Thursday October 11 2018, Daily News Digest

marketplace lending securitization

News Comments Today’s main news: Marcus may reign in new loans, but not SoFi, LendingClub. Fellow Finance goes public. Aereal Bank invests in BrickVest. Aussie borrowers dump banks for P2P lenders. Figure launches HELOCs on blockchain. Today’s main analysis: PeerIQ’s Q3 2018 marketplace lending securitization tracker. Today’s thought-provoking articles: How every day can be payday. Older Americans are most creditworthy. Corporate […]

marketplace lending securitization

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

Goldman’s Marcus May Rein In New Loans Next Year But Rivals Aren’t Worried (Forbes), Rated: AAA

Nearly two years after exploding on the online personal lending market scene, Marcus, the unit of Goldman Sachs, is reportedly retreating, reigning in its loan origination target for 2019.

That’s according to 

PeerIQ’s Q3 2018 Marketplace Lending Securitization Tracker (Lend Academy), Rated: AAA

A total of eight marketplace lending securitizations were issued in the third quarter, totaling $3.5 billion. This is the fifth highest level of quarterly issuance which is noteworthy given that the summer is typically a slower period for issuance. This is an increase of 35% from the prior year period.  It’s hard to believe that total marketplace lending issuance to date stands at $41.9 billion across 134 deals.

There has been a shift with spreads tightening and yields falling on new deals, a reversal from prior quarters. PeerIQ noted that all-in yields on consumer deals decreased 2 basis points from 3.72% to 3.7% and student deals decreased 100 basis points from 4.5% to 3.5% over the previous quarter.

Economic Growth is Solid, Lending Securitization Strong, but are Storm Clouds Gathering? (Crowdfund Insider), Rated: A

PeerIQ states:

“Citigroup, Deutsche Bank, and Credit Suisse continue to top the issuance league tables with 57% of MPL ABS transaction volume. Citi and CS are increasing their activity in the Fintech space, with CS also offering risk retention solutions on securitizations.”

The end of the two-week pay cycle: How every day can be payday (MarketWatch), Rated: AAA

Teresa Long, an assistant manager at a Walmart near Dallas, is like many Americans: She sometimes struggles to pay her monthly bills on time, especially when her biweekly paycheck fluctuates.

Occasionally, when she was not able to budget correctly for the month, she would default on a bill, miss a payment or send in a check late. Sometimes Long would take out a payday loan, but the fees were crippling. “You’re taking a $300 loan, and, by the time you pay it off, it’s probably $1,000 or $1,500,” said the 40-year-old mother of four. “It’s extra money you could have been saving.”

So when she saw information on an internal Walmart website about a new service from an Oakland, Calif.-based company called Even, Long was intrigued. It promised to pay her up to half her wages in advance, on demand, for an average $6 monthly subscription fee.

Sources: Pew Charitable Trusts, Center for Financial Services Innovation

LendingTree Study Finds Older Generations Most Creditworthy (PR Newswire), Rated: AAA

LendingTree today released its study on Americans’ credit scores by generation that found that the older someone is, the better their credit tends to be. On average, members of the silent generation (the oldest cohort) have credit scores 100 points higher than those of millennials.

Key takeaways

  • Millennials and Gen Xers have, on average, “fair” credit scores.
  • Baby boomers have “good” scores.
  • Members of the silent generation have “very good” scores.
Source: PR Newswire

Why older people have higher credit scores

One possible reason for higher scores among older people is cultural. In general, they may use credit less and may be more disciplined savers and spenders, said Kali McFadden, senior research analyst at LendingTree.

Another reason is that older Americans are more settled financially, with lower monthly costs. In general, the older someone is, the lower their mortgage payments and student loan debts are (or they don’t have such payments at all). Older Americans may also not need new furniture or have child care costs. That means they are less likely to have urgent financial costs that can result in delinquencies, which can hurt credit scores.

Millennials and Gen Xers may have to pay more for loans

Banks, credit card issuers and other lenders make lending decisions based on a borrower’s creditworthiness. They offer much better rates to borrowers with higher scores.

