortgage deals. Habito and Trussle are other startups aiming for a slice of UK’s lucrative mortgage market. But Nuvo is in for the long haul and believes it can achieve a market share of 5%-10% of the online mortgage market in the next five years.
According to Nuvo founders, they have 10,000 more deals on their platform than Habito at this moment. There is an in-house team of financial experts that assist the customer in solving complicated financial decisions at zero cost. Nuvo does not charge fees to customers like traditional brokers. Instead, they get a commission from the insurer or the mortgage provider.
Founder Richard Hayes said, “Millennials are now willing to transact digitally, so we have an opportunity to resonate with anyone who is willing to engage digitally.”
So far, the mortgage sector has not been able to innovate to meet the demands of customers, but Nuvo, with its AI-powered chatbot, is attempting to simplify the on-boarding process. They are also focused on first-time buyers to build trust and confidence in the mortgage ecosystem.
A major tailwind for digital brokers is the slow but steady death of brick-and-mortar mortgage advisors. In 1985, there were over 120k independent financial advisors in the mortgage space, but now it’s under 20k. Correspondingly, there has been a massive increase in people seeking mortgages. This suggests that the market is consolidating and scale will be an important element in winning the sweepstakes.
How Nuvo is Capturing the Future Digital Mortgage Market
“2018 will see a full mortgage journey on our platform,” Hayes said. Nuvo is incorporating new features to speed up the application process and using APIs to enhance the customer experience at large. “We all know that buying a house is a costly and long process.” Thus, the platform assimilates all the information about property such as value, construction details, and more, from different sources to help the customer get the best mortgage deal and insights about the property itself.
The platform is focused on its journey to help borrowers find the best mortgage and other financial products. It is looking to raise further funding to grow aggressively in this massive market space with its proprietary AI technology.
News Comments Today’s main news: RateSetter enrolls 5K IFISA accounts in first month. OnDeck makes CFO transition. Augmentum set to IPO. TD Auto Finance, AutoGravity partner. Ranger Direct arbitration proceedings come to a halt. Investly secures 500K GBP through Seedrs. Today’s main analysis: A visualization of America’s personal loans. Today’s thought-provoking articles: UBS banned from sponsoring Hong Kong IPOs. China’s credit […]
America’s personal loans visualized. AT: “Interestingly, the average loan amount Americans take to the grave with them is almost the same as the average loan amount of LendingClub subprime personal loans. I’m not sure what this is saying, but I’m pretty sure it isn’t saying there is any causative effect between the two.”
TD Auto Finance partners with AutoGravity. AT: “AutoGravity continues to expand its footprint. This is another example of a partnership that will benefit both parties, and I’m still looking forward to AutoGravity continuing to expand. They’re doing great things.”
OnDeck today announced that the Company will appoint Kenneth (Ken) A. Brause as its Chief Financial Officer effective March 26, 2018, as part of a mutually agreed upon transition process between the Company and current Chief Financial Officer, Howard Katzenberg. Katzenberg will serve as an advisor to OnDeck until April 13, 2018, working closely with Brause to facilitate a smooth transition.
Consider this: The average personal loan given out by loan giant Lending Club is for $15,000 given to a person with a sub-700 credit score and an income of $6,000 per month.
According to Experian, 73% of Americans die with an average debt balance of $61,554. This – on average – includes mortgage, credit card, auto, personal, and student loans. The average personal loan Americans take to the grave is $14,793.
That data is below and the results are fascinating and even daunting, especially for the apparent 73% of Americans who have a monthly payment to make. Read it and weep. Or make some payments.
Lending Club offers personal loans of up to $40,000. But that doesn’t mean everyone is asking for that much. Not does it mean that Lending Club is offering that much.
Interest rates are largely determined by credit score, but the average rate given out ranges from 12-14% with a peak high point in the 2013-2014 timeframe.
TD Auto Finance (TDAF), a subsidiary of TD Bank, America’s Most Convenient Bank, today announced a partnership with AutoGravity, a fintech provider modernizing the way consumers buy and finance automobiles. Through this partnership, indirect financing offers through TDAF will be made available to qualified auto buyers using AutoGravity’s digital platform to search for and finance their next vehicle from the convenience of their desktop or mobile device.
Santander Consumer USA Holdings Inc. (NYSE: SC) today announced it has reached an agreement with automotive technology leader AutoGravity to streamline and simplify the car-buying process for consumers. Through this agreement, Santander Consumer USA’s indirect finance offers will be available to AutoGravity customers nationwide through the AutoGravity mobile app.
BBVA Compass, the U.S. subsidiary of the global financial services group BBVA, now offers near instantaneous decisioning and potential same day funding for both customers and non-customers with the footprint wide1 opening of the fully digital BBVA Compass Express Personal Loan.
With the Express Personal Loan, customers and prospects can consolidate debt or fund large purchases with a low-interest personal loan that provides near instantaneous decisioning. Applicants with a BBVA Compass checking account can get same day funding upon loan approval. The loan, which represents months of effort across the entirety of the bank, underscores BBVA Compass’ drive to digital transformation and achieving excellence in customer experience.
I recently caught up with the company’s chief information officer Bradley Strock, who has been in his role for three and a half years. We discussed PayPal’s transformation into a more customer-centric company, giving customers more choices of funding vehicles. We also covered how PayPal has successfully navigated the shift to mobile finance, resulting in a 50 percent increase in mobile payment volume in 2017.
In January of this year, Strock joined the ranks of board-level CIOs, as he commenced a directorship with $700 million revenue Elevate Credit, Inc., which provides online credit solutions to non-prime consumers, typically defined as those with credit scores of less than 700.
Peter High: Could you provide an overview of your role as CIO of PayPal?
Brad Strock: Most people are probably familiar with PayPal. We operate in over 200 markets around the globe. We are on a mission to democratize money and have had a great deal of success over the last couple of years. 2017 has been a great year in particular.
FinFit, a U.S.-based fintech that provides more than 80,000 American companies with a financial wellness benefit platform, announced on Monday the closing of a $35 million senior credit facility with Ares Management. The company stated it has the ability to increase the senior credit facility to $70 million and this capital raise follows a $16 million investment from Bison Capital Partners. Keefe, Bruyette & Woods was the exclusive financial advisor for the senior credit facility.
Retail banks are missing out on $15 billion in global revenue thanks to a gender gap in access to checking and savings accounts.
A BNY Mellon report published last week in collaboration with the UN, cites flaws in design and marketing that make financial products less accessible to women than they are to men.
The report identifies gender gaps on other products; financial institutions are missing out on another $7 billion in credit card revenue, $14 billion in personal loans and $4 billion in housing, the report says.
Numerated Growth Technologies, the online lending software startup that started life as an incubator within Eastern Bank, announced Monday it has two new clients, Franklin Synergy and MidFirst Bank.
These two additions bring the number of bank clients Numerated Software has landed to seven.
Fundbox Announces New Credit And Payments Solution To Bring $ 4.5 Trillion SMB2B Transactions Into 21st Century (Fundbox email), Rated: A
Today Fundboxannounced the launch of Fundbox Pay, a new payment and credit solution servicing the $4.5 trillion small business-to-business (SMB2B) transactional market in the U.S. By addressing SMB’s lack of credit access and by facilitating credit payments between buyers and sellers, Fundbox Pay provides the 21st-century infrastructure to unlock the trapped value in the SMB2B economy.
Caliber Home Loans, Inc. (“Caliber”) today announced the launch of a new mobile platform. Featuring three mobile phone apps customized for three user groups – borrowers, the Caliber sales force and their business associates – all users receive real-time information and the ability to respond from virtually anywhere. Caliber processes data from all three apps on the back end, which enables efficient and effective communication across the loan process.
When Home Invest entered the picture, that’s when. Home Invest allows you to run your next renovation from your laptop only, never having to walk your rental investment property.
The company’s investment objective is to generate capital growth over the long term through investment in a focused portfolio of fast-growing and/or high potential private financial services technology businesses based predominantly in the UK and wider Europe.
Ranger Direct Lending Fund PLC said on Monday Princeton Alternative Income Fund LP and Princeton Alternative Funding LLC filed voluntary petitions of bankruptcy last Friday, after arbitration proceedings following a provisional take over of a loan portfolio.
The company said that it was “disappointed” the bankruptcy filing has stopped the first phase of the arbitration, but believes Princeton’s portfolio will be investigated and the investments the fund has made will be compensated.
Upstart challengers continue to lead the way in the UK’s open banking space, as API specialist TrueLayer integrates with Starling to enable businesses to access customer account data.
The Starling tie-up means that the bank’s customers can now share their data to use products created by these developers – including income verification tools, lending products and collated financial dashboards. The partners stress that account information will only be accessible when a customer chooses to use a new product and actively agrees to share their information through an explicit consent.
HSBC will launch a new app that centralises information about customers’ accounts — even those held with rival lenders — as early as next month, becoming the first major UK bank to take advantage of new regulations designed to boost competition and make it easier to switch providers.
The bank has set a target of the first week of May to release the “Connected Money” app, but Stuart Haire, HSBC’s UK head of retail banking and wealth management, told the Financial Times that he was hoping to make it widely available by mid-April.
The RM Secured Direct Lending fund is looking to raise new capital through the issuance of new C shares and Zero Preference shares, according to regulatory filings.
Launched back in December 2016 raising £50.6m, the fund has raised another £30m through a C share issue in October 2017 but its managers have said on several occasions that the strategy can be scaled up significantly. The fund has clocked up a 4.2 per cent dividend pay out last year beating its 4 per cent target.
On Thursday, U.K. personal finance app Emma — which just launched in beta in December — announced a data-sharing agreement with challenger bank Starling Bank. It’s the second such agreement this year after a similar one with challenger bank Monzo in January.
The company’s two key revenue streams are based off interactions with customer data: referral fees from product recommendations and revenue from future financial products it could launch, including premium features within the app, he added.
The Next Gen: Investors and Savers report by P2P lending platform ArchOver has revealed that two-thirds of UK adults (67%) would call themselves ‘savers’ rather than ‘investors’.
The survey of 2,000 UK adults found that the average saver puts aside £191 a month.
Just under two-thirds of savers (66%) maintained a ‘rainy day fund’, while financing a new car or a holiday (29%) or paying for retirement (27%) were the other main reasons for saving.
The majority of savers (83%) used traditional savings accounts to build their nest eggs, followed by Isas (43%) and pension funds (33%).
Swiss banking giant UBS is reportedly banned in Hong Kong from sponsoring initial public offerings (IPOs), reports in Financial Times said Friday (March 9).
The publication cited UBS’s annual report, which revealed the 18-month ban from the Hong Kong Securities and Futures Commission. The regulator also fined UBS $119 million following an investigation into its sponsorship of IPOs for companies listing on the Hong Kong Stock Exchange.
According to reports, the ban comes two years after UBS warned it was also facing a suspension of corporate advisory services in Hong Kong. The bank also faced an investigation in Belgium in 2016 for money laundering allegations.
China Rapid Finance is one of thousands of private online micro-lending companies in China which, in recent years, have filled a critical gap in the country’s economy by extending credit to members of the lower and lower-middle classes, who traditionally have not had access to borrowing under the state-owned banking system.
