Thursday February 14 2019, Weekly News Digest

OnDeck revenues

News Comments Today’s main news: SoFi invests in Apex Clearing. Zopa chairman steps down. Ratesetter ISA tops 17M GBP in first year. Assetz Capital surpasses 700M GBP in lending. Revolut denies getting Lithuanian bank license to influence politics. Today’s main analysis: OnDeck’s Q4 earnings review. Today’s thought-provoking articles: What’s happening with auto loans. How Amazon controls small businesses with lending. Banks […]

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News Summary

United States

SoFi held talks to acquire a fintech company backing some of the hottest robo advisors as it eyes expansion beyond its lending roots (Business Insider), Rated: AAA

OnDeck Q4 2018 Earnings Review (Lend Academy), Rated: AAA

The company achieved much of what they set to do in 2018 and posted another solid quarter as they rounded out the year. Q4 2018 net income came in at $14 million on gross revenues of $109.5 million. The company ended the year with a total of $27.7 million in net income. Below is a snapshot of their Q4 and 2018 full year highlights.

As of Q4 2018 the company still had $246 million of excess debt capacity.

BB&T and SunTrust merger; Tech in Bank Earnings (PeerIQ), Rated: AAA

The Fed’s January 2019 Senior Loan Officer Survey showed that banks tightened standards for commercial real estate (CRE) loans. Overall, banks tightened standards for credit card borrowers. However, lending standards for most categories of consumer loans and C&I loans remained unchanged. Banks also reported weaker demand for both business and household loans.

Source: Federal Reserve, PeerIQ

BB&T agreed to buy SunTrust for $28.2 Bn – the first major mega-bank deal in a decade. This deal will create the sixth-largest US retail bank. The M&A is supported by a constructive regulatory environment fostered by the OCC and CFPB, among others. The previous large acquisition was the JP Morgan acquisition of Bank One in 2004.

A major motivation for the deal was the ability of both banks to pool resources to build better digital offerings. SunTrust has a FinTech focused fund and has partnered with FinTech lenders to provide home improvement and small business loans. Banks are investing billions in digital tech spend to maintain relevance with customers that are increasingly eschewing bank branches for a seamless, online, full-service banking and wealth management customer experience.

Auto Loans in High Gear (Liberty Street Economics), Rated: AAA

Total household debt increased modestly, by $32 billion, in the fourth quarter of 2018, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Although household debt balances have been rising since mid-2013, their sluggish growth in the fourth quarter was mainly due to a flattening in the growth of mortgage balances. Auto loans, which have been climbing at a steady clip since 2011, increased by $9 billion, boosted by historically strong levels of newly originated loans. In fact, 2018 marked the highest level in the nineteen-year history of the loan origination data, with $584 billion in new auto loans and leases appearing on credit reports, up in nominal terms from 2017’s $569 billion. In this post, we take a closer look at the composition and performance of outstanding auto loan debt using the New York Fed’s Consumer Credit Panel (CCP), which is based on anonymized Equifax credit data and also the source for the Quarterly Report.

Amazon’s lending perpetuates the tech giant’s control over small businesses (Tearsheet), Rated: AAA

Amazon runs a marketplace with 2.5 million sellers, 24,000 of which had more than $1 million in sales on the platform in 2018. These sellers represent the potential customer base for the company’s lending model.

From this base of borrowers, Amazon has been able to reportedly lend over $1 billion in 2017, exceeding  $3 billion in total lending volume from its inception in 2011 to 2017. As for 2018, in its annual report, the company reported receivables outstanding from their lending program of $710 million, up from $692 million a year prior.

With access to detailed information and data on each seller, Amazon is able to mitigate lending risk substantially. Seller metrics only available to Amazon are utilized to determine a small business’s creditworthiness. Sales history, product offerings, customer service feedback, and shipping metrics enable Amazon’s lending business to have better insight into how to accurately issue loans. This allows Amazon to have an understanding of the health of each small business on its seller marketplace.

Goldman Sachs, Point72 and others invest $ 44 million in business credit startup Nav (Reuters), Rated: A

Nav, a startup that gives small businesses free access to their credit reports, said on Monday that it had raised $44 million from investors including Goldman Sachs Group Inc (GS.N), Point72 Ventures and Experian Ventures (EXPN.L).

Well Fargo Outage Points to Opportunity in Digital Banking (Lend Academy), Rated: A

Wells Fargo is still digging out from a PR disaster last week when the bank went offline for a large segment of customers due to a fire alarm triggered in a server facility in Minnesota. Customers could not access the mobile app, the website or ATMs. The incident has been used to highlight how big an opportunity there is for fintech firms or more nimble banks.

What the outage shows is that bank infrastructure is still stuck in the past, analysts rightly askedwhy Wells Fargo did not have the bank running on a cloud based system.

Digital bank Chime seemed to benefit from the news with more than 10,000 accounts being opened, a record 24 hour period for the startup.

new survey by Fraedom says 80 percent of banks believe challengers have impacted their business and 30 percent say they are their biggest threat.

Susan Ehrlich of Earnest (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Susan Ehrlich, the CEO of Earnest. They are one of the largest student loan refinancers in the country and they also offer personal loans. Back in 2017 Earnest was acquired by the student loan servicer Navient which was itself spun out from Sallie Mae in 2014.

Government Shutdown Slows SBA Lending Volume, Approval Percentage Dipped Slightly in January (GlobeNewswire), Rated: A

Business loan approval rates dropped three-tenths of a percent at regional and community banks in December 2018. Small bank approvals dropped a full percentage point from 49.9% in December 2018 to 48.9% in January.

Small business loan approval rates for big banks remained at a record high 27% in January 2019, according to the Biz2Credit Small Business Lending Index, which examines more than 1,000 small business credit applications made via its online lending platform.

Goldberg added that since reopening on January 28, her office has guaranteed more than 200 SBA loans worth $59.3 million.

Institutional lenders climbed up to 65.1 %, a jump of three-tenths of a percent from December’s mark of 64.8%.

Loan approval rates among alternative lenders rose from 56.6% in December to 57.3% in January, a jump of seven-tenths of a percent.

Citi rolls out new personal loan, online savings account (American Banker), Rated: A

Citigroup has launched a new consumer loan product and a new high-yielding savings-account as part of its rollout of its new digital bank.

The New York bank recently introduced Citi Flex Loan, which allows select existing Citi credit card customers to convert part of their credit lines to a loan with a fixed annual percentage rate, Mark Mason, Citigroup’s incoming chief financial officer, said Tuesday at an investor conference.

Square’s banking bid avoids backlash that doomed Walmart’s (American Banker), Rated: A

As Square seeks federal approval for a Utah industrial loan company, the fintech’s bid has so far avoided the kind of loud, public opposition that marred past ILC bids by higher-profile nonbanks.

Community banks still criticize the ILC charter as a banking loophole for non-financial firms, and the Independent Community Bankers of America opposes Square’s application.

Almost 60% of small business owners launch with less than $ 25,000 (CNBC), Rated: A

At least that’s according to entrepreneurs polled recently by Kabbage, a financial services and data platform serving small businesses. More than half of those polled, or 58 percent, started their businesses with less than $25,000. A third started with less than $5,000.

These numbers track with the latest data from the U.S. Census Bureau, which found that the median cost to start or acquire a company is about $25,000. It did find fewer businesses that begin with less than $25,000, only 46 percent, though that could be due to its inclusion of new owners who purchase existing operations as well owner starting from scratch.

LoanStreet Adds Commercial Lending Features for Financial Institutions (Crowdfund Insider), Rated: A

LoanStreet, an online platform that enables traditional finance like banks credit unions and other direct lenders to streamline the process of sharing, managing, and originating loans, has added new features. The SaaS platform now offers commercial loan origination and administration solution for any size financial institution, loan or deal volume.

LoanStreet’s new lending features include:

  • Built-in collaboration tools offering the flexibility to originate the loan best suited to your borrowers’ needs without sacrificing the ability to invite other financial institutions into the deal.
  • Single access point allowing all parties, including borrowers, lenders, attorneys and auditors, continuous and secure access to the same information.
  • Integrated platform from origination to maturity avoids re-keying, duplication of efforts and eliminates transfer errors and other critical information loss that occurs over time.
  • Efficient process management enabling online, borrower self-service of key administrative tasks — including online payment acceptance — while improving internal controls and information flow.
  • Automated reporting facilitating completion of all applicable regulatory and financial entries for you and every investor.

Velocity Investments sues woman for breach of contract, seeks ,500 in damages (Louisiana Record), Rated: A

Velocity Investments LLC, assignee of Lending Club Corporation, filed a complaint against Heather Darling on Feb. 12 in the 24th Judicial District Court. According to the lawsuit, the plaintiff states that the defendant has failed to pay off the balance of $22,495.23 plus interest on a contract between the parties. The defendant is accused of sums due on an open account and breach of contract.

Online Loan Companies Are No Easy Fix for Desperate Borrowers (Real Daily), Rated: A

Lending Club is currently the largest online lender in the world. By some estimates, Lending Club, which launched in 2007, facilitated anywhere between $35 billion and $55 billion in online loans in 2018.

Now as more financial institutions are beginning to extend loans, Americans are falling even deeper into debt again. Americans, as individuals and households, owed over $13 trillion dollars, collectively, in 2018.

Best News We’ve Heard All Day: More Single Women Own Homes Than Single Men (Pure Wow), Rated: A

Online loan marketplace LendingTree reports that on average, single women own around 22 percent of homes, while single men own less than 13 percent. The study states that the gender gap in housing across the country is particularly interesting “given the average woman in the U.S. only makes 80 percent of what the average man does.” Interesting, indeed. (We can think of another word for it.)

Thoma Bravo Is Buying Digital-Focused Mortgage Company (WSJ), Rated: A

Thoma Bravo LLC has agreed to buy mortgage software firm Ellie Mae Inc. for $3.7 billion, the latest indication that challenges in the home-lending market are spurring consolidation across the industry.

The transaction will give the private-equity firm control of a company whose technology has been used to help automate the closing of millions of home loans. Based in Pleasanton, Calif., Ellie Mae handles the technology that underpins the entire home-loan origination process, and its services are used in

INSIKT Changes Name to Aura (Business Wire), Rated: B

INSIKT, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced that it has changed its name to Aura to expand its focus on creating greater financial health, independence and economic stability for millions in America.

Roostify Expands Advisory Board with Investment Virtuoso (Roostify), Rated: B

Roostify, the San Francisco-based digital lending platform provider, announced today the addition of financial services consultant Marshall Lux to its advisory board. Lux, a distinguished consultant, advisor and educator, brings more than 30 years’ experience in private equity to the rapidly expanding business and reflects Roostify’s commitment to perfecting a scalable operational model and further developing an ecosystem of technology partners and strategic alliances.

LendIt Fintech USA 2019 (LendIt), Rated: B

April 8-9
Moscone West
San Francisco

HIGHLIGHTED KEYNOTES

Sallie Krawcheck
CEO & Co-Founder
Ellevest

Rob Frohwein
CEO & Co-Founder
Kabbage

Steven Streit
CEO
Green Dot

Mike Cagney
Co-Founder
Figure

United Kingdom

Zopa chairman Giles Andrew to step down after 15 years (Independent), Rated: AAA

Zopa’s co-founder Giles Andrew is to step down as chairman after 15 years at Britain’s oldest peer-to-peer lender.

Zopa appoints Virgin veteran McCallum as chairman (Finextra), Rated: A

P2P lender Zopa has appointed former Virgin Management CEO Gordon McCallum as chairman as it gears up for the forthcoming launch of its new banking venture.

Ratesetter ISA tops £175m in first year (AltFi), Rated: AAA

The peer-to-peer lending platform said its ISA accounts for one-fifth of its £830m of funds under management.

Peer-to-peer lending platform Ratesetter said it has been “blown away” by the popularity of its first ISA product, which has hit £175m of subscriptions a year after launch.

Assetz Capital surpasses £700m lending mark (Bridging and Commercial), Rated: AAA

Assetz Capital has now lent over £700m to SMEs and property developers since launching in 2013.

The P2P lending platform has enjoyed significant progression, providing over £200m of funding in the eight months since it surpassed the £500m lending milestone in June 2018.

Former Assetz Capital founder launches fintech consultancy (AltFi), Rated: A

The co-founder of one of Europe’s largest peer-to-peer lenders has launched a fintech consultancy to help young firms “avoid some of the mistakes made by the early incumbents of the industry”.

Former Assetz Capital chief credit officer Andrew Holgate will lead a team of City veterans at consultancy Equitivo, which will help growing fintech firms raise cash, focus on strategy, trim operations and boost performance.

‘There is no magic bullet, people will get P2P over time’ (FT Adviser), Rated: A

The chief operating officer of peer-to-peer platform Relendex, Max Lehrain, has concerns about the Financial Conduct Authority’s crack down on P2P lenders and crowdfunding platforms.

UK challenger bank Starling secures £75m for European expansion (Fintech Futures), Rated: A

Life is sweet for UK challenger bank Starling as it has raised £75 million in funding for its expansion plans in Europe.

It got £60 million in a Series C round led by Merian Global Investors, including the Merian Chrysalis Investment Company.

Monzo Launches First 100 Business Accounts (Crowdfund Insider), Rated: A

UK challenger bank Monzo announced on Monday the launch of its first 100 business accounts. This news comes just a few months after Monzo revealed it was considered business banking, with Founder and CEO, Tom Blomfield, stating 2019 plans included business accounts. Speaking about the new accounts, Monzo reported:

Main Street banks say fintechs like Monzo, N26 and Chime pose the biggest disruptive threat to their businesses (Business Insider), Rated: A

Main Street banks believe upstarts like Monzo, N26 and Chime, known as challenger banks, pose a significant threat to their business, according to a recent survey.

Fraedom, a credit card specialist who works with companies like Visa, SunTrust, and Bank of Montreal, surveyed bankers on what some of the biggest impacts to their business will be in 2019. The vast majority (80%) believe challenger banks have an increased impact to their business, and 30% pegged the new competitors as the biggest disruptive threat to their business in 2019.

Tandem Bank boss calls for rate cut to kick-start UK economy (AltFi), Rated: A

Ricky Knox, chief executive of app-only lender Tandem Bank called on the central bank to cut rates to kick-start growth, as currently savers are locking away cash in specialist higher interest accounts.

Peer-to-Peer Lending and Brexit (4th Way email), Rated: A

Shares plunged and the pound plummeted to a 31-year low when the UK voted to leave the EU. More recently chaotic Brexit negotiations indicate a disorderly exit that could see investors avoid traditional investments in the UK, but what does this mean for peer-for-peer lending and should lenders be worried?

Bank and P2P lending is far less volatile than equity investing, because:

  • It is short-term orientated.
  • Lenders easily diversify widely across thousands of investments – loans – as opposed to a typical stock investor who diversifies across hundreds of shares through share funds.
  • In P2P lending, buy/sell price swings, often fuelled by uncertainty, are usually irrelevant, since lenders hold loans for the full term.
  • Lenders are usually in a better place in the queue compared to equity investors when recovering losses is involved, which can mean smaller losses on individual investments (loans) that go wrong.
  • With lending being data driven, recession conditions are easier to plan for. A turbulent P2P Brexit would mean a tripling of defaulting loans in some kinds of lending and cut-price sales of borrowers’ assets. Interest rates and reserve funds are prepped for most disasters, leaving a very low chance of a sizeable overall loss on a well-diversified, low-risk lending portfolio.

Most investors in peer-to-peer lending are using platforms that are run by people with relevant banking experience. The banks, when we look at their bread-and-butter lending, have found it easy to maintain net profits even during multiple downturns over the past 20 years, which includes the Great Recession. This is across the spectrum of lending, from buy-to-let mortgages to personal loans and credit cards. Perhaps surprisingly, retail and small business lending combined was still profitable for the UK’s high street banks during the 2008 and 2009 crash.

Learn more about 4th Way here.

Mojo Mortgages secures £7million to revolutionise the UK mortgage experience (Manchester Digital), Rated: A

Mojo Mortgages, a fintech start up based in the North West has secured £7million in Series A funding to transform the mortgage experience.

Mortgage Brain boosts user numbers (Mortgage Introducer), Rated: A

Mortgage Brain welcomed over 2,000 new customers during 2018 with a host of national networks, corporate firms and individual adviser firms choosing to use one or more of its products and services.

A number of new customers – including Censeo, Intelligence Mortgage Solutions, Your Expert Group, Affinity Mortgages and Your Mortgage Solutions – as well as a number of contract renewals and user license increases, have all contributed to Mortgage Brain’s growth throughout 2018.

UK inflation below official target for first time in 2 years (Miami Herald), Rated: A

Lower energy costs as well as a waning impact from the pound’s sharp fall in the aftermath of the country’s Brexit vote have helped consumer price inflation in Britain fall below the Bank of England’s target of 2 percent for the first time in two years.

The Office for National Statistics said Wednesday that consumer prices rose by 1.8 percent in the year to January, down from the 2.1 percent recorded in the previous month. Inflation has been consistently falling since August as the effects of the pound’s decline drop out of annual comparisons. The latest decline was further accentuated by a fall in the price of electricity, gas and other fuels.

Inflation is now at its lowest since January 2017, when inflation was also 1.8 percent.

Arbuthnot Commercial ABL delivers £12m refinancing facility (Bridging Loan Directory), Rated: B

Arbuthnot Commercial Asset Based Lending Ltd. is delighted to announce it has completed a £12m refinancing for L&C Limited, trading under Red 7 Marine (“R7M”), provider of nearshore access solutions to the UK marine construction and maintenance industry, and an investee company of Perwyn Private Equity (“Perwyn”).

European Union

UK fintech unicorn Revolut forced to deny links to Russia (Business Insider), Rated: AAA

Unicorn challenger bank Revolut has strongly denied claims that its activities in securing a banking license in Lithuania are attempts to interfere in the country’s politics.

Revolut was granted a European Banking License in Lithuania in December but has since faced claims of interfering in the country’s political processes by Lithuanian Member of Parliament Stasys Jakeliūnas, chair of the Lithuanian parliament’s budget and finance committee.

German Lending Marketplace auxmoney Overtakes Midsize Banks in Consumer Loan Origination (Crowdfund Insider), Rated: AAA

Düsseldorf-based Fintech auxmoney has surpassed its targets in 2018. Loan volume increased by 74 percent compared to 2017. Raffael Johnen, Founder and CEO of auxmoney, commented:

“While the major German banks are in crisis mode, the leading German fintechs are always setting new records. With our continuously strong growth, we managed to be the first credit marketplace to catch up with medium-sized banks in Germany.”

It issued new loans totaling €551 million last year.

Auxmoney Now Stands for 0.5% of the Market of German Consumer Loans (P2P-Banking), Rated: A

German p2p lending marketplace Auxmoney announced that it has facilitated 551M EUR in consumer loans in the year 2018. Up 74% compared to 2017. Approximately 73,000 loans were financed. That would mean Auxmoney now stands for a market share of roughly 0.5% of the market.

Gymshark teams up with Klarna to announce pay later service (RLI), Rated: B

Fitness wear brand Gymshark has announced the launch of a pay later service in the UK, Sweden, Norway, Finland and Denmark. The company is now in a partnership with Klarna, a payments provider which will offer Gymshark the new payment option. The payment service will allow online shoppers to try on items at home before paying for the order.

Instantor releases report on how machine learning is revolutionising credit risk management in Europe (Fintech Finance), Rated: B

Instantor, the 3rd. fastest growing Swedish FinTech who makes tough calls easy within credit risk management presents “Credit Risk Management 2019 – How Do You Stack Up?”, a report based on a survey conducted by Instantor across Europe among top executives within leading financial organisations. The report reveals that two-thirds of these players are well underway to implementing machine learning (ML) and the majority benefits from its implementation within credit risk management.

International

30 Under 30 Europe: The Young Money Merchants Shaping Financial Markets In 2019 (Forbes), Rated: AAA

Finance is hardly known for its youthfulness, yet this year’s Finance 30 Under 30s are proving that an old industry can learn new tricks. These young venture capitalists, fintech entrepreneurs, crypto enthusiasts and Millennial bankers, with an average age of just 27, are reshaping the sector and transforming our relationship with money.

The Next Global Financial Meltdown Is Just Around the Corner (Equities.com), Rated: AAA

As Bloomberg reported last year:

Shadow banking in China has ballooned into a $10 trillion ecosystem which connects thousands of financial institutions with companies, local governments and hundreds of millions of households. The practice is now at the center of a Chinese government-led regulatory crackdown aimed at defusing financial risks that threaten the wider economy. Unlike in the U.S., traditional commercial banks drive shadow banking, or unregulated lending, in China. That’s because the banks have been able to keep shadow-banking assets off their balance sheets, thereby sidestepping regulatory constraints on lending.

About 169 million Chinese, or about 12 per cent of the population, have invested in wealth management products online, a rise of 66 per cent from two years ago, according to a Moody’s report published this month. Essentially, they are putting money into the shadow banking system.

“The picture is different in the European Union. Here, the shadow sector now accounts for perhaps 30–40% of total financial intermediation. But it is growing. Between 2012 and 2016, shadow banking as broadly measured expanded by almost 40% in the eurozone.

Atlanta-based IDology to Be Acquired by GBG for $ 300m (PR Newswire), Rated: A

GBG, the UK-headquartered Identity Data Intelligence specialist, today announces that it has conditionally agreed to acquire the entire issued share capital of IDology, a US-based provider of identity verification and fraud prevention services, for $300m (£233m) in an all-cash transaction.

Nexo lending to offer crypto-backed loans with Blockport exchange (Bankless Times), Rated: B

Blockport users will be able to use the Nexo platform to get crypto loans, offering them another alternative to selling their cryptocurrencies for fiat currencies. Instead of selling they cryptocurrency assets, Blockport users can now keep their crypto, with all potential upsides, and leverage them to get instant access to cash.

Australia

Next Growth Wave: Fintech (Seeking Alpha), Rated: AAA

In this article we look at some fintech companies, beyond investor’s normal horizon of the United States. In Australia there is a small cluster of listed fintech companies that have started to explode. Some have made gains of 400% in a year and more than 1,000% on the back of strong revenue and turnover growth. Moreover because Australian companies lack access to large scale V.C. investments, technology companies often need to capital raise through a public listing.

Zip Co. (ASX: Z1P)

Zip Co. is quite similar to Afterpay and in some ways its closest competitor with an established market position. However in addition to payment splitting, it also offers interest based loans and is different in other ways.

  • Zip Co. is smaller with a market capitalization of $380 M AUD (about $266 M USD), but still has 12,600 retail partners including most of Australia’s largest retailers, however it hasn’t yet entered the U.S. or the U.K.
  • Zip Co. has Zip Pay, which provides a payment splitting application with no interest, but with more flexibility in length of time or repayment amount than Afterpay’s solution.
  • Zip Co. also has Zip Money also provides loans for purchases above $1,000 AUD, with a 3 month interest free period, but with an establishment fee of up to $99.
  • Source: Seeking Alpha

Labor’s negative gearing policies could hurt first-home buyers (Your Mortgage), Rated: A

“Despite Australia’s tight regulations on foreign investment, other overseas property markets are tighter – including China, Canada and New Zealand,” Driscoll said. “Unlike in Australia, the Chinese lack many appealing alternative investments at home and, due to government crackdowns on peer-to-peer lending, private equity funds and with the majority of their property being leasehold, many investors are forced to look elsewhere.”

India

India’s fintech future looks bright, but it needs to find its raison d’être (India Times), Rated: AAA

Yet there is more room for growth. The market in India is still small; far more deals are being done in China, and for far higher valuations. Last year alone, venture capital investments into Chinese fintechs were more than 10 times larger than those in India, with 75 percent more deals.

Although the value of investments in India declined by 21 percent in 2018 over the previous year, the number of deals actually rose 12 percent, making 2018 the most active year on record for fintech financing.

RBI may change Rs 10 lakh lending cap on P2P platforms, say P2P players (India Times), Rated: A

Peer to Peer or P2P players are hopeful that the comprehensive financial data sought by the Reserve Bank of India might help the regulator to take some major policy decisions concerning the industry.

Asia

Hundreds of unlicensed P2P lenders still operating in Indonesia (The Jakarta Post), Rated: AAA

The Financial Services Authority (OJK) has found that 231 illegal peer-to-peer lending (P2P) providers, including those from other countries, have been operating in the country since January.

An Overview on Peer-To-Peer Lending in Indonesia (Legal Business Online), Rated: A

Two years following the enactment of Financial Service Authority (Otoritas Jasa Keuangan/”OJK) Regulation No. 77/POJK.01/2016 of 2016 (POJK 77/2016), Peer-to-Peer Lending (P2P Lending) has grown popular in Indonesia. Based on data from OJK per Oct. 2018, a total of 15,990,143,141,355 rupiah has been distributed to the borrowers in P2P Lending. It has grown 432.5% from Jan. 2018 until Oct. 2018. Until Dec. 2018, the number of P2P Lending Platform which has been registered and supervised by OJK has reached 88 companies, one of them has been given a license.

Canada

Finastra announces Siobhan Byron as new Head of Technology Enabled Managed Services (Finastra), Rated: A

Finastra has appointed Siobhan Byron as Senior Vice President and Head of Technology Enabled Managed Services (TEMS). In this role, she oversees planning and execution, sales and marketing, research and development and product management across four lines of business including Checks, Enhanced Services, Student Lending and Canadian Mortgage Technology, all in the Canadian market. She oversees more than 1,300 employees that make up Finastra’s TEMS business.

