Thursday October 17 2019, Weekly News Digest

LendingClub

News Comments Today’s main news: Zopa launches tool to compete with credit bureaus. KBRA assigns preliminary ratings to Marlette Funding Trust 2019-4. OnDeck Capital financial results. ID Finance raises 1.7M euro on Crowdcube in minutes. Canada’s fintech adoption rate has doubled since 2017. Today’s main analysis: LendingClub account performance (A MUST-READ). LendingTree’s Personal Loan Offers Report […]

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United States

United Kingdom

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News Summary

United States

KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2019-4 (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2019-4 (MFT 2019-4). This is a $326.27 million consumer loan ABS transaction.

Preliminary Ratings Assigned: Marlette Funding Trust 2019-4

Class

Preliminary Rating

Initial Class Principal

A

AA (sf)

$260,298,000

B

A (sf)

$30,117,000

C

BBB- (sf)

$35,854,000

On Deck Capital Inc. Financial Results Comparing With Consumer Portfolio Services Inc. (Mesa Weekly), Rated: AAA

On Deck Capital Inc.’s volatility measures that it’s 85.00% more volatile than S&P 500 due to its 1.85 beta. Consumer Portfolio Services Inc. on the other hand, has 1.53 beta which makes it 53.00% more volatile compared to S&P 500.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
On Deck Capital Inc. 3 0.12 45.93M 0.45 7.99
Consumer Portfolio Services Inc. 4 0.55 13.97M 0.50 7.37

Profitability

Net Margins Return on Equity Return on Assets
On Deck Capital Inc. 1,349,850,114.62% 12.2% 3.1%
Consumer Portfolio Services Inc. 396,042,410.84% 7.6% 0.6%

Global cooling; Upgrade Card (PeerIQ), Rated: AAA

In industry news, Upgrade led by CEO Renaud Laplanche released the “Upgrade Card”. The product is a cross between credit card and an installment loan. How does it work? Every month any new charges on the card transition into an installment loan of 12, 24, or 36 months. Customers can select the default payback period when applying for the card and they have the option to change the term for new charges at any time. Upgrade Card offers true risk-based pricing with a range of 6.49% to 29.99%. LendIt Co-Founder Peter Renton has a nice summary here.

In macro news, the Fed is expected to cut rates for a third time later this month to a range of 1.5% to 1.75%.

Source: OECD Interim Outlook Projections, Blackstone, PeerIQ
Source: WSJ, Cantor Fitzgerald, PeerIQ

New LendingClub Account Performance (Lend Academy), Rated: AAA

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

Source: Lend Academy
Source: Lend Academy

Personal Loan Offers Report – September 2019 (LendingTree), Rated: AAA

At 1,270 basis points, the spread between the highest and lowest offered APRs offered to the same consumers were especially stark for high-score borrowers.

  • The average spread for those with scores of 760 or higher was 1,270 basis points, amounting to a difference of 58.5% on the average loan amount offered for a three-year personal loan.
  • Consumers with scores between 720 and 759 saw an average offer spread of 1,145 basis points, representing a 49.9% difference in interest paid.
  • For those with scores between 680 and 719, the average spread was 971 basis points, representing a 37.3% difference in interest paid.
  • Borrowers with scores between 640 and 679 had an average spread of 860 basis points, representing a 28.2% difference in interest paid over the three years of the loan.
Source: LendingTree

Kiva Lending Team: Lendio Gives (Kiva), Rated: A

Lendio has provided over 10,000 Kiva microloans through its

Source: Kiva

There’s Never Been a Better Time to Consolidate Credit Card Debt (Credible), Rated: AAA

According to data collected by the Federal Reserve, borrowers who were assessed interest on their credit card accounts paid 16.97% on average during the three-month period ending Sept. 31. But the average rate on personal loans was only 10.07%.

That’s a spread of 6.9 percentage points — an all-time high in Federal Reserve records dating back to 1998.

Apple and Goldman Sachs aren’t reporting Apple Card information to credit bureaus (MarketWatch), Rated: A

Apple and Goldman Sachs have yet to start reporting consumers’ payment information for the Apple Card to the major credit bureaus, a source close to Goldman Sachs confirmed to MarketWatch on Monday. The source later said that the companies will begin reporting to the credit bureaus later this quarter.

Goldman Sachs CEO says Apple Card is the most successful credit card launch ever (CNBC), Rated: B

“In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” Solomon said, adding “which we believe is the most successful credit card launch ever.”

Rise of fintech weakens law to prevent lending discrimination (Roll Call), Rated: AAA

As online banking threatens to make in-person banking at brick-and-mortar branches as archaic as video rental stores, it may do the same to a 1977 law created to counteract decades of underinvestment in minority neighborhoods.

Fewer branches, more online

While that includes some wholesale banks or limited purpose institutions, like credit card banks, online banking is driving the sector’s growth.

At the same time, the number of bank branches with an obligation under the CRA to provide loans and other services is falling. Branches have declined every year since a peak in 2010, at 99,550, according to data from the Federal Deposit Insurance Corporation. Banks closed 1,700 branches in 2018, dropping the total number to 86,375.

After steadily rising to a peak of $505 billion in 2016, the number of CRA-compliant loans that banks issued dropped in 2017 to $482 billion, according to the Office of the Comptroller of the Currency.

CNB Bank Moves to Revolutionize its Retail Lending with nCino (PR Newswire), Rated: A

nCino, the worldwide leader in cloud banking, today announced that Pennsylvania-based CNB Bank will utilize nCino’s Bank Operating System to digitize its retail lending process from end-to-end to enrich the customer experience.

California has reformed consumer loan interest rates. But will lenders find loopholes? (Cal Matters), Rated: A

Gov. Gavin Newsom has signed into law Assembly Bill 539 by Assemblywoman Monique Limón, Santa Barbara Democrat. The measure sets an annual interest rate cap of roughly 36% on consumer loans from $2,500 to $10,000 made by non-bank lenders.

For the prior 34 years, under state law, the sky was the limit on rates charged for such loans. Last year, 333,416 non-bank consumer loans in the $2,500 to $10,000 range had annual percentage rates of 100% or higher. That represented 40.7% of such loans. In the $2,500-$4,999 range, the triple-digit APR ratio was 55.5%.

DrawBridge Lending CEO Discusses Risk and Compliance for Lending Capital to Bitcoin Holders (Crowdfund Insider), Rated: A

Earlier this month, DrawBridge Lending (DBL Digital), a digital asset lending, borrowing and investment management firm, partnered with Kingdom Trust, a qualified custodian providing a self-directed IRA incorporating several digital assets with property and traditional asset investments.

To be eligible to invest, investors must be eligible contract participants (ECPs), which means they should have a minimum net worth of $1 million. The minimum investment in Drawbridge Lending’s series fund is $1 million, which can be met with the contributions of multiple investors.

There are more than 600,000 millennial millionaires in the US, according to report (CNBC), Rated: A

There are 618,000 millennial millionaires in the U.S. and their wealth is only expected to grow.

Currently, 93% of millennial millionaires have a net wealth between approximately $1 million and $2.5 million, according to the report. Nearly 60% live in either California or New York and they are investing more in real estate than their elder-millionaire counterparts.

The Pros and Cons of Using Peer-to-Peer Lending When Investing in Real Estate (The Motley Fool), Rated: A

Today’s real estate investors have many financing options at their disposal. There are traditional options like government-backed loans, home equity lines of credit (HELOCs), and investment property mortgages. But on top of those, you also have new-age choices like crowdfunding and peer-to-peer (P2P) lending platforms.

Real Estate Earnings: What To Watch For This Quarter (Seeking Alpha), Rated: A

The “REIT Rejuvenation” of 2019 has restored the coveted NAV premium for most sectors, giving these REITs the currency to re-open the acquisition pipeline. This valuation premium has allowed REITs to kick-start external growth, which has historically been responsible for more than half of FFO per share growth across the REIT sector. REITs were net buyers again in 2Q19, buying $12.5 billion in assets while disposing of $6.6 billion. The $5.9 billion in net acquisitions was the largest quarterly “buy” since 4Q17, and we expect this trend to continue into 2020 given the favorable valuation environment. We break down the acquisition activity for each of the REIT sectors later in this report.

Source: Seeking Alpha

AMERICAN FINANCIAL RESOURCES AND FINICITY PARTNER TO SIMPLIFY THE MORTGAGE EXPERIENCE (Finicity), Rated: B

American Financial Resources, Inc. (AFR) announced today it is working together with Finicity—a provider of real-time financial data access and insights, to provide its business partners and their borrowers with a faster, simpler and more secure way to verify assets and income while originating loans.

Roofstock Accelerates Innovation with New Chief Product Officer at the Helm (Yahoo! Finance), Rated: B

Roofstock, the marketplace for investing in real estate, announced the addition of Ketan Babaria to the fintech’s leadership team as Chief Product Officer. Formerly the Head of Product for LifeLock and Capital One’s D3 incubation unit, Babaria will enhance Roofstock’s current offerings and introduce new, creative ideas to accelerate the fintech’s growth and make real estate investing radically accessible.

Director of Operations Joins Fintech Startup LenderClose (DS News), Rated: B

Des Moines fintech startup company LenderClose has welcomed Andrew Deignan as Director of Operations. Deignan will manage the Operations and Vendor Relationships group, ensuring LenderClose delivers the highest level of service to its credit union and community bank lender users.

United Kingdom

Zopa launches tool to dispel “mystery” of credit worthiness (AltFi), Rated: AAA

Zopa, the first ever peer-to-peer lending platform, is launching the tool, called Borrowing Power, as it says that lending decisions and credit worthiness have been “shrouded in mystery” for too long.

The tool, which is free of charge, works by giving Zopa customers a borrowing score between one and ten. Customers are shown why they are given the score and how they can help improve the score.

In the Spotlight with Mario Lupori, RateSetter (Financial Reporter), Rated: AAA

We spoke to Mario Lupori, chief investments officer at RateSetter, about whether there is more consolidation to come in the peer-to-peer market and whether forthcoming regulatory changes will hinder the sector.

Samsung.com partners with Klarna to offer pay later payment plans (IBS Intelligence), Rated: A

Samsung.com has partnered with payment provider Klarna in the UK to provide customers service to make purchases from its website and pay later. The customers will get a convenient and hassle-free way to pay later at Samsung.com.

Klarna: too good to be true for students? (Mancunion), Rated: A

Klarna is perfect in those situations, giving you a ‘try before you buy option’. You can get as many items as you wish, in as many sizes, returning all the items you don’t need before a penny leaves your bank account. There’s no waiting around for refunds to reach your depleted bank account – you only pay for what you actually keep.

Octopus Choice’s P2P loans now available within a SIPP (AltFi), Rated: A

The firm has announced that its P2P investment platform is now accessible within a SIPP wrapper.

Could banks become redundant in the future? (Finextra), Rated: A

P2P lending as it right now stands absolutely no chance in competing with traditional banking, as it requires a bit too much time from the lender’s side.

However, should technology such as Artificial Intelligence be successfully implemented on these platforms, it’s likely that P2P lending will occupy a large percentage of the financial market share.

Starling launches TV ad campaign after reaching 900,000 customers (AltFi), Rated: A

Today Starling Bank will premiere its first TV ad on ITV and Channel 4 during England’s UEFA Euro 2020 qualifier against Bulgaria, and Jamie’s Meat Free Meals.

Celsius Now Offers up to 10% Return on TrueUSD Lending Service (Finance Magnates), Rated: A

Celsius Network, a cryptocurrency lending and borrowing platform, has partnered with TrustToken, the team behind dollar-pegged TrueUSD (TUSD), to offer up to 10 percent interest on four new stablecoins.

Casa Italia to expand its restaurant in Liverpool following £650k loan from OakNorth Bank (Fintech Finance), Rated: B

China

PayPal wants to help Chinese online shoppers buy from overseas (Business Telegraph), Rated: AAA

By the end of this year, Chinese online shoppers will have a new way to buy things from abroad: PayPal.

Despite the tensions between Beijing and Washington, China’s central bank has allowed the US company to take a toehold in the country’s valuable payments market by buying a majority stake of Chinese payments group Gopay.

European Union

Barcelona-based fintech ID Finance secures €1.7 million within minutes on Crowdcube (EU-Startups), Rated: AAA

Barcelona–based ID Finance, a fintech that operates in Europe and Latin America, has raised over €1.7 million in crowdfunding within minutes of its campaign going live on Crowdcube, amidst strong demand from investors. The data science, credit scoring and digital finance company has a target of €2.3 million.

The company has a well established global team and over 3 million users, with over 40,000 new users joining each week. It is on track to double revenues this year to €90 million – up from €13 million in 2017 – and is targeting over €267 million in revenue by 2021, with the goal of becoming the number one digital lending platform in Hispanic and Latino markets.

Fintech exits have raked in €83bn since 2013 amid European funding boom (sifted), Rated: AAA

The sale of European fintechs via initial public offerings or acquisitions has pulled in €83bn over the past six years, according to a new report by Dealroom.co and Finch Capital. This is twice as much as the next biggest category, enterprise software, and highlights the scale of opportunity for investors as well as the growing maturity of the fintech market.

Some of the biggest exits were the €7.1bn flotation of Dutch payments company Adyen and the sale of Swedish start-up iZettle to Paypal for $2.2bn last year.

The same report also estimates that the continent’s remaining private fintechs have an “unrealised” value of €43bn combined, including companies such as N26 and Starling Bank.

Source: sifted
Source: sifted

Which P2P Lending Marketplaces in Europe Accept American Investors? (P2P-Banking), Rated: A

European p2p lending services are growing. And yields of 10+% are achievable on some of the platforms. This attracts international investors.

Here is an overview of 5 services (sorted aplphabetically) that do allow US investors.

Assetz Capital is a marketplace for UK SME and property development loans. The liquid ‘access’ products offer 4.1% to 5.75% interest.

Bondora is an Estonian p2p lending marketplace for consumer loans. The highly liquid Go&Grow product offer yields 6.75%. With other products higher yields of 10+% are achievable.

Estateguru is an Estonian marketplace for property loans. Typical interest rates are 10-12%.

Flender is an Irish marketplace for SME loans. Typical interest rates are around 10%.

Mintos is a Latvian p2p lending market place. A wide range of loan types is offered. The fairly liquid ‘Invest&Access’ product currently promotes around 8% rate. Yields of 10+% are possible with manual and autoinvest.

Europe’s top tech startups to know (sifted), Rated: A

Europe’s startup scene is often overshadowed by Silicon Valley, but the continent is gaining ground with more than 160 tech firms valued at over €1bn.

Klarna
Founded 2005 — Stockholm, Sweden — Unicorn

In 2019 it launched a new $460m fundraising round, giving the company a post-money valuation of $5.5bn and making it the highest-valued private fintech company in Europe. That was a 250% increase on its last valuation at the beginning of the year.

Starling Bank
Founded 2014 – London, UK – Rising Star & Female Led

Led by Anne Boden, Starling has made a dent in the UK’s thriving fintech ecosystem. As of August 2019 the bank has just shy of 800,000 customers, including around 60,000 business accounts. The company says it’s on track to pass a million this year and already has £1bn in deposits.

These numbers are not quite as impressive as Monzo, which boasts 3m customers, or Germany’s N26 with 3.5m.

Greensill
Founded 2011 — London, UK — Unicorn

Former British Prime Minister David Cameron is an advisor to the firm, which is backed by Softbank’s vision fund. The most recent funding round of $800m valued the company at $3.5bn — firm unicorn territory.

Its working finance solution is funded through issuing its own bonds, making it one of the largest bond issuers of the world, with an average of 47 bonds a day.

Nigerian SME Digital Lender Lidya Expands to Europe (Forbes), Rated: A

In an increasing trend where African technology companies are finding a global audience, Nigerian digital SME lending platform Lidya has expanded to Poland and the Czech Republic.

International

London-based finance platform Divido inks deal with US payment company Splitit offering point-of-sale finance (AltFi), Rated: A

Divido, the London-based consumer finance platform which lets consumers take out credit at the point of purchase to help spread the cost of purchases, has signed a deal with US payment company Splitit to offer a monthly instalment option to customers.

4+ INTERNET BANKING OPTIONS FOR GAMING (One Vale Fan), Rated: B

Klarna has become famous among the players in many countries since its creation in 2005. This virtual bank is seductive for its fast transactions and its privacy. The gamblers will remain anonymous when they deposit or withdraw funds utilizing Klarna as a method. In fact, this Swedish company does not ask any personal details or private information. What’s more, Klarna is also an excellent service to the mobile casino allowing the users to move funds at their convenience.

India

How Can Neobanks Potentially Transform SME Lending? (Inc42), Rated: AAA

Neobanking is a relatively newer concept in India as compared to the West, and is still on a take-off mode. However, market experts observe the gradual and steady adoption of Neobanks and credit their fast growth to its lender and SME-friendly characteristics.

IN CONVERSATION WITH CRIF’S ATRIDEB BASU & HOW HE SCALED DATA & ANALYTICS PRACTICE IN INDIA (Analytics India Mag), Rated: A

CRIF is an Italian company, based out of Bologna and caters to more than 6K banks and financial institutions across 30+ countries globally. In India, CRIF has two broad arms – one is the 100% subsidiary (called CRIF Solutions India) – which focuses on consulting, analytics and products and the other is the credit bureau where it has major ownership (CRIF Highmark) – which focuses on multiple services on retail and commercial side.

Asia

Investors Pour Record $ 735 Million Into Singapore Fintech Deals (Bloomberg), Rated: AAA

Investors poured a record $735 million into financial-technology ventures in Singapore in the first nine months of this year, according to research from Accenture Plc, which analyzed data from CB Insights, Pitchbook and Tracxn.

That’s up 69% from the same period a year earlier and exceeds the $642 million raised in all of 2018, the study found. Investments in payments startups and those in lending made up the bulk of fintech fundraising, accounting for 34% and 20% of the total, respectively. Insurance technology deals comprised 17%.

MENA

Region’s P2P lending platform Beehive funds first SME in Bahrain (Statup MGZN), Rated: A

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

The funding was granted to Bahrain-based Mira Packaging Factory, which manufactures disposable cups in addition to other food packaging solutions for the GCC, and the African F&B industry.

Canada

FinTech adoption in Canada has increased from 18% to 50% since 2017, according to the EY Global FinTech Adoption Index 2019. Among the reasons driving consumers to FinTech services are better rates and fees (42%), ease of setting up an account (19%) and more innovative products and services (10%).

Authors:

George Popescu
Allen Taylor

The post Thursday October 17 2019, Weekly News Digest appeared first on Lending Times.

Thursday March 28 2019, Weekly News Digest

structured debt

News Comments Today’s main news: Klarna launches open banking platform. SoFi re-engineers home loans. Apple’s new credit card. OakNorth secures guarantee of $133M. Qupital raises $15M to bumrush China. Today’s main analysis: Arbuthnot Banking Group audited final results for 2018. Today’s thought-provoking articles: U.S. yield curve, new fintech products. Cities with most overleveraged mortgage debtors. Household debt. Expanding access to credit […]

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

structured debt

News Comments

United States

United Kingdom

International

Other

News Summary

United States

SoFi Refreshes Home Loans, Making Home Buying Painless and Paperless (PR Newswire), Rated: AAA

Today, SoFi announced the refresh of its mortgage offering as SoFi Home Loans, complete with a reengineered process that helps people buy or refinance a home with an online application, no hidden fees, or prepayment penalties.

SoFi Home Loans offer competitive rates including affordable down payments, with as little as 10% down on loans up to $3MM, with no hidden fees or prepayment penalties. SoFi allows applicants to choose between four different loan terms and fixed or adjustable rates. Those interested in refinancing can choose between traditional mortgage refinancing, cash-out refinancing, and student loan cash-out refinancing. If SoFi Home Loans isn’t able to handle a loan request, SoFi provides an easy option to digitally transfer member information to its affiliate partner who may be able to help.

Apple’s new credit card keeps advisors guessing (Financial Planning), Rated: AAA

The Apple credit card is the latest offering by a Silicon Valley tech giant looking for a ready-made avenue into the financial services’ sector. While the new card mostly benefits loyal users of Apple products, it’s also an unwelcome reminder of an ever present question on the minds of wealth managers: Will the FAANG companies like Facebook, Amazon, Apple, Netflix and Alphabet continue their land grab of services historically provided by the financial services industry — and at what cost to traditional RIAs?

Ominously, a majority of investors considering switching financial services providers said they would consider banking with a tech company like Facebook, Google or Amazon if they could, according to a recent survey by Novantis.

US Yield Curve Inverts; New Products from FinTechs (PeerIQ), Rated: AAA

For the first time in 3,000 days, and with much anticipation, the 3-month and 10-year treasury curve inverted. The median time to a recession after this curve inverts is between 1 to 1.5 years. However, unprecedented interventions such as QE (and higher central bank holdings globally) make it difficult to draw hard and fast conclusions. Market participants are pricing in a 41% probability of an interest rate cut in the September meeting.

Source: PeerIQ; Bianco Research

New Products from FinTechs

FinTech innovation continues with new products from PeerStreet and Figure. PeerStreet has launched a 30-year loan to enable private investors to buy rental properties. Residential for Rent loans are targeted towards rental home operators. The rental market in the US has grown exponentially post-crisis people struggle to buy homes. The number of rental homes has grown from 36 Mn in 2006 to 43 Mn in 2017.

Source: FactTank, PeerIQ

2019’s Cities with the Most Overleveraged Mortgage Debtors (WalletHub), Rated: AAA

Buying a home represents an important milestone for most consumers. But for those who dive in to the deep end of real estate without a financial safety net, the decision could lead to buyer’s remorse in the long run. Mortgage rates are slowly falling after reaching their latest peak in November 2018, and are close to the lowest they’ve been in the past 3 decades. This makes 2019 a tempting time to buy a home. Some industry experts believe 2019 is friendlier toward buyers than sellers because of the lower rates.

Source: WalletHub

Household Debt – Mixed Signals (DBRS), Rated: AAA

The most recent Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York (the Fed) and Equifax Inc. (Equifax) showed that household debt rose for the 18th consecutive period during Q4 2018 to $13.5 trillion, $869 billion higher than the peak reached in 2008. This represented the third-smallest increase (0.24%) over the 18 consecutive periods of growth, partly because of decreasing mortgage loan debt during Q4 2018 to $9.2 trillion from $9.4 trillion at the end of Q3 2018 and flat levels of auto loan debt at $1.3 trillion for both Q3 and Q4 2018.

Expanding Access to Credit in the Land of New “Halves” (Lend Academy), Rated: AAA

Credit is one of the largest, most powerful, lucrative and important industries in the world. It also is one of the best tools for wealth creation – home ownership, small business ownership and growth, and, leveraged investing.  This is readily accessible for prime consumers with more options now than ever before. But for the other half of the country that is non-prime, options are still limited and in many cases non-existent.

Early pioneers of securitizations like SoFi, the scaling of marketplace lending like Lending ClubProsper and Best Egg, and new distribution models like Greensky and Affirm have contributed towards increasing comfort of these “new asset classes” that were mostly locked up in bank’s balance sheets.

There are a lot of new “halves” in today’s world.

Amount Delivers Seamless Digital and Mobile Lending Platform to TD Bank (PR Newswire), Rated: A

Amount, a technology provider for financial institutions, today announced a strategic partnership with TD Bank. TD Bank, a top ten U.S. bank, is leveraging Amount’s platform to power the bank’s TD Fit Loan, which launched in August 2018. This initial offering allows consumers to consolidate higher-interest debt, while helping TD meet growing consumer demand for a seamless digital and mobile lending experience. Through this partnership, TD and Amount will roll out additional offerings, as well as standalone tools addressing fraud, verifications and decisioning.

5 Freebies With Your Student Loans (NerdWallet), Rated: A

1. Career coaching

Who offers it: SoFi.

SoFi members have received over 15,000 coaching sessions to date.

4. Referral bonuses

Who offers it: Multiple refinance lenders.

  • Education Loan Finance offers $400 for each successful referral, as well as $100 for the loan applicant.
  • Laurel Road lets you split its $400 bonus however you and your referral see fit.
  • Splash Financial provides $250 apiece for both parties.

5. Charitable work

Who offers it: CommonBond.

If you prefer freebies that help others, CommonBond has a one-for-one social impact mission. For each loan the lender issues, it donates an amount based on a formula that funds a child’s education in a developing country through the nonprofit Pencils of Promise. Those donations have totaled over $1 million to date.

CNote Launches Wisdom Fund to Close Lending Gap for Women (PR Newswire), Rated: A

Women are the fastest-growing group of entrepreneurs in the U.S. Yet less than 5 percent of small business lending—only $1 in $23—goes to women. CNote aims to fix this disparity with the Wisdom Fund, a new impact investment opportunity launching today.

Investors in the Wisdom Fund will earn an estimated 4 percent annual return, over a 60-month term, on a loan portfolio that’s diversified across established CDFIs. Email wisdomfund@mycnote.com to learn how you can help fund more women-owned businesses today.

Women seeking loans should contact a participating CDFI. Partners in the Wisdom Fund’s first phase include:

  • Carolina Small Business Development Fund, which provides small business loans and financial training to startups, existing businesses and community organizations in North Carolina.
  • LiftFund, a Texas-based organization that empowers underserved entrepreneurs with capital and support services in 13 states.
  • TruFund, a national nonprofit organization that provides affordable capital to small businesses and nonprofits in AlabamaLouisiana and New York.

Study Finds 70% of Americans Would Share More Personal Data for Fairer Credit Decisions (PR Newswire), Rated: A

More than half (54%) of loan applicants don’t even have a clear understanding of why they receive the interest rate they do from a lender, while a majority (70%) say it is difficult finding lenders who will look at them as something other than their credit score.

  • 7 in 10 American adults (71%) wish there was another way to prove themselves to credit lenders outside of the standard credit score.
    • Hispanics (82%) and African Americans (81%) are more likely than Whites (67%) to want lenders to look at additional factors in lending decisions.
  • 77% believe more data is better when evaluating potential borrowers’ credit.
  • 71% would be willing to share more personal data with a lender if it resulted in a fairer credit decision. The motivation is even higher among middle-class earners. 79% of people making $50,000 to $75,000 would share more personal data to prove their creditworthiness, compared to 66% of people making over $100,000.
  • 84% think their bank should use modern technology to assess their creditworthiness.
    • Specifically, about half of loan applicants (53%) would like their ideal lender to use machine learning to make fairer credit decisions.
    • More than 2 in 5 (42%) would like their ideal lender to use machine learning to make the credit for homeownership more accessible to everyone.
    • Surprisingly, older generations want newer technology even more. Baby boomers and seniors (83% and 87%, respectively) wanted their banks to use new technologies to score them, compared to 79% for Millennials and Gen Zers.