Proponents of the payday and peer-to-peer loans offered by these companies assert that they offer borrowers upward financial mobility and the opportunity to achieve the trappings of a middle-class lifestyle. But the rapid proliferation of lending companies in an unregulated market has also led to widespread over-borrowing and a spate of predatory debt collection practices. More and more borrowers began to default on loans, and financial analysts and government regulators both worried that a growing debt bubble at the basement rungs of the Chinese economy might threaten the general stability of the country’s financial system.
Estonian peer-to-peer (P2P) lending platform Investly has successfully secured its initial £500,000 funding target through Seedrs. The equity crowdfunding round has so far attracted more than 375 investors.
CryptoLoan is a smart lending product offering Bitcoin-secured online loans that will allow Bitcoin investors to enjoy the value of crypto assets without selling them. The new product initially will be available for Swedish residents only, but the company is planning to open registration for other European countries shortly.
In the first phase of product development, CryptoLoan will offer online loans with Bitcoin collateral only to Swedish residents, but company development plans include expanding to other European markets shortly as well as enriching the list of accepted collateral with adding other cryptocurrencies. Customers from other European countries are welcome to sign up for news and get an exclusive opportunity to be the first to try the product as soon as it is available in the particular country.
The use of non-traditional data to churn out credit scores is now expanding beyond the underbanked and unbanked to reach even well-banked individuals who already have a credit score. This pool of data, which is used to discover patterns of users’ repayment behaviour based on their mobile phone and social media usage, is playing an increasingly important role in Asia alongside traditional credit scores.
Based on studies that have drawn a correlation between mobile phone usage and repayment rates, algorithms have been created to predict an individual’s potential for defaults. LenddoEFL is one of the pioneers in this field. It started its operations in the Philippines in 2011 before expanding to other countries with large underbanked populations such as Mexico and Colombia.
Mark Mackenzie, managing director for Asia-Pacific at LenddoEFL, says the company will be announcing a partnership in Malaysia in mid-2018, although he is reluctant to disclose more details.
As pointed out by impact investment firm Omidyar Network in its 2016 Big data, small credit report, it is estimated that individual consumer data production will reach 35 billion terabytes by 2020 — some 44 times the data produced in 2009. It also highlighted a few reports that had observed more than 30 companies globally that are already creating credit scorecards using non-traditional data.
The report, Financial Inclusion in the Digital Age, was launched today during Money20/20 Asia in Singapore.
Over two billion unbanked adults in the world, representing 38 percent of all adults globally, do not have access to basic financial services and another 57 percent have basic accounts, but do not have access to diversified investments, low-cost payments systems, core household and business insurance, or credit. Financial Inclusion in the Digital Age explores some of the central frictions that prevent greater financial inclusion and financial well-being, and associated technological innovations that are fostering creative new approaches to mitigating these frictions for individuals and small businesses globally.
Most recently, he founded Celsius, the consumer credit blockchain-based startup.
The Celsius opportunity
Celsius gives its members the opportunity to use the coins they currently hold as collateral. With the Celsius Wallet, users can secure loans in dollars whenever they want by offering up their cryptocurrency as collateral. In the future, consumers will also be able to lend their crypto to others and earn interest in the process.
ApplePay is forecast to facilitate US$200 billion in payments by 2021 and already handles US$50 billion annually. Meanwhile, Amazon is preparing to cut the ribbon on its first chequing account feature by partnering with JP Morgan, a leading US bank.
According to the Australian Financial Review, 84% of millennials would consider banking with a tech giant like Google or Apple. This indicates that the average consumer puts more trust in their search engine provider than their internationally-recognised regulated Tier 1 banking institution, which only reaffirms the scale of the problem banks are now facing.
News Comments Today’s main news: SoFi’s new CEO wants to get the company ready to go public. Revolut’s transaction volumes increased 700%. China to crackdown on non-bank lending. Blender raises $16M. Today’s main analysis: Stay away from LendingClub’s notes and shares. Today’s thought-provoking articles: Legacy banks, digital startups see opportunity to go beyond storing money. LendingBlock aims to mainstream […]
SoFi CEO aims to take SoFi public. AT: “It’s about time, and the company probably would have already started the paperwork had it not been for the scandal that erupted late last year around the former CEO Mike Cagney.”
Legacy banks, digital startups see opportunity to go beyond storing money. AT: “Financial services have grown more complex in the last few years. Technology has enabled greater innovation and specialization, but this will only continue. It’s been a long time since banks saw themselves as simply places people store money. Now, however, it’s essential that they think of themselves otherwise.”
Anthony Noto, the new chief executive officer of Social Finance Inc., is looking to steer the company out of crisis and get it in shape for a potential initial public offering.
The vision for SoFi outlined by Noto didn’t stray far from the one set by his predecessor Mike Cagney, who was ousted after accusations of sexual misconduct inside the company. Noto wants to create a broad online financial-service company, adding checking and savings accounts and wealth management to the main business of refinancing student loans.
In an interview during his first day on the job, Anthony Noto did not promise any big course changes, though he did leave open the possibility that SoFi will revive its quest to get a banking license.
I bought my first batch of $25 notes on April 22, 2016. Now, it is important to note that LendingClub is very clear in its advertising that “99% of portfolios with 100+ Notes have seen positive returns.” So I suppose I added a level of risk by not having a portfolio worth at least $2500. But even still, returns can be .1% annualized and count as ‘positive’, but that is not an acceptable return by anyone’s standards given the risks involved in lending to strangers.
My Portfolio
To date, I have received $436 in payments, $96 of which is interest. I have lost $100 on notes that have charged-off, meaning that there is zero expectation of future payment and LendingClub collectors have stopped attempting to reach the borrower. I also have a note that is late, and based on how things have gone so far, I fully expect that to charge-off too and will lose the $11.50 still owed. In short, I have already lost almost 20% of my initial investment, crossing my fingers that none of the 14 notes I still have that are current don’t enter a late status with more than a year to go before the oldest reaches full term. My results have been dismal.
Source: Seeking Alpha
LendingClub’s ratings are A-G, with A being the safest. As you can see, the vast majority of my portfolio sits in A-C, with one E and one G note (LendingClub did away with F and G notes last year).
Change can be hard for the financial industry, which is dominated by decades of processes and internal systems. But with a slew of upstarts making their way into the trillion-dollar industry, the old guard is finding innovative ways to beat these challenger brands at their own game.
“A lot of these companies have what we call ‘technical debt’—very expensive mainframe systems that are very difficult to change, run [and are] expensive and obviously that limits their ability to innovate,” said Oliwia Berdak, principal analyst at Forrester Research. “The biggest challenge is often culture … In banks the attitude has always been to perfect [products] before it’s unleashed on customers and [technology] is a big change where you’re working with a certain degree of uncertainty and risk.”
According to data collected by Accenture, 90 percent of banking executives said that their companies needed to “innovate at an increasingly rapid pace just to remain competitive,” but only 47.8 percent say that they are actually “investing comprehensively” in digital.
Another challenge: For all the talk about slick mobile banking apps and services, consumers—gasp—still like going to physical banks to manage financial decisions. Eighty-seven percent of customers enjoy going to a physical bank and prefer to interact with a human while there, per Accenture.
Most customers who received face-to-face financial advice from their retail bank felt their needs were completely met (58 percent), but satisfaction drops when advice is delivered by other means, according to J.D. Power’s 2018 U.S. Retail Banking Sales Practices & Advice Study. Only 45 percent of customers who received digital advice through their bank’s website or mobile app felt their needs were met and only 33 percent felt their needs were met via email.
The majority of customers surveyed for the study (58 percent) said they want to receive advice through their bank’s website and mobile app, but only 12 percent said they received advice in that manner.
Customers still aren’t excited about digital-only banks. Less than 10 percent of Americans looking to open a checking account would consider doing so at a digital bank, according to a new report by Cornerstone Advisors.
For example, San Francisco-based neobank Chime’s customers are mostly middle-income millennials, with a median age of 29 and incomes between $45,000 to $65,000. Chime says it caters to a gap in the market for younger customers who felt larger institutions weren’t meeting their needs.
Neobanks should focus on a “clear, differentiated value proposition” for the customer, but too many of them are just adding a little technology to a customer experience that’s not terribly different from what the big banks offer, said Satya Patel, a partner at Homebrew, a seed-stage venture capital firm based in San Francisco and an investor in Chime.
For the past year, Capital One has been rethinking how it can get out of the too-common approach of “innovating” by layering new technology on top of an old product — it’s realized it needs to entirely reconsider the customer’s interaction with it.
About a third of companies have knowingly sacrificed security for expediency or business performance, according to a newly published study, and researchers said that bankers’ responses were consistent with the group as a whole, which included health care and other sectors.
But the financial underserved market spends $173 billion in fees and interest to use $1.94 trillion in financial services, according to the 2017 Center for Financial services Innovation study.
There are four basic categories of people who fall under the credit invisibles umbrella:
Millennials: People between 18– 34 and have not yet borrowed money or gotten a credit card.
Low-Income: People who don’t make enough money to gain access to credit.
Recent immigrants: People who recently moved to the U.S. but haven’t established credit.
Mass-affluent: People who earn more than $100,000 per year and pay with cash instead of credit.
in 2015, mobile payments in the US represented $550 billion. That’s good by most any standard, but the growth expected is staggering. By 2020, that number is projected to hit $2.8 trillion. That represents a compound annual growth rate (CAGR) of 39.1 percent, which is far beyond most any but the most unlikely investments.
China represents $5.5 trillion in mobile payments use as of right now, a combination of various societal factors like a comparative eschewing of the personal computer in favor of the mobile device, as well as a near-ubiquity of locations that accept the system.
BREAKFORM | RE closed its latest small lot subdivision development project in the prime West Hollywood adjacent neighborhood in record time using Equity Multiple, one of the leading real estate crowdfunding platforms. The offering was 145% subscribed in 72 hours.
Credible, the consumer finance marketplace that helps consumers save money and make smarter financial decisions, today announced that it has appointed Chris Bishko as chief financial officer. Mr. Bishko will report to Credible’s founder and CEO Stephen Dash.
A bill to reform the regulation could be introduced “very soon,” State Senator David Carlucci told CoinDesk.
But what is likely to remain is the animosity toward the BitLicense, as evidenced by the small but dedicated protest gathering outside just before the roundtable began, not to mention the grievances aired by the two dozen or so attendees.
Lendingblock aims to become the first to build a marketplace where cryptocurrency lenders meet borrowers, and can exchange their assets across blockchains. The platform aims to bring securities lending to the crypto economy. The current estimates of the market paint a picture of enormous potential for development: in 2017, $2 trillion of assets on loan in traditional securities lending brought approximately $4 billion in revenue. Replicating this in crypto could generate up to $300 million within 3 years as the project notes in its white paper.
British retail banks are poised to introduce money management apps to compete with those already launched by financial technology start-ups, betting their trusted brands, broad client base and deep pockets will help them make up lost ground.
The European Fintech Alliance has fired another broadside in its tussle with the financial services establishment over PSD2, raising fears that banks will develop substandard APIs as a way to fend off competition.
Specifically, the alliance of 74 fintechs, challenger banks and fintech associations is unhappy that the Regulatory Technical Standards on strong customer authentication and common and secure communication under PSD2 allow banks the possibility to be exempted by their National Competent Authority from having to accommodate licensed Third Party Payment Services Providers (TPPs) to access accounts via the so called fallback option in case of malfunction of the API.
