Monday August 13 2018, Daily News Digest

Reasons for Personal Loan Inquiries July 2018

News Comments Today’s main news: OnDeck CEO says online lending is the future of SMB lending. SALT Lending now in 35 states. LendInvest debuts exclusive 5-year fix product through buy-to-let club. Weidai files $100M IPO in New York. Wonga says $3M African loans are unaffected by UK woes. Today’s main analysis: LendingTree Personal Loan Offers Report for July 2018. […]

Reasons for Personal Loan Inquiries July 2018

News Comments

United States

United Kingdom

China

International

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News Summary

United States

OnDeck Capital CEO says online lending is the future for small businesses, talks strong earnings (Proactive Investors) Rated: AAA

CEO Noah Breslow tells Proactive Investors the small business lending company has provided over US$9bln to small businesses, crossing the US$10bln mark this fall, saying online lending is the future for small businesses and consumers.

U.S. Cryptocurrency-Backed Lending Platform Now Available in 35 States After Passing Stringent Regulations (Crypto Disrupt) Rated: AAA

The cryptocurrency-backed lending firm, SALT, has released details that it is now operational across 35 states in lieu of passing crypto regulations and will be expanding its network to 20 new locations.

SALT is based in Colorado and is one of the few companies that allows borrowers to leverage their held crypto as collateral for loans. As more people than ever before hold crypto, it is important that cryptocurrency-backed lending firms pass regulatory checks to offer more competition to potential crypto borrowers in the safest possible manner.

SALT is planning to move into 20 new states, which will include North Carolina, Oklahoma, Florida, and Virginia. Crypto users in all but 15 states can now leverage their crypto to receive personal cryptocurrency-backed lending packages.

Tesla and Spotify say public markets have major flaws. Do they have a point? (Quartz) Rated: AAA

According to two prominent executives this week, the stock market isn’t all that it’s cracked up to be. Initial public offerings are broken, according to Spotify CFO Barry McCarthy (paywall). Tesla CEO Elon Musk says stock investors are too focused on the short-term, and his threat to take the company private sent tradersbankersfans, and government watchdogs into a tizzy.

McCarthy and Musk aren’t alone in their worries. The number of IPOs and listed companies in the US is shrinking: There were an average of 310 public offerings annually from 1980 to 2000, according to an analysis by Jay Ritter, a finance professor at the University of Florida. The average has slipped to 108 since then.

A common complaint is that public markets are too demanding. It’s expensive to comply with regulations, and these days there’s ample private money available for companies to tap without all the hassles of dealing with analysts, short sellers, quarterly reporting, and the rest of it.

Source Quartz

LendingTree Personal Loan Offers Report – July 2018 (Lending Tree) Rated: AAA

Offered loan amounts are down about 3.5% for all borrowers, while offered APRs inched up. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 64% of all loan inquiries.

Source Lending Tree

WV ranked 24th in US for student loan debt (Herald Dispatch) Rated: B

West Virginia schools rank 24th in the nation for the amount of debt its students graduate with, with Marshall University coming in sixth out of the schools tallied in a recent LendEDU report.

By licensing data collected from the annual Peterson’s voluntary financial aid survey, LendEDU, an online loan marketplace, completed its annual Student Loan Debt by School by State Report, a comprehensive analysis of student loan debt statistics for over 1,000 colleges and universities throughout the United States.

The total outstanding student loan debt now stands at $1.52 trillion, making it the second largest form of consumer debt behind only mortgages.

Average individual student loan debt up $ 313 in 2017 (UPI) Rated: AAA

The average amount of individual student loan debt owned by U.S. college students increased by more than $300 in 2017, according to a study by LendEDU.

The New Jersey-based online loan marketplace’s annual Student Loan Debt by School by State Report found the average debt per borrower for the class of 2017 was $28,288, up $313 from $27,975 in 2016.

“Student loan debt in the U.S. continues to be an issue of the utmost importance. The total outstanding student loan debt now stands at to $1.52 trillion, making it the second largest form of consumer debt behind only mortgages,” LendEDU said Wednesday.

The annual report uses data from the Peterson’s financial aid survey, which collects responses from 1,080 four-year public and private institutions to determine average individual student loan debt figures and rank states and colleges in terms of debt per borrower.

Who’s Departed, Who’s Left and Who’s Leading Among Robo-Advisors (Think Advisor) Rated: A

The second quarter of 2018 was a busy one for robo-advisors. Hedgeable announced its impending closure, WorthFM became history and LearnVest notified customers it was discontinuing its planning and online investment services.

During the same quarter, US Bank and Fifth Third Bank launched their robo-advisor platforms and SoFi, a fintech lender with a robo product, introduced checking accounts with debit cards, further blurring the lines between banking and digital advice. And U.K.-based Wealth Wizards, an independent digital advisor with AI capabilities, is exploring a talking robo-advisor.

What you need to know on Wall Street today (Business Insider) Rated: A

The crypto bear market has been a blessing for this bitcoin trading firm’s booming new business

Genesis Global Trading, a crypto trading shop based in New York,launched a crypto lending unit, Genesis Capital, earlier this year.That business originated $30 million in crypto loans on Tuesday, its largest amount ever, according to chief executive officer Michael Moro. The company typically lends out around $2 million per day on average.

In a sense, it could be a bearish indicator for the market. Many of the people who are borrowing crypto from the firm are doing so in order to take a short position on a given coin.

What happens when the government stops doing its job? (The Washington Post) Rated: A

It took almost two years for two dozen officials at the Consumer Financial Protection Bureau to pull together a case against Golden Valley Lending. The online lender was making small short-term loans at interest rates as high as 950 percent, violating laws in at least 17 states that cap interest rates.  Last October, the agency finalized a rule to stop “payday debt traps” by requiring lenders to determine whether people can afford to repay their loans.

Yet a few months later, it unceremoniously dropped the case, telling a federal judge in Kansas that it would “continue to investigate the transactions that were at issue.” Golden Valley is still doing business; its Web site says: “Get the money you need. It’s easy!”

Mulvaney has all but halted the enforcement of certain government regulations. He stripped the bureau’s fair-lending unit of enforcement power and redefined it as an advocacy office.

RealtyShares Launches New Brand Identity and Online Learning Center (SC Now) Rated: A

RealtyShares announced today the launch of its new corporate brand identity and online learning center. The brand changes come at a time when the company is continuing its focus on the commercial middle market, commercial transaction values under $50 million.

As part of the rebrand, RealtyShares is launching a new online learning center where investors can learn more about diversifying investments and the role that commercial real estate can play in an investment portfolio. This learning center includes guided learning paths and educational articles created and curated by RealtyShares’ expert professionals. The content is designed to help investors with a range of investing experience better understand the risks and rewards of investing in commercial real estate.

Kirill Bensonoff: 5 ways real estate can be transformed with a blockchain approach (Augusta Free Press) Rated: A

The real estate market has seen steady growth the past few years, and is showing no signs of slowing down. The commercial real estate industry alone is expected to reach $414 billion in commercial transactions next year.

This isn’t the biggest news in the real estate industry though.

According to real estate and cryptocurrency expert, Kirill Bensonoff, the most significant growth for real estate in the next few years will be how blockchain technology is applied to the market.

U.S. Fintech Even Opens New East Coast Headquarters In North Carolina After Securing More Than $ 40 Million in Series B Funding (Crowdfund Insider) Rated: B

Holistic financial health platform Even announced on Friday it has opened its new office in Raleigh, North Carolina. This news follows the company securing $40 million through its Series B funding round. Founded in 2014, Even describes itself as a mission-driven technology company working to help Americans escape the paycheck-to-paycheck cycle.

Even also reported that its mobile apps instantly budget so that users know how much is “okay to spend,” safely address cash flow issues with Instapay (on-demand access to wages), and help employees automatically save money out of their paycheck before it ever hits their bank balance.

Buy The Block: First Black-Owned Real Estate Investment Platform Allows Communities to Fight Gentrification (Digital Journal) Rated: A

Buy the Block founder Lynn P and her team have struck gold in the hills of Colorado for a second time in as many years with the release of their new app now available on Android and iOS platform. This app will expand the already extensive number of BlockVestor enthusiasts that populate the first Black-female owned FINRA and SEC regulated real estate crowd investing platform in the United States. The addition of the new app will rapidly expand a brand that is on the cutting-edge in alternative financing. This unique and innovative platform allows many inner-city residents a never-before available opportunity to invest with their peers and their communities.

Lowe’s Ventures backs Moved, a startup that makes moving less stressful (Tech Crunch) Rated: A

Moving can also be expensive, so the company has announced a partnership with Affirm, where Affirm’s financing will allow you to break up the moving costs into monthly payments.

To be clear, Moved isn’t doing the moving itself — instead, it’s basically connecting you to a marketplace of movers and other service providers. Pittenger said the company is “very strict about the suppliers and the vendors” and will remove them if customers aren’t happy with their experience.

Moved is managing all of this through a real, human assistant who can help you figure out what you need, handle the scheduling and serve as a “consumer advocate” who ensures that you’re not getting ripped off.

