Thursday June 20 2019, Weekly News Digest

ASIC borrowers

News Comments Today’s main news: LendingClub expands borrower program. Funding Circle forced to narrow range of valuation. Yirendai revenues come from haircut loans. Chinese P2P lenders explore southeast Asia. Borrowell passes 1M members, raises $20M. Today’s main analysis: 5 ASIC findings on marketplace lending. Today’s thought-provoking articles: US Core, inflation ease. Fintech lending algorithms discriminate […]

The post Thursday June 20 2019, Weekly News Digest appeared first on Lending Times.

ASIC borrowers

News Comments

United States

United Kingdom

China

Other

News Summary

United States

LendingClub Expands Program to Help Borrowers Actually Pay Off Debt (Lend Academy), Rated: AAA

LendingClub shared a few stats on borrowers who choose this method:

  • Save an average of nearly $900 over the course of their loan
  • Cut their credit card interest rate nearly in half
  • Increase their credit score in just three months

The product has been tested for over a year and LendingClub is working with a partner network of over 1,700 credit card, bank and loan companies to make the process seamless. What’s interesting is borrowers can add up to 12 creditors per loan which is an important feature since borrowers often hold balances across many cards.

Turning Lending Club’s Worst Loans into Investment Gold (Towards Data Science), Rated: A

This is a writeup of a machine learning project I completed. In this post I hope to:

  • Describe my algorithm for predicting loan defaults.
  • Use the algorithm to construct a portfolio of clean loans

Inflation Miss (PeerIQ), Rated: AAA

US Core CPI rose by 2% YoY in May, just at the Fed’s target rate but below economists’ expectations. Consistently low inflation is boosting calls for a rate cut next week. The market is pricing in a 24% probability of a rate cut next week and a 76% probability of a rate cut in September.

Source: Bloomberg, PeerIQ

Fintech algorithms discriminate 40% less than traditional lenders (Quartz), Rated: AAA

Algorithmic fintech lending is less discriminatory against minorities than traditional loan officers, according to a recent study of US mortgages. The findings signal hope that technology could provide financing that’s more fair, but the research also underscores how widespread discrimination remains.

The US housing market has long been prejudiced against minorities. When Latino and Africa-American borrowers are looking to buy a home, they usually end up paying 7.9 basis points (0.079 percentage points) more than whites to take out the mortgage, and 3.6 basis points more when they refinance the debt, according to a National Bureau of Economic Researchworking paper published this month.

Buttigieg worries tech may add racial bias to credit decisions (American Banker), Rated: A

Pete Buttigieg said the way credit scoring is done in the U.S. is fraught with inequality and he’s worried the process may get worse with systems based on artificial intelligence.

Commercial Real Estate Crowdfunding Eyes ’18-Hour Cities’ for Small Investors (The Street), Rated: A

When Clear Point Gardens, a 604-unit apartment complex in Columbus, Ohio, recently changed hands, it produced a nearly 43% gain in 16 months, an amazing windfall for investors in the deal.

All 68 of them.

The sale of Clear Point, financed with help from investors on CrowdStreet’s online platform, is the latest example of how online syndication is revolutionizing the way deals are financed in the $6 trillion commercial real estate market.

HSBC launches digital mortgage platform with help from Roostify (HousingWire), Rated: A

One of the world’s largest banks is about to join the digital mortgage revolution, as HSBC Bank USA, the U.S. arm of HSBC Group, announced that it is partnering with Roostify to launch a digital mortgage platform.

Mirador’s Trevor Dryer: ‘The world doesn’t need another high price lender’ (Tearsheet), Rated: A

Trevor started Mirador to fill this void of bank-originated small business lending. We talk about why he started Mirador with a lending as a service model and what painpoints he was addressing.

Dave is launching a checking account that helps users build their credit score (Business Insider), Rated: A

The Los Angeles-based company, backed by investors including Mark Cuban, the DJ Diplo, and hedge fund Mark 2 Capital, said on Tuesday it’s rolling out a new checking account product that reports all rent payments to credit agencies. The new feature, added to Dave’s original app, helps customers to build their credit. Dave plans to begin reporting utility payments later this summer.

CoreLogic Launches Marketrac Platinum (CoreLogic), Rated: A

With Marketrac Platinum, lenders and title companies can utilize the interactive platform to identify top performing real estate agents and brokerage firms to prioritize professional relationships based on market trends.

Zirtue Revolutionizes Peer-to-Peer Lending (IT Business Net), Rated: A

Sprout Mortgage Launches ACORN Automated Underwriting System (Yahoo! Finance), Rated: A

Sprout Mortgage, the innovative force in Non-QM lending, today announced the launch of its ACORN automated underwriting system (AUS) as part of an ongoing effort to deliver value-added services to its third-party origination clients.

Finicity Integrates with LendingQB to Optimize Mortgage Origination Process (PR Web), Rated: B

Finicity announced today an integration with LendingQB. LendingQB’s platform now uses Finicity’s digital Verification of Assets (VoA) solution to allow lenders to free up resources, increase processing speed and reduce mortgage fraud while providing borrowers with a more efficient and positive experience.

Cardholders Seek to Capital-ize on Madden (The National Law Review), Rated: A

Last week, three Capital One cardholders filed a putative class action in the Eastern District of New York, Cohen v. Capital One Funding, LLC,1 alleging that the rates of interest they paid to a securitization trust unlawfully exceed the sixteen percent threshold in New York’s usury statutes.  The Plaintiffs seek to recoup the allegedly excessive interest payments and an injunction to cap the interest rates going forward.

Fundbox Tapped By Top B2B E-Commerce Software Provider OroCommerce to Power Net Terms (Fundbox Email), Rated: A

According to a 2019 research study by

Cross River poaches execs from student refinancing firm Laurel Road (American Banker), Rated: A

Cross River Bank, a Teaneck, N.J.-based bank that focuses most of its energy on supporting fintechs, is hiring several people from the student loan refinancing company Laurel Road to its capital markets team.

Cross River’s fintech partners include Affirm, Circle, Best Egg, Coinbase, Rocket Loans, Stripe, Upstart and Transferwise.

Optimizely Closes $ US105M Financing Round (Which-50), Rated: A

Optimisation platform Optimizely has closed US$105 million in financing, including US$50 million in Series D funding. The funding, led by Goldman Sachs Private Capital Investing, also included Accenture Ventures.

Austin Niemiec Named New Executive Vice President of Quicken Loans Mortgage Services (Yahoo! Finance), Rated: B

Quicken Loans Mortgage Services (QLMS), the second largest mortgage lender serving the needs of brokers, regional banks and credit unions, today announced that Austin Niemiec has been named Executive Vice President.

Self Lender Awarded Inaugural Inclusive Fintech 50 (PR Newswire), Rated: B

Self Lender is pleased to announce its inclusion in the inaugural list of winners of the Inclusive Fintech 50. The Inclusive Fintech 50 is a competition launched in February to help early-stage fintech companies attract capital and resources to benefit the world’s 3 billion financially underserved people. The competition was organized by MetLife Foundation and Visa Inc., with global nonprofit Accion and World Bank Group member IFC.

United Kingdom

No sign yet of breaking out of circle (The Times), Rated: AAA

The early days of a company’s life on the stock market tends to set the tone for what follows. The grief around Funding Circle’s listing began even earlier and has continued to plague it.

Days before trading in shares of the specialist online lender began at the end of September, Funding Circle and its bankers were gunning for a valuation of up to £1.75 billion, only to be forced to narrow the expected range shortly before it came to market, and then to price the shares at the lower level of 440p apiece.

Source: Refinitiv

Three Biggest Overperformers And One Underperformer In Peer-To-Peer Lending (4th Way Email), Rated: AAA

Landbay

  • Over £300 million lent.
  • Maximum loan size to property valuation (LTV) 80% – better than all the major high-street banks.
  • Average LTV: 72% – highly suitable for these kinds of mortgages.
  • Average rent: 190% of the monthly mortgage payment.
  • Over 90% of mortgages are to experienced and professional landlords.
  • Reserve fund: 0.6% of outstanding mortgages – modest but useful.
  • Type of lending: residential BTL.
  • Typical risk of this type of bank lending: very low.
  • P2P bad debts: none.
  • Interest rate: 3.54% after expected bad debts.

Proplend

  • £65 million lent.
  • Maximum loan size to property valuation (LTV) 75% and investors can choose to limit to 50% – lower than all high-street banks.
  • Average LTV  60% – highly suitable for these kinds of mortgages and loans.
  • Minimum rent on rental properties usually 110% of the monthly mortgage payment.
  • Type of lending: residential and commercial rented properties up to five years; some development lending; a mix of senior and junior debt (junior means other lenders get repaid first if the borrower’s property has to be forcibly sold to repay the loans).
  • Typical risk of this type of bank lending: low to moderate for shorter-term rental properties; moderate to high for developments and junior debt.
  • P2P bad debts: none.
  • Interest rate: 7.32% to 9.43% after expected bad debts (7.32%-12.13% before bad debts).

CrowdProperty

  • £35 million lent.
  • Maximum loan size to property valuation (LTV) 70% and investors can choose to limit to 50% – lower than all high-street banks.
  • Average LTV  61% (against starting value of property) – very low for these kinds of loans.
  • Type of lending: property development lending.
  • Typical risk of this type of bank lending: moderate to high.
  • P2P bad debts: none.
  • Interest rate: 8% after expected bad debts (7.32%-12.13% before bad debts).

Rebuildingsociety – the Underperformer

  • £15 million lent.
  • Type of lending: unsecured small business lending to sub-prime.
  • Typical risk of this type of bank lending: moderate to high.
  • P2P bad debts: 17% of total lent in pounds
  • Interest rates: estimate an average 5% after heavy losses.

British Business Bank adds £60m firepower to non-bank lender (AltFi), Rated: A

Simply, a non-bank lender, focused on SME asset financing has scored a a third financing tranche of £60m from the British Business Bank.

One fifth of UK investors upping exposure to debt investments (Investment Week), Rated: A

One-fifth of UK investors are increasing their exposure to debt amid low interest rates and Brexit uncertainty, according to research from FJP Investment, which found this number climbs to 34% when 18-to-35 year-olds are considered in isolation.

However, the independent survey – which comprises 950 investors – discovered 44% of participants are more focused on short-term debt investments over this financial year due to both political and economic uncertainty; this figure rose to 68% among under 35s.

OakNorth completes loan to Oncore IT for the acquisition of Fuse Technologies (Fintech Finance), Rated: A

OakNorth – the bank for entrepreneurs, by entrepreneurs – has provided a loan to Oncore IT, a managed service and cloud platform provider.

The finance has been used for the acquisition of Fuse Technologies, a London based provider of unified communications tools.

Brexit and drive for growth sees IT fintech salaries surge (AltFi), Rated: A

London-based java developers lead the pack, commanding starting salaries of up to £60,000, followed by software developers in the capital on up to £55,000.

Intense competition between UK-based fintechs – lead by Revolut, TransferWise, OakNorth and Funding Circle – and high street banks attempting to upgrade their services has led to bidding wars in order to gain top level IT professionals, said the report called The UK Fintech Revolution.

Lloyds first to launch open banking app for credit cards and savings (Fintech Futures), Rated: A

Customers of Lloyds Bank, Halifax and Bank of Scotland are the first to see their savings accounts and credit cards in one place, thanks to open banking technology, reports Jane Connolly.

J.P. Morgan working on a secretive digital banking project based out of London (TechCrunch), Rated: A

A number of incumbent banks are known to be developing new digital-first products in a bid to keep the new wave of challenger banks at bay and now it appears that the latest to make that move is J.P. Morgan.

According to sources, the investment bank has begun recruiting for a secretive skunkworks project within London’s booming fintech industry. Very few details are known about what exactly J.P. Morgan plans to build, although TechCrunch understands the bank is busy hiring high level developers with full-stack and cloud-based dev skills for the new project, along with other personnel.

Following Facebook’s Libra launch, UK regulator hints at greater Big Tech scrutiny (AltFi), Rated: A

The FCA says technology is dramatically changing the markets it regulates and blurring regulatory boundaries in a new report into its activities.

China

Yirendai Revenues Come From Suspect Haircut Loans (Seeking Alpha), Rated: AAA

Over 60% of YRD’s FY 2018 revenues stem from “haircut loans” (P2P service fees charged to borrowers) that are prohibited by Chinese regulation. Recent developments in the P2P lending sector with regards to questionable lending practices, unethical collections, and usury are not being disclosed in YRD’s SEC filings, leaving U.S., Canadian, and international investors completely in the dark.

The Chinese P2P Lending Market

Unlike in developed countries, there are no administrative bodies (such as the U.S. Securities Exchange Commission) which regulate peer to peer lending exchanges in China. Instead, such services are regulated by self-organized internet associations and retail banks. The lack of meaningful oversight has caused the Chinese P2P lending market to bubble into $178.9 Billion in FY2018, almost 22 times the size of the P2P lending market in the United States and 447 times that of Japan’s.

Over 850+ fraudulent/ponzi lending platforms were exposed in FY 2018 alone.

Source: iiMedia Research

But the bad numbers don’t end here:

– The total loan volume amounted to 245.9 billion in Q12019, down -55.5% Y/Y.

– 85.7 in new loans were lent in March 2019, down -53.5% Y/Y.

– Principal balance of all loans: 8,029 CNY billion, down -3.6% Y/Y.

– sum of P2P lenders and borrowers, up 21%.

Chinese P2P lending platforms look to Southeast Asia amid industry purge back home (Technode), Rated: AAA

A slew of Chinese fintech and peer-to-peer (P2P) lending platforms are looking to more lenient markets in Southeast Asia (SEA), following a prolonged industry crackdown in China that has left the sector reeling.

Over the past year, China’s regulatory clampdown on risky financial practices has wiped out more than half of the country’s P2P lending platforms. As of May, just 900 survived, down from almost 1,900 recorded a year ago.

In early June, Indian daily newspaper the Economic Times reported that Chinese fintech companies, including WeShare, 9F Group, and CashBUS, are exploring investment opportunities in the country’s burgeoning online lending sector, particularly in the P2P lending space.

XW Bank Welcomed by IMF as One of 6 Outstanding FinTech Companies From China (Yahoo! Finance), Rated: A

The International Monetary Fund (IMF) welcomed 6 outstanding FinTech companies from China including Ant Financial, WeBank and XW Bank.

European Union

Snask helps Klarna to communicate its ‘smooth’ banking offer with off-the-wall film and photography (Creative Boom), Rated: A

When Stockholm studio Snask was approached by Klarna, one of Europe’s biggest banks, to help communicate how its revolutionary payment solutions make life easier for its customers, it set out to create seven “never-seen-before” worlds.

LHV Bank Integrates Estateguru Investments in Online Banking Dashboard (P2P-Banking), Rated: A

You might wonder why that is relevant as most readers are unlikely to be LHV Bank customers. LHV Bank is a bank in Estonia.

I think it is highly interesting, as it is – to my knowledge – the first time a bank has integrated p2p lending investments in its customer interface. So the LHV bank customers, not only see their accounts and stock depots, but also their Estateguru investments conveniently listed in their online bank dashboard. Much has been talked about what role could banks have in p2p lending (mere transaction banks? providing credit lines?) and also there is a lot of speculation if PSD2 (open banking) will help fintechs to seize the access to the customer from banks because they could control the user interface in the future. But this is actually a first step a bank takes in the opposite direction. By aggregating “non-bank” information inside the dashboard, they aim to make the banking interface more useful for the customers.

International

How Klarna is Helping the World Shop Like a Queen (Power Retail), Rated: AAA

Klarna is the latest Buy Now Pay Later (BNPL) app to sweep through the world. Originating in Sweden, the BNPL platform allows users to purchase goods and schedule repayments in timeslots. At this point in time, Klarna is the first and only BNPL platform that’s available in the U.S. It’s also available in the UK, Denmark, Norway, Belgium and many other European countries.

Australia

Five key ASIC findings on marketplace lending (Cuffelinks), Rated: AAA

In April 2019, the Australian Securities and Investments Commission (ASIC) released its third report on marketplace lending, the Survey of marketplace lending providers: 2017–18The report paints a clear picture of a once-nascent industry enjoying growth with new borrowing increasing by nearly 45% in the 2017-18 financial year. The report notes that this growth is moderating compared to the near doubling in funds borrowed the previous year (from $156 million to $300 million). By contrast, the Australian Bureau of Statistics (ABS) reports that overall personal lending has declined by an astonishing 24% in the 12 months to March 2019.

Source: Cuffelinks

The ASIC report found that the average interest rate charged for marketplace loans entered into during the 2017–18 financial year was 11.5%, up from 10.5% in the 2016–17 financial year.

Source: Cuffelinks
India

All you need to know about P2P lending and Commodities (India Times), Rated: AAA

Vinay Mathews, Founder and COO, Faircent and Sanjay Gakhar, Vice President, MCX talks about the benefits of investing via the P2P platform and Commodities, ET Wealth investment Workshop in Delhi Listen in!

Watch the video here.

Asia

Indonesian firms turn to P2P lenders for funds (Asia-First), Rated: AAA

Small companies in Asia-Pacific are tapping new funding sources, according to the Economist Intelligence Unit (EIU) study commissioned by Mastercard, with peer-to-peer (P2P) lending platforms in Indonesia reportedly posting USD1.4bn worth of transactions in 2018, an increase from USD20m in 2016.

Canada

Borrowell passes one million members, raises $ 20 million in new capital (Zone Startups), Rated: AAA

RFI alumni company Borrowell announced that it had reached significantly more than a million users, making it Canada’s largest consumer fintech company by that measure.

In addition to this membership milestone, Borrowell also confirmed that it has received $20 million in Series B funding.

AltFi Toronto Summit 2019 (AltFi), Rated: B

WED, 9 OCTOBER 2019, 08:30 – 17:30 EDT

Blind Bird tickets are now on sale at a 50% discount ahead of the Summit’s agenda being announced later this Summer.

Authors:

George Popescu
Allen Taylor

The post Thursday June 20 2019, Weekly News Digest appeared first on Lending Times.

Tuesday September 18 2018, Daily News Digest

Student Loan Balance by Servicer and Loan Status

News Comments Today’s main news: Funding Circle U.S. sees loan defaults go up. OnDeck sales expectations. LendInvest raises $39.5M. Zopa boosts target interest rates on all products. UnionPay launches European expansion. Qatar Investment Authority could invest in Lufax. Today’s main analysis: Navient, Nelnet and the student loan market. Today’s thought-provoking articles: This former Googler, Facebook employee is running with SoFi. What’s […]

Student Loan Balance by Servicer and Loan Status

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

Funding Circle Fund Sees US Loan Defaults Rise (PYMNTS) Rated: AAA

In August, more corporate borrowers defaulted on their loans issued by Funding Circle‘s U.S. operations than they did previously in 2018. According to Peer2Peer (P2P) Finance News reports on Friday (Sept. 14), the Funding Circle SME Income Fund (FCIF) revealed there were seven corporate loan defaults in during the month, up from the year’s average so far of six per month.

Still, the company noted, the value of those defaults has inched higher, too. Reports said the FCIF’s net asset value return for August dropped to 0.1 percent from 0.4 percent a month prior, with analysts citing rising impairment charges as a result of the U.S. loan defaults.

How This Former Google And Facebook Employee Is Helping People Reach Their Financial Goals (Forbes) Rated: AAA

Libby Leffler, vice president of membership at Social Finance (SoFi), negotiated with the tooth fairy as a child. “Looking back, I think this lighthearted family story speaks volumes about the way I think about negotiating or knowing one’s worth. Throughout my entire career, I’ve never been shy to ask for a raise or promotion – or both,” she says.

As an adult, Leffler continues to “lean in” and was even business lead to Sheryl Sandberg, the woman who started the Lean In movement. Leffler worked at Google and Facebook before attending Harvard Business School and working at SoFi, a San Francisco-based lending and wealth management company founded in 2011. Now the 

Brokerages Expect On Deck Capital Inc (ONDK) Will Announce Quarterly Sales of $ 94.63 Million (Baseball Daily) Rated: AAA

Equities research analysts expect On Deck Capital Inc (NYSE:ONDK) to announce sales of $94.63 million for the current quarter, Zacks Investment Research reports. Four analysts have made estimates for On Deck Capital’s earnings, with the lowest sales estimate coming in at $83.41 million and the highest estimate coming in at $98.74 million. On Deck Capital reported sales of $83.67 million during the same quarter last year, which indicates a positive year over year growth rate of 13.1%. The firm is scheduled to report its next quarterly earnings results on Monday, November 5th.

On average, analysts expect that On Deck Capital will report full year sales of $373.98 million for the current year, with estimates ranging from $331.20 million to $385.61 million. For the next year, analysts forecast that the firm will post sales of $417.35 million per share, with estimates ranging from $361.41 million to $435.88 million. Zacks Investment Research’s sales averages are an average based on a survey of research analysts that that provide coverage for On Deck Capital.

Navient & Nelnet and the Student Loan Market, OnDeck milestone (Peer IQ) Rated: AAA

As discussed in a recent piece in American Banker, Navient and Nelnet are increasing their role in the private student loan market. Both companies are big players in the market for servicing federally funded student loans. Together, they service $405 Bn with approximately 38% of the market share as of March 31, 2018. Nelnet, which currently focuses on servicing student loans, recently applied to for an industrial bank charter.

Source: Peer IQ

In April 2014, Navient was spun out of Sallie Mae, splitting the business in two. Sallie Mae continued its consumer banking business as well as origination of private student loans. Navient continued with loan management, servicing, and asset recovery. After the split, Navient kept 99% of the legacy company’s FFELP loans and 83% of the legacy company’s private loans. In October of last year, Navient acquired Earnest, a student, and personal loan lender, for $155 Mn in cash. The acquisition allowed Navient to begin originating student loans under the Earnest brand (as they were previously not allowed to make loans under any brand due to a non-compete with Sallie Mae). Starting in 2019, Navient will be allowed to compete directly with Sallie Mae under the Navient brand.

Lehman Brothers – What It Can Teach The Cryptocurrency Business About Lending (Block Tribune) Rated: A

It was all thanks to a niche security asset that had exploded in popularity: collateralized debt obligations (CDO), which packaged individual loans, such as credit card debt and mortgages, into a secondary market product for investors. In just six years, from 2000 to 2006, the CDO market exploded with sales multiplying from $69B to $500B.

Lehman Brothers, the fourth largest investment bank in the US, invested heavily into these securities, and enjoyed incredible profits as a result. In 2007, Lehman reported net income of $4.2B on $19.3B revenue.

The majority of CDOs were comprised of subprime mortgages. Rated triple-B, at the bottom of investment-grade bonds, these mortgages had been distributed to borrowers with higher-than-average credit risk. Computer models had packaged these CDOs into “tranches” based on interest rate and risk, making CDOs incredibly opaque and complex. These models also assumed that the housing market would continue its upward trajectory.

Property Genius Harnesses Big Data to Help Investors Capitalize on (oaoa) Rated: A

Property Genius announces the launch of its proprietary, end-to-end research and marketing platform which harnesses big data to streamline the entire process of finding and investing in Off-market and Wholesale real estate. Built specifically with the real estate professional and investor in mind, Property Genius aims to solve a long-standing problem for the industry by organizing extensive amounts of assessor data from numerous sources into one convenient and customizable dashboard to improve investment opportunities. The company’s initial launch utilizes property data in Colorado – with more states soon to follow – helping investors find, purchase, and reap the rewards on opportunistic properties including foreclosures, absentee owners, and other distressed properties.

The founder of LendingClub, ousted two years ago, pledges not to make the same mistakes with his new company (CNBC) Rated: A

More than two years after his ouster from LendingClub, Renaud Laplanche still owns millions of dollars worth of stock in the company he created, even though he’s since started a rival online lender that’s rapidly growing.

For his second act in financial services, Laplanche is focused on avoiding past mistakes. He was forced to resign suddenly from LendingClub in May 2016 for a convoluted set of events involving the questionable sale of certain loans by the company and a lack of transparency with the board.

Laplanche started his new company, Upgrade, in August 2016, three months after leaving LendingClub. His start-up passed $100 million in monthly loan originations in April. By way of comparison, LendingClub, founded in 2006, averaged almost $1 billion in monthly originations in the second quarter.

Charles Anderson of Currency (Lend Academy) Rated: A

One of the largest verticals in all of lending is equipment finance. There is $1.1 trillion worth of equipment financed each year and yet only a tiny fraction of this number is financed in an all digital process.

Our next guest on the Lend Academy Podcast has made it his mission to change that. Charles Anderson is the CEO and Co-Founder of Currency, the world’s first digital equipment finance platform. They are applying technology, often for the first time, to all phases of the equipment buying process.