Authors:

George Popescu
Allen Taylor

The post Thursday February 14 2019, Weekly News Digest appeared first on Lending Times.

Fintech Sandboxes: A Global Overview

fintech sandboxes

When an industry develops at a breakneck speed, the law can take some time to catch up. Existing regulations usually do not fit new paradigms, and it can stifle innovation. A regulatory sandbox is the perfect solution because it allows for the testing of new innovations in a controlled environment. The term “sandbox” refers to […]

The post Fintech Sandboxes: A Global Overview appeared first on Lending Times.

fintech sandboxes

When an industry develops at a breakneck speed, the law can take some time to catch up. Existing regulations usually do not fit new paradigms, and it can stifle innovation. A regulatory sandbox is the perfect solution because it allows for the testing of new innovations in a controlled environment.

The term “sandbox” refers to the box of sand where small children play in a confined boundary. The term has received a new connotation in a commercial sense and refers to a closed environment used for experimenting and testing projects or new ideas. Regulatory sandboxes help in testing business proposals and prototypes under a regulator’s supervision. These testing grounds have an advantage of not being governed by current rules and, therefore, the business can explicitly experiment the validity of their projects without the danger of getting caught on the wrong side of existing law.

Such regulatory sandboxes are critical for the development of the alternative lending industry. The gist of having regulatory sandboxes in this sector is to comply with the regulatory directives that complement the growth of fintech companies without compromising on users’ safety and protection. The existence of suitable safeguards assists players in executing a live trial in the market without having to worry about the legal consequences.

The Dawn of the Regulatory Sandbox

Financial regulators across the globe understand the challenges and opportunities presented by innovations like digital-only banking, P2P lending, robo-advisors, and other fintech innovations. Some countries have taken the lead in ensuring that an ecosystem is created which helps startups experiment with their products and services without running afoul of current rules.

United Kingdom- The Pioneer

Seeing massive investor interest in this industry, the Financial Conduct Authority (FCA) proposed a regulatory sandbox as a part of its Project Innovate. It started accepting applications in mid-2016.

The UK has completed the successful testing of models from 18 out of 69 firms in the first phase and 24 out of 77 firms in the second phase. The sandbox has accepted 18 out of 61 firms for the third phase, and 29 out of 69 applications received qualified to the testing stage in the fuurth phase.

Participants in the UK sandbox came from sectors like retail banking, general insurance, retail lending, and wholesale lending. Around 35 percent of the participants in the secnd phase were from other countries, including the US and Singapore. The fourth cohort has almost 40 percent of startups experimenting with distributed ledger technology for disrupting traditional finance.

The UK regulatory sandbox includes:

  • A positive reaction from other global regulators.
  • The startup community’s eagerness is evident from each phase being oversubscribed.
  • It has reduced the time to get an idea to market. FCA claims that, during the first year itself, 90 percent of the firms were able to go for a commercial market launch of their product.
  • Also, many of the approved fintech companies were able to attract VC investment for their projects.

Singapore

The second jurisdiction to launch the concept of a regulatory sandbox is Singapore. The Monetary Authority of Singapore (MAS) introduced its sandbox in June 2016. It has launched a range of schemes for interested startups. Till date, the country has the maximum regulatory alliances and has entered into co-operation arrangements with eight countries including UK, Australia, and Japan.

Since its launch, the MAS has guided over 140 applicants from around the globe. About one in five applications has been approved for experimentation.

Startups in crowdfunding, financial advisory, artificial intelligence, cross-border funding, distributed ledgers, and more were able to experiment under the MAS scheme. The sandbox has helped Singapore attract overseas startups to come and do business in the country. And it is contributing positively in making Singapore a Smart Financial Hub by allowing these young startups to form partnerships with traditional financial institutions.

United States

The Consumer Protection Financial Bureau (CPFB) initiated the concept of regulatory sandboxes to ensure global compliance and to stimulate innovation in the fintech industry.

Arizona became the first state to open a fintech sandbox in the US by passing a legislation to create a Regulatory Sandbox Program. This program will enable finetch players to test their financial products without being subjected to the licensing provisions of the state. The move will come under the supervision of the Arizona Attorney General. Another state, Illinois, also on the footsteps of Arizona, has a separate regulatory bill (currently on hold) on the horizon.

Along with the regulatory sandbox, the US has also launched an ‘office of innovation’, which primarily focuses on blockchain and cryptocurrency technologies. The aim is to stimulate competition in the industry and expedite consumer advancement.

The participants included payment start-ups, financial technology companies, credit agencies, and lending companies.

The startups in the Arizona sandbox will be allowed to experiment with their financial products for a period of up to two years. The sandbox has promoted investment and job creation in the state. It will help improve the competitive position of the country in the global fintech industry. The concept has also helped early stage entrepreneurs surpass the legal hurdles with access to a trillion dollar opportunity.

Canada

The Ontario Securities Commission (OSC) launched its sandbox “LaunchPad” in February 2017. The government is said to create a “super sandbox” that will help foster communication between fintech players, financial institutions, regulators, and the government. It is a part of its 2016-2019 Business Plan to understand how technology affects the markets. An agency by the name Ontario Fintech Accelerator Office will also be instituted to provide assistance to start ups. The government plans to develop the retail payment and financial sector framework at the national level.

It has given a push to Canada’s innovation market as earlier, due to the domination of a few financial companies in the industry, innovation was slow. Now, it has allowed Canadian fintech companies to come forward and grow both locally and internationally. The new idea will benefit Canadian SMEs who could not access funding from traditional lenders.

Global Integration

The concept of regulatory sandboxes is currently running in over 20 nations. Apart from the countries mentioned above, Australia, Indonesia, Hong Kong, Malaysia, Denmark, and Thailand have sandboxes running to join the race. To promote interaction among participants at a global level, a GFIN (Global Financial Innovation Network) has been launched, aimed at knowledge sharing and facilitating cross-border testing of ideas. It is a joint effort of FCA and 11 other regulatory authorities. Organizations such as the US CFPB, Hong Kong Monetary Authority, UK FCA, MAS, and others, are a part of this network. The goal is to go past the idea of a sandbox and ensure that regulators are able to support the advancements in the fintech industry.

Authors:

Written by Heena Dhir.

The post Fintech Sandboxes: A Global Overview appeared first on Lending Times.

Tuesday September 4 2018, Daily News Digest

Marketplace lenders have fared substantially worse on the stock market than other fintechs

News Comments Today’s main news: Zuckerberg, Bezos, Gates back Wagestream. Funding Circle plans 300M GBP IPO. P2P lenders take in 300M GBP in second year of IFISA. Hong Kong receives 29 bids for virtual bank licenses. Today’s main analysis: Does fintech has a vicious funding circle? Today’s thought-provoking articles: Samir Desai discusses Funding Circle’s IPO as plan to […]

Marketplace lenders have fared substantially worse on the stock market than other fintechs

News Comments

United States

United Kingdom

China/Hong Kong

Other

News Summary

United States

As Wonga Collapses, Zuckerberg, Bezos & Gates Back A Fairer Alternative To Payday Loans (Forbes), Rated: AAA

Samir Desai On Funding Circle’s $ 2 Billion IPO And His Plan To Conquer America (Forbes) Rated: AAA

Funding Circle has already facilitated over £5 billion ($6.37 billion) in loans since launching in 2010, mostly from its home U.K. market.

Funding Circle facilitated over £1 billion in loans to small businesses during the first six months of 2018 alone.

It’s now on track to become London’s biggest fintech IPO since global payments giant WorldPay’s bumper £4.8 billion ($6.1 billion) listing in 2015.

Source: Funding Circle

In the U.K. just 5% of businesses say Funding Circle when asked where they would go for finance, according to the company’s data, and 95% continue to chose their banks.

The Risk of a Vicious Funding Circle in Fintech (Bloomberg) Rated: AAA

There are fintechs, and then there are fintechs. Cheerleaders point to payments startups like Jack Dorsey’s Square Inc., whose stock has soared 242 percent in a year, as evidence of a Silicon-Valley-style revolution in the making. But there are sob stories, too: loan platforms LendingClub Corp. and On Deck Capital Inc. are still trading well below their IPO prices. Promises of break-neck expansion often crash into the reality of regulated finance.

Source: Bloomberg

Lending Earnings Insights (2018 Q3) (PeerIQ) Rated: AAA

We remain in the late stages of the credit cycle. The US consumer has benefitted from record low unemployment, rising incomes and home prices, and a lower tax rate. The supply of credit and competition to offer loans is increasing. Lenders are optimistic about consumer spending and debt levels, and are reserving for potentially higher losses in the future.

We see divergent credit performance across FinTech asset classes. Enova (Subprime) and OnDeck (Small Biz) are seeing near cycle-low charge-offs, while LendingClub (Prime) is seeing higher delinquencies on newer vintages. LendingClub also increased its charge-off estimates across loan grades by ~40 bps QoQ.

Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Loan loss provisions are increasing at roughly twice the rate of loan growth across card issuers, but overall reserve levels are still low.

Scratch Introduces First Loan Servicing Platform To Align Financial Interests of Lenders and Borrowers (Scratch Email) Rated: A

Scratch, a new financial technology company started in 2015 to transform the antiquated business of getting America’s $13 trillion household debt repaid, introduced the first loan servicing platform to align the financial interests of lenders and borrowers.

The Scratch loan servicing platform empowers borrowers with a simple web application for understanding, managing and paying back their loans while providing lenders accurate, real-time portfolio insights. And, by automating the back-office complexities of loan management, Scratch can devote more resources to giving borrowers the attention and guidance they deserve.

Loan Servicing Crisis Persists

U.S. household debt composed of mortgages, student loans, auto loans, credit cards, home equity lines of credit, and other consumer loans, is at an all-time high and growing daily.

Today, household debt is at a high of $13 trillion and 8 out of 10 Americans carry some type of debt, including mortgages, credit cards, student loans, and auto loans. And everyone who has a loan has a loan servicer.

United Kingdom

Funding Circle plans to raise £300m in London IPO (Financial Times), Rated: AA 

Funding Circle has announced plans to become the first of Britain’s new generation of financial technology companies to go public, in a deal expected to raise £300m and value the peer-to-peer lender at more than £1.5bn.

The initial public offering of Britain’s biggest peer-to-peer lender will provide a significant test of investor appetite for the breed of fintechs that have sprung up in the past decade to challenge high-street banks.  Funding Circle has arranged £5bn of loans to small companies in the UK, the US, Germany and the Netherlands since its launch in 2010 by connecting businesses looking to borrow money with retail and institutional investors willing to lend them money. 

However, the company’s prospective value of more than £1.5bn is above the current value of US-listed peers OnDeck and Lending Club, which have both suffered tumbling share prices since their lPOs.

Funding Circle IPO will be open to platform’s existing investors (Peer2Peer Finance) Rated: A

FUNDING Circle has said it expects its existing investors will be able to become shareholders in the company after it goes public.

Funding Circle said that its initial public offering (IPO), if it goes ahead, would aim to raise around £300m, with at least 25 per cent of the company’s issued share capital to be placed on a free float.

In a blog post on its website, also on Monday, the P2P lender said that its customers would have the opportunity to apply to participate in the IPO and become a shareholder in Funding Circle via an intermediaries offer.

Don’t be blinded by the wizardry of tech darling Funding Circle (London Evening Standard) Rated: A

Given that Funding Circle’s flotation comes just days after the collapse of that other trailblazing fintech, Wonga, it’s hard not to compare the two.

Both were launched to fill the gaps in the lending market where traditional banks feared to tread. Both used tech wizardry to check they were lending to the right people at the right price. Both brilliantly deployed digital technology to make their services simple and fast to use.

Hopefully, for future investors, the similarities end there.

Funding Circle to host cryptocurrency event to promote women in fintech (Peer2Peer Finance) Rated: B

FUNDING Circle is to host a panel event focusing on cryptocurrency, described by the organisers as “one of the most interesting but least understood areas of fintech.”

The event is being held in connection with FinTechWomen, a London-based meet-up group, and is sponsored by Funding Circle.

UK sub-prime lenders shrug off political cloud (Nasdaq), Rated: AAA

UK sub-prime investors are shrugging off Wonga’s cloud. Customer complaints and a regulatory clampdown forced the payday lender to stop making loans. The likes of Amigo Holdings and Non-Standard Finance have different models, and regulators’ blessing. Yet, with Wonga out of the picture, they too risk becoming the focus of public ire.

Investors love it. Amigo’s return on equity will be around 40 percent this year, using Thomson Reuters I/B/E/S, while it and Non-Standard Finance should grow revenue on average by more than 20 percent each year up to 2021, analysts reckon. NSF, which has a more diversified business including unguaranteed loans, is valued at over 17 times forward earnings. Amigo’s shares were priced at 12 times forward earnings even after a selloff promoted by disappointing results on Thursday. The consumer finance sector on average trades at less than 11 times forward earnings, according to Eikon.

Hedge fund Kreos Capital is first in line for Wonga payout deal after lending the collapsed payday loan company around £34m (This is Money) Rated: A

A Mayfair hedge fund is at the front of the queue to be paid by collapsed Wonga as fears grow that thousands of its hard-up customers will get nothing.

Kreos Capital lent Wonga about £34million two years ago and is understood to be still owed around £10million by the payday loan company.

Under the arrangement, it is thought to be in line to collect that sum ahead of other creditors.

P2P lenders record £300m intake in second year of the IFISA (P2P Finance News), Rated: AAA

ALMOST £300m was invested across Innovative Finance ISAs (IFISA) in the previous tax year, HMRC data reveals.

The latest ISA statistics from the taxman shows £290m of subscriptions in IFISA for the 2017/2018 tax year across 31,000 accounts.

P2P lenders saved £9,355 on average.

Zopa revealed it received more than £150m in its IFISA during the previous tax year.

The data shows that savers subscribed to 10.8 million Isa accounts during the 2017-18 tax year, down from 11.1 million in the previous tax year. This represents a fall of 10%.

P2P marketing clampdown ‘may restrict IFISA takeup’ (P2P Finance News), Rated: A

Stuart Law, who heads up the business P2P lender, warned that the strong take-up of the IFISA could be hampered by the FCA’s proposed marketing restrictions for the sector.

Under the proposed changes, platforms would be restricted to marketing to those who are certified as sophisticated or high-net-worth investors or those that certify that they will not invest more than 10 per cent of their net portfolio in P2P agreements.

Northern Irish housebuilder secures £250,000 from P2P platform (Development Finance Today), Rated: A

County Down Developments has received a £250,000 facility from Blend Network for the development of four luxury apartments in Bangor, Northern Ireland.

The loan from Blend Network came after the housebuilder was turned down for a loan by Barclays.

Mattress start-up Casper offered credit in UK without permission (Financial Times), Rated: B

A US online mattress start-up backed by rapper 50 Cent has been forced to stop offering credit to UK customers, after it emerged it had been doing so without permission from the regulator.

Casper, a five-year-old company that is on a major European expansion drive, was allowing UK customers to buy on credit from Swedish bank Klarna.

China/Hong Kong

China’s Fintech Giants Have The Money And Means To Dominate Despite The Wider Slowdown (Forbes), Rated: AAA

China has experienced a fintech explosion in recent years, with top companies dominating the industry. It’s not an accident that 

HKMA Receives 29 Bids for First Round of Virtual Bank Licences (Regulation Asia) Rated: AAA

Standard Chartered, WeLab, Zhong An Bank and HKT among several banking, technology and telecom firms applying for virtual banking licenses.

Twenty-nine financial and technology firms, including Standard Chartered and WeLab have submitted applications to obtain Hong Kong’s first online-only banking licenses.

Tencent-backed Airwallex to join push for Hong Kong virtual bank license (SCMP) Rated: A

The company shifted its headquarters to Hong Kong from Melbourne earlier this month as it prepares to submit a virtual banking license application, along with partners, ahead of Friday’s deadline.

Airwallex co-founder and chief executive Jack Zhang said the company will team up with a traditional bank and other local partners as part of the application process, although he declined to reveal their identities.

Another reason for the relocation to Hong Kong is proximity to major clients, including Tencent, online travel operator Ctrip, e-commerce JD.com as well as traditional lender Bank of East Asia.

Stable earnings growth expected by mainland banks, but bad-loan worries linger (SCMP), Rated: A

And Beijing’s crackdown on the peer-to-peer lending sector – the shadow banking system that saw rampant illicit and risky behaviour continue in the first half of this year – has helped increase demand for corporate lending levels too.

The country’s big four banks – Industrial and Commercial Bank of ChinaChina Construction BankAgricultural Bank of Chinaand Bank of China – reported profit rises of between 5.2 and 7.9 per cent in the three months ending June.

China’s state banks to boost lending as Beijing fans economy (Nikkei), Rated: A

First-half earnings showed the lenders rallying after several years of low growth. Collective net profit rose 5.7% year on year to 532.1 billion yuan ($77.9 billion), while the lenders’ average ratio of bad debt fell 0.06 percentage point in six months to 1.52% at the end of June.

European Union

INSTANTOR OPENS UP BANK API – PROVIDING UNIQUE ACCESS TO HALF A BILLION PEOPLE (Fintech Finance), Rated: B

Today Instantor, the Swedish fintech company making financial decisions easy, announces, WDSK, The World Domination Starter Kit. The WDSK is an initiative to support start-ups and scale-ups to develop next-generation products by giving them access to Instantor´s Bank API with no associated costs for new Instantor customers. By using Instantors bank API, developers will have access to transactional data from over 300 banks in 25 countries, with the potential to reach half a billion people. Instantor´s bank API has an unrivaled reach, and the WDSK initiative includes access to several markets outside new Open Banking legislation. The authentication and the end user’s interaction with banks are handled by Instantor, and the data can be accessed once the end user has given their consent.

International

Robo-advice not dead: GlobalData (Financial Standard) Rated: A

The analyst suggested robo-adviser may be ahead of their time, given high net-worth demand for robo-advice is on the rise among the next generation of investors.

“While robo-advice is here to stay, it will take time to cement itself. The digitally-savvy next generation will embrace an automated service and big banks should capitalize on this. However, a big brand is not enough to justify much higher fees,” Woldemichael said.

To succeed, incumbents will have to provide a level of service, and prices, that are genuinely competitive with those offered by startups.”

Australia

Collapse of UK payday lender Wonga sounds warning for Aussie fintech vigilance (Australian Financial Review) Rated:AAA

The collapse of Wonga, one of Britain’s most high-profile fintech lenders, provides salient lessons for Australia, which considers the UK a template for financial technology policy and where tighter laws to protect vulnerable customers from payday lenders appear to have stalled.

Wonga, built around a slick app allowing customers to get expensive loans via their mobile phone, was “notorious for its extortionate interest rates and was a toxic symbol of Britain’s household debt crisis”, said The Guardian last week.

The payday lender “failed because it was too greedy and at times crossed the ethical line”, it said, quoting prominent UK financial columnist Martin Lewis, who described Wonga’s loans as “the crack cocaine of debt – unneeded, unwanted, unhelpful, destructive and addictive”.

Micro lender makes big difference (Latrobe Valley Express) Rated: A

Her heartfelt story was told at Good Money’s one-year anniversary last week during what Carol described as a “life-changing event” after borrowing money to buy essential appliances like a new fridge and washing machine.

The low to no-interest lender was set up in July last year in partnership with Good Shepherd Microfinance and the National Australia Bank, following a $2.3 million investment from the state government.

More than 2900 people made enquiries in the hub’s first year, and the store has provided more than 500 no and low-interest loans for household appliances, car-related expenses, household furniture and costs such as medical and education expenses.

India

China’s FinUp, existing investors back digital lending startup SlicePay (VC Circle) Rated: AAA

SlicePay, a digital lending platform which caters to college students and young professionals, has raised an undisclosed amount in an extended Series A round of funding led by Chinese firm FinUp Finance Technology Group.

The company said in a statement that existing investors Blume Ventures, Japan’s Das Capital, and Russia’s Simile Ventures had also participated in the round.

A person close to the development who did not wish to be named pegged the deal at $14.9 million (around Rs 105 crore at current exchange rates).

Asia

Southeast Asia’s startups suffer from Series B funding crunch, says Kredivo’s Gar (Deal Street Asia), Rated: AAA

Having recently raised what is estimated to be the largest Series B funding round for a fintech firm in Southeast Asia, Indonesia-focused lending platform Kredivo says the process was far from smooth sailing.

The company was forced to look beyond the region to raise the majority of its fund, as it found that there were simply very few investors in the region that specialized in doing Series B investments.

MENA

Tel Aviv Climbs on List of Top 10 Undergraduate Programs for Entrepreneurs (CTech) Rated: B

Tel Aviv University is among the top ten global undergraduate programs in terms of producing venture capital-backed entrepreneurs, according to a report published last week by Seattle-based market research company Pitchbook. Pitchbook ranked Tel Aviv in eighth place, up from ninth last year, above Yale, Princeton, and Brown.

Two other Israeli universities made the top 50 list: the Technion-Israel Institute of Technology came in at 14, while the Hebrew University of Jerusalem placed at 35.

Authors:

George Popescu
Allen Taylor

Monday May 21 2018 Daily News Digest

ICO red flags

News Comments Today’s main news: Prospa launches $146M IPO. Experian, HSBC UK partner on credit application solution. RateSetter Australia extends green deal. Student Loan Genius raises $3.5M. Australia court rules against Harmoney. Faircent gets certified for NBFC-P2P. Today’s main analysis: WSJ investigates ICO fraud. Today’s thought-provoking articles: One student explains her student loan turmoil. China’s foreign investment restrictions for P2P lending […]

ICO red flags

News Comments

United States

United Kingdom

International

Australia

India

Other

News Summary

United States

 

Wealthfront’s experiment in risk parity has a rocky start (Financial Times) Rated: AAA

Our case here involves Wealthfront, an automated investing service founded by all-star venture capitalist Andy Rachleff. Boasting over $10.5bn under management, the platform offers a wide-range of thoughtful strategies to the casual investor, including indexes optimised to harvest tax-losses and a smart-beta product, overseen by Random Walk proselytiser Burton Malkiel.

Back to Wealthfront’s risk parity offering. In an attempt to lure investors, it backtested its new strategy versus its competitors at AQR and Bridgewater. Here are the results:

Source: Financial Times

I’ve Paid $ 18,000 To A $ 24,000 Student Loan, & I Still Owe $ 24,000 (Bustle) Rated: AAA

The loan, ironically called a “Smart Option” loan, has a variable interest rate that fluctuates based on changes in the financial market — which may have been explained to me at the time (I truly don’t remember), but I know I didn’t fully grasp what that meant.

Source: Bustle

Now, eight years later, that loan — one of nine that left me $95,000 in debt upon graduation (because, yes, interest does accrue while you’re in school) — very clearly marks the exact moment when I lost control of my own financial destiny.

According to a February 2018 study published by the Levy Economic Institute, a nonpartisan policy think tank at Bard College, there are 44.2 million Americans with student loans, which adds up to about $1.4 trillion in debt. There already exists a myriad of research-driven articles that wax on the impact of the student loan crisis on the future of this country (screwed), our economy (broken), and the weight of the loan crisis (crippling)

Student Loan Genius Raises $ 3.5M in Seed Series Prime Financing (Finsmes) Rated: AAA

Student Loan Genius (SLG), an Austin, Texas-based employee benefits platform, raised $3.5m in Seed Series Prime financing.

The round was led by Vestigo Ventures, with participation from CMFG Ventures, Prudential Financial and Rubicon Venture Capital.

The company intends to use the funds to support commercialization of its offering as well as to grow its technology, sales and marketing teams.

Cloudvirga Raises $ 50M in Series C Funding (Finsmes) Rated: A

Cloudvirga, an Irvine, Calif.-based provider of digital mortgage point-of-sale (POS) software provider, closed a $50m Series C funding round.

The round was led by Riverwood Capital with participation from Upfront Ventures. In conjunction with the funding, Riverwood executives Scott Ransenberg and Jay Schneider will join Cloudvirga’s board of directors.

Under-the-radar Wilmington fintech companies burst onto consumer credit scene (Delaware Online) Rated: A

One is Fair Square Financial, which last week snagged a $100 million investment from Vikram Pandit, the former CEO of Citigroup.

It’s an infusion of cash that the online credit card company says will allow it to expand beyond its downtown co-working space this year while doubling its workforce to 100 employees during the next two years.

The expansion decision is the result of surprisingly strong customer demand for its online-serviced, low-fee Ollo cards, Fair Square CEO Rob Habgood said. The credit cards carry a variable interest rate that currently sits at a lofty 24.99 percent.

Fintech is disrupting big banks, but here’s what it still needs to learn from them (The Next Web) Rated: A

Much of the hype around fintech focuses on what traditional banks do wrong: they’re slow to adopt new technology; they don’t center the customer; they’re too big to respond nimbly to change. This narrative is part of why fintech continues to attract massive investment, with $31 billion total flowing into the sector last year, according to KPMG.

The truth is that there’s actually a lot that banks do right — things that fintech startups can struggle to replicate. I mean, there’s a reason why they’ve been successful.

Here are the three areas where I feel fintech’s needs and banks’ expertise overlap.

Will Consumers Take On Too Much Debt In 2018? (PYMNTS) Rated: A

The rate of new delinquencies on credit cards stood at 6.42 percent in Q1, up from 5.9 percent for the same period last year. According to Moody’s, the delinquency trend for the next year is for an “increase.” The Q1 credit card delinquency rate trails the 7.3 percent rate for auto loans but is higher than the 3.4 percent rate for residential mortgages.