Take a Crash Course in Student Housing Investments (US News) Rated: A

As the back-to-school season gets under way, you may be shopping around for new investments for your portfolio. Real estate is a solid diversification tool and student housing is an under-the-radar sector to consider this fall.

“The student housing real estate investment market is virtually untapped,” says Jay Morrison, CEO of the Tulsa Real Estate Fund. An aura of exclusivity surrounds student housing investments but it’s a sector that’s far from fully realized, “which means there’s plenty of room for opportunity for new investors in this market.”

As a smaller niche within the commercial real estate market, student housing has long been the domain of institutional investors and people with a high net worth.

United Kingdom

LendInvest Debuts Exclusive Five-Year Fix Product Through Buy to Let Club (Crowdfund Insider) Rated: AAA

Following the recent changes on its marketplace lending platform, UK-based LendInvest announced the launch of an exclusive five-year fix product through the lender’s Buy to Let Club. The lender reported that the product is Designed for landlords who wish to utilize a higher fee, lower interest rate loan, and allows the borrower to leverage their cash flow.

According to LendInvest, the five year fixed rate of 2.75% is available up to 75% LTV through the distributor, with a product fee of 4.99% which can be added to the loan. Affordability is then calculated at an Interest Cover Ratio (ICR) of 140% for higher rate taxpayers; 125% for limited companies and basic rate taxpayers, at an assessment rate of 4.19% against the total gross loan amount. The mortgage is available on loans up to £500,000 for purchase and remortgages, and suitable for standard property types and HMO’s.

Business funding options – what choices do you have? (Estate Agent Today) Rated: A

When you are starting up a new business, it is unlikely that you will already have enough capital to invest. Taking out a business loan is the best option as this will give you the chance to get set up.

But which loan type is best for your business idea?

Peer to Peer Lending

As banks are increasingly wary about giving out business loans, peer to peer lending has become a more popular method for matching people who wish to invest their money and those who need to borrow. Though this method can be quite expensive and may be risky, it is quite easy to raise substantial funds this way.

Crowdfunding

There are two types of crowdfunding: equity-based and reward-based. Equity-based crowdfunding is where people contribute money to receive equity in your business; reward-based crowdfunding is where people contribute money for a reward.

Competition from alternative lenders driving growth in business lending (London School of Business and Finance) Rated: A

Competition from alternative lenders is driving banks to boost lending amounts for businesses, according to Conrad Ford, Chief Executive of SME finance aggregator Funding Options.

Barclays and NatWest/Royal Bank of Scotland are among the banks that are boosting access to finance for SMEs.

Growing competition

Competition from alternative lenders is thought to have been the driving force behind Barclays’ decision to increase its lending amount to £100,000.

Commenting on the trend, Ford stated that there is growing competition in this sector, adding that Barclays is not the only bank that is taking action, with RBS/NatWest launching their Esme loans service, a digital lending platform that enables SMES to access unsecured loans of up to £150,000.

The pros and cons of alternative property investment and crowdfunding (Buy Association) Rated: A

With tax changes and stricter lending rules making it harder for some to finance a property purchase, investors are increasingly looking to navigate the challenges in the buy-to-let sector.

It’s why setting up a limited company through which to buy and operate rental properties is growing in popularity.

Peer to peer lending has exploded in popularity because it offers investors high interest rates paid over relatively short time periods.

There is obviously a level of risk involved – the property is used as security, and if house prices drop suddenly then you risk losing some capital. That’s why it’s important to consider the loan to value ratio (LTV) – for example, if this is 75%, the borrower can borrow three quarters of the value of their property. This means house prices would need to fall 25% before the investor made a loss.

China

How peer-to-peer lending turned middle-class Chinese dreamers into angry protesters (Quartz) Rated: AAA

In recent years, many in China’s middle classes poured their savings into peer-to-peer lending platforms, known as P2P for short, drawn in by promises of high returns. But amid a larger effort to curb financial risk to China’s economy, financial regulators tightened rules for these platforms, leading many of them to collapse without returning investor money. In Li’s case, the main stakeholders of Yonglibao, which he had put his money into, suddenly disappeared in mid-July (link in Chinese), he told the South China Morning Post. By the time its founders abandoned its offices, the platform had amassed a transaction volume of 7.6 billion yuan ($1.1 billion). The other protester told Quartz he had lost the equivalent of $50,000 on a platform called iqianjin.com—its name is Love Money, though it can also be understood as “Get Ahead” or “Money Coming.”

Both hoped a protest in Beijing would compel the government to help people recover their money from the dozens of P2P platforms that stopped allowing fund withdrawals last month. Instead, they were foiled by hundreds of uniformed police who locked down the area, patrolling corners near the offices of the central bank and securities regulators, and checking identity cards. More than 120 buses were brought to the area to take the stealth protesters away, according to a reporter with AFP.

Chinese Peer-to-Peer Lender Weidai Files to Raise Up to 0 Million in New York (Capital Watch) Rated: AAA

Hangzhou-based peer-to-peer lending platform Weidai, which translates as “micro-lending,” filed its preliminary prospectus Friday seeking to raise up to $100 million in an initial public offering in New York.

The proposed IPO size shrinked significantly since the company first announced its plans in April. According to Bloomberg citing sources, Weidai was previously planning to raise nearly $400 million.

Launched in 2011, the online micro-lending platform has attracted multiple high-profile investments, including a $159 million series C funding in 2016 led by Vision Knight Capital. Among other key investors were Chinese billionaire Chen Tianqiao’s Shanda Group and Shenzhen-listed software developer Hakim Unique Internet Co.

HK is running out of runway (The Edge Markets) Rated: AAA

BRACE, brace. Hong Kong’s initial public offering (IPO) take-off is going to come to a screeching halt.

Source: The Edge Markets

Ascletis Pharma Inc, a Hangzhou-based maker of HIV drugs, has slumped 20% since making its entrance at the end of July (1).

Even the online insurer that sparked a revival of Hong Kong’s IPO frenzy is in the red. ZhongAn Online P&C Insurance Co, a company backed by Internet behemoths Tencent Holdings Ltd and Alibaba Group Holding Ltd, surged on its debut in September, but now stands 42% below its price on listing.

Two-thirds of IPOs that raised more than US$1 billion in the two years ended July 2017 were below their offer prices after six months; three-quarters had dropped after a year, data compiled by Bloomberg show. Ironically, the cause of the pain can be traced partly to measures Hong Kong Exchanges & Clearing Ltd has taken to fight back against a US market that was luring away China’s new-economy stars.

Hexindai Further Strengthens Risk Control to Better Protect Investors (Crowdfund Insider) Rated: A

Hexindai (NASDAQ:HX), a China-based peer to peer lender, announced on Friday it has further strengthened its risk control system to better protect investors throughout the entire process of borrower acquisition, risk-based pricing, post-loan management, and default risk coverage through its new comprehensive, stable and efficient asset security system, HX-CORE. Hexindai reported it established the system based on advanced risk control technologies that leverage risk control models and enormous volumes of credit data from cooperating partners and business data accumulated by the online lending platform.

According to Hexindai, the risk-based pricing is conducted by the Company’s proprietary risk control system, called Hurricane, which was developed by the lender and operates in cooperation with a number of credit information organizations and third-party Big Data risk management companies.

Ning Tang, CEO of CreditEase, Shares Insight into P2P Lending in China (Crowdfun Insider) Rated: A

Ning Tang, founder and CEO of CreditEase – a huge Chinese Fintech that started as just a peer to peer lending platform, recently spoke to Bloomberg in Asia. CreditEase is also the majority shareholder of US listed online lender Yirendai (NYSE:YRD)

Tang provided an interesting update on the Chinese P2P sector as it has been going through a transformational process. In July alone, it has been reported that over 100 peer to peer lenders shut down in China as regulatory authorities tighten operational standards to curb rampant fraud. The actions are to ensure a robust and sustainable sector of online lending.

Tang shared that revenues have not been impacted much by the regulatory actions as CreditEase has become more diversified with inclusive finance, alternative asset management, and wealth management.

China reduces risks of peer-to-peer lending (CGTN) Rated: A

Chinese authorities are taking immediate actions to reduce risks in the peer-to-peer (P2P) lending business and better protect the interests of private investors.

The latest moves by Chinese financial regulators include urging leading internet platforms to undergo self-inspection and fix problems. They will also guide unqualified P2P lending platforms in exiting the market and dealing with their assets and debts in a market-oriented way based on legal principles.

European Union

Sweden’s Largest Loan Marketplace (Killer Startups) Rated: A

Thanks to rapid technological development around the world, it’s now possible for consumers to sidestep banks and other unnecessary intermediaries and secure private loans more efficiently.

One nation where this hasn’t been an issue is Sweden.  Look no further than Lendify – the country’s largest peer-to-peer lending platform – for proof.

“Lendify is a marketplace platform that connects borrowers with investors, without the involvement of banks or credit card companies,” said Erik Wikander, the company’s Founder.  “Some of Sweden’s foremost entrepreneurs are a big part of the platform – and we’ve been granted full approval from Finansinspektionen (the government’s financial regulation agency).”