CoreLogic Launches AutomatIQ Borrower (Corelogic) Rated: B

CoreLogic (NYSE: CLGX) today announced AutomatIQ Borrower, phase one of a comprehensive new underwriting solution designed to help lenders streamline their current mortgage workflows by digitizing, standardizing and automating borrower analysis and verification. By pulling all of the disparate borrower verification tools together into one integrated solution delivered from one provider, AutomatIQ Borrower will help lenders:

  • Reduce underwriting costs and time to close
  • Improve overall loan quality and user experience
  • Increase trust at each step of the borrower underwriting workflow

Hurricane Florence / Lendr (Lendr Email) Rated: B

“All of our clients have been contacted or we will continue to try and get in contact with them and support them in any way we can. We will suspend payments for the rest of September for any client that is affected by Hurricane Florence. Most clients will come back on a reduced payment schedule for a short period of time. In the past we have provided additional funding for clients in need to help get their business back on track due to these types of natural disasters.”  – Tim Roach, CEO of Lendr. 

United Kingdom

LendInvest raises $ 39.5M to grow its P2P property finance platform (TechCrunch) Rated: AAA

Today, LendInvest, a peer-to-peer platform that connects property buyers in the UK with people willing to finance those purchases (bypassing traditional mortgage lending infrastructure in the process), announced that it has raised around $39.5 million (around £30.5 million) in a Series C round of funding led by existing investor Atomico, which participation also from GP Bullhound and Tiger Management (founded by hedge fund investor Julian Robertson).

The plan will be to use this funding to continue to develop its technology and grow business into more the traditional (and bigger) mortgage business. A spokesperson for the company says there are no plans to extend beyond the UK market for now.

LendInvest Is Gearing Up To Be London’s Second Peer-To-Peer IPO (Forbes) Rated: A

Just weeks after Funding Circle launched its $2 billion IPO plans, London’s next peer-to-peer lender is gearing up to follow suit.

LendInvest, the online platform, which matches investors and institutions with borrowers looking for property finance, today announced a “pre-IPO” funding round of $39.5 million.

Since launching in 2008, LendInvest has facilitated over $1.9 billion in loans to buy, build or renovate some 5,000 homes across the U.K., turning a profit consecutively over the last four years.

With fresh capital raised from existing backer Atomico, along with new investors GP Bullhound and Tiger Management, its management seems to be signaling that they’re finally ready to float the business.

Zopa boosts target interest rates across all products (Peer2Peer Finance) Rated: AAA

ZOPA has boosted its lender returns in response to the recent Bank of England interest rate rise.

The peer-to-peer lender is now offering target returns of 4.5 per cent on its Core product and 5.2 per cent for its Plus account, both of which can be held in an Innovative Finance ISA (IFISA) wrapper.

Target returns were previously four per cent and 4.6 per cent respectively.

Church of England considers Wonga rescue (Charity Finance Week) Rated: A

The Church of England is considering bringing together a group of interested parties to buy the £400m loan book of collapsed company Wonga.

Payday loan company Wonga entered administration at the end of August, with Grant Thornton appointed to conduct an “orderly wind down” of the business and sale of assets.

In response to this announcement, Labour MP Frank Field wrote to the Archbishop of Canterbury Justin Welby, urging him to build a consortium of “people of good will” to buy the loan book “in a way which protects poorer people”.

Orca Money to Raise 500K via Equity Crowdfunding – Interview with CEO Iain Niblock (P2P Banking) Rated: A

Orca Money is currently running an equity crowdfunding campaign on Seedrs to raise 500K GBP at a premoney valuation of 1.7M GBP. Anybody can invest in Orca Money shares with a minimum investment amount of 10 GBP applicable. I interviewed the Orca CEO Iain Niblock

You are currently raising money. Who are you raising from and what do you plan to use the capital for?

Our investment is open to the public on the Seedrs equity crowdfunding platform. Investors across the EU can register and invest in the Orca business. The proceeds will allow us to expand our userbase, integrate with more lenders and to further develop the functionality of our platform.

Prior to launching the crowdfunding campaign, we secured a portion of this investment from two institutional funds based in Northern Ireland and a number of leading angel investors. It’s great to be combining these investors with crowd investors.

CTO on our doorstep: David Genn, CTO at Goji, on bridging the gap between the technology team and stakeholders (Information Age) Rated: A

When the regulator comes knocking, companies had better be ready. So it is with the peer-to-peer lending sector which was recently the subject of a 156-page review on the part of the Financial Conduct Authority (FCA) which has proposed a new set of rules for the still formative P2P lending sector.

The issues being addressed by the FCA are as much a technology challenge as they are a regulatory one, particularly when the companies involved are very young and the technology they are utilising is quite new and innovative.

Lenders flock to Scotland as P2P sector takes off (Peer 2 Peer Finance) Rated: A

SCOTLAND looks set to become a peer-to-peer lending hotspot despite fears about the potential impact of Brexit and another independence referendum.

This year has seen lenders such as Assetz Capitaland The House Crowd expanding their presence in the country, while professional services firms Pinsent Masons and Deloitte have formed partnerships with Fintech Scotland to drive the financial technology sector’s growth. LendingCrowd already has its headquarters in Edinburgh, as does ShareIn, which provides a white label crowdfunding technology solution.

China

Platform registers 94 mln online loans (CGTN) Rated: AAA

Online loans worth 116 billion yuan (16.97 billion US dollars) had been registered by the end of August on a unified platform operated by an industry association in China, amid a nationwide campaign to reduce financial risks.

The volume was up 18 percent from a month ago, the National Internet Finance Association (NIFA) has said.

The platform, established in June 2017 had recorded 94.31 million lending deals submitted by 66 online agents, which involved a total of 3.6 million borrowers.

Online registration starts for victims of illegal fundraising cases (Infosurhoy) Rated: A

China’s Ministry of Public Security has started registering investors of 50 illegal fundraising cases involving online peer-to-peer lending platforms to better protect their legitimate interests.

Investors of these platforms can register their information and obtain the latest development of related cases at .

Public security authorities will ensure utmost transparency in their investigation and do their best to recover the losses of investors, an official with the ministry’s economic crime department said.

Registration will open for investors of more cases, the official added.

European Union

China UnionPay kicks off European expansion with UK launch (Financial Times) Rated: AAA

China UnionPay is the biggest payment card issuer in the world and is now launching their cards in the UK, the move will challenge Visa and MasterCard and is the first step in a planned European expansion. The company has struggled to compete with Alipay and WeChat Pay in China

Klarna Bank to acquire UK’s Close Brothers Retail Finance (Compelo) Rated: A

Payment provider Klarna Bank has agreed to acquire Close Brothers Retail Finance (CBRF) from UK merchant banking group Close Brothers Group for an undisclosed sum.

Klarna said that the acquisition of CBRF will enable the payments firm to expand its retail financing services for customers in the UK market.

Banks jump on to the fintech bandwagon (Financial Times) Rated: A

The Treasury Report on fintech released a few weeks ago talks about the promise of data sharing between big bank and technology. The author in the FT questions this enthusiasm, wondering if these tech companies can be trusted with financial data. The article points out that while the EU started allowing data sharing earlier this year it comes with several provisions to protect consumers.

International

Qatar Fund Is Near Investment in China’s Top Online Lender (Bloomberg) Rated: AAA

The Qatar Investment Authority is in advanced talks about an investment in Lufax, China’s biggest online lender, as the sovereign wealth fund seeks to tap into the world’s second-largest economy, people familiar with the matter said.

QIA has been negotiating the potential purchase of a minority stake in Lufax, which is an arm of China’s Ping An Insurance (Group) Co., according to the people. It could spend about $500 million to $1 billion, the people said, asking not to be identified because the matter is private.

A deal could be announced as soon as the next few weeks, the people said. Shanghai-based Lufax, which became profitable for the first time last year, completed a fundraising in 2016 that valued it at $18.5 billion.

What is happening in the IPO market? (Alpha Street) Rated: AAA

The IPO market is abuzz as usual, with many companies inching closer to public listing, while a few have backtracked from their plans. Let’s take a quick look at what you can expect in the coming days.

Cloud-based financial planning company Anaplan Inc. intends to raise up to $100 million through an IPO to meet the working capital and fund operations. The company has roped in former Tesla (TSLA) CAO David Morton as its CFO. It is currently working with an exchange to list the shares under the “PLAN” ticker. It was founded in 2006 as a cloud-based business planning and performance management platform based on a single hub.

Funding Circle Holdings is inching closer to a public listing as the company plans to raise gross proceeds of about 300 million pounds. Shares will be listed on the London Stock Exchange. Funding Circle is a small and medium enterprise loans platform with operations in the UK, US, Germany, and the Netherlands.

Australia

ASIC warns all fintech business lenders over contracts (AFR) Rated: AAA

The corporate regulator wants all online business lenders to remove unfair terms from their contracts just like Prospa has done, indicating start-ups that want to compete against banks will be held to similar regulatory standards as community expectations lift following the royal commission.

In a letter sent last week to Brad Kitschke, CEO of industry lobby group FinTech Australia, the Australian Securities and Investments Commission declared “action [is] required”.

Why this small business owner used a peer-to-peer personal loan for funds (Finder) Rated: A

One of these owners is Mel Flannagan, owner of software and design company Nook Studios. Flannagan’s work is project based and primarily with government departments, so cash flow needs to be managed carefully.

“Sometimes contracts just take a little bit of time to come through,” Flannagan says. But while Nook Studios is a unique business, she says their cash-flow situation is quite common, with the cyclical nature of waiting for invoices to be paid just being “the nature of having a small business”.

To ensure she had the funds to keep her business going, Flannagan didn’t even consider a traditional business loan because she knew she wouldn’t qualify.

Asia

Going international is nice on PowerPoint but difficult to execute, says Grab president Ming Maa (Deal Street Asia) Rated: AAA

“I suspect going international is a nice thing on PowerPoint, but the actual execution of that is very difficult,” Grab president Ming Maa said in a fireside chat at DEALSTREETASIA‘s Asia PE-VC Summit 2018 last week.

Drawing parallels with Meituan-Dianping’s tumultuous ride-sharing journey, Maa said, “We saw that Meituan spent somewhere around $500 million in two different cities in China. In that process, they spent a tremendous amount of capital on subsidies. What that tells me is – for a company to spend so much on subsidies means there are natural barriers to entry for this business.”

E-Commerce Platform KinerjaPay Launches P2P Lending Platform “KFUND” (Crowdfund Insider) Rated: A

KinerjaPay Corp., (OTCQB: KPAY), a digital payment and e-commerce platform, announced on the launch of its new peer-to-peer (P2P) lending platform, KFUND. According to Kinerjapay, PT. Kinerja Simpan Pinjam has been officially registered and will manage KFUND brand as an online lender that focuses on micro-lending activities.

Kinerjapay reported that KFUND will mainly target consumer sectors to provide micro-lending facilities in the range of $100 to $1,000 on biweekly or monthly term loans.

Africa

The Digital Transformation of Banking – Driving Constructive Economic Outcomes from the FinTech Ecosystem in Africa (Global Banking and Finance) Rated: AAA

The hugely successful events in our Finnovation Africa Series in Uganda, Ethiopia, Kenya and South Africa saw more than 800 thought leaders, FinTech pioneers and bankers representing the foremost financial institutions from across the continent gather to address how FinTech can contribute to the positive and profitable transformation of financial services in Africa. From banking powerhouses to start-up FinTech disruptors, Finnovation World sets the stage for the positive and profitable transformation of financial services –and Ethico Live! is now excited to announce the expansion of the conversation to Finnovation Ethiopia 2018for the 2nd year at the Radisson Blu Addis Ababa on the 1st of November 2018. The event will seek to harness the FinTech revolution to boost strategic economic priorities such as financial inclusion and deepening – and how FinTech can make a positive and profitable difference in Africa.

With a focus on the most significant technologies driving the financial services paradigm shift, including Blockchain & Cryptocurrencies, Open Banking & APIs, Payments innovation and Mobile Money, Finnovation Africa: Ethiopia 2018 also features a number of innovative sessions such as The Wolves’ Den, Sheba Valley: Harnessing Ethiopia’s FinTech boom, Inside the Investor’s Mind,and live-on-stage interviews with international Finnovators and African FinTech pioneers.

Authors:

George Popescu
Allen Taylor

Tuesday December 26 2017, Daily News Digest

cumulative loss

News Comments Today’s main news: 3 Reg CF portals no longer FINRA-approved. Zopa launching a bank. LexinFintech completes $108M IPO. European banks prep for PSD2. Australia releases second MPL survey. Today’s main analysis: PeerIQ’s MPL Loan Performance Monitor. Today’s thought-provoking articles: 2017 was a wild ride for alternative lending. Is Congress expanding credit for the poor or enabling high-interest rates? Megatrends […]

cumulative loss

News Comments

United States

United Kingdom

China

European Union

Australia

India

Asia

News Summary

United States

The Wild Ride In Alternative Financing In 2017 (PYMNTS), Rated: AAA

But as 2017 pulled into the station, it became clear that a decade-long era in financial services was officially drawing to a close, other than this transitional year between what was and what’s next.

It became clear that Act I of digital era financial services was drawing to a close – and that Act II is getting warmed up backstage.

The CFPB

The CFPB has spent a year generating surprising questions – with even more surprising answers.

Moreover, there was some thought that the federal courts might render much of the discussion moot, by ruling the CFPB’s independent structure rendered it unconstitutional in the CFPB v. PHH case.

That ruling was thrown out by a three-judge panel of the D.C. Circuit court of appeals, and a final ruling is still awaited.

The Congressional Review Act (And The Fate Of The Old Rules)

The 20-year-old law, which had only been used once before 2017, has been used 15 times since January of last year to undo Obama-era rules.

The law was effectively used to bounce the CFPB’s arbitration rule from going into effect. That rule would have made it illegal for financial services companies to insert mandatory arbitration clauses into consumer contracts, thus forcing consumers to surrender their right to form class-action lawsuits.

A similar maneuver was attempted to block controversial rules the CFPB passed regarding the regulation of prepaid cards. The House approved the CRA resolution, but the bill was unable to garner majority support in the Senate. That means going forward, prepaid cards that offer overdraft protection will be regulated as though they are credit cards, as opposed to debit cards.

The Future Of Innovation Instead Of Regulation

Affirm, founded by PayPal’s Max Levchin, built a POS financing product dedicated to offering consumers an honest, transparent way to pay for items on installment.

Affirm’s mission to expand consumer access to honest financing will rev into high gear next year, on the heels of a $200 million capital raise on an estimated $1.6 billion valuation, and now with the ability for any consumer to take advantage of its credit option at any merchant.

LendUp wants to calibrate financial services to what it calls “the new average consumer” or the “emerging middle class.”

EVEN’s new partnership with Walmart is a new tool to help smooth the income volatility for its workers by allowing them to be paid in real time for the hours they have already worked, instead of having to wait for the traditional payday.

“This isn’t that people just don’t have the money to pay their bills in general, but that they are forced to make bad decisions because the money they have already earned by working is not available to them at the right time,” EVEN CEO Jon Schlossberg told Karen Webster. “That adds up to a $100 billion industry a year in payday loans and late fees. That’s crazy; we can fix that and we should fix that.”

So EVEN – now with Walmart as a partner – is fixing it, both by giving customers access to their funds early, but also by providing access to financial management software so they can better control their money.

What’s Next

Perhaps in 2018, they will even find ways to write studies that use terms properly and do not directly contradict the research of other regulators.

Millennials, she noted, tend to enter the credit system with a bang once they start having families.

MPL Loan Performance Monitor (PeerIQ), Rated: AAA

This week, we introduce our redesigned MPL Loan Performance Monitor where we track the delinquency rates, cumulative losses, and transition matrices on public marketplace lending data that is comprised of loans originated by LendingClub and Prosper.

Source: PeerIQ
Source: PeerIQ

Is Congress expanding credit for the poor or enabling payday lenders? (Salon), Rated: AAA

Ken Rees has made a fortune selling loans with triple-digit interest rates to borrowers with poor credit history or no credit history.

But in 2008, federal regulators ordered First Delaware to stop working with payday lenders — including ThinkCash — so Rees changed his company’s name to Think Finance and started striking deals with Native American tribes, which, as sovereign entities, are also exempt from state usury laws. Think Finance filed a still-pending lawsuit claiming Think Finance used the tribes as a front to make deceptive loans. Think Finance denies the charges and Rees started a new company, Elevate Credit, which operates from the same building in Fort Worth, Texas. Elevate deals in online installment loans, a cousin to payday loans, and partners with a Kentucky-based bank to offer lines of credit with effective annual interest rates much higher than would otherwise be allowed in some states.

Sponsors say the Protecting Consumers Access to Credit Act facilitates bank partnerships by ensuring third parties like debt buyers and rapidly growing financial technology firms can buy, and collect on, loans originated by federally regulated banks regardless of state laws governing interest rates. These partnerships can help make credit available to those left out of the traditional banking system, primarily low-income individuals, backers say.

“The bill covers every flavor of online lending,” said Adam Levitin, a consumer law professor at Georgetown University. “Some members of Congress have gotten snookered that they are fostering innovation, but a loan is just a loan whether you do it online or not.”

But now more payday-style lenders are moving online and donning the friendly face of a tech startup. Some, like LendUp, a lender charging more than 200 percent on some loans and counting Google Ventures among its investors, have attracted mainstream support. Like many high-interest online lenders, LendUp says it is “a better alternative to payday loans” because they use alternative data sources to determine interest rates but consumer advocates say the product, a high-interest loan that can quickly lead to a cycle of debt, is essentially the same thing.

Elevate said in an email it is committed to lowering rates further, and said its loan terms are more transparent and it doesn’t charge expensive fees associated with payday lenders.

Elevate’s installment loan called RISE is licensed in 17 states that don’t impose interest-rate caps and charges annual interest rates as high as 299 percent. Elevate says repeat borrowers can eventually qualify for interest rates as low as 36 percent on subsequent loans.

Fifteen states and the District of Columbia impose interest-rate caps, most around 36 percent, to protect consumers from high-interest loans.

This article originally appeared on publicintegrity.org.

Three Reg CF Crowdfunding Portals are No Longer FINRA Approved (Crowdfund Insider), Rated: AAA

Ufunding was the first to depart FINRAs list of approved platforms. In hindsight it is a wonder the platform was ever approved. The action by FINRA took place a little over a year ago as “potential for fraud” was evident on Ufunding as was “an almost complete failure to follow disclosure and filing requirements.”

DreamFunded Marketplace has hit the exit. We are not certain exactly why DreamFunded left but, if one speculates, it is most likely due to the fact real estate investing is better suited for Reg A+ and Reg D crowdfunding rules which allow issuers to raise more money.

The other former CF platform is Crowdboarders out of Texas. Crowdboarders appears to have pivoted to more of a promotional platform.

After the tech wake-up call… (Banking Exchange), Rated: A

Not long ago, Indiana’s Peoples Bank SB had a business prospect come in who had a loan with Kabbage, the online lender, at 20%. “We reviewed their credit, and we got them into the bank at close to 5%,” says Benjamin Bochnowski, president and CEO at the $914.2 million-assets bank.

With credit that was worthy of a rate like that, the bank asked the customer why it had gone to Kabbage in the first place—and been willing to pay nearly 15 percentage points more for credit. Simple, the new customer responded. Kabbage was easy to use and delivered the proceeds of the loan quickly.

Camilo Concha of LendingUSA (Lend Academy), Rated: A

In this podcast you will learn:

  • The founding story of LendingUSA.
  • The different verticals they operate in today.
  • How their point of sale lending process works.
  • The typical terms on these loans.
  • A profile of the typical borrower who uses LendingUSA.
  • How they do marketing outreach to the merchants offering their loans.
  • The different revenue streams they have.
  • The scale that LendingUSA is at today.
  • How their loan performance has been to date.
  • Why LendingUSA is not competing as much on price as other consumer lenders.
  • Their overall approval rate for loan applications.
  • How they approach fraud prevention.
  • Who is providing the capital for these loans.
  • Where they are on the path to profitability.
  • Why the marketplace lending challenges of 2016 did not impact LendingUSA that much.
  • Why their cost of customer acquisition is going down.
  • Their biggest challenge in getting their business to where it is today.
  • Camilo’s long term vision for LendingUSA.

P2Binvestor CEO Krista Morgan on Marketplace Lending: What to Expect in 2018 (Crowdfund Insider), Rated: A

P2Binvestor CEO Krista Morgan founded P2Binvestor in 2012 with a mission to help growing businesses succeed. Morgan is not only CEO of a fast growing Fintech, she is also the cohost of the podcast “Women Who Startup Radio”, an ardent mentor to other women entrepreneurs who speaks regularly on business finance, fundraising, and scaling a startup.

I recently connected with Morgan via email to learn her 2018 predictions for the Marketplace Lending sector and more specifically, her predictions for P2Binvestor. Her observations follow:

  • More focus will be placed on business models and profitability
  • Platform mergers and shut downs will occur as equity investors remain on the sidelines
  • Capital will start to look for shorter duration assets
  • The conversation about diversity will continue

When asked what PB2i has in store for 2018, Morgan targeted the platform’s growth in four areas:

  • More bank partnerships
  • Tech focused on portfolio monitoring
  • Tighter credit standards

Modo Creates A Payments Data Highway Between The World’s Largest Financial Institutions (Benzinga), Rated: A

Bruce Parker, Modo CEO: Modo creates interoperability in the payments industry by conducting the exchange of data between systems via our translation utility service. Modo allows clients to bring together capabilities from around the payments and commerce industry by directly solving for interoperability between different payment systems.

We’re doing this for some of the biggest names in the payments game: Bank of America Corp BACVeriFone Systems Inc PAY, FIS, Klarna, and Alliance Data Systems CorporationADS, and are proud to say that list is growing.

Who are your customers?

Banks, networks, payments providers and their partners.

PayPal CEO Dan Schulman talks Fintech on Capitol Hill with Georgetown’s Chris Brummer (MENAFN), Rated: A

Other topics touched on during the interview with Mr. Brummer included how fintech can and should improve financial inclusion—and the continued need to eradicate banking deserts—as well as the necessity to better coordinate and launch public-private partnerships. Despite PayPal’s notable profile and 210 million users, it operates in a $100 trillion industry with approximately 1% market share—and there are still nearly 2 billion people around the world who live outside financial mainstream.

Getting Smart About Thin File Student Grads and Their Credit Card Worth (PaymentsJournal), Rated: A

The CARD Act of 2009 disrupted student credit card marketing with a means test and parental approval for certain types of accounts.  The market, which used capture about 12% of total card consumer spend now only contributes a fraction.

The American Banker covered an interesting story about how BankMobile, a digitial only bank with 800 university partners, is attempting to build a model based on academic history and how they maintained their student bank accounts.

3 Real Estate Investing Trends That Gained Steam in 2017 (Realty Biz), Rated: A

In 2016, the real estate crowdfunding industry produced 3.5 billion dollars in a market that has largely gone unnoticed. It’s anticipated by 2025 that the industry is going to be valued at more than 300 billion. Three trends emerged in 2017 that can help the informed investor understand the best approach to this dynamic and explosive industry.

  1. Investors Move Toward Institutional Capital
  2. Non-Accredited Investors Gain Steam
  3. Consolidation allows for the emergence of new players

Can real estate crowdfunding help the homelessness crisis? (Curbed), Rated: A

In addition to commercial space and two market-rate residential lofts, the two-story Jolene’s complex will also contain an 11-room SRO, or single-room occupancy, a dorm-like living arrangement where each resident gets their own 100-square-foot bedroom and access to shared common space. Six of the room will be given to working homeless Portlanders, as part of a partnership with the Street Roots non-profit, while the other five will be rented out to the general population for $425 a month.

After seeing that 90 percent of the participants in Fair-Haired Dumbbell were from Portland, they experimented with a slightly different form of crowdfunding that allowed anybody in Oregon making $70,000 a year or more to invest $3,000 or more in the project (technically, it’s taking advantage of Rule 504 of Regulation D, qualified by the SEC and the Oregon Secretary of State).

EquityStat Brings Portfolio Management To The Cloud (Benzinga), Rated: A

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

Karl Swierenga, founder: EquityStat is an online investment portfolio manager. It allows investors to track and manage their stocks, mutual funds and ETFs, online in the cloud. Many investors own a combination of stocks, bonds, mutual funds and ETFs.

Who are your customers?

Our customers are individual investors who own mutual funds, stocks, bonds and ETFs.