THE GLOBAL marketplace lending sector saw nearly $9bn (£6.45bn) invested across 233 deals last year, marking a new funding record for the industry.
Consultancy firm Fintech Global, who compiled the data, found that equity investment in the sector rebounded to $8.9bn last year after a slowdown in 2016. The total was boosted by the top 10 deals, which raised a combined $4.4bn.
The second half of the year was strongest for funding, with the largest deal of the year closing in the fourth quarter when Shanghai-based peer-to-peer lender Lufax raised $1.2bn.
ID Finance, the emerging markets fintech company, is incorporating behavioural biometrics into its AI-based fraud scoring engine to eliminate fraud, boost loan approvals and reduce the incidence of non-performing loans.
The behavioural biometrics system studies the unique typing and behavioural patterns users display during the loan application process to capture a range of patterns. These include mouse movements, to how fingers interact with a keyboard. The biometrics record patterns such typing speed, typos, flight time between keys, keystroke depressions, as well as the patterns from actual input.
The global financial system is wobbling. Banks and other traditional financial institutions have so far managed to survive the crisis resulting entirely from their errors, greed, and arrogance. Now, many believe, they won’t live through the crypto revolution unless they embrace it.
Meet the Celsius Wallet – a combination of a digital wallet and a peer-to-peer lending platform where members can earn passive interest on their crypto holdings and use them as collateral to get loans in fiat currencies.
The chief executive of banking disruptor Xinja has revealed that mortgage brokers have been involved in the group’s home loan plans and will be “essential” to its strategy.
The crowdfunded online lender recently received an Australian credit license (ACL) from the Australian Securities and Investments Commission (ASIC) and plans to utilise the broker channel to facilitate its digital home loan approval process.
Mortgage franchise Yellow Brick Road posted a 2% decline to $7.74bn in loan settlement volume in the first half of FY18 over the previous period as it reduced its number of branches.
Overall, the company delivered 85% growth in profitability, with net profit before tax increasing to $0.53m in the first half of FY18 over the same period of FY17. It cited higher revenue – up by 5% – and lower costs – down by 4% – as drivers of its result.
The company also expects the addition of a small business lending product through its partner Prospa to provide additional revenue opportunities for its network and support growth in commercial lending.
P Kanwal is from Punjab’s Bhatinda. He has a furniture business which mainly deals in cash, because of which it was difficult for him to get a secured loan from the formal banking system. For him, a Peer-to-peer (P2P) lending platform came as a rescue, which got him an unsecured loan for his kid’s education and expanding his business.
This not just the story of Mr Kanwal, but many more small entrepreneurs who are operating their businesses in Tier-1, Tier-2 cities and far-flung areas, some not even on Google map, who are getting financial support through P2P lending.
The pattern that emerges currently from the P2P lending is that borrowers from tier-2 and tier-3 cities comprised 20% and 17% of the total number of loans disbursed through the platform. The new-to-credit borrowers comprise 35% of fulfilled borrowers, while those with poor credit ratings accounted for 10% of the overall number.
Airfox, a mobile financial services company, today launched its free Android app in Brazil, giving millions of people unprecedented access to much-needed financing solutions.
More than 44 percent of Brazil’s population is unbanked, another 30-44 percent lack sufficient access to mainstream financial services, and those with credit cards face interest rates upwards of 200 percent (sources: World Bank, Bloomberg).
CTV’s Chief Financial Commentator Pattie Lovett-Reid discusses the Canadian banks’ quest to deliver quality online financial advice in an effort to catch up with the digital age.
PayJoy, a San Francisco fintech startup, announced this week it has teamed up with Vodacom and CBA to bring smartphone financing to the country of Tanzania.
PayJoy, a San Francisco fintech startup, announced on Friday it has teamed up with mobile distributor Allied Mobile to bring affordable smartphone payment plans to markets across the continent of Africa. According to the duo, Allied Mobile will use PayJoy Checkout, an instant paperless finance system for customers without access to formal credit, and the patented PayJoy Lock which enables “pay-as-you-go” access to the phone.
News Comments Today’s main news: SoFi seeks to poach Twitter COO for CEO slot. Zopa increases investor interest rates. SoftBank considers IPO in London. TransferWise launches borderless bank account. Spotcap partners with BAWAG Group for same-day financing. Today’s main analysis: Super high-interest loans in California have boomed. Today’s thought-provoking articles: How online branding can help businesses get a loan. Today’s […]
SoFi offers Twitter COO top slot. AT: “I’m sure they’re making a lucrative offer, but the indication here is that Anthony Noto may decline. I would imagine this would be a good move for him, a high-profile move in a growing industry with a chance to make a historical mark. Of course, if Twitter counters with a more lucrative offer to keep him, then the ball will be in SoFi’s court.”
How businesses can use online branding to get a loan. AT: “To my knowledge, no alternative lender in the U.S. is using social media as the primary source of credit data. It’s more than they use alternative data as additional information to traditional metrics, but this could change.”
California’s super high-interest loans are booming. AT: “I’d be curious to see how they’re doing in other states, as well. Given that Texas-based Elevate Credit is one of the top three lenders in this segment, it’s likely that other states have seen a similar increase in these types of loans.”
Anthony Noto, a top Twitter Inc. executive, is in discussions to become the next chief executive of Social Finance Inc., according to people familiar with the matter, as the online lender grapples with accusations of improper workplace culture.
The San Francisco-based company has offered the job to Mr. Noto, currently Twitter’s operations chief and before that a top Silicon Valley banker atGoldman Sachs GroupInc.,people familiar with the matter said. Mr. Noto is likely to make a decision in the coming days, the people said.
He may turn down the offer, as terms haven’t yet been completed, or Twitter might lobby hard to keep him, especially with CEO Jack Dorsey splitting his time between the social-media service and Square.
An increasing number of the largest online lenders, such as Kabbage (a ValuePenguin affiliate) and Funding Circle (also a ValuePenguin affiliate), are relying on online data in addition to traditional data points to gain a fuller picture of a business’s health.
Kabbage, which recently received $200 million in funding from Credit Suisse, uses a fully automated underwriting process (involving no humans) to approve applicants and requires business owners to link online accounts, which run the gamut from bank accounts to vendor accounts, to complete an application.
Even traditional lenders are getting in on this trend. JPMorgan Chase (a ValuePenguin affiliate), which recently renewed its partnership with online lender OnDeck (also a ValuePenguin affiliate), the largest online lender to small businesses, uses the latter’s underwriting technology, which considers online data points, to help it offer online business loans.
Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders.
These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.
In 2009, Californians took out $214 million in installment loans of between $2,500 and $5,000, now the most common size of loan without a rate cap, according to the state Department of Business Oversight. In 2016, the volume hit $1.6 billion. Loans with triple-digit rates accounted for more than half, or $879 million — a nearly 40-fold increase since 2009.
The number of loans between $5,000 and $10,000 with triple-digit rates also has seen a dramatic 5,500% increase, though they are less common. In 2016, loans of that size totaled $1.06 billion, with $224 million carrying rates of 100% or higher.
Many of the loans can be tied to just three lenders, who account for half of the triple-digit interest rate loans in the popular $2,500-to-$5,000 size range. LoanMe, Cincinnati firm Check ‘n Go and Fort Worth’s Elevate Credit each issued more than $100 million in such loans in 2016, as well as tens of millions of dollars of loans up to $10,000 with triple-digit APRs.
Within this large document, there are four key actions being proposed:
Affordability test: This imposes two burdens on payday lenders. First, conducting an affordability analysis would increase the cost of underwriting a loan. Second, people generally turn to payday lenders when they are broke.
Limit payday rollovers
Exemptions made for alternatives to payday lenders, including credit unions and community banks: If a lender derives less than 10% of its revenue from payday loans, it is exempt from some of the most onerous rules. This particular restriction is odd. Why is the hated payday lending product acceptable, so long as the institution making the loan only generates 9.99% of its revenue from such activities? Are high rates and frequent rollovers acceptable when coming from a bank? Or is there a presumption that payday lenders are evil while bankers are not?
Limit on the number of times a checking account can be debited. This rule limits the lender to two unsuccessful debit attempts. Afterwards, the lender can only attempt to debit the account if it receives authorization from the borrower.
The outrageously high APRs paid on payday loans can make anyone’s stomach churn. But why are APRs so high? I believe there are three main drivers:
Risks are high: The people using payday loans are very high risk borrowers.
Price competition is absent: For a payday loan, people value speed and access.
Good behavior does not get rewarded: Payday lenders generally do not report to credit bureaus.
The Consumer Financial Protection Bureau on Thursday dropped a lawsuit against four payday lenders.
Since 2012, two of the firms — Golden Valley and Silver Cloud Financial — offered online loans between $300 and $1,200 with interest rates of up to 950%. The other two firms — Mountain Summit Financial and Majestic Lake Financial — also offered similar terms on loans, according to the bureau.
BofA added about 2 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 32.9 million to 34.9 million annually, an increase largely driven by mobile banking users, which increased by 2.6 million users year-over-year (YoY).
Engagement is rising too. Mobile channel usage rose 34% YoY to reach 1.3 billion interactions in the quarter.
BofA consistently updated its digital and mobile offerings throughout 2017, adding contactless ATM functionality, for example, and integrating tools like the popular peer-to-peer (P2P) offering Zelle. These innovations have likely contributed to rising interactions.
Just under 30 percent of U.S. households are underbanked or unbanked, according to the FDIC. What these terms mean has been up for debate and subject to misconceptions. Let’s look at some of the most pernicious myths regarding underbanked Americans and debunk them:
The person-to-person payments service Zelle differentiates itself from rivals by promising users that transactions sent over its network will clear in near-real time. Yet in recent months, the service has faced a number of complaints from consumers who say they are having problems sending or receiving money or setting up accounts in the first place.
Zelle has acknowledged the problems, but says the occasional delay is the price some users will have to pay as the big banks’ rival to PayPal and Venmo aims to create one of the industry’s strictest fraud-prevention programs.
One of the biggest (and most unique) new companies working in the online lending space is Loanable – a platform that brings together crowdfunding and peer-to-peer lending, but with a twist.
According to Bernard Worth, who created Loanable along with co-founder Justin Straight, there is a whopping $1.3 trillion in American student loan debt.
This system, which just launched in October of this year, is designed specifically for loans from friends and families. Loanable is an innovative way to get a low-interest loan from multiple friends and family members, without of lot of the awkwardness and tension that’s typically involved with borrowing from people you know.