Survey: Alternative Data Sharing (Urjanet), Rated: B

Urjanet surveyed more than 300 U.S.-based adults to assess consumer sentiment around alternative data sharing in the lending process. Key findings include:

  • A majority of consumers have multiple alternative sources of payment history
  • Alternative data sharing represents a huge opportunity for lenders to drive financial inclusion
  • Most consumers (59%) are willing to share utility and telecom data to boost chances of approval

SigFig launches platform to help retail banks sell financial products (Investment News), Rated: A

SigFig, the financial technology firm that developed digital advice platforms for several large financial institutions, wants to help banks automate more than investment management.

Technology to Play Crucial Role in Preparing ABS Professionals for Next Economic Cycle (ABL Advisor), Rated: A

An overwhelming majority (90 percent) of asset-backed securities (ABS) professionals feel that adopting new technologies will be important to preparing their businesses for the next economic cycle, according to Capital One’s sixth annual survey at SFIG Vegas 2019.

The survey also revealed that ABS professionals believe the biggest risks to their businesses are uncertainty around regulatory risk and increased credit risk, both at 29 percent. However, despite regulatory risk being a top concern, the industry’s apprehension has nearly cut in half over the last two years. In 2018, 48 percent noted regulations were the biggest risk to their businesses while 58 percent thought so in 2017. Additional top-of-mind concerns for 2019 include increases in interest rates (18 percent) and increased competition (17 percent).

TrustToken’s Stablecoin Now Available On Cred’s Crypto Earning Platform (BlockTribune), Rated: A

Asset tokenization platform TrustToken has announced a strategic partnership with crypto lending platform Cred.

Founded by former PayPal financial technology veterans, Cred is a decentralized global lending and borrowing platform that allows stablecoin issuers, exchanges and wallets to provide valuable earn and lending services worldwide.

Fintech in Brief: Update on Legal Challenges to OCC Fintech Charter (JDSupra), Rated: A

On March 19, 2019, the New York State Department of Financial Services (“NYDFS”) filed a brief in opposition to the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss the NYDFS’ lawsuit challenging the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). The brief in opposition signals that the NYDFS will continue its opposition to the Fintech Charter under the leadership of Acting Superintendent Linda Lacewell, who replaced outgoing Superintendent Mari Vullo in February. In opposing the OCC’s motion to dismiss, the NYDFS argued that it has standing to challenge the Fintech Charter, the matter is ripe for judicial review, and its claims are not time-barred. The NYDFS also argued that the OCC’s interpretation of the “business of banking” is not entitled to Chevron deference and “should be invalidated in its entirety.”

Mortech Partners with Roostify for Enhanced Online Mortgage Experience (Business Wire), Rated: A

Today, Mortech, a Zillow Group business providing mortgage technology solutions for mortgage lenders and secondary market teams, announced a new partnership between Mortech’s product and pricing engine (PPE) and Roostify, a digital lending platform that gives customers more control of their home buying process while allowing loan officers to utilize the latest technology to more easily process loans. The strategic partnership will integrate two proven mortgage technology solutions to improve the digital mortgage experience for many industry-leading lenders.

Finastra brings community banking services outside the branch with the launch of Fusion Digital Front Office (Finastra), Rated: A

Finastra has launched Fusion Digital Front Office, an innovative tablet-based banking platform that enables community banks and credit unions to take services directly to the consumer, outside of the branch. The solution provides a simple gateway to manage account origination, sales and service, and transaction processing from any remote location.

Huobi’s US Arm Launches Institutional Group for OTC Crypto Trading (CoinDesk), Rated: A

“We’re entering the market now with a real institutional offering, we’re definitely going to be offering some new products and services,” such as token lending and over-the-counter (OTC) trading, in the coming months, he added.

Elevate Named as a Finalist for LendIt Fintech 2019’s Financial Inclusion Award (AP News), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2019. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

J.D. Power ranks Regions among top alternative lenders for personal loans (Biz Journals), Rated: B

Birmingham’s largest bank has ranked among the top alternative lenders in the U.S. for providing personal loan satisfaction through digital applications.

United Kingdom

ARBUTHNOT BANKING GROUP (“Arbuthnot”, “the Group” or “ABG”) Audited Final Results for the year to 31 December 2018 (Morningstar), Rated: AAA

FINANCIAL HIGHLIGHTS

·      Profit Before Tax £6.8m (2017: £2.5m)

·      Underlying profit before tax £7.4m (2017: £3.2m)

·      Operating income increased by 24% to £67.9m (2017: £54.6m)

·      Negative earnings per share 134.5p (2017: positive 43.9p)*

·      Continuing earnings per share 38.0p (2017: 14.0p)

·      Underlying earnings per share 40.3p (2017: 17.6p)

·      Final dividend per share 20p (2017: 19p), an increase of 5%

·      Total full year dividend per share 35p (2017: 33p)

·      Bonus share issue to create new class of non-voting shares

·      Net assets £196m (2017: £236m)

·      Net assets per share 1283p (2017: 1547p)

·      Underlying return on deployed equity 5.6% (2017: 4.2%)

Consolidated statement of financial position

 

At 31 December

2018

2017

Note

£000

£000

ASSETS

Cash and balances at central banks

17

405,325

313,101

Loans and advances to banks

18

54,173

70,679

Debt securities at amortised cost / held-to-maturity

19

342,691

227,019

Assets classified as held for sale

20

8,002

2,915

Derivative financial instruments

21

1,846

2,551

Loans and advances to customers

22

1,224,656

1,049,269

Other assets

24

12,716

20,624

Financial investments

25

35,351

2,347

Deferred tax asset

26

1,490

1,527

Interests in associates

27

– 

83,804

Intangible assets

28

16,538

15,995

Property, plant and equipment

30

5,304

3,962

Investment property

31

67,081

59,439

Total assets

2,175,173

1,853,232

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital

37

153

153

Retained earnings

38

209,083

237,171

Other reserves

38

(13,280)

(949)

Total equity

195,956

236,375

LIABILITIES

Deposits from banks

32

232,675

195,097

Derivative financial instruments

21

188

931

Deposits from customers

33

1,714,286

1,390,781

Current tax liability

236

705

Other liabilities

34

18,549

16,239

Debt securities in issue

35

13,283

13,104

Total liabilities

1,979,217

1,616,857

Total equity and liabilities

2,175,173

1,853,232

Read the full report here.

Tech Nation Lists 10 Fintech Pioneers In Future Fifty 2019 Cohort (Forbes), Rated: AAA

Revolut, Monzo, Starling Bank, Currencycloud, Aire, Blockchain, MarketInvoice, Quantexa, Nested and Salary Finance were revealed to be among the 24 most dynamic and fast-growing late-stage technology companies to be chosen to join Future Fifty’s 2019 cohort.

Tech Nation and Dealroom data has also revealed that the U.K. has attracted a whopping $7.9 billion in funding in 2018 and closed the gap for exits of venture-backed companies with the U.S. As well as this U.K. sales, IPOs and mergers were worth $40 billion – ahead of every other European country – which points to the success of the tech sector as a whole in the country.

OAKNORTH ANNOUNCES BRITISH BUSINESS BANK ENABLE GUARANTEE OF £133M (Business Leader), Rated: AAA

OakNorth has today announced its participation in the ENABLE Guarantee programme, securing a guarantee of £133m from the British Business Bank, the UK government’s economic development bank. OakNorth will use the guarantee to strengthen further its lending support to fast-growth businesses and established property developers and investors.

The ENABLE Guarantee programme is designed to encourage banks to increase their lending to smaller businesses by reducing the amount of capital required to be held against such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.

Inside OakNorth’s plan to take its lending technology global (Tearsheet), Rated: A

As a challenger bank, OakNorth charts a different course. While Revolut, Monzo, and N26 focus on putting their digital current accounts in the hands of millions, OakNorth doesn’t even offer a current account. While other challengers are racing to acquire banking licenses all over the world, OakNorth is happy with just a UK license.

OakNorth is also posting profits while other challengers aren’t.  The bank announced a £33.9m profit for 2018, up 220 percent from 2017.

OakNorth provides debt financing to entrepreneurs in growing businesses, lending £0.5M to £40M to profitable, scale-up, British businesses. To fund its underwriting, OakNorth offers digital savings accounts. It currently has 40,000 customers with digital savings accounts and has lend £3 billion in under four years.

Successful UK Payday Lender Western Circle Limited Begins Offering Personal Loans Online (Finger Lakes Times), Rated: A

Western Circle Limited has made a name for itself by offering responsible payday loans online. Their decision to branch out into the personal loans market through the new brand PersonalLoansNow.co.uk was well received by their customers.

Five last-minute IFISA ideas (P2P Finance News), Rated: A

THE END of the tax year is fast approaching, so if you haven’t yet taken full advantage of your £20,000 ISA allowance to make tax-free returns, now is the time. The peer-to-peer lending industry is expecting to see an uptick in inflows into Innovative Finance ISAs (IFISA) this year now that there is a much wider choice of products available and the potential for higher returns than cash with lower volatility than the stock market.

FINTECH LAUNCHES AI LOAN COMPARISON SERVICE (Business Cloud), Rated: A

Loan marketplace Monevo has launched a new platform to give consumers comparisons of pre-approved loans.

Based in Macclesfield, the business is a licensed credit broker for personal and business loans and is Europe’s largest personal loan marketplace.

An Alternative Approach (IFA Magazine), Rated: A

When it comes to asset allocation, advisers constantly face the challenge of finding real diversification in client portfolios. Sue Whitbread met with Matthew Ardron and Benedict Yung of Basset & Gold Group, to talk about their approach of offering fixed rate bonds that invest in alternative lending.

Half of Brits running out of cash before payday – pushing them to rogue lenders (Mirror), Rated: A

Exclusive research for Mirror Money shows by the end of this month, those turning to payday loans will have shelled out more than £214million – that works out at £28 per second

P2P to have strong presence at Innovate Finance Global Summit (P2P Finance News), Rated: B

FOUNDERS of the ‘big three’ peer-to-peer lenders are among the confirmed speakers at Innovate Finance Global Summit (IFGS), which takes place next month at London’s Guildhall.

Giles Andrews of Zopa, Samir Desai of Funding Circle and Rhydian Lewis of RateSetter are all participating in various sessions at the fintech industry trade body’s flagship conference on 29-30 April 2019, which marks the start of UK Fintech Week.

Other confirmed speakers from the P2P world include Zopa chief executive Jaidev Janardana, ArchOver’s Angus Dent, Ali Celiker from British Pearl and Roxana Mohammadian-Molina from Blend Network.

China/Hong Kong

Hong Kong SME financing platform raises $ 15m for China push (Finextra), Rated: AAA

Hong Kong-based online SME trade financing platform Qupital is targeting the mainland after closing a $15 million Series A funding round led by CreditEase FinTech Investment Fund.

Consumers hunger for loans, lenders popping up everywhere (Shine), Rated: AAA

Qin Shuifeng, 30, who lives in the suburban district of Jiading, went to a branch of the Postal Savings Bank of China in 2016 to seek a loan for home improvements.

The lender granted her and her husband a credit line of 1 million yuan (US$148,600), of which they drew 600,000 yuan, with an interest rate 10 percent higher than the benchmark rate.

Competition 

The central government has issued a series of policies favorable to consumer lending since the second half of 2018.

Still, risks remain. To realize sustainable development, players need to build strong operational and risk control capabilities, either by themselves or in partnership with financial technologies firms.

European Union

Klarna Launches Open Banking Platform (PR Newswire), Rated: AAA

Today, Klarna, one of Europe’s leading payment providers and the global market leader in payment initiation services, announces the launch of its own Open Banking Platform. This platform will enable access to more than 4,300 European banks through a single Access to Account (XS2A) API in line with Payment Services Directive (PSD2). Klarna’s XS2A API is the most established and proven solution that has been developed at scale across markets for almost 15 years through the Klarna Group company Sofort.

This platform provides a fully proven and mature infrastructure, superior market coverage and connectivity, with access to 99% of online banking consumers currently across 14 European markets. By opening up its own advanced technology and capabilities, Klarna is simplifying and democratising access to APIs securely. Both established and newer banks and fintechs as well as other licensed businesses, will be able to build smart and personalised offerings that meet the evolving needs of consumers across Europe. Klarna has been one of the leading proponents of the PSD2 legislation and believes high-quality APIs will drive innovation and competition but most importantly will empower consumers across Europe with increased choice, control and clarity on their finances, and ability to access better products.

International

Has Alternative Lending Seen Its VC Peak? (PYMNTS), Rated: AAA

U.S. FinTech funding reached its highest level in five years in 2018, according to CB Insights data published last month, hitting $11.89 billion. Yet at a time when analysts say VCs are focusing more on late-stage investment, alternative lenders are having a tougher time securing funding, particularly market newcomers in a crowded market.

But there is evidence that investors’ appetite for alternative lending startups is on the wane, even as overall FinTech funding continues to climb — and as the success of the alternative lending market grows, too.

eToro buys blockchain company Firmo (Fintech Futures), Rated: A

Just weeks after launching in the US, trading and investment platform eToro announced plans to purchase Copenhagen-based blockchain firm Firmo, reports Julie Muhn  at Finovate

Founded in 2017, Firmo offers a programming language called FirmoLang that runs on a sidechain. Exchanges can leverage FirmoLang to create financial instruments such as P2P lending platforms or cryptocurrency derivatives with tokens. And Firmo is versatile, allowing the tokens to be run on any blockchain.

Battlestar Capital Earns 30% Returns For Holding Crypto (ChainBits), Rated: B

Battlestar Capital, which is a blockchain staking-as-a-service company, revealed that customers could potentially earn up to 30 percent on a yearly basis when it comes to their idle crypto holdings. Here is everything about the startup’s claims in a nutshell.

In an interview, the company said that it has teamed up with crypto lending startup called Celsius Network in an attempt to launch a large-scale service capable of offering potentially high returns.

Australia

APRA Proposes Stricter Credit Risk Management Standards (Regulation Asia), Rated: AAA

The revised prudential standard enhances board oversight of credit risk and requires more intensive credit checks on borrowers. APRA also highlights the risks of P2P originated loans.

India

New modes of lending, fund raising on cards (The Asian), Rated: AAA

In a bid to change the market dynamics of the banking and financial sectors, the Reserve Bank of India (RBI) will soon come up with alternative models of lending and capital raising for the sectors.

Asia

Bukalapak partners three P2P lenders to provide loans for offline businesses (Tech in Asia), Rated: AAA

Bukalapak is teaming up with Indonesian P2P lending startups Amartha, Modalku, and PohonDana to provide loan facilities in a program called Modal Mitra. The loans are available to offline vendors who are part of the company’s Mitra Bukalapak program.

The financing offered through Modal Mitra ranges between US$70 and US$700 and can be paid back in up to six months, with weekly installments starting from US$6. It can only be used for purchases in the Mitra Bukalapak app.

Eurasia

Russian fintech launches digital bank 131 (Finextra), Rated: AAA

Bank 131, a new digital bank focused on Russian companies and entrepreneurs that work for global internet companies and/or buy from global ecommerce companies with a Russia presence, announced today they have received their banking license from authorities – the first and only new bank to do so in four years.

Canada

Shadow banking has grown, but risks to financial systems are modest (Advisor’s Edge), Rated: AAA

Canada’s shadow banking sector has grown substantially in recent years, but the overall financial system has grown even faster, keeping risks in check, suggests a new report from the Bank of Canada.

In the report, the central bank details the results of its monitoring of so-called “non-bank financial intermediation” (NBFI), also known as shadow banking. Among other things, the report finds the Canadian NBFI sector has grown by 1.7 times since 2006, driven by strong growth in investment funds, securities financing transactions and private lending.

Authors:

George Popescu
Allen Taylor

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

Securing Digital Payments on a Mobile Phone

MagicCube

Digital payments have crossed the Rubicon and are now not only an acceptable form of payment but soon expected to become the dominant form. But the problem is small businesses are still hampered in leveraging digital payments for the convenience of their customer base. The below graph indicates the share of small business owners in […]

MagicCube

Digital payments have crossed the Rubicon and are now not only an acceptable form of payment but soon expected to become the dominant form. But the problem is small businesses are still hampered in leveraging digital payments for the convenience of their customer base. The below graph indicates the share of small business owners in the United States who accept digital and mobile payment methods as of October 2017.

Source: Statista

Similarly, IoT is no longer the future. Autonomous cars and voice-controlled assistants like Amazon’s Echo and Google’s Home are already in our lives. All of these technology developments represent a new challenge in how to manage and secure our digital payment and IoT devices and infrastructure.

The MagicCube Business Model

The MagicCube solution helps in securing digital transactions on different devices, with the same level of security as device hardware solutions without the complexity and cost associated with hardware deployments.

While working with VISA, founder and Chief Executive Officer Sam Shawki witnessed that companies had to use Apple Pay to access chips while securing credit cards. This required an extensive hardware set up. This led him to embark on a project to create virtual chips.

MagicCube’s patented technology provides an embedded software solution in the existing hardware set up. Now, Visa users will not have to go to Apple to get tokenized cards. Rather, they can use the hardware of MagicCube on their regular devices via cloud by just entering a pin. Now the phone can be used to access payments and there is no need for a separate external device. A lot of companies used to give these devices to merchants for free to capture payments and lending business. But now, with MagicCube, the onboarding process does not require expensive hardware. This allows for faster and cheaper penetration of the market, and merchants don’t have to interact with bulky hardware for managing transactions. Now, consumers will not require credit cards to make payments and merchants will not need any hardware device for accepting payments.

The company charges a setup fee depending on the geography, specific requirements, and volume of the client. There is a fee for active merchants on a monthly basis and a software license fee for every user.

MagicCube Products

    • Mobile Payments: According to research reports, digital payments will overtake cash transactions by 2023. All stakeholders in the payments ecosystem need to conform to the latest technologies as well as ensure that these payments are as secure as those executed through chip-based credit cards. The company’s MC Token Shield will offer a device-independent, hardware-grade security for mobile payments without the complications of hardware. It will also render the excessive middlemen fees associated with current digital payments redundant. The company has achieved PC-DSS Level 1 SP Certification and needs just a single API for integration with any App.
    • Connected Cars: Device security in connected cars is extremely important. According to research, by 2020, one in five vehicles on the road will have some form of wireless network connection. The company’s MC Vehicle Shield offers hardware-grade security to autonomous vehicles for their most critical parts. It will not only reduce the hardware bill for the car manufacturers, but any updates in security standards can be handled like a normal software update instead of having to recall the vehicles.
    • Pin on Glass: Only 45% of US Small Businesses accept credit cards. The point-of-sale hardware costs and the complexity attached with operating them has made it too expensive for millions of small merchants. Pin on Glass technology allows for a regular smartphone to safely accept payment card PINs, thus transforming the humble phone into a POS terminal. The tech has the power to change the entire payments paradigm. MagicCube’s MC Screen Shield works on delivering hardware-grade security and cloud monitoring services for such “PIN on Glass” payments.

Who Are MagicCube?

Founded in 2014, the Silicon Valley- and Brisbane, Australia-based MagicCube is the creator of the world’s only Software Trusted Execution Environment (sTEE) platform, a technology that enables large-scale deployment and management of IoT and mobile-secure solutions for consumers. The company has raised over $10.5 million in funding from Bold Capital, Epic Ventures, Silicon Valley Bank, and others. The company’s seed round saw participation by payments giant Visa.

Before launching the startup, Shawki was the head of Visa’s Global Remote Payments business unit. He was the driving force behind the company’s global push in mobile and remote payments. He also served as the chief innovation officer of VimpelCom, the sixth largest telecom player in the world with over 214 million customers in 18 countries.

Nancy Zayed is the cofounder and chief technical officer. She was head of engineering and operations at InnoPath, a founding member of OMA (Open Mobile Alliance), head of platform development at Cisco Systems, and also spent 10 years at Apple in various leadership roles.

Partnerships and Competitors

The company has entered into a partnership with Visa-funded Yellowpepper to secure token-based payments and is launching the solution in the Latin American market. The company has also partnered with ID Tech, a POS solutions provider for launching a product that will securely allow any mobile device to be converted into a POS terminal.

The young startup is competing with heavyweights like Qualcomm and Infineon, who provide security chips powering and securing payments today. But the CEO is confident that their software will soon make any hardware solutions obsolete. The company is also looking to partner with other players for launching new products and is in the process of attaining critical industrial certifications which will make the sales process much easier. The company seems to be in the pole position to change how digital payments and IoT devices will be secured in the future.

Author:

Written by Heena Dhir.

Wednesday March 2 2018 Daily News Digest

Alibaba and Tencent investments

News Comments Today’s main news: Vanguard partners with Raisin. Rumor alert: Upstart seeking $100M from investors. LendInvest changes commercial property products. Apple may be blocking Chinese P2P lenders from app updates. Today’s main analysis: PeerIQ’s MPL earnings insights report. (A MUST-READ) Today’s thought-provoking articles: Fintech holds promise to expand credit. How the PE lifecycle can be audited by the blockchain. How […]

Alibaba and Tencent investments

News Comments

United States

United Kingdom

China

European Union

International

Australia

Asia

Africa

News Summary

United States

Online lender Upstart is said to seek $ 100 million from investors (American Banker), Rated: AAA

Upstart, which was founded by Google veterans, is testing venture capitalists’ appetite for an investment round of about $100 million, said two people briefed on the matter.

The San Carlos, Calif.-based startup is looking to sell shares that would value the business at $500 million to $1 billion, said one of the people, who asked not to be identified because the discussions were private. This venture capitalist didn’t pursue a deal because of an existing competitive investment.

PeerIQ’s Marketplace Lending Earnings Insights (PeerIQ Email), Rated: AAA

    • Where are we in the credit cycle? Earnings calls indicate CEOs/CFOs are constructive on the health of the US consumer and see a tax reform as improving consumers’ disposable income. However, an increasing supply for credit and demand for credit, as well as re-normalization trends and increased competition are leading to higher charge-offs.
Source: PeerIQ
  • Credit re-normalization continues across all major lending groups. Credit performance this quarter is mixed. We observe improvements, and record low delinquencies from ONDK, OMF, and FinTechs in particular. LendingClub expects 31 bps lower charge-offs going forward due to tighter credit standards. At Discover – a bellwether for personal loan performance – the net charge off rate jumped 92 bps YOY to 3.62% – the largest increase in several years.
  • Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. American Express increased loan loss provisions 33% although loan growth was only 14%.
  • GS & Morgan Stanley remain comparable in market cap, revenues, and margins – are focused on lending to improve ROE. MS is doubling the size of its warehouse lending footprint. GS continues to invest in Marcus and aggressively pursue M&A. If GS executes on its strategic plan of generating, in 5 years we should observe a growth in ROE from their consumer lending activities.
  • Bank FinTech partnerships, and M&A continues. Banks are either partnering with FinTechs or investing in beefing up their technology capabilities in payments, lending, digital banking and wealth management. Banks like JP are partnering with Amazon by rolling out co-branded checking accounts and credit cards. A specter is haunting financial services – the specter of Amazon.
  • Lenders are taking actions to pass rising rates on to borrowers to protect margins and investor returns. Lenders are also trying to reduce all-in funding costs by reducing the credit spreads on their securitizations.
Source: PeerIQ

Read the full report here.

 

Fintech Holds Great Promise To Expand Credit, Says Fed’s Bank Supervision Ace (Forbes), Rated: AAA

Fintech holds great promise to expand credit, Federal Reserve Vice Chair for Bank Supervision Randy Quarles told a forum on financial services for the underserved Monday.

While promoting the advantages of algorithm credit rating and other forms of fintech, he voiced it is important for banks to understand the risks when they offer new products of their own or partner with emerging fintech companies.

Touching on another issue, Quarles said the decline in lending by small banks to small businesses can be attributed in part by entrepreneurs using big bank credit cards.

THE PE LIFECYCLE CAN BE AUDITED BY BLOCKCHAIN (AllAboutAlpha), Rated: AAA

The hyperledger fabric is an open-source cross-industry collaborative effort to create a standardized enterprise code base. No cryptocurrency is required, the network is permissioned, and the system of consensus is PBFT rather than proof of work.

That latter point is important in the finance/auditing context, and so is worthy of some explanation here. The usual system in blockchains is “proof of work.” The creator of a new “block” within the chain is required to do something mathematically laborious, a calculation, also called “mining.” This is what allows the trustless and distributed consensus that made possible the creation of “bitcoins” and the launch of blockchain as a technology.

But “proof of work” takes up a lot of computational energy, and for some non-currency uses of blockchain it is just too much trouble. So alternatives protocols have developed within the blockchain world, and one of them has the ungainly name “practical byzantine fault tolerance.” That term comes from a game-theoretical issue called the “Byzantine Generals’ Problem,” which is something like the “prisoner’s dilemma” on steroids. But it is generally best to ignore all of that and just to think of the alternative protocol as PBFT.

Avant Founders Raise $ 15 Million for Blockchain Firm, Token Sale (Bloomberg), Rated: A

The team that founded marketplace lender Avant Inc. raised about $15 million to start a firm that will use blockchain technology and digital tokens to motivate companies to share data about customer identities and credit worthiness.

The venture, which is called Springcoin but does business as Spring Labs, is building a decentralized network that seeks to allow lenders, banks and data providers to pay one another for direct access to consumer information, Spring Labs Chief Executive Officer Adam Jiwan said in an interview. Many companies are hesitant to give out customer data due to concerns about regulation and security, while others don’t have a financial incentive to do so, he said.

TD Bank in commercial lendtech revamp with nCino (Fintech Futues), Rated: A

Chalk up another big win for cloud-based lendtech vendor nCino. The North Carolina-based fintech has signed a deal with TD Bank in the US that will put nCino’s Bank Operating System to work for the bank’s corporate and commercial lending divisions, reports David Penn at Finovate.

The technology is already live with employees in the TD Equipment Finance department. nCino’s platform will give prospective business borrowers faster decisions on their loan requests, as well as add transparency to the loan process. The Bank Operating System will also enable the bank’s credit risk management, sales, and underwriting professionals to benefit from insights into TD Bank’s commercial lending portfolio and better collaborate on deals. Built on top of Salesforce.com, nCino’s Bank Operating system features CRM, loan origination, account opening, workflow, content management, business process management, customer engagement, and instant reporting all on a single platform.

How blockchain is affecting banking (Stitcher), Rated: A

In this episode the host John Siracusa and co-host Sarah Bacehowski. Interview Jason Jones co founder of the Lendit Fintech Conference they discuss how blockchain is affecting national and global banking today and how it may impact credit and lending.

Fintech’s Focus Shifts Toward Finance (CFO), Rated: A

The financial technology industry is maturing at a dizzying pace, having exceeded a combined $31 billion in total funding last year alone, according to KPMG’s recent Pulse of Fintech report.