Schwarmfinanzierung: Deloitte Study on “Crowdlending” in Germany says Banks Win (Crowdfund Insider) Rated: A

Deloitte Germany has published research on the crowdfunding sector and when it comes to comparing new forms of online capital formation and old banks – banks win. That is, at least in the eyes of the Deloitte research.

Deloitte states that when it comes to providing finance to medium sized firms, the fabled Mittelstand, these companies have “little interest” in using this new form of finance. Simply put, their relationships with banks is too strong of a bond.

The research published by Deloitte was done in partnership with EFAM (Europäisches Forschungsfeld für Angewandte Mittelstandsforschung) at the University of Bamberg, the document said that the threat to traditional banks by crowdfunding or crowdlending has not panned out. This more recent study follows a similar one back in 2015 which stated that crowdlending was relatively unknown among company executives. Three years later, their survey of 250 medium size German firms appears to indicate little has change.

International

CreditRiskMonitor Announces Licensing Agreement with DBRS (Credit Risk Monitor) Rated: AAA

CreditRiskMonitor (OTCQX: CRMZ) today announced a new licensing agreement with DBRS, an independent, privately-held, globally recognized credit agency. DBRS is the fourth-largest ratings agency globally, with ratings on more than 2,400 issuer families and nearly 50,000 securities worldwide.

CreditRiskMonitor has also invested in cutting-edge technologies to improve the accuracy of its predictive scoring methods. The FRISK® score, a measure of bankruptcy risk in public companies, uses crowdsourced click patterns of risk professionals who subscribe to CreditRiskMonitor’s service. The PAYCE score, used for private company financial risk assessment, is formulated with deep neural network technology, a type of artificial intelligence.

Can Blockchain Revolutionize The Traditional Lending System? (Crypto Coin News) Rated: A

With the introduction of blockchain technology, there have been lots of projects built on blockchain that have attempted to improve the traditional banking system. This brings us back to the question; Can blockchain revolutionize the traditional lending system? The answer is unequivocally YES since there are projects already on the brink of achieving this. Also, the below features of blockchain technology is naturally what is needed to revolutionize the traditional lending system.

Ways blockchain technology edge the traditional lending system:

  • Accessibility
  • Time
  • Removal of intermediaries
  • Reduced risk

Assuring the future of financial services (Network World) Rated: A

The financial services industry is experiencing a period of dramatic change as a result of the growth in digitalization and its effect on customer behavior. In an emerging landscape made up of cryptocurrencies, frictionless trading, and consolidated marketplace lending, traditional banks have found themselves shaken by the introduction of new, disruptive, digitally-native and mobile-first brands.

With a reputation as being somewhat conservative and slow to innovate, many financial service providers are now modernizing and improving their systems, transforming their new business models and technologies in an effort to stay ahead of the more agile challengers snapping at their heels.

However, while this digital transformation brings significant opportunities, implementing these new technologies also presents challenges.

Australia

Blockchain P2P lender secures $ 1.35m to fund growth (Mortgage Business) Rated: A

BLOCKLOAN, a new blockchain-based marketplace lender headquartered in Sydney, has announced that venture capital fund Xplora Capital has purchased $1.35 million in tokens, as it continues its mission to provide “transparent, easy to understand, [and] real-time” access to personal finance on a global scale at more competitive rates than the banks.

The fintech said that by using cryptocurrency-backed loans on a global P2P lending marketplace, it aims to eliminate the “unnecessary” fees associated with traditional lending, while promising end-to-end loan origination, matching and management through the use of pooled smart contracts and an automated KYC and credit risk engine.

India

Are Digital Platforms Transforming Lending Decisions? (Entrepreneur) Rated: AAA

The effects of technology and the disruptions technology make, manifests itself in clearly perceivable ways. This is very evident in many sectors – in a short span (just eighteen months after its release) Google Maps had knocked out GPS navigation device makers and Amazon and Taobao (Alibaba) have disrupted how consumers shop for goods by moving them to online from offline (O2O). Enterprises are worried about being Uber-ed or Airbnb-ed as new age companies are challenging traditional ways of doing business.

Banking and Lending space have also gone through an amazing level of rapid innovation and disruption starting at the turn on the new millennium. Traditional banking monoliths can no longer feel impervious as they were protected by a myriad of government regulations which used to make it hard for fintech start-ups. Fintech start-ups don’t have to deal with the large legacy systems that drag down big banks and are nimbler and more suited to adapt to global trends and changing regulations. Internet only online banks with meagre to no brick and mortar branch presence have come up and have shaken up the large banks by offering better interest rates for deposits and borrowing than traditional banks. As an added benefit with the ubiquity of eKYC systems and adoption by fintech industry, accounts can now be opened in a matter of minutes and can be ready to transact than days and after an insane amount of paperwork that needed to be filled in earlier days.

Africa

Wonga faced collapse in the UK, but says its 3 million loans in South Africa are unaffected (Business Insider) Rated: AAA

An emergency cash injection of R178 million has saved microlender Wonga from collapse – for now.

The UK firm, which has operations in South Africa, is currently facing immense pressure after the British authorities forced it to write off loans worth R4 billion because Wonga failed to properly check whether customers could afford them.

Wonga’s shareholders, two venture capital funds, have pledged the money to prop up Wonga.

Mobile banking inevitable but ATM card will remain useful (The New Times) Rated: A

During a wide-ranging interview with The New Times at a recent GSMA M360 Africa Series in Kigali, Mr Akinwale Goodluck, Head of the Global Mobile Operators’ organisation in sub-Saharan, sought to dispel the myth that mobile money would cannibalise banks.

He pointed to the fintech synergy between telcos and banks, noting how the significant numbers of people across the region are using “phones to do proper mobile banking.”

This is true, and perhaps more pronounced in East Africa. The sub-region has the largest mobile money market on the continent, accounting for 56.4 per cent of total users in sub-Saharan Africa, according to GSMA.

East Africa is, however, only leading the way, but not for long.

Asia

Indonesian startups Akseleran, Pomona confirm recent funding (Deal Street Asia) Rated: AAA

Two Indonesian startups have confirmed raising a funding round earlier this year.

P2P lending startup Akseleran said it raised a pre-Series A funding round of $1.85 million, while adtech startup Pomona said it secured an undisclosed Series A funding round.

P2P lending startup Akseleran raises $1.85 pre-Series A funding Peer-to-peer lending startup Akseleran has confirmed raising a $1.85-million pre-Series A funding round backed by a New York-based family office, the parent company of PT Bintraco Dharma Tbk and several angel investors.

According to a press release, the startup plans to use the fresh funding for expansion by recruiting representatives in a number of cities in Java such as Yogyakarta, Solo, Surabaya and Semarang. It also plans to step up its marketing campaigns through various advertisements.

Authors:

George Popescu
Allen Taylor

Competing With Banks Through a Mobile App

mobile banking

According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost […]

mobile banking

According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost trust in traditional banks, and millennials don’t see the appeal in standing in line for banking services. To fill the void, Varo Money has launched a mobile banking business. The aim is to disrupt how banking is done in the United States. Its goal as to help customers cover their expenses, pay their bills, and build wealth over time.

Varo Money was founded in 2015 by Assaf Guery, Colin Walsh, Mykola (Kolya) Klymenko, and Roger Van Duinen. Its headquarters is located in San Francisco, California. The company has managed to raise over $78 million in various funding rounds with PE giant Warburg Pincus as the lead investor. CEO and Co-Founder Colin Walsh previously served for over 25 years in various reputed financial institutions like Amex in Europe, Lloyd Banking group, and Wells Fargo.

More Than a Bank

Throughout his professional career, Walsh realized a growing need to empower the next generation with tools that will help them improve their overall financial condition. He also realized incumbents were too entrenched in their existing business models to concentrate on developing products for the millennial generation. This became the driving force behind Varo Money. So he built a talented team with deep financial services expertise and a strong consumer technology knowledge. Varo Money is trying to be a one-stop shop for users’ banking needs and wants to inculcate better financial habits among customers by providing them with the right tools and financial guidance.

Last year, Varo Money launched their mobile app and banking products through a partnership with The Bancorp Bank. The partnership helped the platform come to the market with a FDIC-insured product. This helped them compete against incumbent banks and appeal to a larger cross section of the population. But Varo has big ambitions and wants a bigger share of the pie. That’s why the company applied for a national bank charter through the OCC. Even though obtaining this charter will be an uphill task, considering no new charter has been issued in the last decade or so, it’s a courageous move. It puts the spotlight on the young entrant and highlights its intention to be a serious regulated player in the industry.

Varo’s Business Model

The foundation of the Varo Money platform is relationship banking. It offers a basic consumer checking account just like any other bank, but the difference is a customer can perform all the basic functions like deposits and money transfers without having to go visit a bank branch. It even issues a debit card to customers and has started offering savings accounts. A customer can open a savings account on his or her mobile app and Varo offers interest rates up to 50 basis points as compared to 1 or 2 basis points offered by traditional banks.

Apart from the bank account, Varo also offers short- and long-term financing solutions. The short-term line of credit is a flexible line of credit (LOC) and is available to customers unexpected financial challenges. The LOC helps customers manage cash flows while avoiding the need to take a payday loan or cash advance. Also, 3- and 5-year fixed rate installment loans are aavailable for long-term financial needs.