The friends and family loan set-up process is pretty straightforward. You simply need to enter some information:
The full amount of the loan
Each lender’s name, address and email
The borrower’s name, address and email
The interest rate – which is usually between 2% and 10% for friends and family loans
Your child is enrolled full time in college; you’re a U.S. citizen or permanent resident
Your child is enrolled at least half time in college; you’re a U.S. citizen or eligible non-citizen
Application process
Apply for an instant rate quote with a pre-approval application (soft credit pull); submit full application when you choose a loan (hard credit pull)
Submit the FAFSA; work with your college financial aid office to request a Parent PLUS Loan
Credit requirements
SoFi considers your credit score, debt-to-income ratio, income, career, education, and other factors. Another parent or guardian can cosign
You can’t have an adverse credit history. If you do, you can apply with an endorser who has strong credit
Borrowing limits
$5,000 minimum, up to the total cost of attendance
Up to the total cost of attendance, minus any other financial aid received
Rates
Fixed APRs from 3.25% – 7.25%; variable APRs from 2.58% – 7.07%
Fixed interest rate of 7.00% for the 2017-2018 school year
Origination fees
None
4.264 percent for the 2017-2018 school year
When repayment begins
Immediate repayment
Immediate repayment, unless you request a deferment while your child is in school and for up to six months after they graduate
Repayment options
Five- or 10-year terms
Standard Repayment Plan (10 years); Graduated Repayment Plan (10 years); Extended Repayment Plan (25 years); Income-Contingent Repayment, if you consolidate first (25 years)
With tax season around the corner you might have noticed a deluge of Jon Hamm commercials for interest free tax refund advance loans. This is a newer product used by tax preparation firms to build their customer base around tax season.
H&R Block, Jackson Hewitt, Liberty Tax Service and more recently Credit Karma all market interest free advances on your tax refund. The process is simple and the loans are paid back to the tax preparer when your refund comes back from the government.
CSBG Applauds Senate Introduction of the Small Business Credit Availability Act (Coalition for Small Business Growth Email), Rated: B
There is legislation moving through the state of New York that shifts some responsibility regarding online lending to the New York Department of Financial Services (NYDFS).
This is according to a brief write up in Lexology and the change in approach may have an important impact regarding online lenders operating in the state of New York.
NYDFS does not necessarily have a reputation for being Fintech nor innovation friendly.
Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015.
Softbank Group, the Japanese technology conglomerate, is considering the sale of 30 per cent of the shares in Softbank Corp, a subsidiary that is Japan’s third-biggest mobile phone operator, in an initial public offering.
The mega-deal could raise up to two trillion yen (£13 billion) and may take place this year in Tokyo and London, with the proceeds channelled into investments in new technology businesses, the newspaper Nikkei reported last week.
Research from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above. However, only a quarter said they were comfortable with accessing crowdfunding or peer-to-peer lending.
In contrast, 85 per cent of companies said that they understood how best to access asset-based lending (ABL), while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.
Despite this, traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.
Contego, a regtech and compliance firm, has been chosen by the Open Banking Implementation Entity (OBIE) to verify its users and support open banking development in the UK.
Envestnet | Yodlee has launched a single API solution to make it easier to comply with the UK’s PSD2 and open banking API specifications for account information services, reports David Penn at Finovate (FinTech Futures’ sister company).
“We’ve recruited more than 1,000 specialised consultants across BCG working on topics which didn’t exist just five years ago,” says Mr Morel. They are technologists, data scientists and process specialists who help banks decide what to prioritise and how to design and implement solutions. Most of those newcomers work in financial services, including 100 who work with UK institutions.
LendInvest has been named the exclusive development finance lender on the first phase of a long-term development scheme that aims to build up to 5,750 new homes outside Dover in Kent.
The lender is funding the first 216 units on the first section of the site to be developed by Halsbury Homes – the largest number of units it has funded so far.
In fact, with real estate crowdfunding services like Fundrise Reviews you can invest with as little as £500 in commercial real estate. Something that means you could be looking at a return of over 10 per cent, not bad for such a small investment.
Peer to peer lending is another fantastic option for investors that have a smaller pool of capital to work from.
The past New Year’s Day holiday might not have been a time of celebration for some Peer-to-Peer (P2P) investors in China.
Several Chinese online lending platforms announced a repayment delay or liquidation amid tightening government regulations.
On Dec. 26, 2017, a Beijing-based online lending platform ishoutou.com made an online announcement that it was going into liquidation due to compliance risks. It promised to pay back all loans by 30 percent, 30 percent and 40 percent respectively in the three months from February to April.
However, the company owner, Yang Yinghua, went missing the next day.
And yet it is Orange that has launched one of the most audacious attempts to break into mainstream banking and challenge tarnished incumbents. A couple of months ago Orange Bank was launched with a mission to attract 2m clients and shake up the staid world of French finance.
The shift to smartphone banking should put telecom operators, handset makers and the big technology groups in a strong position to go head to head with the traditional banks.
Springhouse today announced that it has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive.
As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services.
Eiffel Investment Group actively supports the development of digital lending throughout Europe.
We are excited to sponsor the first EUROPEAN DIGITAL LENDING AWARDS.
The event will take place on February 1st, 2018, in Paris (25 Rue du Petit Musc, 75004 Paris) at 7 pm. If you would like to attend, please send us an email at contact@eiffel-ig.com (advanced registration is mandatory).
Launched in January, the company’s ‘borderless’ account – coupled with a debit card – allows users to hold up to twenty-eight currencies. Once signed up, account holders can carry out transactions in a currency of their choice as they travel around the world.
But there are other new players in the market. For instance, Revolut – which styles itself as a digital banking alternative, offers a prepaid debit card that allows users to hold up to sixteen currencies. Again, transactions can be carried out in the currency of choice.
Meanwhile, WorldFirst – a foreign exchange broker serving companies and relatively wealthy individuals – last year announced that it was launching a World Account, Aimed at SMEs, the new account offers the ability to open local bank accounts overseas and hold dollars, sterling and euros.
To Illustrate the potential demand for its service, Worldfirst cited research suggesting that small and medium-sized companies were carrying out foreign-exchange trades to a value of £76bn every month.
According to Bank of America’s Year-end Millennial Snapshot, 49% of Millennials believed that the Great Recession drastically altered their attitudes about banks, specifically with regard to their saving, investment and expenditure.
According to PwC’s Global FinTech Report 2017, FinTech startup funding is over $40 billion in cumulative investment, growing at a compound annual growth rate (CAGR) of 41% over the last four years.
Embrace the Millennial Banking Revolution
59% of Millennials interviewed by BNY Mellon says they’ve never come across a financial product specifically meant for them. A report by The Millennial Disruption Index cited that all the four leading banks in the US are among the least-loved brands by millennials.
Spotcap has entered into a market-leading strategic partnership with BAWAG Group to give Austrian small and medium-sized enterprises (SMEs) access to same-day financing.
More than 99 percent of Austrian businesses are small or medium-sizedand access to finance is a key challenge for SMEs in Austria, as it is for SMEs globally.
AlfaToken, a service enabling startups and innovative entrepreneurs to create their own ICO tokens and smart contracts without coding skills, is gearing about to conduct its Initial Token Offering with the help of ICOBox, the world’s leading provider of ICO solutions. AlfaToken plans to offer services in 14 smart contract areas, from initial coin offerings and real estate rentals, lending and insurance, to business process management, smart homes and property transfers.
Founded in 2017, AlfaToken identified a gap in the ICO market where initial coin offerings are forecast to rise from 43 in 2016 to 537 in 2017, according to coinmarketcap.com. In particular, the company perceived an opportunity for its Ethereum smart contracts in the real estate rentals market, worth $2.8 billion (Airbnb forecasts), in the peer-to-peer lending market (including mortgages), worth up to $180 billion according to Business Insider, and also the insurance market valued at $4.5 trillion according to a 2016 report by the Institute of International Finance.
Every digital financial transaction you’ve ever made in your life has had to go through a bank or large financial institution at some point. They authorise, facilitate and record the transaction, often taking a cut along the way. Blockchain essentially replaces the middleman in this process. It’s international, unregulated, instant and unhackable.
94% of economists surveyed by finder.com.au in November 2017 expect blockchain will have widespread use in the financial sector and economy.
2. Biometric payments
Although biometric payments are increasing, finder.com.au research shows 60% of Aussies – over 11 million people – either feel uncomfortable using biometric identification when logging on to their mobile banking apps, or aren’t really sure about it.
3. The end of our low-interest world
Australia’s cash rate sat stagnant throughout 2017 at a record low of 1.5%, producing low savings rates, cheap mortgages and escalating property prices.
4. The declining human face of banking
A sharp rise in mobile and online banking has meant Australians are less likely than ever to need to visit their local branch. We expect the number of branches to fall further in rural, regional and remote areas.
5. The rise of one-to-one lending
For example, the average three-year term deposit in December 2017 paid 2.55% interest. However, peer-to-peer lender RateSetter are currently offering 7.4% for the same period.
6. The disappearance of ATMs and cheques
The number of ATM withdrawals per month has fallen from a high of 73 million in 2010 to just 47 million in 2017.
8. And finally… instant banking and the New Payments Platform (NPP)
By far the biggest change to the financial industry in Australia will be the New Payments Platform (NPP), which will be switched on in phases from February 2018.
It has been noted that youngsters are averting eyes towards quick personal loans with lesser interest rates rather than the credit cards, says Aditya Kumar, founder of Qbera, a Bengaluru based fintech company. They recently compiled a stats on spending on travel loan trends in 2017. “Millennials, covering more than 50 percent of the Indian population are constantly looking for online digital platforms to plan their finances for holidays; unlike their predecessors who’ve always relied on savings. It has been a regular practice to narrow down their search to fintech lenders for financing their travel needs,” he adds.
According to his company’sstatistical report, out of 1700 applicants of travel loans till last year November, the age of 728 applicants is below 28 years and 105 female applicants within the age span of 20-28 years (both single and married), he adds.
In 2015-16 more than 10,000 businesses across UK benefitted and an estimated 30,000 new jobs were created due to UK government’s favorable policies for the P2P lending sector.
The Financial Services Authority (OJK) is planning to issue a policy in financial services institutions, including guiding principles for Digital Financial Services Providers that include registration and licensing mechanisms as well as the application of regulatory sandbox and policy on crowdfunding.
Not only has the US Federal Reserve started to raise interest rates – a move mirrored by China’s central bank and the Hong Kong Monetary Authority with more developed countries expected to follow suit – but a market correction may be in the works following a strong run in both the US and Malaysian stock markets.
Yet despite its prices taking a plunge recently, its demand is still going strong. Similarly, ethereum, ripple, litecoin and Zcash continue to enjoy the mania status garnered by anything related to cryptocurrency. Equally enticing opportunities are abound with the rapid growth of equity crowdfunding (ECF) and peer to peer (P2P) lending platforms.
Axiata Group Bhd is in the process of building one of the largest fintech companies in Asia to include five micro services – payments, remittance, lending, savings, and insurance.
President and group chief executive Officer Tan Sri Jamaludin Ibrahim said since 2013, Axiata had invested some US$200 million for its digital and internet ventures.
Out of the US$200 million, RM50 million worth of investment went into Axiata’s fintech business.
Russia’s biggest lender Sberbank plans to help small firms raise funds from private investors with a peer-to-business platform, three sources familiar with the plans said, competing with two other ventures that support the cash-starved companies.
The state bank’s foray into p2b lending suggests it sees a revival in fortunes for small businesses as consumer spending picks up.
It also reflects the commitment of chief executive German Gref to enhance the bank’s use of new technology.
News Comments Today’s main news: Rumor: Former SoFi CEO Mike Cagney is planning a comeback with new HELOC startup. Funding Circle preparing 1B GPB float. Morgan Stanley to offer robo-advice. New bill could make IRS use API. Spice Mobility to invest $1.95M in P2P lending startup. Today’s main analysis: Yirendai still growing, and at a good price. Today’s thought-provoking […]
Is Mike Cagney making a comeback? AT: “I figured Cagney would plot a new startup at some point. I didn’t think it would be so soon. If true, this just proves you can’t keep a–eh, good–visionary down.”