Meanwhile, the rate of total new household debt delinquencies was about 4.5 percent in Q1 of 2018, “down slightly from a year ago,” Moody’s said. “Over the next year, we believe delinquencies will rise a bit as lenders modestly loosen underwriting standards.”

Direct Lending Partners Hires Industry Leader as Director of Originations and Capital Markets (PR.com) Rated: B

Dream Live Prosper (DLP), an award-winning family company led by Don Wenner (Founder and CEO), is excited to announce the appointment of Greg E Schecher as Director of Originations and Capital Markets.

Based out of the company’s Southeast headquarters in St. Augustine, Florida, Greg will lead the firm’s CRE bridge loan lending and marketplace lending platform.

United Kingdom

Equifax powers HSBC UK’s first live credit application solution (Fintech Futures) Rated: AAA

HSBC UK has created the “first live” use case of open banking for credit applications using the InterConnect cloud platform from Equifax.

According to Equifax, the solution will help quick affordability assessments by allowing individuals to submit their bank transaction information electronically, in less than five minutes, during an application for credit.

Each submission is presented directly to HSBC UK’s underwriting team in real-time, providing the bank with view of a customer’s affordability and offering faster lending decisions.

Peer-to-peer lending: beware the risks (The Times) Rated: A

About 150,000 Britons have lent nearly £10bn in this way over the past decade, earning around 4.5% interest on average. By contrast, the average interest rate on an easy access savings account is just 0.51%.

The bigger platforms, such as Zopa, Funding Circle and RateSetter, are therefore attractive alternatives for would-be savers.

The market was boosted by the launch in 2016 of innovative finance Isas, which allow people to invest £20,000 a year tax-free in P2P platforms and equity-based crowdfunding, where they buy stakes in companies.

The Disruptive Rise of FinTech (Technative) Rated: A

The fintech industry is one of the fastest growing areas of the British economy and is generating more than £20 billion annually. The sector continues to grow, it currently employs over 60,000 people and has produced more billion pound-valued start-ups than any other British economic sector.

 

P2P lender urges social media firms to allow crypto ads (Peer2Peer Finance) Rated: A

A BAN on cryptocurrency adverts will do more harm than good, a crypto-backed peer-to-peer lender has warned.

Lendingblock, which lets individuals lend in a range of digital currencies such as Bitcoin, Ethereum and Ripple, said rather than Google, Facebook and Twitter pursuing a current ban on cryptocurrency adverts to help clamp down on scams, they should help promote education and awareness.

Lendingblock warned a complete blackout on information may be “the easiest option” but warned that cryptocurrencies aren’t going anywhere so it would be better to partner with the industry and ensure consumers understand the market.

More funding for smes (Manufacturing and Engineering Magazine) Rated: A

The Manufacturer has partnered up with the alternative finance specialist ThinCats to make £100 million of funding available to UK manufacturers, as more and more investors are becoming increasingly keen to help fund SMEs.

The main issue for some SMEs is that they do not have the largest amounts of assets against which the banks are more willing to lend. As a result, many of them can’t invest in their growth, or delay investment until they reach the point they can fund it themselves. The wider knock-on effect of this problem is that the UK’s productivity and growth is being held back.

Crypto world gets most complete and secured crypto exchange with Bitmillex (The Cryptocurrency Analytics) Rated: A

What separates Bitmillex from other crypto exchanges is that the platform was developed out of the long-standing demand of a credible cryptocurrency exchange which will prioritize fund security and also will be able to extend a much wider range of investing and trading options than what is offered by current regular exchanges.  

Speaking further, Mr. Briton highlighted the other state of the art features of Bitmillex which keeps it ahead of other crypto exchanges-

  • Most advanced security and hosting protection through cloud hosted servers that are connected to custom hardware security modules and multiple protective layers to withstand any attack and hack attempts. In addition, 98% of all balances are to be stored in secure offline cold storage.
  • Multiple social trade offerings through Auto-Trade, Peer-to-Peer BTC market and Peer to Peer Lending & Borrowing opportunity. (use the term copy trading)
  • Bitmillex has introduced MTG trading software to ensure a ground-breaking multi-terminal and multi-platform trading experience  (MT4)
  • Traders have the flexibility to hold funds in fiat and trade major forex pairs when the crypto market is bearish
  • Bitmillex is offering its revolutionary Debit Card to users that will be linked to their wallets and will provide them immediate access to their balance at ATMs or POS in fiat currency worldwide

Fintech envoy for Northern Ireland appointed (Open Access Government) Rated: B

Georgina O’Leary, Director of Innovation, Research and Development at Allstate has been appointed as the government’s new fintech envoy for Northern Ireland.

China

Foreign investment restrictions in P2P lending intermediaries (China Business Law Review) Rated: AAA

Current regulations and policies on peer-to-peer lending do not directly restrict or prohibit foreign investment in P2P lending intermediaries.

Relying on a network, a P2P lending intermediary will generally charge a certain consulting fee, service fee, etc., once a lender and borrower that have been brought together establish a lending relationship.

Local financial service office recordal/registration. Article 5 of the measures specifies that, within 10 working days after collecting its business licence, a P2P lending intermediary, or one of its branches, that proposes to launch P2P lending information intermediary services is required to carry out, on the strength of relevant materials, recordal/registration with the local financial regulator of the place where it has its business registration. Once it has completed recordal/registration with the local regulator, the P2P lending intermediary is required to apply for the appropriate telecoms service operating permit in accordance with relevant regulations of the competent telecoms authority before it can launch its services.

European Union

Following the Paypal acquisition: iZettle’s founders are the latest Swedish tech billionaires (Business Insider) Rated: AAA

Mojang founder Markus “Notch” Persson, Skype’s Niklas Zennström and Spotify’s founding duo Daniel Ek and Martin Lorentzon are Sweden’s richest people in tech today – all worth $1 billion or more.

Following Paypal’s announcement that it would buy the Swedish payments company iZettle for $2,2 billion (19 billion SEK), Jacob de Geer and Magnus Nilsson – founders of iZettle – have joined the few dozen Swedish entrepreneurs worth 1 billion krona or more.

International

Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud (Wall Street Journal) Rated: AAA

In a review of documents produced for 1,450 digital coin offerings, The Wall Street Journal has found 271 with red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.

Source: The Wall Street Journal

Data Centers Take Center Stage in Real-Estate Investing (Barron’s) Rated: AAA

“An autonomous car will need 40 times more bandwidth than the cars we use today,” says East. “The demand for data centers is growing 30% per year in the U.S. and 70% in China, but there are only six public companies in the supplier’s market.” They are: Equinix (EQIX), CoreSite Realty (COR), CyrusOne(CONE), Digital Realty Trust (DLR), QTS Realty Trust (QTS), and Switch (SWCH).

Data centers aren’t easy markets to enter. It’s not hard to purchase a piece of land to build the property, but the facility needs to be outfitted in fiber, equipped with interconnected networks, and wired for massive electric power and top-tier security devices. It takes about $1,000 to build one square foot of data center, said East, compared with the average cost of $300 for conventional real estate.

Capgemini And Efma Launch Innovative FinTech Portal (Payment Week) Rated: A

Capgemini and Efma today announced the launch of FinTechVisor, an innovative platform designed to bring FinTechs and financial institutions together to collaborate. The FinTechVisor portal offers a world-wide networking and collaborative community for FinTechs and financial institutions to become game-changers by co-creating the future of the financial services industry.

Launched today at the CCX Forum in London, the portal, which connects financial institutions and FinTechs, will have a feature that allows bankers and insurers to rate FinTechs and comment on their solutions, as well as a “matchmaker-like” personalized function for financial institutions to find a FinTech partner who complements their needs and interests.

InnerScope Hearing Technologies, Inc. Announces Klarna Bank as a Financing Partner (Globe Newswire) Rated: B

Hearing Technologies InnerScopeInc. (OTCQB:INND) announced today the complete integration of www.Klarna.com for a simple and easy one-click payment solutions for its online customers who shop at www.hearingbenefit.com and www.nohasslehearing.com websites.

InnerScope and Klarna have teamed up to offer a frictionless one-click checkout solution which gives customers a choice of 2 simple no-hassle payment options, Pay Now, or Slice It options.

  • The Pay Now option is for customers who want to pay in full at checkout can do it quickly and securely with a credit/debit card.
  • The Slice it option with its instant financing and a quick and simple credit application process allowing the customers to spread the cost of their purchases over a 6 to 24-month period at 0% annual percent rate (“APR”), depending on transaction value, giving them flexibility and increased purchasing power.
Australia

Online lender Prospa launches $ 146m IPO (News) Rated: AAA

Online lender Prospa has launched a $146 million initial public offering, offering shares at $3.64.

Prospa, which lends to small businesses, says the majority of funds raised in the IPO, which includes institutional, retail and employee offers, will be used to grow its existing business, add new products and expand into New Zealand.

RateSetter Australia extends green deal (Peer2Peer Finance) Rated: AAA

RATESETTER Australia has announced an 18-month extension to its green loan marketplace.

The UK peer-to-peer lender’s Australian subsidiary is working with the Australian government’s Clean Energy Finance Corporation (CEFC) to bring clean energy borrowers and investors together.

In its first year it helped more than 1,000 households and small businesses finance green energy products.

 

High Court backs Commerce Commission over Harmoney (Scoop News) Rated: AAA

The High Court has sided with the Commerce Commission on how to interpret peer-to-peer lender Harmoney’s platform fees, deeming them to be credit fees and falling under the regulator’s purview.

The commission, which oversees the Credit Contracts and Consumer Finance Act 2003, claimed Harmoney’s platform fees were an unreasonable credit fee and sought a declaration from the court backing up its interpretation.

Justice Patricia Courtney today backed the commission’s interpretation, saying Harmoney’s documents amounted to a credit contract and that the way the peer-to-peer lender was structured went “beyond mere matchmaking”, providing a nominal creditor to hold loans as a bare trustee for investors and undertaking the full administration of the transactions.

Fintech disruptor will benefit from Banking Royal Commission (Motley Fool) Rated: A

Zip Co Ltd (ASX: Z1P) provides online credit for consumers and businesses at point-of-sale through brands zipMoney and zipPay.

Afterpay Touch Group Ltd (ASX: APT) provides a platform that allows retail merchants to offer consumers to ‘buy now, receive now, pay later’ without having to enter into a traditional loan agreement.

Money3 Corporation Limited (ASX: MNY) started out as a a payday lender, which it plans to exit in the next financial year. The company is predominantly involved in providing secured auto loans, which make up around 80% of its loan book.

Westpac made blind pensioner a guarantor without risk advice, inquiry hears (Reuters) Rated: A

Australia’s Westpac Banking Corp admitted on Monday to signing up a legally blind pensioner as loan guarantor for her daughter’s business without warning her of the risks, then threatened to evict her when the business failed.

The testimony, given to a powerful inquiry into the country’s financial sector, came as Australia’s “big four” lenders all admitted to misconduct in their submissions to a third round of public hearings that focuses on loans to small businesses.

Other transgressions included fraudulent loans and double-charging interest, the inquiry heard, a further hit to the sector’s reputation after previous rounds of hearings uncovered widespread abuses in Australia’s financial planning industry.

FinTech Australia announces new CEO (Fintech Australia) Rated: B

Brad Kitschke has been appointed as CEO of FinTech Australia.

 

India

Faircent Gets RBI Nod For NBFC-P2P Certification (Inc 42) Rated: AAA

Gurugram-based P2P lending startup Faircent has received its non-banking financial companies (NBFC)-Peer-to-Peer (P2P) certification from the RBI (Reserve Bank of India).

The accreditation makes Faircent the first P2P lending platform in the country to receive the certificate of registration as an NBFC-P2P by the national regulator.

FinTech firms assisting banks with customer acquisition (Business Standard News) Rated: A

MoneyTap

People earning more than Rs. 20,000 per month can utilise this app to borrow anywhere between Rs.3,000 to Rs.500,000. Offering flexible payback options, MoneyTap allows borrowers to select their own EMI plans.

CoinTribe

Endeavoring to fill the gaps in SME unsecured loan segment, CoinTribe as a loan marketplace makes it easier for banks to confidently enter the uncharted domains.

Lending on peer-to-peer platforms is fraught with higher risks (Business Standard) Rated: A

Peer-to-peer or P2P lending has emerged as an alternative option for investors who wish to earn higher rates of return than what traditional fixed-income instruments can offer. However, lending on these platforms also entails higher risk, which investors need to be aware of before venturing into this relatively new investment avenue.

6 investments with high return (The Economic Times) Rated: A

Peer-to-peer (P2P) lending is a relatively recent option and is a form of crowd-funding used to raise loans which are paid back with interest by bringing together people who need to borrow, from those who want to invest. For the funds that you invest, the interest rate may be set by the P2P platform or mutual agreement between the borrower and lender.

Risks: Since this is an unsecured loan where there is no face-to-face interaction, a P2P lender, i.e., the investor needs to be aware of the risks involved such as default on the part of the borrowers.

Asia

Finance: RHB plans to win over SMEs with digital agenda (The Edge Markets) Rated: A

Small and medium enterprises (SMEs) can no longer avoid going digital if they want to stay relevant. And RHB Bank Bhd, which has a new five-year strategy, is looking to help them do just that.

Jeffrey Ng, the bank’s head of group business and transaction banking, says the digital economy is the biggest trend impacting SMEs, and many of them will require assistance to adopt the technology. Ng was previously head of RHB’s SME division.

For RHB, this means onboarding SMEs into its electronic financial supply chain platforms. Suppliers and buyers can perform payments for goods entirely on the bank’s platforms and receive payments instantly. SMEs that want to offer cashless payments can also do so with RHB’s solutions.

How Vietnam’s Fintech Market Could Reach Nearly $ 8 Billion By 2020 (Forbes) Rated: A

According to PricewaterhouseCoopers, 

George Popescu
Allen Taylor

Tuesday February 6 2018, Daily News Digest

paypal active customers

News Comments Today’s main news: Zopa reveals where the 3B GBP loanbook gets you. Revolut now operates in the Nordics. MatchMove, Rubique partner on loan payouts, disbursements. Behalf nabs $150M in debt capital. Today’s main analysis: PayPal has another solid quarter of growth. Today’s thought-provoking articles: Why SoFi wants to be a neobank. LendingClub wants to get customers off the […]

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United Kingdom

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International

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News Summary

United States

What is a neobank, and why does SoFi want to be one? (Bankrate), Rated: AAA

The company, Social Finance (often shortened to SoFi), is set to launch its SoFi Money business in the next few months. With this new product line, the company adds its name to the growing list of so-called “neobanks,” alongside firms like Chime, Simple and Varo Money. If you’re interested, there’s a waiting list for SoFi Money.

However, up until now neobanks have tended to stick to narrowly focused product lines, offering only checking or savings accounts. They have also needed to partner with specialty banks to ensure deposits are covered by the Federal Deposit Insurance Corp. (FDIC).

Should you become a customer, your debit card would say SoFi Money and you’d use the SoFi app to check your balance and call customer service when you have a problem, but your money would be on deposit at WSFS Financial.

LendingClub: Getting Borrowers Off The Credit Hamster Wheel (PYMNTS), Rated: AAA

Allocca first observed the problem in the late 1990s, when he began to sense a disconnect between the bank’s stated vision and mission to help customers succeed financially — and the actual help and services that were being offered, from credit cards to overdraft fees.

An October 2017 study by PYMNTS and Unifund dubbed these consumers “financial invisibles,” having no (or little) access to further credit when they need it. These consumers live paycheck to paycheck, and the ends just aren’t meeting up. They feel like they could never set aside $300 a month to square away their credit card debt.

Allocca said they can — and they do — and if they get into the habit of setting aside those $300-a-month payments once the debt has been erased, the savings start to build up.

According to the Financial Invisibles Report, even 40 percent of the population that claims not to worry about money still lives paycheck to paycheck, and that’s true across demographics.

LendingClub (LC) Set to Announce Earnings on Monday (Week Herald), Rated: B

LendingClub (NYSE:LC) will be posting its quarterly earnings results after the market closes on Monday, February 12th.

PayPal sees another solid quarter of growth (Business Insider), Rated: AAA

PayPal, which Wednesday, had another quarter of strong growth across metrics.

  • Total payment volume: The firm’s total payment volume (TPV) increased to $131 billion in the quarter, up 29% from the $99 billion it posted in Q4 2016, and a 15% sequential increase. That volume 
    Source: Business Insider

    NYC-Based Behalf Secures $ 150 Million in Debt Capital (BusinessWire), Rated: AAA

    Behalf, a provider of working capital solutions for small and medium-sized businesses, announced today that it has secured $150 million in debt financing led by a private investment fund managed by Soros Fund Management LLC. Viola Credit also participated in the Debt Financing. An equity investment in Behalf was also made by Viola Credit and a private investment fund managed by Soros Fund Management LLC.

    Credit card issuers block bitcoin purchases (Bankrate), Rated: A

    Nearly all of the nation’s largest financial institutions have blocked consumers from being able to buy the volatile cryptocurrency with a credit cardJPMorgan Chase, Bank of America and Citigroup recently banned credit purchases of bitcoin and other cryptocurrencies, following Capital One and Discover.

    LendEDU, a student loan marketplace, surveyed nearly 700 bitcoin investors in December and asked how they paid for their investment.

    A third used a debit card, and another 19 percent set up an ACH transfer, which is what you’d expect—people tend to fund for their investment portfolio with cash.

    Another 18 percent, though, said they used a credit card. More than a fifth of those respondents said they carried credit card balance as a result of their purchase. Even more troubling, seven out of ten of those who went into debt believed the profit they’d earn from their bitcoin investment would compensate for interest payments.

    Hard Lessons From the Federal Student-Loan Program’s Coming $ 36 Billion Shortfall (WSJ), Rated: AAA

    U.S. officials have long maintained the federal government would make a profit on its $1.4 trillion student loan portfolio or at least break even, but two recent reports suggest just the opposite will be the case. Government lending to college and graduate students could soon become an immense drain on federal coffers, worsening an already deteriorating U.S. budget picture.

    The Education Department’s inspector general, an agency watchdog, in a reportreleased last week said the profitability of the U.S. federal student lending program is being squeezed because millions of Americans who borrowed heavily in recent years—including many graduate students—are flocking into a program to have substantial portions of their debts forgiven. Students who borrowed in the fiscal year ended Sep. 30, 2015, and enrolled in such “income-driven repayment” plans, for example, are expected to pay back $11.5 billion less than they took to pay tuition and other schooling costs.

    The prospect of taxpayer losses on student loans increases the chances that Congress will make major changes to the program, such as eliminating debt-forgiveness options or placing new dollar limits on how much individuals can borrow.

    REWIREMENT IS NOT AN ALTERNATIVE TO RETIREMENT, BUT A PHASE OF GLOBAL EXPLORATION THAT CAN HAPPEN AT ANY AGE (Ron Suber), Rated: AAA

    ON DAY 231-237,

    While hiking through a forest in Patagonia, wading over volcanic ash for miles, kayaking around fjords amongst glaciers and jumping off cliffs into roaring rapids I found the space to contemplate more on three of the most common topics of conversation.

    FEAR

    Few know that fear drove me to withdraw from the Prosper deal just days before we were going to invest with Sequoia in January of 2013.

    The fear of failure, fear of change, fear of losing, fear of the unknown; all drove me to say no to the Prosper opportunity that I wanted and had worked so hard on with my business partners.

    Overcoming that fear changed the trajectory of my life and helped shape my own investment philosophy (and the strategy of using an Investment Thesis).

    APPEARANCE

    Things aren’t always as they seem in nature, business, people and life. Keep staring, stay curious but remain open.

    ADAPTING

    Adapting is the ability to adjust and modify one’s self to new conditions and new circumstances, and it’s a proficiency we should nurture as our surroundings change ever more rapidly.

    Matt Hollender of NetCredit (Lend Academy), Rated: A

    In this podcast you will learn:

    • The history of Enova and how they have evolved over time.
    • What was appealing to Matt about taking the helm at NetCredit.
    • Where NetCredit fits in the overall picture at Enova.
    • Who the near prime consumer is they are targeting.
    • The range of loan terms that NetCredit offers.
    • While they don’t have a cutoff by FICO score for who they will serve.
    • How their underwriting process works.
    • The channels they use to find these customers.
    • How they are improving the financial lives of their customers.
    • How their unique bank partnership works and how it allows them to expand their reach.
    • The balance they strike between automation and human intervention in credit decisions.
    • How NetCredit differentiates themselves from their competitors.
    • How they are funding these loans.
    • The scale they are at today.
    • How their MyRightFit tool works during the loan application process.
    • The percentage of their customers that come to them on mobile.
    • What the future holds for NetCredit.

    How Millennial Shoppers Make Purchase Decisions Today (Free Biz Mag), Rated: A

    Millennials have become the most in-demand consumer group among online retailers. Experts estimate they already spend over $1 trillion annually. Savvy eCommerce executives are studying Millennials to understand how to better speak to (and sell to) this growing and highly influential audience. This article discusses:

    1. Actionable tips for improving relationships with Millennial customers
    2. Mistakes many companies make when speaking to Millennials
    3. Factors that make Millennials loyal to certain brands

    Pace of Small Business Investment Remains Strong (PayNet), Rated: A

    Small business investment continued to register gains at the end of 2017 as delinquencies and defaults remained at low levels according to the latest small business credit trends from PayNet, the leading provider of small business credit data and analysis. However, some warning signs in financial health are starting to emerge.

    The December 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) decreased 1% to 136.5 from 138.5 (revised) in November 2017. Compared to December 2016, the SBLI increased 2%.

    Construction increased +7%, Transportation +13%, and Administrative and Waste Services +5% on a three-month rolling basis compared to three months ago.

    Weaknesses are primarily in the services sector with declines in Information Services (-8%), Professional Services (-3%), and Health Care (-2%) on a three-month rolling basis compared to three months ago.

    New Product Alleviates Mortgage Lending Compliance Risk and Worry (PR Newswire), Rated: A

    Financial institution executives in charge of mortgage lending compliance training now have a solution to stay ahead of employee training, certification and licensing requirements with the launch of Compliance Keeper 2.0 by OnCourse Learning Financial Services.

    The new product alleviates mortgage lending compliance issues regularly plaguing compliance officers, such as tracking loan officers’ completed pre-licensing and continuing education courses, compliance report generation, and assessing company risk and liability.

    Mortgage lending compliance made easy
    Compliance Keeper 2.0 empowers financial services compliance departments to administer, schedule, communicate, report and customize employee training programs to ensure compliance and success.

    Additional benefits of the new product are:

    • Mitigation of risk, and time and money savings on audit preparation.
    • Ability to meet state and national regulatory compliance requirements on time.
    • Automatic notifications that alert managers and employees to training and compliance deadlines.
    • Review of all company license information in one dashboard.
    • Actionable insight into employee certification needs.
    • Continuity of training across departments and/or branches.

    Fluz Fluz Blockchain Cashback Platform Aims to Enter and Reshape US Consumer Market (Insider Monkey), Rated: A

    However, one of the most important areas that blockchain technology can and will disrupt in the near future is financial services. Put simply, the technology represents a shared database that contains entries that are incorruptible and immovable and have to be confirmed in order to be added and each entry is logically linked to the previous one. This makes it perfectly suitable for international money transfers, so it’s unsurprising that 90% of major North American and European banks are exploring the use of this technology, according to an Accenture survey.

    According to a PwC report, 77% of financial institutions expect to adopt blockchain technology as soon as 2020.

    Fluz Fluz currently has over 40,000 active users in Colombia, where it launched in January 2017 built by the serial Ecommerce entrepreneurs Maurice Harary and Stefan Krautwald. The company sells instantly usable gift cards from over 200 merchants. Whenever a purchase is made using this card, network participants earn cashable rewards called Fluz, which are stored in mobile wallets. Fluz points can be exchanged for other cryptocurrencies or fiat money.

    Verifundr Moved to Next Phase Reports APT Systems (GlobeNewswire), Rated: A

    APT SYSTEMS, INC. (OTC Pink: APTY), a fully reporting public company in the Fintech sector, is pleased to announce that it has formally engaged the services of Difitek, Inc. to build the Verifundr escrow and payment platform. We look to Difitek to provide us with a modern framework, architecture and bank grade security features.

     

    The Worst Law Schools If You Ever Want To Pay Off Your Student Loans (Above the Law), Rated: B

    Worst Law School Salary-To-Debt Ratio
    School Avg Salary Avg Debt Salary-To-Debt Ratio
    Florida Coastal $84,664 $158,427 0.5x
    Charlotte School of Law $84,285 $154,802 0.5x
    Saint Thomas $96,356 $175,075 0.5x
    Barry University $86,908 $156,228 0.6x
    Appalachian School of Law $84,366  $143,724  0.6x
    Thomas Jefferson School of Law $101,173 $169,951  0.6x
    Roger Williams School of Law $94,557 $157,494  0.6x
    Elon University $87,680 $145,610  0.6x
    Texas A&M $90,665 $149,042  0.6x
    Arizona Summit f/k/a Phoenix School of Law $96,115  $155,697  0.6x
    United Kingdom

    Zopa reveals where a £3bn loanbook gets you (P2P Finance News), Rated: AAA

    ZOPA investors have funded enough car purchases to fill a traffic queue stretching from London to New Delhi, the platform claims.

    The peer-to-peer lender, which reached £3bn of loans last week, has been disclosing where the funds have ended up.

    Its loanbook has helped get 147,000 cars on the road, the platform revealed in a blog post on its website on Friday.