Source: PR Newswire

Boomers aren’t much better off

While the higher credit score of baby boomers (average credit score: 696) is a sign of better financial stability than the younger generations, there’s still room for improvement. The average boomer score trails that of the elder generation by 38 points.

The CEO of Robinhood sets out his vision after announcing another move to compete with major brokerages (Markets Insider), Rated: A

Robinhood, the zero-fee stock trading app that helped kickstart a race to the bottom in brokerage fees, has a new weapon in its arsenal as it fights to become the Amazon of personal finance: an in-house clearing system.

The $5.6 billion startup announced Wednesday that it has completed a two-year effort to build and launch its own in-house clearing provider that will allow it to save money and improve trading for its 6 million customers, cofounder and CEO Vlad Tenev told Business Insider.

Mike Cagney’s Figure Launches Blockchain-Powered Online Home Equity Loans (PYMNTS), Rated: AAA

Figure rolled out the first of those products yesterday: a digitally processed home equity loan that it claims can cut approval time to five minutes. According to Cagney, those Figure loans can range between $15,000 and $100,000, with funds made available to users in five days — down from the 45 days that such products usually take.

Learn more about Figure’s business model here.

Online Investing in Real Estate through Crowdfunding Expected to Grow (Urban Land Institute), Rated: A

Crowdfunding has captured the imagination—and money—of investors throughout the United States. While it is used for everything from charitable campaigns to launching startup businesses or paying legal fees, commercial real estate may be the largest online investment opportunity for crowdfunding to date, according to a panel at the 2018 ULI Fall Meeting in Boston.

“This $14 trillion market is the nation’s third-largest investment asset class behind stocks and bonds. Crowdfunding allows real estate firms to reach beyond friends and family to investors anywhere,” he said.

Toward a more inclusive fintech industry (American Banker), Rated: A

I worked for seven years in a company run exclusively by men — no women on the leadership team at all. The executive suite was physically walled off, a literal boys’ club, and no matter how valuable my performance, I wasn’t going to be a “cultural fit” for the all-male back room. Even now, 84% of venture-backed companies lack even a single female founder.

Significantrigorous research proves women in leadership make companies more profitable, and diverse leadership teams make better business decisions.

Direct lending platform Goji hits £100m in assets (AltFi), Rated: A

Goji has reached over £100 million in assets under management on its platform, the firm has said.

This latest milestone coincides with Goji becoming a partner of adviser-support network SimplyBiz.

Jake Wombwell-Povey, CEO of Goji says the firm has doubled the assets on the platform in a little over six months.

Roostify Announces Bidirectional Integration with Ellie Mae’s Encompass Digital Mortgage Solution (BusinessWire), Rated: B

Roostify, a digital lending solution, announced that its platform now offers a bidirectional integration with Ellie Mae’s Encompass digital mortgage lending platform. The seamless integration allows lenders to easily pass information between the two systems, driving quality and efficiency in the loan origination process.

States’ response to OCC fintech charter ‘disappointing,’ top Treasury official says (American Banker), Rated: B

A senior Treasury Department official said he was disheartened by state regulators’ negative response to its fintech report, which supported the Office of the Comptroller of the Currency’s plans to create a national fintech charter.

United Kingdom

Fintech startup Wagestream wants to tackle Britain’s ‘poverty premium’ (TechWorld), Rated: AAA

The UK’s Financial Ombudsman Service claims to have received 10,979 complaints about payday loans between April and June 2018, according to figures from its annual review for 2017/18.

The figures came just weeks after what was the UK’s biggest payday lender, Wonga, went into administration.

But London-based Fintech startup, Wagestream, has emerged to put an end to the misery of ‘poverty premium’ as it makes a stand to ‘destroy payday loans’.

Savers Offered 8% By ISA Bond That Fights for Justice (OA Online), Rated: A

INVESTORS seeking a higher rate of return – and who want to use their money to help victims of things like professional negligence – will be interested in a new bond by Just, held through an Innovative Finance ISA called Just ISA.

Launched in summer 2018, the Just ISA offers tax-free returns of 8% by investing in a bond that is ultimately used to fund legal cases on behalf of people who are seeking redress from things such as professional negligence by individuals and corporations.