Cagney has been approaching investors in recent weeks about a new fintech startup with a plan to raise about $25 million, according to multiple people familiar with his outreach. He has pitched investors such as Peter Thiel along with several others who were backers of SoFi, a company that Cagney pushed to become worth almost $5 billion.
Cagney is starting the new company alongside his wife, June Ou, who previously served as SoFi’s chief technology officer, the people said. The company does not yet have a name and has yet to be publicly announced — Ou’s LinkedIn page says she will serve as the COO of a “#newCo.”
The company is said to focus on HELOC, or home equity lines of credit, though the people said the idea was in the early stages and still required more sharpening. Ou this month shared a job posting on GlassDoor for engineers at a company soon to launch.
Morgan Stanley has made a late push for dominance in the fast-growing market for “robo-advice” in America, launching an automated service aimed at the offspring of its well-heeled customers.
Funds managed by software will grow to $385bn by 2021, according to Cerulli Associates, more than quadrupling from today’s levels.
Morgan Stanley is the latest to pitch in, offering a choice of ETFs, mutual funds and seven themed portfolios, among them sustainability, gender diversity and next-wave technology. The new online tool, known as Access Investing, is designed to appeal to a younger generation, many of them members of wealthy families.
Our credit system runs on the power of data. A simple IT upgrade at the IRS would put more of this power in your hands.
The IRS Data Verification Modernization Act of 2017, recently introduced in Congress by Rep. Patrick McHenry (R-NC) and Sen. Cory Booker (D-NJ), would set up an application programming interface (API) at the IRS.
This API would turn a cumbersome, manual process into an automated one. An API would allow the agency to provide your transcripts the instant you give your authorization. Credit providers would then have more information to make better decisions about your approval and rate. This could cut financial fraud and improve credit prices, speed and access for everyone.
A recent study by Visa showed that, unsurprisingly, consumers are ready to say goodbye and good riddance to passwords, both because of the friction they create when trying to remember them – and the inevitable stutter step that the “forgot password” prompt creates – and because in the aftermath of the Equifax breach, the public has never been more conscious of how far passwords fall short in preventing fraud and keeping their data secure.
It was one of the big drivers, Nelsen said, behind the development of Visa ID Intelligence. Nelsen said that ID Intelligence is an ecosystem of authentication solutions to which issuers connect via a single API.
Over the last four years, Nelsen said there’s been an enormous increase in credit applications – a healthy portion of which are from fraudsters who’ve stolen legitimate credentials and have attempted to use them to open new accounts. Banks now recognize that the best way to combat new account fraud is to put knowledge-based authentication in their rearview mirror, in favor of using tools like identity documents and device data to help determine whether an identity is legitimate, stolen or synthetic.
2017 has been a great year for equity and credit markets. The S&P500 ended the year up 20%, while CDX IG and CDX HY spreads tightened 46bps. ABS markets enjoy record issuance and all-tight time spreads.
Republicans have made limited progress on President Trump‘s pledge to “dismantle” the Dodd-Frank Act, which the GOP had hoped to gut by the end of 2017. But the GOP and independent regulators could still make critical changes to key parts of the law’s legacy.
Senate Majority Leader Mitch McConnell told reporters last week that he’d like to hold a vote on a bipartisan Senate Banking Committee bill to exempt small and mid-size banks from aspects of Dodd-Frank.
During the Banking panel’s markup of bipartisan Dodd-Frank rollback bill, Sen. Brian Schatz (D-Hawaii) sought to add language meant to boost accountability and transparency when credit reporting agencies are breached.
As we have previously reported, the Bureau’s final rule on payday, vehicle title and other so-called high-cost installment loans created new consumer protections for a wide variety of short-term loans and provided official staff interpretations of the rules. Nearly 1,700 pages in length, the rule was issued on Oct. 4.
One of the more controversial provisions of the rule declares it an “unfair and abusive practice” for any lender to make covered short-term or longer-term balloon-payment loans, including payday and vehicle title loans, before reasonably determining that consumers have the ability to repay the loans according to their terms. Pursuant to the rule, it would also be an unfair and abusive practice to make attempts to withdraw payment from consumers’ accounts after two consecutive payment attempts have failed, unless the consumer provides a new and specific authorization to do so.
Now the rule—which is currently set to take effect Jan. 16, 2018—may see the same fate as the arbitration rule. H.J. Res. 122, introduced by Rep. Dennis Ross (R-Fla.), states “That Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Payday, Vehicle Title, and Certain High-Cost Installment Loans’ and such rule shall have no force or effect.” Significantly, H.J. Res. 122 includes Democratic co-sponsors.
Auto Finance—Another Bureau rule may soon be on the road to CRA repeal after the Government Accountability Office (GAO) wrote to Sen. Pat Toomey (R-Pa.) in response to a query about CFPB Bulletin 2013-02.
The long-term vision of the company has not changed: to provide banking products and services to people when they want it. We call it personalized banking for all—anytime, anywhere.
But how do you create a human relationship when more and more business is being done electronically?
So we’ve decided as a long-term strategy to combine the human element with digital components. We call it “human-digital banking.”
What does that mean? We have a new retail application in pilot called BFF—Best Financial Friend—created by Pivotus Ventures [Umpqua’s Palo Alto, Calif.-based fintech/research unit], that customers download on their phones. The first phase of the pilot was a centralized hub. Now we’re rolling it out in stores in the Portland [Ore.] market, training associates to serve as a BFF digitally in addition to working with customers in person. Our intent, as a more robust application becomes available early in 2018, is to introduce it into other metropolitan markets.
Using the app, customers pick a banker in the bank who will be kind of their personal concierge—almost like a personal shopper. They will help the customer do anything with Umpqua except get cash.
More than 53,000 single-family homes and condos were flipped nationwide in the second quarter of 2017 alone for a home-flipping rate of 5.6 percent of second-quarter home sales, according to Attom Data Solutions. The estimated total dollar volume of financing for homes flipped in second-quarter 2017 was $4.4 billion, the highest level since third-quarter 2007, nearly a 10-year high.
More than 35 percent of homes flipped in second-quarter 2017 were purchased with financing, according to Attom. That’s the highest level since third-quarter 2008, or a nearly nine-year high.
A joint study by the University of Cambridge and the University of Chicago suggests that the alternative lending sector, which includes crowdfunding, “hit a stride” in 2016 and has plenty of room for growth. Total market volume in 2016 for alternative financing in the U.S., Canada, Latin America the Caribbean was $35.2 billion, up 23 percent versus 2015. Real estate crowdfunding accounted for just 2.3 percent of the alternative lending market in 2015, but its volume rose by 70 percent in 2016.
And finally, short-term lines of credit are more expensive than products that you’d get at a bank. The exact interest rate you’d get on an OnDeck line of credit, for instance, depends on the exact qualifications of your business, but in general, you can expect them to range from 10% to 80%.
There are several ways you can invest in small businesses. Peer-to-Peer (P2P) lending is a popular way that you definitely need to look into. This lending system eliminates middlemen completely and lets you connect with small businesses across the country with ease.
Funding Circle, the UK’s biggest peer-to-peer lending platform, is preparing to hire advisers to oversee a £1bn-plus London flotation.
Sky News has learnt that the company has told investment banks that it will hold a beauty parade towards the end of the first quarter of 2018, with a listing possible as soon as the late autumn.
Open banking is coming to the UK. To be more precise, from January 13, 2018, Britain’s nine largest banks and one building society will be required to make customer account data available to approved rivals. If all goes according to plan, the new regime will herald a bold era of competition by allowing up-and-coming challenger banks and fintech (financial technology) businesses to compete on a more-or-less level playing field with the giants of the financial services industry.
In the business loans market, peer-to-peer platforms have become increasingly accepted as a source of debt finance. For instance, in the three months to September, pioneering peer-to-peer platform, Funding Circle rang up £114m in new net lending to small businesses. This compared with £95m in new net lending by the big four banks.
According to a survey conducted by Decision Technology, 43% of bank retail customers would consider sourcing a personal loan from a fintech provider. Although consumers were less amenable to opening savings accounts (only 26% would do so).
Earlier this month, Liverpool-based property developer Mitty Group secured £1,982,000 worth of funding from UK-based peer-to-peer lender Assetz Capital to develop two new residential and leisure sites in Merseyside.
According to Assetz Capital, Mitty Group has secured a £942,000 loan from the online lender to fund its Regency Court Development in the Old Swan area of Liverpool.
Assetz Capital also reported that Mitty Group secured a £1,040,000 loan to fund its Burscough Street Development in Ormskirk town center.
Real estate crowdfunding is becoming increasingly popular and it was valued at $3.5 billion in 2016. It is also projected to have the value of $5.5 billion by the end of 2017. It is a great time to think of investing in property UK using the crowdfunding option. However, it is important that you proceed with caution. Here are a few tips to help you make savvy decisions about real estate crowdfunding.
Understand the rules.
Real estate crowdfunding can be risky too.
Take baby steps.
Know your investment company.
Always remember that real estate crowdfunding is generally the same as other investments.The higher the returns, the higher the risks. Try to limit your investment to 5% of your earnings, or 10% for higher net worth individuals.
Satoshi Nakamoto is the anonymous coder, or group of coders, who created bitcoin as a stateless digital currency nine years ago. It’s a pseudonym. Her/his/their true identity remains a mystery, but, as cryptocurrencies continue to rise in influence and as investors lose faith in traditional institutions, that influence is more than likely to grow.
Imagine, for a moment, what it means to be Satoshi Nakamoto. You are, at least digitally, one of the 50 richest people alive and one of the most important people in the financial world.
Robo advisers promised to shake up the UK investment market by using algorithms to deliver low-cost automated services to the masses. However, British investors have found a bug in the system — when it comes to managing their money, they want to speak to human beings too.
The new breed of “robos” are morphing their business models to provide over-the-phone and face-to-face advisory services, recognising that more of a personal touch is needed to win over customers.
Scalable Capital, the European online robo-advice company backed by BlackRock, is launching over-the-phone and face-to-face consultations for a one-off fee of £200 from January after finding a number of clients wanted to talk to human advisers rather than answering its online questionnaire alone.
Andrew Lawson, Chief Product Officer of Zopa.com, a UK online personal finance peer-to-peer lending company, believes that Wow service/experience starts with the customer and solving a problem they face. Too often customer service is a team that is set up to solve the problems that are inherent within the products/services that have been created.
Emerging fintech player Yirendai Ltd. is well positioned in the expanding Chinese P2P lending industry.
P2P lending has a potentially huge market in China that could actually be enhanced by the government’s development of its Social Credit System.
Yirendai has strong revenue growth, a good return on equity, an attractive valuation, a nice cash flow, is free of debt, and plans on continuing to pay a dividend.
An uptrend is on the company’s price chart, reinforced by 50-DMA, 200-DMA, and Relative Strength technical indicators.
But it has also made things easier for scammers. QR codes are so accessible that a simple scanning of an unidentified barcode can lead to a loss of huge money or massive personal information leakage.
For instance, while offering credit support for small and micro-sized enterprises who may not have enough collateral or sound balance sheets is still a headache for the banking sector, banks now can make better loan decisions by evaluating their conditions more precisely with technologies like big data and blockchain.