FindBob Closes $ 1.26M USD Seed Round (Business Insider), Rated: A

FindBob () announced today that its seed round is closed at over $1.25 million USD. Grinnell Mutual led the investment.

The capital will allow FindBob to grow its sales and marketing teams, expand into additional U.S. markets and execute on its multi-generational product roadmap.

FindBob champions better transition behavior among financial professionals and their firms in order to perpetuate and protect their most precious asset: their book of business. By allowing company principals to take control of their futures on a secure digital channel, FindBob helps them safely discover opportunities to buy, sell, merge, partner or address succession and to be confident in their plan for the business they worked so hard for.

Fintechs that flamed out or faded in 2017 (American Banker), Rated: A

Source: American Banker
Source: American Banker

Fintech Outlook For 2018: US Banks Look To AI (The National Law Review), Rated: B

With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:

  • Artificial intelligence and machine learning
  • Open banking
  • Cybersecurity and biometrics
  • Commercial banking innovation

Anyone invest in p2p lending? (blind), Rated: B

Just found out that I can earn annual returns of 6-12% by investing in p2p lending platforms like lendingclub and prosper. Way more than the measly 1.3% I get from my savings account.

Lendio Announces New Franchise in Rochester, New York (Crowdfund Insider), Rated: B

Lendio, an online lending marketplace for small business loans, announced on Thursday the opening of a new Lendio franchise in the Rochester area.

LendingTree,Inc. (NASDAQ:TREE) Files An 8-K Departure of Directors or Certain Officers (Market Exclusive), Rated: B

On December 19, 2017, our Board of Directors and Nikul Patel mutually agreed to change Mr. Patel’s position to Chief Strategy Officer, effective January 1, 2018. He currently serves as Chief Product and Strategy Officer, a position he held since November 2016.

United Kingdom

Zopa to launch a bank (Monzo), Rated: AAA

It’s why we’re applying to launch our own next-generation bank. We’ve listened, and we’re confident that we can deliver the bank that will be the best place for your money.  

Leading comparison websites have removed potentially misleading information from their sites after a Moneywise investigation found peer-to-peer (P2P) investment products included in the same best buy tables as high street savings products.

Moneywise looked at the UK’s leading product comparison websites and found issues with the four sites which offer P2P comparisons – Go Compare, Love Money, Money.co.uk and MoneySuperMarket.

A helping hand for small businesses (Money Week), Rated: A

A decade after the credit crunch, too many small and medium-sized enterprises (SMEs) in the UK still feel their potential is being hampered by a lack of access to appropriate financing. The government’s Industrial Strategy report, published at the end of November, identified financing issues as a clear problem for SMEs that are looking to grow; surveys of sentiment continue to reveal frustration.

Research from Hitachi Capital Business Finance shows that two-thirds of SMEs with growth plans for the year ahead fear that their expansion plans could be derailed if they cannot secure appropriate finance. A third of SMEs applying for finance aren’t securing enough funding to underpin their investment plans, according to similar research from Close Brothers Group; a quarter of SMEs think funding is still too dear.

New rules clarify P2P business borrowers are not deposit takers (P2P Finance News), Rated: A

In an announcement titled ‘protecting the future of P2P lending’, the Treasury said that no P2P business borrower needs to be regulated as a ‘deposit taker’ – often referred to as a ‘banking licence’ – unless that is their core business.

This clarification will be added to the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001.

10 business trends to look out for in the coming year (inside.co.uk), Rated: B

“I think we will see a strong increase in the number of Scottish businesses sourcing peer to peer lending, which matches borrowers directly with lenders, in 2018,” Hardie said. “Companies such as the Lending Crowd are currently the business world’s best kept secret, but their ability to deliver speedy transactions with attractive terms are firmly establishing them as strong alternatives to the banks.”

“A European directive being implemented in January 2018 will ban businesses from charging customers extra for making payments using a debit or credit card in the EU,” said Lynne Walker, head of business advisory at Johnston Carmichael.

China

China’s LexinFintech Completes $ 108M Listing As Sixth Chinese Fintech IPO In US (China Money Network), Rated: AAA

LexinFintech Holdings Ltd. (NASDAQ:LX), a Chinese online lender previously known as Fenqile backed by investors including Matrix Partners and JD.com Inc., has completed a listing on the NASDAQ to raise US$108 million.

Chinese online lender LexinFintech surges in US market debut (China Economic Review), Rated: A

Chinese online lender LexinFintech Holdings Ltd’s shares surged in their US market debut on Thursday, as investors brushed aside worries about Beijing’s recent crackdown on China’s booming microlending industry.

LexinFintech’s shares jumped 53% from its IPO price, which valued the Shenzhen-based company at $4.5 billion, to reach a high of $14.88.

China IPOs In New York Rebound To 16 In 2017, Online Lender Lexin Aces Nasdaq (Forbes), Rated: A

The 16 Chinese companies in 2017 raised $3.7 billion or about 8 percent of the total $35.6 billion raised by 160 IPOs.

Chinese tech titans Tencent and Alibaba are behind some of this pick-up, as they backed recent new listers including Chinese search engine Sogou, e-book company China Literature, microlender Qudian and logistics company Best.

Squeezing in its IPO before the year, Chinese online lender LexinFintech Holdings listed on Nasdaq on Dec. 21, raising $120 million and trading upward on its opening day by 19.4 percent.

Fintech Pioneer Sees Money in the Masses (Caixin), Rated: A

China’s booming fintech sector will see growth come from small business loans, wealth management tools for the “affluent masses,” and technology that helps you sift through thousands of insurance products in minutes, according to Tang Ning, founder and CEO of financial conglomerate CreditEase.

As of September, the company’s wealth management business oversaw assets worth $20 billion for nearly 50,000 high net-worth customers in China. It also manages $1 billion through a venture fund, which is among the ten most active venture capital investors in global fintech companies, according to data provider CB Insights.

Caixin: What are the most promising fintech trends over the next decade?

Tang Ning: We see small business lending being a key area of growth. In the past 10 years, creative lending models have done a good job at serving individuals, but there is much more to be done for small businesses.

We also see the emergence of insurance tech.

How are Chinese investors’ needs changing?

We are seeing the Chinese wealth management industry go through profound changes. It is moving from fixed-income investments to equity investment, from short-term speculation to long-term investment, from China-focused investment to global opportunities, from investing into single products, single opportunity to comprehensive risk management and comprehensive asset allocation, from managing this generation’s wealth to thinking about succession planning and inheritance.

Chinese peer-to-peer lender Golden Bull sets terms for $ 9 million US IPO (NASDAQ), Rated: A

The Shanghai, China-based company plans to raise $9 million by offering 2 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Golden Bull would command a market value of $64 million.

European Union

Europe’s banks brace for a huge overhaul that throws open the doors to their data (CNBC), Rated: AAA

On January 8, banks operating in the European Union will be forced to open up their customer data to third party firms — that is, when customers give consent.

Banks will be required to build application programming interfaces (APIs) — sets of code that give third parties secure access to their back-end data.

Spain’s BBVA, Denmark’s Saxo Bank, Nordic lender Nordea and Ireland’s Ulster Bank have already published open developer portals ahead of the EU legislation.

HSBC has also made early moves toward meeting the incoming rules. In October, the bank launched a beta version of an app that lets customers see all of their bank accounts — including those from competitors — on one screen.

Several small lenders set up with the aim of competing with larger institutions are hoping to take advantage of the move toward a more open data infrastructure. U.K. firms Starling and Monzo, for instance, are want to make banking more like a “marketplace,” by connecting consumers with a number of products and services — including those from other providers — within their apps.

How PSD2 will make personal lending more competitive (IT ProPortal), Rated: A

Today, banks sell few unsecured personal loans to new customers – of seven of the UKs tier one banks only two offer personal loans to new customers – instead focusing on the needs and data of their own clients. The establishing credit risk and difficulties of pricing accurately has simply made it too complex to be competitive.

Also, although many peer-to-peer lending sites now have better protection for consumers as the industry became regulated by the FCA in April 2014, it can be argued this protection is greater for savers and lenders than it is for those borrowing and that the industry is still high-risk when compared with traditional routes.

This could all be about to change with the introduction of the intertwined The Second Payment Services Directive (PSD2) and open banking regulation.

First, XS2A will significantly improve the customer experience for loan applicants.

Hive Project buzzing after ICO (Bankless Times), Rated: A

After securing $8.95 million (BTC 2,087) from 2,234 participants through an ICO in August, Hive Project has released a demo version of their platform and completed an eight-market deal.

Hive Project uses distributed ledger technology to grant every issued invoice a unique fingerprint.

“In the Russian market alone there are  5.67 million SMEs with a combined turnover of €700 billion,” Mr. Soklic said.

Australia

ASIC releases second marketplace lending survey (Lexology), Rated: AAA

ASIC has released its second survey on the marketplace lending industry, which indicates steady growth in both borrowing and lending activity in the market since the last report.

Key findings from the report are outlined below:

  • there are three new marketplace lending platforms in the industry;
  • with $300 million in loans written to consumers and SMEs, there was a doubling of activity in relation to the number of borrowers and total amount borrowed since 2015-16;
  • the average reported default rate across the respondents was 2.2%;
  • there are an additional 4,187 retail investors since 2016, representing $12 million of extra investment in the industry; and
  • loan origination fees remained the primary source of revenue for marketplace lending providers.

The True Threat to Aussie Banks (Money Morning), Rated: A

The updated code of practice brings a number of changes. Most are simple consumer protections. Making it easier to cancel credit cards online, for example, and preventing banks from soliciting customers for credit limit increases.

India

Digital payments, P2P lending among key mega-trends of the year gone by (The Hindu Business Line), Rated: AAA

It was a great year for digitalisation and digital payments in the country.

Besides reducing the merchant discount rate for debit card transactions, the Centre announced a subsidy on transactions up to ₹2,000 via debit cards to expand the digital payment ecosystem.

P2P lending boost

Also, 2017 was a milestone year for the peer-to-peer (P2P) lending industry, as the RBI issued some guidelines in October.

Other defining changes

In April 2017, five associate banks of State Bank of India and Bharatiya Mahila Bank were merged into SBI, catapulting the latter into the league of top 50 global banks.

In May, the much talked about NPA ordinance giving greater power to the RBI to handle the bad loan crisis came about.

The other key decision of the RBI this year to improve transparency in the system was the move to make it mandatory for the banks to disclose in their balance sheets the extent of divergences between the gross NPAs in their book and those determined in RBI inspection. Private sector lenders such as Axis Bank, YES Bank and ICICI Bank were found to have under-reported their bad loan assets in recent years, prompting the central bank to take this decision.

How retail lending is set to scale up in 2018 (Financial Express), Rated: A

Major factors like steady decline in lending rates, strong focus and performance on growth and credit metrics in retail lending, investor interest in the segment, P2P regulation formalising the new category, increased focus on digitisation and path-breaking initiatives towards affordable housing are helping set a strong base for retail lending. Some of the big trends I see in the New Year are:

Consumer lending

Contrary to the slowdown in credit offtake by the corporate sector, retail credit segment has registered a strong growth of around 20% this calendar year.

Mobile: India today has more than 300 million smartphone users, removing geographical constraints of access to financial products. New venture investments will drive experiments in alternate lending.

Growth in MSME lending

With around 55 million MSME units employing over 80 million people, this sector contributes about 8% to the national GDP. Around 90% of these units are classified as micro businesses.

Growth in affordable housing segment

With home loan to GDP ratio of just 9%, the Indian housing finance sector remains relatively under-penetrated when compared to its Asian peers like China (20%), Thailand (17%), and Malaysia (34%).

The P2P Lending Segment will Drive the Next Phase of Growth of the Indian Fintech industry (BW Disrupt), Rated: A

With the much-awaited legitimacy, the sector is only at growth radar and trust in the segment is developing at a much faster pace. With more and more people moving towards online payments and transactions, the P2P lending space will witness a remarkable rise in the number of borrowers as well as investors. The growth will not only arrive from the urban India but also from Tier II and Tier III cities, leading the country towards the national goal of financial inclusion.

As predicted by NASSCOM, the Indian fintech space is expected to reach $2.4 billion by 2020, 2018 will act as a major contributor towards this direction.

How can P2P lending disrupt MSME sector in India? (MENAFN), Rated: A

There are more than 5 crore MSMEs in India and their contribution to the Indian economy is quite significant. The Micro, Small and Medium Enterprises are creating massive employability i.e. up to 12 crore people which is close to 33% of Indias manufacturing output. But still MSMEs suffer from an incredible capital shortage that amounts to Rs. 32 trillion as per the International Finance Corporation.

Fintech start-ups tap small-town users (Business Standard), Rated: A

Paynear, a start-up, has more users in small towns than in the metros. The Hyderabad-based firm, which provides a platform to traders for accepting digital payments, has seen a surge in growth from small towns. Of its 50,000 merchants, two-thirds are in small towns.

Funding Galore: Indian Startup Funding Of The Week [18-23 Dec] (Inc42), Rated: B

This week 19 Indian startups raised about $41 Mn in funding altogether in the Indian startup ecosystem.

Peel-Works: The consumer focussed SaaS and big data analytics startup raised an undisclosed amount in Series B funding led by Mumbai-based Unilever Ventures and Amazon Internet Services.

Faircent: Gurugram-based P2P lending startup Faircent raised $3.9 Mn (INR 25 Cr) in a Series B round of funding.

Asia

Financial inclusion is in your hands (National Multimedia), Rated: AAA

Aside from offering new innovative financial services to their existing customers, the use of Fintech also allows banks to serve potential |customers – those considered “underbanked” and “unbanked” – who in the past did not have access to financial services due to costs, lack of credit or access. The ability for the banks to serve everyone is known as “financial inclusion.” According to the World Bank, around 2 billion people don’t use |formal financial services and over 50 per cent of adults in the poorest households are unbanked.

A report from Thailand’s Ministry of Finance in 2016 shows that 56 per cent of Thais received micro finance from special financial institutions and less than 9 per cent from commercial banks. Clearly, most Thais often turn to non-bank providers for small sums of money.

The K Plus Shop is an example of fintech for financial inclusion from KBank. It is a mobile application designed to be a one-stop solution for micro businesses such as small shops and street vendors. The app is a point of sale, sales tracking, sales reports and PR tool combined into one app that anyone can download and use free of charge on any smartphone – iOS or Android. With K Plus Shop, the vendor can receive QR payment from any customer using K Plus, other mobile banking or e-Wallet applications via the standard QR for PromptPay, as well as from WeChat Pay and Alipay.

FintruX partners with blockchain data exchange DataWallet (Cryptoninjas), Rated: A

Authors:

George Popescu
Allen Taylor

Friday December 15 2017, Daily News Digest

mortgage tech

News Comments Today’s main news: Walmart partners with Even, PayActiv on employee financial wellness. Moody’s says some consumer ABS sectors will be weaker next year. LendInvest has $1B in funds under management. Yirendai’s investment in Lion Rock amounts to $50M. LexinFintech kicked off IPO yesterday. Crowd Genie to launch ICO. Today’s main analysis: Why mortgage tech is finally taking off. Australian […]

mortgage tech

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

Walmart Teams Up With Fintech Startups Even & PayActiv to Launch Financial Wellness Services For Associates (Crowdfund Insider), Rated: AAA

On Wednesday, retail giant Walmart announced it has teamed up with fintech startups Even and PayActiv to provide a suite of new financial wellness services for its more than 1.4 million associates nationwide.

Goldman Sachs’ and Morgan Stanley’s Big Growth Opportunities (The Motley Fool), Rated: AAA

Goldman Sachs (NYSE:GS) and Morgan Stanley(NYSE:MS) are both trying to expand their businesses into more traditional areas of consumer banking, such as consumer loans and mortgages.

Matt Frankel: Out of all the major unsecured lending platforms — Lending Club, things like that — Marcus was the quickest one to get to $1 billion in loan volume.

The interest rates people have gotten are more competitive than the others, because they can afford to run it at slightly more compressed margins than, say, a Lending Club.

Frankel: Morgan Stanley’s robo-advisory platform just launched. So that’s one way they’re trying to branch out into more traditional areas of banking and investing.

Just to throw a couple of figures out there, Morgan Stanley’s wealth management business, which is not the highest-margin business, which is why they’re not as efficient as Goldman, their wealth management business, they’re margin has gone from 9% to 22% since 2010.

Morgan Stanley estimates that their clients still have about over $2 trillion worth of assets with other asset managers, and they’re trying to bring some of that in.

Nearly 5 Million Americans in Default on Student Loans (WSJ), Rated: AAA

The number of Americans severely behind on payments on federal student loans reached roughly 4.6 million in the third quarter, a doubling from four years ago, despite a historically long stretch of U.S. job creation and steady economic growth.

In the third quarter alone, the count of such defaulted borrowers—defined by the government as those who haven’t made a payment in at least a year—grew by nearly 274,000, according to Education Department data released Tuesday.

The total number of defaulted borrowers represents about 22% of the Americans who were required to be paying down their federal student loans as of Sept. 30. That figure has increased from 17% four years earlier.

 

Mortgage Tech 101: What It Is & Why It’s Taking Off Now (CB Insights), Rated: AAA

By the end of 2017, nearly $1.8T worth of mortgages will have been originated in the United States this year, according to government-backed mortgage lender Freddie Mac.

Yet, despite the size of the mortgage industry, the space still hasn’t digitized. Originating, processing, and underwriting a home loan with a large bank lender still requires faxes and snail mail and take almost as long as it did 20 years.

Source: CB Insights

Driver 1: New lenders increase the competition

Non-bank lenders are becoming much bigger players in mortgages. In 2011, three banks accounted for half of new mortgage loans, according to the Washington Post. As of September 2016, that share dropped to 21%.

In 2011, just two of the top 10 biggest lenders were non-bank lenders. In 2016, non-bank lenders like Quicken Loans accounted for six of the top 10.

Driver 2: Incumbents are looking to improve their technology

At an average cost of $7,000, originating and processing a loan takes over 400 pages and more than 25 humans working hundreds of hours across 50 days. Of the total, approximately $5,000 can be attributed to human processing costs.

Driver 3: Individuals’ debt burden forces them to find alternative lenders

Eighty percent of millennial renters want to buy a single-family home or apartment, but 72% cannot afford to, according to survey data from Apartment List.

Source: CB Insights

Although total US homeownership has risen to 64% as of Q3’17, when examined by age group, the percentage of homeowners under 35 years old is only 36%. This is down from 44% in 2004.

Some consumer ABS sectors to have weaker collateral performance due to pockets of borrower stress and weaker underwriting (Moody’s), Rated: AAA

The anticipated continued expansion of the US economy into 2018 will support overall collateral performance of consumer asset-backed securities (ABS), according to Moody’s Investors Service. However, growing financial strains among some pockets of borrowers and loosening of underwriting by lenders will result in slightly weaker collateral performance for several categories of consumer ABS, including transactions backed by auto loans, credit cards and unsecured personal loans.

Amid further declines in automobile sales and used vehicle prices, Moody’s says issuers will generally maintain the steady collateral quality in their 2018 auto loan and lease deals, with incremental weakening in certain collateral attributes such as loan terms. New private student loan ABS, meanwhile, will likely continue to have strong credit quality and performance.

An Open Internet is Essential for Financial Inclusion (Huffington Post), Rated: AAA

The Federal Communications Commission (FCC) voted today to dismantle internet “net” neutrality: a vote that determined whether the internet should be treated like a public good or service or whether it should be treated like a product.

Another consequence of dismantling net neutrality has to do with undermining financial inclusion and the impending technological revolution of financial services. An array of financial technologies—online and mobile technologies referred to by their shorthand “fintech”—is heralded with the potential to expand access to financial services to underserved households and in underserved communities.

Internet connectivity is required for online and mobile transactions and many lower-income households alreadycannot afford internet service capable of making these transactions.

Online and mobile banking could become less reliable if internet service companies adjust connectivity speeds. Banks are increasingly shifting their products and services online and the number of bank branches is projected to decline by 20% over the next decade.

Prosper brings on JPM Chase veteran as board member (GlobalCapital), Rated: A

Online lender Prosper announced the appointment of Claire Huang as a board member this week as the company looks to enhance its product offerings in 2018.

Huang’s appointment was effective as of Tuesday, according to a company statement. Prior to joining the San Francisco-based lender’s board of directors, Huang was the first ever chief marketing officer at JP Morgan Chase.

INSIKT raises $ 50 million to lend to low-income communities (TechCrunch), Rated: A

An estimated 45 million Americans don’t have a credit score and others have trouble bringing up their scores, even if they are in a better financial position than in years past.

And after facilitating 125,000 loans in three years, INSIKT is raising $50 million to expand. The round is led by Grupo Coppel, with participation from FirstMark Capital, Revolution Ventures and Colchis Capital. INSIKT has raised $100 million to date.

INSIKT has built what they believe is a better alternative to payday loans, breaking up payments into smaller installments. Its white-label loan processing service is used in over 600 banks and credit union locations across California, Texas, Illinois and Arizona.

Kasisto Raises $ 17M in Series B Funding (Finsmes), Rated: A

Kasisto, the NYC-based creator of a conversational AI platform for finance, raised $17m in Series B funding.

The round was led by Oak HC/FT with participation from existing investors Propel Venture Partners, Two Sigma Ventures, Commerce Ventures, Mastercard and Partnership Fund for New York City.

Consumer lending 2017: Bold bets and strategic exits (American Banker), Rated: A

With the economy continuing to improve and household wealth growing, total consumer debt has increased in 12 consecutive quarters and hit a record $12.8 trillion in the second quarter, according to the Federal Reserve Bank of New York. And, for the most part, consumers are staying on top of their bills. The American Bankers Association said recently that the midyear consumer delinquency rate held steady around 1.56%, which is below the 15-year average of 2.16%.

Banks searching for growth pushed and pulled on a variety of consumer lending levers this year. Personal loans, particularly those offered through digital channels, were especially popular as banks aimed to emulate online lenders’ speed and efficiency.

How Twine, John Hancock’s robo-adviser tool, keeps a startup feel (Tearsheet), Rated: A

John Hancock wants to change that narrative with Twine, its robo-adviser and personal finance tool it released last month.  Twine emphasizes simplicity in its look and feel — a user interface similar to many startup-developed apps out there.

John Hancock looked outside, buying San Francisco-based financial services AI startup Guide Financial in 2015.

Twine operates as a separate organizational unit based in San Francisco, while most of John Hancock’s offices are in Boston. The team of around 25 employees includes engineers, product managers, user experience designers and marketing staff. But despite being organizationally separate, Goose said the team stays in contact with the mother ship through travel and video conferencing.

41% of households mix digital, human financial advice (InvestmentNews), Rated: A

But this isn’t a return to the way things used to be, said Hearts & Wallets, the Rye, N.Y.-based research firm that conducted the study of 40,000 individuals.

Today’s investors are what the firm calls “hybrids,” who use a mix of paid and free live professional advice, digital advice and their own insights. They now account for 41% of all U.S. households, the firm said.

Blenders of digital and live advice include 68% of consumers ages 35 to 44 with investable assets between $100,000 and $250,000, and 85% of consumers under age 35 who have over $1 million in assets. In all, over 75% of consumers under age 45 with assets of over $250,000 are “hybrids,” the firm said.

USAA’s Heather Cox is blurring the lines between business and technology (Tearsheet), Rated: A

In hiring Cox, the San Antonio bank, which has a longstanding reputation for being innovative, effectively agreed to restructure the entire company. She has plans to “levelize” the business and technology teams and morph them into “business technologists,” who are empathetic and understand that technology is the enabling function of their entire business — not the checking account or the insurance policy.

The new model will make USAA look more like one of the technology “greats” — the usual suspects like Apple, Amazon, Facebook and Google — instead of an old bank or insurance company, Cox said.

 

Despite court win, OCC still faces legal ‘landmine’ over fintech charter (American Banker), Rated: A

Comptroller of the Currency Joseph Otting has not weighed in on the fate of a fintech charter yet, but the ball is now squarely in his court.

The agency that Otting was just appointed to run scored a victory earlier week when a judge dismissed a lawsuit from the New York Department of Financial Services, which had challenged the Office of the Comptroller of the Currency’s authority to create a charter for fintech firms.

Jax small businesses turn to site to find lenders (Jacksonville Business Journal), Rated: B

New York-based Fundera has made a splash in Jacksonville with companies looking to find lenders.

Regions Bank Increases Prime Lending Rate (BusinessWire), Rated: B

Regions Bank today announced it is increasing its prime lending rate to 4.50 percent from 4.25 percent, effective Thursday, Dec. 14.