    Zorin Finance reaches £300m of lending (AltFi), Rated: A

    Zorin Finance, the alternative property lending specialist, has passed £300m of loans funded.

    Five UK FinTechs Leading The Charge In FinTech Fortnight (Forbes), Rated: A

    Today marks the start of FinTech Fortnight, a two-week celebration of the UK’s rapidly-growing FinTech sector.

    Revolut is a mobile-only digital banking app which launched its first UK current accounts in 2017.

    Founded in 2007, FreeAgent provides cloud-based accounting software, specifically for freelancers, micro businesses and accountancy practices.

    Bud is a London start-up that is trying to introduce “tailor-made banking”, by bundling a person’s various financial services, from a credit card with one bank, to a current account with another, into one platform.

    Funding Circle connects investors who wish to lend money directly to small and medium-sized enterprises via its peer-to-peer, alternative financing platform. Since its launch in 2010, investors on the platform have lent more than £3.2bn to UK firms, which has helped more than 33,000 companies access financing.

    Digital-only bank Monzo, began life as a start-up offering a pre-paid debit card.

    Current account customers slapped with an average of £152 in fees last year – here’s how to check what you paid (This is Money), Rated: A

    Plum has launched a Fee Fighter tool you can use to check how much you have handed over in fees yourself.

    Current account customers handed over an average of £152 each in banking fees last year, effectively putting an end to the myth of free banking.

    Given there are around 65 million active current accounts in the UK, this means the banks could have made nearly £10 billion in fees, according to the figures from savings app Plum.

    The research, which looked at 11,217 current accounts, showed that only 7 per cent (770 users) paid no bank fees at all.

    Over half (57 per cent) of the £152 average annual cost to current account customers came from using an overdraft and 56 per cent of account holders, or 6,276 people, used their overdraft, dipping in to the red at least once in the year.

    The next largest slice of the £152 average fee (at 27 per cent) was made up of monthly account charges or unspecified fees – which can include the cost of payments made or bounced by the bank that take you beyond your limit that are are commonly known as paid and unpaid item or transaction fees.

    These payments typically cost between £5 and £10 each.

    Source: This is Money

    R5-SHCH Connect goes live with eight Chinese banks (Finextra), Rated: A

    Theresa May today announced the launch of R5-SHCH Connect, a new service which links banks in China with London’s foreign exchange (FX) market.

    Using R5-SHCH Connect domestic banks in China now have access to the London FX market, recognised as the leading centre for global FX trading. The new service is a partnership between London’s R5 and the Shanghai Clearing House, announced by UK Chancellor Philip Hammond in December as part of the 9th UK China Economic Dialogue.

    European Union

    Red-hot fintech startup Revolut is taking on the Nordics (Business Insider), Rated: AAA

    Stockholm’s hot fintech scene is about to get hotter as Revolut – one of recent years’ biggest fintech sensations – arrives in the Swedish capital to launch its Nordic expansion.

    Since 2015, the startup has acquired some 1,3 million users around the world, making it one of the world’s fastest-growing fintech startups.

    The company, which recently added all the Scandinavian currencies among its basket of 130 global currencies, is now officially live in all the Nordic countries.

    Dutch fintech firm Ohpen raises €25 million to expand into new markets (Tech.eu), Rated: A

    SaaS-based core banking software Ohpen has raised €25 million in a Series C round led by private equity firm Amerborgh.

    Amsterdam’s Ohpen develops software tools used in the financial sector to digitalise services and for moving customers to the cloud. The new funds will be invested in growth and expanding into new markets.

    Finance chiefs warn on Big Tech’s shift to banking (Financial Times), Rated: A

    Europe’s introduction this year of “open banking” regulation, which forces lenders to provide access to accounts of customers who authorise it, has left senior bankers worrying that tech groups will cherry-pick the best parts of their business.

    Francisco González, executive chairman of Spanish bank BBVA, has warned that groups such as Facebook and Amazon in the US, and Alibaba and Tencent in China will “replace many banks”. He called on a global body such as the G20 to take action, saying “authorities [need] to bring order to this massive change” that could “pose risks to financial stability”.

    France regulator AMF clarifies its expectations for crowdfunding (LeapRate), Rated: B

    The crowdfunding regulatory framework, which was established in 2014 and updated in 2016, set up different statuses for intermediaries in relation to the marketed products:

    • crowdfunding investment advisors for investments in equity, bonds and “minibons” (interest-bearing notes). They are supervised by the AMF;
    • crowdlending intermediaries for donations or loans – with or without interest. These professionals fall under the jurisdiction of the ACPR.

     

    International

    16 Fintech Startups Deliver $ 12 Billion Financing to Consumers and SMEs in 32 countries (Crowdfund Insider), Rated: A

    The conference gathered more than 2,500 delegates from more than 50 countries from the five continents at the old French stock exchange in Paris, France. Alternative finance was one of the many topics addressed – the event spans Fintech and Insurtech and topics ranging from cryptocurrencies and blockchain to Artificial Intelligence and to Regtech.

    • They’re young: The 16 firms are on average 5.5 years old (with the oldest being 12 years old, the youngest not even 2),
    • Very international: They serve on average 4 different countries and together, with much overlap, cover 32 countries on the five continents.
    • Getting big: They have helped finance nearly €9.5 billion ($12 billion) worth of loans, bonds, and private equity for consumers and SMEs.
    • Well-funded: They raised on average $30 million in private equity for themselves

    Panelists Davis Barons, CEO of Creamfinance, Poland; Boris Batin, CEO of ID Finance, Spain; and Mark Ruddock, CEO of 4finance, Latvia, may be the best-kept secrets of global alternative finance. Founded respectively in 2012, 2012, and 2008, these companies have originated loan volumes measured in the €100s of million, and even, in the case of 4Finance, in billions of euros.

    Revolutionize Your Finance Industry Business With FinTech Mobile Apps (Finextra), Rated: A

    With the increased use of mobiles and digital revolution, every business has been disrupted, and financial services are no exception to this. There has been a drastic change in the way people are now accessing financial products and services. Customers are now looking out for FinServes that offer mobile apps and wearable technology to uninsured millennials. Insurance companies associating with FinTechs is on a rise and FinServes are increasingly leveraging new technologies to enhance customer experience. All insurance related process platforms ranging from claims, underwriting, distribution, and brokerage are being automated in innovative ways.

    According to a survey, FinTech is expected to be customer-focus by nearly 75% respondents out the 432 respondents surveyed. About 84% respondents expect that in the next five years, FinTech mobile applications will show the largest growth in usage.

    • Accept the changing market scenario 
    • Invest in technology: You need to implement innovative technology by investing in ventures to sideline your competitors in the FinServe industry.
    • Work in partnership: You need to collaborate with partners beyond the FinServe industry who have experience and can come up with new ways to generate value.
    • Analyse your success goals: So, plan your goals for the future by cautiously investing in digital technologies that are easy to implement and considering the opportunities available for improving business models.

    Challenges faced by InsurTech

    • IT security concerns: The security challenges of the IT industry make it a challenge for customers to enter the FinTech environment with complete reliability.
    • Frictions in customer journey: With the introduction of FinTech, customer expectations have reached a whole new level. However, they still experience a lot of friction throughout their journey as their very high expectations are still not met.
    • New and different business models: As the traditional insurance industry remained unchanged for over a century, the change in business models is not easily acceptable. Failure to meet user’s rapidly changing needs with time creates a challenge for FinTech adoption.
    Australia

    Why property buyers need to know about tax deductions (Domain), Rated: AAA

    According to a recent survey by online lender State Custodians, 61 per cent of respondents don’t know that mortgage interest payments on an investment property are tax deductible.

    A property is said to be negatively geared when expenses exceed rental income, and this net loss can be applied against other income, including salary or business income, to reduce your tax bill.

    Only 23 per cent of people under 35 know interest repayments are tax deductible compared with 44 percent of people aged 35 and over.

    The Australian Tax Office explains what expenses are deductible, but crunching the numbers based on a hypothetical property purchase can help put it into perspective.

    Source: Domain.com.au
    India

    Startup CXOs welcome boost to digital infra, ask for redressal of angel tax (money control), Rated: A

    Even as the government failed to address the issues of angel tax and crowdfunding of startups in Budget 2018, India’s young ventures have welcomed the move to encourage financial-tech sector and healthcare.

    Bhavin Patel, Founder & CEO, LenDenClub: 

    “The government’s step of introducing LTCG tax of 10 percent on capital gains over Rs. 1 lakh could push investors to go to other fixed income avenues like P2P Lending. The policy will encourage investors to consider P2P lending as an alternate platform to invest and earn profitable returns. The reduction in the Corporate tax to 25 percent also appears as some relief to MSMEs like us.

    The efforts towards creating the right environment for Fintech companies to grow in India will bring in promising growth prospects for P2P lending platforms.”

    Satyam Kumar- CEO and CO-Founder, Loantap: 

    “We are happy that Finance Minister has acknowledged voice from Fintech Industry seeking soft touch approach to regulation and making a strong case for Fintech participation in supporting SME/ MSME growth. Fintech as a segment has been signalled out in this budget with a very clear objective of credit push to the last mile. We see it as strong government backing for the way fintech industry is shaping in India.”

    Asia

    MatchMove and Rubique to Disrupt Loan Payouts and Disbursements (Payments Journal), Rated: AAA

    MatchMove India today announced its partnership with Rubique, India’s leading marketplace for financial services, to transform the current way of paying and disbursing funds to multiple recipients. Rubique’s platform provides a wide range of loan products and end-to-end loan fulfilments to individuals and Small and Medium Enterprises (or SMEs) through its wide network of retailers and distributors.

    The globally proven MatchMove Bank Wallet Operating System enables Rubique to pay commissions, incentives and cashbacks to its retailers and distributors securely with just one click.

    India’s lending market is expected to be valued at US$3 trillion by 2026 and this presents a huge opportunity for Rubique.

    To date, Rubique has processed approximately 100,000 applications, disbursed US$345 million worth of loans and signed up about 65,000 cards across 80 financial institutions. Rubique’s business has seen a fourfold increase year-on-year and it plans to increase its footprint from 27 to 100 cities next year.​

    Cayman

    FINTECH POISED TO TRANSFORM FINANCIAL SERVICES INDUSTRY (Cayman27), Rated: AAA

    Traditional financial services accounts for around 55% of Cayman’s economy, but emerging technologies – blockchain being one example – are poised to change the industry forever.

    Fintech, a mash-up of finance and technology, is a word we are likely to hear more often in years to come. In the not-so-distant past, Fintech referred to the back-end computer technology used by banks or trading firms. Over the last decade Fintech has evolved to describe a broad variety of technological interventions into personal and commercial finance, and it’s garnering a lot of investment.

    Authors:

    George Popescu
    Allen Taylor

Wednesday December 13 2017, Daily News Digest

Wednesday December 13 2017, Daily News Digest

News Comments Today’s main news: Court dismisses case against OCC Fintech Charter. Affirm’s valuation confirmed at $1.75B. RateSetter Australia reaches $200M milestone. SoftBank invests $450M into Compass. Starling Bank expected to profit in 2019. Linked Finance launches P2P lending pension accounts. ID Finance raises $85M through ETF bonds. Today’s main analysis: TransUnion reports on consumer credit markets. Today’s thought-provoking articles: What […]

Wednesday December 13 2017, Daily News Digest

News Comments

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International

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News Summary

United States

Court throws out New York regulator’s suit against OCC fintech charter (American Banker), Rated: AAA

A New York District Court judge threw out a lawsuit by the New York Department of Financial Services that sought to block the Office of the Comptroller of the Currency’s attempted fintech charter, saying the charter doesn’t exist yet so the suit is premature.

Lending startup Affirm valued at $ 1.8 bln in latest financing round (Business Insider), Rated: AAA

Silicon Valley lending startup Affirm said on Monday it has raised $200 million in a fresh round of funding, boosting prospects as the firm aims to go after the market for millennial shoppers needing loans.

The new financing put Affirm’s total fundraising to date at about $450 million, and increases its valuation to $1.75 billion, according to a source with knowledge of the matter.

Max Levchin On What Comes After $ 200M Worth Of Capital Affirmation (PYMNTS), Rated: AAA

The CEO with the measured response is PayPal co-founder Max Levchin, who told Karen Webster that with any capital raise of size, the temptation is to believe that “it is a big victory and it is validation … but all it really is, is a temporary tally of how far you have gone.”

He noted that with big investments come big responsibility (and Affirm has raised roughly $450 million to date), as he remarked that there is the implicit end goal of taking the money and parlaying vision and strategy into strong returns on that cash.

Affirm says that its retailers report that consumers who use Affirm leave with a basket size 75 percent greater than those who don’t use Affirm to pay for their purchases, and enjoy site-wide conversion rates as much as 20 percent higher, with revenue per visitor lifts of more than 10 percent.

Doing customers wrong allows your competitor to make things right (American Banker), Rated: A

Consider Affirm, a startup that offers consumers installment loans for individual purchases and markets the loans as a simpler and more honest financing alternative — a message that is clearly targeted at consumers who are frustrated by a perceived lack of transparency in the costs associated with using credit cards. This message appears to be resonating in the market; Affirm is processing relationships with more than 1,000 internet retailers and is reportedly working with Walmart on a pilot project.

In an interview with American Banker, Douugh founder and CEO Andy Taylor said: “When we dug deeper, we realized the consumer debt levels are out of control. Big banks are running off legacy business models that are driven to keep customers within these debt cycles. They’re not properly incentivized to foster financial wellness.”

Affirm, Marcus and Douugh are all basing their strategic direction on a simple but powerful insight: There is a difference between the way many consumers use credit cards and the way that those consumers should use their credit cards in order to maximize their financial wellness.

Retailers now offers Instaloans to pay for purchases (ABC30.com), Rated: A

A growing number of major retailers offer shoppers instant loans to pay for your purchases.

But how do they work? And are they better than credit cards?

Each lender may be slightly different, but typically: you give basic information, decide the length of the loan -usually anywhere from three to twenty-four months and in less than a minute you’ll know if you’re approved.

Prosper Appoints Former J.P. Morgan Chase CMO Claire Huang to Board of Directors (Crowfund Insider), Rated: AAA

Peer-to-peer lending platform Prosper announced on Tuesday it has appointed former Chief Marketing Officer of J.P. Morgan, Claire Huang to its board of directors. According to Prosper, Huang has held senior leadership positions at various well-known financial services companies, which includes Bank of America, Fidelity Investments, and American Express.

OnDeck Adds Former GE Capital and SunTrust Executives to Finance Team (PR Newswire), Rated: AAA

OnDeck (NYSE: ONDK), the leading online lender to small business, today announced the hiring of two senior financial services executives to join its management team. Kelly Merrill and Erich Wust will assume new leadership roles that directly support OnDeck’s mission of empowering small business owners with the fastest and most flexible credit solutions.

Kelly Merrill joins OnDeck as the Senior Vice President for Finance, where she will help lead the company’s short-term and long-term financial planning initiatives. Merrill brings over a decade of finance experience to OnDeck from GE Capital, where she played a leading role in developing and executing the disposition strategy for GE Capitals’s $200 billion balance sheet.  Previously, Merrill was the Chief Financial Officer (CFO) of GE Capital Real Estate, where she led a team of more than 50 employees.

Erich Wust has been appointed as the Senior Vice President for Portfolio Management at OnDeck. He will be responsible for managing portfolio credit strategies, balance sheet optimization and other components of the company’s loan portfolio. Wust joins OnDeck after more than a decade in credit and risk leadership roles at SunTrust Bank.

Compass gets $ 450M from SoftBank; real estate portal now valued at .2B (TechCrunch), Rated: AAA

Less than a month after raising $100 million led by Fidelity, real-estate startup Compass is striking while the iron is hot. The company has now picked up an even bigger investment of $450 million, this time from the SoftBank Vision Fund, plus another $50M in secondary deals, to fill out a vision of its own: taking its real estate rental and sales platform global.

New York-based Compass is now valued at $2.2 billion post-money, up from $1.8 billion just four weeks ago, with $775 million raised to date.

Consumer Credit Market Expected to Remain Strong in 2018 Even in a Rising Rate Environment (NASDAQ), Rated: AAA

In spite of rising interest rates, the U.S. consumer credit market is poised to perform well in 2018, with well-managed delinquencies and continued wide access to credit across all products. TransUnion’s (NYSE:TRU2018 consumer credit forecast found that expected increases to GDP, personal income, total employment and the Housing Price Index, among other factors, will outweigh potential negatives such as increasing interest rates and slowing vehicle sales.

5-Year Trends: Serious Borrower-Level Delinquency Rates for Key Credit Products**
Credit Product Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017* Q4 2018* PCT Change in Last 5 Years (2013-2018)
Auto Loans  

1.23

%  

1.19

%  

1.27

%  

1.44

%  

1.43

%  

1.46

%  

+18.7 %

Credit Cards 1.60 % 1.48 % 1.59 % 1.79 % 1.86 % 1.96 % +22.50 %
Mortgage Loans 4.31 % 3.40 % 2.46 % 2.28 % 1.83 % 1.65 % (-61.7%)
Unsecured Personal Loans 4.01 % 3.73 % 3.62 % 3.83 % 3.37 % 3.36 % (-16.21%)
*Projections; **Serious mortgage, auto loan and personal loan delinquencies are defined here as those with payments 60 or more days past due. Serious credit card delinquencies are defined as those with payments 90 or more days past due. 

Inside the Mortgage Forecast

60-Day+ Mortgage Delinquency Rate and Average Mortgage Debt per Borrower
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017* Q4 2018*
7.16% 6.65% 6.15% 5.38% 4.31% 3.40% 2.46% 2.28% 1.83% 1.65%
$190,324 $186,488 $185,594 $184,753 $187,228 $187,311 $189,914 $194,415 $200,935 $205,534
*Q4 2017 and Q4 2018 include projections

Inside the Credit Card Forecast

90-Day+ Credit Card Loan Delinquency Rate and Average Credit Card Loan Debt per Borrower
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017* Q4 2018*
2.97% 2.17% 1.90% 1.75% 1.60% 1.48% 1.59% 1.79% 1.86% 1.96%
$6,043 $5,609 $5,485 $5,371 $5,324 $5,329 $5,337 $5,486 $5,626 $5,675
*Q4 2017 and Q4 2018 include projections

Inside the Auto Finance Forecast

60-Day+ Auto Loan Delinquency Rate and Average Auto Loan Debt per Borrower
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017* Q4 2018*
1.59% 1.27% 1.11% 1.15% 1.23% 1.19% 1.27% 1.44% 1.43% 1.46%
$14,922 $15,031 $15,377 $16,061 $16,781 $17,456 $18,004 $18,391 $18,588 $18,694
*Q4 2017 and Q4 2018 include projections

Inside the Personal Loan Forecast

60-Day+ Personal Loan Delinquency Rate and Average Personal Loan Debt per Borrower
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017* Q4 2018*
4.98% 4.78% 4.20% 3.93% 4.01% 3.73% 3.62% 3.83% 3.37% 3.36%
$6,650 $6,138 $5,895 $5,904 $6,247 $6,741 $7,360 $7,640 $8,066 $8,461
*Q4 2017 and Q4 2018 include projections

Why JPMorgan, Amex, HSBC are backing ‘isolation’ web browsing (American Banker), Rated: AAA

Often users are tricked by phishing emails that mimic a legitimate note from the boss or a senior corporate leader. And the links and sites can look secure. According to PhishLabs, nearly 25% of all phishing sites in the third quarter were hosted on HTTPS domains — almost double the rate of the previous quarter.

As part of their effort to deflect these attacks, some banks are turning to isolated browsing, or remote browsing, technology. Such systems force all internet activity to happen in a protected space on the cloud, preventing malicious code from reaching a company’s network. The technology is not brand new, but it is starting to gain traction as some large banks have finished their testing of it and are going public with their use of it.

JPMorgan Chase, American Express and HSBC announced Monday that they are leading a $40 million round of funding in the isolation-tech provider Menlo Security, bringing its total funding to $85 million.

Source: American Banker

 

Niche lending and fintech cross paths in Silicon Slopes (Utah Business), Rated: A

There are, however, entire demographics not serviced by tried-and-true lending institutions. Often, these folks’ credit score fails to meet a bank’s minimum standards. Or they need unconventional terms on an equipment or business loan. Whatever the reason, these transactionally marginalized sectors find themselves at the mercy of high-interest lenders. Or with no access to capital at all.

“There is a significant population of U.S. consumers who can’t get a loan,” notes Nate Heward, CFO at Acima Credit, a company that provides a point-of-sale credit platform.

Capitalism abhors a void

From the ubiquitous strip mall payday lender to the world of microfinance, a plethora of entrepreneurial solutions has emerged to get cash in the hands of would-be borrowers cut off from other avenues. These alternative lending practices have various degrees of reputability; a wide spectrum exists between the purely predatory lending shop, on the one hand, and the creative value-adding venture, on the other.

Scratching the consumer itch

In practical terms, Acima asks four simple questions of the would-be borrower:

  1. Do you have a three-month history with your current employer or source of income?
  2. Do you deposit $1,000 or more into your checking account each month?
  3. Have you had a checking account for at least 90 days?
  4. Is your checking account free from NSFs, excessive overdrafts and negative balances?

It’s all fintech

The companies profiled in this article may not be considered fintech firms per se; they’re not using technology to create a new financial paradigm a la Paypal, Indiegogo or Coinbase. They’re merely offering tried-and-true solutions to untapped consumer markets. Viewed from another angle, however, they’re fintech companies through and through. Acima, Progressive, et al are racing to deliver the most convenient financial solutions to the most people in their target customer base. And to do so, they’re relying on technology all the way.

Finance teams are ‘bottlenecking’ banks’ digital transformations (Tearsheet), Rated: A

Banks are working hard to beef up their technology and innovation teamsembrace agile developmentand move to acting like digital companies, but bank finance departments still do a lot of manual work and will start to hold their companies back from becoming digital entities. Finance teams are the control functions and scorekeepers of an organization, but if they can’t process data at the same speed as the rest of the organization they could slow down the speed of company mergers or product rollouts when competing transactions are already taking place.

Royal Business Bank Invests $ 500K in Lendistry Loan Fund, Providing Opportunity for Small Businesses in Underserved Communities (Digital Journal), Rated: A

Royal Business Bank, a wholly-owned subsidiary of RBB Bancorp, has made a $500K commitment to the Lendistry CRA Loan Fund I. Launched at a time when most banks were struggling, Royal Business Bank has been successfully serving the Asian-American community since 2008. While specializing in businesses engaging in trade with Pacific Rim countries, the bank also offers small business loans and residential mortgages.

First financial industry brief filed in CFPB English v. Trump case (Ballard Spahr Email), Rated: A

This afternoon (LT Editor: December 12,2017) the Credit Union National Association (CUNA), represented by Ballard Spahr’s Alan Kaplinsky, filed the first amicus brief from the financial industry in the English v. Trump litigation over who will succeed Richard Cordray as the head of the Consumer Financial Protection Bureau. CUNA supports the President’s authority to appoint an acting director.

Lawsuit: Trump appointee Mick Mulvaney has ‘no more right’ to lead CFPB ‘than Santa’ (Washington Examiner), Rated: A

A new federal lawsuit says President Trump’s “plainly illegal” appointment of Mick Mulvaney to be acting director of the Consumer Financial Protection Bureau must be reversed in favor of Leandra English, who also claims the title.

Ilann Maazel, an attorney for the Lower East Side People’s Federal Credit Union, told the Washington Examiner that the credit union is suing because of the feared effect of Mulvaney policies.

The legal dispute centers on whether the 2010 Dodd-Frank financial reform, which set up the CFPB, makes the deputy director the acting director if there’s a vacancy, or whether the older Federal Vacancies Reform Act gives the president that power.

US Bank sees success with Zelle (Business Insider), Rated: A

US Bank integrated Zelle — which has over 30 other banking partners like Bank of America (BofA), JPMorgan Chase, and Citi — last year. The bank saw a 104% increase in Zelle transactions in the past four months, and a 50% increase in customer enrollment in the P2P offering during that time.

Source: Business Insider

To compete with big tech firms, banks need big-tech talent (American Banker), Rated: A

Nine years ago, D.J. Patil and Jeff Hammerbacher coined the term “data scientist.” Four years later, Patil and Thomas Davenport deemed the profession “the sexiest job of the 21st century” in the pages of Harvard Business Review.

For banks, this imbalance is particularly challenging at a time when the industry is increasingly vying for the same talent the tech giants are aggressively courting. To stay competitive, the financial services industry must defend against a new cast of competitors by changing how it attracts, hires and develops data science talent.

 

BitGo Raises $ 42.5M in Series B Funding (Finsmes), Rated: A

BitGo, a Palo Alto, CA-based company which makes digital currencies usable for businesses in a regulated economy, raised $42.5m in Series B financing.

The company intends to use the funds to accelerate enabling businesses to integrate digital currencies into their existing financial systems.

AI 100: The Artificial Intelligence Startups Redefining Industries (CB Insights), Rated: A

Source: CB Insights

5 Promising Early-Stage Startups to Watch (Tech Startups), Rated: B

Throtle is a 2nd generation data onboarding company focused on deterministic matching, identity resolution and closed loop enablement, powering brands and companies with their omnichannel marketing efforts.

Affirm is a San Francisco-based financial service startup that offers installment loans to consumers at the point of sale. Its aim is to improve the banking industry to be more accountable and accessible to consumers.