Last month, a number of private banks (except WeBank, MYbank and XWBank)received notification from CBRC that they should stop offering online lending services, which caused quite a stir within the industry.
On December 23rd, a charity-crowdfunding campaign from Fenbeichou received profound attention and donations on China’s leading social platform WeChat. People were encouraged to donate and help underprivileged children who have same birthday as themselves. Applause for the campaign’s creativity didn’t last long when journalists found that there were some beneficiaries on the platform who were labelled with different names (but for the same picture) or even non-existent date of birth (e.g. 2017.2.29). People suspected this “Same-Birthday Crowdfunding” campaign was a fraud.
On December 28th, the Nanjing Municipal Public Security Bureau posted on its official Weibo that the head of online finance platform Qbao.com had surrendered himself to the local police.
On December 27th, a new range of rules were released to ramp up the security in the mobile payment sectors.
Online lending, including marketplace lending or peer to peer lending, is entering a new era. Goldman Sachs and their Marcus platform is schooling early entrants with good tech and access to low cost of capital that is hard to beat. Big tech is moving in too, as companies like Square, PayPal and Amazon are now providing loans. In the US, early online lenders are rushing to launch new verticals and update models to remain competitive and relevant. Elsewhere, such as the UK and China, models are becoming more established as the focus has been different and the regulatory environment more welcoming.
Equity-based crowdfunding is now accounting for 17% of all seed and venture stage equity investment in the UK. Peer-to-peer business lending provides 15% of all new loans lent to small businesses by UK banks.
Today, the Fintech Charter has not moved an inch forward and is arguably in retreat. And why is that? Because the States do not want to lose relevance and Congress is unable to do anything about it. Who loses out? Consumers and small business, of course.
In early 2017, the Governor of the Bank of England Mark Carney delivered a pointed speech where he said Fintech could “signal the end of universal banking as we know it.” Why is this important? Because it is the Bank of England: the second oldest central bank in the world.
Australia gets a huge shoutout for being consistently vocal in their advocacy of Fintech from both the private and public sector.FinTech Australia has accomplished quite a bit in a short time as the advocacy group promoting the virtues of financial innovation.
The UK’s impending divorce from the European Union is still meandering down the negotiation path.
The shocking downfall of Mike Cagney, founder of unicorn darling SoFi – a company that once envisioned itself as the future of banking, rocked the Fintech world.
The dramatic rise of cryptocurrency and initial coin offerings (ICO) is nothing short of spectacular.
Borrowing rates have fallen to their lowest level for 62 years, triggering debate that Australia’s increasing household debt will force regulators to raise further speed limits to contain new lending, despite an already slowing investor market.
Other lenders, including online lender ING and Newcastle Permanent, the nation’s largest building society, are also targeting the owner-occupied fixed-rate sector with cuts pushing the headline rate to below 3.8 per cent.
Mortgages are a key profit generator for lenders, accounting for about 55 per cent of bank loans and 30 per cent of cash earnings.
BK Modi group company Spice Mobility Ltd is set to pick up a 30% stake in Luharia Technologies Pvt. Ltd, which runs peer-to-peer lending platform anytimeloan.in, for Rs 12.5 crore ($1.95 million) in an all-cash deal.
Spice Mobility Ltd is buying 30% stake in Luharia Technologies Pvt. Ltd which operates P2P lending platform anytimeloan.in, in all cash deal of ₹12.5 crore ($1.95 million), the company said in a stock exchange filings.
THE YEAR 2017 has been somewhat of a twilight zone for digital in India.
India is the world’s second largest online market with 460 million internet users and more than 1 billion mobile subscribers. But internet penetration is still south of 20% of our overall population.
I read recently that over 2.4 billion brand-related conversations happen online every day. In one significant trend, consumers are undergoing digital saturation amidst the social media and marketing barrage. As many as 83% of consumer respondents in a recent survey felt that brands didn’t handle their emotions well across different touchpoints.
For some startups, especially for Fintech firms like Paytm, 2017 has been an incredible year as they were most ready to reap the benefits of disastrous demonetisation policy announced by Prime Minister Narendra Modi which forced the people to rely on mobile wallet firms for making payment for even their tea. Further, implementation of GST has push an environment wherein individuals and SMEs are looking to go digital.
Lohia says that 2018 will see scaling up of players in the lending space especially in small business lending.
On the other hand, for peer to peer (p2p) lending platform – OMLP2P – that brings investors and borrowers together for a seamless and transparent loan disbursal experience, the year 2017 was a mile stone year because on October 4, 2017, RBI came out with the guidelines for the P2P industry, which paved the way for the P2P players to get themselves registered as “ NBFC- P2P” with RBI.
For starups like CreditMantri, 2017 has been a good year as they were able to reach out to 3.8 million Indians with their CreditMantri platform.
For Pune based startup Loantap, which focuses on providing lending platform to Salaried Professionals, 2017 has been a good year. He bets that 2018 is going to be great year for LoanTap and his firm will cross 100 crore Loan Book within first few months.
In 2017, Banks have targeted below areas to practice Innovation –
Architecture to innovate: Challenges around quick interfacing between systems through API Banking.
Operations Overheads: Improvement areas in Operations and Cost optimisation through Robotic Process Automation
Skillset Availability: Creation of skillset around new technologies was always main Agenda in 2017
Traditional Banking: Banking Services on limited channels for Customers, It’s very important to provide Banking services through many other non-Banking Channels
Fintech Experimentations: Challenges around quick partnering with external partners. Availability of API Management interfacing for third-party partnering
Agility in Solution: Availability of quick solutions for payments & other Banking Services
Remove Barriers of digital transformation like lack of skills, lack of technology, lack of adoption
Innovative Culture building for of business Team to drive innovation or digital transformation
Digital banking Enhance of channels to drive digital services e.g. Customer Onboarding, customer serving, customer engagement, custom education
So far Bank has conducted 5 Hackathons which is something Unique in the banking industry.
Main achievements through Innovation Carnival
1st Bank in INDIA: DCB BANK – First Bank to conduct National Hackathon in 6 Cities
Digital Culture Building at DCB bank – This program touches on all entities in the organisation
Corporate Partnering & Training – Model to train participants e.g. by IBM, Redhat, NPCI etc Corporate conducted Sessions
Established Mentorship Collaboration with 60+ Fintech Mentors in various areas added value to boost true evaluation
18 Innovation Themes: It keeps motivated internal team thru idea generation for 18 Themes
Both Virtual & 6 Physical hackathons: It keeps touch with external parties thru Hackathon, Summit
Meeting Bank’s Strategy Goals: It’s helping to execute the strategy for our Bank and to grow bank
Unique India Collaboration: Building Innovation Community among Government, Accelerators, Institutes, Corporate, Banks
Lendingkart Finance: The Ahmedabad-based SME lending startup raised $3.8 Mn (INR 25 Cr) in debt from the State Bank of India. The latest influx of funds will be utilised to bolster Lendingkart’s loan book. The fresh capital will also enable the startup to expand its geographical reach to over 950 cities.
Foyr: Virtual reality-based prop-tech startup Foyr raised $3.8 Mn in Series A funding led by property consultancy JLL and other individual and non-institutional investors.
Anytimeloan.in: Spice Mobility is gearing up to buy 30% stake in Luharia Technologies, which owns and operates P2P lending platform Anytimeloan.in.
Fintech lending
The fast-paced digitization has unlocked fresher avenues for fintech players, especially the ones associated with SME-based lending.
Virtual agents With everything going digital, loan officers can’t be too far behind.
Machine Learning and user experience
2018 will also be the year for adoption of new regression models driven by Machine Learning.
Automated Personalization
All of this is being done through automated algorithms that scrape everything from historic transactions, preferences, and supply chain partnerships, down to critical metadata embedded into user information.
IndiaChain
Our nation has taken a giant stride in the realm of technology by developing its own blockchain network.
Open Banking
UPI (Unified Payment Interface) and AEPS (Aadhaar-enabled Payment System) have paved the way for an open banking channel in 2018.
Physical and Digital Merger
In India, despite a commendable effort to bank the unbanked, a majority of the Indian population is still deprived of access to banking services till date. Businesses, on the other hand, have enough data to prove their creditworthiness but fail to acquire credit because of conventional scoring mechanisms that banks use. Lately, fintech startups have begun collaborating with banks and helped them in making good use of their data and increasing ..
EY’s Fintech Adoption Index (2017), a survey of more than 22,000 digitally active consumers, ranks India second (52%) behind China (69%) in terms of percentage of the digitally active population.
Digital payments reached 1,162 crore transactions between April and November and are expected to exceed 1,800 crore in the current fiscal.
Wallet Usage To Rise
2017 has been the year which saw e-wallets and digital payments come to the fore, placating the masses post demonetization. Come 2018, this trend will likely mature as more and more Indians turn to the digital side of things.
More Emphasis On Data Analytics And AI
Beyond payments, interest in fintech startups in areas like blockchain, artificial intelligence andlending are just some of the focus areas that will garner attention.
Banks And Fintech Companies Collaborating
A Secure Digital India
The rise in digital payments and online lending also makes the sector exposed to hackers who are always on the prowl to feed on vulnerable security.
P2P Moneylending
Motivated by the intention of democratising financial services while aiming for exponential growth, these FinTech startups will come up with newer models for lending, especially in the P2P Lending space.
Instant Payments
Open banking – With initiatives such as Unified Payments Interface (UPI) and Aadhaar Enabled Payment System (AEPS), banking will become more ‘open’ in 2018.
Proliferation Of Chatbots
In 2018, we can expect more chatbots to be deployed with improved quality of interactions, the speed of responses and accuracy in decision-making.
India will be more than USD 4-trillion economy by 2022. Out of this, USD 1-trillion would be digital economy—and it’s the most conservative estimate the government is working with. As Indians become digitally more aware, India’s emerging Peer-To-Peer (P2P) lending industry will flourish in 2018.
Here’re the top 5 trends to watch out for:
P2P lending platforms to become an important contributor to India’s growth story… Micro, Small and Medium Enterprises (MSMEs) contribute about a third of India’s manufacturing output and provide employment to over 10 crore people. Despite this, the share of institutional lending in the total borrowings of MSMEs is less than 10%.
Faster and cheaper loans to SMEs and self-employed borrowers
Fund raising activities of the P2P lending platforms may gather pace… RBI has given 3 months to the existing players and 12 months to the new players for registration. The regulator has made it mandatory for an aspirant P2P lender to have a minimum net worth of Rs 2 crore.
Personal loans to grow at a healthy pace
Awareness about the P2P lending sector to grow among investors
The infrastructure to enable digital payments has been strengthened through issuance of debit cards, roll-out of Point of Sale machines, launch of phone-based acceptance through the BHIM app and the Bharat 4.0 app that allows seamless acceptance of QR code and UPI based payment.
At the same time, incentives have been provided to merchants to accept digital payments through the new Merchant Discount Rate rules
The RBI is helping make digital payment instruments like Wallets more viable
Along with these initiatives, the Government has concomitantly undertaken a massive consumer education and information campaign.
FINTQ, the PLDT group’s financial technology (fintech) arm, seeks to bring insurance, investment and savings solutions to 30 million unbanked Filipinos by 2020 through a grassroots-based financial inclusion program KasamaKA.