With this sustained influx of funding, innovations within the space are moving traditional banks to partner up with fintech firms. That benefits both sides as well as customers like corporate finance departments.

On Deck Capital and Lending Club have both recently found themselves in publicly precarious situations related to risk management. On Deck has had to change its strategy several times over the years to address investor concerns. Lending Club experienced a systematic fraud issue that resulted in a CEO departure, stock-price drop, and public cynicism. Other, smaller companies have faced similar problems stemming from a deficient focus on this important role.

Top 5 Debt Consolidation Loan Companies for 2018 (Student Loan Hero), Rated: A

Using a personal loan to consolidate debt can simplify your financial life. But this move is most worthwhile if you can get debt consolidation loan rates that are lower than what you’re currently paying.

This overview can help you quickly find debt consolidation loan companies with the best rates. From there, you can find the lender that offers the best rates and terms to help you get ahead of your debt.

Source: Student Loan Hero

Omnichannel and Short-Term Lending (Lendit), Rated: A

Research conducted in late 2016 noted that three things were apt to cause the average customer to end his or her interaction with a company. These included being transferred between multiple employees when seeking a resolution to a problem, long wait times, and having to repeat themselves during a transaction process. To solve these kinds of discrepancies between customer expectations and the quality of service provided across multiple platforms, more companies are taking an omnichannel approach to the customer experience—especially in the financial services industry.

Below are three questions and answers about how this novel approach to customer experience can benefit both short-term lenders and borrowers.

  1. What does the omnichannel approach offer businesses and customers in the short-term lending industry?
  2. What obstacles stand in the way of the mass adoption of omnichannel lending?
  3. What is the best way for short-term lenders to implement an omnichannel model?

LAUREL ROAD DEBUTS TRULY DIGITAL MORTGAGE PLATFORM (PR Newsire), Rated: A

Laurel Road, an online lender and FDIC-insured bank, today debuts a truly digital mortgage product that uses the company’s secure lending technology to offer home buyers and owners personalized mortgage options at real, competitive rates. Laurel Road’s platform builds mortgages entirely online, simplifying the process with transparent fees and a customized end-to-end digital experience with human support only when customers need it.

Additional product features include:

  • Truly digital experience – Laurel Road’s mortgage product puts customers in the driver’s seat by enabling a digital-first user experience, with human support via phone or online chat as needed but never required outside of closing
  • Stated pricing – Customers who have a price range or specific house in mind can input these details upfront to generate customized options and rates
  • Maximum affordability – By inputting basic financial information, customers can determine the maximum affordable loan they’re eligible for early in the process with no commitment required
  • Added savings – Customers have the ability to earn savings off their closing costs by using the online capabilities throughout the process, such as data verification
  • Optimized for efficiency – Digitally-enabled experience and built-in incentives for options that streamline the process allows Laurel Road to invest more in customer experience and deliver mortgages in just a few weeks
  • Educational resources – Prompts integrated into the user journey will help customers establish their financial readiness and evaluate how Laurel Road can be a partner in the process
  • Expert options and clear terms and fees – Based on a customer’s preferences, 3 unique mortgage options are presented in a transparent way so one doesn’t get caught with misleading teaser rates or hidden fees
  • Soft credit pull – Laurel Road will conduct a soft credit pull during preliminary stages to avoid credit penalties when customers are still exploring options

DiversyFund Hires New Chief Technology Officer (Digital Journal), Rated: B

DiversyFund has named Mark Brogowicz as its new Chief Technology Officer as the firm ramps up its efforts to reinvent alternative investing through its revolutionary crowdfunding platform.

Brogowicz will lead the firm’s product and engineering teams. Brogowicz previously helped Los Angeles startup PeerStreet launch their product and is now looking to replicate that process in San Diego.

MassChallenge wants to pair fintech startups with finance giants (Boston Business Journal), Rated: B

MassChallenge is preparing to launch a program for startups specializing in financial services technology, or fintech — a fast-growing field that’s increasingly a top priority for Boston’s investment firms, banks and insurance companies.

While details are still being worked out, the program is expected be similar to the Boston-based organization’s accelerator for health technology startups, according to MassChallenge. That program, known as Pulse@MassChallenge, pairs later-stage startups with some of the industry’s biggest local and national players, like Aetna and Vertex Pharmaceuticals. The program provides them with mentoring, office space, and an opportunity to compete for cash prizes.

Shinnecock Partners Publishes an Investor’s Guide to Fine Art Secured Lending (PR News), Rated: B

Shinnecock Partners, a 28-year old family office boutique with significant expertise in alternative finance and fintech, has published “Creative Collateral: Lending Against Fine Art,” by the firm’s founding partner, Alan C. Snyder and co-authors/firm analysts Michael Cervino and Christian Williams. The 16-page report outlines a little-known niche investment opportunity, art-secured lending, which, as reported by Deloitte, is a $15 – $20 billion market that is growing at an annual rate of 13 percent.

The research paper covers:

  •     An overview of the market and the “buzzword” lexicon
  •     Key factors to consider
  •     Risk mitigants
  •     An investor participation road map

You can access the report at: 

Private Lending Association to Offer Class for Certified Fund Manager Designation (PR Newswire), Rated: B

The American Association of Private Lenders (AAPL) is offering the Certified Fund Manager (CFM) designation class May 9, 2018, at the Geraci Activate Conference, located at the Sofitel Hotel in Beverly Hills, California. AAPL members are eligible for the CFM designation and may register for the class at  or  The CFM designation class requires a separate registration from the Geraci Activate Conference.

Seek Capital Wins Again, #1 Customer-Rated Lender for the Business Loans Category from LendingTree in Q4 2017 (PR Newswire), Rated: B

On LendingTree’s platform, Seek Capital has a 4.9 out of 5 star rating. 57 different businesses have reviewed Seek Capital on LendingTree.

Seek Capital specializes in getting startup business loans for new businesses. While there is a large array of funding options for established businesses, new businesses are left with little to no options. Seek Capital provides solutions to this under-serviced segment of the business funding market. In 2017, Seek Capital originated close to $100 million for startup businesses in the form of an unsecured line of credit.

United Kingdom

LendInvest changes commercial property products (Mortage Introducer), Rated: AAA

Borrowers wishing to fund the purchase of, extend the lease on, or refurbish a commercial property where the use will remain commercial, are directed to the updated commercial bridging product.

LendInvest has increased the maximum term for its commercial bridging loans from 12 to 24 months, and reduced rates.

Its commercial bridging rates vary between LTV but the base 60% has been reduced from 0.90% to 0.79%.

Best refer-a-friend schemes: how you can earn up to £500 (Which?), Rated: A

NatWest has launched its first ever refer-a-friend scheme, which could earn eligible customers up to £500 – and it’s not the only company offering incentives for signing-up your loved ones.

Until 20 April 2018, eligible customers will receive up to £500 when their friends and family join NatWest. But it’s not open to everyone, with NatWest randomly selecting 300,000 customers for the test phase.

Refer-a-friend: current accounts

Earn £500 with NatWest-NatWest recently launched its first ever refer-a-friend scheme, offering existing members the chance to earn up to £500 by recommending its current accounts to friends and family.

Earn up to £500 with Nationwide-Nationwide is offering existing members the chance to earn up to £500 by encouraging friends and family to switch their current account.

Earn £25 with Vanquis -Vanquis Bank customers could earn £25 for convincing friends and family to sign up to the Vanquis Credit Card.

Earn £25 vouchers with Scottish Friendly-Customers of Scottish Friendly could earn £25 by introducing a new friend or family member to the company.

P2P securitisation boom still on the cards (Peer2Peer Finance), Rated: A

PREDICTIONS of a securitisation boom in the peer-to-peer lending sector last year failed to materialise, but analysts are still optimistic about the market.

Ratings agencies such as Moody’s predicted a boom in P2P securitisations, but the only activity in 2017 was a £208.9m Zopa deal led by investment trust P2P Global Investments.

Ratings agency S&P Global is also expecting more activity and has predicted a 30 per cent increase in securitisations from marketplace lenders around the world during 2018.

7 TECH STARTUPS THAT ARE TAKING IRELAND BY STORM (Irish Tech News), Rated: A

Pro-business policies have made the country an extremely favourable environment for startups, and the capital can lay a convincing claim to be Europe’s Silicon Valley. Here are just seven of the most interesting and highly awarded startups finding success in Ireland.

Mingo- Mingo are aiming to replicate the success of digital currencies like Bitcoin and Ethereum by floating their own currency called (quite logically) Mingocoin.

Trezeo- Firms are using digital tools to revolutionise the process of transferring and storing traditional currencies as well as digital-only ones. Trezeo are a perfect example of this mindset, and offer a product that’s of use to the everyman rather than the big financial institutions.

FlenderFlender is one of the success stories from crowdfunded investment platform Seedrs. The premise: peer-to-peer lending, where lenders can set their own rates and terms for borrowers to agree to.

Don’t Innovate for Innovation’s Sake. Understand the Need for Change. (Retail Tech News), Rated: A

Here, Luke Griffiths (pictured below), general manager, Klarna UKexplains why that means it’s crucial that retailers consider the shopping journey from browsing through to purchase, delivery, and returns.  

It’s no longer good enough for retailers to wait on the sidelines while others make the first move into innovation – something which was highlighted in a recent white paper Klarna produced in association with Internet Retailing. In it, we explored the main qualities needed to be successful in today’s ever-changing retail sector.

Retailers can’t afford to ignore more innovative payment options. This was highlighted by recent Klarna research, which found that 53% of shoppers are looking for new, easier ways to pay online; while 56% would buy more online if there was more variety in payment options available.

 

British Business Bank provides 1pm with £35m funding line (Leasing Life), Rated: A

The British Business Bank provided 1pm Group with a £35m asset finance facility which will be used mainly on hard assets through its subsidiary Bradgate Business Finance.

At the end of February 1pm has entered into a cooperation agreement with Mintos to be a loan originator on its online marketplace for loans.

1pm is the first loan originator from the UK to access the Mintos marketplace and joins approximately 30 other loan originators globally.

 

 

It’s time to crack down on high-cost credit cards, says Labour MP (The Investment Observer), Rated: B

Stella Creasy is hoping to crack down on high-cost credit cards, introducing a cap on fees and interest charges.

The Labour MP, who was credited with the caps on interest rates and fees charged by payday loan companies, will attempt to enforce similar laws for credit cards on in Parliament on Tuesday.

The FCA has ruled out capping credit card costs after reviewing the market last year.

 

China

Apple App Store Said to be Blocking Chinese Peer to Peer Lenders from Updating Apps (Crowdfund Insider), Rated: AAA

We have received some information from an insider regarding Chinese peer to peer lending platforms being unable to update their Apps in the Apple App store due to a regulatory disconnect.

The problem is that not a single Chinese peer to peer lender has passed the necessary evaluations as regulators have not yet processed any. The first batch of approvals from the Chinese authorities is due at the end of April with the deadline by the end of June. According to the source, it is even more perplexing due to the fact that having an updated iOS App is necessary to comply with the Chinese regulations and pass the tests.

The Apple enforced process is described as follows:

  • We need to update our iOS App so that we can provide updated features to customers that are in compliance with regulations
  • Local financial regulators will not allow us to complete the record-filing process if they see that we have not come into compliance across all of our platforms (Android, iOS, PC)
  • If we can’t complete the record-filing process, then we will not be allowed to update our business license to include “internet loan information agency” in permitted activities
  • If we can’t update our business license, we can’t provide the necessary documentation to App Review to have our App Update approved
  • If we can’t get our iOS app updated, then we won’t be in compliance with regulations
  • Dead-end feedback loop back to point #1….
European Union

Vanguard Teams With German Fintech Raisin (Investopedia), Rated: AAA

Vanguard, the king of passive investing and one of the world’s largest fund managers, is partnering with Raisin, the German fintech, enabling some of its investments to be sold on the fintech’s platform.

Raisin, among Europe’s largest fintechs, counting more than 100,000 customers, will offer four portfolios comprising index or exchange-traded funds from Vanguard and BNP Paribas. The Financial Times reported that the investment portfolios have annual costs on average that are less than 0.5%. According to The Financial Times, this is the first time Raisin is getting into the investment area, previously focusing its efforts on brokered savings deposits.

Banks deploy ID software for client verification (Financial Times), Rated: A

Banks have begun to implement new technologies to help verify who the customer is, though the new GDPR rules in Europe could complicate usage; the General Data Protection Regulation, which will restrict how companies collect and store data, allows for customers to ask for their data to be removed and non compliance results in huge fines; banks have started to slowly add new technology but they are still figuring out where to limit storage; new companies are trying to sell services into bank that allow them to collect information but store it in a certain way to be compliant; with new technology being developed so rapidly, governments need to ensure they keep up with innovation and clearly tell the market how to comply.

German fintech Penta launches new business banking platform (AltFiNews), Rated: A

Berlin-based Penta has announced its newest fintech “Compass”, a platform that allows incorporating businesses in Germany to deposit their share capital and open a bank account in under 24 hours.

According to Penta, incorporating a business can take up to 6-8 weeks because of the bureaucratic process of opening a bank account and registering with the correct government bodies, which is legally required in Germany. Penta’s latest proposition will allow founders to open a bank account in a process that takes less than 15 minutes, completing the whole process online for free.

 

International

BBVA-backed fintech launches global bank account (American Banker), Rated: AAA

A new fintech backed by the Spanish bank BBVA aims to do something that others before it have failed to do: simplify international payments.

The fintech, Denizen, claims it has created a “global banking platform” that allows customers to receive money in one country and pay it out in another immediately, avoiding international transfer fees and eliminating currency exchange fees.

The firm says the cross-border money movement service is the first in a planned series of products. Denizen is currently available to expatriates living in Spain and the United States. The service is set to expand in 2018, adding as many as 10 European Union countries in the second half of the year as well as the United Kingdom.

Finastra appoints new CTO to lead next wave of financial services innovation (Fintech Finance), Rated: B

Finastra today announced that Eli Rosner has joined the firm as Chief Product and Technology Officer. Eli is responsible for global product and technology strategy and will support Finastra to deliver world class products, fully integrated solutions and its open FusionFabric.cloud platform for innovation.

Eli brings more than 25 years of industry experience to the role at Finastra. He joins from NCR Corporation where he served as CTO and Head of Product Management. Based in London, Eli will lead a global team of strategy and product managers, enterprise architects, data scientists and software engineers.

Australia

Online lender launches new loan portal (The Adviser), Rated: AAA

A custom-built introducer portal designed to facilitate fast, real-time processing of loan applications for brokers has been launched by an Australian marketplace lender.

Online lender Zagga this week launched the new portal, which uses custom-built algorithms to match wholesale investors with borrowers.

Speaking to The Adviser, Zagga CEO Alan Greenstein said the portal would provide brokers with simple, fast, and direct access to the loan application process from start to finish.

Sydney Angels funds QPay $ 570k to steal millennial students from banks (Finextra), Rated: A

Australia’s first ever student marketplace app, QPay, has raised $570,000 from a series of high profile investors, including Sydney Angels and the Sydney Angels Sidecar Fund 2, to break into student banking through the release of a student-targeted QPay MasterCard.

QPay aims to use the QPay MasterCard to capture the largest cluster of millennial consumers at the point when they’re most likely to begin making serious financial decisions – when enrolled in tertiary education.

Asia

How Alibaba and Tencent became Asia’s biggest dealmakers (Financial Times), Rated: AAA

The China Music story shows just how hard it can be to say no to Tencent — and the other big player in the Chinese tech world, Alibaba. With their large resources and long-term perspective, the two Chinese groups are transforming Asia’s investment landscape, posing challenges for private equity and venture capitalists as well as the start-ups looking for funds. In some parts of the region, SoftBank, the Japanese investment group, is playing a similar role.

The reach of Tencent and Alibaba in their home market dwarfs that of the big tech groups in the US. While the latter accounts for less than 5 per cent of all venture capital flows in their home market, Alibaba and Tencent account for 40-50 per cent of venture capital flows in mainland China, according to data from McKinsey.

If the venture capital market in China has become a fierce battle between Alibaba and Tencent, in other parts of the region it is often a three-pronged competition that also includes SoftBank.

 

Can Korean entrepreneurs help create Indonesia’s next unicorn? (The Investor), Rated: A

Indonesia is home to four unicorns — startups whose value reaches over US$1 billion — Go-jek, Traveloka, Tokopeida and Bukalapak. But the world’s fourth populous country with more than 250 million potential spenders wants more such success stories.

“Currently, we have four startup unicorns from Indonesia but none are from fintech services. I hope to see the next unicorn from this field,” said Rudiantara, adding that he believes P2P lending fintech startups have a chance to become the next unicorn.

His wish may soon become a reality as Indonesia’s market potential, combined with the government’s push for creating a startup hub are attracting aspiring entrepreneurs from all around the world.

Africa

How technology is changing wealth management (Money Web), Rated: AAA

The investment world is no different. Robo-advice is but one small part of the broader fintech landscape, but it has already made a major impact on the investment space through improved access and by allowing investors to plan for specific needs without the use of a traditional advisor. Technology has also made pricing more competitive.

According to Accenture, global investment in fintech ventures tripled from just over $4 billion in 2013 to more than $12 billion in 2014.

Authors:

George Popescu
Allen Taylor

2018 Predictions for MPL, SMB Lending, and Other Alternatives

Lending Club

In just over a decade, alternative lending has evolved from a niche fintech play into a hundred billion dollar industry. 2017 was somewhat of a bumpy ride. Growing competition, shrinking bottom lines, stringent regulations, and traditional banks’ willingness to take on alt-lending using their financial muscle were the key trends that emerged last year. It […]

Lending Club

In just over a decade, alternative lending has evolved from a niche fintech play into a hundred billion dollar industry. 2017 was somewhat of a bumpy ride. Growing competition, shrinking bottom lines, stringent regulations, and traditional banks’ willingness to take on alt-lending using their financial muscle were the key trends that emerged last year. It is difficult to be sure what 2018 will bring, but here is what experts and pundits are predicting.

Marketplace Lending

Ron Suber (Founder and former president, Prosper & chairman of the board, Credible) believes the marketplace lending industry has finally grown up. Companies will focus more on cash flow, profitability, and EBITDA. He encouraged online lenders to look for a lower cost of capital if they want to compete with the like of Marcus. He is also predicting the entrance of big technology companies like Amazon, Apple, Facebook, and Google.

Peter Renton (Lend Academy) believes five of the top 25 banks will launch their own platforms. He also believes Congress will pass a Madden fix and the IRS will modernize with its own API. One startling prediction he makes that one of the top online lenders (Lending Club, SoFi, Prosper, OnDeck, or Avant) will be acquired, and he believes a major platform will be hit by a cyber attack. Like everyone else, he believes the tech giants will solidify their positions in alternative lending, and more interestingly, he says messaging apps will integrate with online lending platforms.

Krista Morgan (CEO, P2Binvestor) makes predictions for MPL sector:

  • Companies will shift their focus on business models and unit profitability as hiring and spending decrease.
  • Mergers and shutdowns will continue as equity investors remain absent. She thinks it will be a tough year.
  • Investors believe the market is set for a correction; therefore, they will be looking at short duration assets for deploying their capital. Platforms will have to shift their focus to product development.
  • 2018 will be the year of increased diversity.

Adam Stettner (Founder and CEO, Reliant Funding) predicts a year of instability. He also believes market variables will counterbalance themselves this year. The Fed is expected to increase interest rates, which will have a ripple effect in terms of rates for various types of loans. If unemployment levels remain low, it will lead to wage inflation. So the order of the day for alternative finance and small business funding companies will be adaptability, he says.

Additionally, Stettner sees a year of increased fraud, and companies will have to invest in identification tools and fraud detection techniques.

Two more predictions he points to are increased consolidation as companies overextend themselves and more disruption from big business names entering the space.

The Motley Fool is predicting a Lending Club stock price turnaround.

Juan Tavares (LendingPoint) predicts balance sheet lenders will take over, there will be more collaboration, and payments and credit will intersect more.

Small Business Lending

Trevor Dryer (Co-founder and CEO, Mirador) made predictions on small business lending:

  • Banks will continue to increase small business lending and alternative lenders will struggle.
  • Crowdfunding got a boost last year when Title III of The Jumpstart Our Business Startups Act (JOBS Act) was implemented, opening the gates for crowdfunding. Dryer believes this sector will thrive in 2018.
  • Alternative lending has removed physical barriers that makes the lending process faster and more convenient. Alternative lending will continue to be more inclusive and encourage more people to start businesses.
  • Legislative barriers will continue to fall.
  • Alternative lenders will focus on experience and relationship building. Companies able to streamline and automate the application processes will thrive.

Alternative Lending in India

Rajesh Gupta (Founder and CEO, Cash Suvidha) made the following predictions for the Indian alternative lending market.

  • A significant increase in alternative lending market share.
  • Favorable regulations, cash benefits, ease of usage, and increased internet and smartphone penetration.
  • Investors and venture capitalists will remain optimistic about the Indian alternative lending industry since it is the second most funded segment in Indian fintech.

“2018 will witness a transformation in the Indian financial landscape, all thanks to alternative lending,” he writes.

Traditional Financial Services and Alternative Investing

Kevin McPartland (Greenwich Associates) says 2018 will be the year of digital. He believes product-agnostic investing will be huge, and passive investing will gain on active investing. 2018 will also be the year that alternative data goes mainstream, he believes while data will be more important than trading. He also believes wealth management will “come out of retirement” and, finally, a ton of innovation in the financial markets as banks focus on crypto.

Chris Skinner (The Finanser Blog) writes a lot about banking’s reaction to alternative lending. He believes 2018 will be the year of artificial intelligence for banks and that banks will continue to drive digital technology deeper into their core systems. Not surprisingly, he also predicts that banks will develop more proof-of-concept operations for distributed ledger technology. Finally, he predicts the banks will develop an Enterprise Data Architecture this year to clean up their fragmented systems.

Alexander Prokhorov (FinSight Ventures) made some general predictions for fintech that apply just as well to alternative lending:

  • Software will converge with financial products in the U.S. and Europe
  • Insurtech will be more prominent
  • Artificial intelligence will transform financial services
  • There will be a lot of innovation in emerging economies such as Africa, Latin America, and Asia
  • Wealth management will pick up speed
  • Crypo assets and blockchain will take center stage for retail investing

Mitek believes 2018 will be the year of the cyber criminal and predicts there will be 150 million attempts to set up fraud accounts this year.

Don Steinbrugge, CFA (Founder and CEO, Agecroft Partners) is predicting a banner year for the hedge fund industry. He believes hedge fund assets will reach an all-time high for the 10th straight year. He also believes there will be an increase in hedge funds shutting down. And there will be an increase in cryptocurrency funds. Strategies that will gain assets, he believes, include:

  • Asia long/short equity
  • Reinsurance
  • Those that blur the lines between private equity and hedge funds

The Lending-Times Prediction

Allen Taylor (Editor, Lending-Times) believes more U.S. platforms will open the doors to non-accredited investors. Blockchain will feature more prominently in alternative lending with more platforms focused on crypto-lending including a prominent alternative lender adding cryptocurrency to its list of core services. He also believes increased specialization will lead to platforms targeting specific industries, regions/states, and other narrow target markets.

Conclusion

2018 will surely see the alternative lending industry enter a consolidation phase to withstand the changes in market dynamics, and companies best able to cope with these headwinds would emerge bigger and stronger.

Authors:

Written by Heena Dhir and Allen Taylor.

Allen Taylor

Tuesday October 17 2017, Daily News Digest

PeerIQ IMF

News Comments Today’s main news: RateSetter receives full FCA approval. PayPal’s market value eclipses American Express’s. Lending Club files 8-K entry into material definitive agreement. Some of Zopa’s loans are up for sale by P2PGI. Hexindai sets terms for U.S. IPO. PolicyBazaar becomes most-funded insurance aggregator worldwide. Today’s main analysis: Big bank earnings, IMF global growth forecast. Betterment vs. Wealthfront. Today’s […]

PeerIQ IMF

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

APAC

Africa

News Summary

United States

PayPal’s Market Value Eclipses AmEx, Nears Morgan Stanley, Goldman (WSJ), Rated: AAA

PayPal Holdings Inc. PYPL +0.04% vaulted over American ExpressCo. AXP -0.20% in terms of market value this week, punctuating a rally that has pushed up the payments company’s shares by nearly 75% since the start of 2017.

Its market capitalization stands at about $83 billion, nearly double the $47 billion value it had when it spun off from eBay Inc. a little over two years ago.

PayPal is even gaining ground on Wall Street titans. Its market value is now about $6 billion less than Morgan Stanley ’s and about $10 billion less than that of Goldman Sachs Group Inc.

PayPal, which reports earnings on Thursday, now trades at a multiple of about 32 times forward earnings, according to FactSet. So although its market value is about half that of Mastercard Inc. and about two-fifths that of Visa Inc., its earnings multiple is far dearer. Visa trades around 27 times forward earnings and Mastercard is around 29 times. AmEx, meanwhile, trades just shy of 15 times.

Ron Suber: We are in the Golden Age of Fintech (Crowdfund Insider), Rated: AAA

So what exactly is the “Golden Age of Fintech”?

Ron Suber: Innovation cycles take 50 years. PayPal started it in 1998, Lending Club and Prosper accelerated it in 2006 by giving people reasons to borrow and lend online … similar to how AOL and EBay gave people reasons to go on the World Wide Web in the early internet days. And now we are in the Golden Age of Fintech which is the middle 10 years of the 50 year innovation cycle.

How does this fit with the online lending space? Can early MPL/Online Lenders remain competitive? And what do they need to do to remain competitive?

Ron Suber: Yes, The keys (KPI’s = key performance indicators) continue to be:

A) Loan Performance

B) Equilibrium between capital and borrowers

C) Committed Long term, low cost of capital

D) Unique, diversified and low cost methods of acquiring borrowers

E) Increasing Life Time Value (LTV) with multiple loans and additional products

F) Platform efficiency, customer experience and profitability

G) Scale and Brand.

What is next for you? Was Lend360 really your final appearance as the “Godfather of Fintech”? Or is this the intermission before the next act?

Ron Suber: Lend360 was my last presentation in North America … I am heading back to Australia and Southeast Asia for the remainder of the year … then to Patagonia for a Q1 vacation and then onto Africa to do some teaching about lending and entrepreneurship with Opportunity International (OI). OI provides entrepreneurs around the world with access to loans, savings, insurance and training – tools that empower them to work their way out of poverty…..a hand up, not a handout.

[Editors Note: Ron has created his own “Rewirement” web site available here.