London’s most influential people 2018 (Evening Standard), Rated: B

Tom Blomfield   – Chief executive of Monzo

The Oxford graduate has made carrying the ubiquitous orange payment card a mark of cool as its cult status continues to grow.

Samir Desai – Chief executive and co-founder of Funding Circle

The former management consultant has been at the helm for eight years of the leading peer-to-peer lender to small businesses.

Jaidev Janardana – Chief executive of Zopa

The former Capital One man is boss of the world’s first peer-to-peer lending company which is launching a bank.

China

Overheard in the Long Room: corporate China (FT Alphaville), Rated: AAA

Two diverging trends here. China, on a national level, is requiring more and more cash to service its debts. Not good news for those concerned about the Republic’s burgeoning debt burden, estimated to be anywhere between 300 to 350 per cent of GDP, depending on who you ask and what mood they’re in.

Source: Financial Times

This hasn’t deterred bond buyers however, as the IMF recorded a circa $40bn flow into yuan-denominated bonds over the second quarter of this year, according to Brad Setser at the CFR:

Source Financial Times
European Union

Fellow Finance goes public (AltFi), Rated: AAA

The platform is expected to raise approximately €10m. With a valuation of €55m at the close of the IPO on Tuesday, the platform anticipates rapid growth. The IPO saw 1.3 million new shares in the company on offer for an 18.3 per cent stake in the company. The offer was 2.2 times oversubscribed.

In addition to the new shares on offer, just under 1.3 million in existing shares in the company will go on sale too.

Nasdaq Helsinki welcomes Fellow Finance to Nasdaq First North Finland (Nasdaq), Rated: A

Nasdaq (Nasdaq: NDAQ) announce that trading in Fellow Finance Plc shares (short name: FELLOW) commence today on Nasdaq First North Finland. The company belongs to the Financials sector. Fellow Finance is the 61st company to be admitted to trading on Nasdaq’s Nordic markets* in 2018, and it represents the 9th listing on Nasdaq Helsinki in 2018.

German Blockchain Banking Group Bitwala Teams Up With solarisBank to launch Cryptobank Services (Crowdfund Insider), Rated: A

On Tuesday, German blockchain banking group Bitwala announced it has teamed up with solarisBank to launch its new cryptobanking services. According to Bitwala, nearly 35,000 customers have already pre-registered to be among the first to get access to new service, which helps customers to manage cryptocurrencies with unprecedented convenience and benefit from the high level of security and deposit protection commanded by German banking laws.

International

Germany’s Aareal Bank invests in UK real estate platform BrickVest (Banking Tech), Rated: AAA

Germany’s Aareal Bank says it plans to acquire a stake in BrickVest, the London-based online platform for commercial real estate investments.

SALT Coin Hits Retracement Target After 55% Gains (Global Coin Report), Rated: A

The announcement by SALT coin to accept Litecoin (LTC)as collateral in their blockchain lending platform led to an explosion in the price of their ERC-20 token. In a 24 hour shake-up that rocked the altcoin market just before the weekend, this crypto-lending favorite rose over US $0.82 on Friday morning. SALT (SALT) shot up 55% overnight while the rest of the market stagnated in a prolonged malaise.

The platform now offers USD loans at a 5.99% interest rate(for loans less than US$75,000) and has removed the cap on maximum loan amounts.

Nexo (NEXO) Overview: We might have gotten the first legit crypto lending platform (Captain Altcoin), Rated: A

After a prolonged period of sideways movement throughout the month of September, staying just below $0.050, the currency started growing around 21st. The slow rise lasted until 30th, when the daily trade volume sharply dropped off from $984,935 to $230,742. The same way it dropped, the volume soared back up on October 1st. NEXO price followed suit and grew to$0.0933 on a daily trade volume of $1,765,517. After a short correction of both parameters, the price and volume spiked up once again on the 5th, this time reaching $0.1143 and $1,936,530 respectively.

Source: Captain Altcoin

Crowdfunding firm aims for rapid global growth (BusinessDay), Rated: A

Finnish crowdfunding platform Fellow Finance is targeting fast international growth after a successful initial public offering (IPO) in Helsinki, its CEO says.

Founded back in 2013, the company was valued at €55m by the IPO, which closed on Tuesday and was more than two times oversubscribed.