Varo Money’s Technology and Competitive Posture

Varo Money is available as an iOS application with an Android version coming soon. The app is loaded with features like touch ID, a geolocation service to spot nearby ATMs, and the ability to link other accounts through APIs. The app is free and requires no minimum balance to open an account. Also, there are no foreign exchange charges or overdraft fees. Its customer base has access to over 55,000 ATMs worldwide as compared to 18,000 ATMs for Chase and 12,000 for Wells Fargo.

Varo charges a nominal fee for debit card usage. It also sells financial products of its partner bank earning income from that partnership. However, its lending products are a primary income generator. The pricing and structure of LOC products are developed to compete with other alternative lenders in the market.

Varo has a lot of competitors in different niches of banking. Players like Discover, Ally, and Goldman Sachs concentrate on only a few lending segments; these lenders do not follow a complete relationship model, but only offer a specific product. On the other hand, there are neobanks like Chime, Simple, and BankMobile that are single-purpose saving apps. Though they are doing a great job when it comes to user experience, the range of products offered by them is narrow compared to a full suite of products offered by a traditional bank.

This is where Varo Money is different. It is focused on customer relationships and wants the ability to offer the entire gamut of banking services to consumers. This gives it multiple cross-selling opportunities and reduces the cost of client acquisition. Its strategy seems to be paying off. In just 7-8 months, Varo has garnered tens of thousands of customers and over 100k downloads.

Conclusion

Varo Money is focused on replacing traditional banks with its comprehensive suite of online banking services and products. Coupled with its obsession for helping millennials make smarter financial decisions, Varo Money is looking to be an emerging player in the digital bankin sector.

Author:

Written by Heena Dhir.

Tuesday December 12 2017, Daily News Digest

P2P investors

News Comments Today’s main news: Affirm raises $200M at almost $2B valuation. Elastic Line of Credit surpasses $1B in funding. Klarna signs 500 online retailers in U.S. Zopa makes changes to Isa. Mintos adds first Russian loan originator. Flexiti offers online financing for e-tailers in Canada. Today’s main analysis: UK alternative finance is still healthy. Today’s thought-provoking articles: Cross River […]

P2P investors

News Comments

United States

United Kingdom

China

International

Asia

Russia

Africa

Canada

News Summary

United States

Max Levchin’s Affirm raises $ 200 million at a nearly $ 2 billion valuation (TechCrunch), Rated: AAA

The San Francisco-based company confirmed that it’s raising $200 million, led by GIC, a Singaporean sovereign wealth fund. Existing investors Khosla Ventures and Spark Capital are also participating.

Affirm’s valuation is estimated to be between $1.5 billion and $2 billion, as first reported by The Wall Street Journal. Investors are betting on Max Levchin, the PayPal co-founder who runs Affirm.

Elastic Line of Credit Surpasses $ 1 Billion in Total Funding (Morningstar), Rated: AAA

Elevate Credit, Inc., a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the Elastic product has originated more than $1 billion, and has served over 200,000 customers since 2013.

Elastic, a bank-issued line of credit offered by Republic Bank & Trust Company (“Republic Bank”), currently has more than $260 million in total principal outstandings across over 150,000 open accounts.

Klarna North America Sees Surge In U.S. Merchant And Consumer Adoption Of Its ‘Smoooth’ Financing Solution (Business Insider), Rated: AAA

Since Klarna introduced its financing solution in the U.S. in October 2016, 500 online retailers have already enrolled in the simple and ‘smoooth’ credit solution that is fully integrated into the online checkout process. Available in 10 countries via a single API, retailers include powerhouse global brands like Microsoft, TaylorMade, Overstock and Lenovo.

Why Cross River Bank and Mastercard are collaborating on cardless ATM access (Tearsheet), Rated: AAA

Cross River Bank, the bank of fintech startups, is working with Mastercard to give consumers cardless access to ATMs through an offering called Mastercard Cash Pick-Up. It allows businesses or individuals to send cash payments by logging in to the Cash Pick-Up platform via their bank’s website or mobile app and entering the necessary transaction and recipient. When they’ve done that, recipients receive a text message with the order number, PIN and a link that helps them locate a participating ATM nearby.

The offering highlights the role of mobile phones in banking’s new normal — mobile is more than just a channel, it’s the thing that’s guiding both financial incumbents and consumers alike through  the shift from physical to digital banking, which still hasn’t been fully realized.

For now, Mastercard Cash Pick-Up is only available at enabled ATMs in the U.S., where the postal service plays far too big a role in payments, particularly low dollar disbursements, Isaacson said.

 

Once Shunned, Regulated Industries Now a Lure for Some Investors (Xconomy), Rated: AAA

Niehenke theorized that consumers whose trust in traditional banks had eroded might become a willing customer base for financial technology startups. But it was a bumpy time for tech companies entering the highly regulated financial sector.

Among those startups was Prosper, a peer-to-peer lending startup that had been temporarily shut down in 2008 by the Securities and Exchange Commission. The SEC maintained that the company was, in effect, selling securities rather than merely functioning as a marketplace connecting lenders and borrowers, TechCrunch reported.

CAN Capital Makes Three Strategic Hires to Strengthen Sales and Technology Teams (PR Newswire), Rated: A

CAN Capital, a small business specialty finance company, today announced three strategic hires as the company continues to invest in its technology and growth strategies. Mike Dodson, Vice President, Technology, Michael O’Brien, Director, Business Development, and Liping Deng, Director, Modeling & Analytics, have joined CAN Capital to focus on accelerating the company’s expansion.

China’s JD partners with accelerator program Plug and Play to reach US startups (TechCrunch), Rated: A

E-commerce giant JD.com, the closest rival to Alibaba in China, is broadening its presence in Silicon Valley after it announced a collaboration with accelerator firm Plug and Play to seek out and work with promising U.S. startups.

Robo-advisors hit lull in everything but VC backing as reality fragments their identity (RIABiz), Rated: A

Last summer, Sallie Krawcheck took a seat before 18 venture capitalists to raise capital for Ellevest Inc., her New York-based robo-advisor for women. See: Sallie Krawcheck astonishes industry observers by raising another $32.5 million for her robo-advisor — perhaps on strength of ‘unit economics’.

The role reversal reflects broader changes occurring across automated advice. BlackRock Inc. originally bought San Francisco-based FutureAdvisor as a retail product, then made it into a B-to-B offering. See: Why FutureAdvisor orphaned its B2C book of business, how post-Invesco Jemstep is doing and other learnings at CFA Society’s robo-panel in San Francisco

News out of Betterment has slowed to a crawl.

Wealthfront Inc.‘s Andy Rachleff leaned into the irony of robo-advisors moving away from digital-only in a September blog post.

Yet, in an autumn largely devoid of news from robo-advisors, Acorns had a blistering announcement of a much deeper integration with one of its VC backers, PayPal, which has 218 million users. See: As Acorns grapples with monetizing 1.1 million micro-accounts, the laid-back LA robo-advisor brings Wealthfront’s former chief exec onto its board.

In the case of Irvine, Calif.-based Acorns, the nudging took the form of A/B-style testing of giving investors choices of how much to invest.

Robo-adviser launches using chatbot technology (FT Adviser), Rated: A

Nuvo has launched what it describes as an “artificially intelligent digital broker powered by chatbot technology”.

The launch of the robo-adviser, which uses AI to learn about customers to pick prices for mortgages and protection products tailored to them in less than a minute, comes just days after a US company claimed to be the first in the world offering financial advice with artificial intelligence.

US Banks Look to Silicon Valley as Fintech Booms (PaymentsJournal), Rated: A

More than eight out of ten (82%) US commercial banks have pledged to increase fintech investment over the next three years as the sector continues to expand, with 86% of senior managers planning an imminent rise in investment.

The in-depth research commissioned by global Fintech provider Fraedom, polled decision-makers in commercial banks including shareholders, middle managers and senior managers.

The study also found that more than seven out of ten (71%) respondents believe that the rise of technology within commercial banking threatens traditional one to one bank and customer relationships. This disruptive impact was felt greatest by shareholders (95%) as opposed to 67% of middle managers.

Need a Shot of Capital for Business Growth? Here’s How to Find a Working Capital Loan This Year (AllBusiness.com), Rated: A

Startup founders know to look for grants, crowdfunding, and angel investors, and established small business owners understand the ins and outs of bank loans. However, another form of financing for established small businesses—working capital loans—is a little less familiar to many owners, yet working capital loans can be the ideal financial tool to handle opportunities (or problems) that present themselves in the shorter term.

Here are some of the highlights:

  • You don’t need to lay out a detailed plan of what you want to do with the money. Paperwork is minimal.
  • If your credit score is at least 500, you’ll need to show an annual profit of $50,000; if your credit score is at least 600, that gets cut in half to $25,000. If you’ve been denied a bank loan, your chances may still be good for a working capital loan.
  • You have the flexibility of choosing the type of working capital loan that best meets your needs: a term loan, cash advance, invoice factoring, revolving line of credit, or purchase order advance.