Homebuying With Alternative Credit (Microbilt), Rated: B

Source: Microbilt
United Kingdom

Digital challenger Starling to hit profit in 2019 says founder Anne Boden as European expansion takes crucial step (City A.M.), Rated: AAA

Digital-only challenger bank Starling will “definitely” be in profit by the end of 2019, its chief executive told City A.M., as it announced a major step in its plans for European expansion.

The bank will today announce it has become a direct member of the single euro payments area (Sepa), which allows credit transfers, direct debit and card payments in euros across the whole of the EU.

Crowdfunding a mission to save capitalism from itself (Financial Times), Rated: AAA

Jeff Lynn is on a mission to save capitalism from itself at a time when millions feel locked out, and unable to foresee themselves better off than their parents. His answer: to democratise capital.

That is one reason he founded Seedrs, an online platform through which individual investors can buy shares in high-growth companies at an early stage — a privilege once reserved for institutions and private equity funds. The other reason was to make money.

Seedrs, which along with Crowdcube dominates the UK market, has funded more than 540 deals, representing £280m of investment. Some were follow-on rounds, and in total about 400 companies have been funded. About 20-30 companies are live on the site at any time.

Crowdfunding by numbers

Critics say a big difference between crowdfunding and the stock market is liquidity — you cannot just sell your stake. But Seedrs has begun a secondary market and says it has had several exits already.

Free Agent, a Scottish maker of accounting software, floated in November 2016 at 87p. Its shares remain below the 100p Seedrs investors paid, though some sold when it hit 140p this year. Chapel Down, a vineyard, was already quoted on the Nex exchange (formerly ISDX) when it raised money at 28p a share in October 2014. It has been trading around three times that level.

China

SenseTime Raises US$ 410M Series B Financing (Finsmes), Rated: A

SenseTime, a Chinese artificial intelligence company focused on computer vision and deep learning technologies, raised US$410m series B1 B round of financing.

SenseTime has powered many industries such as finance, security, smart phone, mobile Internet, robotics, and automobile with core computer vision technologies including face recognition, video analysis, character recognition, and autonomous driving.

European Union

Linked Finance Launches New P2P Lending Pension Accounts (Better Business), Rated: AAA

Irish peer-to-peer lending company Linked Finance has launched a new type of account that allows holders of self-administered pensions to make P2P lending to Irish SMEs part of their pension investment portfolio.

With net returns of between 7 and 8.5 per cent, 24/7 online account access, complete control of lending activity, and monthly repayments of principal & interest, P2P lending is becoming an attractive asset class for a growing number of investors.

Mobile bank N26 partners with crowd-lending platform Younited Credit in France (Telecompaper), Rated: A

European start-up N26 has expanded the range of its banking services on offer in the French market via a partnership with Younited Credit, a fintech start-up specialising in short-term loans and crowd-lending.

The Advantages of #Peer-to-Peer Lending (EU Reporter), Rated: A

For many years, if someone wanted a loan, they would have to apply for one through a bank. Before they received that loan, the bank investigated their credit and decided what the rate of interest would be applicable.

However, there is another way to get a loan without worrying about a low credit score or high interest rates. This is peer-to-peer lending or P2P. Through peer-to-peer lending platforms, individuals can invest their money in other individuals, with an interest rate that the two groups have agreed is fair.

Hungarian fintech secures EUR 6 mln in Czech funding (Portfolio.hu), Rated: A

The investor will first acquire a 20% stake in Barion, which is active in online and mobile payments, for EUR 2 mln.

Finnish Crowdfunding & P2P Lending Platform Fellow Finance Receives Payment Institution Authorization (Crowdfund Insider), Rated: B

Finnish crowdfunding and peer-to-peer lending platform Fellow Finance announced on Tuesday it received payment institution authorization from the Financial Supervisory Authority of Finland. The online lender claims it is the first funding platform to receive this type of authorization, which will notably enable Fellow Finance to provide new services to its consumer and corporate customers, to expand its services further in Europe and to utilize the new payment service directive (PSD2) in the development of Fellow Finance service.

With Norrsken House, ex-Klarna executive envisions a global network of co-working spaces focused on impact (TechCrunch), Rated: A

He launched the Norrsken Foundation later that year with about $20 million of his own money. By early 2017, the first fruits of that funding took shape with the opening of Norrsken House, a co-working space in Adalberth’s hometown of Stockholm dedicated to companies that are developing technologies that have a social impact.

Now, Adalberth has committed an additional $62 million of his own money to expand that vision. The goal, he said, is to eventually create a network of 25 impact-focused co-working spaces and foundation hubs around the globe in the next 10 years. The first Norrsken House has 112 companies in it and seven have received direct investment from the Norrsken Foundation’s fund (more on that in a bit).

International

ID Finance raises $ 8.5m via exchange-traded bonds to support growth (Finextra), Rated: AAA

ID Finance, the emerging markets fintech company, today announced successful completion of its first issuance of exchange-traded bonds.

The company raised $8.5m from the bond registered in Russia and listed on the Moscow Exchange. It was the first tranche of a $170m bond issuance programme that the company plans to support global expansion.
The bond, which was oversubscribed, has a maturity period of three years and a quarterly coupon payment frequency.

Banks, fintechs and a Brit royal to build green-lending blockchain (American Banker), Rated: A

Could fintech help the planet cope with climate change?

Some major players — Prince Charles; bankers from Barclays, Standard Chartered, and BNP Paribas; three fintechs; and professors from the University of Cambridge — all hope the answer is yes.

On Tuesday at the One Planet Summit in Paris, they are expected to announce they are developing blockchain technology that lets banks see which potential borrowers use environmentally sustainable practices and therefore are worthy of preferential lending terms. Such disclosures presumably would put pressure on companies to pollute less.

Australia

RateSetter’s Australian business hits $ 200m milestone (AltFi), Rated: AAA

RateSetter Australia has hit the AUD$200m mark in lending a little over three years removed from launching down under. The platform, which lends to both businesses and individuals, has doubled its lending volumes over the past six months.

Interestingly, 56 per cent of its investors withdrew money from bank savings accounts in order to divert them into the platform, while a further 17 per cent reallocated money from bank term deposits. The greatest proportion of the platform’s investors are millennials, at 58 per cent, although they invest the least amount of money on average of any age group at $9,454. Retirees (aged 65 and over) by contrast invest an average of $66,118.

India

Understanding the Data Protection White Paper Part XI: Establishing proper deterrent consequences for privacy violations (Tech 2), Rated: AAA

This article is Part 11 of a multi-part series explaining the recently issued white paper on data protection in India. You can read Part 1Part 2, Part 3Part 4Part 5Part 6Part 7Part 8Part 9 and Part 10.

Consider also the case of Sitesearch in the US, where the company bought payday loan applications and sold them to third parties, which included fraudsters, who used the data to steal more than $25 million from user accounts. Such careless buying and selling off of data should not be justifiable in the name of consent. While safeguards such as requiring that companies transfer data to only to companies with a comparable level of privacy provisions help, these must be backed up by huge penalties for violations.

For example, consider the Equifax data breach, the breach of a credit information company, leading to the loss of crucial data of over 143 million Americans. This breach was the result of a vulnerability in their web application software, a vulnerability that was discovered and for which a patch had been issued at least 2 months before the actual hack. The breach of this crucial data was thus the result of negligent, or non-implementation of the patch.

A landmark privacy judgment in India is the Canara Bank case, which struck down a provision in a law, which allowed the authorisation of ‘anyone’ to conduct investigations and demand the production and seizure of documents, including bank documents. Such a wide delegation of powers can allow any and everyone, even unscrupulous actors, permission to gain access to confidential data, which should not be allowed.

This case draws attention to an important aspect of data protection — it must be ensured that investigations, at all times, must be authorised, and by authorised personnel only. Any violations, or even exceeding of powers must be punishable.

Asia

8Percent leverages power of platform (Korea Herald), Rated: A

Companies that have used the 8Percent platform include Korea’s leading vehicle-sharing app operator Socar, solar energy firm S-Power and restaurant chains Power Plant and The Booth.

For example, a P2P investor into Socar was given a 1-hour free-driving offer each month for a year, until the loan matured. The offer was part of a return to about 600 retail investors, who lent a combined 1.3 billion won ($1.19 million) to the car-sharing firm in July 2015.

Vouchers for restaurants, such as Power Plant and The Booth, were given as rewards to investors.

According to a December estimate by 8Percent, three-fourths of investors, who offered an accumulated 97.7 billion won in loans, were from metropolitan areas — either Seoul or Gyeonggi Province — while those in their 20s or 30s accounted for over three-fourths of investors. The investors, without tax being deducted, are offered on average 9.78 percent interest for investments.

Some 65 percent of its borrowers — about 5,000 – had a credit rating between 4 and 6 on the scale of 1 to 10.

MENA

Crowdfunding real estate: a new reality booming? (Gulf News), Rated: AAA

Similarly, online REITs use online platforms and digital technology to enable wider access to REITs and quicker dissemination of REIT information. This allows mass participation and broader wealth distribution.

The ticket size to crowdfund a $1-billion airport is not exactly for everyone. However, a three-bedroom apartment in Mumbai, Manchester or Dubai Marina jointly owned by a hundred individuals sounds realistic. It also helps diversify risks for investors.

Smart Crowd is a crowdfunding platform, very different from an online REIT. The company believes it can enable anyone with Dh5,000 in savings to enter the Dubai property ladder. Its platform is awaiting final regulatory approval from the Dubai Financial Services.

Israel

MK Rachel Azaria threatens banks with P2P legislation (Globes.co.il), Rated: AAA

MK Rachel Azaria, chair of the Knesset Reforms Committee (officially known as the Special Committee on the Planning and Building Bill and the Maternity Leave and Parenting Bill) did not like the draft circular released by the Bank of Israel on regulating the relationship between the banks and the digital peer-to-peer (P2P) lending platforms on Sunday.

Azaria is now threatening to promote legislation that will regulate relations between the banks and the platforms, but this appears to be designed to pressure the Bank of Israel to publish new, more focused guidelines .

South America

Creditas Raises $ 50M in Series C Funding (Finsmes), Rated: A

Creditas, a Sao Paulo, Brazil-based digital secured loan platform provider, raised $50m in Series C funding.

Authors:

George Popescu
Allen Taylor

Friday September 22 2017, Daily News Digest

APAC alternative finance

News Comments Today’s main news: SoFi hit with a new lawsuit. Former SoFi loan reviewer says company created a hostile work environment. LendingClub launches Android app for investors. ZhongAn prices Hong Kong IPO at HK$59.70, raises $1.5B. Australia passes Japan to become second largest alternative finance market in APAC. Today’s main analysis: APAC alternative finance report. Today’s thought-provoking […]

APAC alternative finance

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United States

SoFi Condoned ‘Rampant Sexual Activity,’ Lawsuit Alleges (Bloomberg), Rated: AAA

A former loan reviewer at Social Finance Inc. claims in a lawsuit she was repeatedly sexually harassed while working there, ratcheting up pressure on the embattled fintech startup.

Sonoma County Superior Court court clerk confirmed by phone that the complaint was filed Thursday.

Top management indulged in the inappropriate behavior, which then trickled down through the ranks, according to the complaint. Cagney dated subordinates at SoFi’s San Francisco office — where his wife works as chief technology officer and vice president of engineering — and attended parties with SoFi’s Healdsburg staff while intoxicated, Zamora alleges.

SoFi Faces New Sexual Harassment Claim Days After CEO’s Departure (WSJ), Rated: AAA

Yulia Zamora, who worked as a loan reviewer at SoFi’s Healdsburg, Calif., office from October 2015 until October 2016, said in a complaint against the company that a manager had propositioned her for sex and retaliated against her when she refused.

She added that SoFi exhibited a “hostile work environment where sexually inappropriate behavior became widely accepted and laudable by upper management.”

In her complaint, Ms. Zamora said that a SoFi director of operations who had authority over promotions approached her during and after an office Christmas party in December 2015. The manager, Adam Cobb, told her that he was “intimidated by [her] beauty” and that he “want[ed] to do sexy things” to her, according to the complaint. She denied his advances, the complaint added.

In the weeks following those comments, Mr. Cobb refused to promote Ms. Zamora and refused to write her a letter of recommendation after she resigned from the company, according to the complaint. She raised the issue with supervisors just after the party, but said that they found the story “entertaining rather than upsetting.”

Why Startup Founders Should Be Required to Sign a ‘No Go, Bro’ Clause (Fortune), Rated: AAA

Startup CEOs like Cagney, Travis Kalanick at Uber, and Taylor Freeman at UploadVR—accused in a recent lawsuit of bragging with his co-founder Will Mason about how many girls they were going to have sex with at company parties, and designating a room at the office as a “kink room”—can destroy as well as create billions of dollars in value for their companies, all while creating toxic work environments.

Whether they resign like Cagney and Kalanick or remain with the company like Freeman and Mason, startup executives typically own a large percentage of company stock. That often leads investors and boards to treat them gently when it comes to sexual harassment allegations and other forms of misconduct—but it should not.

Before making a big investment in a startup, investors should use their power to require CEOs to sign a clause under which they forfeit a large proportion, or potentially all, of their stock, if fired for misconduct, including reasons such as sexual harassment and misrepresentations to investors.

 

 

 

LendingClub, a peer-to-peer loans platform, just launched its Android app for investors (Android Police), Rated: AAA

With the LendingClub Invest app, you can log in via your fingerprint, view information like your current value and return, as well as transfer money.

Keep in mind that this is for investors, not borrowers. It’s for those using the service who want to manage their accounts and view the details of their current investments. Borrowers using LendingClub don’t have an app just yet.

The full log for this initial release is below:

WHAT’S NEW

Access your LendingClub investor account through a convenient experience optimized for your mobile device.
In this initial version you can:
– Log in to your account with a touch of the finger (for Android 6.0 or above)
– View and manage your account
– See your Net Annualized Return (NAR)
– Invest in Notes
– Use your saved filters to find the Notes you want
– Set up and update automated investing
– Transfer money between your LendingClub account and your bank

Hackers Entered Equifax Systems in March (WSJ), Rated: AAA

Hackers roamed undetected in Equifax Inc.’s EFX +2.76% computer network for more than four months before its security team uncovered the massive data breach, the security firm FireEye Inc.FEYE +0.24% said this week in a confidential note Equifax sent to some of its customers.

FireEye’s Mandiant group, which has been hired by Equifax to investigate the breach, said the first evidence of hackers’ “interaction” with the company occurred on March 10, according to the Mandiant report, which was reviewed by The Wall Street Journal.

Equifax has said it didn’t discover the breach until July 29. Days later it called in Mandiant. Equifax didn’t disclose the breach until Sept. 7.

In a progress report that accompanied that announcement last Friday, Equifax said hackers accessed consumers’ data from May 13 through July 30. It didn’t mention in that report that the attack had begun at an earlier date.

Mandiant’s report this week noted the hackers accessed one of Equifax’s servers by taking advantage of a flaw in software called Apache Struts, used by many companies to build interactive websites.

Two days before the access occurred, on March 8, security researchers at Cisco Systems Inc. warned of the flaw in Struts and a patch was issued by the Apache Software Foundation. Equifax in its report last week said its security staff “took efforts” to fix the system, saying it understood the intense focus outside the company on patching efforts and that its review was ongoing.

After interacting with Equifax’s server in early March, the hackers then entered the computer command “Whoami,” Mandiant wrote. This command would have given the attackers the username of the computer account to which they had just gained access, an early step in a hacking attempt.

The Ultimate Anti-Competitive Mergers (Prospect), Rated: A

When you need a new mortgage in the future, will your only options be AmazonWellsFargo or AppleChase? The prospect of a mash-up of banking and commerce keeps people like George Washington University law professor Arthur Wilmarth up at night. “This would mean an end to healthy innovation and startups and competition,” said Wilmarth. “I think it is that dire.”

In principle, these maneuvers could inject competition into a banking industry controlled mostly by four Wall Street giants, making financial services more accessible and flexible to modern needs. But special charters also let fintech evade critical regulatory scrutiny. And the tentative steps by SoFi and Square seem like a dry run for the day Silicon Valley’s giants decide to get in the game, building sprawling businesses the government has aimed to prevent for decades.

Banks get all sorts of privileges from the government—and if banks can also function as ordinary commercial enterprises, they have unfair advantages against other businesses (who are also their clients).

Non-Prime Gen-Xers Lack Financial Stability According to New Research by Elevate’s Center for the New Middle Class (BusinessWire), Rated: A

Members of Generation X (those born between 1965 and 1980) now sit at the age where they anchor the country’s economic and social structure. Yet, new research from Elevate’s Center for the New Middle Class shows that Gen-Xers face a slew of economic challenges that perpetually keep them off balance. Worse still, that lack of balance means they can’t plan for the future or get back on track.

Non-prime Gen-Xers, in particular, lack stability – in their employment as well as their income. They have difficulty predicting their monthly income, and consequently act like cash accountants in managing their day-to-day finances. Non-prime Gen-Xers are thus the least likely generational cohort to be able to save money—an important aspect of financial planning. Compared to their prime counterparts, non-prime Gen-Xers are:

  • 4x as likely to be living paycheck to paycheck
  • 4.5x as likely to worry about meeting monthly expenses
  • 2x as likely to have been laid off in the past year, and almost 3x as likely to be laid off in the last 5 years
  • 5x as likely to feel “significant stress” over finances
  • 5x more likely to say that in the prior 12 months they were never able to plan for a major expense

The planning gap between prime and non-prime Gen-Xers is wider than any other generation, and 1 in 5 reports running out of money every month. When it comes time to pay for unplanned or unexpected expenses, such as medical bills or car repairs, only 13 percent feel confident they could come up with $1,200. This lack of confidence may be due to lack of reliable options. Though 80 percent of prime Gen-Xers have a solid option – savings, credit or turning to family/friends – only 44 percent of their non-prime counterparts have a solution for coming up with the funds.

3 Stocks With eBay-like Return Potential (The Motley Fool), Rated: A

Peer-to-peer lending platform Lending Club is finally starting to show signs of growth after several quarters of stagnant loan originations. With the stock down 74% since its first trading day in 2014, there’s certainly potential for a big investment win if things continue to go well.

For the second quarter of 2017, Lending Club’s loan originations grew by 10% year over year as well as sequentially, which came as a pleasant surprise to investors. Revenue grew by an impressive 35% from last year, and profit margins improved tremendously. What’s more, Lending Club’s CEO said that the company could approach GAAP profitability as we head into 2018, which would be a major improvement from the first half of the year.

Lending Club’s loan portfolio is currently about $11.1 billion in size, which may sound like a lot, but consider that the U.S. nonrevolving (loan) consumer lending market has more than $2.7 trillion in outstanding balances, not including mortgages, according to the Federal Reserve.

US auto-loan fintechs help incumbent lenders stay up to speed (Business Insider), Rated: A

Hyundai Capital America, the car maker’s US lending division, has partnered AutoGravity, a US-based digital car shopping and financing platform, to extend its loans more easily to consumers looking to buy a Hyundai, Kia, or Genesis vehicle.

Hyundai Capital will be one of several auto lenders that consumers can borrow from via the platform.

JPMorgan Chase partnered online car marketplace TrueCar in August 2016 to launch an end-to-end digital platform, Chase Auto Direct, for finding and financing a vehicle. Additionally, Ford Motor Credit Co., the car giant’s lending arm, started leveraging US marketplace lender AutoFi’s software in January to make it easier for customers to buy and finance a vehicle without going to showrooms.

The Saatva Company Partners with Payment Solutions Company Klarna (PR Newswire), Rated: A

The Saatva Company, the largest online luxury mattress retailer, has formed a strategic partnership to offer financing plans to its customers with Klarna, a global payment solutions company that works with other top U.S. brands like Microsoft and Taylormade.

Through this partnership, Saatva customers now have the option to “Slice Up Your Payment” through Klarna and spread the cost of purchases over time with convenient, stress-free low APR financing offers. It is available immediately under all three Saatva Company brands – Saatvamattress.com, Loomandleaf.com and Zenhaven.com.

After selecting the perfect mattress, customers can apply for Klarna financing at checkout through a simple three-step instant credit approval process. Customers are approved for an open line of credit that may also be used at any other merchant where Klarna is accepted.

Digital Lending Dramatically Cuts Down Closing Times (The M Report), Rated: A

In a recent sampling of 10,000 purchase loans from LendingTree, a leading online loan marketplace, the closing times on mortgages saw a sharp decrease thanks to more digital lending; approximately 74 percent on average from May 2016 to May 2017. According to the report, the average closing still takes roughly 72 days, but this rate is influenced by several other buying factors as well as digital integrations.

The study shows the average amount of days to close in Boston (79.5) strongly differs from the time spent in a city like Denver, (56.2); a 23.3 day difference.  New York closely followed Boston at 79.2 days and Cleveland at 71.5. Phoenix and Dallas barely ranked above Denver at 57.5 and 57.6 days respectively. The time to close also varies largely by state, with Montana measuring at 52.7 days until closing and New York at 91 days.

Activehours raises $ 39 million for its new take on cash advances (TechCrunch), Rated: A

Nine months after raising $22 million for its unique take on the cash-advance business, Activehours has gone back to the venture capital well and pulled out another $39 million in financing.

Led by Andreessen Horowitz, with participation from the company’s early-stage investors Matrix Partners, Ribbit Capital, and March Capital Partners, Activehours has managed to now raise nearly $65 million since its launch in 2013.

The Palo Alto-based company skirts regulation as a payday lender because it doesn’t charge interest on the cash that it fronts to customers. Instead, the company asks that users pay a small voluntary fee for access to their money ahead of their payday.

Tribal Lender Claims Immunity From Challenge To Immunity (Law360), Rated: A

An online lender accused of striking “rent-a-tribe” deals with a Native American tribe in order to benefit from tribal immunity urged a Virginia federal judge Tuesday to dismiss a proposed class action over its lending practices, saying it is, in fact, a sovereign arm of the Chippewa Cree tribe and therefore immune from the litigation alleging false immunity.

The Government Shouldn’t Collect Private Financial Information from America’s Poor (National Review), Rated: A

The CFPB, which was created under Dodd-Frank supposedly to protect consumers and prevent the next big financial crisis, is now being used to try to discourage payday lending, vehicle title, and certain high-cost installment loans.  The rule will require customers applying for a small-dollar loan – the average of which is $350 — to submit extensive personal financial information in support of their applications. In addition to determining a customer’s ability to repay the loan, the lenders will be required to share this information with each credit reporting agency (CRA) registered with the Bureau.

With this data all in one place, it will be vulnerable to a potential hack.

And just this week the SEC reported a hack.  Now government will have a new pool of data for hackers to try to infiltrate.

Embracing Blockchain Is in the ‘National Interest’ (Coindesk), Rated: B

Giancarlo continued:

“Everything we do has been digitized. The one thing that has not yet been digitized is regulation. We’re still very much an analog regulator of digital markets.”

And most importantly, Giancarlo stressed that it is imperative that U.S. regulatory structures catch up with the fast-moving digital economy.

eOriginal Announces Coluzzi as New Chief Financial Officer (Benzinga), Rated: B

eOriginal, Inc., today named Michael Coluzzi as Chief Financial Officer (CFO), another valuable addition to the executive team of the rapidly growing financial services technology firm.

Coluzzi is the third key addition to eOriginal’s leadership following a growth capital investment by LLR Partners. In addition to the new CFO, Brian Madocks joined as Chief Executive Officer in April 2017 followed by Timothy Wall as Chief Revenue Officer earlier this month. These hires and the existing eOriginal management team together will drive the business towards achieving full potential.

Veteran CFO Bruce Felt Joins Personal Capital’s Board of Directors (Business Insider), Rated: B

Personal Capital, the leading digital and professional advisor based wealth management firm, today announced that Bruce Felt, the Chief Financial Officer of DOMO, has joined Personal Capital’s Board of Directors and will chair the Audit Committee.

Felt is the CFO of DOMO, one of the fastest growing SaaS companies in the country. Previously, he was the CFO of SuccessFactors, where he guided the company through six acquisitions, a public offering and the sale of the business to SAP. Felt has spent 25 years managing financial operations for high-tech companies and serving on multiple boards of directors.

Form 8-K Elevate Credit, Inc. For: Sep 15 (StreetInsider.com), Rated: B

The Registered Office of the corporation in the State of Delaware is changed to 251 Little Falls Drive, in the City of Wilmington, DE, County of New Castle, Zip Code 19808. The name of the Registered Agent at such address upon whom process against this Corporation may be served is Corporation Service Company.

United Kingdom

Ex-Barclays CEO Antony Jenkins raised £34 million for his fintech startup (Business Insider), Rated: A

Former Barclays CEO Antony Jenkins has raised £34 million ($46 million) for his fintech startup 10X Future Technologies.

The Series A funding round was led by Chinese firm Ping An Insurance and consulting firm Oliver Wyman.

London-based 10X, which went public last October, will help banks and financial institutions modernize their back office technology.

Older people are underserved by financial services, says the City watchdog (City A.M.), Rated: A

In its Ageing Population Project, the FCA found that older people’s needs are not being fully met which may result in exclusion, poor customer outcomes and possibly even harm.

It has called on retail banks, advisors and the savings industry to think about the vulnerabilities which older people – defined as those who are aged 55-plus – may face.

Cautious investors blind to risks of alternative favourites (FT Adviser), Rated: A

The aftermath of the financial crisis has seen investors pour capital into income generating alternative assets perceived to be low risk but market watchers have warned the dangers won’t be evident until interest rates rise.

The AIC said 70 per cent of the investment trust launches over the past five years have been in the alternative income sector.