LendingClub Corporation (NYSE:LC) Files An 8-K Entry into a Material Definitive Agreement (Market Exclusive), Rated: AAA

On October 10, 2017, LendingClub Warehouse I LLC (“Warehouse”), a wholly-owned subsidiary of LendingClub Corporation (the “Company” or “Lending Club”), entered into a Warehouse Credit Agreement (the “Warehouse Agreement”) with certain lenders from time to time party thereto (the “Lenders”), a large commercial bank as administrative agent (the “Administrative Agent”), and a national banking association as the collateral trustee (in such capacity, the “Collateral Trustee”) and as paying agent. to the Warehouse Agreement, the Lenders agree to provide a $250 million secured revolving credit facility (the “Credit Facility”) to Warehouse, which Warehouse may draw upon from the Credit Facility closing date until the earlier of October 10, 2019 or another event that constitutes a “Commitment Terminate Date” under the Warehouse Agreement. Proceeds under the Credit Facility may only be used to purchase certain unsecured consumer loans from the Company and related rights and documents and pay fees and expenses related to the Credit Facility.

IMF Raises Global Growth Forecast, GS Enters Fix-and-Flip, Deep Dive on Big Bank Earnings (PeerIQ), Rated: AAA

During an unusual period of global synchronized growth, the IMF raised its Global Growth Forecast for 2017 and 2018 by 10 bps to 3.6% and 3.7%, respectively. The IMF also named nine banks that will struggle to achieve profitability.

Source: IMF

In securitization news, Marlette Funding Trust 2017-3 is expected to close at the end of October with $298 Mn in loans. MFT 2017-3 is the fifth ABS from this platform and the fourth on the MFT shelf (the first was on Citi’s CHAI shelf).

In this week’s newsletter, PeerIQ dives into the earnings and loan loss provisions for the major money center banks.

The big money center banks released earnings this week to a mixed reception although YTD stock performance is strong. FICC trading revenues were down year-over-year across the board. ROE levels for the big banks remain mired in the low double-digit area or lower.

Source: PeerIQ, Company Information

Highlights:

JP Morgan

  • JP Morgan is currently the largest US Bank ranked by total US Deposits, which has grown 9% year over year.
  • JP Morgan credit card costs were up about $200 Mn year-on-year driven by the successful Sapphire launch, and higher net charge-offs.
  • Q3 2017 provision for credit losses was $1.5 Bn, up from $1.3 Bn in the prior year. Currently at 3.3%, credit card allowance to total loans rose every quarter this year.

Citigroup

  • Citi built approximately $500 Mn in card loan loss reserves this quarter:
    • $150 Mn from regular seasoning and volume growth.
    • $50 Mn from hurricanes and other natural disasters.
    • $300 Mn attributable to forward-looking NCL expectations.
  • Citi expects NCL rate on branded cards to increase 10 bps in 2018 to 295 bps.
  • Citi shifted away from rewards oriented products and more towards value products due to heavy competition in rewards products (see Chase Sapphire Reserve). These cards typically have non-yielding promotional balances in the near term.

Bank of America

  • Quarterly profit rose 13% year over year.
  • Provision for loan losses increased by nearly 15% quarter over quarter while allowance for loan losses decreased 1.7% over the same period.
  • Allowance for loan losses as a percentage of total loans decreased to 1.15% from 1.19% last quarter and from 1.29% last year.

Wells Fargo

  • Wells Fargo was the only reporting bank that had decreasing negative returns YTD and a ROE decline YOY.
  • Revenue fell 2% year over year, and Wells is the only reporting bank to have falling revenues.
Source: PeerIQ, Company Information

It Was a Busy Quarter for Deals in Fintech (Bloomberg), Rated: AAA

Traditional Wall Street firms are keeping financial technology humming as they set their sights on developing technologies of their own. The third-quarter saw the second highest financing deal count ever, with 412 total transactions, according to a report from investment bank FT Partners.

Still, some areas are hotter than others. Banking — which includes peer-to-peer lending — and payments reported the most deals in the period. The largest was Softbank Group Corp.’s $250 million investment in online lending startup Kabbage Inc. Payments startups Toast Inc. and Raise Marketplace Inc. were also in the top 10 deals with $101 million and $60 million investments, respectively.

Robo-Advisor Teardown: How Betterment And Wealthfront Stack Up (CB Insights), Rated: AAA

In the battle for assets under management (AUM), incumbent wealth management firms have faced significant pressure from insurgent robo-advisors, as investors have poured over $1.6B into robo-advisors across 151 investments since 2013.

The two largest of these robo-advisors, Betterment and Wealthfront, have collectively raised $405M in aggregate funding to date and have both voiced the long-term goal of going public. Nearly a decade after launch, Betterment and Wealthfront together manage approximately $15.9B of assets for over 495K client accounts.

Some of the key takeaways from our analysis include:

  • Betterment continues to outpace Wealthfront in client accounts. As of Q1’17, Betterment managed approximately 330K accounts, nearly 2X as many accounts as Wealthfront (at 165K accounts).
  • Wealthfront has a higher growth rate than Betterment. As of their respective filings in Q1’17 and Q2’17, Wealthfront had added 65K accounts, representing 65% growth, while Betterment added 52K accounts and grew 19%.
  • Betterment has raised more than 2X the amount of funding as Wealthfront. Betterment has raised $275M total as of its latest investment (a $70M Series E – II round in Q3’17), while Wealthfront has raised $129.5M as of its last funding (a $64M Series D in Q3’14).
  • Betterment has taken the lead over Wealthfront for total AUM since 2015.
  • Wealthfront has consistently had a higher AUM per client. Wealthfront clients average $40.9K per account, compared to Betterment’s account average of $27.4K.

CLIENT ACCOUNTS: WEALTHFRONT COULD SURPASS BETTERMENT IN 3 YEARS

An analysis of the data shows that while Betterment leads Wealthfront in number of client accounts today, Wealthfront’s higher growth rate suggests that Wealthfront could surpass Betterment within 3 years. Wealthfront added 65K accounts in H1’17, representing 65% growth, while Betterment added 52K accounts and grew only 19% over the same period.

Comparing average AUM per client, Wealthfront has consistently had a higher AUM per client ($40.9K invested per account, vs. Betterment’s average of $27.4K), and as it continues to add additional services like PATH and the portfolio line of credit, that average could grow over time.

Source: CB Insights

 

ASSETS UNDER MANAGEMENT (AUM): BETTERMENT GROWTH SLOWS

Betterment grew AUM by approximately 13% since their last filing, their slowest quarter for growth. Again, this comes on the heels of the backlash against changes in Betterment’s fee structure in Q1’17. In contrast, Wealthfront set a new record for AUM growth in Q2’17, adding approximately $1.76B in AUM since the previous quarter. This was Wealthfront’s largest quarterly dollar increase in AUM.

Source: CB Insights

Mortgage startups blur lines between old and new capital strategies (National Mortgage News), Rated: AAA

Marketplace lending is, in many respects, an evolution of the privately funded mortgage market, which has co-existed with mainstream lenders without posing much threat for years.

Technology used by marketplace lenders offers deeper insights and transparency into transactions, while more easily connecting investors and borrowers in disparate locations.

LendingHome has raised $110 million in venture capital since it was founded in 2013 and is looking for more. It’s done six bridge-loan securitizations totaling $183 million and has a marketplace lending vehicle where accredited investors can purchase fractional interests in loans.

This suggests that the legacy of fintech and marketplace lenders will not be defined by drawing lines between this new breed of lenders and mainstream incumbents, but rather by how those lines are blurred.

Source: National Mortgage News

Income&, while reaching out directly to investors, is working to serve retirees potentially more interested in accessing the mainstream mortgage market’s lower-risk cash-flows than taking on more risk in order to reach for yield the way marketplace lenders’ investor bases tend to.

The company structures the investments through a twist on traditional securitization.

SoFi Bails On Being A Bank (PYMNTS), Rated: A

“With SoFi’s leadership in transition, we’re withdrawing our application with the FDIC for now,” SoFi spokesman Jim Prosser said in a statement to Reuters. “A bank charter remains an attractive option when the time is right. This decision does not change our plans to make deposit accounts available through partner banks in the near future.”

Barclays CEO Says Bank Must Protect Payments Business From Apple, Amazon (Bloomberg), Rated: A

Barclays Plc will need to defend its advantages in the payments business from encroachment by technology companies including Amazon.com Inc. and Apple Inc., according to Chief Executive Officer Jes Staley.

LendingHome adds $ 450 million to ramp up originations (National Mortgage News), Rated: A

A fund LendingHome began setting up earlier this year raised $100 million in commitments and established a $300 million credit facility that brings its total potential assets to $400 million.

LendingHome Opportunity Fund II is committed to buying more than $1 billion in high-yield bridge loans over a two-year period, but the company also will continue to sell loans to other investors through other existing channels.

Pefin Leverages Artificial Intelligence To Provide A Comprehensive Set Of Financial Advisory Services (Superb Crew), Rated: A

Q: Catherine, what is Pefin?

A: Pefin understands a user’s complete financial situation, including their current spending patterns, their debt and investments and their goals. An interactive chat experience helps users plan for life events that matter to them- like buying a home, having kids, sending them to college, and retiring in comfort. Pefin then incorporates the economy, markets, social security rules, federal and state taxes and much more to craft a thorough financial plan tailored to each user, showing the affordability of their plans. It provides ongoing advice on how they can save to achieve their plans, when they should repay debt, and whether investing is appropriate. If it is, Pefin also offers investment advice and portfolio management services through its SEC regulated subsidiary, Pefin Advisors. Pefin does not require that users invest through its platform, but if they choose to do so, it tailors each portfolio to help users achieve their plans.

Source: Superb Crew

Q: Who are the primary users of Pefin and what are some of the key challenges you are helping them solve?

The typical human advisor charges between $2,000 – $,5000 for a one-time financial plan and being static, it is obsolete moments after it is created. Robo-Advisors, while affordable, are unable to offer a comprehensive financial plan, instead focusing on recommending a generic portfolio (one of 10 or so static investment portfolios), primarily based on a risk level the user picks. Pefin’s AI stays on top of 2-5 million data points per user and updates plans real-time, ensuring the advice users receive is current and anything but generic. And Pefin does all this, for $10 a month. As for investments, Pefin requires no minimum investment size, and fees are 0.25% of assets under management, with the first $5,000 managed for free.

Q: Can you give us more insights into your Artificial Intelligence powered solution?

The neural network understands these financial rules and relationships, and propagates them forward in time, up to 80 years depending on the age of the client. The network starts with a user’s current finances and projects how they change over time with market conditions, inflation, taxes, government rules, and their plans. For any given user, the network evaluates anywhere from 2-5 million data points, depending on the complexity of their financial situation and financial plans are available 24/7.

BlueVine Expands Reach With up to $ 130 Million in New Debt Financing, Business Credit Line With Monthly Payments (PR Newswire), Rated: A

BlueVine is expanding its reach in online business lending with new debt financing of up to $130 million and a new additional line of credit product that allows business owners to make monthly, instead of weekly, payments, over 12 months.

BlueVine secured major funding as the company rolls out a 12-month business line of credit based on monthly payments, a new offering that would make it easier for business owners to meet their everyday funding needs.

BlueVine introduced the new product in response to client requests for a longer-term business line of credit with monthly payment plans. The new financing underscores the fintech pioneer’s commitment to innovation based on customer needs.

The new product gives business owners 12 months to repay each withdrawal in full, meaning lower payments each month.

Fintech market moves beyond lending (Financial Times), Rated: A

Goldman Sachs, arguably the world’s leading investment bank, has not been the greatest success story of recent times. After all the challenges of the 2008 financial crisis and the post-crisis regulatory glut, its profitability has declined sharply.

Today its stock market valuation, though far stronger than most banks, puts it on a so-called price-to-book valuation of 1.1 times. That is to say, its shares are worth 10 per cent more than the value of its net assets.

Compare that with the market’s view of Lending Club, the upstart peer-to-peer lender. Despite a scandal last year founded in slipshod controls, and a fall in the group’s share price from a 2015 high of more than $25 to barely a fifth of that today, it is relatively far more valuable than the Wall Street titan, with a price-to-book multiple of 2.6 times.

All that has yet to follow is a re-rating of Goldman stock — from bank to fintech. Though with barely $1bn of Goldman’s near $1tn balance sheet so far devoted to online lending, it may have a while to wait.

In a sign that the fintech business is maturing into more sophisticated areas, “regtech” is among the fastest-growing areas, accounting for a chunk of applications to the Future of Fintech awards.

Community Banks Take A Swing At FinTech Collaboration (PYMNTS), Rated: A

Community banks are typically a better bet for small businesses in search of a loan, with approval rates higher than those at larger financial institutions. But the latest data on SMB lending in the U.S. suggests a shift is ahead.

Earlier this month, Biz2Credit released its monthly Small Business Lending Index and found that approval rates at large banks increased more than they did at smaller community banks. And while community banks’ SMB loan approval rates are still higher than those at large banks (49.1 percent compared to 24.8 percent, respectively), separate analysis from the Federal Reserve, also published earlier this month, concluded that community banks are beginning to reexamine how small businesses fit into their broader loan portfolios.

The Fed found that small business lending at community banks actually declined in 2016, while SMB lending at big banks increased over the same period.

SENATE DEMOCRATS CLAIM A TOP BANKING REGULATOR IS SERVING ILLEGALLY IN HIS POSITION (The Intercept), Rated: A

SIX SENATE DEMOCRATS have asked the Treasury Department’s inspector general to investigate whether Keith Noreika, head of the Office of the Comptroller of the Currency, is illegally serving in office.

Noreika planned to serve temporarily until Joseph Otting, former CEO of OneWest Bank and Trump’s nominee for the OCC, was confirmed. But that hasn’t happened yet; Otting’s nomination has sat on the Senate calendar for over a month.

Special government employees are limited to 130 days of service over a 365-day period. The OCC contends that the number only refers to business days, meaning weekends can be taken off and Noreika still has until November to go. But “business days” appears nowhere in the statute.

No, Trello Didn’t “Fail To Build A Billion Dollar Business” (Medium), Rated: A

I’ve seen a lot of folks passing around that article about how Trello failed to build a billion dollar business. It’s stunningly obtuse.

The premise is that the software that was sold for a $400m acquisition was a failure because it wasn’t worth $1b.

When Fog Creek spun Trello off as its own entity, the amount of money they raised was $10m. That was the only money they ever raised, and it was all they needed to raise.

For almost anyone with a sincere connection to reality, a $400,000,000 exit is an amazing win.

The “Trello Failed” take is not only wrong…

Really, what is the issue with an exit that large, after a fundraise that small? I believe there’s a level of unicorn fetishism at play here that’s more than a little depressing. To think that on any level a company either reaches a billion dollars or has “failed” is to denigrate the work of entrepreneurs building amazing products and achieving amazing things.

I have no real interest in billion dollar companies. I’m interested in companies that serve their customers, build amazing products and make money. If they happen to reach a billion, that’s great. But getting to a billion is not a goal that keeps me up at night.

Companies Are Owning Less And Creating More Value (Forbes), Rated: A

Although our society and culture are slow to realize it, the assets of yesterday are quickly becoming the liabilities of today. This is true in business and in our individual lives as well.

Digital technology and digital assets, rather than physical things, are giving us options that are newer, faster, cheaper, and more convenient.  It appears that today, the less you own, the more have.

By owning less and relying on a network to share the load, they operate more profitably and scale rapidly and inexpensively, trouncing big, established, asset-heavy players.

So, what are we doing in a world where less (stuff) is becoming more (valuable) and access is trumping ownership?

  • First, we are lightening our balance sheets, both personal and corporate. People are carefully considering which assets they actually need to own, and what stuff actually creates more value than its cost of ownership.
  • Second, we are using our intangible assets, like skills, ideas, technology, and particularly relationships, to serve us in ways never before possible.
  • Third, we are identifying our own professional skills and differentiators for the gig economy.

Congress Should Fix Fintech Lending Model (Competitive Enterprise Institute), Rated: A

Originally announced for markup, the Protecting Consumers’ Access to Credit Act of 2017 never made it to a vote. Yet, this is one of the most important bills Congress can pass this session, as it provides a legislative fix to a damaging U.S. Court of Appeals ruling, Madden v. Midland Funding.

Nonbank Fintech lenders are not currently chartered at the federal level. Instead, each Fintech lender is required to charter in each the state in which it originates loans. Each state sets its own regulations with regards to interest rates. Such a patchwork of different regulations means that Fintech lenders often cannot lend to customers in other states at the same interest rates that they lend to their in-state clients. This puts Fintech lenders at a competitive disadvantage, as solely state-chartered firms cannot offer consistent products nationwide that can provide benefits from economies of scale.

Source: CEI.org

Fintech’s Achilles heel: Reaching low-income consumers (American Banker), Rated: A

Over the last decade, fintech companies have launched robo-advisers, digitized lending, improved fraud detection and created virtual currencies. In short, fintech firms have helped change our understanding of what is possible in financial services.

However, the fintech revolution has largely ignored the financial needs of the bottom third of the U.S. population. For instance, fintech companies have so far failed to successfully create an alternative to credit scores for the 51% of people with subprime scores. Secondly, fintech firms have yet to help move our national savings rate in a positive direction. Thirdly, the amount of money that lower-income households have left over every month after paying their expenses is still declining despite fintech apps’ promise to help people budget. According to data from the Pew Charitable Trusts, the typical low-income household had $1,500 of income left over after expenses in 2004. In 2014, they were $2,300 in the red after expenses.

One explanation: Consumer spending dictates the preponderance of innovation and investment, and spending by 5% of households with the highest income now directs one-fifth of gross domestic product.

AI can help people save more of their paycheck

Close to half of Americans have expenses that equal or exceed their income, making every month a financial balancing act.

A fintech company could use artificial intelligence to identify patterns in someone’s past family financial behavior — both successful and unsuccessful — to recommend an easy-to-follow budget, send reminders or prompts, and eventually, say, help someone consistently lower expenditures and increase savings. Digit, for instance, is one example of a fintech company paving the way to do just that. The digital service mines someone’s checking account data to determine what he or she can afford to save and then Digit automatically transfers that amount into someone’s savings account.

Improve government-issued benefit cards

Each month, 52.2 million Americans receive government benefits — and most of them receive the benefits on a payment card. Most of these payment cards lack associated mobile apps that could make it easier for someone to check balances, track spending or fund savings. The cards also fail to let someone pay utility or phone bills directly.

Peer-to-peer platforms that enable lending between friends and family

Twenty percent of Americans have a credit score below 600 and another 19.3% of Americans are considered to be “unscored” or “credit invisible.”

Pro-consumer auto and mortgage loan calculators

In 2014, auto loans (29%) and mortgages (28%) were the second and third largest debt categories in America. In a world where visiting two additional mortgage brokers (or getting two more quotes) could save someone over $24,000 over the lifetime of their loan, the lack of clarity and understanding when people are signing their loan documents is reprehensible.

Wall Street Veteran Joins PeerStreet To Lead Capital Markets Team (BusinessWire), Rated: B

PeerStreet, an award-winning platform for investing in real estate backed loans, is excited to announce the appointment of Louis Nees as Head of Capital Markets. He will be based in the firm’s headquarters in Los Angeles, California.

In this role, Nees is responsible for leading PeerStreet’s Capital Markets team, which plays a crucial part in interfacing with the growing number of investors seeking to invest in loans on PeerStreet. The company recently surpassed half a billion in cumulative loans funded, all with zero losses to investors, and monthly origination volumes now reach above $50 million.

With his deep Wall Street background, Nees will provide key guidance on multiple and varied capital sources for PeerStreet.

Centana Growth Partners Expands Investment Team with Senior Hires (BusinessWire), Rated: B

Centana Growth Partners (Centana), a unique growth equity firm focused on the future of financial services, today announced an expansion of its investment team with the hiring of Tom Davis, Principal, and Matthew Alfieri, Vice President. Mr. Davis and Mr. Alfieri join the firm after the successful close of its $250 million fund earlier this year.

Mr. Alfieri joins Centana from Goldman Sachs where he spent nine years, most recently as a Vice President with the Principal Strategic Investments team, where he invested in financial technology and enterprise technology companies.

Kansas AG’s office targeting student loan scammers (WIBW News Now), Rated: B

Kansas Attorney General Derek Schmidt is joining the Federal Trade Commission and ten of his colleagues from other states in a coordinated crackdown against student loan scammers.

“The student loan market is the second largest debt market after mortgages,” said Schmidt. “There’s more than $1.4 trillion in outstanding student loan balances around the country.”

Around 42 million Americans have student loan debt.

United Kingdom

UK Peer-To-Peer Lender RateSetter Receives FCA Regulatory OK (The New York Times), Rated: AAA

British peer-to-peer lending platform RateSetter on Tuesday said it had received full regulatory authorisation from the country’s Financial Conduct Authority watchdog.

P2PGI puts portion of Zopa loans up for sale (P2P Finance News), Rated: AAA

PEER-TO-PEER investment trust P2P Global Investments (P2PGI) has appointed Deutsche Bank to sell off 31,153 Zopa loans in its portfolio in the latest securitisation activity in the sector.

The bank is offering the loans in three tranches worth £208.9m overall.

The average value is £7,488 with an average interest rate of 7.2 per cent and remaining term of 45.7 months, Deutsche Bank said.

Inflation hitting higher income households hardest (P2P Finance News), Rated: AAA

NEW analysis by investment and financial planning group Tilney has revealed that the wealthiest households have experienced a much higher rate of inflation over the last two decades than everyone else.

In its household inflation index report, Tilney calculated that the top 10 per cent of households – those with incomes above £78,500 a year – have seen overall inflation of 64 per cent since 1997. That’s compared to 50.7 per cent for typical households (those with incomes of £26,900 to £30,000 a year) and 53.8 per cent for the lowest income families (less than £10,400).

Inflation has grown sharply in recent months, hitting a higher-than-expected 2.9 per cent in August, making it ever more difficult to savers to find an inflation-beating return from conventional savings accounts, adding to the allure of the peer-to-peer lending market.

Payday P2P lender Welendus receives full FCA approval (P2P Finance News), Rated: A

WELENDUS, the peer-to-peer payday lender, has received full authorisation from the Financial Conduct Authority (FCA.)

The milestone comes a year after the company was formed.

The platform, which wants to shake-up the payday lending market by offering more reasonable interest rates than its competitors, launched a crowdfunding campaign on Seedrs in January to raise £300,000, but closed that campaign two weeks ago and instead started a new one to raise £100,000.

Moneyfarm is changing the face of wealth management (City A.M.), Rated: A

Moneyfarm is one of the new kids on the block. Founders Giovanni Dapra and Paolo Galvani left behind their City careers to set it up in 2011. It’s an app-based digital wealth management platform, which expanded into the UK from Italy last year. Dapra, the firm’s chief executive, is on a mission.

Since moving to London, the business has doubled its user base, now managing £260m in assets across the UK and Italy.

As well as a partnership with Allianz Global Investors, and launching separate partnerships with Uberand Revolut, Moneyfarm is in the process of launching a pension product.

Fewer people are saving into a private pension plan than at any point for the past 60 years. Auto-enrolment has gone some of the way to curing this ill, yet still there is a reluctance to think ahead.

Collaboration brings benefits to business at every level, say bosses (The Yorkshire Post), Rated: A

One banking leader said that the rise of fintech and challenger banks had forced his and other large scale banks to collaborate more widely while all assembled agreed that universities and business leaders should work together more closely for the benefit of students as well as their respective organisations.

Pete Sumners, director of corporate structure finance at Clydesdale Yorkshire Bank, said that recent innovations in disruptive lending technology has meant that the banking sector at large had had to admit it did not have the technology to offer certain services and as such was forced to work with fintech companies: “In terms of banking, not just CYBG, collaboration has been forced on us by competition.

Simon Pilling, partner at Bond Dickinson, agreed that the rise of artificial intelligence had meant professional services had needed to change their business model but that there was still a need for skilled lawyers in all ends of the process.

Future of Fintech Awards shortlist 2017 (Financial Times), Rated: A

There are two categories; the Impact Award is for larger and more established fintech companies, which are starting to have an effect on the financial services industry, while the Innovation Award is for newer fintech companies that are bringing out novel solutions.

Impact Award

Funding Circle, a direct lending platform that connects investors to borrowers, is shortlisted for the second year running for our Impact Award. With valuation of more than $1bn it is one of the UK’s “unicorns” and the largest British online “peer-to-peer” company by cumulative amount lent. More than £3bn has now been lent through the platform, with £1.1bn of that in 2016.

THE JUDGES SAID:

“The company is big enough to be making an impact in small business lending now.”

Ant Financial Services, founded in 2014, is an affiliate of Alibaba, the Chinese e-commerce company.

THE JUDGES SAID:

“This is clearly one of the most innovative and impactful fintech companies of the moment, changing the landscape completely.”

California based Ripple, founded in 2012, has grown to be one of the world’s biggest blockchain networks. It allows businesses to transfer money globally at low cost using its own cryptocurrency XRP.

THE JUDGES SAID:

“This is no longer a prototype. Ripple is actually sending blockchain payments through. Many of these are still test payments but it is further than a lot of others.”

EFL Global provides alternative credit scoring for people who have previously been outside the banking system.

THE JUDGES SAID:

“There were many credit scoring entries and we liked what many of these were doing in terms of giving more people access to finance. However, we particularly liked the way EFL went beyond traditional credit score information.”

Digital Reasoning uses cognitive computing techniques to detect rogue traders at financial services companies.

THE JUDGES SAID:

“We thought this idea was cool. Cutting rogue trader activity and fraud at banks is a serious issue with consequences beyond just the banks themselves.”

Innovation Award

Micro finance lending platform QCash Financial was founded by the Washington State Employee Credit Union as an alternative to expensive payday loans.

THE JUDGES SAID:

“We liked this because it was an alternative to payday lending and an instance of an established financial institution doing something innovative.”

Token is creating an open banking platform aimed at making it easier for people, businesses and financial institutions to move money around. Using digital identity and smart tokens it offers a way for people to give third parties access to their account details in a secure and simple way.

THE JUDGES SAID:

“This is solving the problem that PSD2 brings, where banks need to provide APIs to authorised third parties. Token simplifies the many APIs and is already integrating 10 banks into the system.

RSRCHXchange was founded in 2014 as a one-stop-shop for asset management firms to purchase research services from banks, brokers and boutique providers. It will be particularly useful in helping banks comply with the EU’s new Mifid II rules, which come into force at the start of 2018.

THE JUDGES SAID:

This is solving a problem that comes with Mifid II. A more sophisticated solution than others in the market.

Bricklane.com is an online property ISA allowing anyone to participate in the housing market with an initial investment of as little as £100.