Australia

More Aussie borrowers are dumping banks for peer-to-peer lenders, CommSec reveals (mozo), Rated: AAA

According a recent CommSec Economic Insights Report, the number of Aussies borrowing from non-bank financial institutions rose by 10.3% over the year to August.

“Banks are facing greater competition from non-banks. At the same time bank deposits are only lifting at a 2.5% annual rate, putting greater reliance on external funding. It is clearly a competitive and challenging environment for financial institutions,” said CommSec chief economist, Craig James.

Latin America

Goldman Sachs has joined George Soros and Steve Cohen in backing an Argentinian mobile banking startup (Business Insider), Rated: AAA

Ualá, the one-year-old mobile banking startup, raised $34 million in its series B round led by Goldman Sachs Investment Partners, along with existing investors including a private fund managed by Soros Fund Management, Jefferies, the venture arm of Steve Cohen’s Point72, and entrepreneur Kevin Ryan, according to an announcement seen by Business Insider.

Over 50% of people in Argentina had never had a card before and are only operating in cash, so the company aims to provide these people financial inclusion by giving them access to financial system, he added.

What’s happening with crypto in Latin America? (Crypto Insider), Rated: A

Latin America is undergoing somewhat of a transformation in the world of global finance. With the state of the banking industry in many countries in the region, people are turning to one another to solve their problems. From neighborhood initiatives to cross-border peer-to-peer lending platforms and online-only independent banking solutions, Latin America is exploring new ways to approach their personal finances.

APAC

Borrowers and Lenders Discover a Reputable Financial Conduit with FundKo (Digital Journal), Rated: AAA

As the world becomes ever more interconnected, as does the financial system. Borrowers and lenders are no longer confined by the parameters of a localized system. In fact, many lenders are branching out to the internet, through online companies such as FundKo.

FundKo is a peer to peer lending company in the Philippines.

No customer may invest 100% of their money on a single loan: in fact, the largest sum of money they may invest is 10% of a loan. This guideline ensures that lenders never suffer a catastrophic loss.

Authors:

George Popescu
Allen Taylor

Tuesday September 18 2018, Daily News Digest

Student Loan Balance by Servicer and Loan Status

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

Student Loan Balance by Servicer and Loan Status

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News Summary

United States

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

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

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

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

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

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

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

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

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

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

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

Source: Peer IQ

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

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

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

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

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

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

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

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

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

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

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

Charles Anderson of Currency (Lend Academy) Rated: A

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

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

CoreLogic Launches AutomatIQ Borrower (Corelogic) Rated: B

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

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

Hurricane Florence / Lendr (Lendr Email) Rated: B

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

United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

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

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

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

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

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

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

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

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

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

European Union

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

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

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

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

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

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

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

International

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

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

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

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

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

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

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

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

Australia

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

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

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

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

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

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

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

Asia

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

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

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

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

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

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

Africa

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

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

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

Authors:

George Popescu
Allen Taylor

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

Friday April 20 2018, Daily News Digest

Marketplace Lending Securitization League Table

News Comments Today’s main news: OnDeck closes $100M credit facility. LendingClub expected to announce quarterly sales of $152.18M. Affirm expands to cover smaller purchases. Funding Circle lends 80M GBP through IFISA. China Construction Bank opens robot-only branch. Today’s main analysis: Originator league table. UK P2P lending nears 9B GBP. Today’s thought-provoking articles: Top fintech investors by stage. Interview with […]

Marketplace Lending Securitization League Table

News Comments

United States

United Kingdom

China

Australia

Other

News Summary

United States

OnDeck Announces New 0 Million Revolving Credit Facility (PR Newswire) Rated: AAA

OnDeck announced today the closing of a $100 million asset-backed revolving credit facility with Pioneers Gate LLC, a lending vehicle of a leading life insurance company managed by 20 Gates Management. The new facility provides the longest revolving funding period of any of OnDeck’s funding sources, and the lowest interest margin of any of OnDeck’s variable-rate funding facilities to date.