Jonathan Davis, who runs Jonathon Davis Wealth Management in Hertford, said he has been preparing his clients portfolios for higher inflation, and higher interest rates, and generally avoiding UK equities.

LendInvest hires Aldermore’s Boden (Mortgage Strategy), Rated: B

Aldermore head of commercial mortgages Ian Boden has joined specialist lender LendInvest.

Boden joins the group as sale director, after five years at Aldermore Bank.

He has previously worked at Lloyds Bank and HSBC and has an advanced diploma in financial planning from the CII.

In his new role, Boden will help grow the business development team at LendInvest. He will help the group expand to new markets.

Deadline nears for pub purchase (County Echo), Rated: B

THE 30 September deadline to secure the necessary funds to purchase the threatened Tafarn Sinc pub in Rosebush is fast approaching.

“The aim now is to see a sum of £200,000 in shares achieved by 1 October and also the committee has endorsed a special Peer to Peer (P2P) lending scheme where a four per cent gross interest rate is offered to individuals who can lend a £5,000 sum to the co-operative to secure the total funds.

“As a target for the P2P we have 20 lots of £5,000 loans we are seeking and then this will bring in the needed final sum to purchase the pub and ensure it is owned by local people.”

China

China online insurer ZhongAn prices HK IPO at top end, raises $ 1.5 bln (Kitco), Rated: AAA

ZhongAn Online Property & Casualty Insurance Co priced its IPO at the top of an indicated range, raising $1.5 billion in Hong Kong’s biggest ever financial technology stock offering, IFR reported on Friday.

China’s first internet-only insurer priced 199.3 million new shares at HK$59.70 ($7.65) each, the top of a HK$53.70-HK$59.70 range said IFR, a Thomson Reuters publication. It cited people close to the deal.

ZhongAn Online Property & Casualty Insurance Co priced its IPO at the top of an indicated range, raising $1.5 billion in Hong Kong’s biggest ever financial technology stock offering, IFR reported on Friday.

China’s first internet-only insurer priced 199.3 million new shares at HK$59.70 ($7.65) each, the top of a HK$53.70-HK$59.70 range said IFR, a Thomson Reuters publication. It cited people close to the deal.

China’s first Internet Insurance Company is set to list in Hong Kong on 28th Sep (Xing Ping She), Rated: A

Zhongan Insurance, which was co-founded by Jack Ma of Alibaba, Ma Mingzhe of PING AN and Pony Ma of Tencent, is the first internet insurance company in China. Because of its strong background, every move of Zhongan Insurance is closely concerned. On September 17, Zhongan Insurance revealed it would be listing in the main board of Hong Kong stock exchange. More details, the price range will be set at HK$53.7- 59.7, and the company plans to raise HK$10,948 million in total, it is scheduled to begin trading on the main board of the Hong Kong stock exchange on September 28. If the plan is implemented, Zhongan will become the first publicly listed fintech unit of China.

Chinese online stockbroker Tiger Brokers gets investment from US firm Interactive Brokers (SCMP), Rated: A

Tiger Brokers, a Chinese online securities brokerage start-up backed by Wall Street billionaire investor Jim Rogers, said on Thursday it has landed an investment from Interactive Brokers Group, one of the largest electronic brokers in the United States.

The Beijing-based Tiger Brokers, which offers an app to allow Chinese investors to trade on US stock markets and the Hong Kong exchanges and in Chinese A shares, did not disclose the size of the investment by Interactive Brokers.

The Top 10 Most Valuable Unicorns (Benzinga), Rated: B

The United States is home to the most unicorn companies in the world, with over 100 such companies, according to a new report by HowMuch.

8. Lu.com ($18.5 billion): China

Lu.com is an online finance marketplace which started as a peer-to-peer lending platform. Since 2011 it has service over $2.5 billion peer-to-peer loans.

 

European Union

EU’s new data privacy law creates headaches for U.S. banks (American Banker), Rated: AAA

What happens when a cookie of a Brit in London lands in the server of a community bank in the U.S. if, on an off-chance, the Brit browses the bank’s website?

It’s unclear, experts say, but U.S. banks — especially small and midsize banks — need to go find out because the European Union’s General Data Protection Regulation (GDPR) could affect them, unlike the EU privacy regulations before it.

The countdown is ticking on GDPR’s website. The law, approved by the European Parliament in April 2016, will take effect in late May 2018. It will apply to “all companies processing and holding the personal data of data subjects residing in the European Union, regardless of the company’s location,” the website said.

International

SoftBank’s Banker Stash (Bloomberg), Rated: AAA

Their presence begs a question of the Vision Fund, whose backersinclude Apple Inc. and Saudi Arabia. Is its long-term goal to get into everything from ride-hailing apps to indoor farming, or is it more about getting juicy returns?

One Fund to Rule Them All
SoftBank’s $93.2 billion Vision Fund is the world’s largest private equity fund.
Anshu Jain, Deutsche Bank’s former co-chief executive officer and key architect of its rapid growth in markets prior to the credit crunch, was an adviser at SoftBank-backed U.S. based online lender Social Finance Inc. until recently.

While SoftBank put in equity to the tune of $28 billion, its partners, including the government funds of Saudi Arabia and Abu Dhabi, hold part of their stakes via preferred instruments, also known as mezzanine capital. It means they’re owed yearly payouts, similar to a dividend.

Saudi Arabia’s Public Investment Fund, for instance, is injecting $45 billion, but only $18 billion of that is straight equity, the Wall Street Journal reported in May. The preferred units will earn about 7 percent interest annually over the life of the fund, expected to be 12 years.

Source: Bloomberg

Which banks are leading digital (and who are the laggards)? (The Finanser), Rated: A

Banks typically spend 80% of their IT budgets on legacy technology maintenance and a tier one bank could easily spend up to $300m a year on existing software which constantly needs expensive updates in order to meet regulatory requirements.

Why so much? Because most of those systems are written in programming languages that no one knows anymore. Anna Irrera writes on Reuters that 43 percent of US banks’ core systems are written in COBOL.

$3 trillion in daily commerce flows through COBOL systems. The language underpins deposit accounts, check-clearing services, card networks, ATMs, mortgage servicing, loan ledgers and other services.

In another report, Autonomous Research said the banks with the most potential to do better than analysts’ profit expectations because of digitisation were: JPMorgan Chase and SunTrust in the US, Spain’s CaixaBank, Lloyds Banking Group in the UK and KBC in Belgium.

Autonomous ranked the banks based on two criteria: their current level of digitisation and their transformation outlook. It assessed 18 attributes from customer ratings of mobile banking apps to IT expertise on the board of directors. Banks viewed as being behind on digitalisation included HSBC, BNP, Credit Suisse, Intesa Sanpaolo and Standard Chartered; the three biggest Japanese banks: MUFG, Mizuho and Sumitomo Mitsui Financial Group; and the four big Canadian banks: TD Bank, Royal Bank of Canada, Bank of Montreal and Bank of Nova Scotia.

Bitcoin’s connection to the real economy (Business Live), Rated: A

Among those leaving the building is Wayniloans (‘an online peer to peer lending platform based on bitcoin technology. Wayniloans INC was founded in 2015 and is based in Buenos Aires, Argentina’).

According to Juan Salviolo, Wayniloans co-founder:

On Wayniloans part of our business is achieved thanks to bitcoin, and in May we agreed to a sentence to reach consensus for the good of the ecosystem. This sentence was later changed to a longer agreement without our notice, and it was known as the New York Agreement (NYA). At the time we didn’t know that existing developers wouldn’t support it, or that most Latin American bitcoin users, our customers, would view it as a contentious proposal.

Which brings us back to Fickling’s point. The connection between Bitcoin and the real economy is sentiment and therefore, ipso facto, prima facie, mutatis mutandis, sentiment is the sole driver of value.

Australia

Australia ranked as the second largest alternative finance market in the Asia Pacific (Finextra), Rated: AAA

Findings from a joint study by KPMG, the Cambridge Centre for Alternative Finance and the Australian Centre for Financial Studies, released today, reveals that Australia’s alternative finance market size grew by 53 per cent from 2015 to 2016 and has now reached US $609.6 million.

According to the Second Asia Pacific Alternative Finance Industry Report, Australia has leap-frogged Japan to become the second largest alternative lending market (behind China) across the Asia-Pacific.

Outside of China, Australia now contributes 30.42% of the total market in Asia Pacific and stands well ahead of Japan (US $398.45 million) and South Korea (US $376.31 million) in terms of market size.

CCAF Asia-Pacific Report Shows Dramatic Rise for Alternative Finance in Australia (Crowdfund Insider), Rated: A

China is the biggest kid on the block when it comes to the emerging alternative finance market in the Asia Pacific region. In fact, China has the largest alternative finance market in the world driven by a fast growing economy, a highly connected population via mobile devices, and a need for access to capital not serviced by traditional state owned banks. But rapid alternative finance growth is not isolated to just China in the Asia Pacific region. Australia experienced growth of 53% from 2015 to 2016, according to the recent research report published by the Cambridge Centre for Alternative Finance. Australia’s alternative finance market has now reached US $609.6 million.

MoneyPlace CEO Stuart Stoyan echoes Bertoli’s sentiment regarding online lending;

“We have now moved on from being an ‘early stage’ and ‘cottage’ industry to be a legitimate source of funding for Australian borrowers,” he said.

Daniel Foggo, CEO of RateSetter Australia, explained that while trust and confidence in banks continues to erode, peer-to-peer lenders are building a sustainable, technology-led alternative to the bank model, offering better value to Australian investors and borrowers.

Trademarks and fin-tech (Lexology), Rated: A

Technology is an increasingly important aspect of the financial marketplace. With the rapid introduction of platforms such as crowdfunding, peer-to-peer lending and new crypto-currencies, it is important for fin-tech users and providers to protect their intellectual property (IP) from infringement and ensure they are not at risk of infringing the IP of another.

Businesses that provide fin-tech services are at risk of infringing the trademarks of other such providers. For instance, one European peer-to-peer facilitator attempted to register a trademark for their brand, only to be challenged by a similarly branded business. This resulted in an expensive negotiation that lasted for almost a year and a half.

India

RBI move on P2P lending companies may affect small players, say experts (The New Indian Express), Rated: AAA

While the recent Reserve Bank of India (RBI) notification treating all peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) is likely to bring some credibility to the business, experts say it’s a battle half won by the fintech firms.

The RBI proposal, they say, might cripple the operations of small players who won’t be able to comply with some of the new requirements such as keeping net available funds of Rs 2 crore.

APAC

Asia Pacific Alternative Finance Report “Cultivating Growth” Released (Lend Academy), Rated: AAA

The Cambridge Centre for Alternative Finance together with the Australian Centre for Financial Studies at Monash University and Tsinghua University today released their second annual alternative finance report.

Source: Lend Academy

Alternative finance volume totaled $245.28 billion in 2016, up from $103.31 billion in 2015. It’s amazing to see alternative finance continue to grow in the region. Not surprisingly, China is the main driver accounting for 99.2% of the total Asia Pacific market. China represented approximately 85% of the entire global market in 2016.

Other findings from the report include:

  • China continues to see “distinctively low levels” of institutional participation in alternative finance compared to other markets such as the US and UK, with only five per cent of peer-to-peer business lending coming from institutions in 2016.
  • In the Asia Pacific outside of China, about $1.5 billion was raised by businesses through alternative finance channels, up 72 per cent from the previous year, with an estimated 43,000 business entities utilising alternative channels of business finance.
  • In China, 72 per cent of peer-to-peer consumer lending platforms see cyber-attacks as the biggest threat to the industry, while more than 50 per cent across all platforms in China see current and proposed regulatory norms to be adequate.
  • Outside of China, 69 per cent of platforms in Japan see existing regulation as inadequate or too relaxed, while in Singapore, Australia, New Zealand and Malaysia around two thirds of platforms see current regulations as adequate.
Source: Lend Academy
South America

Venezuela Said to Be Late on $ 185 Million Sovereign Bond Payment (Bloomberg), Rated: A

The intermediaries tasked with passing along interest payments for the cash-strapped nation haven’t received the funds for an $185 million coupon that was due Sept. 15, according to people with knowledge of the matter. Investors interviewed by Bloomberg say they haven’t been paid, and brokers say their clients are still waiting on the cash.

The government has a 30-day grace period — now 25 days — to make good on the payment before triggering an event of default on the notes.

Authors:

George Popescu
Allen Taylor

Thursday March 23 2017, Daily News Digest

insurtech

News Comments Today’s main news: Kabbage to raise money for acquisitions, possibly OnDeck. Fundbox partners with Zoho. Goji launches diversified P2P lending bond. HNW Lending launches IFISA. Property Crowd launches IFISA. Today’s main analysis: Ron Suber on Fintech & fraud. Today’s thought-provoking articles: Podcast: Dominic Venturo on creating a model for innovation. Alternative finance for SMEs is even more urgent. Jail […]

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News Comments

United States

United Kingdom

European Union

Australia

Canada

China

India

Asia

Latin America

News Summary

United States

Kabbage looks to raise money for acquisitions (Reuters), Rated: AAA

Small U.S. business online lender Kabbage Inc is in talks to raise a new round of equity funding that could be used for potential acquisitions at a time when many of its peers face funding challenges, people familiar with the matter said.

One of the acquisition targets under consideration by Kabbage is rival On Deck Capital Inc, which has market capitalization of $321 million, according to one of the sources.

Ron Suber on Fintech & Fraud: A Global Challenge (Crowdfund Insider), Rated: AAA

How fraud occurs is a never-ending, shape-shifting challenge for individuals, companies and public authorities. There will always be another Ponzi or Madoff looking to separate hard-earned money from honest people via duplicitous actions. As all types of business shift online, fraudster’s will inevitably adapt to pursue their malevolent objectives.

Some of the challenges that impact online lenders include:

  • “Shotgunning” – taking out multiple loans from multiple platforms in under ten days
  • Loan stacking – multiple unsecured loans over several months

Download Ron Suber’s special report “Fintech & Fraud” here.

FUNDBOX PARTNERS WITH ZOHO TO SOLVE CASH FLOW GAPS (Fundbox Email), Rated: AAA

Fundbox, the cash flow optimization platform for small businesses (SMBs), and Zoho, the cloud-based business operating system, today announced a partnership in which Zoho will offer Fundbox to its user base of over 25M. Under the partnership, Zoho will provide access to Fundbox’s technology to streamline and automate the business borrowing experience within the Zoho ecosystem.

Fundbox addresses one of the biggest pain points for small businesses and freelancers: cash flow.  A recent Fundbox study revealed that 64 percent of small businesses are adversely affected by late payments. Over 80 percent of small business invoices are over 30 days due. This integration will allow Zoho customers approved for Fundbox Credit to advance funds tied up in their receivables so they can focus on business growth.

U.S. Bank’s Dominic Venturo on creating a model for innovation (Tearsheet), Rated: AAA

Every institution innovates differently. Our approach is to work with the businesses to understand their objectives and strategies. We want to keep a long-term eye on emerging technology and how consumers and businesses interact with technology. We’ll blend that into the product development roadmaps for the businesses. In some cases, emerging technology will look like it has a lot of potential but then you really have to see how it applies to a business, whether it solves a customer problem or pain point, and whether it can scale to a company our size. I don’t know if this is different than others, but it’s definitely our approach.

Ondeck announces extension, upsize of revolving credit facility with Deutsche Bank (Reuters), Rated: A

On Deck Capital Inc – amended its asset-backed revolving credit facility with Deutsche bank to extend facility’s maturity date to march 2019

On Deck Capital Inc – amended credit facility to increase facility’s borrowing capacity by about $52 million to a total of up to approximately $214 million

Online small-business lending recovering (Biz Journals), Rated: A

For online business lenders, 2016 was a rough year.

Two prominent fintech companies saw their market valuations drop. One small-business lender abruptly stopped issuing loans temporarily due to performance issues, while another was forced to shut down.

Lifshitz offers his view on the subject:

1. Fintech loan originations will surge in 2017.

It’s clear to me that the fintech space’s long-term themes are unchanged. The credit gap remains, and fintech companies still provide a much-needed service. Plus, they’re doing so in a far easier and seamless way than has been available to customers in the past.

Those who reacted to the negativity of 2016 are going to be surprised. Fintech companies will recover from the sector’s downbeat view. Demand and originations will continue to grow. I predict that market sentiment will come back as confidence returns.

2. Fintech companies will adapt by diversifying products and target markets.

Fintech also will get a boost from a secular trend. More millennials are joining the workforce and consuming more services online, including financial services. The generational change favors fintech companies.

3. Fintech companies could form partnerships with banks.

4. Fintech will dominate the user experience.

How one startup aims to help ‘credit invisible’ foreign workers in the U.S. (Tearsheet), Rated: A

For millions of immigrants and temporary foreign residents in the U.S., establishing a financial identity here can be complicated and expensive. Since credit reports don’t cross borders, an immigrant with an exceptional credit score in his home country may arrive in the U.S. as ‘credit invisible’ — a status that may render him ineligible for loans or long-term housing.

Nova Credit is an alternative score to assess foreign residents’ creditworthiness based on their home country credit data. It can also be used for Americans returning to the country after years working abroad. The company obtains the data through agreements with major foreign credit bureaus, a process that can only be initiated with the customer’s consent, Esipov said. Though Nova Credit is initially focusing on India and Mexico, it’s entered into arrangements with credit bureaus in Europe, Canada, Australia and the Philippines. Its revenue model is based on fees to lenders who request the reports.

BP Podcast 219: Private Lending, Turnkey Investing, and Crowdfunding Real Estate with Dr. Kenyon Meadows (Bigger Pockets), Rated: A

If you are looking to make your real estate more passive, this is one show you can’t afford to miss!

Humans to Robos: You Can’t Touch This (Think Advisor), Rated: A

Over the past five years, robo-advisors that provide algorithm-based financial advice and online portfolio management have skyrocketed in popularity. Once the robots take over, the argument goes, humans will be no more.

A commoditized approach to investing cannot incorporate potentially high-impact life events in the same way a knowledgeable human advisor can. Humans offer expertise throughout the life cycle of a client’s investments, while a robo-advisor often reduces a client to a formula. Moreover, the human advisor offers another invaluable service that the robo-advisor can’t replicate – emotional intelligence.

Industry research supports our view. The Financial Planning Association and Investopedia found that investors want a low cost, automated platform combined with personal advice from a human adviseor. Moreover, they noted that 40% of the investors surveyed revealed they are very uncomfortable with automated investing during periods of extreme market volatility.

MyPrivateBanking estimates that hybrid human/automated solutions will accumulate AUM of nearly $3.7 trillion by 2020, and $16.3 trillion (slightly more than 10% of all investable wealth) by 2025. They estimate that pure robo-advisors will have a market share of only 1.6% of total investable wealth by 2025.

New US insurtech Fabric targets parents (Business Insider), Rated: A

The number of insurtechs in the life insurance space has been in two minutes online; and Fabric Premium, a more comprehensive 20-year term policy. As of Tuesday, Fabric is live in 32 US states, with license applications in the remainder pending approval. Fabric recently raised a $2.5 million Seed round led by VC firm

Evolve Capital Partners Advises on Acquisition of LeaseDimensions (Yahoo! Finance), Rated: A

Evolve Capital Partners Inc., a specialized investment bank, today announced its client, LeaseDimensions, has been successfully acquired by GenPact (NYSE: G), a global professional services firm focused on delivering digital transformation for clients.

Founded in 1995, LeaseDimensions is a technology-enabled business processing management and information technology services company that specializes in providing finance process and technology domain expertise to equipment, vehicle finance and renewable energy companies. By acquiring LeaseDimensions, GenPact will unlock synergies across its core equipment financing businesses, offering enhanced growth and scalability opportunities while effectively providing onshore servicing capabilities.

Financial Stress Suggests Consumers are Making Impulsive Decisions in the Home Buying Process (Yahoo! Finance), Rated: A

Owners.com, an innovative online brokerage, recently commissioned a survey of more than 1,200 consumers considering a home purchase this year. The theme of this year’s spring real estate season? Stress. In fact, according to the study, 72 percent of potential home buyers stated that they expect stress in the home buying process, with many citing financial aspects as the most concerning. Additional key findings are included below.

When asked about concerns and issues when buying a home, leading financial aspects included:

  • Fear of losing earnest money deposit (64 percent)
  • Becoming “house poor” (61 percent)
  • Bidding wars driving up the price (59 percent)

Despite these financial stressors, when potential home buyers were questioned about their willingness to go over budget in a competitive bid to get into a dream home:

  • More than half (55 percent) said they were willing to go beyond their budget
  • For those willing to stretch their dollars, on average, consumers stated they were willing to go $37,809 over budget

Given these monetary pressures, savvy consumers are considering real estate models that offer opportunities to cut costs in the transaction. When asked about their propensity to handle the home buying or selling process themselves if they would be charged a lower commission, 85 percent said they were likely to consider this opportunity if it meant they had access to some of the more complicated transaction services like the appraisal or legal documents. Nearly one-quarter (23 percent) indicated that they would be motivated to work with a real estate agent or broker who would reward them financially for the work they do on their own. These consumers should look for opportunities to work with a brokerage that offers a buyer rebate or sellers an opportunity to save on traditionally high agent commissions.

Detroit Fintech Startup Autobooks Closes $ 5.5M Series A Round (Xconomy), Rated: A

Autobooks, the Detroit-based startup spun out of Billhighway in 2015, has closed on a $5.5 million Series A funding round. The investment was led by Pittsburgh-based Draper Triangle, with participation from CU Solutions Group, Baird Capital, Detroit Venture Partners, and Invest Michigan.

Autobooks, he explains, has created a set of digital tools to automatically handle a range of accounting tasks, including collecting payments owed to a business and disbursing money a business owes to others. The company licenses its software to banks and credit unions, and they in turn make the technology available to their small-business customers.

Autobooks sprang from Troy, MI-based Billhighway, a financial technology company serving large enterprise customers.

Banks are Back in the Game (Forbes), Rated: A

The introduction of online and small business lending has forced banks to rethink their strategies, but banks are now starting to play ball and shift the industry again.

In the lending industry, there’s a perception that extreme competitiveness has developed between banks and non-bank lending, but I don’t believe that’s the case. By working together, they can help small businesses – the backbone of the American Dream.

JPMorgan Chase and Bank of America took two different approaches to building out online small business lending. They were able to learn from non-bank lenders and emulate the customer experience, or partner with a non-bank lender, to improve their own offerings. Non-bank lenders like OnDeck have reinvented the customer journey. Combine that with the advantages banks have with cost of capital, customer base, underwriting credit cycles and access to data, and you have a good recipe for the future of small business lending.

But as Tufail pointed out, the migration from baby boomers to millennials will further emphasize digital channels. Tech savvy folks will want even quicker lending decisions, and that starts online.

5 ways banks are using Snapchat (Tearsheet), Rated: A

American banks have also amped up their Snapchat recruiting efforts. Not long after their launch of Snapchat Spectacles, Citibank employees began shooting videos with them to offer insights of life as a Citibank worker.

Dutch bank ABN Amro launched a Snapchat customer service capability (Snapchat “webcare”), a feature that’s yielded them 2000 followers since its launch a year ago. The bank posts stories to engage users who can ask questions using photos, videos, emojis and filters.

Through Snapchat, banks are affiliating themselves with causes close to customers’ hearts. For example, CIBC, Canada’s fifth-largest bank, launched a Snapchat pride filter to mark LGBTQ pride festivities last summer.

The Bank of Ireland pulled in celebrity influencers who use the Snapchat offer financial tips and advice to younger customers — a part of the bank’s FeelFree student reward program.

Bank of America’s Llama was used as a Snapchat lens was released last summer in conjunction with the MLB All Star Game to promote the bank’s mobile app.

Small Change Announces First Los Angeles-Based Real Estate Offering (Crowdfund Insider), Rated: B

Real estate crowdfunding platform Small Change announced on Wednesday the launch of its first Los Angeles-based offering.

Small Change describes Rosewood as a urban-minded development of four single-family units that are designed to achieve net-zero energy usage and further vitalize the area. Each of the units is designed with energy efficiency and resource conservation in mind and will also be pre-wired for solar panels with sufficient roof space to achieve net-zero energy living.

Small Change added a 10% return is projected on this investment.

Conference of State Bank Supervisors Releases Statement to Congress on OCC FinTech Charters (Buckley Sander), Rated: B

Ryan stated that the OCC’s Proposal “sets a dangerous precedent [by demonstrating that] the OCC has acted beyond the legal limits of its authority [and has] bypassed and ignored bipartisan objections from Congress, [thereby] creat[ing] new risks to consumers.” He asserted that the proposed charter would “preempt existing state consumer protections without a comparable mechanism to replace them. It also exposes taxpayers to the risk of inevitable [F]inTech failures.”

United Kingdom

Goji launches P2P lending bond (FT Adviser), Rated: AAA

Goji’s Diversified Peer-to-peer Lending Bond claims to be the UK’s first diversified peer-to-peer lending proposition with a portfolio of loans from a variety of lenders.

It is targeting returns in excess of 5 per cent over a one or three-year term.

The bond is eligible for inclusion within the Innovative Finance Isa.

HNW Lending unveils Innovative Finance ISA targeting 7% – 15% (AltFi), Rated: AAA

HNW Lending has received full approval from the Financial Conduct Authority approval to offer Innovative Finance ISAs (IFISA), with minimum investments of £5,000 per loan.

It will target returns of between 7 per cent per annum and 15 per cent per annum depending on the risk of the loans in which the investors choose to invest.