THE JUDGES SAID:

“We liked this because it is creating a new product. The founders say the main competitor is cash, with most of their funds coming from people transferring their ISAs.”

Castlight Financial is aiming to prevent another credit crunch by providing a more accurate way to assess what a consumer can afford to borrow. It collects data in real time from customers’ banks accounts, including income and expenditure, and uses these to build a clear picture of a their monthly disposable income. People who may have previously been refused loans because banks had too little data about them may become eligible for credit. Castlight says it can also speed up the mortgage decision process from six weeks to 10 minutes.

THE JUDGES SAID:

“The idea of better credit scoring is attractive and it is significant that the company has made a profit from the first year and has not had to take any financing.”

SMEs are ignoring their credit score (P2P Finance News), Rated: A

ALMOST half (44 per cent) of small- and medium-sized enterprises (SMEs) have never checked their credit score, new research from RateSetter Business Finance shows.

The study, released on Monday, found that a further six per cent have opted against checking their score in the last year, while less than one in five (18 per cent) have checked the score in the last six months.

The peer-to-peer lender pointed out that credit scores are an integral part of establishing whether a business has a decent record of repaying debt, and have a significant impact on their chances of getting further finance.

Epiphany appointed by Wonga to help with brand perception (Prolific North), Rated: B

Leeds search specialist Epiphany has been appointed to help improve the brand perception of payday loan company Wonga.

Epiphany will work in partnership with Wonga’s content agency, Cedar, on brand perception and delivering a customer-first multi-channel content strategy.  The agency will also be responsible for driving traffic and enquiries from organic search.

China

Chinese peer-to-peer marketplace Hexindai sets terms for $ 58 million min-max US IPO (NASDAQ), Rated: AAA

Hexindai, a Chinese marketplace for peer-to-peer lending, announced terms for its min-max US IPO on Monday. The offering is being made on a best-efforts, min-max basis and therefore will not be included in our IPO stats.

The Beijing, China-based company plans to raise at least $30,000,000 by offering a minimum of 2.7 million ADSs and a maximum of 8.9 million ADSs at a price range of $9 to $11. At the midpoint of the proposed range, Hexindai would command a fully diluted market value of $487 million.

European Union

Credimi: four asset management funds renovate and increase the commitment up to €72.5 million (Credimi Email), Rated: AAA

Barely a year after the launch, Credimi – the digital financing platform for SMEs that makes liquid the working capital in short time at low costs – has renewed the agreement with the four primary investment funds. They committed up to 72,5M€ to purchase the entire portfolio of commercial credits originated by the fintech platform.

Credimi is a fintech company officially authorized by the Bank of Italy to the public financing activity according to the dispositions contained in the new art.106 of the Banking Consolidated Law. The company will be able to provide funding to SMEs up to €300 million in the next months .

The four partners previously involved, Anima Sgr, Anthilia Capital Partner Sgr, BG Fund Management Luxembourg S.A. and Tikehau Capital, have decided to renew the agreement. Credimi is therefore reinforcing the attractiveness of its notes, which are the among the most profitable and diversified asset class among investments with a comparable risk profile.  In fact, the notes combine an average life of the underlying invoices of less than 3 months with a spread around 450 base points and credit losses of 0.3%.  Credimi finances hundreds of SMEs with average ticket of 20,000€, creating a low risk, diversified portfolio.

The portfolio subscribed by the four noteholders is untranched and pays a quarterly  coupon. Additionally, Credimi continues to keep a stake of around 5% (as fifth noteholder alongside with the other four) to have ‘skin in the game’. This is not requested by law as the note is untranched and is ensured by Credimi to the noteholders on a voluntary basis.

Since launch on the market, Credimi has achieved outstanding results, exceeding initial expectations: €40million of loans have been delivered to Italian SMEs and more than 2.000 invoices have been financed. The same strong  results have been obtained with the Supply Chain financing: by signing deals with corporations – such as Ariston Thermo, Jab group (Jimmy Choo and Bally), Pittarosso and few others – Credimi helps large enterprises to finance their suppliers at competitive prices and with an unmatched flexibility.

International

Lenddo and EFL Team Up to Lead Financial Inclusion Revolution (Lenddo Email), Rated: A

United by the common vision of providing financial inclusion for more than one billion new and underserved individuals across the globe, Lenddo and EFL will together provide a suite of credit scoring and identity verification products to more than 20 emerging markets.

Lenddo and EFL have individually facilitated over 5 million credit assessments since inception, allowing more than 50 financial institutions to disburse over $2 billion USD in credit to people with limited information. The combined company will work directly with banks, telcos, retailers, microfinance institutions and insurers to serve individuals and small businesses.

The first joint product offering goes live in Asia and Latin America today, with additional products and features scheduled for release in the coming months.

Australia

Australian banking doesn’t need Google to be competitive (Financial Review), Rated: A

A leading member of Australia’s fintech community has backed the view of veteran bankers that technology giants will be dissuaded from setting up shop in Australia and taking on the big four. But the disrupters see different reasons for Google’s absence.

SocietyOne CEO Jason Yetton said for the tech companies with the resources it wasn’t a question of whether they could disrupt the incumbents but whether they should do so.

In Australia there is a raft of smaller companies looking to carve out their own share of the financial services market including personal loans company Ratesetter, layby purchases Afterpay and online lender Zipmoney.

Tyro is a payments and technology company that also lends to small businesses. It also has Australia’s newest banking licence and is therefore subject to the same oversight as other authorised deposit taking institutions (ADIs).

Online Lender Prospa Forms New Partnership With Retail Marketplace MyDeal (Crowdfund Insider), Rated: A

Prospa, an Australian online lender for small businesses, has formed a partnership with Gandel-backed retail marketplace MyDeal, which will allow retailers on its platform to apply for loans of up to $250,000.

Senvirtne and his MyDeal team will be receiving a 1-2% small commission for every loan that comes through the marketplace.

India

PolicyBazaar Raises $ 77M at a $ 500M Valuation (Coverager), Rated: AAA

Gurgaon-based PolicyBazaar announced it has raised $77M in a Series E round led by Wellington Management , with participation from IDG Ventures India and True North; to name two. The online insurance aggregator has raised a total of $146.6M since its inception in 2008 and is currently valued at $500M.

According to VCCiRCLE, the company plans to go public by the end of 2018 after breaking even in November 2016.

Source: Coverager

Micro-lending startup KrazyBee raises $ 8M, plans to enter payday-loan segment (YourStory), Rated: A

On Monday, Bengaluru-based micro-lending startup KrazyBee said it had raised $8 million in a Series A round led by Xiaomi Technologies and Chinese venture capital fund Shunwei Capital. The funding raised was a combination of equity and debt, with participation from Essel Group’s E-City Ventures and RK Group.

The funding announcement comes within a year of the firm raising $3 million pre-Series A round in January from Plum Ventures. Prior to this, KrazyBee had raised a seed round of $2 million in May 2016.

Until July this year, the company claimed they had disbursed 80,000 loans and processed close to 170,000 loan applications. As of October 2017, the company had disbursed close to 150,000 loans and processed above 200,000 loan applications.  The founder claims that of this number, 75,000 loans have already matured with steady settlement.

The average size of loans by KrazyBee is around Rs 15,000 with the maximum tenure being 12 months.

Lending and borrowing limits on peer-to-peer lending platforms (Livemint), Rated: B

Many lenders find P2P platforms attractive because of their potential for giving higher returns, compared to fixed and savings bank deposits. In fact, these platforms also market their services by comparing the returns from P2P lending with returns from mutual funds. It is important to note here that these platforms cannot guarantee any return.

Thus, the RBI imposed limits on how much can be lent and how much can be borrowed by individuals from these platforms—to limit the risk exposure of individuals.

If such a person was to take a personal loan from a bank, it would come at 16-17%. Through P2P lending they can get that loan at around 14%. Those with low credit scores typically go to other NBFCs, and get loans at 22-23%.

No borrower can have loans of more than Rs10 lakh, from all the P2P platforms combined; and no more than Rs50,000 from one lender. All loans through P2P platforms come with a payback period that cannot be more than 36 months.

APAC

Markel International Launches Fintech Insurance for Asian Market (Insurance Journal), Rated: A

Markel International, the specialist insurer, has unveiled a fintech policy offering comprehensive protection for businesses in the financial technology sector in Asia, having successfully launched it in the UK early last year.

Coverage also extends to the costs involved when sensitive documents or data are lost.

On top of the professional indemnity core cover, the policy offers protection for three additional perils to protect clients against their key exposures:

  • Directors’ and officers’ liability cover protects against claims of mismanagement, which could be brought by shareholders, employees, creditors or regulators.
  • Theft option covers the insured against the stealing of money or other financial instruments, through both electronic and non-electronic means, including through extortion. It will also cover the cost of rectifying computer systems following a theft.
  • Cyber liability and loss cover provides protection if the insured suffers a network security incident, such as a hack, denial of service attack, or a computer virus, and will also cover business interruption losses arising from such an incident. This section includes cover for the cost of rectifying computer systems following a network security incident.

Baker McKenzie snags top G+T partner (Australasian Lawyer), Rated: B

Baker McKenzie has snagged a top partner from Gilbert + Tobin.

In addition to his knowledge in DCM matters, McGrath brings to Baker McKenzie a practice that covers a wide range of areas, including securitisation, leveraged and general finance, peer-to-peer lending, insolvency and restructuring, blockchain, and smart contracts.

Africa

SA’s Retailer Pick n Pay Reaches 200 000 Money Transfer Users (Tech Financials), Rated: AAA

South Africa’s Pick n Pay announced on Tuesday that it has 200 000 registered money transfer customers as of 27 August 2017.

The largest online grocery business in Africa is in partnership with digital bank TymeDigital, a subsidiary of Commonwealth Bank, to deliver money transfer.

In line with its plans to launch a digital bank, TymeDigital was recently awarded a banking licence by the South African Reserve Bank, a first in 18 years.

Authors:

George Popescu
Allen Taylor

Friday July 14 2017, Daily News Digest

Visa revenues

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-D. IEG Holdings cites slim margins, weak underwriting as reasons for LendingClub offer. Bank execs say UK sets the standard for fintech regulation. Rocket Internet sells stake in Lendico. Today’s main analysis: Visa’s international expansion. Today’s thought-provoking articles: DBRS Student Loan ABS report (a […]

Visa revenues

News Comments

United States

United Kingdom

China

European Union

International

Israel

India

Latin America

Canada

News Summary

United States

DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-D (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-D (SoFi 2017-D):

— $245,000,000 Class A-1FX Notes at AAA (sf)
— $266,000,000 Class A-2FX Notes at AAA (sf)
— $40,000,000 Class B-FX Notes at AA (sf)

DBRS Student Loan ABS report (DBRS), Rated: AAA

In this commentary, DBRS provides the following:
— A review of Q1 2017 student loan ABS performance and H1 2017 student loan ABS issuance.
— An outlook for future student loan ABS issuance and the trends expected in H2 2017.
— Analysis and highlights of student loan collateral performance.

Download the full report here.

IEG Holdings Highlights the Urgency of LendingClub Correcting its Flawed, Slim Margin “Broker” Business Model and Weak Underwriting Standards (Sys-Con), Rated: AAA

IEG Holdings yesterday announced the commencement of a tender offer to exchange four shares of IEG Holdings’ common stock for each share of LendingClub common stock, up to an aggregate of 40,345,603 shares of LendingClub common stock, representing approximately 9.99% of LendingClub’s outstanding shares as of April 28, 2017, validly tendered and not properly withdrawn in the offer.

IEG Holdings Corporation (OTCQB: IEGH) (“IEG Holdings”) cautions shareholders of LendingClub Corporation (“LendingClub”) against dismissing IEG Holdings’ tender offer. IEG Holdings believes that the LendingClub board of directors should be held accountable by its shareholders for continuing to pursue a flawed, slim margin “broker” business model. IEG Holdings urges LendingClub to enter into negotiations with IEG Holdings, rather than simply dismissing the tender offer.

FLAWED, SLIM MARGIN, LOSS-MAKING BUSINESS MODEL

Despite brokering more than $26 billion of loans since inception, LendingClub still reported a loss of $29.8 million for Q1 2017 and loss of $146.0 million for the 2016 full year. Transitioning to a balance sheet lender likely would significantly increase gross margins, without a significant change in customer acquisition costs.

WEAK UNDERWRITING STANDARDS

A recent media report by Bloomberg indicates that:

  • LendingClub only verified income about a third of the time for one of the most popular loans it made in 2016, and
  • If LendingClub finds errors in a loan application, it may still approve the loan.

LACK OF COMPANY-OWNED STATE LENDING LICENSES

LendingClub doesn’t hold individual state lending licenses and instead utilizes the services of a Utah-based bank. This raises regulatory risks around issues such as the potential breaking of individual state interest rate caps and compliance.

POOR STOCK MARKET PERFORMANCE AND ZERO DIVIDENDS TO SHAREHOLDERS

LendingClub’s share price has decreased 79% since its initial public offering in December 2014, dropping from $25.74 in December 2014 to $5.39 yesterday, after reaching a low of $3.51 in May 2016. In addition, LendingClub has never paid, and has no reported intention to pay, a dividend to shareholders.

IEG Holdings’ Reasons for the Offer

IEG Holdings believes that changing LendingClub’s business model to a balance sheet lender model would enable the company to generate significantly higher gross margins, provide significantly higher long duration cash flow from customers, build increased customer goodwill with customers and enable increased customer refinancing. The longer duration cash flow would provide more flexibility in reducing lending volumes during periods when underwriting risk levels are rising, as the company would be less dependent on brokering new loan deals every day to provide revenue.

  • IEG Holdings intends to encourage LendingClub to undertake substantial costs cuts by terminating excess employees, achieving substantial cuts in advertising/marketing costs and other significant cost cutting measures;
  • IEG Holdings intends to encourage LendingClub to transform its broker business model with low gross margins and high volumes to focus on high gross margin unsecured loans to near prime clients with strong underwriting, company owned individual state licenses and retention of loans on its balance sheet to secure long duration cash flow from longer term loans; and
  • The acquisition of LendingClub shares would be substantially net asset per share accretive for IEG Holdings stockholders and substantially increase shareholder equity.

New partnership turns PayPal into Apple App Store payment option (Banking Tech), Rated: A

This week the company announced a partnership with Apple to allow shoppers pay for their purchases at the App Store using PayPal. The feature will be available for users of a variety of Apple devices including iPhone, iPad, Apple TV, Apple Watch, and iPod.In addition to the App Store, PayPal will be a payment option for a variety of Apple services including Apple Music, iTunes, and iBooks.

Finicity and JP Morgan Chase pair for data share (Banking Tech), Rated: A

Data aggregation provider Finicity has signed an agreement with JP Morgan Chase to let the bank’s customers choose data to share with apps.

The companies will use a direct API to allow Chase customers to share information with the apps and services that Finicity supports. According to the firms, this tokenised access will eliminate the need for customers to share their Chase credentials with third-party apps.

Paypal Holdings Inc (NASDAQ:PYPL): Beginning of Market Dominance (Library for Smart Investors), Rated: A

Paypal Holdings Inc (NASDAQ:PYPL) is getting investors attention after the stock touched fresh highs amid a new partnership with Apple.

The stock is up over 43% since the start of the year.

In the first quarter, PayPal saw a jump of 10.3% in monthly active users on year-over-year basis. The total number of transactions also increased by 22.5% in the period.

In the first quarter, Venmo processed $6.8 billion in total payments, a 100% growth on year-over-year basis. Venmo is slated to grow more as the company expands to small businesses.

WEALTHTECH — THE DIGITIZATION OF WEALTH MANAGEMENT (FT Partners), Rated: A

WealthTech companies are targeting inefficiencies that span the entire wealth management value chain, from client prospecting to investing to portfolio management and reporting. Benefits include more efficient workflows, improved client experiences and greater transparency. Regardless of their value proposition, WealthTech companies are seeking to improve overall wealth management and investing.

This report highlights a number of key trends within the broader WealthTech industry such as…

  • Growing number of advisors joining the independent channel
  • Incumbent financial institutions are entering the robo-advice space
  • Increased demand for alternative investments
  • Financial planning trending towards goal-based approaches
  • Higher levels of active risk management
  • Commoditization of portfolio management software is leading to expanded offerings
  • RIA custodians evolving into more holistic roles

Download the full report here.

Wells Fargo trims auto loans as market cools, risk overhaul kicks in (Reuters), Rated: A

Wells Fargo & Co (WFC.N) is scaling back and remolding its auto lending business in response to growing stress in the market, as well as a bank-wide push for more centralized risk controls.

Wells, which was the No. 2 U.S. provider of auto loans less than a year ago, has already cut quarterly originations by nearly 30 percent over the nine months leading into March 31, according to a May 11 company presentation. It has also begun consolidating the collections operation in a move that people familiar with the business say could eliminate hundreds of jobs, after a new head of auto finance took the reins in April.

5 Fintech Startups Under the Radar (Bank Innovation), Rated: A

Spotme

This New York City-based startup facilitates micro-loans between borrowers and lenders, allowing users to set up pretty much all the parameters of a loan themselves: users can control the amount, the interest rate, the payback period, and the way they are reimbursed for the loan themselves.

Ledger

Ledger might be able to help out there: this San Francisco-based startup allows users to “open tabs with friends,” boiling down a transaction to just 3 clicks. By connecting with a user’s financial accounts (protected by “military-grade” cybersecurity, according to the company), users are able to aggregate all of their transactions in one place, as well as receive notification about when transactions are due.

Wallio

More and more companies are striving to solve the main problem when it comes to personal finance management services: how do you make a user actually take the financial advice that is being offered?

Wallio starts off the week by giving a user an allocated amount of money they can spend for that week, on whatever the user wants (expenses and savings are already factored into this amount). If a user underspends, great: Wallio will allow that user to put that money towards a goal. If a user overspends, Wallio will simply allocate less money for the user to spend next week.

Samwise

This robo-investing startup allows users to turn their existing brokerage account into an autonomous investing account using machine learning algorithms.

OnePebble

Invest, and make a difference in the world at the same time: that’s the dream of OnePebble, an online investment broker/dealer that puts each investment toward companies “doing good in the world.”

3 Investing Trends to Keep on Your Radar (Morningstar), Rated: A

Trend: Passive products continue to gain assets.

This is the trend shaping the investment management industry today. Asset flows to passive products, both traditional index mutual funds and exchange-traded funds, began in earnest following disappointing active-fund performance during the financial crisis.

Trend: New ways to hire–and pay for–financial advice. 

Robo-advisors provide automated advice for a low annual fee as low as 0.25% or even less. Meanwhile, mutual fund companies and brokerage firms may provide advice for customers who have amassed sufficient assets at the firm. For example, Vanguard Personal Advisor Service charges 0.30% and is available to investors with at least $50,000 in assets at the firm. (The service combines human financial advisors with robo-advisor technology.)

What to watch out for: The profusion of different business models means that the business of selecting an advisor is more complicated than ever. Robo-advisor fees might look like a screaming buy relative to the fees that a full-service human advisor charges, but the robo won’t be able to give you advice on nonportfolio matters like whether to pay off your mortgage or purchase long-term care insurance.

Trend: An increased emphasis on behavioral factors that can affect investor outcomes.

What’s to like: Many robo-advisors have also embedded behaviorial research into their services.

What to watch out for: Behavioral finance is trendy right now, and with any trend comes the opportunity for gimmickry. Beware of advisors who are using behavioral finance as their main hook to snag clients; high-quality advisors have been employing behavioral finance into their practices for years.

US Tax Professionals Tackles the Tax implications of Crowdfunding (Digital Journal), Rated: A

It’s important to understand that all the income a person receives, regardless of the source, is considered taxable income in the eyes of the IRS. That includes crowdfunding dollars.

Even if the campaign only raised the projected $15,000 and no gifts were offered, the money would still be considered taxable income and need to be reported as such on a tax return.

Generally, crowdfunding revenues are included in income as long as they are not:

  • Loans that must be repaid;
  • Capital contributed to an entity in exchange for an equity interest in the entity; or
  • Gifts made out of detached generosity and without any “quid pro quo.” However, a voluntary transfer without a “quid pro quo” isn’t necessarily a gift for federal income tax purposes.

Morgan Stanley digital chief: AI to help advisers, not ‘cyborg bots’ (Financial-Planning), Rated: A

Advisers tasked with processing a “mountain of information” will get a reprieve through artificial intelligence, according to Morgan Stanley Wealth Management’s chief digital officer.

“What we want to do is, with one click of a button, they can take action on that research report to all their clients within minutes, not hours, not phone calls,” Hassan said. “That’s the promise of what we’re trying to build.”

Rival firms have shown they’re headed down a similar path. Like Morgan’s planned offering, the UBS-SigFig service will save advisers’ time through automated messaging to clients on important dates, according to Richard Steinmeier, the head of the UBS Wealth Advice Center.

Congress Should Use Congressional Review Act to Strike Down Ill-Advised Arbitration Rule (Daily Signal), Rated: B

Cutting through the hyperbole that the arbitration rule protects consumers from “unfairness” that would deny them “their day in court,” this rule is in fact highly anti-consumer and harmful to innovation.

This regulation could have particularly harmful effects on FinTech innovations, such as peer-to-peer lending.”

How much money do Arizonans spend playing the lottery? Less than most Americans (AZ Central), Rated: B

Arizonans on average shelled out $100.85 per capita on lottery tickets in 2015, according to the study by LendEDU, based on preliminary data for state government finances collected by the Census Bureau. For Americans overall, the per-capita figure was $206.69.

United Kingdom

UK setting the bar for fintech regulation, bank execs say (SNL.com), Rated: AAA

U.K. authorities have created a world-leading regulatory environment for the burgeoning fintech industry that is being emulated elsewhere, according to bankers.

The Financial Conduct Authority’s “sandbox,” a program launched in 2015 to let companies test innovative ideas under close regulatory supervision, has been particularly helpful, she said.

Meanwhile, initiatives such as FCA-organized hackathons — or “TechSprints” as it prefers to call them — have been particularly appreciated by the industry, according to Sophie Guibaud, vice president of European expansion at Fidor Bank AG, a German online lender that was bought by Groupe BPCE in 2016. These events invite market participants to come up with technological solutions to certain problems, such as financial issues faced by people with mental health problems.

The U.K. is home to more fintech companies valued at more than $1 billion than the rest of Europe put together, according to an April 2017 report by technology investment bank GP Bullhound. Three U.K.-based companies, Funding Circle, Paysafe and Transferwise, have crossed that threshold, and GP Bullhound said that it does not expect London to relinquish its lead, due to its prominence in international financial services.

Comparison site GoCompare invests in mortgage robo-adviser (AltFi), Rated: A

Financial comparison site GoCompare is hoping to transform the UK’s mortgage application process by investing in MortgageGym, a digital mortgage robo-adviser.

Users can complete a free application within 15 minutes on MortgageGym and receive matches within 60 seconds, as well as robo advice and access to live advisers. The website will use automated algorithms to match applicants with the best mortgage providers.

The House Crowd hits £50m via mix of P2P and crowdfunding (P2P Finance News), Rated: A

THE HOUSE CROWD has hit the £50m funding target it set out to achieve in October last year.

The Manchester-based property platform started targeting institutional money at the end of last year to achieve its first £50m of funds channelled to property and buy-to-let borrowers, through both its peer-to-peer side and its crowdfunding arm.

The firm raised over £15m in the six months to early 2017, while a loan it closed last month added another £600,000.

Fintech CurrencyCloud tapped up investors months before Google raise (Business Insider), Rated: A

CurrencyCloud, which provides a platform to process international payments, raised £9.5 million from its existing investors in December 2016. The company had £10.5 million in the bank at the end of the month, accounts show, suggesting the platform had around £1 million left at the time of the fundraising.

The volume of payments jumped by 110% to 1.5 million but net revenue from currency transactions increased by just 10% to £3.2 million. Meanwhile, administrative expenses rose by 54% to £13.9 million as CurrencyCloud invested in “recruiting staff, developing our technology infrastructure and operations services, and moving to new office premises.”

P2P fund share issues boost investment trust sector (P2P Finance News), Rated: A

FUNDRAISINGS by Honeycomb and the Funding Circle SME Income Fund (FCIF) helped push share issues to record levels in the investment trust sector for the first half of 2017.

Secondary issuances raised £3.3bn in the first six months of the year, trade body the Association of Investment Companies has revealed, up from £1.8bn at the same time in 2016.

FCIF raised £142m in conversion shares in April, the largest total in the specialist debt sector, while the Honeycomb investment trust raised £105m through a ordinary share issue.

Alternative Credit funds drive record cash raise (AltFi), Rated: A

Assets in investment trusts have hit an all time high thanks in part to a huge swathe of secondary issuance in closed-ended funds’ shares.

In the first half of 2017, the most poplar area of the investment trust market was Infrastructure – in terms secondary issuance – raising £1.2bn. This was followed by Alternative Credit at  £514m. Funding Circle SME Income raised the largest total in the sector securing £142m via its C share issue, followed by Honeycomb Investment Trust (£105m).

China

The number of Online Financial platforms in China Exceed 19,000, ranking the first place of the world. (Xing Ping She), Rated: AAA

According to data from National Institution of Internet Financial Risk Analysis &Technology,there are more than 19,000 online financial platforms across China, including over 6000 online lending platforms, nearly 3500 online assets managers, and 800 crowdfunding platforms. The total cumulative volume of internet loans, crowdfunding and internet payment have reached to 70 trillion RMB (US$ 10.33 trillion). Zhou Hongren, director of the National Committee of Internet Finance Professional Technology, claimed that, “No matter in terms of quantity or scale, China has already become the largest international finance marketplace around the world.”

European Union

Rocket Internet Sells Stake in Lendico Startup (Handelsblatt), Rated: AAA

Incubator firm Rocket Internet has sold its majority stake in peer-to-peer lender Lendico to Arrowgrass, Handelsblatt has learned, as the British hedge fund acquired complete ownership of the Berlin startup.

The partners to the transaction agreed to keep the purchase price confidential. Rocket Internet, which specializes in helping online startups get off the ground, most recently valued its 50-percent-plus stake in Lendico at €140 million ($159 million).

Funding Circle Germany Takes a Fresh Start (Crowdfund Insider), Rated: AAA

Germany is a huge SME and VSME (very small business) credit market. But it is not as mature a market for online marketplace lending as the UK, the US, or even the Netherlands. This partly explains why Funding Circle Germany’s early loan book underperformed. Now the platform is starting afresh to match its market’s reality.

With offices and business in Germany, the Netherlands and Spain, Zencap had originated €35 million in loans to 500 SMEs at the time of its acquisition. Its operations were very small in comparison with the more than $1.5 billion originated by Funding Circle in the US and the UK at the time (meanwhile Funding Circle passed the $3 billion mark).