United Kingdom

LendInvest hits $ 1bn in funds under management (AltFi), Rated: AAA

Cutting out retail P2P investors doesn’t seem to have slowed LendInvest down. The UK’s leading fintech property lender now holds £765m (approximately $1bn) under management. Its capital base has more than doubled in 2017, up 104 per cent since the start of the year.

Manchester tops the buy to let index for England and Wales (PropertyWire), Rated: A

The highest yields for landlords are in Manchester at 5.55% and the city is also top in terms of rental growth at 5.76% and has a reasonable capital gains growth at 8.34%, the buy to let index from specialist lender LendInvest.

When it comes to capital gains the top city is Colchester at 11.96%, followed by Southall at 11.09%, Hemel Hempstead at 10.27%, Slough at 10.19%, Harrow at 9.89% and Ipswich at 9.44%.

Millennials will spend £1.1MILLION on rent over their lifetimes if they don’t get onto the property ladder (DailyMail), Rated: AAA

Millennials who began renting at 21-years-old and live in an average-sized property outside of London will spend an average of £110,830 in household rent before buying their first home – typically at an age of 32, according to research by peer-to-peer lending platform Landbay.

For those living in the capital – where property prices and rents are significantly higher – the amount increases to £273,210.

Source: DailyMail

Mortgage write-offs fall 79% in one year (Bridging&Commercial), Rated: A

The value of residential mortgages written off by banks and building societies has dropped by 79% in the past year, according to the latest research.
Data from the Bank of England revealed that UK lenders wrote off £72m of residential loans in the year end 30th September 2017, 79% lower than the same period in 2015/2016 – when £348m was written off – and even lower than pre-credit crunch levels.

Developer secures £1.9m from P2P platform for Merseyside projects (Development Finance), Rated: B

Mitty Group has secured £1.98m worth of funding from Assetz Capital to develop two new residential and leisure sites in Merseyside.

UK consumers ditching banks for digital loan alternatives (Finextra), Rated: A

UK consumers looking for personal loans are increasingly shifting away from traditional banks towards digital loan providers according to Zopa, the pioneering financial services company.

Research on the price comparison sector* shows loan sales obtained via price comparison sites have doubled in the last two years.
The data highlighted by Zopa shows that over 113,000 loans were sold through price comparison sites in the 6 months to April 30 2017, representing a 139% increase compared to the same period in 2015, whereas the overall unsecured personal loan market grew only by approximately 20% in the same period.

Gibraltar launches world’s first licence for fintech firms using blockchain (Independent), Rated: A

Gibraltar’s financial services watchdog will introduce the world’s first bespoke licence for “fintech” firms using blockchain distributed ledger technology from next month in a bid to attract start-ups to the British overseas territory as it prepares for Brexit.

Twenty-two of the world’s biggest banks and fintech firm R3 have just developed an international payments system using blockchain.

Gibraltar expects firms numbering well into “double digits” to seek authorisation after the new rules come into force on January 1, Gomez said.

China

Yirendai Makes $ 50 Million Strategic Investment in Finance Services Platform Lion Rock (Crowdfund Insider), Rated: AAA

China-based fintech Yirendai announced on Wednesday it has made a $50 million strategic investment in Lion Rock through the financial service platform’s Series A funding round.

LexinFintech starts IPO amid sector crackdown (Finance Asia), Rated: AAA

The Shenzhen-headquartered online micro lender, which launched the deal on Thursday, joins a flurry of other Chinese internet finance companies, including Qudian, PPDai and Hexindai, in their rush to  raise capital with a New York listing…with a US share sale worth up to $132 million.

Chinese fintech company PPDAI Group inks partnership deal with Sun Hung Kai (SNL.com), Rated: B

The move comes after Sun Hung Kai became a strategic investor in PPDAI Group through a private placement concurrent with the latter’s U.S. IPO.

European Union

Belgian crowdlending company expands in Europe (The Brussels Times), Rated: AAA

Look & Fin, the largest Belgian player in the field of crowdlending, plans to expand again in Europe.

On average, more than one million euros is invested monthly via Look & Fin. Loans vary between €50,000 euros and €1 million, with an average term of 38 months. Individuals invest on average €2,400 and can count on an average return of 7.6%.

Can a BBVA spinoff crack the digital ID code? (American Banker), Rated: A

Governments, banks and startups have been trying for years to solve the problems associated with identifying people in a digital world. The challenges are only getting harder thanks to identity thieves, data breaches that have exposed the personal information of hundreds of millions of consumers, and the fact that some folks want to avoid having to register face-to-face.

The latest entrant, a recent BBVA spinoff called Covault, is a bit different.

Its app lets consumers store their digital identity documents, passwords and (potentially) digital currency in a secure cloud, and then share pieces of that information with others as they see fit.

Regtech insights from Suade CEO, Diana Parades (Holland Fintech), Rated: A

Diana is the CEO and co-founder of Suade, a software platform which allows financial institutions to better understand and meet their regulatory requirements.

At SIBOS2017, Paredes encouraged financial institutions to think of regulation as being at the centre of their business. More education and research for implementation is needed, suggested Paredes in our interview. Smaller companies like startups offer more agile  implementation as they are technology driven companies. Meanwhile, the big machine of a bank is becoming better at agile acceptance of new technology.

‘Regtech will prevent the next financial crisis.’

Paredes explained this quote saying that while regulation is trying to prevent another crisis, it has no implementation guide. As such, regtech will be needed to give effect to the regulation.

Saxo Payments Banking Circle Nabs Prestigious Award (Holland Fintech), Rated: B

The Banking Technology Awards 2017 has named the organisation’s Banking Circle Virtual IBAN as the Best Corporate Payments Initiative.

International

Exclusive Interview with Celsius CEO Alex Mashinsky (ChipIn), Rated: A

Celsius is a peer-to-peer (P2P) and blockchain-powered global lending and borrowing network designed to enable coin holders to earn interest.

First off, why did you decide to use the blockchain to build Celsius?

The blockchain is the first real technology threat that the large banks have faced for the past 100 years. It has the potential to spur a new financial revolution from which they cannot adjust. We decided to build Celsius using blockchain to leverage the technology’s global presence and decentralized design to extract the bank’s profits and distribute them to our members.

What was your thought process behind it?

We want to find the best way to add the next 100M crypto users to the market, and we came to the conclusion that offering coin holders 5-7% in interest on their coins would be the best way to get there.

Did you face a problem within the consumer credit industry or do you think there is a gap in the market for Celsius to fill?

Unfortunately, the continued concentration in the banking sector has allowed banks to pay people less than 2% interest but charge our credit cards 25% interest when lending us the same dollars.

THE TRANSFORMATION OF THE GLOBAL REINSURANCE INDUSTRY (All About Alpha), Rated: A

A new paper from Milliman, a consultant to the insurance and financial services industries, discusses the ongoing transformation in and of the global reinsurance industry that alternative investment has created.

By the end of 2016, Milliman says, alternative capital in the catastrophe space consisted of around $76 billion, which breaks down as follows:

  • Collateralized reinsurance $39 billion
  • CAT bonds, $25 billion
  • Sidecars $8 billion, and
  • Industry loss warranties $4 billion.

As a proportion of the whole: alternative capital now represents roughly 13% of the available capital in global reinsurance.

Since 2011 the percentage of bonds with indemnity triggers has increased from 30% to roughly 70%.

Australia

Behind the 500% increase in small businesses using marketplace lending (SmartCompany), Rated: AAA

The number of small business customers signing onto loans through marketplace lenders has increased more than 500% over the past year, but experts say scrutiny must be put on the alternative finance sector now to ensure smaller operators get the best deal.

In 2015-16, ASIC’s survey of the sector put the total value of loans through this kind of model at $156 million, but that figure has doubled over the past year to now sit at $300 million. Total borrowers for the year jumped from 7,448 last year to 18,746 this year.

Australian Securities & Investment Commission Publishes Report on Marketplace Lending, Shows Double the Loans (Crowdfund Insider), Rated: AAA

Earlier today, the Australian Securities and Investments Commission (ASIC) published a report on the marketplace lending industry (peer to peer lending).  ASIC believes that by monitoring Fintech they are better positioned to assess any risk as the industry develops.

The survey covers marketplace lending activities of 12 platforms that are regulated by ASIC – so it is not comprehensive of the entire online lending sector.

In summary, there were 353 incidents or suspected incidents of fraud , compared to 126 incidents or suspected incidents of fraud during the 2015 – 16 survey. There was one cyber security incident, compared to zero during the 2015– 16 survey. There were reports of some borrower complaints but most appeared to be minor. The average default rate was 2.2%.

Source: Australian Securities and Investments Commission
Source: Australian Securities and Investments Commission

Read the full report here.

India

Impanix Fuels Loans Marketplace Finbucket With $ 1.87 Mn Funding (Inc42), Rated: AAA

New Delhi-based online loans and investments marketplace FinBucket has raised $1.87 Mn (INR 12 Cr) from Impanix Capital.

As evident from her statement, the online loans marketplace aims to use the newly raised funds in the growth of business and infuse new technology to scale further.

Asia

CROWD GENIE ASSET EXCHANGE TO HOLD ICO (Bitcoinist), Rated: AAA

Crowd Genie, a fully operational Singapore-based peer-to-peer digital lending platform licensed by the Monetary Authority of Singapore (MAS), has been selected by the token holders of the ICOS platform as the latest promising project to hold its own ICO.

Unlike most projects contemplating an ICO, Crowd Genie is not a startup but rather a debt-based lending platform that has been in operation for more than 12 months. It is one of only four P2P lending platforms licensed by the MAS. The project’s vision is to build a tokenized Pan-Asian lending exchange based on smart contracts, to ensure cost-effective, safe and efficient cashflows between lenders and borrowers.

The public ICO will begin on January 15, 2018, and will run until February 15, 2018. On offer will be 50,000,000 CGCOINs, a utility token which can be used to trade on the Crowd Genie platform.

Credit Suisse Snaps Up Fintech Stake (FiNews), Rated: A

Singapore-based fintech Canopy announced it has raised fresh funding of $3.4 million from investors including Switzerland’s second-largest bank Credit Suisse as well as Lionrock Capital.

Canopy, formerly known as Mesitis, is a Singapore-based anonymous account aggregation and analytics platform for financial institutions, wealth management professionals, and high net worth individuals.

Authors:

George Popescu
Allen Taylor

Singapore Fintech Market: Overview

southeast asia fintech lending

South East Asia (SEA) is finally embracing financial technology and marketplace lending is at the heart of this boom. The breadth and depth of solutions across FinTech Lending in the region is quite impressive and clearly signifies that a digital revolution is underway in the South East Asian lending industry. Top and Emerging Fintech Sectors in […]

southeast asia fintech lending

South East Asia (SEA) is finally embracing financial technology and marketplace lending is at the heart of this boom. The breadth and depth of solutions across FinTech Lending in the region is quite impressive and clearly signifies that a digital revolution is underway in the South East Asian lending industry.

Top and Emerging Fintech Sectors in South East Asia by Country

Singapore in particular has become a hub for the nascent fintech lending industry. It is the runaway leader in the region and holds 52% of the market share (both by number of deals and money invested). It is followed by Philippines which accounts for 14%, Thailand 13% and Indonesia 12%.

However, with so many different governments involved, SEA poses an overregulation risk. Already, P2P lenders here have to criss-cross through various layers of regulations that their competitors in other regions don’t have to face.

Singapore Fintech Market: Overview

Singapore has always been known as the technology capital of Asia; MNCs and financial institutions have considered it a natural choice as HQ for their Asian operations. Though Singapore has deep roots in technology and innovation but ironically it got on the Fintech bandwagon rather late. But with the support of regulators, Singapore has established itself as the “Fintech Hub” of South East Asia. Singapore fintech market crossed $83 million in deals during the second quarter of 2017. In 2016, investment in Singapore based fintech companies dropped by staggering 65 percent (US$605 million to US$214 million), as per KPMG International study- Pulse of Fintech. But interestingly the number of deals decreased by only two to 28 during the same period. The main reason for the fall was complicated authorization process for fintechs, but Monetary Authority of Singapore (MAS) is working aggressively to streamline the authorization process, in order to attract more fintechs to Singapore.

Regulatory Ecosystem

“Over the longer term, MAS hopes to see more fintechs using Singapore as a base to pilot and then deploy solutions to other countries within South-east Asia, such as Indonesia and Thailand,” said Mr Chia Tek Yew, the head of financial services advisory at KPMG Singapore.

Monetary Authority of Singapore; the regulatory body has backed the fintech industry right from the get go and that is the reason why Singapore has become the leader in South East Asia. Some of those favorable regulations are mentioned below:

  • Last year, under the “FSTI” scheme, MAS committed S$225 million (US$164.2 million) over the next five years to foster the innovation ecosystem in Singapore.
  • It also developed the road map that showed the central bank’s move toward an open Application Programming Interface (API) architecture.
  • In association with National Research Foundation, it announced the establishment of a dedicated FinTech office to facilitate the use of technology and innovation in the financial sectors (FinTech office to review, align and enhance FinTech-related funding schemes across government agencies).
  • It also released a consultation paper on proposed guidelines for a ‘regulatory sandbox’ that will enable financial institutions (FIs) as well as non-financial players to experiment with financial technology (FinTech) solutions.
  • Struck partnership with the Australian Securities and Investments Commission (ASIC) to help FinTech companies from their respective countries scale into each other’s markets and help reduce regulatory uncertainty and time to market and it is trying to strike such more partnerships with other countries as well.
  • MAS have also announced it will be opening a fintech innovation hub “the looking glass” to promote innovation.
  • It also released a consultation paper on proposed changes to the payments regulatory framework and establishment of a National Payments Council, whose key initiatives are to promote interoperability and adoption of common standards.

This highlights that though the regulator was slow from the blocks, but has aggressively covered ground to create a supportive environment for the fintech lending community.

Leading players in the Singapore Market

Capital Match ( an online peer-to-peer lending marketplace for SMEs based in Singapore and Southeast Asia. It provides SMEs with affordable working capital from professional investors through its online platform. It was founded in 2014 by Arnaud Bailly, Kevin Lim, and Pawel Kuznicki. Since inception, it has facilitated over S$60 million in cumulative origination. It has raised S$1,000,000 from three investors; Innosight Ventures being the lead investor. It offers business and SME loans and invoice financing facilities of S$50,000- S$200,000 with loan duration ranging from 3-12 months.

Minterest ()- Minterest is a peer-to-business financial technology platform founded by a team of former bankers with more than 120 years of collective experience in corporate and structured finance. It was founded in 2016 by Charis Liau, Ronnie Chia, and Wei Choong Loo. It offers various flexible funding options with interest rate as low as 1% and loan terms ranges from 3-12 months.

SmartFunding ( is a platform that provides trustworthy alternative financing solutions that are 100% focused on small and medium businesses. It was founded in 2016 and raised S$700,000 as seed funding. It offers invoice financing to SMEs.

FinAccel ( FinAccel is a financial technology company creating products for the retail credit sector for Southeast Asia. With an all-star team of investors, founders and employees, FinAccel is currently focused on disruption in the unsecured lending space. It was founded in 2015 by Akshay Garg, Alie Tan, and Umang Rustagi. It raised S$1,100,000 from various rounds of funding. Kredivo is the flagship product developed by the company; it gives ecommerce shoppers instant credit financing based on real-time decisioning. Jungle Ventures led the funding round in the company.

InvoiceInterchange ( is a peer-to-peer invoice-trading marketplace that provides working capital solutions to fund growth for small- to medium-sized enterprises. It offers both selective invoice discounting and the whole turnover invoice discounting to SMEs. It was founded in 2015 by Brian Teng and Nalinee Chinowuthichai. Investor fee is typically between 0.8% – 1.5% (per 30-days) of the advanced amount. Transaction fee is typically between 1.0%-1.5% of invoice amount.

Conclusion

Singapore has emerged as an undisputed leader in the SEA region but considering it has always been the gateway to Asia, it will certainly want to have a bigger share of the fintech lending pie. The MAS has laid out a well-thought out road map to attract startups and investments. With a massive demand-supply mismatch in credit, Singapore is poised to witness a marketplace-lending boom.

Author:

Written by Heena Dhir.

Monday June 26 2017, Daily News Digest

banks stress test

News Comments Today’s main news: LendingClub on its latest securitization. Atom Bank gets 30M GBP from UK government. Yoyo raises 12M GBP. ArchOver, Escalate partner. Stripe enters 6 new markets. TD Bank opens new branch in British Columbia. Today’s main analysis: Banks pass stress test. Today’s thought-provoking articles: OCC advises fintechs, MPLs. Congressman launches alt lending investigation. BNP Paribas startup camp the […]

banks stress test

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

Middle East

Canada

News Summary

United States

LendingClub Closes First Self-Sponsored Securitization to Expand Investor Access (LendingClub), Rated: AAA

LendingClub (NYSE:LC), America’s largest online marketplace connecting borrowers and investors, today closed its inaugural self-sponsored securitization deal. The Consumer Loan Underlying Bond (CLUB) NP Credit Trust 2017-NP1 (CLUB 2017-NP1) issued $279.4 million in notes backed by consumer loan assets facilitated through the LendingClub platform. The transaction marks the start of LendingClub’s securitization program as Sponsor, Servicer and Administrator. LendingClub expects to sponsor programmatic securitizations and to use the CLUB structure for future transactions. This is the fifth securitization backed by consumer loan assets facilitated through the LendingClub platform and the third rated securitization of such assets overall.

LendingClub anticipates that programmatic use of the CLUB structure could provide institutional ABS investors with consistent access to securitized assets facilitated through its platform, standardization, consistency, and a more efficient means of financing for the long-term. The transaction was rated by Kroll and includes $162.4 million of Class A notes rated “A- (sf)”, $41.2 million of Class B notes rated “BBB (sf)” and $75.7 million of Class C notes rated “BB (sf)” backed by approximately $337 million of collateral. Each tranche of notes was oversubscribed by a diverse set of investors, most of whom were new to investing in assets facilitated by LendingClub. Citi and JP Morgan acted as lead underwriters. BNP and Jefferies acted as co-managers.

“I’m very pleased with our execution. We’re broadening our platform to tap into a large and liquid ABS market and with this deal we’ve reached 20 new investors, including insurance companies and large asset managers who are looking for new ways to access the platform,” said Patrick Dunne, Chief Capital Officer of LendingClub. “This transaction also demonstrates a capital markets financing alternative for the portfolios of our existing investors, which may provide better pricing transparency and enhanced liquidity.”

Bank Stress Tests Pass, True Lender Contest in CO, GS Marcus hits $ 1 Bn (PeerIQ), Rated: AAA

This week, major banks passed their Comprehensive Capital Adequacy Review (CCAR):

Source: Bloomberg, Federal Reserve, PeerIQ

One bank that has recently entered the lending market, GS Bank, reports they have achieved a $1 Bn lending milestone and remain on track to generate $2 Bn in loans by year-end – amongst the fastest growth rates we have seen across the PeerIQ data & analytics platform.

In the wake of emerging bank competition in the prime & super-prime category, non-banks are applying a few strategies:

  • Focus on underserved credit segments where traditional banks outside of a few specialists will not compete (e.g., Fair Square Financial, Loan Depot, various non-QM lenders)
  • Compete on brand and service, rather than rate, by offering a better customer experience and integrated product mix to a targeted customer segment. (e.g., SoFi)
  • Lending-as-a-Service models that enable banks and credit unions to compete with licensed technology (e.g., Upstart, Avant, LendKey)

On the securitization front, three deals from non-bank lenders priced this week including Springleaf ($650 MM), Lendmark ($350 MM), and Marlette ($323 MM).

OCC Offers Advice on Fintechs, Marketplace Lenders (Lexology), Rated: AAA

Defining a third-party relationship as “any business arrangement between the bank and another entity, by contract or otherwise,” the OCC explained that it can include activities that involve outsourced products and services; use of outside consultants, networking arrangements, merchant payment processing services, and services provided by affiliates and subsidiaries; joint ventures; and other business arrangements in which a bank has an ongoing third-party relationship or may have responsibility for the associated records.

Whether or not a fintech company arrangement can be considered a critical activity depends on a number of factors, such as whether significant bank functions (payments, clearing, settlements and custody, for example) are involved or other activities that could have a major impact on bank operations if the bank has to find an alternative third party or if the outsourced activities have to be brought in-house.

The bulletin also clarified that no requirement exists that a third party must meet the bank’s lending criteria in order to establish a relationship.

Banks must also establish appropriate processes and systems to effectively monitor and control the risks inherent within the marketplace lending relationships, the OCC said, from adequate loan underwriting guidelines to cover credit risk management to ensuring the marketplace lender has adequate compliance management processes in place to satisfy compliance risk management concerns.

To read Bulletin 2017-21, click here.

Congressman Cleaver Launches Investigation into Fintech Lending (House.gov), Rated: AAA

Today, U.S. Congressman Emanuel Cleaver, II launched an investigation into small business FinTech lending, including online companies that offer payday loan-like products for small businesses and individual consumers.

In a letter from Congressman Cleaver to the Chief Executive Officers of several rapidly emerging FinTech small business lenders, the executives were asked to share information about their company products, fees, and methods when it comes to disclosures and potentially discriminatory practices. The letters were sent to Lending Club, Biz2Credit, Fora Financial, Prosper, and Lend Up. Companies are expected to respond by August 10, 2017.

How To Fix And Flip A Property While Wearing Your Bathrobe (Forbes), Rated: A

In the first quarter of 2017, according to ATTOM Data Solutions, there were 43,615 single family homes and condos flipped. These types of transactions accounted for 6.7% of all homes sold in Q1. Across all markets, flippers averaged a $64,284 gross profit, according to ATTOM.

This other way to invest has to do with another statistic in ATTOM’s report: “Flippers” borrowed an astounding $3.5B in Q1 to facilitate property acquisition and repairs. What’s not widely known is that a majority of this capital comes not from banks, but from private investors.”

  • The platforms source projects from real estate flippers through digital and boots-on-ground marketing.
  • Each platform has underwriting criteria that helps to determine which projects will be selected for funding. Our firm requires the flipper to have completed at least three projects in the last 12 months.
  • If everything checks out, the platform will fund the project and secure a first-position mortgage on the house.
  • Most platforms are “pre-funding” the loan, meaning they’re using their own capital to originate the loan.
  • For your investment, you can earn anywhere between 7-12% annualized return.

However, there are still some limitations.

  • Accredited investors only
  • Startup risk
  • Lack of control

Online Lender Accused Of Linking With Tribe To Get Immunity (Law360), Rated: AAA

A group of Virginia residents filed a proposed class action in federal court Thursday alleging that an internet lending company engaged in a “rent-a-tribe scheme” to allow it to charge illegally high interest rates on its loans while attempting to use a Michigan tribe’s sovereign immunity as a shield from suit.

Lula Williams and four other plaintiffs claimed in their complaint that Big Picture Loans LLC purported to be owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians.

CHOICE Act Helps Sharing Economy and FinTech, but a Senate Bill May Harm It (CEI.org), Rated: A

The U.S Senate should get to work on passing portions of the CHOICE Act, particularly regarding the sharing economy and FinTech. It should also shelve legislation that would harm those sectors.

One example of the latter is a terrible bill from Sen. Charles Grassley (R-IA) and Diane Feinstein (D-CA) that would shove any “issuer, redeemer or cashier” of a “digital currency” into the same anti-money laundering regulations as those that govern the big banks. This bill is called the Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017.

Small Business Financial Stability: What is the Role of Mission-Based Lenders? (Huffington Post), Rated: A

Small business ownership’s promise of long-term asset generation is not without tradeoffs. Unexpected shortfalls in revenues or increases in expenses can be devastating to a young business, and recent research by the JPMorgan Chase Institute reveals that small businesses operate with tenuous cash reserves to cover these costs. In fact, the typical small business could only cover expenses for 27 days in the case of a financial emergency. For businesses in low-wage industries, that time window drops to 19 days.

Business cash flow volatility often has consequences for household finances. Most small business owners (76%) respondto cash flow challenges by using personal funds. This could mean drawing from personal savings, foregoing a personal salary or maxing out credit utilization limits, which can damage one’s credit score and impact opportunities to secure future sources of financing. (The majority of small business owners use personal credit scores to apply for business capital.) Accion and Opportunity Fund borrowers generally re-invest business profits into the business rather than the household – 55% of study respondents experienced an increase in business profits in the previous six months but only 30% increased their household savings over the same period.

Often, small business owners find themselves in a cycle of debt after taking out a high-cost loan. In fact, approximately one in four small business loan applicants cite refinancing existing debt as their main reason for applying. Recognizing this trend in their own applicant pool, Opportunity Fund analyzed alternative loan contracts for 104 small business owners seeking relief from high-cost loan debt. Their analysis found that the average loan imposed an annual percentage rate (APR) of 94%. Further, the average monthly loan payment for business owners was nearly double their net income.