Today In Data: Consumer Spend, Venture Capital And Bitcoin Reach Record Highs (PYMNTS), Rated: A

$682 billion | Amount that consumers are expected to spend on presents and other holiday preparations this holiday shoppingseason, with retailers going the extra mile to meet them where they are in a simpler and faster way. That means upping mobile and online shopping experiences, offering a buy online pick up in-store model and launching services like curbside pickup and better shipping options.

Broker-Dealer Firms Raise Alarms That SEC’s CAT Database Isn’t Secure (Financial Advisor), Rated: A

Broker-dealer firms aren’t confident the SEC’s consolidated audit trail (CAT) – a single, comprehensive database expected to store an unprecedented amount of sensitive trade data and personal identifiable information (PII) – is secure, according to testimony delivered before the U.S. House of Representatives.

National securities exchanges, Finra, alternative trading systems and broker-dealer firms have been required to submit information on trading activities – including customer information and prices – to the CAT daily since November 15 of this year. Large broker-dealers will be required to start submitting information to the CAT by November 15, 2018, while small broker-dealers are expected to do so by November 15, 2019.

The CAT is expected to take in 58 billion records daily – including orders, cancellations, modifications, executions and quotes for the equities and options markets – and maintain data for more than 100 million customer accounts and their unique customer information, according to parties involved in the CAT.

.46 Billion in Extra Credit Card Charges Due to Upcoming Fed Rate Hike (WalletHub Email), Rated: A

Forecasts call for a 99%+ chance of a Federal Reserve rate hike on Wednesday, which would make three for 2017. The move couldn’t come at a worse time for consumers, according to WalletHub’s 

Use your 2017 budget before you lose it (LendIt), Rated: B

Having an exhibitor booth or sponsoring this event is your best chance to do business with companies shaping the fintech industry. 100+ companies have picked their spot. Download the sponsorship brochure today now and our team will help you seal the deal before your budget runs out.

Take advantage of the current ticket price and save $1,200 vs. the standard ticket.

Angie Herbers Launches Online FA Education Platform (Financial Advisor), Rated: B

Financial advisor consultancy founder Angie Herbers has launched an online training platform aimed at helping advisors grow their firms.

Beyond U offers advisor education via videos, online seminars and assessments, covering such topics as operations, management, sales and marketing, client services, compensation and more, according to a press release from the firm.

United Kingdom

Zopa announces changes to its Isa (Bridging&Commercial), Rated: AAA

Zopa investors can now redirect their repayments into an Isa, allowing investors to gradually transfer their funds into an Isa without having to sell loans or pay fees throughout the process.

The UK alternative finance market is still healthy (Business Insider), Rated: AAA

The UK’s alternative finance market — including marketplace lending, crowdfunding, and invoice trading — grew 43% year-over-year (YoY) in 2016, from £3.2 billion ($4.3 billion) to £4.58 billion ($6.17 billion), according to a recently released study from the 

Source: Business Insider

UK positioned to win in fintech, despite Brexit uncertainty (AltFi), Rated: AAA

Just this week the 

Small Businesses Drive 43 Percent Growth In UK Alternative Finance (PYMNTS), Rated: A

Researchers said about 72 percent of market volume in 2016 can be traced back to demand for lending options among startups and small businesses, up from 50 percent the year before. That amounts to more than $4.4 billion driven by startups and SMBs in 2016.

Peer-to-peer businesses lending was 2016’s largest alternative finance market segment, which saw 36 percent year-over-year growth.

Squirrel Extends Crowdcube Campaign After Achieving £400,000 Funding Target (Crowdfund Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, has successfully secured its initial £400,000 funding target from 450 investors through its equity crowdfunding campaign on Crowdcube.

Downing enters property development space with Funding Circle hires (P2P Finance News), Rated: A

DOWNING has hired two real estate experts from Funding Circle’s property division as it enters the property development space through its crowd bonds platform.

Investors on Downing’s crowd bonds platform are being offered returns of five per cent for one year or six per cent for two years by investing in Downing Development Finance (DDF) through the DDF Property Bond.

 

Investors put trust in Scotland’s canniness (The Scotsman), Rated: B

Edinburgh Worldwide is another Baillie Gifford managed trust, though rather obscured by the group’s better known trusts. Notable performers (not a Scottish name among them) were Alnylam Pharmaceuticals, a gene silencing company, LendingTree, an online loan marketplace, and IPG Photonics, a manufacturer of fibre-lasers used in metal processing.

China

 

How asset managers like FinEx Asia are using AI to disrupt traditional bank lending (SCMP), Rated: AAA

Banking disintermediation – essentially, taking out the middle man – has taken a new twist. While in recent years peer-to-peer (P2P) lending has become the poster-child for threatening banks’ lending business, a new type of hybrid disrupter is apparently starting to emerge: asset managers backed by financial technology.

One such firm attempting to cut banks out of the consumer-lending equation is FinEx Asia. The newly-licensed asset manager connects Asian investors with American consumer-credit assets, using artificial intelligence to select the loans based on risk appetite.

Founder and chief executive Maggie Ng said the company’s three funds now have US$100 million under management. They are backed by a portfolio of more than 10,000 US-based borrowers who have obtained loans from multiple online lending platforms, she said without specifying which ones.

Thomson Reuters platform to help further develop Hong Kong’s fintech offerings (SCMP), Rated: A

Thomson Reuters, the news and market data giant, is partnering with a Hong Kong government-backed body to help the city’s banks and fintech firms develop new technology, cut costs and create new products.

Celebrating its 150th anniversary in Hong Kong next year, the new arrangement will see Thomson Reuters offer its platform to financial firms to distribute their products as well as use its technology, tools and data to create products, for free.

International

Growth of Investor Numbers on P2P Lending Platforms (P2P-Banking), Rated: AAA

Today I take a look at how investor numbers are developing at several platforms.

Source: P2P-Banking

FinTech Startup Nanopay Is For Banks, Not Against Them (PYMNTS), Rated: A

Whether bank customers are consumers or businesses, chances are good that they do at least some of their banking online. This month, startup nanopay is announcing a partnership with Canadian nonprofit interbank network Interac to help businesses manage the complexity of working across borders.

The partnership creates access for any bank account holder in the country to send funds to or receive funds from any other bank account served by nanopay. So far, that’s a short list including just India. But, according to nanopay CEO Laurence Cooke, coverage will be supported in the U.S. and China as well in Q1 of 2018.

The First Social P2P Cryptobank Datarius to Launch a Pre-Sale on December 12 (Coinspeaker), Rated: B

The Datarius main characteristics are the use of blockchain, artificial intelligence, cryptocurrency operations and a special designer of the customer-adapted tariffs.

P2P lending is another characteristic of Datarius. It provides millions of people around the world with the possibility to receive and make loans using a Personal Account in the browser or through a smartphone application. It is a fast, reliable and easy way to get a loan wherever a person is. This is an opportunity to earn without involving brokers.

The pre-ITO round starts on December 12 on the official website of the Datarius Cryptobank and will last till December 31. 1 DTRC token = $ 1, but during the Pre-sale every buyer receives a 35% bonus. Soft Cap: $ 125,000.

Asia

ANNOUNCING THE LAUNCH OF THE iFX EXPO ASIA 2018 (NewsBTC), Rated: B

CONVERSION PROS, a marketing agency within the retail finance sector and founding company behind the iFX EXPO series of financial B2B events, has announced their next event, the iFX EXPO Asia 2018, which will take place in Hong Kong from the 23rd to the 25th January 2018 at the HKCEC (Hong Kong Convention & Exhibition Centre).

This event holds special significance, according to Gal Ron, CEO of CONVERSION PROS:

“This will be our 12th show to date and we expect to showcase this steady growth as we present an expanded floor plan with more exhibitor and sponsor areas tailored to the needs of our attendees. We are also placing special focus on Crypto as well as Peer to Peer lending as we are sure that this is part of the future of the online trading industry.”

Russia

Mintos, an Online Marketplace for Loans, Adds First Russian Loan Originator to Platform. (Crowdfund Insider), Rated: AAA

The Mintos marketplace for loans has added its first Russia based loan originator: EcoFinance. The online lender offers investments in unsecured personal loans issued in Russia under its CreditPlus brand. Mintos reports that EcoFinance loans on its marketplace will initially be listed in Euros with investors able to earn up to 11% annually.

Africa

Kiakia — get real-time capital as a business owner or working class (Techpoint), Rated: AAA

It’s no longer news that many individuals and SMEs in Nigeria have limited access to finance, especially from commercial banks.

Kiakia, an AI and machine learning powered alternative credit scoring, customer service, direct and a P2P lending platform has launched a virtual agent called “Mr K” to help working adults and SMEs access credit.

According to the Co-founder, Olajide Abiola (who also doubles as the Chief Data Scientist), millions of naira in loans have been successfully granted to and repaid by hundreds of borrowers across 22 States in Nigeria. This comes with a loss/default/NPL ratio of below 2.3%, which is consistently maintained over a 12-month period, all thanks to Kiakia’s algorithm.