Lending Club (LC) Expected to Announce Quarterly Sales of 2.18 Million (The Lincolnian Online) Rated: AAA

Wall Street brokerages expect that Lending Club (NYSE:LC) will announce sales of $152.18 million for the current fiscal quarter, according to Zacks. Three analysts have provided estimates for Lending Club’s earnings. The lowest sales estimate is $150.00 million and the highest is $154.53 million. Lending Club posted sales of $124.48 million during the same quarter last year, which suggests a positive year-over-year growth rate of 22.3%. The firm is scheduled to announce its next earnings results after the market closes on Tuesday, May 8th.

On average, analysts expect that Lending Club will report full-year sales of $688.45 million for the current financial year, with estimates ranging from $680.00 million to $693.30 million. For the next fiscal year, analysts expect that the company will post sales of $803.61 million per share, with estimates ranging from $773.00 million to $858.31 million. Zacks Investment Research’s sales averages are an average based on a survey of sell-side research analysts that cover Lending Club.

Affirm Expands Offering to Cover Smaller Purchases with Simple, Transparent Payments (The Virginian Pilot) Rated: AAA

Affirm, Inc., the company founded by entrepreneur Max Levchin to provide fair and honest financial products, today announced Affirm will partner with brands and retailers to offer shoppers a simple, no-interest payment option on purchases of any size via three easy, monthly payments. Now, Affirm’s financial products are available for purchases of any size, marking an expansion for the company. Affirm will continue to offer shoppers the option to buy now and make simple, transparent payments over time for purchases up to thousands of dollars, with terms ranging from 3 to 36 months.

The expansion of Affirm’s capabilities will be especially valuable to fashion and apparel brands and retailers that want to offer a quick and convenient payment method that better aligns with shoppers’ cash flows and are more transparent than traditional credit.

PeerIQ Releases Their Marketplace Lending Securitization Tracker For Q1 2018 (Lend Academy) Rated: AAA

We see another robust quarter for marketplace lending securitizations with $4.3 billion in new deals.

SoFi lead the way again with $2.6 billion or around 60% of the market with two huge student loan deals and a consumer loan deal.

Online Lending in Risk On Mode: Unprecedented 21 Months of Non Stop Securitization Issuance (Crowdfubd Insider) Rated: A

The most recent report stated that PeerIQ has observed an “unprecedented 21 months of non-stop issuance. Markets remain in a “risk-on” mode and MPL investor appetite continues to grow. This is a very bullish statement for online lenders coming at a time when interest rates are rising as is competition in the sector is increasing.

Top Seed-Stage FinTech Investors (Crunchbase News) Rated: AAA

Crunchbase News recently took a deep dive into the U.S. FinTech industry’s Q1 2018 venture activity. We found that deal volume in 2017 amounted to more than $7 billion in venture funding for seed, early, and late-stage startups. As 2018 came to a head, the number of deals in the space declined slightly, while venture capital dollars increased by 37 percent quarter over quarter.

The firm has made more than 690 investments in technology companies, with lead investments in 24 startups. Plug and Play also made an early bet on PayPal, now a public company with a market cap over $90 billion. California-based Hippo Insurance picked up an investment by Plug and Play in its $25 million Series B in January 2018. Hippo Insurance was coincidentally also mentioned in our Crunchbase News analysis of startups that have weird names.

Source: Crunchbase News

Defi Solutions, a SaaS platform for lenders, was the latest growth-stage FinTech company to score an investment by the firm. Bain Capital Ventures was the sole investor in the startup’s $55 million Series C in January 2018.

Source: Crunchbase News

RealtyMogul’s MogulREIT I Closes Senior Debt Investment in San Francisco (The Virginian Pilot) Rated: A

MogulREIT I today announced that it has completed an investment in a $6.69 million mixed use building in San Francisco, California, its 15 th acquisition since inception. MogulREIT I was designed to offer investors potential cash flow through managing a diversified portfolio of commercial real estate investments, including, but not limited to medical office buildings, multifamily apartment complexes, office spaces and retail shopping centers.

Ascentium Capital Surpasses $ 4 Billion in Originations (deBanked) Rated: A

Texas-based lender Ascentium Capital announced last week that it had surpassed $4 billion in origination volume since the company was founded in 2011.