Launched to veer Filipinos away from usurious informal lenders, KasamaKA enables members to earn by referring applicants to any of the digital financial services offered by Lendr, FINTQ’s digital loan platform.
Singapore headquartered fintech start-up, InstaReM, which offers convenient and cost-effective international money transfers to individuals and businesses aims to grow 600 percent in financial year 2018-19.
News Comments Today’s main news: SoftBank leads $120M funding round for Lemonade. Shareholders file class action against Qudian. RateSetter looks to cautious growth in car financing. LoanBook rakes in 650K GBP on Crowdcube. Prospa planning a 2018 IPO. Today’s main analysis: Muddy Waters goes cold on China Internet Nationwide Financial Services Inc. (CIFS). Today’s thought-provoking articles: Two big banks […]
Two big banks to launch online lending platforms. AT: “I suspect more to come. This Lend Academy analysis is worth the read and highlights how online lending has grown to the point of being ‘legitimized’. Marcus has proven that traditional banks can compete with up-and-coming tech companies. But will they be the only success story? Maybe not, but we will have to wait and see.”
The law firm of Kessler Topaz Meltzer & Check, LLP announces that a shareholder class action lawsuit has been filed against Qudian Inc. (NYSE: QD) (“Qudian” or the “Company) on behalf of investors who purchased the Company’s securities between October 18, 2017 and November 20, 2017, inclusive (the “Class Period”).
Qudian shareholders may, no later than February 12, 2018, petition the Court to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, or other counsel, or may choose to do nothing and remain an absent class member.
A little over a year ago Goldman Sachs launched their consumer lending platform Marcus as part of a digital strategy to move into the retail banking segment. They have since grown faster than any online lending platform with originations approaching $2 billion. Goldman Sachs now believes revenues from online loans will equal that of trading in the near future.
U.K. based Barclays has been increasing their footprint in the U.S. the last few years through the Barclaycard brand. They are now one of the top 10 credit card issuers in the US. News broke last month that Barclays would be launching a digital bank in 2018 and rebranding from Barclaycard to Barclays in the US.
After a meteoric rise, marketplace lending has had its share of challenges and scrutiny, but the future should still be bright for such an industry on the forward edge of technology and consumer needs. Yet marketplace lending seems to be ending 2017 under an unwarranted attack from regulators and commentators determined to find similarities in marketplace lending to the subprime mortgage market in the years leading up to the financial crisis.
CEO Charles Clinton and CIO Marious Sjulsen co-founded EquityMultiple with a shared vision of transforming real estate investing through tech and by providing new access to private transactions while streamlining the investment process.
Erin:Please share EquityMultiple’s latest stats.
Charles: We’ve funded 32 investments to date and are expecting to hit around 100% year-over-year growth in dollars invested. For investments that have fully repaid or are currently cash-flowing to investors, we’re averaging around a net 9% annualized dividend.
Erin: What sets EquityMultiple apart from its industry peers? How will EquityMultiple continue to differentiate itself?
Charles: We’ve taken a different path from most of our direct competitors and I suspect that will continue. This started at the very beginning – rather than look for venture capital financing, we sought out a real estate firm to partner with and found that in Mission Capital, a national capital markets firm that has done over $70 billion of business in its 15-year history.
Erin: Earlier this year you stated that individuals made up 100% of EquityMultiple’s investments. Has institutional money entered into this investment flow? Why or why not? What are your methods of tapping into new investors?
Charles: We are still 100% focused on individual investors by design. We feel that individual investors are the customers that we provide the most value to. For institutional investors, there often is no real accessibility issue for getting into commercial real estate. Individual investors, on the other hand, are significantly under-allocated into real estate by comparison.
Investors can access the robo-adviser by itself for 25 basis points (formerly 50 basis points), which includes algorithmic portfolio construction, tax minimization strategies, and now support from human advisers via email and text.
For 50 basis points and an account minimum of $50,000, investors can access Ellevest Premium, which includes the technology platform as well as personalized goals-based planning from an adviser with certified financial planner credentials.
Roughly a quarter of American families suffer a major disruption to their income each year, according to the Urban Institute. Nearly one in five of those families suffer an income drop of 50% or more: a potentially catastrophic shock for low-income families.
But it’s not just these one-time shocks that affect families’ ability to plan and save — it’s the month-to-month fluctuations, as well. The JP Morgan Chase Institute foundthat, between 2012 and 2015, 55% of the bank’s customers regularly experienced more than a 30% change in income — up or down — from one month to the next.
BankMobile has become the first bank to start using online lending software developed by Upstart, which is designed to use artificial intelligence and alternative data to determine the creditworthiness of consumers with thin or no credit files.
BankMobile, the digital-only subsidiary of Customers Bank in Wyomissing, Pa., which is due to be spun off and merged with Flagship Community Bank in mid-2018, is planning to use the software to offer its first credit product to the students it reaches through relationships with 800 universities.
Finra has fined Merrill Lynch $1.4 million for alleged supervisory failures related to extended settlement transactions, the industry’s self-regulator says in a press release.
From April 2013 through June 2015, the wirehouse allegedly didn’t collect enough margin to offset credit, market and exposure risk presented by the longer time period between trades and settlements inherent in such trades, Finra says.
Banks have always proclaimed themselves as technology companies with banking licenses. But culturally, banks are still banks: conservative. Innovation teams can only innovate so much before someone in legal or compliance tells them no; they can only move so fast before someone tells them to slow down.
In this installment of Confessions, in which we trade anonymity in exchange for honesty, we spoke with an analyst at a startup attached to a large bank about internal innovation, attracting strong talent and why alternative bank service companies should get serious about becoming or partnering with a bank.
Move over Wells Fargo, another prominent financial firm has taken your place as the poster child for bad behavior.
Equifax, the credit reporting agency whose primary responsibility is to protect consumers’ personal information, became public enemy No. 1 this year when it revealed that thieves hacked into its database and stole the personal information — birth dates, credit card data, Social Security numbers — of some 145 million consumers.
Runway Growth Credit Fund Inc. (“Runway Growth Credit”), a provider of term debt to fast-growing companies seeking an alternative to raising equity, today announced the successful closing of its $275 million initial equity capital raise with an increased commitment to $139 million from OCM Growth Holdings, LLC, an entity owned by certain investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”), along with commitments from other investors.
As reported by CoinDesk, the first leg of the sale – in which the firm is selling Simple Agreements for Future Equity (SAFEs) that will later be redeemed for tokens by accredited investors – began yesterday, albeit a bit laterthan planned. Hiccups aside, Byrne told CoinDesk the sale ultimately attracted a big crowd – some 2,000 accredited investors.
As such, he indicated the company may move to shorten the initial two-month timeframe for the token sale.
Some of the offers, he said, were as high as $5 million or more for single token allocations.
Comptroller of the Currency Joseph Otting said in a press conference Wednesday morning that there is a place in the banking world for some kind of fintech charter, though the exact parameters of such a charter are still unclear and have to be worked out.
“I’m not sure what it looks like, and how it’s funded, but I do think there’s a space there that a technology solution can solve,” Otting said when asked whether he sees a future for the Office of the Comptroller of the Currency’s nascent fintech charter.
An October paper put out by Strategic Partners Fund Solutions, of Blackstone, argues that(despite risks and drawbacks) investing in the secondary private equity market can still be a smart play, offering “accelerated returns with lower volatility, lower loss rates, and greater downside protection” than the primary market.
The 2016 Small Business Credit Survey, published by the Federal Reserve Bank of New York, reports that startups are more likely than their mature counterparts to be undergoing growth and planning to add jobs. The report shows 70 percent of startup applicants are in need of funding to support this growth, versus 60 percent of mature applicants. Additionally, in 2016, 52 percent of startups applied for financing.
The Credit Survey highlights that only “31 percent of startup applicants were approved for the full amount of financing sought”.
Debt crowdfunding: Peer-to-Peer lending
Lending Tree was a revolutionary option for individuals to secure financing when they simply wanted to compare options or if they may not have been bankable. Kiva, for example, allows lenders to contribute small amounts, sometimes as little as $25, to help fund requests.
As of October 2017, Kiva reports funding over 1M loans resulting in $1 billion being lent.
Equity crowdfunding
Now, instead of searching for affluent individuals looking to invest in a business, entrepreneurs can turn to sites like MicroVentures. MicroVentures is a public, online venture capital investment bank. Investors have the opportunity to invest as little as $100, which opens up the market to a much larger pool of potential investors. This option is best suited for established companies with strong historical performance and larger financial needs. Since their launch in 2011, MicroVentures reports facilitating over 160 investments, resulting in over $100M in capital investment to date.
Bank on Atlanta, a financial access program that will focus on providing free or low-cost banking products, along with financial education and financial counseling, to unbanked and underbanked residents in the city of Atlanta has been created.
Research shows that relying on alternative financial service providers such as check-cashing or payday lending establishments makes it hard for residents to rise out of poverty in our city.
Online student loan marketplace LendEDU.com studied the most sought-after gift cards and listed them in descending order: Amazon (AMZN – Get Report) , Walmart (WMT – Get Report) , Target (TGT – Get Report) , Best Buy (BBY – Get Report) , and Subway. But these cards sold for only 2% to 5% less than face value, compared with 1-800-Flowers (FLWS – Get Report) , H&M or Dress Barn gift cards which offered, on average, 30% off face value on their sites. Even Dunkin’ Donuts (DNKN – Get Report) and Godiva mark down their gift cards by 25%.
RealtyMogul, a unique commercial real estate private markets investing platform, today announced the addition of Soley Van Lokeren as Chief People Officer.
Credit Karma, the leading personal finance technology company in North America, today announced it has appointed Gannesh Bharadhwaj as general manager of credit cards. Previously president of Renew Financial, Bharadhwaj brings a strong background in financial institutions as Credit Karma remains focused on using innovative technology to bridge the gap between banks and consumers.
Entrepreneurs can make charity a part of their approach to business, and in a variety of ways. A survey by Funding Circle revealed some interesting figures, as reported by Joshua Sophy last December for smallbiztrends.com.
Of 1,400 small business owners polled, 52 percent said they were donating or had already donated to charity.
Chip, the chatbot app that plugs into your bank account and lets you automatically save for a rainy day, has raised nearly £1.1 million on equity crowdfunding platform Crowdcube.
The fund raise, which is part of a larger £2.4 million funding round, forms part of plans for the London-based startup to apply for a banking license so that it has more flexibility regarding the kinds of products it can offer in the future. The app currently claims 30,000 active users “who are collectively saving millions a month”.
We conclude that China Internet Financial Services Inc. (NASDAQ:CIFS) is a King Zero – just another worthless China fraud, says Muddy Waters Research.
Every one of the purported borrowers to which CIFS disclosed having made loans (accounting for 84.2% of loan balances) appears to be a sham counterparty. (The purported borrowers of the remaining 15.8% of reported loan balances were not disclosed; however, we strongly suspect that most – if not all – of these loans and associated income are also fabrications.)
CIFS’s recently announced “big data” company purchase also appears to be a lie.
47.3% of CIFS’s reported 2016 net income purportedly was generated by its Kashgar subsidiary; however, that subsidiary existed for only two days in 2016.