The second reason for starting afresh, was a need to revisit the credit model. Since January, the new German team has been busy recalibrating and restarting the German operations.

Loan origination resumed at previous level in the first half of 2017 and is expected to grow again in the second half of this year.

Spanish Fintech Industry Comes into its Own (Finance Magnates), Rated: A

The Spanish fintech ecosystem has been a steadily growing force over the past few years, swelling from just fifty financial technology startups in 2013 to well over three hundred in 2017. This rapid surge is only going to continue with this number estimated to hit four hundred companies by 2018.

In terms of the value of the operations, this sector passed rose from just €35 million in 2014 to €206 million in 2016, justifying a 600 percent growth in just two years.

According to the Spanish Association for Fintech and Insurtech (Asociación Española de Fintech e Insurtech – Aefi), companies operating in this space in Spain are going to create a total of 10,000 jobs in 2017 alone.

While the value offintech operations in Spain is increasing, two areas that constitute the most focus are the crowdfactoring or invoice factoring crowdfunding platforms – these saw a total of €120 milion euros in 2016, that concentrate most of the operations domestically, followed by crowdfunding with €43.5 million and crowdlending or p2p lending with €42 million.

International

Visa Expands Its Footprint in Europe (Market Realist), Rated: AAA

In May 2017, Visa announced that in order to give consumers more control and make transactions transparent, the company will create digital card management experiences for its partners. Visa’s partners include financial institutions. Since the new offerings will lead to more transparency, Visa expects to see volume growth in fiscal 3Q17. Market analysts expect Visa to report revenues of $4.36 billion in fiscal 3Q17—a decline of 2.7%.

 

What Can Visa Expect from Russia, China, Japan, and India?

In fiscal 2Q17, there was growth in Visa’s cross-border business due to Russia’s developed economy. Visa implemented ~1,600 point-of-sale terminals. As a result, payment volumes are expected to grow in fiscal 3Q17.

Management thinks that obtaining a domestic license in China is a time-consuming process. Visa is expected to witness lower revenues and payment volumes from China due to discontinued dual branded cards.

Management has a positive outlook on Japan’s economy due to digitization. Japan’s government has become more inclined to use digital and electronic payments.

In fiscal 3Q17, India could be a major contributor to payment volume growth.

Visa has delivered a return on equity of 16.2% on trailing 12-months basis. Other consumer financial peers (XLF) have delivered the following return on equity on a trailing 12-month basis:

  • American Express (AXP) – 25.1%
  • MasterCard (MA) – 75%Discover Financial Services (DFS) – 21.10%

Visa Expects to Benefit from Its European Business

Visa’s (V) acquisition of Visa Europe allowed the company to enhance its global reach. The main agenda behind the acquisition was to bring innovation to the European market. Visa had been working closely with its partners and clients. The company also plans to create new services and products.

Israel

THE SURPRISING COUNTRY LEADING THE FINTECH REVOLUTION (Ozy.com), Rated: AAA

The country that gave the world smart drip irrigation and the Epilady has also been an early and enthusiastic adopter of financial technology, as in mobile banking apps, digital wallets, online lending and other services that manage moola. In fact, a survey of selected industrialized countries shows that:

As for the specifics, 50 percent of Israeli adults use mobile banking apps at least once a month. In the U.S., it was 38 percent; the U.K., 37 percent; in France, 35 percent; and in Germany, a surprisingly anemic 28 percent.

The five largest banks in Israel control more than 90 percent of the market, and as Sandra Octaviani, research lead for fintech at the University of Utah’s Center for Innovation in Banking and Financial Services, notes, traditional banks tend to serve low-risk, highly profitable clients, which creates an opportunity for nimbler fintech firms to swoop in and serve the underserved.

India

RBI wary of first loan default guarantee cover (India Times), Rated: AAA

The Reserve Bank of India is learnt to be wary of peerto-peer lending platforms offering any FLDG, or first loan default guarantee, cover to institutional lenders for any lending they do through these technology startups, said sources familiar with the discussions.

While various lending entities are keen on exploring this space as a cheap source of customers, they often look for a security cover against loans going bad. Experts say such guarantees or covers might go against the intentions of the central bank.

SME Lending Based on Payment History is the Next Big Wave in Fintech (BW Disrupt), Rated: A

ftCash aims to empower micro-merchants and entrepreneurs with the power of electronic payments and loans with zero upfront cost and no monthly rentals. Merchants are able to offer their customers multiple payment methods including credit cards, debit cards, net banking, mobile wallets, PayPal and more.

Nonethless, credit lending is the next big wave of Indian fintech. Lodha explains, “SME Lending based on payment history will be next big wave in fintech. On an active basis, it allows a lender to decide the paying ability of a merchant/business and the recollection of these loans can be done from the payment platform itself. The combination of the payments data along with GST data provides deeper insights into a business. We at ftcash are heavily invested in this idea and believe there is a great potential for scale here.”

Latin America

Venture fund for Latino entrepreneurs, fintech in Mexico  (ImpactAlpha), Rated: AAA

Financial technology, or fintech, startups offering digital payment, remittances and lending services, could capture 30% of Mexico’s banking market within 10 years, according to Finnovista, a fintech accelerator. Six in 10 Mexicans are unbanked. Financial exclusion is a problem but “also an opportunity,” Francisco Meré, the director of Bankaool, one of the first online-only banks in Mexico, told the Financial Times[paywall]. “The cost of engaging a customer through technology is a fraction of using a branch.” Clip has grown to become one of Mexico’s largest digital payment providers (Accion sold its stake in February). Kubo Financieroprovides peer-to-peer lending; Albo, mobile-based banking; and Kueski, a digital micro-lender — all have secured venture backing. More than 150 fintech, or financial technology, firms now operate in Mexico, giving Mexico 35% of fintech companies serving the under- and un-banked in Latin America.

AFLUENTA INCORPORATES THE MEXICAN INVESTMENT FUND IGNIA TO ITS PRESTIGIOUS LIST OF SHAREHOLDERS (AltFi), Rated: A

Afluenta (www.afluenta.com), a leading online credit platform for the people of Latin America, announced the addition of Mexican venture capital fund IGNIA to its group of shareholders. IGNIA is a venture capital fund specializing in investments in entrepreneurial companies with great potential for growth, whose services meet the needs of the emerging middle class.

In Mexico, where local credit to the private sector is below 35% of GDP, compared to 68% in Brazil, Afluenta aims to revolutionize the market with its human approach to credit and investment.

Afluenta connects borrowers with investors who can be individuals or companies, eliminating intermediaries such as traditional financial institutions. Its technology allows investors to receive competitive returns on their contributions in a simple, fast and efficient way, while applicants obtain loans faster, without bureaucracy and at a lower interest rate than in a bank.

Canada

Katipult CEO finalist for the prestigious EY Entrepreneur Of The Year 2017 (Digital Journal), Rated: A

Brock Murray, CEO of Katipult, a SaaS company that enables firms to design, setup, and manage an investment crowdfunding, Peer to Peer lending, or investor management platform, has been named a finalist in Ernst & Young’s Entrepreneur of the Year in the Emerging Technology category in Prairies.

Authors:

George Popescu
Allen Taylor

Friday July 14 2017, Daily News Digest

Visa revenues

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-D. IEG Holdings cites slim margins, weak underwriting as reasons for LendingClub offer. Bank execs say UK sets the standard for fintech regulation. Rocket Internet sells stake in Lendico. Today’s main analysis: Visa’s international expansion. Today’s thought-provoking articles: DBRS Student Loan ABS report (a […]

Visa revenues

News Comments

United States

United Kingdom

China

European Union

International

Israel

India

Latin America

Canada

News Summary

United States

DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-D (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-D (SoFi 2017-D):

— $245,000,000 Class A-1FX Notes at AAA (sf)
— $266,000,000 Class A-2FX Notes at AAA (sf)
— $40,000,000 Class B-FX Notes at AA (sf)

DBRS Student Loan ABS report (DBRS), Rated: AAA

In this commentary, DBRS provides the following:
— A review of Q1 2017 student loan ABS performance and H1 2017 student loan ABS issuance.
— An outlook for future student loan ABS issuance and the trends expected in H2 2017.
— Analysis and highlights of student loan collateral performance.

Download the full report here.

IEG Holdings Highlights the Urgency of LendingClub Correcting its Flawed, Slim Margin “Broker” Business Model and Weak Underwriting Standards (Sys-Con), Rated: AAA

IEG Holdings yesterday announced the commencement of a tender offer to exchange four shares of IEG Holdings’ common stock for each share of LendingClub common stock, up to an aggregate of 40,345,603 shares of LendingClub common stock, representing approximately 9.99% of LendingClub’s outstanding shares as of April 28, 2017, validly tendered and not properly withdrawn in the offer.

IEG Holdings Corporation (OTCQB: IEGH) (“IEG Holdings”) cautions shareholders of LendingClub Corporation (“LendingClub”) against dismissing IEG Holdings’ tender offer. IEG Holdings believes that the LendingClub board of directors should be held accountable by its shareholders for continuing to pursue a flawed, slim margin “broker” business model. IEG Holdings urges LendingClub to enter into negotiations with IEG Holdings, rather than simply dismissing the tender offer.

FLAWED, SLIM MARGIN, LOSS-MAKING BUSINESS MODEL

Despite brokering more than $26 billion of loans since inception, LendingClub still reported a loss of $29.8 million for Q1 2017 and loss of $146.0 million for the 2016 full year. Transitioning to a balance sheet lender likely would significantly increase gross margins, without a significant change in customer acquisition costs.

WEAK UNDERWRITING STANDARDS

A recent media report by Bloomberg indicates that:

  • LendingClub only verified income about a third of the time for one of the most popular loans it made in 2016, and
  • If LendingClub finds errors in a loan application, it may still approve the loan.

LACK OF COMPANY-OWNED STATE LENDING LICENSES

LendingClub doesn’t hold individual state lending licenses and instead utilizes the services of a Utah-based bank. This raises regulatory risks around issues such as the potential breaking of individual state interest rate caps and compliance.

POOR STOCK MARKET PERFORMANCE AND ZERO DIVIDENDS TO SHAREHOLDERS

LendingClub’s share price has decreased 79% since its initial public offering in December 2014, dropping from $25.74 in December 2014 to $5.39 yesterday, after reaching a low of $3.51 in May 2016. In addition, LendingClub has never paid, and has no reported intention to pay, a dividend to shareholders.

IEG Holdings’ Reasons for the Offer

IEG Holdings believes that changing LendingClub’s business model to a balance sheet lender model would enable the company to generate significantly higher gross margins, provide significantly higher long duration cash flow from customers, build increased customer goodwill with customers and enable increased customer refinancing. The longer duration cash flow would provide more flexibility in reducing lending volumes during periods when underwriting risk levels are rising, as the company would be less dependent on brokering new loan deals every day to provide revenue.

  • IEG Holdings intends to encourage LendingClub to undertake substantial costs cuts by terminating excess employees, achieving substantial cuts in advertising/marketing costs and other significant cost cutting measures;
  • IEG Holdings intends to encourage LendingClub to transform its broker business model with low gross margins and high volumes to focus on high gross margin unsecured loans to near prime clients with strong underwriting, company owned individual state licenses and retention of loans on its balance sheet to secure long duration cash flow from longer term loans; and
  • The acquisition of LendingClub shares would be substantially net asset per share accretive for IEG Holdings stockholders and substantially increase shareholder equity.

New partnership turns PayPal into Apple App Store payment option (Banking Tech), Rated: A

This week the company announced a partnership with Apple to allow shoppers pay for their purchases at the App Store using PayPal. The feature will be available for users of a variety of Apple devices including iPhone, iPad, Apple TV, Apple Watch, and iPod.In addition to the App Store, PayPal will be a payment option for a variety of Apple services including Apple Music, iTunes, and iBooks.

Finicity and JP Morgan Chase pair for data share (Banking Tech), Rated: A

Data aggregation provider Finicity has signed an agreement with JP Morgan Chase to let the bank’s customers choose data to share with apps.

The companies will use a direct API to allow Chase customers to share information with the apps and services that Finicity supports. According to the firms, this tokenised access will eliminate the need for customers to share their Chase credentials with third-party apps.

Paypal Holdings Inc (NASDAQ:PYPL): Beginning of Market Dominance (Library for Smart Investors), Rated: A

Paypal Holdings Inc (NASDAQ:PYPL) is getting investors attention after the stock touched fresh highs amid a new partnership with Apple.

The stock is up over 43% since the start of the year.

In the first quarter, PayPal saw a jump of 10.3% in monthly active users on year-over-year basis. The total number of transactions also increased by 22.5% in the period.

In the first quarter, Venmo processed $6.8 billion in total payments, a 100% growth on year-over-year basis. Venmo is slated to grow more as the company expands to small businesses.

WEALTHTECH — THE DIGITIZATION OF WEALTH MANAGEMENT (FT Partners), Rated: A

WealthTech companies are targeting inefficiencies that span the entire wealth management value chain, from client prospecting to investing to portfolio management and reporting. Benefits include more efficient workflows, improved client experiences and greater transparency. Regardless of their value proposition, WealthTech companies are seeking to improve overall wealth management and investing.

This report highlights a number of key trends within the broader WealthTech industry such as…

  • Growing number of advisors joining the independent channel
  • Incumbent financial institutions are entering the robo-advice space
  • Increased demand for alternative investments
  • Financial planning trending towards goal-based approaches
  • Higher levels of active risk management
  • Commoditization of portfolio management software is leading to expanded offerings
  • RIA custodians evolving into more holistic roles

Download the full report here.

Wells Fargo trims auto loans as market cools, risk overhaul kicks in (Reuters), Rated: A

Wells Fargo & Co (WFC.N) is scaling back and remolding its auto lending business in response to growing stress in the market, as well as a bank-wide push for more centralized risk controls.

Wells, which was the No. 2 U.S. provider of auto loans less than a year ago, has already cut quarterly originations by nearly 30 percent over the nine months leading into March 31, according to a May 11 company presentation. It has also begun consolidating the collections operation in a move that people familiar with the business say could eliminate hundreds of jobs, after a new head of auto finance took the reins in April.

5 Fintech Startups Under the Radar (Bank Innovation), Rated: A

Spotme

This New York City-based startup facilitates micro-loans between borrowers and lenders, allowing users to set up pretty much all the parameters of a loan themselves: users can control the amount, the interest rate, the payback period, and the way they are reimbursed for the loan themselves.

Ledger

Ledger might be able to help out there: this San Francisco-based startup allows users to “open tabs with friends,” boiling down a transaction to just 3 clicks. By connecting with a user’s financial accounts (protected by “military-grade” cybersecurity, according to the company), users are able to aggregate all of their transactions in one place, as well as receive notification about when transactions are due.

Wallio

More and more companies are striving to solve the main problem when it comes to personal finance management services: how do you make a user actually take the financial advice that is being offered?

Wallio starts off the week by giving a user an allocated amount of money they can spend for that week, on whatever the user wants (expenses and savings are already factored into this amount). If a user underspends, great: Wallio will allow that user to put that money towards a goal. If a user overspends, Wallio will simply allocate less money for the user to spend next week.

Samwise

This robo-investing startup allows users to turn their existing brokerage account into an autonomous investing account using machine learning algorithms.

OnePebble

Invest, and make a difference in the world at the same time: that’s the dream of OnePebble, an online investment broker/dealer that puts each investment toward companies “doing good in the world.”

3 Investing Trends to Keep on Your Radar (Morningstar), Rated: A

Trend: Passive products continue to gain assets.

This is the trend shaping the investment management industry today. Asset flows to passive products, both traditional index mutual funds and exchange-traded funds, began in earnest following disappointing active-fund performance during the financial crisis.

Trend: New ways to hire–and pay for–financial advice. 

Robo-advisors provide automated advice for a low annual fee as low as 0.25% or even less. Meanwhile, mutual fund companies and brokerage firms may provide advice for customers who have amassed sufficient assets at the firm. For example, Vanguard Personal Advisor Service charges 0.30% and is available to investors with at least $50,000 in assets at the firm. (The service combines human financial advisors with robo-advisor technology.)

What to watch out for: The profusion of different business models means that the business of selecting an advisor is more complicated than ever. Robo-advisor fees might look like a screaming buy relative to the fees that a full-service human advisor charges, but the robo won’t be able to give you advice on nonportfolio matters like whether to pay off your mortgage or purchase long-term care insurance.

Trend: An increased emphasis on behavioral factors that can affect investor outcomes.

What’s to like: Many robo-advisors have also embedded behaviorial research into their services.

What to watch out for: Behavioral finance is trendy right now, and with any trend comes the opportunity for gimmickry. Beware of advisors who are using behavioral finance as their main hook to snag clients; high-quality advisors have been employing behavioral finance into their practices for years.

US Tax Professionals Tackles the Tax implications of Crowdfunding (Digital Journal), Rated: A

It’s important to understand that all the income a person receives, regardless of the source, is considered taxable income in the eyes of the IRS. That includes crowdfunding dollars.

Even if the campaign only raised the projected $15,000 and no gifts were offered, the money would still be considered taxable income and need to be reported as such on a tax return.

Generally, crowdfunding revenues are included in income as long as they are not:

  • Loans that must be repaid;
  • Capital contributed to an entity in exchange for an equity interest in the entity; or
  • Gifts made out of detached generosity and without any “quid pro quo.” However, a voluntary transfer without a “quid pro quo” isn’t necessarily a gift for federal income tax purposes.

Morgan Stanley digital chief: AI to help advisers, not ‘cyborg bots’ (Financial-Planning), Rated: A

Advisers tasked with processing a “mountain of information” will get a reprieve through artificial intelligence, according to Morgan Stanley Wealth Management’s chief digital officer.

“What we want to do is, with one click of a button, they can take action on that research report to all their clients within minutes, not hours, not phone calls,” Hassan said. “That’s the promise of what we’re trying to build.”

Rival firms have shown they’re headed down a similar path. Like Morgan’s planned offering, the UBS-SigFig service will save advisers’ time through automated messaging to clients on important dates, according to Richard Steinmeier, the head of the UBS Wealth Advice Center.

Congress Should Use Congressional Review Act to Strike Down Ill-Advised Arbitration Rule (Daily Signal), Rated: B

Cutting through the hyperbole that the arbitration rule protects consumers from “unfairness” that would deny them “their day in court,” this rule is in fact highly anti-consumer and harmful to innovation.

This regulation could have particularly harmful effects on FinTech innovations, such as peer-to-peer lending.”

How much money do Arizonans spend playing the lottery? Less than most Americans (AZ Central), Rated: B

Arizonans on average shelled out $100.85 per capita on lottery tickets in 2015, according to the study by LendEDU, based on preliminary data for state government finances collected by the Census Bureau. For Americans overall, the per-capita figure was $206.69.

United Kingdom

UK setting the bar for fintech regulation, bank execs say (SNL.com), Rated: AAA

U.K. authorities have created a world-leading regulatory environment for the burgeoning fintech industry that is being emulated elsewhere, according to bankers.

The Financial Conduct Authority’s “sandbox,” a program launched in 2015 to let companies test innovative ideas under close regulatory supervision, has been particularly helpful, she said.

Meanwhile, initiatives such as FCA-organized hackathons — or “TechSprints” as it prefers to call them — have been particularly appreciated by the industry, according to Sophie Guibaud, vice president of European expansion at Fidor Bank AG, a German online lender that was bought by Groupe BPCE in 2016. These events invite market participants to come up with technological solutions to certain problems, such as financial issues faced by people with mental health problems.

The U.K. is home to more fintech companies valued at more than $1 billion than the rest of Europe put together, according to an April 2017 report by technology investment bank GP Bullhound. Three U.K.-based companies, Funding Circle, Paysafe and Transferwise, have crossed that threshold, and GP Bullhound said that it does not expect London to relinquish its lead, due to its prominence in international financial services.

Comparison site GoCompare invests in mortgage robo-adviser (AltFi), Rated: A

Financial comparison site GoCompare is hoping to transform the UK’s mortgage application process by investing in MortgageGym, a digital mortgage robo-adviser.

Users can complete a free application within 15 minutes on MortgageGym and receive matches within 60 seconds, as well as robo advice and access to live advisers. The website will use automated algorithms to match applicants with the best mortgage providers.

The House Crowd hits £50m via mix of P2P and crowdfunding (P2P Finance News), Rated: A

THE HOUSE CROWD has hit the £50m funding target it set out to achieve in October last year.

The Manchester-based property platform started targeting institutional money at the end of last year to achieve its first £50m of funds channelled to property and buy-to-let borrowers, through both its peer-to-peer side and its crowdfunding arm.

The firm raised over £15m in the six months to early 2017, while a loan it closed last month added another £600,000.

Fintech CurrencyCloud tapped up investors months before Google raise (Business Insider), Rated: A

CurrencyCloud, which provides a platform to process international payments, raised £9.5 million from its existing investors in December 2016. The company had £10.5 million in the bank at the end of the month, accounts show, suggesting the platform had around £1 million left at the time of the fundraising.

The volume of payments jumped by 110% to 1.5 million but net revenue from currency transactions increased by just 10% to £3.2 million. Meanwhile, administrative expenses rose by 54% to £13.9 million as CurrencyCloud invested in “recruiting staff, developing our technology infrastructure and operations services, and moving to new office premises.”

P2P fund share issues boost investment trust sector (P2P Finance News), Rated: A

FUNDRAISINGS by Honeycomb and the Funding Circle SME Income Fund (FCIF) helped push share issues to record levels in the investment trust sector for the first half of 2017.

Secondary issuances raised £3.3bn in the first six months of the year, trade body the Association of Investment Companies has revealed, up from £1.8bn at the same time in 2016.

FCIF raised £142m in conversion shares in April, the largest total in the specialist debt sector, while the Honeycomb investment trust raised £105m through a ordinary share issue.

Alternative Credit funds drive record cash raise (AltFi), Rated: A

Assets in investment trusts have hit an all time high thanks in part to a huge swathe of secondary issuance in closed-ended funds’ shares.

In the first half of 2017, the most poplar area of the investment trust market was Infrastructure – in terms secondary issuance – raising £1.2bn. This was followed by Alternative Credit at  £514m. Funding Circle SME Income raised the largest total in the sector securing £142m via its C share issue, followed by Honeycomb Investment Trust (£105m).

China

The number of Online Financial platforms in China Exceed 19,000, ranking the first place of the world. (Xing Ping She), Rated: AAA

According to data from National Institution of Internet Financial Risk Analysis &Technology,there are more than 19,000 online financial platforms across China, including over 6000 online lending platforms, nearly 3500 online assets managers, and 800 crowdfunding platforms. The total cumulative volume of internet loans, crowdfunding and internet payment have reached to 70 trillion RMB (US$ 10.33 trillion). Zhou Hongren, director of the National Committee of Internet Finance Professional Technology, claimed that, “No matter in terms of quantity or scale, China has already become the largest international finance marketplace around the world.”

European Union

Rocket Internet Sells Stake in Lendico Startup (Handelsblatt), Rated: AAA

Incubator firm Rocket Internet has sold its majority stake in peer-to-peer lender Lendico to Arrowgrass, Handelsblatt has learned, as the British hedge fund acquired complete ownership of the Berlin startup.

The partners to the transaction agreed to keep the purchase price confidential. Rocket Internet, which specializes in helping online startups get off the ground, most recently valued its 50-percent-plus stake in Lendico at €140 million ($159 million).

Funding Circle Germany Takes a Fresh Start (Crowdfund Insider), Rated: AAA

Germany is a huge SME and VSME (very small business) credit market. But it is not as mature a market for online marketplace lending as the UK, the US, or even the Netherlands. This partly explains why Funding Circle Germany’s early loan book underperformed. Now the platform is starting afresh to match its market’s reality.

With offices and business in Germany, the Netherlands and Spain, Zencap had originated €35 million in loans to 500 SMEs at the time of its acquisition. Its operations were very small in comparison with the more than $1.5 billion originated by Funding Circle in the US and the UK at the time (meanwhile Funding Circle passed the $3 billion mark).

The second reason for starting afresh, was a need to revisit the credit model. Since January, the new German team has been busy recalibrating and restarting the German operations.

Loan origination resumed at previous level in the first half of 2017 and is expected to grow again in the second half of this year.

Spanish Fintech Industry Comes into its Own (Finance Magnates), Rated: A

The Spanish fintech ecosystem has been a steadily growing force over the past few years, swelling from just fifty financial technology startups in 2013 to well over three hundred in 2017. This rapid surge is only going to continue with this number estimated to hit four hundred companies by 2018.

In terms of the value of the operations, this sector passed rose from just €35 million in 2014 to €206 million in 2016, justifying a 600 percent growth in just two years.

According to the Spanish Association for Fintech and Insurtech (Asociación Española de Fintech e Insurtech – Aefi), companies operating in this space in Spain are going to create a total of 10,000 jobs in 2017 alone.

While the value offintech operations in Spain is increasing, two areas that constitute the most focus are the crowdfactoring or invoice factoring crowdfunding platforms – these saw a total of €120 milion euros in 2016, that concentrate most of the operations domestically, followed by crowdfunding with €43.5 million and crowdlending or p2p lending with €42 million.

International

Visa Expands Its Footprint in Europe (Market Realist), Rated: AAA

In May 2017, Visa announced that in order to give consumers more control and make transactions transparent, the company will create digital card management experiences for its partners. Visa’s partners include financial institutions. Since the new offerings will lead to more transparency, Visa expects to see volume growth in fiscal 3Q17. Market analysts expect Visa to report revenues of $4.36 billion in fiscal 3Q17—a decline of 2.7%.

 

What Can Visa Expect from Russia, China, Japan, and India?

In fiscal 2Q17, there was growth in Visa’s cross-border business due to Russia’s developed economy. Visa implemented ~1,600 point-of-sale terminals. As a result, payment volumes are expected to grow in fiscal 3Q17.

Management thinks that obtaining a domestic license in China is a time-consuming process. Visa is expected to witness lower revenues and payment volumes from China due to discontinued dual branded cards.

Management has a positive outlook on Japan’s economy due to digitization. Japan’s government has become more inclined to use digital and electronic payments.

In fiscal 3Q17, India could be a major contributor to payment volume growth.

Visa has delivered a return on equity of 16.2% on trailing 12-months basis. Other consumer financial peers (XLF) have delivered the following return on equity on a trailing 12-month basis:

  • American Express (AXP) – 25.1%
  • MasterCard (MA) – 75%Discover Financial Services (DFS) – 21.10%

Visa Expects to Benefit from Its European Business

Visa’s (V) acquisition of Visa Europe allowed the company to enhance its global reach. The main agenda behind the acquisition was to bring innovation to the European market. Visa had been working closely with its partners and clients. The company also plans to create new services and products.