Canada

FLEXITI FINANCIAL ANNOUNCES ONLINE FINANCING TO GROW E-COMMERCE SALES FOR CANADIAN RETAILERS (Flexiti Financial), Rated: AAA

Flexiti Financial, a provider of Point-Of-Sale (POS) financing and payment technology, announced today that its award-winning POS consumer lending platform is now available for online transactions. Retailers across Canada now have access to a powerful, online financing platform that easily integrates into any e-commerce engine, offering a low-cost solution. This is a critical new offering for Canadian retailers as it overcomes two key hurdles – speed of implementation and cost – as e-commerce continues to grow as a critical sales channel.

Flexiti Financial’s POS lending platform offers low rates for retailers who want to offer their customers flexible payment options, such as 0% interest financing. Customers do not require an existing credit card to apply.

Authors:

George Popescu
Allen Taylor

Wednesday October 4 2017, Daily News Digest

ICO funding by month

News Comments Today’s main news: Elevate customers save more than $2B. Overstock launches SEC-compliant ICO alternative. RateSetter trims secondary market fees. PeerStreet funds over $500M in loans with zero investor losses. Qudian leads 2 IPO launches totaling $869. Kabbage on the road to $161M raise. Today’s main analysis: International P2P lending volumes. Today’s thought-provoking articles: Renren’s Joe Chen’s sneaky SoFi share grab. Hedge […]

ICO funding by month

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Caribbean

News Summary

United States

Elevate Customers Save More Than $ 2 Billion Thanks to Advanced Tech-Enabled Underwriting (BusinessWire), Rated: AAA

Elevate Credit, Inc. (“Elevate” or “the company”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced their customers have saved more than $2 billion, versus what they would have paid for payday loans. $613 million of these cumulative savings were incurred in the first half of 2017 alone.

Joe Chen’s Sneaky SoFi Share Snatch (Forbes), Rated: AAA

But in Silicon Valley Renren’s founder and CEO, Joseph “Joe” Chen, is no outcast. He is a well-connected guru and mentor who sits on the boards of companies in which Renren has invested, like LendingHome, Fundrise, and Motif Investing. Chen also sits on the board of Social Finance, known as SoFi, which has been under fire due to a mounting sexual harassment scandal that recently saw Mike Cagney resign as SoFi’s CEO and chairman.

Chen is cooking up a deal that will allow shareholders of Renren who are “qualified purchasers” and “accredited investors,” to exchange their shares in the company for ownership in a spinoff entity consisting of its investment portfolio, including Renren’s stake in SoFi. Other shareholders who do not qualify would instead get a cash payment reviewed by a special committee of Renren’s board.

Under the spinout plan, Chen, who owns 31% of Renren’s stock, SoftBank, which owns 39% of Renren, and DCM, which owns 8.6%, will likely increase their SoFi holdings. Most of the shareholders owning the remaining 20% of Renren would lose their exposure to SoFi given that they appear to largely be individual retail investors, Securities & Exchange Commission filings show. This would leave them with a yet-to-be determined dividend, and a holding in a declining, money-losing Chinese internet company.

Renren still has its stake in SoFi, which together with some other Renren investments is worth more than Renren’s market capitalization of $630 million.

Overstock.com launches SEC-compliant ICO alternative (Bankless Times), Rated: AAA

Online retail giant Overstock.com is currently not only offering custom jewelry or discount mattresses but has been delving into cryptocurrency through Overstock.com, its subsidiary focused on Blockchain ventures.

In their Overstock.com, they are now in a joint venture together with RenGen and Argon Group to launch an Automated Trading System (ATS) for trading tokens issued via ICOs.

According to reports, $2 billion has been raised in token sales this year alone.

Hedge Funds Flip ICOs, Leaving Other Investors Holding the Bag (Bloomberg), Rated: A

Hedge funds are proving to be first among equals when it comes to digital token sales by technology startups, receiving preferential discounts and terms and then often cashing out. While legal, the maneuver is drawing comparisons to some of the eyebrow-raising practices that took place during the IPO heyday of the 1990s, when many preferred investors would quickly resell shares for big profits.

“It’s not healthy for the ecosystem, and it’s pretty abusive,” said Kyle Samani, a managing partner at Austin, Texas-based Multicoin Capital, which invests in ICOs. “They are getting a discount because they are a big name, and they think it’s going to draw the retail investor. It’s the greater fools theory –- I’ll buy it if there’s someone who’s more of a fool than me.”

Source: Bloomberg

Startups often announce, with much fanfare, that such-and-such funds and big-name investors have participated in the presale. What isn’t as well publicized is that the early investors — and, possibly, even the startup’s founders — can often cash out right after the ICO.

Source: Bloomberg

More than 80 percent of ICOs are doing presales, according to Lex Sokolin, global director of fintech strategy at Autonomous NEXT.

PeerStreet funds over half a billion in loans, maintains zero losses to investors (PeerStreet Email), Rated: AAA

PeerStreet, the real estate investing platform for real estate debt, has just hit the milestone of having funded half a billion in loans and with zero losses to investors since the company launched in 2015.

Platforms in the P2P and crowdfunding space are seeing increasing competition and scrutiny, but PeerStreet has continued to offer investors access to quality loans and high yields, earning the public testimonial of some high-profile users, such as 

Kabbage is Raising $ 161 Million (Crowdfund Insider), Rated: AAA

Online SME lender Kabbage is raising $161 million, according to a filing with the Securities and Exchange Commission. The Fintech firm filed the Form D last week indicating it had already received $80,573,040 with the same amount remaining to be raised.

Atlanta fintech ‘unicorn’ Kabbage raising $ 161 million (Biz Journals), Rated: B

Kabbage, which is mulling an IPO, has raised about $80 million on the planned raise, according to a Securities & Exchange Commission filing. The fintech, valued at more than $1 billion, announced a $250 million investment from SoftBank last year.

Kabbage’s Petralia Talks Big Tech, Fintech and Lending (deBanked), Rated: A

It’s only been a few weeks since the blockbuster announcement that SoftBank is investing $250 million into Kabbage, which thrust the small business lender into the spotlight for a few reasons, not the least of which was the more than $1 billion valuation that has been speculated for Kabbage.

This valuation, of course, is in stark contrast to that of OnDeck, which also lends to small businesses.

“All of our bank partnerships are technology integrations where our technology sits in their systems. They use our technology to deliver the customer experience. And I think what SoftBank saw in us was that potential. Whatever the valuation was I can assure you it was a result of a lot of due diligence on the part of SoftBank,” she said.

Rethinking Credit Scores in the Age of Fintech (Huffington Post), Rated: AAA

What value do the three big ratings bureaus, Equifax, Experian and TransUnion, provide today in our emerging digital economy?

Increasingly in a world where payments may involve a peer to peer exchange, a global transfer, and more and more often a mobile phone transaction, the definition of good credit is going to change and widen.

Today, Experian maintains credit information on 215 million American consumers [Experian]. That’s over two-thirds of the total U.S. population [U.S. Census]. Roughly half of the population in the US has a FICO credit score that is less than 650, meaning that nearly half of people in the US cannot get credit from banks today.

The Equifax debacle turned up the volume on the call for change. We’re about to see more innovative ways of looking at credit, most of them built by mobile-first fintech companies.

Companies like PayPalKabbageSmartBizSquare, and others have stepped in to look at new ways to determine creditworthiness. Rather than depend solely on a single score like FICO, they are looking at a more holistic picture of a credit applicant.

SoFi, another lending startup, is using AI to analyze data from sources other than credit card information. And ShoCard, a blockchain-identity management system (IMS), teamed up with Creditinfo to let a customer claim their identity and manage who it gets shared with.

Chad Swenson of Lantern Credit believes your credit should be under your control. “Companies,” he says, “now have the ability to work with multiple alternative data streams outside of the traditional data delivered from the bureaus.”

Evan Singer, CEO of SmartBiz, a company devoted to helping small businesses secure loans, says that other metrics like your bank rating (how you use your bank rather than your credit) is another important piece of the puzzle often ignored.

CrowdStreet Debuts First Direct Commercial Real Estate Investing Platform for Financial Advisors (CrowdStreet), Rated: A

CrowdStreet, provider of the leading commercial real estate investment platform for investor acquisition and relationship management, today announced several enhancements to its flagship Sponsor Direct white-label software platform designed to address the needs of modern investment firms. With these new features, Sponsor Direct is now the only software offering that combines support for financial advisor accounts with a suite of tools specifically developed to help them engage, communicate with and service their investors. Hines Securities Inc. is the first firm to leverage these new capabilities, relying on Sponsor Direct to provide easy-to-use online real estate capital fundraising functionality to financial advisors.

CrowdStreet’s proven software solutions currently support more than 53,000 investors, managing more than 1,000 offerings and $3.7 billion in invested capital. Since its launch, the CrowdStreet software platform has been used to raise more than $260 million and distribute more than $684 million to investors.

New Yorkers pay the second highest ATM fees in the country (NY Daily News), Rated: A

ATM fees have reached an 11-year record high, and New Yorkers are paying the second highest rates, says Bankrate’s annual Checking Account Survey for 2017.

The national average ATM fee is $4.69, equaling the average ATM surcharge of $2.97 plus the average out-of-network fee your main bank charges of $1.72.