What is the role of mission-based lenders?

  • Lending innovation: alternative finance products fulfill an important demand—to keep the doors open in the case of a pressing financial need. Mission-based small business lenders must better meet that immediate need before entrepreneurs turn to costlier options.
  • Financial advising: Among those who participated in Accion and Opportunity Fund’s study, just over a half (54%) used a business financial plan. This illustrates the imperative of increased investment in financial advising that better equips business owners to plan for and manage financial emergencies while building long-term stability.
  • Education: The financial landscape is convoluted and ever-changing, and entrepreneurs need support in navigating their options. Accion publishes 90+ online resources per year to help business owners build their business and financial skills. Opportunity Finance Network’s Venturize campaign, which helps small business owners understand their financing options, generated over 73 million impressions in its first year.
  • Leadership: Advancing responsible lending practices is not just a moral imperative. It’s also a business imperative to ensure client satisfaction and business survival.

Robo-advice and payments are counterrevolutionary, but not fintech lending (AltFi), Rated: A

Worse: because it can easily be adopted by incumbents, robo may not just be un-revolutionary but actively counterrevolutionary, claims a new report by Silicon Valley think tank the Christensen Institute.

Payments is put in the same boat, noting it requires close cooperation with powerful businesses who control important infrastructure. And cooperation means large chunks of fees collected from merchants must be shared.

The report reserves higher praise for the marketplace lending which, it claims, has enormous potential and could even undermine banking majors’ ability to set interest rates.

Nevada Imposes Fiduciary Obligations on Broker-Dealers and Investment Advisers (National Law Review), Rated: A

Broker-dealers and investment advisers with clients in Nevada should review the fiduciary obligations contained in new amendments to the Nevada financial planner statute that go into effect on July 1, 2017.

As a result of the June 2017 Amendments, broker-dealers, investment advisers, and their representatives will now be classified as “financial planners” for purposes of the Nevada Securities Act and will become subject to the following provisions of the financial planner law:

  • Duties—A financial planner has the duty of a fiduciary toward a client. Accordingly, a financial planner shall disclose to a client, at the time advice is given, any gain the financial planner may receive, such as profit or commission, if the advice is followed.
  • Liability—If loss results from following a financial planner’s advice under any of the following circumstances, the client may recover from the financial planner in a civil action the amount of the economic loss and all costs of litigation and attorney fees.[2] The circumstances giving rise to liability are that the financial planner (1) violated any element of his or her fiduciary duty;[3] (2) was grossly negligent in selecting the course of action advised, in light of all of the client’s circumstances known to the financial planner; or (3) violated any law of Nevada in recommending the investment or service.

However, there are still some uncertainties that arise from this determination by Nevada to apply a statute intended for financial planners to broker-dealers and investment advisers. These include the following:

  • Duties—The June 2017 Amendments could be read to create a continuing fiduciary duty after delivering a financial plan. Registered investment advisers now deliver the plan and state that delivery ends the relationship (i.e., no continuing duty).

  • Delivery of Compensation Information—Delivery timing may be slightly off from Form ADV delivery. Form ADV is delivered to a client at or before the opening of the account, while the June 2017 Amendments call for delivery at the time advice is given.

  • Point of Sale Disclosure—It is not clear if the point of sale disclosure of compensation is intended to be different from the level of disclosure currently provided. In this regard, use of the term “gain” can be viewed as involving a different calculation than fees charged.

  • Broader Inquiry—The obligation under the June 2017 Amendments to “keep currently informed, concerning the client’s financial circumstances and the client’s present and anticipated obligations and goals for his or her family” arguably is a greater burden than is currently required.

Reg CF Portal Pivot: DreamFunded Abandons Startups for Real Estate Crowdfunding (Crowdfund Insider), Rated: A

DreamFunded, a FINRA approved Reg CF portal, has pivoted from its original model of providing access to capital for early stage companies. Today, instead of the next cool startup gracing the pages of DreamFunded there are single family homes up for investment.

Currently, they are in the legal process of getting our 1st Title III real estate debt deal approved, which expects to go live on July 5th, 2017.

Edward Jones Tops Internet Search Ranking (Barrons), Rated: B

The 15,000-advisor firm is dominating its rivals when it comes to pulling those searchers to its sites, InvestmentNews reports, citing a new study from Hearsay Systems and Moz.

Edward Jones spends nearly half of its media investment on digital marketing, Olsen tells the publication. Most of that is geared to the local digital space. Each advisor and branch has a custom microsite—a separate site outside the main company homepage.

Morgan Stanley ranked second in overall click share percentage. It also came out on top in paid searches, or ads. Wells Fargo Advisors and Fidelity Investments came in second and third on that list.

Lendy Expands: Appoints Three New Senior Hires to Team (Crowdfund Insider), Rated: B

Peer-to-peer lending platform Lendy recently announced it has appointed three new senior hires to its growing team. Shane Lewin was named compliance officer, while Shaun Reynolds was appointed development finance support manager, and Pamela Guillamon was appointed international marketing manager.

United Kingdom

Atom Bank gets £30 million from the government as Philip Hammond pledges investment boost (Business Insider), Rated: AAA

Startup bank Atom has received a £30 million funding boost from the state-owned British Business Bank (BBB).

British Business Bank Investments, the commercial arm of the BBB, announced it has agreed a £30 million Tier 2 capital facility with Atom, a digital-only bank founded in 2014. The facility, effectively a loan to Atom, will allow the Durham-based bank to lend out more money to small businesses.Startup bank Atom has received a £30 million funding boost from the state-owned British Business Bank (BBB).

Yoyo raises £12m as fintech defies Brexit fears (Financial Times), Rated: AAA

Yoyo Wallet, the fast-growing British mobile payments app, has raised £12m from investors including the German retailer Metro Group and fund manager Neil Woodford to finance its expansion in Europe and the US.

Yoyo, which recently passed the milestone of processing more than 1m monthly payments for its 400,000 registered users, has grown rapidly since its creation four years ago as a mobile app to pay for goods in university student unions.

The app is used to handle payments in 1,700 outlets, including over 60 UK and Irish universities; the canteens of several big companies such as JPMorgan Chase; and retailers such as Caffè Nero and Planet Organic.

The latest fundraising, which takes the total Yoyo has raised in three rounds to over £20m, will be used to finance the company’s expansion in the US.

ArchOver partners with Escalate (Bridging & Commercial), Rated: AAA

Peer-to-peer lending platform ArchOver has become the first UK lender to partner with commercial dispute resolution service Escalate.

The partnership will increase ArchOver’s ability to provide loans for the SME market, as well as helping borrowers collect disputed payments and enhancing security for lenders.

Escalate will enable ArchOver to recoup any disputed assets being used as security for loans over the ArchOver platforms.

WiseAlpha Set to Complete Crowdcube Round With More Than £1.1 Million in Funding (Crowdfund Insider), Rated: A

WiseAlpha, a UK online lending platform that gives everyday investors access to high yield institutional bond and loan investments, is set to close its equity crowdfunding campaign on Crowdcube with more than £1.1 million secured from nearly 1,000 investors.

The new ISA that pays 6.1% interest on your money – everything you need to know (Mirror), Rated: A

The average interest on a cash ISA is running at 0.4% according to recent figures.

So the news that a new ISA is paying 6.1% is bound to make people’s ears prick up.

Customers can put as much as £20,000 into a Zopa innovative finance ISA.

There are two rates on offer – a “Core” deal paying 3.9% returns and a “Plus” offering that pays 6.1%.

So far this year just 0.08% of loans have defaulted, although in the worst years of the credit crunch as many as 4.21% did.

Most of the time, fewer than 2% of loans actually default.

Investec Wealth launches ‘robo advice’ platform offering active management (AltFi), Rated: A

Investec Wealth & Investment has launched a new online investment platform called Click & Invest, aimed at competing in the fast growing ‘robo advice’ market.

The firm, which is one of the larger wealth management firms and part of the wider Investec group, has more than £32.5bn of client funds under management.  Its new platform aims to differentiation from the majority of robo-platforms “by going beyond algorithms and offering an actively managed investment strategy”, selecting from over 300 actively managed funds.

Individuals are not charged for setting up and creating a portfolio, commission, transferring in, withdrawing money or closing an account. Fees for Click & Invest are 0.65 per cent on the first £100,000 invested, 0.50 per cent on the, £10,000 invested and 0.35 per cent on any amounts invested over £250,000.

Fintech LendInvest’s growth slows due to ‘challenging’ property market and investment (Business Insider), Rated: A

Online mortgage marketplace LendInvest saw revenue growth slow and profits dive last year as it invested for growth and dealt with “challenging” market conditions.

Accounts seen by Business Insider show LendInvest’s revenue grew from £18.6 million to £22.1 million in the year to March 2017. That’s a significant slowdown on the prior year when revenues jumped to £18.6 million from £7.2 million in 2015.

The company made a loss of £1 million in the year to March 2017, down from a pre-tax profit of £2.4 million in 2016. Operating profits shrunk from £3.3 million to £52,000.

Linked Finance talking to AIB about lending deal (Independent.ie), Rated: A

Irish online lending company Linked Finance is in talks with AIB and other major Irish banks about future collaborations, its founder said.

Serial investor Peter O’Mahony, who founded the peer-to-peer lending platform, said the firm had been approached by AIB, Bank of Ireland and Ulster Bank.

Talks with all three banks are still at an early stage, but O’Mahony said there were a number of possibilities for collaboration.

China

Tencent and Bank of China jointly set up a joint financial and technical laboratory (01Caijing), Rating: AAA

Recently, the “Bank of China – Tencent Financial Technology Joint Laboratory” was established. Bank of China and Tencent Group will focus on cloud computing, large data, block chain and artificial intelligence and other aspects of deep cooperation, build Pratt & Whitney Finance , cloud finance, smart finance and technology finance.

Credit Insurance Meets Fintech: Hong Kong’s Atradius Launches New Digital Platform (Crowdfund Insider), Rated: AAA

Hong Kong-based credit insurance provider Atradius announced on Thursday the launch of its new digital fintech platform, Atrium. The company describes the portal as an innovative tool that provides customers and distribution partners with real-time data to better understand buyers, credit limits, and risks a company poses.

Chinese acquirers face tougher due diligence (Financial Times), Rated: A

A regulatory probe announced by China into the “systemic risk” of some of its biggest overseas acquirers is both welcome and troubling. Welcome because Beijing is raising a red flag over corporations long known for high leverage and opaque operations. Troubling because it creates big uncertainties, both for the future of Chinese outbound investment and for the several notable US and European brands snapped up in recent years.

The companies included so far in what is being called a “fact-checking” initiative are Dalian Wanda, the property-to-entertainment company, Fosun International, the consumer group, HNA, a diversified conglomerate, and Anbang, an unlisted insurer. Together, these four have bought $56bn-worth of companies in the past five years.

DCM Ventures leads $ 10m Series A in Chinese real estate crowdfunding platform (Deal Street Asia), Rated: A

DCM Ventures has led a $10-million Series A round in Duocaitou, a crowdfunding platform for accommodation industry, according to a company announcement.

Shunwei Capital, which is co-founded by Xiaomi’s chief executive Lei Jun, also joined this round.

To date, it claims total fundraising on the platform has reached RMB4.6 billion ($670 million) from more than 10,000 individual investors.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Jiangsu Suning Bank Co., Ltd., a private online bank backed by Suning Commerce Group Co., Ltd., officially launched last Friday.

Like many of its peers, Suning Bank aims to create an online-to-offline bank driven by technology and taking advantage of its 1,576 offline direct-sale stores and thousands of franchise stores to offer payment and banking services to customers. Suning Commerce and Jiangsu Sunrain Solar Energy contributed CNY 1.2 billion and CNY 944 million to the new bank, holding a 30% and 23.6% interest respectively, and the total valuation of the bank exceeded CNY 4 billion.

On June 12th 2017, in presence of the Prime Ministers of both countries, a Memorandum of Understanding was signed between China’s National Internet Finance Association (NIFA) and Luxembourg House of Financial Technology (LHoFT), providing a framework to intensify the cooperation between both countries in the area of digitalization of financial services.

Shenzhen Futian district has announced that it is forming a Fintech advisory committee to conduct industrial policy research, giving advice on investment promotion and gather input on regulation issues and industry trends. The committee will include 30 experts and representatives from various sections of the fintech industry.

Additionally, Futian district and Shenzhen Stock exchange also announced the launch of the first FinTech Index in China, which provides a benchmark to track the performance of companies engaged in financial technologies. The index includes all technologies applied to financial services as blockchain, digital payment and P2P online payment. It is based on May 26, 2017, and the base points are 3000.

On June 14, China Asset Management Co., Ltd. (China AMC) and Microsoft Research Asia jointly announced that the two sides will carry out strategic and cooperative research on the application of artificial intelligence in financial services and promote the intelligent transformation of the asset management industry.

On June 14, the Shenzhen Internet Finance Association, Hong Kong’s Internet Professional Association (iProA) and Singapore’s FinLab announced the establishment of the Shenzhen-Singapore-Hong Kong Fintech Hubs Federation.

China’s biggest dairy firm, Yili Industrial Group plans to invest CNY 300 million to set up a small-loans lender in Inner Mongolia Autonomous Region.

Personal credit card issued by the “letter” or will be established (iFeng), Rated: A

Phoenix WEMONEY news on the evening of June 22, Phoenix WEMONEY was informed that the personal credit card issued by the suspension, a number of third-party institutions or will initiate the establishment of “letter of the Union.”

April 20, the central bank credit management bureau director Wan Cunzhi in the “personal information protection and credit management” international seminar, for the first time announced, including sesame credit, Tencent letter, including the first batch of eight pilot personal credit card Of the credit business without a qualified.

Should You Worry About Baidu’s Fintech Move? (Madison.com), Rated: A

About 160 million people in China took out 1.2 trillion yuan ($180 billion) in online loans last year, according to iResearch. The firm sees that figure growing at an annual rate of 50% over the next three years.

iResearch reports that the average overdue rate ranges from 10% to 20%, and is the “main factor that prevents online lending from becoming a mainstream channel in China’s financial industry.”

Baidu’s Financial Services Group (FSG), which was officially formed a year ago, had 25 billion yuan ($3.7 billion) in assets at the end of its last quarter, which accounted for 12% of its total assets.

Fitch believes that Baidu’s credit risk is higher than Alibaba and Tencent’s, since those two companies are more profitable and have stronger cash flows.

But even if Moody’s downgrades Baidu’s debt from A3 to Baa1, or Fitch cuts its current rating from A to A-, the bonds would still be well within “investment grade” parameters.

European Union

BNP Paribas to Setup a 1,000-Startups Campus in Paris, France (Crowdfund Insider), Rated: AAA

There are nowadays gazillions of accelerators, incubators and startup labs, but no one comes close to Station F. Here is why:

  • The sheer size of the campus: 34,000 square meters, 310 meters long (the size of the Eiffel tower!), 1,000 startups, 3,000 startup workstations, and a total capacity to host 9,000 people. The building also houses 8 event spaces and many recreational areas, including a tennis court. More than 250 million euros are invested in its construction.
  • More than 17 big brand incubators. Next to BNP Paribas, HEC Business School, Facebook, China-based Serrinnov, online retail group Vente-Privé, VC firm Daphni, industrial group Thalès, South-Korea’s Naver, and more than a dozen other companies from all sectors will run their innovation lab or startup accelerator from Station F to benefit from the emulation and the synergies that the space offers.

For its Station F program, BNP has chosen to partner with a global partner, Plug and Play, a Silicon Valley-headquartered innovation platform with 22 locations around the world. Plug and Play prides itself with a track record of more than 2,000 backed or accelerated startups, including well-known brands like DropBox and SoundHound, and Fintechs like PayPal and Lending Club. Plug and Play invests in over 100 companies every year and connect startups to corporations.

The partnership between BNP Paribas and Station F will extend beyond hosting the accelerator. BNP Paribas will also become a reference bank for the startups and digital workers of Station F. Depending on their needs, these young companies will be able to draw on the wide range of services of the group which covers the whole spectrum from corporate finance and private equity to mobile personal finance.

Stripe refocuses European effort with 6 new markets and expanded payments platform (VentureBeat), Rated: AAA

Stripe has announced a handful of tidbits that underscore the fast-growing fintech startup’s aspirations in Europe.

Thus far, Stripe has only been fully available to businesses in the U.K., Ireland, Denmark, France, Spain, Norway, Finland, and Sweden. But as of this week, another six markets have been added to the mix: Germany, Switzerland, the Netherlands, Austria, Belgium, and Luxembourg.

Sarego, a New Crowdfunding Platform for Real Estate, Starts with Large Housing Project in Vienna (Crowdfund Insider), Rated: A

German real estate crowdfunding platform Sarego that uses platform technology from CrowdDesk, private investors may now invest in the first real estate project on the platform. The project  is for the development company Vermehrt GmbH who is crowdfunding one million euros for the energy-efficient renovation and modernization of Gründerzeit-old building in Vienna.

International

FinTech VC Funding Slowing (Forbes), Rated: AAA

US VC funding for Fintech was down by 13% to at $6.2 billion in 2016, much of this attributed to poor performance of lending platforms and a contraction of investment as VCs re-examine where the money is going to be made in FinTech moving forward. It was noted that there were virtually no new entrant digital banks in the US.

The UK attracted $834 million of investment in 2016, down by 38%, mainly attributed to Brexit, though a bumper venture round following the referendum delivered 8 of the top 20 deals attracting $368 million.

New digital challenger banks Atom and Monzo jointly attracted over $150 million in the first half of 2017 highlighting some of the differences between US and UK FinTech when it comes to lending platforms and digital banks.

FinTechs across the payments space continue to grow and MortgageTech / RealEstateTech is emerging and is being watched closely.

Though later stage valuations have appeared to come down, they still look high, and “flat” appears to be the new “up”.

Of the many attributes that VCs look for in startups: market, product fit, disruption and innovation, the key one critical to success is talent:  the founder / CxO and team:

  • Repeat entrepreneur?
  • Domain expertise?
  • Do strategy within a complex highly regulated ecosystem?
  • Marry strategy with detail and execution?
  • Recruit outstanding people that follow?

EY Fintech Adoption Index: China Leads the Pack. USA is Just Average (Crowdfund Insider), Rated: A

EY has published the “Fintech Adoption Index 2017” that grades the various markets where EY operates so just about most of the developed world. When you think about the giant internet firms in China, and the ubiquity of mobile internet, it just makes sense that China leads the way.

 

Australia/New Zealand

ASIC permanently bans former AMP Financial Planning adviser from financial services (Leaprate.com), Rated: A

ASIC announced that has permanently banned Perth man, David Fong, from providing financial services and engaging in credit activities after it was found that he acted dishonestly in the course of providing financial services and failed to comply with the ‘best interests’ duty.

ASIC decided to ban Mr Fong permanently after finding that he:

  • engaged in dishonest conduct relating to client records and applications for financial products;
  • provided advice to clients that did not comply with the best interests duty, was not appropriate and did not leave them in a better position having received the advice.
Asia

Itochu partners with Sinar Mas on Indonesian fintech (AltFi), Rated: B

Itochu, Japan’s second-largest trading company, has bought a US$50 million stake in an Indonesian P2P lending company as it views Indonesia’s weak financial infrastructure as a fertile harvest for fintech credit services, Nikkei Asian Review reports.

Middle East

A deeper look at the Middle East’s FinTech market (ITP.net), Rated: A

Despite a record-setting 2015 year that saw total global funding to Fintech companies reach $46.7bn, 2016 saw a decline in Fintech investment by 47.2%.

The quarterly report noted that despite VC investments slowing down in the second half of 2016, the year concluded with $2bn invested in Q416 across 200 deals. As a result, VC funding to Fintech companies reached a record of $13.6bn in 2016, up from the $12.6bn reported the year before.

KPMG also highlighted that corporate VC investment in Fintech rose for the seventh year in a row, reaching 145 deals and a total of $8.5bn in 2016.

Canada

TD opens new branch in Richmond, B.C. at Gilbert and Lansdowne (Newswire), Rated: AAA

TD opened a new concept branch in Richmond’s Cadence by Cressey community that marries environmental sustainability and legendary customer service in a uniquely inviting space. The branch, at the corner of Gilbert Road and Lansdowne Road in Richmond, is conveniently located in the new Cadence community which is walkable and close to the waterfront and Richmond’s Olympic Oval.

More comfort, convenience and sustainable attributes include:

  • An inviting, open concept feel encourages collaboration and conversation so customers can get the meaningful, personalized advice they need. When customers come into the branch, there is a mural of the Lansdowne Park Race Track circa 1928.
  • Energy-efficient design sustainably-sourced finishes help reduce the branches environmental footprint and reinforce our commitment to the environment.
  • A customer lounge offers a comfortable space to gather or wait for an appointment with access to tea and coffee.
  • Free Wi-Fi access for customers to use while they wait or to use during an appointment.
  • Digital displays throughout the branch offer customers access to current information, advice and tips to help manage their finances while they wait to see a customer service representative.
  • Sustainable interior elements like responsibly sourced wood finishes, recycled materials and low-energy LED lighting.
  • A flexible, scalable design allows the branch to easily grow and adapt along with the needs of the community.

The branch is also designed to be a full-service advice centre with employees to meet all its customers’ financial needs in multiple languages, including English, Mandarin and Cantonese.

As part of TD ‘s extended hours, the branch is open seven days a week – 9:00 am to 6:00 pm, Monday through Wednesday; 9:00 am to 8:00 pm Thursday and Friday; 9:00 a.m. to 4:00 p.m. on Saturday; and 11:00 am to 4 pm on Sunday.

Fintech Sandbox expands to Canada (Finextra), Rated: A

Today Ontario Centres of Excellence (OCE) and Boston-based FinTech Sandbox, signed an historic memorandum of understanding (MOU) to collaborate and expand the FinTech Sandbox model into Canada, starting in Ontario.

FinTech Sandbox will open its program in Ontario, which will provide quality data products from 32 industry-leading partners, to qualified start-ups in Ontario.

Authors:

George Popescu
Allen Taylor

Friday June 16 2017, Daily News Digest

Indonesia fintech

News Comments Today’s main news: SoFi wants to steal banks’ most coveted customers. Biggest online lenders don’t always check key borrower data. Fed issues FOMC statement. RateSetter puts aside George Banco partnership. Alibaba’s first fintech investment in Hong Kong. Investree enters Vietnam. Today’s main analysis: How fintech startups are transforming banking in Indonesia (A MUST-READ). Today’s thought-provoking articles: Real estate […]

Indonesia fintech

News Comments

United States

United Kingdom

China

International

Australia

India

Asia

Africa

News Summary

United States

SoFi Wants to Steal Your Most Coveted Customers (The Financial Brand), Rated: AAA

Don’t look now, but the ‘in your face’ fintech firm, SoFi, is moving from offering just student and personal loans to providing wealth management and opening checking accounts. And their target market is one of the most coveted by banking … the educated, affluent, digital-first Millennial.

In an interview with Mike Cagney, “Mad Money” host Jim Cramer said, “If Bank of America or Citi had the Internet when they were forming, this (the SoFi model) is what they would have started.” Cagney responded saying, “Absolutely. I think what’s going to happen is the banks are going to move toward our model over time. And we certainly don’t have the hubris to expect that we’re going to change all of banking, but we are going to drag them into a different kind of service model. One that’s a lot more aligned to the customer.”

The company is also developing financial planning services, which it expects to launch this summer. These include joint financial planning for couples and first-time home buying.

“If you look at SoFi, we run over 65 percent contribution margin across our three lending businesses. We’re the most profitable fintech company in the marketplace. And there’s huge opportunity to expand from that, and it comes down to cost of acquisition. If you build really strong brand, really strong evangelism, really strong what I call ‘cross-buy,’ you can drop that cost of acquisition significantly and that drives margins,” Cagney said.

When fintech meets CRA: SoFi bank bid draws activists’ ire (American Banker), Rated: A

In its early days, Social Finance made loans only to borrowers who had attended name-brand universities. Graduates of elite colleges were paying relatively high interest rates on federal student loans even though they represented a low risk, and the Silicon Valley startup saw in that mispricing a chance to make money.

SoFi CEO Mike Cagney noted in a 2013 interview that traditional banks were aware of this opportunity but were unwilling to pursue it.