Israel

THE SURPRISING COUNTRY LEADING THE FINTECH REVOLUTION (Ozy.com), Rated: AAA

The country that gave the world smart drip irrigation and the Epilady has also been an early and enthusiastic adopter of financial technology, as in mobile banking apps, digital wallets, online lending and other services that manage moola. In fact, a survey of selected industrialized countries shows that:

As for the specifics, 50 percent of Israeli adults use mobile banking apps at least once a month. In the U.S., it was 38 percent; the U.K., 37 percent; in France, 35 percent; and in Germany, a surprisingly anemic 28 percent.

The five largest banks in Israel control more than 90 percent of the market, and as Sandra Octaviani, research lead for fintech at the University of Utah’s Center for Innovation in Banking and Financial Services, notes, traditional banks tend to serve low-risk, highly profitable clients, which creates an opportunity for nimbler fintech firms to swoop in and serve the underserved.

India

RBI wary of first loan default guarantee cover (India Times), Rated: AAA

The Reserve Bank of India is learnt to be wary of peerto-peer lending platforms offering any FLDG, or first loan default guarantee, cover to institutional lenders for any lending they do through these technology startups, said sources familiar with the discussions.

While various lending entities are keen on exploring this space as a cheap source of customers, they often look for a security cover against loans going bad. Experts say such guarantees or covers might go against the intentions of the central bank.

SME Lending Based on Payment History is the Next Big Wave in Fintech (BW Disrupt), Rated: A

ftCash aims to empower micro-merchants and entrepreneurs with the power of electronic payments and loans with zero upfront cost and no monthly rentals. Merchants are able to offer their customers multiple payment methods including credit cards, debit cards, net banking, mobile wallets, PayPal and more.

Nonethless, credit lending is the next big wave of Indian fintech. Lodha explains, “SME Lending based on payment history will be next big wave in fintech. On an active basis, it allows a lender to decide the paying ability of a merchant/business and the recollection of these loans can be done from the payment platform itself. The combination of the payments data along with GST data provides deeper insights into a business. We at ftcash are heavily invested in this idea and believe there is a great potential for scale here.”

Latin America

Venture fund for Latino entrepreneurs, fintech in Mexico  (ImpactAlpha), Rated: AAA

Financial technology, or fintech, startups offering digital payment, remittances and lending services, could capture 30% of Mexico’s banking market within 10 years, according to Finnovista, a fintech accelerator. Six in 10 Mexicans are unbanked. Financial exclusion is a problem but “also an opportunity,” Francisco Meré, the director of Bankaool, one of the first online-only banks in Mexico, told the Financial Times[paywall]. “The cost of engaging a customer through technology is a fraction of using a branch.” Clip has grown to become one of Mexico’s largest digital payment providers (Accion sold its stake in February). Kubo Financieroprovides peer-to-peer lending; Albo, mobile-based banking; and Kueski, a digital micro-lender — all have secured venture backing. More than 150 fintech, or financial technology, firms now operate in Mexico, giving Mexico 35% of fintech companies serving the under- and un-banked in Latin America.

AFLUENTA INCORPORATES THE MEXICAN INVESTMENT FUND IGNIA TO ITS PRESTIGIOUS LIST OF SHAREHOLDERS (AltFi), Rated: A

Afluenta (www.afluenta.com), a leading online credit platform for the people of Latin America, announced the addition of Mexican venture capital fund IGNIA to its group of shareholders. IGNIA is a venture capital fund specializing in investments in entrepreneurial companies with great potential for growth, whose services meet the needs of the emerging middle class.

In Mexico, where local credit to the private sector is below 35% of GDP, compared to 68% in Brazil, Afluenta aims to revolutionize the market with its human approach to credit and investment.

Afluenta connects borrowers with investors who can be individuals or companies, eliminating intermediaries such as traditional financial institutions. Its technology allows investors to receive competitive returns on their contributions in a simple, fast and efficient way, while applicants obtain loans faster, without bureaucracy and at a lower interest rate than in a bank.

Canada

Katipult CEO finalist for the prestigious EY Entrepreneur Of The Year 2017 (Digital Journal), Rated: A

Brock Murray, CEO of Katipult, a SaaS company that enables firms to design, setup, and manage an investment crowdfunding, Peer to Peer lending, or investor management platform, has been named a finalist in Ernst & Young’s Entrepreneur of the Year in the Emerging Technology category in Prairies.

Authors:

George Popescu
Allen Taylor

Monday July 10 2017, Daily News Digest

marketplace securitizations PeerIQ

News Comments Today’s main news: LendingClub receives unsolicited offer from IEG for nearly 10% stake. Goldman looks to spin off Simon at $75M valuation. Assetz Capital to expand UK broker network. Stripe integrates with Alipay, WeChat. Australian advisers drop big banks. Today’s main analysis: MPL securitization tracker. Will China Rapid Finance turn the tide for Chinese IPOS in the U.S.? […]

marketplace securitizations PeerIQ

News Comments

United States

United Kingdom

China

European Union

International

Australia

Canada

Middle East

News Summary

United States

LendingClub gets unsolicited offer from IEG for 9.99 pct stake (Business Insider), Rated: AAA

LendingClub Corp said it had received an unsolicited offer from IEG Holdings Corp to buy a 9.99 percent stake in the online lender.

IEG’s proposal offers two shares for each LendingClub share, and is at a 38 percent discount to LendingClub’s Thursday’s close.

The online lender urged its stockholders to ignore the offer, if and when made.

Marketplace Lending Securitization Tracker Q2 2017 (PeerIQ), Rated: AAA

 Some highlights:
  • This quarter we see quarterly issuance of $3.0 Bn, representing 76% growth over 2Q2016.  To date, cumulative issuance equals $21.9 Bn across 92 deals.
  • Multi-seller club deals and self-sponsored deals have emerged at several leading platforms.  All deals were rated in this quarter, including record-sized consumer deals from SoFi, large multi-seller deals from Marlette and Prosper, and the first self-sponsored, near-prime deals from Lending Club and Upstart.
  • Dealer and rating agency participation continues to intensify. Fitch rated its first Consumer MPL, Prosper’s PMIT 2017-1, indicating broadening acceptance across ratings agencies. Goldman Sachs, Morgan Stanley, and Deutsche Bank lead over 47% of MPL ABS transaction volume. Noteworthy is the rising presence of BNP Paribas, which co-managed CLUB 2017-NP1. DBRS leads the rating agency league table, and Kroll dominates the unsecured consumer sub-segment.
  • New issuance spreads continued to tighten and flatten—a credit friendly environment for securitization.  In 2Q2017, we saw spreads tighten in riskier tranches of consumer ABS, indicating strong investor appetite for MPL ABS paper in the market.
  • Delinquency rates have continued to increase across in several verticals—such as subprime auto, student, and personal loans—due to exposure to riskier borrowers, a re-leveraging of consumer balance sheets, “loan stacking,” and shifting payment priority trends.
  • Initial pricing is near record tight levels. Lending Club’s inaugural deal priced at Libor + 110, second only to Marlette’s MFT 2017-1 (L+100) on the Class A bond. Overall, spreads have tightened with greater investor acceptance in an overall “risk on” environment.

Get the full report here.

Source: PeerIQ

Online Lenders Work Wall Street For Capital (ValueWalk), Rated: AAA

Equity financing events dropped to $2.2 billion in deal value across 145 transactions in 2016 down from $5.1 billion across 174 deals in 2015. This pace has continued to trend down in 2017, with 25 deals completed through March, yet SoFi’s $453 million Series G has bumped the total deal value to $754 million.

Instead of an IPO, Prosper has resorted to a major down round to stop the bleeding. The company is raising a $59 million Series E venture round that values the company at $460 million (post-valuation), a steep drop from the $165 million series D raised in 2015 that valued the company at a postval of $1.87 billion.

Goldman Sachs is looking to spinoff one of its tech bets at a $ 75 million valuation (Business Insider), Rated: AAA

Goldman Sachs is looking to sell a stake in one of its fintech bets — an online platform for retail bond investors called Simon — that would value the web app at about $75 million, according to The Wall Street Journal.

The investment bank launched Simon — which stands for Structured Investment Marketplace and Online — a couple years ago to help clients more easily learn about structured investments and execute transactions.

How financial advisers can “bridge the digital” divide (Investment News), Rated: A

Of those surveyed, 55% said that an aggregated view of their key financial accounts would be “extremely useful” or “very useful.” An account reporting dashboard was the second most popular tool, at 50%, followed by customized notifications and alerts (44%) and financial calculators (43%). Each of these tools provides investors with easy access to their own financial information in an easily digestible way. The good news is that advisers agree with investors on what is “extremely” or “very” useful, with financial account aggregators (69%) and account reporting dashboard (67%) being seen as the top tools.

VW Credit, Inc., Invests In AutoGravity Leading Financial Technology For Vehicle Financing (Cision), Rated: A

VW Credit, Inc. (VCI) today announced that it has committed to make an equity investment in AutoGravity, pending customary regulatory approvals. With this strategic investment, VCI is supporting its goal to create a digital experience that enhances the customer financing process. AutoGravity is a FinTech pioneer facilitating car shopping and financing with the power of the smartphone.

In addition to this investment, VW Credit, Inc., has worked with AutoGravity to bring Volkswagen and Audi financing directly to car buyers across the United States. Through this project, VW Credit, Inc., has launched the Volkswagen Creditsmartphone app, powered by proprietary AutoGravity technology and available for iOS and Android. Finance options from Volkswagen Credit are now available on the AutoGravity platform, extending the range of options available to more than 400,000 consumers who have downloaded AutoGravity. Volkswagen dealers now can benefit from a new source of potential car buyers.

How the U.S. compares to others in fintech use (Benefits Pro), Rated: A

Why OCC fintech charter may have life under new leader (American Banker), Rated: A

With legal challenges and uncertainty about the agency’s leadership, the Office of the Comptroller of the Currency’s fintech charter appeared dead in the water just months ago. But industry observers say the OCC’s interim chief is emerging as a potential savior for the controversial initiative.

“We’re seeing an assertive OCC,” said Brian Knight, a senior research fellow at the Mercatus Center.

Podcast 108: Perry Rahbar of dv01 (Lend Academy), Rated: A

In this podcast you will learn:

  • How Perry’s time at Bear Stearns during the financial crisis influenced his thinking on transparency.
  • What problem dv01 is trying to solve.
  • The different ways they work with securitization buyers and whole loan buyers.
  • The details about their reporting partnership with SoFi.
  • How they are able to create data standardization with disparate data from many platforms.
  • How they are using Experian data in their partnership.
  • Why updated credit attributes on loan data is going to be critically important when the credit cycle turns.
  • When and how dv01 is going to expand beyond the online lending space.

SoFi Announces Partnership With Alaska Air (Crowdfund Insider), Rated: A

Online lending platform SoFi announced this week it has teamed up with Alaska Air to help its new members save money on student loans while also earning extra summer travel points.

CreditEase Fintech Fund continues to invest in strong Fintech companies in CB Insights’ Global Fintech 250 (Broadway World), Rated: A

As many as 13 companies backed by investments from CreditEase Fintech Investment Fund (CEFIF) were named today by CB Insights to the prestigious global Fintech 250, a select group of emerging private companies working on groundbreaking financial technology. The list was revealed during The Future of Fintech conference in New York on June 27th.

The winners in relation with CreditEase investments include Addepar, NAV, Tradeshift, Upgrade, Circle, TruMid, WorldCover, TrueAccord, Bocheng (CreditEase Insurance Agency) and others.

Apple Bank here we come (LinkedIn), Rated: B

According to the limited information available, Apple will automatically issue a virtual payment card to all iOS users, allowing them to receive and hold money in Apple Wallet.

This isn’t Venmo. Or even Paypal. We aren’t linking up accounts and plastic cards here. We are issuing cards. Virtual cards. To all iOS users.

How soon will they start to pay interest? What about something like Apple Wealth? The scale and impact really boggle the mind. We are breaking new ground here. Only WeChat and Alipay are operating on this scale, but let’s face it, they are still one trick ponies operating in a single market.

Private bank Brown Brothers Harriman creates fintech position (American Banker), Rated: B

Brown Brothers Harriman promoted Michael McGovern to the newly created position of head of investor services fintech offerings, as custodial banks ramp up digital offerings in the face of competition.

United Kingdom

Assetz Capital to Expand UK Broker Network to Further Scale P2P Business (Crowdfund Insider), Rated: AAA

Assetz Capital is looking to increase its active broker network significantly in the next two years, and has announced a strategy to further support brokers through several methods.  This includes using its network of nationwide Regional Relationship Directors to locally support more brokers, further product and pricing improvements, dedicated staff in the head office and a series of regional broker events which are specifically aimed at educating and supporting brokers.

Funding Options founder sees limit to P2P growth (P2P Finance News), Rated: A

THERE is a limit to how much peer-to peer lending platforms can grow, according to Funding Options’ founder Conrad Ford.

The head of the online small- and medium-sized enterprise (SME) finance aggregator told Peer2Peer Finance News that there are lots of “smallish, niche opportunities” for P2P firms but that they would not be able to graduate to originating larger facilities.

Authorised P2P property lender clinches seed funding (AltFi), Rated: A

LandlordInvest, a property-focused peer-to-peer lender, has clinched a round of seed funding from Alan Gabbay, director of O&H Properties, a London-based privately owned investment firm with assets valued at around £1bn. Further details of the investment have not been disclosed. The platform is also backed by LNK Capital, and angel investors Reece Chowdhry and Lee Josephs.

FCA applications have cost the P2P sector up to £2m (P2P Finance News), Rated: A

THE FINANCIAL Conduct Authority (FCA) has pocketed up to £2m from full authorisation of the peer-to-peer lending sector, figures suggest.

A freedom of information request by Peer2Peer Finance News shows that the City watchdog has considered 146 applications for full permission from P2P platforms since 2014 – when the FCA took over regulating the sector – with firms paying application fees of £600 to £15,000 depending on their income at the time.

This reveals that the regulator has raised up to £2.1m if all firms paid £15,000, or a minimum of £87,600 if all firms paid the lowest fee of £600.

Happy Birthday, Landbay!: P2P Platform Celebrates Three Years of Online Lending (Crowdfund Insider), Rated: A

On Friday, UK-based peer-to-peer lending platform Landbay celebrated its third birthday. The online lender revealed that in the past three years, it has lent a total of £47.31 million, which is funding buy-to-let mortgages throughout the UK.

New P2P business lender launches as Appointed Representative (AltFi), Rated: A

Huddle Capital is the UK’s newest peer-to-peer business lender, but its route to market is somewhat different to those that went before it. Huddle launched too late to operate under the FCA’s interim permissions regime, and achieving full authorisation – as even the biggest peer-to-peer lenders have discovered – takes time.

Huddle has come to market as an Authorised Representative of fully authorised peer-to-peer firm rebuildingsociety.com.

British venture capital investing trends in the tech sector (RealBusiness), Rated: A

Peer-to-peer lender Funding Circle and mobile banking service Atom Bank secured the biggest amounts of British venture capital investing, raising £83m apiece. In fact, the five largest deals accounted for a third of overall British capital investing.

Indeed, 27 fintech companies secured £262m from 49 investors.

People are raising hundreds of millions selling digital coins online (Business Insider), Rated: B

Over half a billion dollars has been raised through so-called “Initial Coin Offerings” (ICOs) since the start of the year, according to Richard Kastelein, a partner at the Cryptoassets Design Group, a company that helps launch ICOs.

Gnosis, a prediction market for digital currency Ethereum, raised $12 million in just 10 minutes in April. Brave, a new web browser startup set up by the founder of Mozilla, made that look pedestrian, raising $35 million in less than 30 seconds selling “Basic Attention Tokens” last month.

To raise money through an ICO, a company issues a new digital currency that can either be spent within its ecosystem, a bit like Disneyland dollars, or used to power part of the business, like the fuel you put in your car.

China

Bitcoin-Friendly Stripe Strikes Major FinTech Deal with China’s Alipay, WeChat (Cryptocoins News), Rated: AAA

The integration will now enable all Stripe merchants in over 25 countries make money from Chinese consumers. Alipay, the payments platform of Ant Financial – the financial arm of e-commerce giant Alibaba has over 500 million users on its platform. WeChat Pay, the digital payments platform of WeChat – China’s most popular messaging app – has over 600 million users. The two firms were responsible for handling near $3 trillion in 2016, according to a UN report.

The integration coincides with the payments processor’s official launch in Hong Kong.

Alibaba-Backed Company Could Turn The Tide For Chinese IPOs in US After String of Busts (Frontera News), Rated: AAA

The pipeline of Chinese (FXI) IPOs planning to list on the New York Stock Exchange (SPY)(NYSE) (NDAQ)could make 2017 the biggest year for the country’s stocks since 2014 when Alibaba (BABA) listed its shares.

2016 saw new listings worth $119.4 billion on the New York Stock Exchange with Chinese logistics company ZTO Express (ZTO) being the largest with an IPO worth $1.4 billion. So far in 2017, 137 IPOs worth $27.2 billion have been announced in the United states, 6.6% higher year over year.

Shares of Alibaba(BABA) are up 42% while shares of JD.com have surged 94.9% since their IPOs in2014. Shares of Baidu are currently trading 19 times of its IPO price.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On June 27th, The Alibaba Group financial affiliate rolled out an artificial intelligence-driven, image-recognition system to aid vehicle insurance claims adjusters in operating faster and more efficiently.

Yu’E Bao, one of China’s most popular internet-based funds, had amassed CNY 1.43 trillion of assets under management by the end of June, which has already exceeded the size of individual deposits at some of China’s largest banks.

The development of the Shenzhen Municipal Government Financial Services Office, the local banking regulator in Shenzhen, has released guidelines to prompt large and medium-sized banks to set up inclusive finance divisions, a move to increase loans for money-starved small firms, which is the latest native government’s effort to improve links in economy.

European Union

Visa’s Long-Term View On Klarna (PYMNTS), Rated: A

Though the actual terms of the Klarna investment, such as dollar size and the magnitude of the equity ownership stake, remain under wraps, the intent was more clearly shaped in an interview between Karen Webster and Bill Gajda, SVP of Innovation and Strategic Investments at Visa following the announcement.

This is Visa, after all, so … think credit — but transactional credit extended at the online point of sale. Think payments, but not just card-based payments, since Klarna today is a pay-by-bank account model. Think cards, but digital ones, accounts issued digitally by the Bank of Klarna.

That comes against a backdrop where Klarna’s transactions grew more than 50 percent over 2015 and volume was up 44 percent in Europe, driven by mobile commerce.

International

Fintech VC Funding on the Decline: What Next? (TechBullion), Rated: AAA

According to a call co-hosted by Lawrence Wintermeyerof Forbes and Peter Rentonof LendIt, fintech venture funding has declined both in the U.S and the U.K.

In 2016, venture funding for fintech in the US fell by 13% to $6.2 billion. Much of this decline is attributable to poor performance by lending platforms coupled with a contraction of investment as venture capital firms went slow on investments to figure out what would be the most profitable fintech investment in future.

The situation in the UK was not any better as there was even a greater decline in VC fintech investment during the same year, 2016. The sector attracted only $834 million worth of investment, translating to a 38% decline.

Despite the general decline in fintech VC funding, some sectors are still thriving. For instance, the payments subsector has witnessed sustained growth. Similarly, Insurtech is flourishing especially as far as seed investment is concerned.

Fintech enterprise solutions have increased with innovations around machine learning, distributed ledger, big data and cloud heralding the entry of global tech giants into the fintech sector.

How the FinTech revolution is changing the regulatory approach (Fintastico), Rated: A

Some national authorities have chosen to regulate fintech companies through preexisting frameworks. This mean using the same set of rules previously applied to all financial and banking institutions. Other authorities have preferred introducing specific and tailored regulations for fintech companies with the aim of adapting the system to the particular needs of the sector and of stimulating the growth of these companies.

Continental Europe

For instance, Germany does not have specific regulations for fintech credit platforms. In other words, a fintech credit company must be granted a banking license to pursue a credit activity; however, it must ascertain what type of service the business is providing to verify if the business offer might qualify as a regulated activity under general German financial regulatory laws.

As in Germany, the Netherlands does not have specific regulations for fintech companies. In the Netherlands, a fintech credit platform must obtain a regular license for credit activity from the Dutch Central Bank (“DNB”) and the Netherlands Authority for the Financial Markets (“AFM”) before providing credit to customers.

Several authorities have created specific and tailored regulations for fintech companies by introducing new licenses for fintech platforms. For instance, one of the most customized and effective one is in Switzerland. The national policymakers have introduced a new licensing category for fintech companies. This regulation would give the Swiss Financial Market Supervisory Authority (“FINMA”) the chance to analyze the fintech platforms individually and to tailor the appropriate regulation according to the activity they pursue.

China

The core of the regulatory framework is represented by the Guiding Opinions on Promoting the Sound Development of Internet Finance and the Provisional Rules for the Administration of the Business Activities of Online Lending Information Intermediary Institutions, respectively were amended by the People’s Bank of China and the China Banking Regulatory Commission (CBRC) with the assistnace of other authorities. However, there is something unusual characterizing the Chinese approach in the way it conceives fintech credit platforms as being essentially information intermediaries rather than credit intermediaries.

English-speaking countries

Some jurisdictions, such as United Kingdom, Australia and Singapore have introduced a different kind of approach to regulate fintech service providers. Using the innovative approach dubbed “regulatory sandbox”, fintech providers offer their products or services to a limited group of customers to minimize the risks, allowing them to test the market without any risk or regulatory sanctions.

United States 

Fintech providers in the United States are not subject to a fintech-specific regulatory framework. However, fintech providers are subjected to numerous and fragmented federal and state licensing or registration requirements depending on the activities of the company, and are also subject to laws and regulations at both the federal and state levels. Such complexity has appeared as an obstacle to the expansion and growth of the entire sector because it may subject fintech companies, looking to expand their business across the U.S., to regulation and supervision by the laws and regulations of different regulators.

FinTech players are taking away the remittance business from banks (Moneymail), Rated: A

Commercial banks remain the most expensive channel for sending money, pricing their services at 11.12%, while a post office is the least expensive channel (5.88%). As for money transfer operators, they were able to decrease the price of sending money to 6.24%.

Non-bank providers charge an average of 0.9% on £10,000, which is 4 times less than the average for banks.

 

Australia

Advisers quit big banks, AMP as watchdog intensifies scrutiny (The Australian), Rated: AAA

Financial advisers are deserting the major lenders, voting with their feet as the corporate watchdog heightens its scrutiny of the controversial cross-selling of wealth products in the “vertically integrated” lenders.

The big four banks and AMP, which control nearly half of all financial advisers in Australia, have bled more than 400 advisers in the last six months, according to Bell Potter analyst Lafitani Sotiriou.

Mr Sotiriou believes the rush for the exit has been caused by major banks limiting the freedom of their advisers to recommend products offered by rivals.

In the past six months, Commonwealth Bank, Westpac, ANZ, NAB and AMP have lost nearly 2 per cent of their market share in the country’s advisers.

SocietyOne’s lending tops $ 300 million, bucking personal credit weakness (The Sydney Morning Herald), Rated: A

SocietyOne will on Monday report its total loans arranged since it launched in 2012 have exceeded $300 million, with new lending in the first half of 2017 up 67 per cent on a year ago.

Rival P2P lender RateSetter has also funded about $130 million of loans since its inception in late 2014, according to its website, a figure that has roughly doubled since December.

Canada

Power Corp. venture capital fund plays the long game (Montreal Gazette), Rated: A

Faced with a changing market, one of Montreal’s largest companies is using an in-house venture capital fund to give it access to new technologies and new ideas.

Power Corp. of Canada (TSX: POW) runs some of the largest insurance and financial services companies in the country, it’s a market where new, technologically-enabled computers are emerging.

Last October, through three of its subsidiaries, Power launched Portag3, a venture capital fund that invests in fintech startups.

Last October, through three of its subsidiaries, Power launched Portag3, a venture capital fund that invests in fintech startups.

Middle East

FinTech comes to the fore in the GCC (Gulf Business), Rated: AAA

It’s an industry that is blossoming in earnest across the world, with investments worth $7.7bn taking place in China last year, $6.2bn in the US, and $1.5bn in the UK. It’s an industry that was valued at a staggering $867bn in 2016.

To date, the Middle East has accounted for only a small proportion of this, with regional FinTech companies expected to raise $50m in 2017, according to a report by Wamda Research Lab and Payfort – a marked improvement on last year’s $18m. In total, the report shows that only $100m has been raised in the past 10 years, while a 2016 report by FinTech Week said less than 0.1 per cent of global FinTech investments originated in the Middle East.

Authors:

George Popescu
Allen Taylor

Thursday June 29 2017, Daily News Digest

U.S. venture capital exits

News Comments Today’s main news: PayPal invests in LendUp. KBRA upgrades SoFi Consumer Loan Program 2016-1. Revolut spent 7M GBP on incredible sales growth. Today’s main analysis: VCs may face cash crunch as more tech startups stay private longer. Today’s thought-provoking articles: FSB issues report on fintech. Inside Ping An’s massive expansion. Chinese players pursue $3.4T international digital payments opportunity. Auto manufacturers leverage […]

U.S. venture capital exits

News Comments

United States

  • PayPal invests in LendUp. GP:”An outstanding partner to have for LendUp. With a little luck maybe Paypal and LendUp can also partner on customer acquisition.”AT: “I wonder why PayPal isn’t in the top 25 largest Internet companies. They’ve always had such great potential, but they never make the lists. Perhaps they aren’t diversified enough.”
  • KBRA upgrades SoFi Consumer Loan Program 2016-1. GP:”SoFi seems to go from high to even higher. “
  • Venture capitalists may face cash crunch, tech startups stay private longer. GP:”This could also be a hint that the companies private VC-driven valuations are not in line with the general public’s perception of their value”AT: “Not specific to online lending or fintech companies, but there is certainly an application to the alternative lending space. I can’t help but wonder if this is a long-term or shorter-term trend, but it seems to have started in the middle of last year some time.”
  • Global Debt Registry develops blockchain-based proof of concept for online lending. GP:”Slowly but surely we are starting to see the first blockchain applications that make sense.”AT: “There hasn’t been a single public ledger make a breakout, so these kinds of initiatives make me wonder if developments are based on demand or high hopes. I like this particular one, it’s interesting and innovative, but how many online lenders are asking for it?”
  • Home Point Financial grows third-party origination channel.
  • SEC’s robos handling is a big charade. GP:”The workings of a government are often obscure. I would call it politics. Perhaps one shoudl watch House of Cards TV series more often.”
  • Better Mortgage empowers consumers with a better price guarantee. GP:”I am not sure if this was necessary in order to convince people that a simpler and faster application is needed. In fact I usually advise companies not to price cheapest but to price as expensive as they can get away with as long as they provide real value to the users. Cheap has many issues: low margins, no profits, perceived lack of value, etc.”
  • Why Square is the ‘Tesla of payments’. GP:”I personally am not convinced that a Tesla car makes sense economically or practically over a gas or hybrid car at this time. There is a lot of hype and fashion into Tesla. I do have to recognize the Tesla cars look great though. I don’t think there is a hype behind Square, as it offers a really easy solution to accept credit card payments. Setting up credit card payments has always been a nightmare for all small businesses for no aparent reason. I am glad Square solved that.”
  • Which payment app is best? AT: “A pros/cons look at Venmo, Apple, and Zelle.”
  • Veem integrates with Intuit QuickBooks.