Property Crowd launches IFISA with target returns of 7-10% (AltFi), Rated: AAA

Property Crowd, the real estate crowdfunder that’s owned by global secondary market platform Global Alternatives, has launched its Innovative Finance ISA offering just days prior to the April 5th tax cut-off. The product offers investors returns of up to 10 per cent.

The minimum invest amount for the IFISA offering is £5k.

Pollen Street Capital-backed alternative lender Capitalflow has secured a new round of funding valued at £50m to finance its loans to Irish SMEs.

P2P platform Landbay is turning to crowdfunding for capital. The buy-to-let mortgage lending platform, is hosting a £1.5m equity crowdfunding round on SeedrsLandbay is already overfunded, with more than £1.7m invested so far.

Innovative Finance ISA offers sweet deal for investors – if they know it exists (The Investment Observer), Rated: A

The survey, which focused on understanding investors’ intentions for the year ahead, found priorities for savers included a fixed income (17%), the opportunity to self-select how and where their money is invested (18%) and tax efficiency (24%) were top of their list of investment priorities.

Whilst the IFISA aims to meet all of these needs, half of investors questioned said they had never heard of it. 29 percent said they do know the name but don’t know what it is and only one in 20 said they know enough about what an IFISA is to be able to explain it clearly to other people.

However, the survey also found that those that do know about IFISAs and have invested in them have invested more on averagethan in traditional Cash ISAs.  The average amount of £7,013 per person has been invested in Crowdstacker’s IFISA to date; this is compared to £5,810 in cash ISAs between 2015 and 2016.

Master Investor Show: Setting the Standard for Investment Events (Yahoo! Finance), Rated: B

The Master Investor Show brings together private investors of all portfolio sizes to hear keynote talks from celebrity investors and gain access to new investment opportunities.

Ordinary investors will get the opportunity to speak to the CEOs and founders of 100 companies from multiple investment sectors, including equity funds and retirement saving, crowdfunding, life sciences and FinTech, and alternative finance such as film funding and peer-to-peer lending.

This year’s main-stage celebrity line-up:

  • Gonçalo de Vasconcelos, CEO of SyndicateRoom, the innovative online investment platform
European Union

Alternative finance for SMEs is even more urgent (Irish Examiner), Rated: AAA

While recent Central Bank figures found that perception by Irish SMEs of the willingness of banks to provide them with credit have improved considerably in the past three years, other surveys show access to finance is still a high concern for about one-third of Irish small businesses.

This is why SMEs are looking beyond their banks for alternative sources of funding.

Among these options is peer-to-peer lending. The largest platform Linked Finance launched in 2013 and rival Grid Finance arriving the following year.

Ms Kenneally was getting frustrated with the 10-week wait for a decision on an application for a bank overdraft when a friend pointed her towards Microfinance Ireland, a government initiative to provide loans to small businesses. She received a loan of €25,000 and was impressed with the fast turnaround.

Another source is crowdfunding. The idea behind crowdfunding is to pair donors with small businesses, charities or arts events who want to raise funds for a project or campaign. Platforms include Fundit, iDonate, and Seedups.

Warburg Pincus buys stake in Swiss fintech group Avaloq (Financial Times), Rated: A

Warburg Pincus has agreed to pay close to SFr300m for a minority stake in Avaloq, Switzerland’s largest software provider to banks.

The acquisition of a 35 per cent stake by the private equity group values the company, which already serves key financial centres, in excess of SFr1bn ($1bn), the private equity group said.

Avaloq has more than 2,000 employees and serves 155 banks and wealth managers in financial centres, including London, Frankfurt and Paris. It generated revenues of SFr533m in 2016, which represented a 10 per cent increase from a year earlier.

The private equity group has recruited several leading banking figures to sit on the Swiss company’s advisory board. Among them are Javier Marín, the former chief executive of Santander, Stefan Krause, former chief financial officer at Deutsche Bank and Jacques Aigrain, former chief executive officer at Swiss Re.

Here’s why fintech will make banks stronger (City A.M.), Rated: A

Brian McCabe, who chairs the fintech working group at the Fintech and Payments Association of Ireland, says existing banks and financial players won’t get weaker at the expense of new entrants.

Collaboration will be a feature of fintech’s next phase as traditional banks, financial institutions and insurance companies in Europe seem to recognise the importance of becoming smarter, more efficient and customer-focused.

Now is the chance for banks to take what fintech pioneers have to offer, and use it to make themselves more competitive.

Australia

Commonwealth Bank of Australia and Austrade sign fintech collaboration agreement (Finextra), Rated: A

The Commonwealth Bank of Australia (CBA) and Austrade have signed a new collaboration agreement to support the flow of fintech innovation between Australia and the UK.

The agreement will be used to target and attract fintech investment to Australia, and assist Australian fintech companies to access the UK market.

Canada

Investing in the Fintech Revolution: How Glance Technologies is innovating mobile payments (OTC Markets), Rated: A

Now, the creator of PayByPhone parking app has set his eyes on the restaurant industry, creating the Glance Pay Mobile Payment App under Glance Technologies Inc. (CSE:GET) (OTCQB:GLNNF) to revolutionize a C$650 Billion restaurant bill payment industry. Glance Pay allows diners to pay their restaurant bill in seconds using their mobile phone while automatically receiving exclusive restaurant rewards. Gone are the days of waiting for the server to bring around the card machine. Restaurant owners benefit from automatic bill collection, built-in loyalty programs, turn-key in-app marketing and valuable customer experience feedback.

China

Jail sentences for P2P lending scam (Shangai Daily), Rated: AAA

FORTY-ONE people in the city’s first and high-profile P2P fraud case involving nearly 700 million yuan (US$10.2 million) have been jailed, according to Yangpu District prosecutors.

The 41 were staff members from five outlets of Baiyin Wealth Co, including one in downtown Xintiandi area. Sentences ranged from six to eight months in prison, with some granted a reprieve.

Other suspects are either being investigated or are waiting to be tried.

India

Peer to Peer Lending Advantages and Disadvantages [Case Study] (Scalar), Rated: A

Peer to Peer lending advantages and disadvantages – lenders perspective

Advantages

  1. Higher interest

For example, a 5 year bond with a fixed rate interest of an Indian bank offers 3% AER, while the same amount has the potential to earn 6.32% to 30% p.a. through a peer to peer website, on the same tenure.

  1. Diversification
  2. Freedom to commit

Disadvantages

  1. Waiting period
  2. No legal laws
Asia

How transparency is driving Asian asset managers to technology (The Asset), Rated: A

The need for improved transparency is pushing Asian asset managers to use more sophisticated technology than they’ve ever used before in the management of their portfolios and to boost the overall efficiency of their businesses.

Another trend among Asian asset managers is using technology as a way to drive transparency between what their internal stakeholders and investment teams are actually reading and what is driving their investment decision.

Asset managers are also using this technology to look at broker performance which involves having all their data, primarily data on trading positions and transactions, on one buyside platform.

Latin America

Latin American Venture Capital Firms Invest in MPOWER Financing (NBC12), Rated: AAA

VARIV Capital, a Latin American venture capital firm, and Chilango Ventures, an investment firm with offices in San Francisco and Mexico City, have invested in MPOWER Financing () to help the innovative fintech firm expand its presence in Latin America and attract a greater number of high-potential students to America’s best colleges and universities.

Latin American students already represent 25 percent of MPOWER’s outstanding loan portfolio, with Mexico representing the third-largest student population currently studying in the U.S. through MPOWER’s financial support.

With the addition of these two new equity investors, MPOWER Financing has assembled a diverse global investor base that is enabling the firm to fulfill its mission to provide educational loan support to high-potential, international students who do not fit within traditional credit assessment models. Currently, MPOWER Financing, founded in 2014, has a pipeline of more than $120 million in loan applications from students in Asia, Europe, Latin America and Africa which it expects to fill in 2017. The recent investments are part of the closing of MPOWER Financing’s Series A funding.

Authors:

George Popescu
Allen Taylor

Monday February 27 2017, Daily News Digest

funding circle sme income fund

News Comments Today’s main news: SoFi raises $500M for international expansion. Funding Circle business jumped 50% post-Brexit. Bank lending in UK soars. Today’s main analysis: My adventures in various p2p lenders. How P2P funds have fared over the last 12 months. Today’s thought-provoking articles:  Rise of P2P in Korea puts government on edge. Canadian regulators welcome FinTechs. United States SoFi […]

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United Kingdom

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United States

SoFi Raises $ 500 Million Led by Silver Lake for Global Expansion (Bloomberg), Rated: AAA

Social Finance Inc. said it raised $500 million in a financing round led by private equity firm Silver Lake Partners. It plans to use the funds for international expansion of its online lending business and development of new financial products.

Other investors in the round include SoftBank Group Corp. and GPI Capital, and the funding brings SoFi’s total investment to $1.9 billion, the company said. Several sovereign wealth funds from countries in Asia and Europe invested as well, said Mike Cagney, SoFi’s chief executive officer and co-founder. The international group will purchase SoFi’s loans in addition to taking an equity stake, he said.

SoFi said it plans to develop new personal finance tools, including mobile deposit, credit and payment products that will be rolled out this year. It also anticipates bringing its lending products to Australia and Canada by the end of the year.

My Adventures in Fintech (Wealth Management), Rated: A

Two major factors have come together to make fintech platforms so popular. First, the rise of smartphones puts the apps right into the hands of millions of users who feel alienated by slow-moving traditional banks. Second, the financial crisis of 2008 eroded the borrowing ability of many middle-class individuals and small business owners as banks curtailed unsecured lending and other high-risk loans.

From 2010 to 2015, investment in fintech has grown from $1.8 billion to $22.3 billion, according to Accenture.

Lending Club

I started investing in Lending Club in 2011. My experience is limited to being an investor. I am a fractional owner in a total of 3,167 notes (see Figure 1).

So, if any one note defaults, my downside is generally limited to $25. Of those notes, 1,387 are current (that is, the individual borrowers are current in their payments), 1,269 notes have been fully paid off, and 432 notes have defaulted and been charged off.

 

My 12.97 percent net annualized return will probably be reduced by 1 to 2 percentage points given the predictable defaults, but I’m very satisfied with the results to date.

I faced two major issues in managing a P2P account. First, how to select notes. Second, how to manage the small amounts of cash that accumulate every day. The Lending Club website lists tens of thousands of notes available for investment at any time, each with details about the underlying borrower such as income, credit score, whether he or she owns or rents, state of residence, purpose of loan, etc. At first, I inspected each note and selected the ones that appealed to me, but that can be a full-time job and is probably counterproductive. It’s much easier, and probably more reliable, to trust the Lending Club automated investment system.

Upstart

Almost all Upstart borrowers are recent college graduates at the beginning of their careers. This population has a much thinner conventional credit history, so Upstart developed an algorithm that looks beyond traditional credit data such as earning potential and employability. To invest with Upstart, you must be an accredited investor.

But lately, the platform is encouraging investors to determine a risk grade then automate the selection. Risk grade notes run from AAA to D. Almost every borrower signals that they intend to use Upstart funds to consolidate high interest credit card debt.

I have funded on a fractional basis 140 three-year notes from exclusively Grade B borrowers. Eight notes have matured. One borrower has defaulted. The value of my account is $13,933. I’ve made $452 in interest and my annualized IRR is 7.24 percent (Figure 3). Based on Upstart’s performance statistics (Figure 4), my performance of 7.42 percent is apparently better than the average across all notes (5.72 percent).

Acorns

I easily linked Acorns with my checking and credit card account more than a year ago. Since then, it has been systematically rounding up my purchases to the next dollar and investing the difference in a diversified portfolio of ETFs.

At the end of a year, I had contributed a total of $283.57, and earned $3.17 in dividends. I’ve paid a total of $8 in fees. The current value of my account is $282.23—not too great of a return until you consider I chose the “conservative” balanced portfolio with 39 percent in government bonds and 18 percent in corporate debt.

Fees are $1 per month or 0.25% per year, depending on your balance. The app is free and fees are waived to college students for four years.

Weekly Online Lending Snapshot – February 24, 2017 (Orchard Platform), Rated: AAA

In China, as reported by the Beijing Bureau of Financial Work, nine out of 10 of the roughly 5,000 lending platforms across the country may not survive the coming year as the government begins a well-telegraphed tightening ofregulatory supervision of these lending platforms. NatWest Bank, in the U.K., announced the launch of a digital platform for small and medium-sized businesses to apply for unsecured loans up GPB$150,000. Australian small business lender Prospa raised an AU$25 million funding round led by Sydney-based AirTree Ventures valuing the firm at AU$235 million.

3 Industries Being Disrupted by Crowdfunding (Entrepreneur), Rated: A

1. Corporate finance: From software to farm equipment

Large finance organizations can use it as a catalyst for gaining small businesses who seek to harness leased products that are tailored to them specifically. What’s more, the lower cost credit of the products they offer will appeal more to businesses that pay sky-high APRs.

For leaseholders of larger equipment, crowdfunding platforms will allow leaseholders such as farmers to finance crops and equipment from other farmers and associates.

2. Real estate: From housing to business establishments

Before crowdfunding, closing an actual real-estate deal required back and forth passing and signing of documents among lawyers. Beyond being slow, the process often added up to thousands of dollars in legal fees. Crowdfunding allows businesses of all sizes to bypass the monotonous process and dodge expenses. What’s more, real-estate crowdfunding allows potential investors access to a wider array of deals.

3. Consumer lending: Cars and home appliances

For financial institutions, this means learning to leverage a crowd’s interest to inform their lending offers. As the trend continues, new crowdfunding platforms will pop up to cater to specific lending verticals. Imagine a crowdfunding space where consumers can get loans for anything related to transportation or kitchen appliances. In this way, brands will be able to save on financing costs while gaining on capital returns.

AUTOFI UNVEILS ONLINE MULTI-LENDER SALES SOLUTION FOR USED CAR DEALERS (iLendingDirect Email) Rated: A

Today AutoFi, a financial technology company that is transforming the way cars are bought and sold, announced the launch of the first fully online sales and multi-lender financing solution for used car dealers. Financing on AutoFi’s platform will be provided by its lender network of banks, speciality lenders, and credit unions. Today, the company announced that its credit union financing will be offered in partnership with iLendingDIRECT.

The AutoFi platform is the first online point-of-sale solution for auto finance. It allows customers to purchase and finance a car completely online, either through a dealer’s website or an in-store digital experience. The company recently announced the world’s first online car sales and financing solution for new car dealers in partnership with Ford Motor Credit. Today’s announcement further expands AutoFi’s ability to serve the multi-billion-dollar used car sales market through its partnership with iLendingDirect.

AutoFi’s platform will now allow used car buyers to research a vehicle on the dealership’s website; select “Buy Now”; receive an automated credit decision; and get loan offers from banks, specialty lenders and iLendingDIRECT’s credit union network who compete for the car buyer’s business in real time.

Consumers can then customize their financing deal by selecting down payment and loan  terms; choose vehicle protection products; and e-sign all financing documents online. The new platform gives used car dealers and buyers the ability to transact online with competitive financing options in a fully automated process.

Lending Club Alters Grace Period for Borrowers (Crowdfund Insider), Rated: A

Lending Club (NYSE:LC) has tweaked the way it manages the “grace period” for borrowers when they make payments past the due date. Previously, borrowers received a 15 day grace period for any penalties on payments less than 15 days late.  Beginning today, Lending Club requires borrowers to pay the additional accrued interest as a result of their late payment.

RentRange Identifies 25 Markets with the Largest Rental Rate Increases (MarketWatch), Rated: A

RentRange, one of the premier providers of market data and analytics for the housing industry, today released data ranking the top 25 U.S. Metropolitan Statistical Areas (MSAs) by average rental rate increase for single-family1 homes between the fourth quarter (Q4) of 2016 and the same quarter in 2015. The data analysis also identified the average vacancy rate within these markets in Q4 2016.

The Q4 2016 RentRange® data identified rental rate increases in areas like Cape Coral and Portland, both of which moved up the list into the top five, as well as newcomers including McAllen, Denver, Boston, Nashville and Miami. While rents remain high in the Bay Area, San Francisco dropped several positions, indicating that the year-over-year rent change was not as significant as seen in past years. Comparatively, San Jose made the list as a new addition in Q4 2016.

Analyzing the average vacancy rate, which demonstrates the percentage of all available units in a rental property that are vacant or unoccupied at a particular time, shows that the highest rates, as reflected from the list, are seen in the Southeast region, where vacancy rates range from 10.5 percent in Charleston to 20.4 percent in Myrtle Beach. In these areas, builders and investors may need to compete for a limited number of renters. An oversupply of new properties can drive up the vacancy rate and eventually push rental rates down. This scenario is currently happening in Myrtle Beach, where more than 3,100 new homes were built in 2015, a 94 percent increase compared to two years earlier.

United Kingdom

Brexit Terrified This CEO. Then Business Jumped 50% (Bloomberg), Rated: AAA

At sunrise on June 24, Samir Desai rushed to his offices near St. Paul’s Cathedral in London. Britain had just voted to quit the European Union and he knew his staff at peer-to-peer lender Funding Circle Ltd. would be freaking out.

As the pound tumbled and the government quaked following the resignation of Prime Minister David Cameron, Desai walked the floor of Funding Circle’s whiteboard-decked offices, fielding anxious questions. The non-British EU citizens feared they’d have to leave the country. The sales team feared that investors funding the firm’s loans to small businesses would bail.

In the eight months since the Brexit vote, Funding Circle has been on a tear. The firm originated more than 530 million pounds ($685 million) in loans during the second half of 2016, a 50 percent jump from the same period a year earlier, according to AltFi Data Ltd., which analyzes the British peer-to-peer industry. In the fourth quarter, Funding Circle’s U.K. division became profitable for the first time.

The question now is whether Funding Circle’s post-referendum run has legs. Meekings theorizes that volume has been driven by the Bank of England’s decision to lower interest rates to 0.25 percent from 0.50 percent in August. That spurred more retail investors to chase yield in the firm’s loans, which are returning an average 6.2 percent annually. Meantime, credit-hungry borrowers may also be flocking to Funding Circle as banks retrench from lending to small companies.

The great British credit boom: Bank lending soars in January (P2P Finance News), Rated: AAA

Figures from the British Bankers Association (BBA) showed that total consumer borrowing growth rose to £538m, more than doubling from December’s figure. This was primarily driven by the increase in personal loans and overdrafts, which rose to an eight-month high of £422m.

Meanwhile, bank lending to businesses rose by £3.4bn in January, which was the largest increase since January 2015.

Banks tightened up lending after the financial crisis which had a detrimental impact on economic recovery, although it created an opportunity for the peer-to-peer lending sector.

At 44,657 in January, mortgage approvals for house purchases were up 18.6 per cent from their August 2016 low, although they were still 2.5 per cent below the January 2016 level.

Gross mortgage borrowing came in at £13.8bn, with re-mortgaging approvals 15.7 per cent higher year on year.

How P2P funds have fared over the past year (P2P Finance News), Rated: AAA

Net asset value (NAV) returns range from three per cent to 20 per cent while discounts to NAV have fallen as low as 20 per cent.

P2P Global Investments

Almost 60 per cent of the assets are in the US, with 23.2 per cent in Europe, 8.7 per cent in cash, 6.4 per cent globally and 2.2 per cent in Australia.

Over the past 12 months its NAV has grown 5.34 per cent and it is currently on a discount to premium of 20.8 per cent.

SME Loan Fund

Almost two thirds, 63 per cent, of assets are in the UK, with 13.1 per cent in the US, 18.6 per cent in Europe and the rest in cash.

The trust has seen its NAV total return grow by seven per cent over the past 12 months and it is currently trading at a discount to net asset value of 10.3 per cent.

Ranger Direct Lending

The ordinary income share class is currently on a discount to NAV of 10.5 per cent while the zero preference and c share classes are on 2.2 per cent and 1.2 per cent respectively.

Funding Circle SME Income Fund

Its regional exposure is currently broken up as 73 per cent in the UK, 17 per cent in the US, two per cent in continental Europe and eight per cent in cash.

It has seen its NAV deliver total returns of 6.7 per cent over the past 12 months and is currently on a premium of 1.6 per cent.

VPC Specialty Lending

The investment trust is composed of 36 per cent marketplace loans and 39 percent in balance sheet investments, with the rest in shares, securitisation and cash.

Its NAV has returned 3.1 per cent over the past year and it is trading at a discount to NAV of 19.4 per cent.

Honeycomb Investment Trust

It has returned 8.7 per cent over the past 12 months and is on a premium to NAV of 7.7 per cent.

RateSetter Forms Partnership With Accountancy Advisor TaxAssist to Engage With SMEs (Crowdfund Insider), Rated: AAA

Online lender RateSetter has formed a partnership with accountancy advisor TaxAssist Accountants to help engage with small and medium-sized enterprises (SMEs). TaxAssist Accountant notably specializes in all businesses with a turnover of £2 million of less. It has more than 290 locations throughout the UK.

I’d use peer-to-peer lending to beat the banks (Moneywise), Rated: A

This growing market, which is now regulated, is dominated by three players – Funding Circle, RateSetter and Zopa. The annual interest on offer varies, ranging from 2.9% (RateSetter) through to in excess of 7% (Funding Circle), but so does the degree of risk you will take.

While the 2.9% interest on offer from RateSetter comes with the backing of a ‘provision fund’ (designed to protect your capital from losses if loans turn bad), the 7% from Funding Circle has no such underpin. If a loan goes bad, your capital could be compromised.

My peer-to-peer money is spread across 16 businesses operating in everything from retail through to IT. It is effectively an investment play on UK plc. When the economy is strong, my companies are more than likely to keep repaying the loans they have secured.

Welendus Live on Seedrs (Welendus Email), Rated: A

I am pleased to announce that Welendus is now back live on Seedrs. I would like to invite you to visit our campaign and watch our video at (

The Funding Network celebrates 15th anniversary (UK Fundraising), Rated: B

The Funding Network celebrates its 15th anniversary this March, having so far raised over £9.8 million for more than 1,450 social change projects through its live events since its 2002 launch.

TFN is celebrating with a special event on 16th March at the Funding Circle’s Funderbar in London.

International

Marketplace lending news roundup 27/02/17 (AltFi), Rated: AAA

In the UK, the overall market for alternative finance has just ticked over £10bn – including crowdfunding – in terms of the amount of money lent and invested into the equity of companies via crowdfunding platforms.

UK P2P business lending Growth is still in rude health as proven by AltFi Data’s number crunching, in the same week that Funding Circle tops £2bn mark. In the funds world, P2P GI has continued its share buyback strategy while the SME Loan Fund may be about to see an investment management change by New York-based SQN.

Not so good for US-based OnDeck, which despite a surge in Q4 lending is looking to cut jobs amid rising losses.

Financial technologies that make banks better (Finextra), Rated: A

A Reykjavik-based company strongly commits to improving the way the banks function. Meniga is, mostly, known for its money management software that allows the banks to start offering great personal and business financial management applications to their clients without investing heavily into the development.

Recent developments in Payment Services Directive 2 make banking APIs so important as never before. On the one side, banks are required to provide open technology for accessing their customers’ data to third parties. And, instead of investing into the development of open APIs, a bank can pick the technology up from Kontomatik as it already has the API in place. On the other side, smart banks will not only release open APIs but will also do everything at their disposal to benefit from the access to the data of other banks.

Started in 2009, it has taken Kabbage roughly 5 years to come up with a white-label solution that allows financial companies to use its technology for assessing the risks and issuing the loans online. With white-label technologies from Kabbage, a bank should be able to launch a great B2B lending platform without investing into development, testing and implementation of the modern risk assessment models.

Australia

US Market leader delivers keynote address to AltFi Australasia (The Bull), Rated: A

A reluctance by banks and government agencies to share data with alternative lenders is driving up the cost of borrowing in Australia, a global fintech leader told the AltFi Australasia conference in Sydney today.

Rob Young, Senior Vice President, International at OnDeck Capital Inc, said that a lack of open data is a major issue for alternative lenders in the fintech space.

He explained that in Australia, there is limited sharing of credit, banking or tax data, while the UK’s open data regime has forced banks to share customer data and open up their APIs to third parties.

“The UK is a great example of where open data has been in place for several years, the alternative finance sector is flourishing, and even the banks have benefited by opening up cross-sell opportunities within their own businesses. It’s a win-win for the lending sector and its customers,” Mr Young said.

Fintech Business Awards announces 2017 winners (EconoTimes), Rated: B

Midwinter Financial Services that has developed a range of cutting edge financial planning software packages, has been recognized for the Fintech Business Excellence Award for company category, having been awarded the highest points of all winners.

Other awards in the fintech category include Fintech Mentor of the Year that was awarded to Claire Wivell Plater from The Fold Legal and Fintech Start-Up of the Year given to Valiant Finance. Apart from this, Crowdfunding Innovator of the Year, Insurance Innovator of the Year, Payments Innovator of the Year, Investment Innovator of the Year, among other awards were also recognized.

China

The day of reckoning is nigh for fintech startups (SCMP), Rated: A

What started as a venture capital-driven, primal scream against the perceived backwardness of traditional banks and financial institutions has run into problems that no other new technology has faced.

The last two years saw an expansion of incubators and platforms to cultivate fintech startups. And this year, I am observing clues in major fintech centres where leaders are quitting startups and bank sponsored vehicles.

The hope and dream of being able to disintermediate financial institutions and the entire industry is unrealistic given how much protection and restriction is needed to prevent another financial meltdown that threatens to cast a 1930s style depression across the world.