The other business channel is a direct channel where Ascentium makes direct loans to small and medium sized businesses of up to $250,000. Depping told deBanked that the company’s direct channel makes up about 30 to 40 percent of its business.

Q&A: Renaud Laplanche on Starting Upgrade and Offering New Credit Products to Consumers (LendEDU) Rated: AAA

Q: It looks like you co-founded Upgrade with a total of 6 co-founders. How has starting Upgrade been unique from a team building perspective?

A: Over the last year we’ve on-boarded more than 250 team members across our three offices – San Francisco, California headquarters, Phoenix, Arizona operations center and Montreal, Quebec, Canada development center. It has been an incredible year, especially looking back at the team we’ve formed.

Q: How did the challenges of starting LendingClub compare to the unique challenges of starting Upgrade?

A: The challenges are quite different because the launch of each company stands about decade apart, so the landscape is very different.

Q: Beyond credit monitoring, how is Upgrade helping to educate consumers about their finances?

A: We believe helping people get smarter about credit can enable them to access more affordable credit in the future, and that’s why we launched Credit Health. Credit Health comprises of a range of tools that we think can help people understand their credit profile and what they can do to improve it. In addition to credit monitoring and alerts we offer Credit Health Insights – a library of educational articles and videos. Credit Health also features a credit simulator that gives you customized advice and tips tailored to your unique credit history. We haven’t seen other credit monitoring platforms offer this the same way we do.

Blockchain Startup Backed By Billionaire Bitcoin Bull Peter Thiel Gets $ 28 Million Investment (BTC Manager) Rated: A

Harbor, a blockchain startup backed by billionaire bitcoin bull Peter Thiel, has received an additional $28 million investment that it hopes will make blockchain real-estate investing a reality.

This latest cash infusion was led by Thiel’s Founders Fund, venture-capital fund Andreessen Horowitz, and cryptocurrency investment firms Pantera Capital and Craft Ventures. The San Francisco-based Harbor secured $10 million in Series A financing in February 2018, raising its total investments to $40 million.

LendingClub vs. Prosper Review: Here’s What You Need to Know (Student Loan Hero) Rated: A

In recent years, there’s been rising interest in peer-to-peer (P2P) lending. A report from Research and Markets estimates that P2P lending could grow by 53.06% between 2016 and 2020, while Transparency Market Research projects that the global P2P market will be worth $897.85 billion by 2024.

Source: Student Loan Hero

Need an Alternative to a Capital One Personal Loan? Here’s Where to Look (Student Loan Hero) Rated: B

For example, if you’re looking for a small loan — say, around $500 — you should skip online lenders. Most don’t provide loans for less than $1,000 or $2,000. Also remember that your credit score is vital to the approval process, so if you can’t get one on your own, consider getting a cosigner.

Source: Student Loan Hero

Why digital banks are welcoming CRA revamp (American Banker) Rated: A

To get a sense of why Ally Bank wants the Community Reinvestment Act rewritten, look at its situation in Utah.

Since it has no retail branches, the $137 billion-asset Ally is assessed for CRA compliance for its lending in Salt Lake City, where its bank is headquartered. But Ally gets no CRA credit for lending in Detroit, where its holding company is based and where nearly four in 10 households are living in poverty.

Quarles suggests new Fed approach to ILCs (American Banker) Rated: B

The Federal Reserve Board’s chief regulator suggested he was open to companies receiving industrial loan company charters, a sign that the central bank’s view on ILCs may be evolving.

“I don’t think of [ILCs] as a particularly special, excessively problematic case,” said Federal Reserve Vice Chairman for Supervision Randal Quarles at an International Monetary Fund forum Wednesday.

Education Loan Finance Receives AAA Ratings on Inaugural Securitization Deal (Business Wire) Rated: A

Education Loan Finance (ELFI), a division of SouthEast Bank, focusing on student loan debt refinancing and consolidation, announces the close of its inaugural securitization of refinanced student loans. Education Loan Finance is the first student loan refinancing lender to receive the AAA rating from both Standard & Poor’s and DBRS on its senior notes in its first securitization transaction comprised of this type of education loan product.