CIFS is too good to be true – claiming to turn a seeming commoditized business model into an overnight juggernaut with purported gross margins over 97% and net margins over 70%.
Since 2009, China has surpassed the United States as the largest market for new-vehicle sales, according to Deloitte Consulting LLC. And now, auto finance is starting to catch up.
For many years, the Chinese automotive market has been propped up by government incentives like tax breaks, which encouraged customers to purchase cars. So far, this incentive has led to more than 2 million cars being sold a month, with growth running up 15% last year, the Wall Street Journal reported in March. But as the tax breaks are expected to wind down, auto lenders have a greater opportunity to step in and capture marketshare in China, where penetration rates remain lower than other developed nations.
In the U.S., for instance, 84% of new cars in the U.S. were financed in 2014 compared with 20% in China, according to Experian. The Chinese auto finance rate rose to 38% in 2016, and is expected to rise steadily in the next few years; reaching an estimated 55% in 2021, according to ReportLinker.
China maintains a public blacklist of debtors that effectively restricts their movements and their spending habits.
The country’s highest court publishes the names and ID numbers of “dishonest people” on its website and restricts those people from flying domestically, using high-speed trains, or enrolling their children at expensive private schools.
Defaulters are also prevented from staying at hotels with three-stars or more. They also face tougher exams if they want to join the civil service, and are charged higher fees for booking cars. The bans work by linking to a person’s ID number. Some people used their passport when travelling to circumvent the ban, but that loophole now appears to be closed.
LoanBook, a Spanish marketplace lending platform, has successfully secured its initial £650,000 funding target from more than 200 investors through equity crowdfunding platform Crowdcube. Founded in 2013, LoanBook claims to be Spain’s largest marketplace lending platform, with a 4-year track record of working capital lending to Spanish SMEs and 40% market share.
It’s simple: the probability of being under cyber attack is 100%.
With high probability and high impact, the risk is very high that API’s in the PSD2 era will enable a New Normal in Bank Robberies. Not IF, rather WHEN and WHO.
1. Consider new AI-based approaches in vulnerability scanning.
My advice is to keep track of all dependencies and track vulnerabilities in all underlying components. OWASP has a project calledDependency-Check aimed to do just that.
iZettle CEO Jacob de Geer says you should team up with peers – and experiment.
“Apart from getting the business started, is to experiment with whatever idea you have. Most of your trials will fail, but one in 100 will work. If you view problem solving as a way of increasing the value of the company that you are building, then you are off to a good start.”
Klarna co-founder Sebastian Siemiatkowski thinks it’s important to have a holistic approach to problem solving.
When I advise young entrepreneurs, I tell them, “It’s not about figuring out the best business ideas, and it’s not about solving problems theoretically, but it’s about testing your ideas. It’s about coming up with an idea, and then trying it and learning from it.”
Shares of Net Element soared more than 300% on Wednesday after announcing the launch of a new blockchain-focused business unit. They have since pulled back and are up 254% at $18.60 apiece.
Investment bankers lining up for a stronger 2018 pipeline of initial public offerings have online business lender Prospa in their sights.
Street Talk understands a handful of banks have pitched their wares to Prospa’s chief executives Greg Moshal and Beau Bertoli in recent weeks ahead of a planned run at the local bourse some time next year.
Alternative investing is as much a mindset, as it is about specific investments. Here are some alternative investments approaches culled from our members around the world that are applicable to any investment decisions.
Invest in markets or assets that your analysis leads you to believe will do well; don’t invest in a product just because it’s likely to (or, worse, has in the past) “outperform the market”.
Understand that returns are one-dimensional, risk is multi-dimensional
You should constantly revisit your assumptions of the return drivers of the investment (much more so than its price performance), in case they change and you need to rethink your investment.
When we’re asked to define alternatives, we often end up saying “well, anything that’s not traditional”. Actually that’s not quite such a lame definition; alternative investment practitioners know that the best opportunities are usually those that are yet well known or exploited, and hence the field of “alternative investment” is one populated by investment ideas that may not be immediately obvious.
Diversification is the only free lunch – make sure you are diversified
India has a unique problem of too much money chasing too few customers. So at one end, we have traditional salaried class getting loan offers and at the other end, people are left at the mercy of hawkish money lenders ever-more resembling Shakespeare’s Shylock. Clearly, P2P lending and borrowing is the disruption that was waiting to happen as banks and NBFCs have successfully struggled at twin accounts of making credit affordable and accessible in a credit-hungry nation.
If 2016 saw demonetisation change India’s fintech ecosystem forever, this year will be remembered for the Reserve Bank of India’s (RBI) multiple regulations aimed at organising the sector. Recognition of peer-to-peer lending startups, revised guidelines for digital wallets, finalising charges for digital payments—the second half of the year saw it all, setting the template for a more mature yet challenging 2018.
The 22nd Wharton India Economic Forum (WIEF) has announced the finalists of the Yes Bank – Wharton India Startup challenge.
Perpule:Perpule’s 1Pay is a self -checkout app for express checkouts and easy payments in Perpule’s partnered stores like Hypercity, Spar etc.
Capzest: Capzest is a digital lending platform focused on providing unsecured credit to individuals for income generation purposes. It secures partnerships with income generation service platforms and provides short term capital to their various stakeholders. It was founded in October 2015 in Mumbai by Rohan Adlakha andSayantan Sarkar.
Luharia Technologies Pvt. Ltd: Based in Hyderabad, Luharia Technologies owns and operates peer-to-peer platforms for businesses and individuals. Founded by ISB alumni Keerthi Kumar Jain, Luharia’s flagship solution is Vote4Edu, which is an online peer-to-peer lending platform for K-12 education loans. The company also runs Vote4Cash, a P2P marketplace where borrowers can avail cash loans. Machine Bank, an infrastructure ecommerce platform, and P2P lending platform SMEBank are also owned by Luharia Group.
A South Korea-based cryptocurrency exchange was brought to its knees by a cybersecurity attack.
Yapian, the operator of crypto-exchange Youbit, halted trading of cryptocurrencies on its venue Tuesday and filed for bankruptcy after a hack, according to reporting by The Wall Street Journal.
The Journal reported the exchange had 17% of its digital currency holdings stolen.
Your credit score reflects how well you have treated your credit in the past. It is one of the most important factors that lenders consider while evaluating a loan or credit card application. But what if you don’t have a credit score?
NBFCs
If your bank has rejected your personal loan application, approach NBFCs. Since they usually target customers with low or no credit score, they are more flexible with credit scores than banks.
Peer to Peer Lending
Since P2P platforms connect borrowers and investors online, they run with lower overheads and resultantly offer services cheaper than what traditional financial institutions have to offer. There are over 40 peer-to-peer lending platforms in India that are helping a large section of people who have been failed to qualify for loans from banks.
A RateHub report examining FinTech trends in 2017 found that there is a generational divide when it comes to trust in the emerging technology.
Nearly twice as many millennials (44 percent) and Generation Xers (42 percent) said they trust robo-advisors, compared to baby boomers (23 percent).
Forty-seven percent of millennials and forty-eight percent of Gen Xers trust marketplace lenders, compared to 23 percent of boomers.
Online banking and contactless payments were the two most trusted FinTech offerings this year, capturing the trust of 85 percent and 62 percent of Canadians on average.
South East Asia (SEA) is finally embracing financial technology and marketplace lending is at the heart of this boom. The breadth and depth of solutions across FinTech Lending in the region is quite impressive and clearly signifies that a digital revolution is underway in the South East Asian lending industry. Top and Emerging Fintech Sectors in […]
South East Asia (SEA) is finally embracing financial technology and marketplace lending is at the heart of this boom. The breadth and depth of solutions across FinTech Lending in the region is quite impressive and clearly signifies that a digital revolution is underway in the South East Asian lending industry.
Top and Emerging Fintech Sectors in South East Asia by Country
Singapore in particular has become a hub for the nascent fintech lending industry. It is the runaway leader in the region and holds 52% of the market share (both by number of deals and money invested). It is followed by Philippines which accounts for 14%, Thailand 13% and Indonesia 12%.
However, with so many different governments involved, SEA poses an overregulation risk. Already, P2P lenders here have to criss-cross through various layers of regulations that their competitors in other regions don’t have to face.
Singapore Fintech Market: Overview
Singapore has always been known as the technology capital of Asia; MNCs and financial institutions have considered it a natural choice as HQ for their Asian operations. Though Singapore has deep roots in technology and innovation but ironically it got on the Fintech bandwagon rather late. But with the support of regulators, Singapore has established itself as the “Fintech Hub” of South East Asia. Singapore fintech market crossed $83 million in deals during the second quarter of 2017. In 2016, investment in Singapore based fintech companies dropped by staggering 65 percent (US$605 million to US$214 million), as per KPMG International study- Pulse of Fintech. But interestingly the number of deals decreased by only two to 28 during the same period. The main reason for the fall was complicated authorization process for fintechs, but Monetary Authority of Singapore (MAS) is working aggressively to streamline the authorization process, in order to attract more fintechs to Singapore.
Regulatory Ecosystem
“Over the longer term, MAS hopes to see more fintechs using Singapore as a base to pilot and then deploy solutions to other countries within South-east Asia, such as Indonesia and Thailand,” said Mr Chia Tek Yew, the head of financial services advisory at KPMG Singapore.
Monetary Authority of Singapore; the regulatory body has backed the fintech industry right from the get go and that is the reason why Singapore has become the leader in South East Asia. Some of those favorable regulations are mentioned below:
Last year, under the “FSTI” scheme, MAS committed S$225 million (US$164.2 million) over the next five years to foster the innovation ecosystem in Singapore.
It also developed the road map that showed the central bank’s move toward an open Application Programming Interface (API) architecture.
In association with National Research Foundation, it announced the establishment of a dedicated FinTech office to facilitate the use of technology and innovation in the financial sectors (FinTech office to review, align and enhance FinTech-related funding schemes across government agencies).
It also released a consultation paper on proposed guidelines for a ‘regulatory sandbox’ that will enable financial institutions (FIs) as well as non-financial players to experiment with financial technology (FinTech) solutions.
Struck partnership with the Australian Securities and Investments Commission (ASIC) to help FinTech companies from their respective countries scale into each other’s markets and help reduce regulatory uncertainty and time to market and it is trying to strike such more partnerships with other countries as well.
MAS have also announced it will be opening a fintech innovation hub “the looking glass” to promote innovation.
It also released a consultation paper on proposed changes to the payments regulatory framework and establishment of a National Payments Council, whose key initiatives are to promote interoperability and adoption of common standards.
This highlights that though the regulator was slow from the blocks, but has aggressively covered ground to create a supportive environment for the fintech lending community.
Minterest ()- Minterest is a peer-to-business financial technology platform founded by a team of former bankers with more than 120 years of collective experience in corporate and structured finance. It was founded in 2016 by Charis Liau, Ronnie Chia, and Wei Choong Loo. It offers various flexible funding options with interest rate as low as 1% and loan terms ranges from 3-12 months.
Singapore has emerged as an undisputed leader in the SEA region but considering it has always been the gateway to Asia, it will certainly want to have a bigger share of the fintech lending pie. The MAS has laid out a well-thought out road map to attract startups and investments. With a massive demand-supply mismatch in credit, Singapore is poised to witness a marketplace-lending boom.