Real Estate Lending: The Investment Bankers are Coming (Lend Academy), Rated: AAA

Back in 2012, I borrowed money to purchase a house I planned to fix-and-flip. I contributed 20% of the purchase price as a down payment. For the privilege of borrowing the other 80%, I paid a local “hard money lender” a 3.5% origination fee plus interest only payments at a 13% APR.

I started doing some more research into the market that was originating a majority of these types of fix-and-flip loans, which is called “hard money lending”. There were a few things that became quickly apparent to me.

  1. The market was highly-fragmented. There wasn’t a single lender that controlled any significant amount of the national market.
  2. The use of technology was virtually non-existent. The ability to apply online for a hard money loan didn’t exist. The lender I borrowed from didn’t even have a website.
  3. Capital formation was very analog. This put them in a perpetual cycle of originating new loans to keep their funds working while also raising additional capital to meet the demands of their borrower base.
  4. Hard Money Lenders, generally speaking, had a very negative reputation among the borrower community. This was in part due to the high interest rates. However, upon further digging, the real cause of dissatisfaction among borrowers was the lack of service and transparency.

Much like the early days of peer-to-peer lending, the new online real estate originators won business by providing a better borrower experience. Online applications with instant feedback on pricing and terms provided better transparency to borrowers. Quick funding decisions that are augmented by large data sets, rather than relying 100% on appraisals, allows these new lenders to provide more certainty around closing. Online dashboards where borrowers can order construction draws and make interest payments make the loan servicing experience easier for the borrower. Regardless of the financial innovation that is to follow, these technology platforms have improved the level of service provided to borrowers.

That said, the five largest online originators still only write between 5-8% of the total loan volume in the fix-and-flip market. We are still in the very early days of what is likely to be a massive consolidation of a previously fragmented market.

Biggest Online Lenders Don’t Always Check Key Borrower Data (Bloomberg), Rated: AAA

Prosper Marketplace Inc. doesn’t verify key information like income and employment for around a quarter of the loans it makes, according to documents tied to bonds that Prosper sold last month. LendingClub Corp. said it only verified income about a third of the time for one of the most popular loans it made in 2016, according to company data seen by Bloomberg. If either lender finds mistakes in a borrower’s application, such as overstated income, they may still go ahead with the loan, according to disclosures linked to bond sales from the companies, including documents for securities that LendingClub is offering now.

Online loans usually don’t have collateral, so when they go bad, investors can lose out. Traditional consumer finance companies and banks tend to check incomes and employment on closer to 100 percent of new customers before making these kinds of loans, according to industry executives. Online lending competitor Social Finance Inc. checks income on 100 percent of its borrowers, according to a report from Kroll Bond Rating Agency.

Investors in LendingClub loans earn average annual returns of around 4.3 percent, about three percentage points higher than the yield for two-year U.S. Treasuries. Those kinds of returns helped nonbank startups arrange more than $36 billion of loans in 2015, mainly for consumers, according to a report from KPMG.

LendingClub verified income on 35.6 percent of one of its most popular types of loans in 2016, according to company data obtained by Bloomberg. That figure has bounced around over time: it was 16 percent in 2008, and 47 percent in 2013.

LendingClub has had to write off a growing percentage of its loans — 8.5 percent, annualized, in the first three months, compared with 5 percent the same quarter a year ago.

Federal Reserve issues FOMC statement (Federal Reserve), Rated: AAA

Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent.

SEC: RIAs Are Worse Than BDs at Cybersecurity (Financial Advisor IQ), Rated: A

The SEC says many financial advice firms are falling short when it comes to cybersecurity, with investment advice firms being less prepared than broker-dealers, Reuters writes.

As part of its second stage of cybersecurity exams initiated in 2014, the SEC analyzed 75 firms and found that 26% of the companies don’t conduct risk assessments on a continuous basis and 57% of the firms fail to carry out vulnerability and penetration tests with simulated attacks on critical systems, according to the newswire.

The SEC has concluded that investment advice firms have had more issues with cybersecurity than broker-dealers, according to the newswire. On the other hand, the SEC learned that almost all investment advisors practiced regular system maintenance as part of their cybersecurity process, namely by consistently installing security patches, Reuters writes.

Only 4% of the companies examined were missing essential patches or updates, according to the newswire.

Marlette Funding Depositor Trust (SEC), Rated: A

On June 2, 2017, representatives of the Company provided us with a computer-generated unsecured consumer loan data file containing data, as represented to us by the Company, as of May 24, 2017, with respect to 29,806 unsecured consumer loans (the “Statistical Loan File”).  At your instruction, we randomly selected 125 unsecured consumer loans (the “Initial Sample Loans”) from the Initial Statistical Loan File using the following criteria provided to us by the Company:
(i)
3 unsecured consumer loans with a seller identified as “Seller #1” on the Initial Statistical Loan File;
(ii)
21 unsecured consumer loans with a seller identified as “Seller #2” on the Initial Statistical Loan File;
(iii)
1 unsecured consumer loan with a seller identified “Seller #3” on the Initial Statistical Loan File;
(iv)
23 unsecured consumer loans with a seller identified as “Seller #4” on the Initial Statistical Loan File;
(v)
15 unsecured consumer loans with a seller identified as “Seller #5” on the Initial Statistical Loan File;
(vi)
62 unsecured consumer loans with a seller identified as “Seller #6” on the Initial Statistical Loan File;
In addition, on June 13, 2017, representatives of the Company provided us with a computer-generated unsecured consumer loan data file containing data, as represented to us by the Company, as of May 24, 2017, with respect to an additional 4,203 unsecured consumer loans (the “Subsequent Statistical Loan File”).  At your instruction, we randomly selected 8 unsecured consumer loans from the Subsequent Statistical Loan File with an origination date (as set forth on the Subsequent Statistical Loan File) on or before March 31, 2015 (the “Subsequent Sample Loans”).  The Initial Sample Loans and the Subsequent Sample Loans are collectively and hereinafter referred to as the “Sample Loans”

Fintech Ingo Money raising $ 12M in venture capital, plans to add up to 100 jobs (Biz Journals), Rated: A

Ingo provides risk-management services to financial institutions, such as banks and payment networks. Investors include Baltimore-based Camden Partners, Philadelphia-based MissionOG, and Bethesda, Md-based CNF Investments.

Notice of Class Action Settlement (Google AdWords Email), Rated: A

In Re Google AdWords Litigation, No. 5:08-cv-03369-EJD
U.S. District Court Northern District of California
A $22,500,000 class action settlement has been preliminarily approved by the U.S. District Court for the Northern District of California, in the case In Re Google AdWords Litigation, No. 5:08-cv-03369-EJD.  Your rights may be affected and you may be entitled to a portion of this settlement if you are an eligible Class Member.
Who Is Included in the Settlement?
You may be a Class Member if during the period of July 11, 2004 and March 31, 2008, you: 1) were a U.S. resident; 2) had a Google AdWords Account; and, 3) were charged for clicks on advertisements appearing on parked domains or error pages.
What Is This Case About?
This case alleges that Google failed to disclose to its AdWords customers that it placed ads on websites known as parked domains and error pages.  The lawsuit alleges this conduct violates California laws against unfair competition and false advertising.  Google denies these claims.
How Do I Ask for Payment?
To receive payment, you must submit a claim form no later than June 21, 2017 and have spent at least $1.00 on AdWords served on parked domains or error pages between July 11, 2004 and March 31, 2008.  You may complete the claim form online at June 21, 2017. If you do not want to stay in the Class, you must submit a request for exclusion by June 21, 2017. If you exclude yourself, you cannot get a payment from this settlement, but you will keep any rights to sue Google for the same claims in a different lawsuit. The detailed notice explains how to exclude yourself, object, and request to appear.
The Court’s Fairness Hearing.
The Court will hold a Final Fairness Hearing on July 27, 2017 at 9:00 am PST at the following location: U.S. District Court for the Northern District of California, San Jose Courthouse, Courtroom 4 – 5th Floor, 280 South 1st Street, San Jose, CA 95113.  At this hearing, the Court will consider whether: 1) the settlement is fair, reasonable, and adequate; 2) to approve the service awards to the class representatives; and 3) to approve the award of attorneys’ fees and expenses to the attorneys for the class.
Where Can I get More Information?

SEC heightens exam focus on robo advisers (Financial-Planning), Rated: A

Under newly confirmed Chairman Jay Clayton, the SEC is setting its sights on expanded protections for retail investors, planning a series of RIA sweep exams exploring areas like robo advisers and money market funds.

Slated to launch this year is an exam sweep looking at how firms are deploying robo advisers, or using automated services to augment the provision of investment advice.

Levine said that the sweep will likely run along the lines of the guidance on digital advice platforms that the SEC issued in February, when it affirmed that robo advisory services still have a fiduciary duty, and warned of potential issues around disclosure and client communications.

Also this year, the SEC is planning to launch a sweep looking at how firms that traffic in money market funds are incorporating the rules the SEC adopted to shore up that sector following the destabilizing run in 2008.

As part of a broader focus on retail investors saving for retirement, the commission is also planning to launch a sweep exam looking at how firms are adhering to the schedules laid out in the disclosures of target-date funds, and another probing the controls advisers have in place on fixed-income cross trading relating to retirement accounts.

Initiative invests $ 5M to help more educators access Landed (Landed Blog), Rated: A

Today, we’re excited to announce that the Chan Zuckerberg Initiative (CZI), has invested $5,000,000 to create a Landed down payment support fund that will make it easier for educators in the Redwood City, Ravenswood City, and Sequoia Union High School districts in California — districts which face some of the highest housing costs in the country — to buy homes.

  • Eligibility: Any district or public school employee within the boundaries of Sequoia Union High School District, Redwood City School District and Ravenswood City School District.
  • Support: Up to half of a down payment (max $120,000), for the purchase of a primary residence.
  • Terms: Participants share up to 25% of the appreciation (or loss) in the price of the home upon sale, or after 30 years, whichever is sooner. There are no monthly payments.
  • Other: Participants can choose to end their relationship with Landed at any time. Financial coaching support will also be made available to participants.

Fletcher Jones Auto Group Partners With AutoGravity To Bring Financing Of Real Time Inventory To The Smartphone (PR Newswire), Rated: A

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, has announced the launch of real-time inventory on the Fletcher Jones Drive (FJ Drive) smartphone app powered by AutoGravity. Car shoppers now have access to the largest selection of Mercedes-Benz inventory in the nation, a seamless auto financing application and Mercedes-Benz Financial Services offer presentment – all in the palm of their hand through the AutoGravity powered FJ Drive app for iOS and Android.

AutoGravity joined forces with the Fletcher Jones Auto Group to launch FJ Drive, the nation’s first and only mobile app that allows customers to secure financing for any new Mercedes-Benz right on their smartphone. Real time inventory extends the partnership by empowering users to shop for specific vehicles sitting on the dealership lot. Guests can choose any Mercedes-Benz model and browse all available cars for their store of choice. Easy to use filters, including model year, body type and color, make finding cars simple and intuitive. Guests apply for financing and review their lease or loan offer in the app before picking up their car at the Fletcher Jones showroom.

Venture fund seeks fintech ‘workhorses’ (American Banker), Rated: A

Since its beginnings in 2015, Centana has invested in four companies, including the insurance technology company One and digital identity management firm Jumio. The New York-based limited partnership says it is hunting for other investment candidates and that it expects to put $5 million to $30 million into as many as 15 investments.

Centana is hoping to differentiate itself from other venture capital firms by pursuing “workhorses” — essentially, companies that will help incumbent companies improve on existing business models, Cukier said.

FinTech Marketplace Wealth Migrate Announces Luxury Condo Give-a-way (Benzinga), Rated: A

Wealth Migrate, an online real estate investment marketplace, announces the global opening of its #LikeAMillionaire luxury condo give-a-way. The competition, which is open to all new users who sign up on the WealthMigrate.com platform, is another example of how Wealth Migrate is putting quality real estate within reach of middle class investors throughout the globe, who typically do not have access to these types of deals.

The Zero-2-One Tower, standing 42 stories tall, is set to be the tallest building in Cape Town upon completion in 2020.

FinTech and InsurTech company IATAI Enterprises and payment solutions enabler BPP create Handy U (Crossroads Today), Rated: A

The FinTech and InsurTech company IATAI Enterprises (IATAI), which specializes in making mobile transactions, communications and other interactions quicker and easier across platforms, has joined forces with the payment solutions enabler BPP to develop Handy U, a universal and customizable payment, rewards and insurance solution for consumers, businesses and merchants.

Handy U is a reloadable Visa virtual/digital account that enables IATAI’s travel and insurance clients to instantly make and receive payments, access benefits and redeem rewards generated by their loyalty programs. Handy U is hosted on IATAI’s digital wallet, onepocket, which lets users combine several payment methods in a single transaction, both online and in-store.

First Foundation to acquire Community 1st Bank for about $ 50 mln (Reuters), Rated: B

* First Foundation – deal is valued at approximately $50.4 million in aggregate

* First Foundation – at closing, transaction is expected to be about 2.5% dilutive to co’s tangible book value per share with an estimated tangible book value earn-back period of 3.6 years

“Investing in Real Estate through Equity Crowdfunding Websites” Now On Demand (Benzinga), Rated: B

This Financial Poise webinar series explores the purchase of ownership shares in private companies via crowdfunding websites.

Episodes in the series address

  • the modes of angel investing in a company during its early stages,
  • the opportunities and perils of crowdfunding real estate investments,
  • the money-raising entity’s perspective and
  • a close look at crowdfunding options under federal and state law.

The 3rd episode of the “Equity Crowfunding” series is available now on demand! “Investing in Real Estate through Equity Crowdfunding Websites” (Register Here) features Moderator Chris Cahill of Lowis & Gellen. Chris is joined by Jordan Fishfeld of CFX Markets, Marty Coyne of Connected Investors Inc. and Lynda Davey of Avalon Net Worth.

Boston’s FinMason Announces New Fintech Accelerator Program (Crowdfund Insider), Rated: B

FinMason, a Boston-based fintech and investment analytics firm, announced on Thursday the launch of its new fintech accelerating program, FinSpring, which is described as an initiative that will provide free access to FinRiver, a set of flexible and lightning-fast investment analytics APIs.

United Kingdom

RateSetter Update: Decides to Not Go Ahead With George Banco Partnership (Crowdfund Insider), Rated: AAA

Last month, RateSetter announced it was entering a partnership with George Banco and acquiring an equity stake in the personal loan provider company. Unfortunately, RateSetter revealed earlier this month that it has decided to pull out of the partnership after all.

“We have subsequently decided not to go ahead with this new arrangement with George Banco. After further examination of the infrastructure required to do this, we concluded there were better uses of our development resources which may be deployed more effectively to source other borrowers. Therefore, we will not facilitate lending directly to George Banco’s customers, and accordingly we have updated our Principles of Lending document which sets out our lending criteria. The existing wholesale loans to George Banco will continue to be repaid in accordance with the schedule of the existing loan contracts. The total of these existing loans currently stands at £31.5 million.”

To see the updated Principles of Lending document, click here.

BTL index: Nothing to choose between Tory and Labour-voting regions (Letting Agent Today), Rated: AAA

The top ten buy-to-let postcodes in England and Wales are evenly split between locations that voted for the Conservatives or Labour.

Luton has been identified as the best buy-to-let investment location across England and Wales, with an average yield of 4.54% and rental price growth of 7.37%.

According to LendInvest, which analyses data from Zoopla and the Land Registry to compile its Buy-to-Let Index, Stevenage is the best performing buy-to-let postcode out of areas that voted Conservative last week.

The Hertfordshire town has recorded capital gains of 11.64% and rental price growth of 7.5% over the last quarter.

Luton is the top performing Labour-voting postcode.

Top 10 buy-to-let postcodes

Yield Capital gains Rental price growth Transaction volume growth
Luton 4.54% 12.83% 7.37% -10.40%
Stevenage 4.05% 11.64% 7.47% -9.40%
Rochester 4.55% 12.34% 5.45% -9.40%
Colchester 4.29% 14.14% 4.14% -11.16%
Dartford 4.37% 13.61% 3.92% -10.94%
Peterborough 4.71% 9.04% 6.98% -10.67%
Southend-on-Sea 4.30% 12.37% 3.89% -10.26%
Manchester 6.11% 7.58% 7.53% -12.41%
Canterbury 4.36% 9.34% 6.62% -11.49%
Romford 4.81% 14.42% 1.28% -11.67%

MoneyThing posts record month ahead of 2017 IFISA launch (P2P Finance News), Rated: A

MONEYTHING is on track to boost its loan origination ahead of an Innovative Finance ISA (IFISA) launch later this year, after delivering its highest new loan monthly level to date in May.

The peer-to-peer lending platform launched £7.7m of new loan opportunities last month, which marks its strongest result since it launched in February 2015, and £3.7m more than its previous record.

It now aims to roll out the tax-free wrapper by the end of the year, although the launch will not be imminent, a company representative told Peer2Peer Finance News.

Irish fintech firm Assure Hedge receives UK regulatory boost (Irish Times), Rated: A

Assure Hedge, a provider of foreign exchange technology to protect businesses from currency fluctuations, has received a boost from the UK Financial Conduct Authority under a programme aimed at drawing financial technology (fintech) under its regulatory oversight.

China

Meet Alibaba’s first fintech investment in Hong Kong (The Asset), Rated: AAA

Aiming to fix cash flow issues for companies operating in Hong Kong, Andy Chan along with his partner Winston Wong, set out on a mission to craft Hong Kong’s first invoice trading platform, Qupital.

Since its inception less than a year ago, the company has started to gain attention from companies including Chinese e-commerce giant Alibaba.

In terms of generating revenue, Chan shares that when an invoice is purchased, Qupital would take between 25-75 basis points of the total invoice value. Moreover, the company would take 20% of net gains made by funders.

With fresh capital from high-profile backers, Chan has his sights on deepening his business in Hong Kong with an eye on expansion to other markets in 2018 such as Thailand and Vietnam.

Baidu, With a Move Into Fintech, Gets Wary Credit-Ratings Look (WSJ), Rated: A

Baidu Inc. is among China’s tech giants looking to get a leg up in the competitive financial-services market. Credit-rating companies aren’t so sure it’s a good idea.

Fitch recently placed Baidu on negative watch, citing “significantly higher” business risks as it moves into making unsecured consumer loans and selling uninsured investments known as wealth-management products, which Fitch said are “part of the shadow banking system in China.”

Moody’s decided last month to place Baidu’s bond ratings on review for a downgrade, citing concerns over the firm’s short history in the financial-services business.

Baidu’s financial services, which also include its mobile payment platform, now account for about 12% of its assets, or 25 billion yuan ($3.7 billion)—representing rapid growth for a firm that formed its financial-services group only about a year ago. That has significantly changed Baidu’s credit profile, said Moody’s vice president and senior credit officer Lina Choi.

International

Transforming banking with fintech (HSBC), Rated: A

HSBC has its own tech teams designing new platforms and products, and they are absolutely brilliant. But we need to be humble and recognise that we don’t have all the answers. We invest in and work with fintech start-ups where we think they can help.

Our partnership with Tradeshift is making it easier for business customers to manage their accounts and their relationships with suppliers online, saving time and cutting down paperwork.

Retail customers in the UK can now download an HSBC SmartSave app, developed in partnership with a start-up called Pariti. It helps them save money without even having to think about it.

We have invested in a start-up which is developing technology that can sift through large amounts of financial transactions to pinpoint suspicious patterns. This will help us tackle financial crime more effectively, and, ultimately, keep our customers safer.

Australia

ZipMoney eyes profitability, partners with NAB (AltFi), Rated: A

ASX-listed fintech zipMoney has put the finishing touches on its A$260 million debt warehouse with big four bank NAB and could become one of the few all-Australian fintechs to make a profit.

The money raised will go to the “immediate refinance of $70 million of existing receivables”, ZipMoney told the ASX, resulting in lower interest rates across the board. It will also allow the company to increase volumes and hire more staff.

ZipMoney provides a ‘buy now, pay later’ service, offering shoppers loans between $1000 and $10,000 for up to eight months.

ASIC permanently bans Perth financial adviser (Professional Planner), Rated: B

An ASIC investigation found that between January 2011 and November 2012 Mr Hutchison dishonestly:

  1. banked cheques he received from his clients for advice fees directly into his personal bank account, when he knew he was obliged to remit or report them to RI Advice. Mr Hutchison then deducted additional fees from his clients’ investment platform or financial product for payment to RI Advice; and
  2. banked cheques he received from his clients for advice fees directly into his personal bank account and failed to record the receipt of the cheques on RI Advice’s payment system.

Mr Hutchison misled or deceived his clients by failing to disclose to them that they had been double charged advice fees and failed to comply with the proper process for remitting and reporting the fees. He also misled or deceived RI Advice by failing to disclose that he had deposited the advice fees into his own account and did not comply with RI Advice’s relevant fees policies and procedures.

India

SMC Capital, REPL launch Rs 1,000-crore real estate fund (India Times), Rated: A

SMC Capital and EPC developer REPL group have come together to launch a Rs 1,000-crore real estate fund, SMC IM Capital. The fund has already got commitments from global investors based in the US and Middle East and will look at a first close by end of this month.

The fund will invest between Rs 50 crore and Rs 80 crore in the middle segment affordable housing projects in tier I and II cities.

In India, real estate is the second largest employer after agriculture, and is slated to grow at 30% over the next decade. The real estate sector comprises four sub sectors — housing, retail, hospitality, and commercial.
Asia

Indonesian P2P lending site Investree to enter Vietnam, launches sharia-based service (e27), Rated: AAA

Indonesian peer-to-peer (P2P) lending startup Investree announced on Thursday that it is set to begin expansion to Vietnam in 2018, DailySocial reported.

The Jakarta-based startup said it is currently undergoing the process of setting up a joint venture with an undisclosed local financial institution.

Investree also announced that it is going to launch a sharia-based lending service in July; the startup is currently on the process of applying for certification from the National Sharia Board (DSN).

Gunadi cited strong demand from both borrowers and lenders to set up a lending practice based on the Islamic law, and by far three small businesses from Jakarta and Surabaya have agreed to join in the pilot project.

How FinTech Startups Are Transforming The Way Banks Function In Indonesia (inc42), Rated: AAA

India, November 2016. PM Modi launched a demonetisation drive to eradicate black money, fostering a new wave of digitisation in India. Consequently, there was a tremendous rise in the adoption of e-wallets, launch of new fintech startups, and the average Indian became familiar with a new financial entity, bitcoin.

From local grocery shops to petrol pumps to movie theatres, digital wallets have captured each and every day-to-day business which requires payments. Not only this, digital wallets have even seen a massive adoption for payment chores like booking air tickets or buying movie tickets or paying bills (DTH, Water, Electricity).

Be it digital payments, online lending, or remote banking, Indonesia has seen a surge of startups that have developed products to solve the current needs of the population.

At the same time, the country remains a challenging market for fintech industry to grow with only 40% of adults in the country having access to banks. 49 Mn SMEs unit are still not bankable, because of low credit score and little or no financial history.

It is estimated that only 40% of Indonesia’s 250 Mn populationcurrently have access to services provided by banks.

Secondly, Indonesia is a country of SMBs. These enterprises account for 99% of the total amount of enterprises that are operating in Indonesia and they create a total of 107.6 Mn jobs in Southeast Asia’s largest emerging economy, as per a Deloitte report. Moreover, Indonesia’s micro, small, and medium-sized companies contribute 60.6 % to Indonesia’s gross domestic product (GDP).

Thirdly, due to Indonesia’s peculiar geography, its traditional banking system suffers. The number of bank branches, which is estimated at 10 banks (branches)  per 1,000 square kilometersis far too low to serve Indonesia’s vast geography.

The major areas that startups are capturing and disrupting are payments, insurance, stock markets, investments, PoS, comparison, and online lending. Major startups in the payments sector include Mandiri, T-Cash, PayPro, IPayMu, Xenditi among others.

Digital payments have become so big in the archipelago that the total transaction value in the “Digital Payments” segment amounts to $18 Mn in 2017. Additionally, the total transaction value is expected to show an annual growth rate (CAGR 2017-2021) of 18.4 %, resulting in the total amount of $36 Mn in 2021. Popular fintech categories in Indonesia are lending platforms, capturing 17% and marketplaces for financial products that have occupied 13%.

Deposits, Lending, And Capital Raising

The online lending space is dominated by players included Modalku, Taralite, and Investree. The online lending segment has a huge market demand in the country, owing to the fact that a major population of the country has a low credit score and SMEs can benefit from these alternative services.

Taralite: Launched in 2016, the startup sanctions financial loans with relatively low interest, starting from 1%, for education, marriage, childbirth, house renovation, vehicle purchase, property & housing. It also provides loans without collateral. It recently secured $6.3 Mn from Japanese financial services provider, SBI Group.