United Kingdom

  • Revolut spent 7M GBP last year to fuel growth. GP:”What one needs to look at is not how much money was spent but what was gained and built through that. I am happy with a company spending 100mil GBP if they build 200mil GBP in revenue per year. A ration of spending 7mil for a revenue of 2.3mil is not impressive, however lets see the impact of this spent the following year.”AT: “Customer acquisition costs money. Remember, it took Amazon 10 years to make a profit. Now they’re the largest Internet company on the planet. While Revolut’s sales went up more than 500% in one year, they spent over half of their equity capital to do it. I see another funding round on its way.”
  • Financial Stability Board issues report on fintech.
  • Are alt lenders ready to publish APRs? GP:”Many of them already are publishing APRs on their websites. I am not sure why this is a question. While it is not a requirement I think it’s good practice and the serious ones are publishing it.”
  • Building a bank is not easy. GP:”Nobody ever said building a company , a startup , or a bank was easy. This is why often people with no experience and who don’t know what it takes are better position to take such a project. They are not afraid of what they don’t know and often they even find new solutions and innovate withotu being constrained of the existing established solutions to known problems. Many VCs, because of this reason, invest in inexperienced CEOs seeing it as a strenght. “
  • Hargreaves scraps P2P lending plans.
  • How to save cash, make more using P2P lending.

China

International

European Union

India

Asia

Canada

News Summary

United States

PayPal invests in online lender LendUp (Reuters), Rated: AAA

PayPal Holdings Inc has invested in LendUp, a San Francisco-based startup that offers loans online to consumers who have been traditionally overlooked by banks because they are considered too risky.

LendUp said it had secured a strategic investment from the payments company on Wednesday. It did not disclose terms of the deal. PayPal confirmed in a statement that it had made an investment.

PayPal has been expanding partnerships and acquiring new services to gain advantage over rivals in a highly competitive digital payments market.

KBRA Upgrades the Ratings on SoFi Consumer Loan Program 2016-1 (KBRA Email), Rated: AAA

Kroll Bond Rating Agency (KBRA) upgrades the rating on the Class A notes issued under the SoFi Consumer Loan Program (SCLP 2016-1), a consumer loan ABS transaction which closed on June 27, 2016. The credit enhancement has built for the Class A notes since closing. While cumulative net losses are slightly above KBRA’s initial loss expectations, the transaction has breakeven loss multiples which are sufficient for an upgrade of the Class A rating.

The collateral in the SCLP 2016-1 deal currently includes $382.3 million of loans, as of May 31, 2017. The collateral in the transaction has amortized from the initial pool balance of $506.4 million at closing. The current credit enhancement levels are 31.66% for the Class A notes. Credit enhancement consists of overcollateralization, cash reserves, and excess spread.

Please click on the link below to access the report:

Venture capitalists may face a cash crunch as more technology startups stay private longer (Quartz), Rated: AAA

Private equity research firm Pitchbook reports startup exits—sales or mergers of companies delivering returns to shareholders—has fallen in recent years. The number and value of startup exits were down about 70% last year from their 2014 peak. Despite big IPOs of companies such as Snap, 2017 has yet to yield a bumper crop of new exits as companies stay private longer.

It’s not a new problem, says Scott Jordon, managing director at Glynn Capital, but it’s now more acute. The time it takes for technology firms time to IPO has stretched (pdf) from around five to eight years in 2000 to about 11 years today. Pitchbook’s Nizar Tarhuni says they’re seeing venture firms extend funds or negotiate longer periods than the standard 10 years to return money to their limited partners such as pension funds.

A resurgence in IPOs is still possible. Public investors extended a (mostly) warm welcome to the 11 or so tech companies that have gone public so far this year, including Appian, Carvana, Cloudera, Elevate Credit, Netshoes, Okta, Veritone, and Yext.

Global Debt Registry Develops Blockchain-Based Proof Of Concept For Online Lending (Fin Alternatives), Rated: A

Loan data specialist Global Debt Registry has completed a proof-of-concept that utilizes the blockchain to provide investors with an immutable audit trail and a single source of core loan data.

The firm’s inaugural blockchain proof-of-concept (POC) lays the groundwork for providing investors and senior lenders in the online lending space with a safe and secure way to confirm loan ownership and collateral interests across companies within the ecosystem, GDR said.

In developing the blockchain POC, GDR worked with three leading blockchain platforms – Hyperledger, Ethereum and Chain.

Home Point Financial grows third-party origination channel (Housingwire), Rated: A

Shortly after wrapping up its acquisition of Stonegate Mortgage Corp.Home Point Financial Corp. already announced it’s expanding its third-party origination channel.

The lender plans to increase its wholesale client base by expanding the geographic reach and number of third-party originators the channel will serve.

Home Point finalized its $211 million acquisition of Stonegate Mortgage back at the beginning of the month.

‘Big Charade’ Seen in SEC’s Handling of Robos (Financial Advisor IQ), Rated: A

The rising popularity of robo-advisors is bringing increased scrutiny by regulators. At the same time, industry lawyers say they don’t foresee any substantive changes coming in the form of new rules.

This year for the first time, the SEC put online advice-giving on its list of examination priorities, raising concerns about “heightened risk to investors and/or the integrity of the U.S. capital markets.”

A key issue securities lawyers like Fein raises is that if the SEC insists its current rules adequately apply to robos – yet there seem to be shortcomings in how some robos execute their fiduciary duty – then any perceived enforcement gap will only widen.

But MacKillop, whose startup indie RIA manages about $50 million, scoffs at notions that computer-based investing can live up to the same sort of “best interest” standards for individual clients as brick-and-mortar advisors.

Better Mortgage Empowers Consumers with the Better Price Guarantee (BusinessWire), Rated: A

Better Mortgage officially rolled out the Better Price Guarantee — a promise to all of its borrowers that it will beat any competitor’s loan estimate by $1,000. If not, Better will actually give the borrower $1,000.

Better’s mission is to embolden consumers to confidently shop around while also de-risking one of the largest financial transactions they’ll ever make. According to a report published by Oliver Wyman, 71% of customers only get a loan estimate from one lender, which could mean that many home buyers aren’t actually getting the best price on their mortgage.

How the Better Price Guarantee works:

  • If the customer thinks another lender has a more competitive price, they can send Better the competitor’s Loan Estimate(LE) within three business days from the date on the loan estimate. If Better can’t beat the competitor’s LE by at least $1,000, Better will give the borrower $1,000 in cash when they fund with the other lender.
  • An LE is a standard form that all lenders are required to provide a consumer.
  • Better Mortgage may extend this guarantee to non-standard rate sheets.

Why This FinTech Firm Reminds One Analyst of Tesla (Barron’s Next), Rated: A

What do you call a financial-technology company whose stock is up 75% this year as investors bank on its ability to bring a disruptive product into the mainstream? The “ Tesla of Payments,” apparently.

That’s the way to describe Square, according to Mizuho analyst Thomas McCrohan, who began covering the company on Tuesday. The key question for Square is whether it can scale its business up to serve larger customers, and McCrohan is optimistic about the payment processor’s ability to do so while still making money.

Tesla happens to be up 74% this year. Tesla and Square are the top two performers in the Barron’s Next 50 index.

Which Payment App Is Best for You: Venmo, Apple or ‘Zelle’? (WSJ), Rated: A

Venmo

Pros: Works across several types of mobile devices and bank accounts. Funds can immediately be used to shop with Venmo.

Apple

Pros: Service works with Apple’s iMessage, so users don’t need to download a separate app.

Zelle

Pros: Will work within the apps of the biggest banks such as J.P. Morgan Chase, Bank of America and Wells Fargo. Funds are deposited directly into bank accounts within minutes.

Blockchain Payments Startup Veem Integrates with Intuit QuickBooks (Coindesk), Rated: B

Intuit QuickBooks customers can now send international payments via blockchain payment provider Veem as an alternative to traditional wire transfers.

United Kingdom

Hot foreign exchange app Revolut burned through £7 million fuelling its growth last year (Business Insider), Rated: AAA

London-based Revolut, which offers a pre-paid international currency card, made a pre-tax loss of £7.1 million in 2016, its first full year of operations. Revenue was £2.3 million in the year to December 31, accounts filed with Companies House show.

The loss was largely down to “card scheme costs, acquiring costs, and user acquisition costs,” the company’s directors write in the accounts. In plain English, that means the cost of processing payments done on its cards, and the cost of getting people to sign up for the cards in the first place. The cost of sales jumped from £1.5 million to £7.8 million.

Staff numbers jumped from 7 in 2015 to 32, with staffing costs climbing from just under £300,000 to £1.5 million.

The startup has raised £12.1 million in equity capital to date.

Financial Stability Board Issues Report on Fintech: “Regulators Need to Understand the Impact” (Crowdfund Insider), Rated: AAA

The Financial Stability Board (FSB) has weighed in on the burgeoning Fintech sector of finance. The FSB has been analyzing “financial stability implications” potentially created by Fintech innovation. The FSB says it is specifically seeking to identify “supervisory and regulatory issues that merit authorities’ attention”.

The FSB stated there are currently no compelling financial stability risks from emerging Fintech innovations.

According to the FSB, ten areas of interest have been identified of which the following three are seen as priorities for international collaboration. These three priorities are viewed as “essential” to supporting financial stability “while fostering more inclusive and sustainable finance.” The three priorities are:

  • The need to manage operational risk from third-party service providers;
  • Mitigating cyber risks; and
  • Monitoring macro financial risks that could emerge as Fintech activities increase.

The other areas that merit attention include:

  • Cross-border legal issues and regulatory arrangements.
  • Governance and disclosure frameworks for big data analytics.
  • Assessing the regulatory perimeter and updating it on a timely basis.
  • Shared learning with a diverse set of private sector parties.
  • Further developing open lines of communication across relevant authorities.
  • Building staff capacity in new areas of required expertise.
  • Studying alternative configurations of digital currencies.

Are the UK’s alternative lenders ready to publish APRs? (AltFi), Rated: A

In May of last year, the Competition & Markets Authority (CMA) published its rather hefty “Retail banking market investigation” report. Buried among its “proposed remedies” was a provisional decision to require lenders specialising in unsecured loans and overdrafts of up to £25k for SMEs to use annual percentage rates (APRs) to show the cost of these products. The proposed measure is set to become a reality in August, according to multiple sources. But are the UK’s alternative lenders ready?

The impending APR directive will not affect merchant cash advance firms, such as Liberis, because merchant cash advance is not technically considered lending. Nor will it affect asset-backed finance firms like MarketInvoice.

GrowthStreet is another business lending platform that would be affected by the directive, had it not taken the decision some time ago to publish APRs of its own accord.

One group that will presumably take a keen interest in the upcoming APR directive is the Association of Alternative Business Finance. The trade association, which launched in February, represents ten of the UK’s small business-focused direct lenders.

Building A Bank Is Not Easy (Forbes), Rated: A

UK Challenger banks, like AtomStarlingTandem and Monzo, are building from the ground up to do things differently.

But building a bank is not easy. Sophisticated and diverse product offerings, consumer trust, and security are three vital components. And in this regard, the incumbents often have a head start.

In our portfolio, we have seen AukaPay partnering with Sparebank1 in Norway to provide a white label payments app, MarketInvoice joining forces with BNI Europa to enable SMEs to access more working capital on its platform, Crosslend working with institutions to provide investment opportunities in consumer loans, and iZettle in successful partnership with Santander.

And when talking challenger banks, we can’t forget to mention BBVA’s acquisition of Holvi last year.

While P2P lending still represents a small proportion of total lending volumes, in the UK, origination grew 36% year on year in 2016.

Zopa is approaching bank building from a different base to the other challenger banks, and a case in point of collaboration with the incumbents.

Hargreaves scraps peer-to-peer lending plans (Money Marketing), Rated: A

Hargreaves Lansdown has dropped its plans to set up a peer-to-peer lending platform.

The company, which was expected to launch both a P2P lending platform and a cash management service to clients this year, has now decided it will solely focus on the cash management service.

Hargreaves Lansdown chief executive Chris Hill tells Money Marketing that despite P2P being “interesting”, the firm would rather focus on the new savings proposition because it is “a much bigger market”.

How to save your cash and make some more using P2P lending (Born2Invest), Rated: B

P2P lending seems to be a novel and definitely, profitable investment opportunity. It is becoming more and more popular and so there is a constant boost in the number of lenders who are getting profitable returns from this investment option. Here are a few essential steps for making money from the P2P investment.

Step No.1: P2P investment should be treated as an extra element in the overall financial portfolio

You must do ample research, deliberate and then come to a decision about what all should be included in your financial portfolio. You must possess a diversified and comprehensive financial portfolio. P2P lending seems to be a wonderful addition to this portfolio.

Step No. 2: Set a target and attain it

A profit of 2 percent over a 12-month deposit seems to be realistic. The two percent would be paying for the risk factors including investment in time.

Step No.3: Fortify your financial foundation

In order to make an impressive profit in your P2P investment, you must have a fantastic and truly solid financial foundation. This is certainly not a getting rich fast scheme but eventually, you could expect good returns.

Step No.4: Create a comprehensive system

Create a comprehensive system for investing in borrowers that is based on important information which is available, and is relating to the borrower.

China

Inside Ping An’s Massive Expansion (Institutional Investor), Rated: AAA

Almost 30 years after founding Ping An, Ma is ambitiously broadening his supermarket of financial products, much like U.S. financier Sandy Weill did as chief executive officer of Citigroup from 1998 to 2003.

Ma founded Ping An in 1988 in Shenzhen, the financial hub of southern China, which lies just north of Hong Kong’s border with the mainland. Over the past five years, the company has climbed onto the list of the world’s ten largest insurers, now ranking No. 4 behind France’s AXA, Germany’s Allianz, and U.S.-based MetLife in terms of assets, according to Relbanks.com. Though Ping An’s insurance assets rose 17 percent in 2016, to $802 billion, the company’s double-digit profit growth is benefiting in part from a diverse group of revenue streams, including banking, securities, asset management, wealth management, private equity, and, more recently, China’s booming arena of Internet finance.

Ping An saw 11.7 percent revenue growth, with gross earnings reaching a record high of 774 billion yuan ($112 billion), and a 15 percent growth in profits; net earnings rose to 62 billion yuan. About 56 percent of the group’s profits were derived from insurance, down from more than 80 percent a decade ago. The rest came from banking (20.6 percent), asset management (15.5 percent), and Internet finance (8.3 percent).

Among the company’s most touted technology successes is the 2011 founding of peer-to-peer lender Shanghai Lujiazui International Financial Asset Exchange Co. Lufax, as the company is known, has become an e-commerce giant for finance in China, the world’s second-largest economy. It’s the country’s biggest online marketplace for wealth management products: Last year more than 7.4 million individual and corporate investors used Lufax to purchase 6 trillion yuan worth of investment products from Ping An and thousands of other Chinese financial institutions.

Chinese Players Pursue $ 3.4 Trillion International Digital Payments Opportunity (PR Newswire), Rated: AAA

A new study from Juniper Research highlights the increasing dominance of Chinese companies in digital payments, with players such as Alibaba, Tencent and UnionPay seeking to bolster their revenues through international expansion.

According to the research, Strategies for Payment Providers: Opportunities, Risks & Competition 2017-2021, digital payment transaction values are expected to reach $5 trillion by 2021, up from $3.6 trillion this year, of which $3.4 trillion will come from sales outside mainland China.

The research includes the latest Juniper Leaderboards, highlighting best-in-class players in key payments arenas, including PayPal (for eWallets), Worldpay (for payment service providers) and Vodafone (for telco payments in emerging markets).

The complimentary whitepaper, Who will Own the Digital Payments Sector in 2021?, is available to download from the Juniper website together with further details of the full research and the attendant IFxl (Interactive Forecast Excel).

Hong Kong’s future is in learning new words: fintech, regtech, wealthtech (SCMP), Rated: A

Hong Kong’s role as a global financial hub may be under threat unless the city can embrace technology and adapt quickly to the tectonic changes that have taken place in the financial landscape in the two decade since its return to Chinese rule, experts say.

Hong Kong’s greatest moment of innovation was in 1997 with the Octopus card, a smart-card payment system that is now a ubiquitous part of daily life. Two decades since, the city has not made further progress and has lagged mainland China in exploring new forms of electronic payment such as Tencent Holdings’ WePay or Alibaba Group Holding’s Alipay.

Hong Kong’s existing banking model would change dramatically with the rise of fintech, similar to how Amazon.com revolutionised America’s retail industry, he said.

For Hong Kong to succeed as a fintech hub, regulators should license more companies to handle clients’ money to accelerate innovations in fintech and wealthtech, or the use of technology for wealth management and investing, he said.

“More than 70 of the world’s largest 100 banks are in Hong Kong, and this gives the city a big advantage because in fintech, the majority of the customers are going to be banks,” he said.

As many as 82 per cent of incumbent banks and financial institutions plan to increase partnerships with fintech companies in the next three to five years, according to a fintech survey in Hong Kong by PwC this year.

 

China’s Central Bank Vows to Push for Blockchain in Five-Year Plan (Coindesk), Rated: A

The People’s Bank of China (PBoC) is releasing new details about a forthcoming five-year development plan focused on its strategy for advancing technology use in the country’s domestic financial industry.

According to the announcement by the central bank, the PBoC intends to actively push forward the development of new technologies such as blockchain and AI. It also plans to strengthen its research on applications of fintech in regulation, cloud computing and big data.

Hong Kong Asserts Its FinTech Prowess (Financial Technologies Forum), Rated: B

In fact, the FinTech Association of Hong Kong (FTAHK) had its official launch on June 28, underscoring the point that financial IT innovation is no longer restricted to New York City and its concrete canyons or Silicon Valley in Northern California.

There will be committees taking on key sectors such as:

  • Blockchain/DLT;
  • Artificial intelligence;
  • Big data;
  • Payments;
  • Regulatory tech;
  • and financial literacy.
International

Automotive Manufacturers Leverage Fintech through Partners to Deliver a Differentiated In-vehicle Experience (Cision), Rated: AAA

The thinning margins in the automotive industry are making a strong case for vehicle original equipment manufacturers (OEMs) to explore revenue streams beyond sales and periodic maintenance. As customers become accustomed to digital transactions, OEMs will look to tap the hitherto underutilised fintechservices segment to generate additional revenues. Active partnerships with fintech companies will enable OEMs to offer multiple use cases that enrich in-vehicle experience, which will ultimately influence customers’ purchase decisions.

Fintech in the Global Automotive Industry, Forecast to 2025 is part of Frost & Sullivan’s Automotive & TransportationGrowth Partnership Subscription. The study examines key application areas of fintech in the automotive industry: leasing and finance, insurance, digital retailing, digital payments, and automotive services. Europe, followed by North America, is anticipated to lead in digitising finance, and North America, followed by Europe, in automotive service investments. The average investment in fintech is estimated to grow from $16 million in 2016 to $230 million by 2025with the emergence of digital car retailing and new business models in insurance.

The synergies between automakers and technology companies will power next-generation financial service infrastructure. Even though fintech partnerships with big banks slow down transactions, it is important to note that banks manage almost 32% all new vehicle financing in North America. Besides:

  • The competition for market share between banks and captives finance companies is expected to digitise new car sales and result in a $1 trillion auto financing market; and
  • Fintech will monetise services based on subscription models and on-demand vehicle features.
European Union

Fintonic Closes €25M Funding Round (Finsmes), Rated: A

Fintonic, a Madrid, Spain-based provider of a mobile app to optimize personal finances, closed a €25m round of funding.

Backers included ING Group and insurance group PSN, amongst other investors.

The company intends to use the funds to drive its growth in Spain and LatAm and increase its value proposition.

Luxembourg and Singapore fintech hubs connect (Finextra), Rated: A

The LHoFT, Luxembourg House of Financial Technology, and LATTICE80, the world’s largest Fintech Hub located in Singapore, are excited to have signed a Memorandum of Understanding (“MOU”) at Money 2020 Europe, setting a foundation for collaboration between the two centres.

This Memorandum of Understanding provides a framework to intensify the cooperation between two leading financial centres with a specific focus on Fintech and driving digital transformation in financial services.

Swiss Crowdlending Fintech Opts for Blockchain (Finews), Rated: A

Splendit is a Swiss fintech firm dedicated to broker loans to students paid for by financiers.

The company has decided to link up with Blockchain-fintech Lykke, Splendit said in a statement today.

Thanks to the deal with Lykke, Splendit henceforth will be able to finance foreign students by sending them their loans via the Lykke Wallet. Florian Kuebler, the co-founder of Splendit, says that this will save transaction costs and enable crowdlending across the globe.

Agreement between Willis Towers Watson and Workinvoice to support companies on the commercial credit market (Intermedia Channel), Rated: A

Willis Towers Watson (WTW) and Workinvoice have signed a collaboration agreement exclusively with the aim of bringing more and more Italian companies on the commercial credit market run by the Italian Fintech company.

The Workinvoice activities enable companies ‘ access to a particular market to obtain immediate liquidity, and to protect themselves from payment risks through the sale of its trade receivables to Italian and international institutional investors “ .

India

Rohan Tibrawalla Takes On Country Director-India Role for MPOWER Financing (PRWeb), Rated: B

MPOWER Financing (), an innovative fintech company and provider of educational loans to high-potential, international students, recently appointed Rohan Tibrawalla to the position of Country Director-India to oversee the company’s operations in the region from its soon-to-be-opened office in Bangalore.

In his new position, Tibrawalla is responsible for expanding and executing MPOWER Financing’s operations, marketing and business development strategies as well as for managing the loan portfolio and debt and equity capital sourcing.

MPOWER Financing is a public benefit corporation whose mission is to remove the financial barriers to higher education in the U.S. by providing loans and other resources necessary for students to complete their undergraduate or graduate studies.

Asia

Challenge is to navigate global fintech regulations and scale: Finastra’s Nadeem Syed (Deal Street Asia), Rated: AAA

Nadeem Syed, who heads mega fintech firm Finastra, believes regulators worldwide will need to evolve guidelines for the emerging sector  (fintech) but the challenge for many financial services firms would be to navigate the new environment and also scale services.

What are your plans in Asia Pacific in terms of expansion and growth after the merger and how has the journey been in Asia so far in terms of revenues and capturing markets?

We have long been committed to Asia Pacific and continue to see great opportunity across the region with double-digit growth rates. Developed and growth markets of Asia Pacific are successfully riding the digital wave especially with the tremendous opportunities that lie ahead of us in Indonesia, Myanmar, Thailand and China to name a few.

Misys has over 400 customers that cut across from Japan to Australia and we see tremendous opportunity to leverage our strength in the region to bring the D+H products to market, especially payments and cash.

Over the years, how have you seen Asia’s competitiveness in fintech being transformed? Has that been affected by the rivalry between region’s financial centres – Singapore and Hong Kong?

The financial services landscape, not just in Asia but globally, has seen a lot of regulators becoming more and more receptive to new technologies – distributed ledger technology, artificial intelligence, P2P lending and so on.

The challenge for all financial services companies is to navigate each jurisdiction’s new or upcoming regulations on fintech while translating their various innovations into services that can be scaled up and rolled out in a safe and reliable manner.

What kind of competition do you see from the internet giants like Baidu or Alibaba are fast emerging as fintech players worth noticing. What future do you see for Chinese fintech industry?

China’s internet giants are increasingly looking at fintech as it is a complementary sector that helps create a tighter online ecosystem for their customers. They are mostly focused on personal banking and payments solutions, which means traditional banks need to concentrate on evolving their own digital and online presence.

As the fastest growing region, do you see Asia emerging as a digital champion anytime soon. If yes, what will help to bring it and where are the major challenges?

Many countries in Asia are seeing exponential growth in the number of Internet and mobile device users – this has a direct correlation to the boom in digital or online banking, as well as other services being carried out online. Digital platforms mean that rural populations now have easy access to services previously unavailable to them, but the challenge is always how to ensure these platforms are safe and secure as cyber criminals get more sophisticated.

Fujitsu Starts Sales of Cloud-based Lending and Leasing Services from Cloud Lending Solutions (Fujitsu), Rated: A

Fujitsu today announced it is commencing sales in Japan of cloud-based solutions for lending and leasing businesses. Developed by US-based Cloud Lending Solutions and known as the CL Series, the solutions will be deployed and operated as Software as a Service (SaaS) with the support and operations services of Fujitsu technicians with expertise in financial systems. This is the first time services from Cloud Lending Solutions will be available in Japan.

ALT Corporation, a subsidiary of Yayoi Co., Ltd., Japan’s largest accounting software company, has decided to become the first Japanese customer for these solutions. ALT is using these solutions to set up a unique online lending business, with plans to begin trial lending in October 2017.

With the goal of offering solutions to transform business using Fintech to customers at financial institutions around the world, on July 12, 2016, Fujitsu signed a Memorandum of Understanding (MOU) with Cloud Lending Solutions for a strategic partnership.

The CL Series is a set of cutting-edge cloud services offered as SaaS, which digitize a suite of business processes for lending and leasing businesses, from applications to reviews, contracts and collections.

Canada

WEALTHSIMPLE, TRULIOO AMONG CANADIAN COMPANIES IN CB INSIGHTS FINTECH 250 (Betakit), Rated: A

Canadian FinTechs that made the list include Wealthsimple, which recently announced its UK expansion and raised a $50 million Series B; Montreal-based Blockstream, which raised a $55 millionSeries A in February 2016; and Toronto-based Wave, which raised $32 millionfinancing round from RBC, Portag3, and other investors in May.

The list also includes Vancouver-based Trulioo, which produces ID verification software for compliance and to fraud risk mitigation; Toronto-based Financeit, a cloud-based point-of-sale platform; and Toronto-based Street Contxt, which raised a fresh round of funding from 8VC, Point72 Ventures, Palm Drive Capital, and Portag3 Ventures in April.

Authors:

George Popescu
Allen Taylor