Cities whose fees top over $5 include Pittsburgh ($5.19), New York ($5.14), Washington, D.C. ($5.11), Cleveland ($5.11) and Atlanta ($5.05).

Even the lowest fees still don’t drop below $4 with Milwaukee at $4.19 and Dallas at $4.07.

Overall, ATM withdrawal fees have risen by 55% over the last ten years and there is little to curb this growth.

1031 Crowdfunding Moves Up Rankings to #4 Among Top Real Estate Crowdfunding Sites (PR Newswire), Rated: A

1031 Crowdfunding, LLC announced today that the Company moved up in the rankings for the 2017-2018 Top 100+ Real Estate Crowdfunding Sites to #4 overall and maintained its position as #1 ranked Real Estate Crowdfunding site for 1031 Exchanges.

The Real-Estate Crowdfunding Review conducted in-depth research of over 100 real estate crowdfunding sites to form the reviews and rankings provided in the Top 100+ Real Estate Crowdfunding Sites. Site features most highly-valued included: pre-funding, low investor fees, low investors minimums, bankruptcy protection, velocity, positive investor feedback, co-investment by the company, and venture capital funding in the company.

Top 100+ Real Estate Crowdfunding Sites (The Real Estate Crowdfunding Review), Rated: A

13 sites in the former top 25 have fallen completely out of the rankings due to abandoning their business model or challenges. 5 sites have improved tremendously with substantially increased volume, and a few of these that were lower ranked have leaped up the charts as well.

Tier 1: Best of the Best

These sites have it all: High transparency, co-investment,  pre-funding, high-volume, average to low fees, excellent bankruptcy protection, strong administration and customer service, and strong financial backing.

None. No site has all these features yet, but we hope that will change by the time of our next review.

Tier 2: All-Stars

These sites are all extremely strong in the majority of the fundamentals that are most important to investors.

Tier 4: Up-And-Coming + On-probation

There are 2 types of sites in this category. The 1st are up-and-coming sites that may not be as polished as competitors but have some sort of promise or potential for the future. The 2nd are sites that did well in last year’s rankings, but since then have had substantial investor complaints, decreasing volume or other challenges.

Justice Department gives big banks green light on real-time payments (American Banker), Rated: A

Following an antitrust review that lasted almost a year, the Department of Justice has greenlighted a real-time payments network being developed jointly by the nation’s largest banks.

The government’s approval may boost the prospects of a system that is being built by The Clearing House, the payments firm co-owned by JPMorgan Chase, Citigroup, Bank of America, Wells Fargo and a host of other banks.

Fintech players assess post-disruption environment (Banking Exchange), Rated: A

Has the state of consumer credit changed post-crisis? Lending Club Chief Executive Scott Sanborn said he believes that the “new normal” in consumer lending is riskier.

Wages are stagnant, Sanborn said, and a greater portion of many consumers’ income now goes toward repayment of debt. Credit cards, student loans, and auto loans are among the major drains on the consumer wallet today, he noted.

A common use of marketplace lenders’ credit is debt consolidation loans, undertaken by consumers to bring down their overall borrowing rates.

Lending Club is not alone among nonbank digital lenders in going beyond traditional credit criteria. A co-panelist with Sanborn, Sarah Friar, chief financial officer at Square, said that her company—which recently applied for an industrial bank charter in Utah—doesn’t use FICO ratings at all. Friar said Square—which began as a payments mechanism and has expanded into small business credit—looks at financial accounts, number of employees, and status versus other players, among other factors.

Spending Within Their Means: Some Cities Do It Better Than Others (Business Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, has released the findings of its study on how well residents in the top 50 U.S. metropolitan areas are spending within their means – or aren’t.

Among the 50 ranked metro areas, residents are, on average, using 30 percent of their revolving credit lines — such as credit cards and home equity lines of credit, or HELOCs. They also have mortgage balances averaging 79 percent of their annual income and non-housing debt balances averaging 44 percent of annual income, and have had five credit inquiries in the last two years.

Greenville, SC takes the top score, despite having the second-lowest average income among the 50 cities ranked at $65,503 per household.

Source: LendingTree

Rank

Metro

Spending Within Their Means Score

Inquiries (last 2 years)

Revolving Credit Utilization

Non-Housing Debt % of Income

Mortgage Debt % of Income

1

Greenville, SC

71

4.0

27.6%

47.3%

61.6%

2

Greensboro, NC

65

3.8

28.9%

48.5%

63.9%

3

Kansas City, MO

64

5.9

28.4%

42.8%

65.0%

4

Buffalo, NY

64

4.0

29.0%

50.5%

55.2%

5

Charlotte, NC

64

3.8

28.2%

43.2%

84.9%

6

Milwaukee, WI

64

7.1

28.4%

39.7%

65.8%

7

San Francisco, CA

63

3.9

28.9%

28.4%

109.1%

8

Boston, MA

62

4.6

29.0%

35.7%

86.9%

9

New York, NY

62

4.4

30.5%

34.7%

77.6%

10

Raleigh, NC

61

3.8

27.6%

45.2%

85.6%

11

Pittsburgh, PA

60

5.1

28.0%

51.2%

49.3%

12

Nashville, TN

59

4.4

27.8%

43.9%

80.4%

13

Hartford, CT

58

5.5

30.0%

38.1%

76.8%

14

Oklahoma City, OK

58

6.0

28.3%

47.8%

60.7%

15

Portland

56

3.5

30.0%

40.2%

90.8%

16

Grand Rapids, MI

56

6.8

29.4%

43.3%

59.8%

17

Detroit, MI

56

5.9

30.1%

41.0%

65.0%

18

Louisville, KY

56

6.8

28.3%

43.0%

68.4%

19

Washington, DC

55

4.0

30.1%

37.1%

102.8%

20

Richmond, VA

55

4.0

29.8%

41.2%

87.5%

21

Denver, CO

55

3.1

29.2%

39.9%

108.0%

22

St. Louis, MO

53

7.7

29.0%

42.8%

67.0%

23

Philadelphia, PA

53

5.6

28.9%

43.0%

79.4%

24

Minneapolis, MN

53

4.3

30.5%

39.5%

83.6%

25

Birmingham, AL

53

5.6

29.2%

47.3%

62.5%

26

Cincinnati, OH

53

5.7

29.1%

44.9%

68.0%

27

Cleveland, OH

52

6.6

28.9%

49.4%

58.9%

28

Austin, TX

52

4.9

30.0%

42.5%

78.2%

29

Dallas – Fort Worth, TX

52

5.1

29.5%

44.3%

69.9%

30

Indianapolis, IN

51

6.6

28.4%

46.1%

68.3%

31

Atlanta, GA

51

4.3

29.2%

45.0%

81.2%

32

Columbus, OH

49

6.2

30.6%

45.9%

57.4%

33

Salt Lake City, UT

48

4.2

30.2%

39.7%

98.2%

34

Chicago, IL

46

7.2

30.1%

39.5%

80.1%

35

Seattle, WA

46

4.6

30.6%

37.6%

98.7%

36

Memphis, TN

45

5.1

29.7%

51.2%

64.9%

37

New Orleans, LA

43

4.2

30.8%

50.8%

66.9%

38

Miami, FL

43

4.1

29.0%

48.7%

89.5%

39

Harrisburg, PA

42

6.2

29.1%

47.8%

70.1%

40

Sacramento, CA

42

4.4

32.0%

38.5%

103.2%

41

San Diego, CA

41

4.3

32.8%

37.2%

118.2%

42

Los Angeles, CA

39

4.6

32.0%

38.6%

108.3%

43

Houston, TX

39

5.3

31.4%

46.8%

70.3%

44

Tampa, FL

38

4.2

29.9%

51.6%

80.7%

45

Virginia Beach, VA

36

3.8

33.2%

46.8%

95.4%

46

Orlando, FL

31

4.3

30.7%

51.0%

82.1%

47

Jacksonville, FL

25

4.1

32.3%

51.8%

87.9%

48

Phoenix, AZ

25

5.1

30.4%

48.1%

102.7%

49

Las Vegas, NV

20

5.1

31.8%

50.6%

96.6%

50

San Antonio, TX

19

7.3

32.1%

54.7%

72.2%

Goldman Sachs Explores a New World: Trading Bitcoin (WSJ), Rated: B

Goldman Sachs Group Inc. GS 0.40% is weighing a new trading operation dedicated to bitcoin and other digital currencies, the first blue-chip Wall Street firm preparing to deal directly in this burgeoning yet controversial market, according to people familiar with the matter.

Goldman’s effort is in its early stages and may not proceed, the people said.

United Kingdom

RateSetter streamlines secondary market fees (P2P Finance News), Rated: AAA

RATESETTER has announced that it is simplifying the way investors can access their money, with one single “transfer fee” when selling loans on the secondary market.

Lenders are currently charged two fees when selling out existing RateSetter loans, but from 2 November this is being streamlined into a single charge. The fee will be a percentage of the capital being withdrawn, and will be fixed for each market.

P2P Finance News

LendInvest urges government to back SME builders (Mortgage Solutions), Rated: AAA

Property finance platform LendInvest has called on government to do more to support small builders after discussing the subject with a group of influential MPs.