MODALKU: Founded in 2016, it is an online lending platform, that provides loans up to IDR. 2 Bn, with relatively affordable interest. Its focus areas are SMEs looking for working capital, with minimum one year of operations.

Market Provisioning

Cekaja.com: Launched in 2013, the platform allows users to compare various financial products at one place.

Investment & Risk Management

JOJONOMIC: JOJONOMIC digitises the entire employee reimbursement process for an employee.

RajaPremi:  Founded in 2014, RajaPremi is an online insurance marketplace.

Bareksa: Founded in 2016, it is an online and integrated marketplace for mutual funds.

Digital Payments

Kudo: Launched in 2014, the startup has a website and a mobile application that enables anyone to be an online entrepreneur without having to personally stock the items.

DOKU:  A 2007 founded startup, Doku is the biggest player in the Indonesian payments scene. Functioning as an online and offline payment gateway for businesses and individuals, DOKU is an e-wallet equipped with links to credit card and electronic money.

t-cash: Founded in 2011, it is an electronic money service provided by Telkomsel (a telecom giant). Users are required to install the T-Wallet app on their mobiles and equip their mobiles with the t-cash stickers.

Ayopop: Launched in 2016, Ayopop is an app that specialises in bill payments.

POS (Point-Of-Sales Startups)

Pawoon: Launched in 2013, Pawoon is a cloud-based Point of Sales (POS) application for SMEs.

DealPOS: DealPOS is a cloud-based point-of-sale ( POS ), inventory and accounting software for business which was also launched in 2013.

A Year Ago… (LinkedIn), Rated: A

A year ago, I found myself on stage in Hong Kong, China speaking on “How Fintech Companies Can Differentiate Themselves and Build Special Competitive Advantage“.

Wondering in the halls of an incredible conference in Shanghai a few days later at LendIt Conference China, I was consumed with anxiety. Every platform I saw in China easily had 30 million plus active users. Whether it was credit, payment, insurance or investments, the conference in China was filled with eager entrepreneurs, seasoned executives and hunger investors.

Out of necessity, with a series of coincidences and a ton of luck I founded a company called MaxDecisions, Inc. with an old colleague and friend Henry Wang. We didn’t think too much of it and we didn’t really know where we will end up with it.

In the same month, I founded another company called Kuber Financial, LLC. and later Kuber Inc. with two other co-founders. Both of them left in the middle of the project, one early on and one late later year.

Fluid App came to me because I wanted to build something that’s truly different from all other platforms. A fun, mobile only, credit building product that could truly change lives of millions of young Americans. A FinTech, AdTech mesh up, that a lot of people are now starting to understand and appreciate my vision for this product.

With our 10th employee coming onboard at www.maxdecision.com next week, we’ve officially broke our first million dollars in sales.

Shenzhen – Singapore – Hong Kong Financial Technology Alliance was formally established (01Caijing), Rated: B

June 14, Shenzhen Internet Finance Association, THE FINLAB PTE LTD and the Hong Kong Internet Professional Association in the World Youth Entrepreneurship Forum officially signed a tripartite cooperation memorandum, at the same time announced at the forum, Shenzhen – Singapore – Hong Kong Financial Technology Alliance was formally established.

Africa

Payment Startups Lead Way In Africa’s Booming FinTech Scene (Forbes), Rated: AAA

Payments and remittances startups account for the majority of Africa’s over 300 fintech startups, though blockchain companies are the more likely to secure funding.

Payments and remittances is the most populated of nine sub-sectors addressed in the report, with 125 startups across the continent focused on making the process of sending and receiving money easier. Lending and financing – with 65 startups – is the next most popular category; indeed, over 60 per cent of all Africa’s fintech startups are focused on these two crucial spaces.

African blockchain startups are the most successful in percentage terms, with almost 40 per cent of the blockchain-focused startups on the continent securing funding.

The continent’s fintech startups have secured over US$92.5 million in investment since 2015, the report finds, while the data shows fintech startups are spread across the African continent. Southern Africa and West Africa are fintech leaders – with 34.2 per cent and 34 per cent respectively based in those regions respectively. South Africa has the most fintech startups (94), followed by Nigeria (74) and Kenya (56).

Authors:

George Popescu
Allen Taylor

Tuesday June 6 2017, Daily News Digest

u.s. FICO scores

News Comments Today’s main news: Proposed U.S. REIT credit rating methodology. Tisa group pushes for P2P lending in Sipps. Dumiao issues first digital lending ABS on Shanghai exchange. Today’s main analysis: Borrowers accelerating paydowns on six-figure student loan debt. Top 10 P2P lending platforms by volume and loan balance in China. Today’s thought-provoking articles: Millions of Americans just got […]

u.s. FICO scores

News Comments

United States

United Kingdom

China

  • Dumiao issues first digital lender ABS in Shanghai. GP:”ABS offering on Shanghai Stock Exchange. In general investors see the Shanghai Stock Exchange as being particularly prone to insider trading and not many international investors participate in the market. Despite this there is a need for Chinese ABS and there will be, with or without international investors, a Chinese ABS bond market due to the needs of local insurance, private equity, banks and other participants.”
  • Top 10 P2P lending platforms. GP:”A very useful list.”AT: “Interesting, Yirendai, #2 by loan balance, isn’t on the volume list.”
  • Renaud Laplanche to keynote at LendIt’s Lang Di Fintech conference. GP:”I think his return to the public speaking circuit in our industry in China will not receive as much visibility as expected. Renaud should speak in the US again.”

International

Australia

India

Asia

News Summary

United States

Proposed U.S. Real Estate Investment Trust Credit Rating Methodology (Morningstar), Rated: AAA

The four key components that drive MCR’s credit rating methodology for REITs are:

  1. Our Business Risk encompasses various measures of a REIT’s business risk.
  2. Our Cash Flow Cushion ScoreTM is an evaluation of a REIT’s ability to cover debt maturities, interest, and other debt-like obligations.
  3. Our Solvency ScoreTM is a predictor of default based on four key metrics.
  4. Our Distance to Default Score is based on a REIT’s likelihood of financial distress using market-based inputs.

Two separate component scores converge to form our final Business Risk assessment: Country Risk and Company Risk. Once we assign these two component scores, we weight them as follows to determine the overall Business Risk assessment for each REIT:

  • Country Risk: 10%
  • Company Risk: 90%

We believe EBITDA is the best measure of size for REITs and assign points for size according to the following scale:

Source: Morningstar

The distance to default metric is a market-based measure of financial health. Both inputs, equity volatility, and the ratio of enterprise value to market capitalization, are calculated using daily updated market data. This allows us to incorporate new information faster through the distance to default calculation compared with accounting-based measures of financial health. As a result, our credit ratings can be more responsive to early signs of financial distress.

  • Step 1: Calculate annualized trailing 300-day equity total return volatility (EQVOL).
  • Step 2: Calculate current enterprise value/market cap ratio (EVMV).
  • Step 3: Transform EQVOL into a percentile [0, 1] by ranking it relative to all other stocks in the calculable universe (EQVOLP). 1 represents high equity volatility, 0 represents low equity volatility.
  • Step 4: Transform EVMV into a percentile [0, 1] by ranking it relative to all other stocks in the calculable universe (EVMVP). 1 represents high leverage companies, 0 represents low leverage companies.
  • Step 5: Calculate new raw DTD = 1-(EQVOLP + EVMVP + EQVOLP*EVMVP)/3
  • Step 6: Transform new raw DTD into a decile [1, 10] by ranking it relative to all calculable U.S.-domiciled stocks. 10 represents poor financial health while 1 represents strong financial health.

Request for Comment (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC (MCR) will accept comments on this Request for Comment until 5 p.m. Eastern Time on July 5, 2017.

Comments should be submitted by the deadline date and time via email to NRSROconsultations@morningstar.com. Comments should contain your name, your title (if writing on behalf of an organization), your organization (if applicable), address, phone number, and email address.

Millions Of Americans Just Got An Artificial Boost To Their Credit Score (Zero Hedge), Rated: AAA

Stated simply, the definition of the all important FICO score, the most important number at the base of every mortgage application, was set for a series of “adjustments” which would push it higher for millions of Americans.

Now, as the Wall Street Journal points out today, efforts to rig the FICO scoring process seems to be bearing some fruit.  The average credit score nationwide hit 700 in April, according to new data from Fair Isaac Corp., which is the highest since at least 2005.

Meanwhile, the share of consumers deemed to be riskiest, with a score below 600, hit a new low of roughly 40 million, or 20% of U.S. adults who have FICO scores, according to Fair Isaac. That is down from 20.5% in October and a peak of 25.5% in 2010.

Extreme refinancing: Borrowers accelerating paydowns on six-figure student loan debt (Credible), Rated: AAA

A growing number of Americans who have student loan debt are enrolling in repayment plans that ease the burden of their monthly payments by stretching them out over a longer time period. Some borrowers pursuing this strategy may qualify to have their remaining debt forgiven after 10, 20, or 25 years of payments. Others will rack up thousands of dollars in additional interest rate charges without qualifying for loan forgiveness.

Credible’s analysis found most borrowers who have refinanced more than $100,000 in educational debt are taking the opposite approach. Most are on track to dispatch their loans in 10 years or less — saving tens of thousands of dollars in interest payments in the process. Many who have refinanced six-figure educational debt at lower rates will pay it off in just 5 years, Credible found.

Read the full report here.

June Legislative Update (Experian Email), Rated: A

Highlights include:

  • On May 19 Experian submitted comments in response to the CFPB’s Request for Information (RFI) on the use of alternative credit data and alternative credit scoring models. The CFPB sought comments on the types of information that should be considered alternative data and how it could be used to improve financial inclusion.
  • On May 18, Representative Marsha Blackburn (R-TN) introduced the Balancing the Rights of Web Surfers Equally and Responsibly (BROWSER) Act of 2017 (H.R. 2520). Blackburn is joined by Representatives Brian Fitzpatrick (R-PA) and Bill Flores (R-TX) as original co-sponsors of the bill. The legislation seeks to bring internet service providers and edge service providers under the same privacy regime, by designating the FTC as the nation’s sole online privacy enforcement agency.
  • On May 8, Representative Barry Loudermilk (R-GA) introduced H.R. 2359, the FCRA Liability Harmonization Act. The bill seeks to bring consistency to national consumer financial protection laws by capping class action damages and eliminating punitive damages to align the Fair Credit Reporting Act with other consumer financial protection laws.
  • In New York, S.B. 5601 amends the state’s breach law by adding biometric data to the definition of personal information and permitting email notification unless the breach includes access credentials for an email account. Notification would instead be provided in real time by providing clear and conspicuous notice when the consumer is accessing the account from their usual location.

Read the update here.

Marketplace ABS evolving (Structured Credit Investor), Rated: A

At the upcoming SCI Marketplace Lending Securitisation Seminar in New York on 22 June, panellists will discuss the structuring and evolution of marketplace loan ABS. The fact that deals are increasingly incorporating features to reduce risk is one area that is expected to be covered.

This trend is supported by the recent US$495m Prosper Marketplace Issuance Trust Series 2017-1 – the first ABS launched by Prosper via its own branded shelf, when previous deals had been issued by Citi on the CHAI shelf. Rated by KBRA and Fitch, the deal comprises US$311m A/A- class A notes and US$70.67m BBB/BBB- class B notes. KBRA rated the US$113m class C notes single B-plus, but these are unrated by Fitch.

Plaid Is Powering the Future of Banking and Finance (Inc.), Rated: A

Plaid co-founders William Hockey and Zachary Perret noticed the need for something simpler, a system that would do the heavy lifting for other companies aiming to work with real financial data. The pair developed APIs that can ingest the mass volumes of financial data on the backend, transform it into a useable format, and then build a service on top – in other words, a platform.

As developers themselves, they focused on building a platform that was developer-friendly and for building integrations. Due to this focus, they quickly saw growing demand from developers and the emerging fintech industry to help build new applications for financial services.

Hockey and Perret’s goal is to drive innovation in financial services. Instead of attempting to serve consumers directly, the pair believed it was a smarter move to build a business- and developer-facing platform, one that would power the entire fintech ecosystem for consumers indirectly.

Moving forward, Plaid will focus on scaling this year. Its main goal is to continue to grow the platform that is seeing a lot of demand — which also means recruiting more people to join the team. Although the team currently numbers around 90, the leadership hopes to grow the team to somewhere around 120 by the end of the year, hiring across all departments.

How this Ohio mutual is getting an edge in tech (American Banker), Rated: A

Recently, First Federal was one of the founders of an Ohio-based fintech accelerator. It’s also invested in Numerated Growth Technologies — a commercial lending technology that lets banks make lending decisions in as little as five minutes.

“Why can’t a group of 10 community banks figure out how to make investments in an innovative platform down the road?” he said. “Or a group of banks being part of a development fund to steer a variety of tech initiatives?”

With the accelerator, First Federal is teaming up with larger banks. Its partners in the accelerator include Fifth Third Bancorp, Huntington Bancshares, KeyCorp and the insurer Progressive. JPMorgan Chase and Silicon Valley Bank are also part of the initiative.

Sweden’s Klarna looks to fuel US growth with e-commerce financing products (451 Research), Rated: A

The vendor has grown from a niche Nordic payments specialist to a global player with operations in 18 markets in little more than a decade. Recently launching in the US, Klarna has chosen to orient its primary go-to-market efforts around an alternative financing offering for e-commerce purchases.

Sequoia raises $ 2 bln for global growth fund, additional capital for China, India funds (PE Hub), Rated: A

Sequoia Capital said it has raised more than $4 billion for venture and growth funds in the United States, China, India and elsewhere in the world, according to filings with the SEC.

The Silicon Valley-based firm said it raised nearly $2 billion ($1.9995 billion) for its Sequoia Capital Global Growth Fund II, according to the filings. The firm had unveiled the fund in 2015 but without a target. Commitments came from 104 LPs.

What is Nevada’s Pro-blockchain Bill? (The Merkle), Rated: A

The state of Nevada has proven to be quite open-minded when it comes to blockchains and cryptocurrencies these days. In fact, the State Legislature approved a bill preventing local governmental entities from taxing any blockchain transaction.

Senate Bill 398 was first introduced in March of this year and is now presented by Governor Brian Sandoval to be signed. Governmental entities can’t impose any tax or fee on the use blockchains by both individuals and entities alike. Moreover, they can’t require these users obtain a license or permission to use blockchain technology either.

Is Marketplace Lending a Safer Investment Than the Stock Market? (National Real Estate Investor), Rated: B

While equities are often thought to yield high returns with fairly low risk, it takes time for them to fully develop and come to fruition. Alternative investment vehicles are coming into the market that are becoming particularly attractive when investing with a low appetite for risk.

With consistency and diligence, the stock market can make for a profitable long-term strategy. According to Credit Suisse, as of February 2017, the U.S. averaged 6.4 percent in inflation-adjusted equity return.

Marketplace lending, on the other hand, has consistent returns with lower volatility. Investopedia names marketplace lending as one of the best investments for high return rates.

Essentially, the main risk associated with marketplace lending is that you are loaning to people who may not have been able to get approved through traditional outlets.

United Kingdom

Tisa group pushes for P2P lending in Sipps (Citywire), Rated: AAA

A working group run by the Tax Incentivised Savings Association (Tisa) is gathering advisers’ views on the use of alternative finance products such as peer-to-peer (P2P) lending in Sipps.

The group, which consists of the heads of several P2P and crowdfunding firms along with consultants and Tisa technical policy director Jeffrey Mushens, first met on 19 January.

It has highlighted tax regulation as a key barrier, as well as wider concerns about non-standard assets being held in Sipps.

Despite the industry body helping to push P2P into the mainstream, advisers may take some convincing, with many hesitant until the market has ‘matured’.

The survey is available here.

Most investors not expecting to beat cash, says peer-to-peer lender (AltFi), Rated: A

Major peer-to-peer lender RateSetter has unveiled the findings of a new survey of 2,000 people, of whom more than 500 invest their money via products like equities, bonds or peer-to-peer loans. The findings suggest that most of these investors expect their portfolios to be outperformed by cash over the next 12 months.

The average return on cash currently stands at a meagre 0.15 per cent, according to Bank of England data.

LendInvest launches new three-year bridge (Financial Reporter), Rated: A

LendInvest has launched a new three-year bridge product with 110% ICR as a funding alternative to a conventional buy-to-let loan.

The product is available on loans between £100,000 and £2 million with a maxmimum LTV of 70% on day 1, rising to 75% as interest on the loan is deferred and rolled up.

China

PINTEC Subsidiary Dumiao is First Digital Lending Tech Provider to Issue ABS on Shanghai Exchange (PR Newswire), Rated: AAA

PINTEC Group, China’s leading financial technology provider, announced that its wholly owned digital lending technology subsidiary Dumiao successfully issued RMB245 million worth of asset-backed securities (ABS) on the Shanghai Stock Exchange, in the first such issue by a digital lending technology provider.

The underlying assets of the ABS are receivables facilitated by Dumiao on Qunar’s “Naquhua” installment payment service. Qunar, a leading online travel agency in China, is supporting the ABS program, ensuring the asset formation and stable service operation. Dumiao, a leading digital consumer lending technology provider, supplies Qunar with a digital lending technology solution and offers consumers flexible and efficient financial service.

The Dumiao offering represents the first internet consumer finance ABS sponsored by a third-party digital lending technology provider. Prior to the listing of Dumiao’s ABS on the Shanghai Stock Exchange, ABS offerings from the internet finance sector had been dominated by e-commerce companies.

Top 10 P2P Lending Platforms (Xing Ping She Email), Rated: AAA

By the end of May 2017, the total loan balance of P2P lending platforms in China reached to $1146.30 billion, and the total volume reached to $366.05 billion. According to the ranking list issued by Online Lending House, we picked out the top 10 P2P lenders per Loan Balance and Volume.

Top10 P2P Lending Platform per Loan Balance in May 2017
Rank Lending Platform Location Loan Balance

(Billion dollars)

Growth of loan balance (%) Overall yield Rate(%) Loan term (Month)
1 Lufax Shanghai 19.48 4.34 7.9 31.01
2 Yirendai Beijing 4.90 5.12 11.56 30.68
3 JBH Beijing 4.18 1.37 7.45 5.39
4 Eloancn Beijing 4.10 -5.12 9.1 10.32
5 PPDAI Shanghai 3.28 12.49 17.22 11.24
6 Xiaoying.com Guangdong 3.06 21.35 7.34 8.4
7 IQianJin Beijing 2.82 13.31 10.96 30.17
8 Hongling Capital Guangdong 2.56 1.68 7.67 2.66
9 Niwodai Shanghai 2.49 -0.02 10.73 16.98
10 Renrendai Beijing 2.35 5.08 10.19 35.07

 

Top10 P2P Lending Platform per Volume in May 2017
Rank Lending Platform Location Volume

(Billion dollars)

Growth of loan balance (%) Overall yield Rate(%) Loan term (Month)
1 Lufax Shanghai 1.65 -0.68 7.9 31.01
2 Xinhehui.com Zhejiang 1.60 8.34 7.13 0.75
3 Hongling Capital Guangdong 1.30 2.22 7.67 2.66
4 Wei Dai Network Zhejiang 1.09 -7.70 7.62 2.81
5 Xiaoying.com Guangdong 1.02 52.99 7.34 8.40
6 Tuandai Network Guangdong 0.73 24.64 9.05 3.59
7 IQianJin Beijing 0.68 42.77 10.96 30.17
8 PPDAI Shanghai 0.61 -7.52 17.22 11.24
9 Yidai.com Sichuan 0.57 53.67 11.70 7.57
10 PPmoney Guangdong 0.52 185.77 9.50 6.35

Renaud Laplanche Joins LendIt’s Lang Di Fintech as Keynote Speaker (Crowdfund Insider), Rated: A

Now Laplanche is returning to the public stage as a keynote speaker roster for Lang Di Fintech 2017, LendIt’s Chinese conference. Lang Di Fintech, said to be the largest Fintech conference in China, marks Laplanche’s first public speaking role since founding Upgrade. His presentation is said to focus on the concept of online lending 2.0, including how new technologies such as Blockchain are increasingly incorporated into a Fintech company’s technology architecture.

International

Singapore fintech hub LATTICE80 launches initiative to connect Asia and Nordic fintech ecosystems (e27), Rated: AAA

Singapore-based fintech hub LATTICE80 has signed a memorandum of understanding (MOU) with the Nordic Finance Innovation (NFI), an independent Nordic executive network for the finance industry.

The partnership will raise awareness of fintech’s potential between Asia and the Nordics; office space sharing; events collaboration; in-country exclusivity; exchange programs for members; and the leveraging of mutual contacts and networks.

Meanwhile, 42 per cent of Nordic financial institutions surveyed want to expand their existing partnerships with fintech firms. 42 per cent of Nordic banks surveyed also intend to set up fintech incubators.

Tommaso Zanobini to Lead Fintech at Deutsche Bank (Crowdfund Insider), Rated: A

Deutsche Bank has hired Tommaso Zanobini as Managing Director and Global Head of Financial Technology (Fintech), a joint venture between Deutsche Bank’s FIG and TMT banking team.

SAIL Capital Awarded Most Innovative Sustainable Investment Firm, Recognised Leader in Global Resource Investing (PRWeb), Rated: B

Wealth & Finance magazine have announced the winners of the 2017 Alternative Investment Awards. SAIL Capital of Newport Beach, CA has been awarded Most Innovative Sustainable Investment Firm 2017 (Energy & Water) & Recognised Leader in Global Resource Investing 2017.

SAIL Capital has been a pioneer and thought leader in impact/alternative investing since the early 2000’s under the leadership of Founder and CEO Walter Schindler.

Now in its fourth year, the 2017 Alternative Investment Awards casts a light on the individuals, firms and departments from across all sectors that have played a part in shaping this dynamic and imitable industry.

Australia

How peer-to-peer lending could hit big bank profits (The Motley Fool), Rated: AAA

For example ANZ pays 2.4% annual interest on its one-year term deposit, and charges 13.95% annual interest on its personal loan.

Direct banks usually offer slightly higher interest rates on deposit accounts, lower loan costs, and reduced fees because they do away with the costs and inefficiencies (and arguably some of the service) of the traditional banks.

For example, the direct bank ME pays 2.85% annual interest on its term deposit, and charges 12.49% annual interest on its personal loan, making for a spread of 9.64%. Compare this to ANZ’s spread of 11.55% and you’ll note that ME’s more bare bones set up allows it to better cater to the more cost-conscious customers.

For example, the P2P lender DirectMoney Ltd (ASX: DM1) pays the investor around a 7.50% annual return for their personal loan fund, and charges the borrower around 9.50% annual interest on their personal loan. The spread is just 2.0% – a fraction of the banks with ANZ at 11.55% and ME at 9.64%.

Big BankANZ Direct BankME P2P LenderDirectMoney
Lender (Personal Loan) 13.95% 12.49% 9.5%
Borrower (Term Deposit) 2.4% 2.85% 7.5%
Net interest spread 11.55% 9.64% 2.0%

* All rate as of 2/6/17

Australia’s ASIC Proposes Next Steps on RegTech (The National Law Review), Rated: A

On Friday 26 May 2017, ASIC released its Report 523 titled “ASIC’s Innovation Hub and our approach to regulatory technology”. This report gives an update on the work of ASIC’s Innovation Hub and outlines ASIC’s current and proposed future approach to RegTech.

The report proposes that ASIC increase its focus on supporting RegTech developers, including by:

  • establishing a new RegTech liaison group comprising industry, technology firms, academics, consultancies, regulators and consumer bodies to enable networking, discussion of RegTech developments and collaboration opportunities that promote positive applications of RegTech;

  • continuing to hold RegTech trials and sharing knowledge about those trials with the market to promote wider use of technologies that promote good consumer and market integrity outcomes; and

  • hosting a problem-solving event (“hackathon”) later in 2017 to stimulate thinking and approaches to deal with problems of regulation commonly faced by the financial services sector.

India

Sundaram Finance backs online education loans marketplace GyanDhan (VC Circle), Rated: A

GyanDhan, an online marketplace for education loans operated by Delhi-based Senbonzakura Consultancy Pvt. Ltd, has secured an undisclosed amount from Sundaram Finance Holdings, a subsidiary of Chennai-based Sundaram Finance Ltd, it said in a statement.

The platform had raised an undisclosed amount in seed funding from Stanford Angels & Entrepreneurs and Harvard Angels in July last year .

It had earlier received angel funding from Satyen Kothari, founder of Cube and Citrus Pay.