Besides BlackRock’s acquisition of the roboadvisor site FutureAdvisor in 2015 (valuing it between US$150 million to $200 million) other asset managers like Fidelity and Schwab believed they could accomplish roboadvisor front ends on their own.

So approaches and results are very mixed.

India

Fintech aims to facilitate Rs. 100 cr. loan in 100 days (The Hindu), Rated: A

Peer-to-peer lending platform Oxyloans is targeting to facilitate disbursement of Rs. 100 crore as loans in 100 days beginning March 1. The firm, which neither mobilises deposits nor disburses loans, earns revenue from the commission — 1.5% from lenders and 2.5% from borrowers — it charges.

The loans disbursed through the platform are typically short-term, from 6 months to 11 months, and the rate of interest ranges between 14% and 36%.

India to Get Its Own Fintech Hub in Vizag (NewsBTC), Rated: A

India has been making a lot of noise in the banking, fintech and cryptocurrency sector lately. The country, currently heading towards a financial revolution now has plans to set up a fintech hub. The proposed fintech hub will be established in the city of Vizag.

According to reports, the concerned government has allocated resources to set up the necessary infrastructure in the “Fintech Tower”. Slated to go live next month, Thomson Reuters and Visa will be among the first few companies to set up shop in the Fintech Tower.

Asia

Rise of peer-to-peer financing puts gov’t on edge (Korea JoongAng Daily), Rated: AAA

Starting this week, a guideline that sets ground rules for P2P platforms will go into effect nationwide. Other steps to safeguard investors from risk include ongoing efforts by the Financial Services Commission, the country’s financial regulator, to make credit businesses linked to P2P platforms register with the FSC regardless of size.

According to Crowd Institute, a research center in Korea dedicated to P2P finance, the P2P market size grew to as much as 700 billion won ($616 million) by January this year, growing almost 14 times from 2015. The number of P2P platforms also skyrocketed to 131 in January this year from 16 in January 2016.

The Crowd Institute projects that by the end of this year, the size of the market will grow to as large as 1.5 trillion won.

Of the 700 billion won already in the P2P market, over half, or around 408 billion won, is in real estate, according to the institute.

Roof Funding’s model is project financing, which means investors crowdfund a project to build a building from scratch. If the builder goes bankrupt, the ownership is transferred to the investors, and they can choose to auction off the building or sell the units after completing construction with additional funding.

For instance, interest rates on one-year fixed deposits at local commercial banks as of Feb. 21 range from 1.10 percent to 1.75 percent, according to data from the Korea Federation of Banks.

Despite the rising popularity of real estate P2P platforms, financial authorities in Korea warn that the investments may not be as safe as they seem. In one case, a firm called Money Auction declared bankruptcy last November after it was saddled with debt. Founded over a decade ago as one of the first P2P platforms in Korea, it faced a liquidity crunch after payment delays led the firm to owe over 4 billion won to investors.

Those working in the P2P industry note that many apartments are struggling to attract buyers, and when the market suffers, smaller buildings like duplexes and multiplexes (the main investment targets of most P2P platforms) will likely feel the impact first, jeopardizing lenders’ interest and principal.

Lee complains that some clauses in the guideline are too restrictive. “For instance, about 80 percent of all investment made through January exceeded 10 million won, which is especially the case for real estate P2P projects,” he said. “If investors can only invest less than 10 million won per year, it is possible that the entire industry will take a heavy blow.”

SBXbank to Launch Crypto Currency Marketplace (JakartaGlobe), Rated: A

Smart Banking Exchange, better-known as SBXbank, a London-headquartered company, is set to launch a unique marketplace called “Coinxmart,” in which transactions are done using crypto currency, an alternative digital currency not dissimilar to the old bitcoin.

Abdul Rahman Said, SBXbank’s Asean vice president of marketing, told the Jakarta Globe in an interview on Wednesday (25/2) the company seeks to sink up to Rp 100 billion ($7.5 million) into developing financial technology services that offer not only e-commerce, but also peer-to-peer investment and peer-to-peer lending, all of which will use a crypto currency.

Sedania to buy fintech firm for RM12m (The Star), Rated: A

Technology empowerment company, Sedania Innovator Bhd, has proposed to acquire a syariah-based financial technology (fintech) company, Sedania As Salam Capital (SASC), for RM12 million.

In a statement on Monday, Sedania Innovator said the purchase consideration would be satisfied via RM4 million cash, and RM8 million via the issuance of 25.8 million new Sedania Innovator shares at 31 sen each.

Sedania Innovator said under the proposed acquisition, SASC would provide a profit guarantee of RM1.5 million per year for the financial years ending Dec 31, 2017 and 2018.

To-date, it has processed over 300,000 personal financing transactions worth more than RM25 billion.

Canada

Canadian regulators welcome fintech amid rising global oversight interest (Reuters), Rated: AAA

Recognizing the need to shift its regulatory focus to accommodate the use of advanced technology in the delivery of financial services, the Ontario Securities Commission (OSC) has launched initiatives aimed at providing compliance advice and flexible regulatory requirements for fintechs.

The OSC Launchpad initiative provides some flexibility in regulatory compliance for fintechs with the aim of making it easier for startups to innovate. The types of relief or support available through the OSC LaunchPad include informal guidance on regulatory compliance matters from OSC staff and, on a case-by-case basis, eligibility for time-limited registration or exemptive relief. At the same time the OSC has stated (here) that it will continue to scrutinize fintechs for potential investor protection risks.

While the OSC is the first provincial securities regulator to undertake formal fintech initiatives, other provinces and territories have begun to recognize a need for more flexibility in overseeing fintechs. When Lending Loop, a peer-to-peer lending platform, began in Canada in 2015, it had to obtain approval from provincial securities regulators for a prospectus and comply with other securities-related regulatory requirements. The Toronto-based company subsequently paused its operations and re-launched in late 2016 under an exempt market dealer license (here) that was granted by the OSC.

Authors:

George Popescu
Allen Taylor

Wednesday February 22 2017, Daily News Digest

Marcus

News Comments Today’s main news: OCC addresses risk management for bank-MPL relationships. IFISAs dogged by further delays. Radial integrates with Klarna. Bitbond raises $1.2 mil. Today’s main analysis: Marcus marks the end of traditional banking. Today’s thought-provoking articles: 3 upcoming changes to private student lending. The Pulse of FinTech infographics. United States OCC establishes risk management expectations for bank-MPL […]

Marcus

News Comments

United States

United Kingdom

European Union

International

Australia

News Summary

United States

OCC’s Third-Party Risk Management Expectations for Bank Relationships with MPLs (Pepper Hamilton LLP), Rated: AAA

On January 24, the Office of the Comptroller of the Currency (OCC) issued a new bulletin, OCC Bulletin 2017-07 (Supplemental Examination Procedures for Risk Management of Third-Party Relationships). The stated purpose of the bulletin is to assist bank examiners in evaluating the third-party risk management practices of national banks and federal savings associations (collectively, banks). For the most part, Bulletin 2017-7 reinforces existing OCC supervisory expectations. In several notable respects, however, the bulletin breaks new ground, including by addressing relationships with marketplace lenders.

In establishing risk management expectations for relationships between banks and marketplace lenders in its new bulletin, the OCC is following the lead of the Federal Deposit Insurance Corporation (FDIC), which issued its own supervisory expectations for these relationships in late 2015. As in the case of the FDIC’s guidance, the OCC bulletin broadly defines the term “marketplace lender” to include any “companies engaged in Internet-based lending businesses (other than payday lending).”2 Specific examples of marketplace lenders stated in the OCC Bulletin include online companies that make small business loans, consumer loans, student loans and real estate loans.3

If a bank plans to contract with a marketplace lender to “perform some, if not all operational functions, including processing, underwriting, closing, funding, delivering, and servicing of loans,” OCC Bulletin 2017-7 requires the bank to have sufficient support “systems, controls, and personnel [in place] to adequately support the volume of planned loan origination, servicing, or collection activities.”4 In addition, if the bank is considering contracting with a marketplace lender to originate or purchase loans, the bank must determine whether the lender’s underwriting methods are “new, nontraditional, or different from the bank’s underwriting standards.”5 Finally, if the bank will be investing directly or indirectly in, or will be providing warehouse lines or other credit facilities to, any third-party lender, including a marketplace lender, the bank must determine whether the third-party lender’s underwriting standards are consistent with the bank’s own underwriting standards.6

Goldman Sachs’ Recent Move Marks The End Of Traditional Banking (Newsmax), Rated: AAA

At the end of 2016, Goldman Sachs launched a new online lending platform called Marcus. The move into online lending by one of the most successful investment banks in the world is a telling move for two reasons.

First, it’s a good indicator of the post-financial crisis banking industry.

Second, rising compliance costs—combined with over seven years of zero-interest rate policy from the Fed—was a bad environment for bankers.

Peer-to-peer lending has grown from nothing a decade ago to be a $26 billion industry in 2015. However, it still only accounts for 2% of the market for unsecured consumer credit.

Goldman Sachs is using Finacle, a software program owned by Infosys, to run the Marcus lending platform. With this software, Marcus customers will be able to fully customize their loan parameters within guidelines set by the bank.

Gone are the days of negotiating with a banker on loan terms. The Finacle software is fully automated and will process the transactions in real time. It’s a fully operational “bank within a bank” that only relies on approximately 200 Goldman employees, according to Bloomberg.

Marcus is not a peer-to-peer lending platform. Instead, Goldman will be making loans against its own balance sheet. This will give the bank more flexibility with setting competitive loan terms and fees.

According to a Morgan Stanley report published in 2015, the effective annual interest on the peer-to-peer lending platforms analyzed was on average 6.8% lower than those offered by banks.

All the while, P2P lending platforms have historical net annualized returns between 5% and 10%. Compare that to investing in a 5-year US Treasury note that yields less than 2% today, below the reported rate of inflation, and can you see why Goldman Sachs got involved with online lending.

3 Upcoming Changes in Private Student Lending (US News), Rated: AAA

In fact, the day after Trump was elected to office, the stock price for Sallie Mae Corp., a large student loan lender, shot up nearly double from $7.10 per share on Election Day to $12.47 on Feb. 15.

For prospective private student loan borrowers, here are a few expectations that experts say consumers may see in the next year or two as a result of changes at the federal level.

1. More lenders entering the private student loan market: Matherson says easing of lending restrictions will lead to more lenders entering the marketplace over the next two years.

Experts say large commercial banks that left the private student lending market after the 2008 financial crises may also return.

2. Interest rate hikes for both variable and fixed-rate private loans:The Federal Reserve is signaling that it’s on course to raise the short-term interest rate this year.

Lending experts say they expect to see a 1 percent rise in interest rates for private student loans over the next two years. Those increases, they say, will affect both variable and fixed-term rates on private education loans.

3. A growing number of start-ups offering income-shared agreements: Under an income-shared agreement or ISA, students use funds from an investor to pay for college and in turn agree to make payments based on a percentage of their income for a set period of time after they graduate.

Casey Jennings, chief operating officer at nonprofit 13th Avenue Funding, which works with low-income students, says clarification of the legislation will make it much easier for financial and educational institutions to enter this space.

Prosper Marketplace President Ron Suber Joins Unison as an Investor and Strategic Advisor (PR Newswire), Rated: A

Unison Home Ownership Investors, the leading provider of home ownership investments, announced today that Ron Suber, president of Prosper Marketplace, has become an investor in the company and has taken on a significant advisory role as the company is experiencing a period of unparalleled growth, opportunity and availability.

A financial services industry veteran, Suber brings to Unison a wealth of experience across multiple disciplines. As an influencer in the financial technology space, Suber will look to grow the home ownership investment category through his relationships with marketplace lenders, mortgage companies, realtor groups and banks.

LendIt Announces 2017 PitchIt Finalists (PR Newswire), Rated: A

LendIt, the world’s largest show in lending and fintech, today announced eight finalists for its fifth PitchIt @ LendIt competition. In partnership for the first time with 500 Startups, the world’s leader in investing and mentoring, and sponsored by Marqeta, PitchIt is a leading global competition for fintech startups to earn mentorship, endorsement and exposure to institutions, investors and broad visibility.

This year’s finalists were chosen from nearly 300 high caliber applicants covering all areas of fintech including insurtech, blockchain, payments, online lending, credit and artificial intelligence.

The eight 2017 PitchIt finalists are:

  • Nova Credit
  • StackSource
  • Alloy.co
  • Qwil
  • Aella Credit
  • Real Atom
  • Float Credit
  • WeTrust Platform

The finalists will pitch their concepts at LendIt USA 2017 on March 7 to a panel of judges from the venture capital community including: David Teten, ff Venture Capital; Kareem Zaki, Thrive Capital; Ben Malka, F-Prime; and Joel Monegro, Union Square Ventures.

Kabbage preps small business loan deal (Global Capital), Rated: A

Online small business lender Kabbage is marketing a $500m securitization of loans to small and medium sized businesses which will be used to refinance an existing deal from 2014.

Guggenheim is the sole lead of the $500m deal, which is expected to officially begin marketing to investors in the week of March 6.

Kroll Bond Ratings has assigned an A rating to the $370.37m ‘A’ notes, and BBB to the $79.37m ‘B’ notes.

Marketplace deals readied, with innovations (Structured Credit Investor), Rated: A

Kabbage is marketing its first marketplace loan ABS of the year and its second since inception. Meanwhile, SoFi is in the market with its second consumer loan ABS – SoFi Consumer Loan Program 2017-2 – backed by US$343m of consumer loans and comprising several elements that differ from its previous securitisation.

Kroll Bond Rating Agency Assigns Preliminary Ratings to Arcadia Receivables Credit Trust 2017-1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by Arcadia Receivables Credit Trust 2017-1 (“ARCT 2017-1”). This is a $213.137 million consumer loan ABS transaction that is expected to close March 6, 2017.

This transaction is the first rated securitization of prime unsecured consumer loans facilitated by LendingClub Corporation’s (“Lending Club” or the “Company”) proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com(the “Lending Club Platform” or the “Platform”).

Why big banks are helping financial tech startups (Tradestreaming), Rated: A

Finlab, short for Financial Solutions Lab, is an 8-month startup accelerator program funded by JPMorgan Chase and run by the Center for Financial Services Innovation. It just sent out its third call for applications from financial technology startups working on tools for underserved populations. It’s an example of how banks are now partnering rather than competing with startups — a trend that’s grown quickly over the past couple of years.

Finlab began two years ago, and winners get $250,000 of capital, one-on-one mentorship and networking opportunities. About eight or nine winners are picked each round. Winners participate in a series of workshops across the country on how to grow their businesses, including a session on regulation.

Big banks are likely to keep supporting these programs — not only for relationship building, but also because startups are working on areas major banks aren’t addressing, said Gilbert.

4 Real Estate Crowdfunding Trends You Should Be Watching (Forbes), Rated: A

Real estate is one of the fastest growing markets to take on the concept of crowdfunding and apply it in a new way.

Here are four emerging trends in real estate crowdfunding to watch this year.

  1. Regulation Brings Crowdfunding to Maturity. Today, crowdfunding has matured and investors are more intrigued than they are skeptical. This is due, in large part, to the JOBS Act and the enactment of Regulation A+. It legitimized the industry and it has been growing ever since.
  2. Foreign Investment in Real Estate Is Booming. According to The Guardian, a recent U.S. real estate study showed that Chinese investors have poured $110 billion dollars into the U.S. market in the last 5 years (both commercial and residential). This investment is set to double in the next 5 years. Because of foreign investment expansion in the U.S., it’s relatively safe to assume that a portion of those dollars will go into alternative funding options like real estate crowdfunding.
  3. Wealthy Millennials Are Investing Their Money Differently. However, with the influx of unicorn technology companies and the increase of millennial millionaires, the need to put their money somewhere is still very much on their minds. Real estate crowdfunding has the potential to help them share the wealth while staying true to their sensibilities.
  4. Crowdfunding for Retirement. Those considering real estate investing, especially through crowdfunding platforms, could potentially improve their rate of return with tax efficient strategies, more specifically IRA’s. Real estate crowdfunding platforms allow those saving for retirement to invest in real estate right from the golf course, with just a few clicks on their phone or tablet.

PeerStreet’s CEO Brew Johnson Talks Real Estate Crowdfunding Market (Forbes), Rated: A

The company was founded by former Google executive Brett Crosby and real estate attorney Brew Johnson. By the end of 2016, the company originated more than $200 million.

Johnson: The biggest differentiators between PeerStreet and other players are pretty simple: (i) our platform is very focused on one asset – first-lien debt. We think creating this focus at the outset is important in delivering value to users. And most importantly, (ii) we don’t originate loans directly to borrowers, but rather we aggregate loans from a distributed network of lenders, curate those loans, and then make it easy for investors to invest in them.

Johnson: We exceeded $200 million in origination volume by the end of 2016. Our KPIs are based on loan volume and quality.

Johnson: We maintain focused on our core asset: short-term, first position lien loans. Our data continue to show that this asset provides favorable risk-return profiles for investors, so 2017 is about growing our loan volume in order to serve even more investors.

Johnson: I think there are opportunities of various sizes across the industry. That said, a couple that I find particularly interesting are the potential implications for a more robust rating and credit scoring of alternative lending investments across platforms and those of creating a truly efficient secondary market or exchange that enables investors to seamlessly trade in and out of positions.

Misys Targets Offerings for P2P Lending (Intralinks), Rated: B

Traditionally focused on treasury and capital markets solutions, Misys revised its focus to include solutions that would allow banks to branch into peer-to-peer (P2P) lending, as well as an offering for machine learning that would detect anomalies in trading patterns.

Altisource’s Premium Title Announces Integration with LendingQB’s Loan Origination System (Yahoo! Finance), Rated: B

Premium Title, a national provider of title and escrow services, announced today its integration with LendingQB’s end-to-end, browser-based loan origination system (LOS). The integration can help provide customers with the ability to obtain title and settlement quotes faster, place orders with Premium Title and receive a title fee certificate guaranteeing fees for 30 days, all without leaving the LendingQB platform.

This integration, gives Premium Title clients the capability to experience a seamless and more efficient process within the LendingQB LOS platform. Lenders using LendingQB can receive an automated quote for title services and a title fee certificate guaranteeing title fees, which auto-populates into the LOS. LendingQB can also maintain the loan estimate and any adjustments in fees associated with the loan, assisting with TRID compliance and faster disclosure timelines.

United Kingdom

Innovative Finance Isas dogged by further delays (Financial Times), Rated: AAA

The Innovative Finance Isa was officially launched by former chancellor George Osborne in July 2015, putting peer-to-peer lending platforms — where individual investors are matched with interest-paying borrowers — on a level playing field with traditional savings and investment products which can be held within an Isa wrapper.

A year on, the FCA has still yet to grant the bulk of peer-to-peer lenders, including the three largest — Zopa, Funding Circle and RateSetter — the authorisation they need to launch an Innovative Finance Isa in time for the new tax year in April.

These three peer-to-peer platforms account for more than 40 per cent of the UK’s market share by loan origination, according to AltFi data, having lent nearly £6bn combined.

Chatbot savings app Plum partners P2P lender Ratesetter (Finextra), Rated: AAA

British AI-powered savings Facebook Messenger chatbot Plum is to start steering users that are willing to take on risk in exchange for higher interest rates to P2P lender Ratesetter.

According to Moneyfacts, the average UK rate on easy-access accounts is 0.15%, while the average return earned by RateSetter investors to date is 4.7%.

The money goes into users’ Plum savings account but the Ratesetter deal means that people can also now choose to earn a better rate – if they are willing to take on the associated risk.

Zopa Named Best Personal Loan Provider & Best Alternative Finance Provider at the 2017 British Bank Awards (Crowdfund Insider), Rated: AAA

Zopa, the UK’s very first peer to peer lending platform, announced on Monday it was named Best Personal Loan Provider & Best Alternative Finance Provider at the 2017 British Bank Awards.

This news comes just a few weeks after Zopa was named Personal Loan Provider of the Year at the Consume MoneyFacts Awards for the fourth year in a row.

Zopa recently announced it topped £2 billion in lending.  According to information provided by the online lending platform, as of today, the lender matched over 246,000 borrowers to 75,000 investors to provide access to capital in the form of loans.

RateSetter Borrowers Have Paid Back £1 Billion, Investors Have Earned £63 Million (Crowdfund Insider), Rated: A

Online lender RateSetter has said it has now collected £1 billion in capital repayments from borrowers since its first loan back in 2010. Overall, RateSetter has originated approximately £1.75 billion in loans while paying out £63 million in interest.  The average interest rate ranged between 3.1% on the Rolling market and 6.0% for the 5 Year market. In 2016, total lending was pegged at £668 million.

Awareness of P2P drops north of London (P2P Finance News), Rated: A

AWARENESS of peer-to-peer finance products among small- and medium-sized enterprises (SMEs) is at its lowest in the Midlands and the north of England, the British Business Bank (BBB) has revealed.

The figures, revealed in its latest annual Small Business Finance Markets report, showed fewer than 40 per cent of firms in the Midlands were aware of P2P lending, compared with almost 60 per cent in London.

Around half of firms in the south of England were aware of P2P, while just 40 per cent of firms in the north had come across it.

Despite the varying levels of awareness, the report found annual lending through P2P platforms increased by 34 per cent to £3.9bn in 2016. Business lending made up £1.3bn of that amount.

SME Loan Fund plans break with GLI in bid for scale (Citywire), Rated: A

The SME Loan Fund (SMEF +), the small directing lending investment trust set up by GLI Finance, plans to break ties with its founder in a bid to gain scale.

The trust launched in 2015 amid a boom in peer-to-peer lending launches, yet was able to raise just £12.4 million capital. Assets currently stand at £53 million, mostly from an initial portfolio of loans transferred by GLI Finance (GLIF +) as part of the launch.

The SME Loan Fund said that GLI had agreed to sell its 48% stake in the trust through a placing. Should the placing prove successful, the SME trust will switch management from Amberton Asset Management, 50% owned by GLI. If it is not, the board will propose the wind-up of the trust.

GLI Finance, an investment trust in its own right, said it would use the money from a share sale to repay a £14.9 million loan to strengthen its balance sheet.

Most board members of P2P trusts have skin in the game (P2P Finance News), Rated: A

THE MAJORITY of board members of peer-to-peer investment trusts have “skin in the game”, research has revealed.

Canaccord Genuity research has assessed the pay and investments of board members of investment trusts. The analysis included funds focused on the P2P sector.

It showed that the highest annual pay packet among P2P investment trusts is £50,000, taken by the chairmen of the Funding Circle SME Income Fund and Victory Park Capital (VPC) Specialty Lending.

Samir Desai, co-founder of the Funding Circle platform, who sits on the investment trust’s board, has put £152,775 into the fund.

This is the highest among its board members, followed by £110,349 invested by non executive director Frederic Hervouet. The Funding Circle SME Income Fund board chairman Richard Boleat takes the highest annual fee on the board at £50,000 and has invested £5,157.

The trust’s board members Jonathan Bridel and Richard Burwood, both non-executive directors, have also invested £5,157 and their annual fee is £40,000 and £30,000 respectively.

Desai does not take a fee and Hervouet has an annual fee of £35,000.

European Union

Radial payments platform integrates with Klarna (Finextra), Rated: AAA

Klarna, one of Europe’s leading payments providers, and Radial, the leader in omnichannel commerce technology and operations, today announced a new partnership to further expand Radial’s payment options.

The integration of Klarna with Radial’s Payment platform enables clients and prospects to offer a financing option at checkout to give customers more choice and could give retailers a 58 percent higher order value.

Financing a purchase over time has historically been optimized for brick and mortar stores. The online equivalent, however, can often be an ordeal, with redirects, lengthy forms and unclear information. Klarna’s process only requires a few fields of information, and lets customers know instantly if they qualify for the financing solution.

International

Bitbond raises $ 1.2 million to grow SME lending platform (Finextra), Rated: AAA

Global SME lending platform Bitbond today announced the closing of an equity funding round of $1.2 million (€1.1 million).

This round brings Bitbond’s raised equity capital to a total of $2.3 million.

Led by mobilike founder Şekip Can Gökalp, a number of business angels contributed to the round. Among them were Fyber founders Janis Zech and Andreas Bodczek as well as Kreditech co-founder & CEO Alexander Graubner-Müller.

Bitbond will use the additional funds for further product development and to grow its user base in markets which are underserved by traditional lenders. Over 1,600 loans worth $1.2 million were originated on Bitbond since its launch. 76,000 users from 120 countries registered with the service to date.

Infographics – The Pulse of Fintech – Q4 2016 (KPMG), Rated: AAA

According to The Pulse of Fintech, after 2015’s record-setting $46.7 billion in global funding to fintech companies, 2016 brought reality back to the market with an almost 50 percent slide in fintech investment.

Australia

Australia weathers fintech slump (The Australian), Rated: A

Global investment in fintech companies almost halved last year as “froth” comes out of the burgeoning industry and investors wait to see if they can successfully disrupt incumbents such as banks and insurers, according to a new report.

Fintech investment funding declined to $US24.7 billion ($32.17bn) last year from a bumper $US46.7bn in 2015, driven by fewer merger and acquisitions, and private equity investments, KPMG found.

However, the less mature Australian fintech industry bucked the trend as investment soared to a record high of $626 million last year, up from $185m in 2015 and $461m in 2014.

In contrast, corporate venture capital arms — those owned by banks and other incumbents — played a bigger role in the market, expanding investment to $US8.5bn from $US4.9bn. Australia’s institutions, including National Australia Bank, are increasingly investing in fintech via internal VC arms.

Authors:

George Popescu
Allen Taylor