The event follows the publication of a report by LendInvest earlier this year on the challenges faced by property SMEs. These include constrained access to finance and distorted policy around regulation, taxation and access to land.

At the time of the report LendInvest said only 12.5% of new homes built today are constructed by small builders, down from 37.5% before 1990.

A canary in the P2P coal mine? (Financial Times), Rated: A

How are British “peer-to-peer” lenders doing?

Employee lenders are one of the fastest-growing areas of UK fintech (Financial Times), Rated: A

Online lenders that are repaid from people’s salaries have raised more than £175m in recent months, marking out the nascent sector as one of the hottest areas of the UK financial technology market.

Legal & General, the insurer, will on Wednesday announce that it is leading the latest £40m investment in SalaryFinance, which provides loans to employees of 50 groups in the UK and plans to expand in the US.

Founded by three former executives from Google, PA Consulting and Royal Bank of Scotland, SalaryFinance combines with companies to offer their employees loans at lower rates than credit cards or payday lenders.

The company has an unusually low default rate of 0.5 per cent because of the security of deducting repayments directly from a borrower’s salary, and the extra information it gains about its customers by tapping into their employer’s payroll systems.

Fintech awareness is surprisingly low in the UK (Business Insider), Rated: A

Despite the high number of UK consumers who use financial products and the extent of financial services penetration in the country — 91% of people across the UK have a current account, and 67% use contactless payments at least once a month — awareness of fintech services in the UK remains low, according to a 

Source: Business Insider

Luton is still the best place for buy-to-let investors (What Mortgage), Rated: B

According to the latest Buy-to-Let Index from online mortgage lender LendInvest, Luton has managed to hold on to the top spot as the best place for buy-to-let investment.

Luton has seen a 4.51% increase in rental price growth and an average yield of 4.51%.

China

Chinese Lender Qudian Leads 2 IPO Launches Totaling $ 869M (Law360), Rated: AAA

Chinese online lender Qudian Inc. launched an estimated $769 million initial public offering on Tuesday, adding to a growing IPO pipeline along with private equity-backed medical device company OptiNose Inc., which set terms on a projected $100 million offering.

Beijing-based Qudian plans to offer 37.5 million Class A shares priced between $19 and $22, raising $768.8 million if shares price at midrange. Qudian, represented by Simpson Thacher & Bartlett LLP, is directly offering 35.6 million shares in the IPO while various existing shareholders are selling 1.9….

European Union

Robo.cash Founder Sergey Sedov Comments on Recent Milestone (Crowdfund Insider), Rated: AAA

Robo.cash, an automated P2P lending platform that includes a buyback guarantee, recently celebrated its own steady growth during 2017 Q2, noting that its total amount of investments now exceeds €1.8 million. In addition, nearly €400,000 in loans were added in August alone, while the  average invested amount per investor gained 2.2% to the previous month at €3,270 in August. More than 900 investors have joined the platform in the first six months of operation.

The Ultimate List of LendIt Europe 2017 Speakers to Follow on Twitter (LendIt), Rated: B

If you follow them, we guarantee that your news feed will be filled with industry news, trends, thoughts, opinions and more!

Source: LendIt

 

International

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

This month I added Raize, a marketplace in Portugal.

Source: P2P-banking

GoldMint Partnership Signals Strategic Advancement (NASDAQ), Rated: A

GoldMint, a blockchain-based startup that helps gold owners profit from digital assets backed 100 percent by physical gold, recently announced an innovative collaboration with the mineral production company Eurasia Mining .

Through this agreement, GoldMint is establishing a method for applying blockchain-based technology to the development of resource industry projects.

India

GET YOUR FINANCES RIGHT (Daily Pioneer), Rated: A

Last year, State Bank of India (SBI) announced that the ceiling limit for its foreign educational loans would be raised from Rs 30 lakh to Rs 1.5 crore.

According to statistics, about45 per cent of international students in US alone comprise of Chinese or Indian students.

Here’s a quick look at the financial loan options other than SBI:

  • The Indian Government has installed the portal ‘Vidya Lakshmi’ that allows students to check out various loan options and fund providers. Loans are provided in four slabs — Below Rs 4 lakhs, between Rs 4 lakhs and Rs 7.5 lakhs; and above Rs 7.5 lakhs with differing interest rates for each slab.
  • Credila, an HDFC Ltd. Company, India’s first dedicated educational loan company, offers loan approvals before you secure admission. You can get loans up to Rs 2.5 crores.
  • Prodigy Finance offers competitive loans which does not need a co-signer or collateral. Students can start repaying six months after graduation, and there are no penalties for early repayment. You can also avail of their $10,000 scholarships, which is being given away this year to mark their decade of business.
  • GyanDhan, India’s first educational loans marketplace, offers 100 per cent financing for top B-Schools and engineering schools. They offer loans with collateral starting as low as 9.1 per cent.
  • Avanse Educational Loan covers 100 per cent of study abroad expenses on a floating interest of 12 per cent to 17 per cent.
  • Nationalised banks are offering a comparatively lower rate of interest between 9 per cent to 13 per cent on an average.
Asia

Seasoned Japanese startup puts fintech on the map with $ 500m IPO (Tech in Asia), Rated: AAA

Money Forward, a well-established financial tech startup, has launched its IPO, marking a watershed moment for Japan’s burgeoning fintech scene.

The firm, started in 2012, is now worth US$505 million after listing on the Mothers Index Futures section of the Tokyo Stock Exchange, which is designed for high-growth and emerging stocks.

The IPO raised approximately US$25 million.

MENA

Payday Loan Ranger Is Helping People Cover Gaps In Between Their Paychecks (MENAFN.com), Rated: A

Payday Loan Ranger is a loan service that specializes in providing loans from $50 to $1000.

Payday Loan Ranger’s popularity rises from the fact that it completely simplifies the process and never makes it as hectic and difficult as similar services. Their entire service is reduced down to three simple steps, applying online, searching for the best lenders, and then receiving the cash as early in the first 24 hours.

With over 2,000,000 applications already processed, it has become one of the most popular services used for such transactions and continues to rise in usage as it seems people are truly in need of such a novel service.

Caribbean

Why Bitcoin Will Not Solve the Caribbean’s Financial Inclusion Woes (CircleID), Rated: AAA

The issue of financial exclusion can be summarized into two categories: unbanked and underbanked. Unbanked individuals do not have an account at a regulated financial institution, while underbanked individuals have accounts, but frequently use alternative or unregulated financial services.

Unbanked individuals are faced with a heavy economic burden when conducting even the most basic financial transactions. For example, cashing a cheque can cost the average person with full-time employment as much as USD$20,000 over his/her lifetime. Western Union, as an example, charges as much as USD$42 to send a USD$500 remittance to Barbados. ‘Underground’ alternative financial service providers levy as much as USD$10 on every USD$100 transferred.

Another reason for unbanked individuals is attitudinal and behavioral; they really do not trust banks. This sentiment may not be all that unfounded, as a number of the banks across the Caribbean region have been reducing the teller services that unbanked individuals are familiar with and prefer, forcing more (non-technical) customers to online channels, regularly increasing service fees, and even worse, looking to divest their retail operations in favor of corporate banking and wealth management business units.

To obtain Bitcoin, you must already be “economically included” — both in terms of Internet and financial access.

Predatory businesses are convenient where the unbanked live. Rural areas like Trelawny, Jamaica or Mayaro, Trinidad are home to large swathes of unbanked households. Traditional banks don’t see a viable business cases for locating a branch or satellite office in such districts. This means that check cashing and money changing businesses that charge exorbitant rates are the only real means of conducting transactions. Kenya’s M-PESA succeeded because it leveraged an existing network of agents and vendors.

Globally, mobile banking is overtaking branch-centered activity more and more — for example, in Norway, 91% of the population use online banking channels. The explosion of fintech companies that are ‘unbundling’ traditional banking functions, added to the maturity of the first generation of Internet banking solutions, are hastening this trend. Consequently, the amalgamation of omni-channel banking, fintech platforms, and open APIs are obscuring the lines between traditional and alternative finance.

Moreover, besides remittances, financial inclusion also includes micro-credit, micro-insurance, cooperatives, peer-to-peer lending, rural/agricultural credit, mobile money, mobile vouchers, and a number of other alternative financial services. Financial inclusion is multi-faceted, and Bitcoin has yet to distinguish itself in any of the aforementioned categories.

The Caribbean region has serious online trust issues. In 2016, OAS and IDB published a report titled, ‘Cybersecurity: Are We Ready in Latin America and the Caribbean?’ Researchers conducted assessments of 13 Caribbean nations, including Bahamas, Barbados, Jamaica, and Trinidad & Tobago. The methodological framework covered ‘Culture & Society’, and one of the key findings was the extremely low levels of online trust in the region. Caribbean people do not trust that their online activities aren’t being monitored, they do not trust their service providers, they do not trust social networks, they do not trust their search engine provider, they do not trust companies to keep their personal data safe and secure, and most relevant — they do not trust online and mobile banking platforms.

Authors:

George Popescu
Allen Taylor