Fintech platform MaxMyWealth raises funds from two UK firms (VC Circle), Rated: A

London- and India-based Heathwalk Advisors Pvt. Ltd, which runs financial technology platform MaxMyWealth, has raised an undisclosed amount from two UK-based firms, it said in a statement.

The firm will use the funds to build the team, enhance its offering and grow its customer base.

Asia

Top 10 Fintech Companies South Korea (TechBullion), Rated: A

According to Statista, the Transaction Value in the fintech market amounts to US$43,032m in 2017.

Developed by Samsung electronics, Samsung Pay allows users to make payments using compatible phones and other Samsung-produced devices.

Founded in 2013, Viva Republica is a fintech company that offers innovative peer-to-peer money transfer services via a mobile app called “Toss”.

8percent is a leading start-up that brings together savvy investors and creditworthy borrowers together so that both can benefit financially.

Founded in 2012, Rainist offers financial products recommendation based on individual’s life patterns and purchase behaviour.

DAYLI Financial Group is a leading financial technology platform consisting of innovative technologies such as machine learning, payment solutions, big data analytics, bitcoin exchange, and blockchain solutions.

‘Stocks Plus for Kakao’  enables users to check their stock quotes in real-time via Kakaotalk, a multi-platform messaging app.

Founded in 2011, Newsystock is a Robo-Portfolio platform that provides accurate analysis and equity purchase recommendations in the stock market.

Infosonic is the start-up that produces Sonic Pass as mobile authentication and payment app.

Authors:

George Popescu
Allen Taylor

Monday May 1 2017, Daily News Digest

Upstart

News Comments Today’s main news: Funding Circle US to bolster capital markets team. US investors in Yirendai try to preserve lawsuit. Fed wants a say in fintech rules. Ablrate gains ISA manager status. Mizuho commits to fintech partnerships. Today’s main analysis: AI fintech startups offer loans on new credit. Global fintech report from CB Insights. Today’s thought-provoking articles: Multi-seller ABS […]

Upstart

News Comments

United States

United Kingdom

European Union

China

International

Australia

Asia

Africa

News Summary

United States

Funding Circle US to bolster capital markets team (AltFi), Rated: AAA

Funding Circle US is currently advertising for a number of capital markets jobs, all based in San Francisco. Among the listed jobs is a newly created Head of US Capital Markets role.

A Funding Circle spokesperson told us that Sachin Patel is now running capital markets for the firm globally.

There are currently five capital markets jobs listed in the US.

US Investors In Chinese Online Lender Fight To Preserve Suit (Law360), Rated: AAA

Shareholders in Chinese peer-to-peer lending company Yirendai Ltd. asked a California federal judge on Thursday to keep their securities fraud suit against the company and its executives alive, saying their request to dismiss the case rested on mischaracterizations and factual arguments the court couldn’t consider.

The investors sued Yirendai in 2016 after news that Chinese regulators were cracking down on the peer-to-peer lending business sent its stock tanking.

AI Fintech Startups Offer Loans on New Credit (Nanalyze), Rated: AAA

We’ve found more than a dozen AI fintech firms through our friends at CB Insights that claim their machine-learning algorithms can evaluate loan applications in milliseconds while minimizing defaults.

Many of these companies target so-called thin-file borrowers—people with little credit history—who are usually trying to consolidate debt from high-interest credit cards.

CB Insights reported in its 2016 Global Fintech report that investments dropped from an all-time high of $14.6 billion in 2015 to $12.7 billion last year. Online loan companies, in particular, took something of a hit in 2016. The last quarter was particularly tough, with a 31 percent tumble in loan originations. (However, overall, the top online loan sharks companies tracked by S&P Global Market Intelligence improved their bottom-dollar on loan originations by 15 percent from year-to-year, mostly on the backs of small businesses and students.)

Avant offers direct unsecured personal loans ranging from $1,000-$35,000 with funding delivered as soon as the next business day. It has served more than 500,000 customers worldwide, though last year’s downturn for digital lenders also hit Avant. Its year-to-year loan originations were down 12 percent to about $1.7 billion.

Led by a bevy of former Google-ites, including former Google CIO and ZestFinance CEO and founder Douglass Merrill, ZestFinance has raised $62 million in equity financing, including an undisclosed amount last July. Total funding is $262 million thanks to a couple of additional rounds of debt financing. Peter Thiel’s name again appears on the long list of investors.

Key VC tech investors like Andreessen Horowitz and Khosla Ventures have helped pour $320 million of equity into Affirm, bringing total funding to $420 million after a $100 million round of debt financing from Morgan Stanley. The company is led by PayPal co-founder Max Levchin.

Upstart is an AI fintech version of Lending Club. Meaning it provides peer-to-peer lending. Like ZestFinance, it particularly markets to the skinny jeans crowd, offering loans of up to $50,000 to help consolidate debt, pay off student loans and build credit history for those living in hipster cities like Portland and Brooklyn. The machine learning bit involves taking less tangible variables like education, college major and astrological sign into account.

Upstart CEO (and former president of Google Enterprise) Dave Girouard told TechCrunch he expects his company to become profitable this year. He predicts Upstart will originate about $1 billion in loans this year after doing about $650 million in loans in its first 2½ years.

Federal Reserve wants a say on U.S. fintech rules -Brainard (NASDAQ), Rated: AAA

The Federal Reserve wants to give input on future rules governing how technology companies move into consumer lending markets, Fed Governor Lael Brainard said on Friday.

Policymakers will have to determine whether financial technology, or fintech, companies may tap the Fed for services that large, traditional banks enjoy.

“The OCC’s proposal raises interpretive and policy issues for the Federal Reserve regarding whether charter recipients would become Federal Reserve members or have access to Federal Reserve accounts and services,” Brainard told a conference at Northwestern University in Evanston, Illinois.

Ten Marketplace Lending Options for Accredited Investors (Lend Academy), Rated: A

LendingHome launched in 2014 but quickly established themselves as the leader in the category. They are the only real estate crowdfunding platform to have reached $1 billion in total loans issued, a milestone they crossed in December, 2016 just two and half years after launching.

PeerStreet were founded just 18 months ago but they are already making a name for themselves. They are also focused on the fix & flip market providing loans ranging from 6-24 months in length. They target 6-12% returns and they maintain a conservative maximum LTV (loan-to-value) of 75%.

Sharestates has offered both debt and equity investments, although the vast majority of their deals are for debt. These deals are similar to other platforms with loan terms typically 6-24 months targeting 8-12% returns.

RealtyMogul is one of the most established players in the space having launched in 2013. They have done around $260 million in deals and today they focus primarily on commercial property.

Patch of Land is 100% focused on debt deals tied to mainly residential properties but with a small number of commercial properties as well.

RealtyShares is a “full stack” capital provider, meaning they offer both debt and equity deals on a single project for borrowers. They have done some large deals including this $5.9 million deal for a 132-unit apartment complex in Ohio.

The world leader in marketplace lending for small business loans offers US accredited investors a solid option. Loan terms range from 12 – 60 months and interest rates from 5.49% – 27.79%. Loans are rated from A+ for least risky down to D grade. They have a marketplace where you can browse the loans on offer or you can setup automated investing strategies based on loan grade. As I wrote this there were 12 loans available on their marketplace. Funding Circle provides financials and other details about each company although they don’t provide the company name.

Streetshares is a relatively new small business lender, they launched in 2014, and they are focused primarily on providing funding for military and veteran community businesses. Run by two veterans they provide three different products: term loans (3 – 36 months), lines of credit ($5,000 – $100,000) and government contract financing (for companies dealing with federal or state government contracts).

P2Binvestor, or P2Bi for short, is an asset backed lender providing revolving lines of credit typically backed by accounts receivables. These lines of credit range from $250,000 to as much as $10 million.

Upstart has been something of a quiet achiever when compared to some of their well-established competitors. Founded by ex-Googlers they have a very data-centric approach to their business. One of the things that makes Upstart unique is they were the first platform to look at a borrower’s education and factor that into the lending decision. Interest rates range from 6.37% – 29.99% APR, loan terms are three or five years and amounts range from $1,000 – $50,000.

Could Facial Recognition Technology Transform Insurance? (FA Magazine), Rated: A

In Wilmington, N.C., a high-tech company called Lapetus Solutions has developed a technology it calls Chronos that interprets facial characteristics such as baggy eyes, rosy cheeks and double chins to estimate a person’s life expectancy. One purported use of this futuristic-sounding software is to help insurance companies assess risk quickly and inexpensively. Customers could then purchase life insurance online in record time, perhaps circumventing the usual medical examination altogether.

In theory at least, insurance carriers want to provide coverage only to those less likely to need it. The better the carriers understand and predict risks, the better they can manage their liabilities. So if facial recognition technology identifies risks that were previously unknown or unknowable, it could render some consumers uninsurable, an advantage perhaps for the insurance company but not the consumer.

But Erin Ardleigh, president and founder of Dynama Insurance, an independent insurance brokerage based in New York City, isn’t so sure. “How would facial recognition technology help underwriters? I suppose if it could identify clients [who were] engaging in risky behavior, such as smoking or skydiving,” she says.

Rodgers, though, contends that the decision of whether to try this or any other new technology may ultimately come down to dollars and cents.

McHenry Working With Senate Democrat on New Fintech Bill (Bloomberg BNA), Rated: A

A leading House Republican on financial technology issues said April 25 he is working with a Senate Democrat on a revised “permanent beta test” bill to prod regulators to foster fintech innovation.

“You must have a default ‘yes’ to new innovation,” Rep. Patrick McHenry (R-N.C.) said in a speech at the American Action Forum in Washington.

McHenry said the 2017 version of the act would include “significant changes and revisions,” but he declined to discuss those. He also declined to identify the Democratic senator with whom he is working. He said he hopes to introduce the new bill in two months.

Global Debt Registry Wins FinTech Breakthrough Award (GDR Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it has won the FinTech Breakthrough Award for ‘Best Business Lending Product’. The 

Female Fintech Founder On Series F And The Future Of Payments (Forbes), Rated: A

Karla Friede was first an executive with depth in sales and marketing and a passion for innovating. As the president and CEO of a company who had developed a new offering, a B2B payment technology, she was excited about getting to market.

Friede, now the CEO along with co-founders, Tana Law and Shaun McAravey, bought the rights to the idea from Zevez Corporation and in 2009 launched Nvoicepay.

Friede admits it wasn’t easy launching and scaling at that time. But, it taught them to be very smart with every penny. And, they had to prove their business case as they went along because investors weren’t throwing money at every shiny object.

Many B2B organizations don’t accept credit cards. And, managing ACH transfers require a lot of manual processes and the collection of sensitive financial data.

Friede says she was a little naïve in tackling the launch because the B2B payments space was so large. It’s one thing tackling Billion Dollar industries, it’s another thing dipping your toe into a market in the tens of Trillions.

Friede encourages founders to partner with people that think differently but complement your skills.

As Friede puts it, investors are looking for reasons not to invest in you…rather than reasons to invest in you. Don’t give them those reasons, give them a proven business model and secure set of customers.

Only 9% of VC-backed companies have woman CEOs so you won’t ‘look and feel like them.’ Instead, look and feel like someone who knows what they are doing and has proven it. That’s a shorthand all investors respond to.

If you are a female founder and you’re concerned about bias, she has this advice:

  • Target women-lead VCs or those with a woman partner.
  • Make it easy for the VC to relate to you.
  • Talk like the men around you.

She considers it a point of pride that they’ve raised $25M and it’s taken them to Series F to do it.

Small Change Announces Pittsburgh’s Liberty Bank Building Real Estate Offering (Crowdfund Insider), Rated: A

Real estate crowdfunding platform Small Change announced this week the launch of Pittsburgh’s Liberty Bank Building real estate offering. The funding portal noted that the project is seeking $300,000 to fund development of the building into co-working operator Beauty Shoppe’s flagship location.

Picker also noted that the next reincarnation of the Liberty Bank Building is having difficulty getting funds because it is considered to be the first full co-working building in Pittsburgh:

“Why is it so difficult to finance projects that bring innovation and new life to neighborhoods and cities? Must we rely on traditional financial institutions that are not very innovative at their core?”

Small Change added there is a 10% projected return on debt instrument. A full return of interest and capital is anticipated in 36 months. This is not an offer to sell securities.

State Bank Regulators Sue to Stop the OCC’s Fintech Charter (National Law Review), Rated: A

As we reported last fall, New York Department of Financial Services Superintendent Maria T. Vullo stated that she was “ardently opposed” to the Office of the Comptroller of the Currency’s (OCC’s) intention to process applications for a new financial technology (fintech) company charter. We now see just how much her counterparts in other states share that view, as the state bank regulators recently came together under the Conference of State Bank Supervisors (CSBS) banner to ask the federal courts to stop the OCC’s fintech charter initiative.

In turn, we believe that the CSBS action will act as a further disincentive for at least some fintech companies to pursue a national bank charter at this time.

Are Robo-Advisers in Your Future (My Prime Time News), Rated: A

Rather than having a “real” human being as your financial adviser, you can now hire a robot, or robo-adviser. The automated adviser will then manage your investment funds through the use of mathematical rules called algorithms. There is almost no human interaction.

While there may be cost savings, it is important to understand their risks and limitations before using them. First, what level of human interaction is important to you? While limited human interaction may result in reduced fees, many people feel more comfortable having often complex investment decisions explained by a person they trust. Before you decide to create an account with a robo-adviser, it’s important that you understand how the system works. Robo-adviser systems are limited to the information provided, and do not seek out new information or research potential options in the same way that a human adviser would.

Therefore, remember that even if you are not dealing with a human, you still need to verify the license of the service and the registration of the product or offering with the proper authorities.

FinTech Fireside Chat with PayJoy (Center for Digital Strategies), Rated: B

PayJoy is a FinTech company based in San Francisco, CA. PayJoy is bringing consumer finance to people who otherwise could not afford modern electronics such as smartphones. Today, PayJoy’s unique locking technology enables us to offer monthly installment payment plans to millions who otherwise would be unable to afford a quality smartphone. PayJoy’s ambition is to deliver affordable consumer finance to 1B+ people worldwide to obtain a smartphone and join the modern digital, mobile economy.

Poloniex Lending Bot vs Manual Poloniex Lending (The Merkle), Rated: B

Unfortunately, Poloniex Lending Bot cannot do much about issuing loans at very low rates when the market spikes. Additionally, the bot negates any opportunity to benefit from high long-term rates. Moreover, there is a 10% fee for using the bot, which can negate some of the profits earned rather quickly. It is a convenient lending bot, granted, but it should not necessarily replace manual, lending activities for anyone who knows what they are doing.

This also means one needs to buy small amounts of said coin to effectively issue the loan. If the coin suddenly plummets in value, that can cause losses in a cryptocurrency portfolio. Then again, a lending bot would not be able to protect users from falling currency values either by any means.

United Kingdom

Ablrate Gains ISA Manager Status and Passes £20 Million in Loans (EIN News), Rated: AAA

David Bradley-Ward, CEO at Ablrate, said: “Following our successful application for full authorisation from the FCA we now have the necessary approvals from HMRC to offer an Innovative Finance ISA. We hope to be able announce the launch of our IFISA soon after integrating the necessary technology.”

However, the asset backed lender is taking a cautious attitude towards the new product.

Multi-seller ABS approach to flourish (Structured Credit Investor), Rated: AAA

Marketplace loan ABS involving a multi-seller approach is expected to become more commonplace, due to the extra control that online lending platforms can exert over the securitisation process. Investors and loan sellers also benefit from a consistent securitisation programme, but a degree of expertise is required to handle the greater complexity involved in executing such transactions effectively.

VPC Specialty Lending Net Asset Value Rises As Dividend Is Lifted (Alliance News), Rated: A

VPC Specialty Lending Investments PLC on Friday said its net asset value increased significantly over the course of 2016 but said its NAV per share declined after its share capital swelled, while it reported negative total return in the period.

VPC said its net asset value at the end of 2016 stood at GBP363.1 million versus GBP201.8 million at the close of 2015, but the NAV per share fell to 95.26 pence from 100.90 pence after 182.6 million new shares were issued throughout the year.

Total shareholder return in the period was -17% versus the total return in 2015 of -5.5%. Revenue return was 6.0% versus 4.3% the year before.

Funding Circle to shut down forum amid property loan debate (P2P Finance News), Rated: A

FUNDING Circle is closing its community forum on Tuesday, as it says that some investors are “asking questions about a narrow range of technical topics” that would be better dealt with through its investor support team.

A thread on short-term property loans has now attracted 1,300 replies and more than 59,000 views. Lenders on the platform expressed their concerns around a tranche of London-based property loans that are going into default.

The platform suggested that its investors share their views on another website called the P2P Independent Forum instead.

How will your career evolve as the fintech sector grows? (Silicon Republic), Rated: A

For a start, you are probably wondering what future jobs will be available in fintech, as banking as we know it transforms into an online entity and long-standing financial institutions are shapeshifting for a new era.

If you want to work in this sector, you’ll need to brush up on the latest goings-on in the industry, and what better way to do that than to follow the experts online? To save you some trouble, we’ve provided you with a list of 10 people to follow on Twitter if you want to work in the fintech sector.

European Union

Tradeplus24 CHF100m Fintech raise in Switzerland signals Insurance move into SME Lending (Daily Fintech), Rated: AAA

Note: the deal was done in CHF which is about parity with USD, so you can read that as $100m.

A $100m Fintech raise in Switzerland in 2014 would have been inconceivable. In 2017 it is noteworthy as another sign of a rapidly maturing Fintech community in Switzerland.

I could only find the Tradeplus24 news on German language sites, so if that is an issue for you, here are the key facts:

– they raised CHF100m debt

– The debt is for lending to Swiss SME (note: they refer to KMU which translates to SME). This makes them a balance sheet lender, like Avant, not a marketplace lender like Lending Club. This means they have assured capital to offer rather than simply matching on a best efforts basis (our take is the latter is the better model long term but that you need balance sheet based lending to get a market going).

The Tradeplus24 approach is different. It brings Insurance into the mix. AsOceanoOne put it “An insurance or equal protection of investment grade quality against credit loss and fraud is in place for all pre-financed receivables. The purchase of the receivables occurs only when a credit insurance or an equal protection is in place and confirmed by the relevant protection provider.”

China

26 on trial over China P2P fraud (XinhuaNet), Rated: AAA

Twenty-six executives of a Chinese online peer-to-peer lender stood trial in Beijing on Wednesday and Thursday after allegedly cheating the public out of a huge amount of money.

The local procuratorate charged that the defendants had used two online P2P platforms, Ezubao and Sesame Financial, to illegally raise funds and then spent lavishly on luxury gifts and salaries between June 2014 and December 2015.

International

THE GLOBAL FINTECH REPORT: Q1’17 (CB Insights), Rated: AAA

While fintech covers a diverse array of companies, business models, and technologies, companies generally fall into several key verticals, including:

  • Lending tech: Lending companies on the list include primarily peer-to-peer lending platforms as well as underwriter and lending platforms using machine learning technologies and algorithms to assess creditworthiness.
  • Payments/billing tech: Payments and billing tech companies span from solutions to facilitate payments processing to payment card developers to subscription billing software tools.
  • Personal finance/wealth management: Tech companies that help individuals manage their personal bills, accounts and/or credit, as well as manage their personal assets and investments.
  • Money transfer/remittance: Money transfer companies include primarily peer-to-peer platforms to transfer money between individuals across countries.
  • Blockchain/bitcoin: Companies here span key software or technology firms in the distributed ledger space, ranging from bitcoin wallets to security providers to sidechains.
  • Institutional/capital markets tech: Companies either providing tools to financial institutions such as banks, hedge funds, mutual funds, or other institutional investors. These range from alternative trading systems to financial modeling and analysis software.
  • Equity crowdfunding: Platforms that allow a collection of individuals to provide monetary contributions for projects or companies provisioned in the form of equity.
  • Insurance tech: Companies creating new underwriting, claims, distribution and brokerage platforms, enhanced customer experience offerings, and software-as-a-service to help insurers deal with legacy IT issues.

Read the full report here.

Australia

The Australian Securities and Investments Commission (ASIC) anticipates getting over $200 million returned to consumers out of its so-called “fee for no service” remediation projects plus $30 million out of quality-of-advice work with the large institutions.

It said that in the financial advice space in the last 12 months it had extracted six enforceable undertakings; banned 41 individuals from providing financial advice; had four infringement notices and had undertaken seven criminal actions.

“In our fee-for-no-service remediations, we have got up to just over $60 million, and we anticipate getting over $200 million returned to consumers out of that project. We will have about $30 million in the backward-looking quality-of-advice work that we have done with the large institutions,” Bird said.

Kristen Lunman: Taking a chance on financial technology (NZ Herald), Rated: A

As the programme director for New Zealand’s first fintech-focused business accelerator programme, the pressure is on in the countdown to demo day. That’s when the teams will pitch their business plans and – they hope – attract the crucial dollars that will enable them to forge ahead.

The 39-year-old expat Canadian moved to Wellington six years ago with her husband and two pre-school children after falling in love with the country when the couple honeymooned here.

Asia

Japanese Megabank Mizuho Commits to Fintech in Series of Partnerships (Crowdfund Insider), Rated: AAA

One of the largest banks in Japan, Mizuho Financial Group, has been in the news recently for several partnerships involving fintech. According to Nikkei Asian Review, the bank is in talks to co-develop a fintech incubator that will be focused on virtual currencies, like bitcoin, and AI-based loan screening ventures. The discussions are with World Innovation Labs (WiL), a firm based out of Silicon Valley that helps US and Japanese startups raise capital, to co-found the incubator by as early as June of this year.

The creation of an incubator is not Mizuho’s first foray into fintech. Just last week, it was reported that Mizuho partnered with Cognizant (one of the world’s leading professional services companies, a member of the Nasdaq-100, and Fortune 500 company) to develop a distributed ledger solution for more efficient and secure trade financing.

Just two days after the partnership with Cognizant was reported, it was announced that Mizuho had also partnered with IBM to create a blockchain-based trading platform.

OJK’s regulation on financial technology-based lending services (Lexology), Rated: AAA

Both agreements must be drawn up in an electronic form. Providers are restricted by the following rules:

  • Providers must be established as a legal entity in the form of a limited-liability company as meant by Law No. 40 of 2007, or in the form of a cooperative as meant by Law No. 25 of 1992.
  • The maximum direct or indirect foreign share ownership in Providers in the form of a limited-liability company which are established and owned by foreign citizens and/or legal entities is 85% of the total issued capital.
  • Providers are required to have IDR 1 billion in capital (i.e. paid-up capital for a limited-liability company and self-capital for a cooperative) at the time they apply for registration and IDR 2.5 billion at the time they apply for the license. Limited-liability companies or cooperatives intending to engage in the P2P Lending Services business are required to register with and subsequently apply for a license to the OJK.
  • Providers are prohibited from conducting other businesses outside the P2P Lending Services, such as acting as lender or borrower, providing security or guarantee for other parties’ debt and issuing bonds.

Vietnamese fintechs and the $ 35 billion dream (VietnamNet), Rated: A

According to Boston Consulting Group (BCG), roughly $53 billion has been reserved for fintech firms and there are over 3,500 fintech firms all over the world.

According to PwC, online payment and mobile money transfer services are becoming the gateway to approach a fraction of the population which have not yet transacted with banks.

It forecasts that mobile technology will help many new customers access financial services and open up a new market worth $3 trillion in global payments.

Vietnam has 90 million people, most of whom are young, 50 percent of whom have internet access and 70 percent use smartphone.

These factors, according to Nielsen, a market survey firm, are the important reasons for experts to believe Vietnam is a potential fintech market.

Are crowdfunding and P2P lending good investments? (The Star), Rated: A

However, there is also “equity-based” crowdfunding, which is smaller, but more interesting from an investment point of view.

Peer-to-peer lending, on the other hand, is not concerned with equity, but with debt.

In Malaysia, it will still take a few years before these alternatives really take off, either as a way to obtain debt or equity for entrepreneurs or as an investment vehicle for investors.

But some fintech crowdfunding start-ups already exist, such as pitchIN, Mystartr and CrowdPlus.asia.

For those of us looking to obtain unsecured loans for personal consumption, the bank still seems the best option. For now.

Africa

World Bank offers African FinTech startups better odds (IT Web Africa), Rated: AAA

An exclusive pan-African post-acceleration programme, XL Africa has been launched by the World Bank Group for African digital startups.

XL Africa aims at supporting enterprises in any sector that are making smart use of digital solutions and connect these businesses with angel investors and venture capital firms in a bid to raise growth capital estimated at US$1.5 million.

Authors:

George Popescu
Allen Taylor