The $200 million transaction was comprised of $24.784 million of variable rate Class A-1 Notes, $158.65 million of fixed rate Class A-2 Notes, and $16.566 million of Class B Notes. The Class B Notes are rated A by DBRS. Citi and Credit Suisse served as joint lead managers on the transaction.

The process of elimination in multiple-offer scenarios (The Ledger) Rated: A

If a house is listed for $400,000 and someone presents a cash offer for $380,000, that will not be favored over an offer for $400,000 from a person getting an 80 percent loan.

For example, a 75 percent loan from an online lender with no ties to the Nashville area could be trumped by a 100 percent loan from a local, well-known lender that provides physician loans.

Boulder solar power finance firm lands big bucks (like $ 112M of them) (Denver Business Journal) Rated: A

Boulder-based Wunder Capital, which lends money for commercial-scale solar power projects, said Wednesday it’s raised $112 million in equity and debt financing to grow the company.

The Series B financing round was led by New York City investment firm Cyrus Capital Partners, which manages $4 billion in investments. Existing investors also were involved in the round, including Techstars Ventures which led the company’s Series A round of funding in March 2016.

United Kingdom

£80m lent through Funding Circle Isa (Bridging & Commercial) Rated: AAA

Funding Circle has announced that approximately £80m has already been lent to thousands of businesses through its Innovative Finance Isa (IFIsa).

The Isa offers an estimated tax-free projected return of 7.2% and is a flexi Isa which allows investors to take money out of their account and put it back later in the tax year without losing their tax-free entitlement.

There is an initial minimum investment of £1,000 and investors will be able to transfer exiting Isas into the Funding Circle Isa later this year.

 

 

P2PFA: UK Peer to Peer Lending Industry Nears £9 Billion in Total Lending (Crowdfund Insider) Rated: AAA

The UK Peer to Peer Finance Association (P2PFA) has released Q1 data for its member platforms. According to the industry association, P2P lending is nearing £9 billion in loan originations having provided finance for approximately 50,000 business and 221,000 individuals. Total investors stand at around 150,000.

 

Source: Crowdfund Insider

How Starling Bank is taking cues from Amazon (Tearsheet) Rated: AAA

And digital-only banks with a license, like Monzo, Starling, Tandem and OakNorth, are growing market share.

What are the biggest problems with banking today?
Banking as it is today sucks — it’s hard to easily manage account openings, and [until recently] to send payments to friends. That’s why Venmo has been so successful, but this should be a thing banks do.  You shouldn’t have to read an FAQ to use the mobile app or set up a bill pay.

LendInvest Calls Upon UK Government to Improve Finance Access for Property SMEs (Crowdfund Insider) Rated: A

LendInvest reported that in a new report entitled Putting Finance First: the alternative route to funding Britain’s SME housebuilders, the online lender recognizes that while the government is trying to help improve the outlook for property SMEs, but then argues that not enough is being done to put rhetoric into action. The report focuses on three proposed initiatives that combine existing government-backed funding mechanisms with the experience and expertise of alternative lenders, like LendInvest, to speed up and increase the supply of finance to property SME businesses:

  • Homes England: Should deploy its £2.5 billion Home Building Fund through funding lines agreed with alternative lenders.
  • Local authorities: Should co-invest with alternative lenders in local developments, utilizing the Public Works Loan Board mechanism to provide discounted capital for SMEs.
  • The British Business Bank: Should appoint more alternative lenders to use the ENABLE Guarantee programme to underwrite property investment and development loans.

Malta-Based Decentralized Ventures to Spearhead Crypto Island’s Blockchain Services Provision (Blockchain News) Rated: B

Blockchain services provider Decentralized Ventures on Tuesday announced its official launch, with the objective of bolstering Malta’s crypto communities.

A partnership between initial coin offering (ICO) specialist TokenKey and token research and Blockchain consultancy Strategic Coin Inc., Decentralised Ventures is designed to support the Maltese government’s plans to create the world’s first fully regulated market for ICOs, DLT and virtual currencies, a statement said.

 

JustUs launches IFIsa to support ethical housing scheme (Bridging & Commercial) Rated: B

The IFIsa aims to raise £367,500 and will offer a return of up to 6.5% to investors.

JustUs will provide a bridging loan to Mersten for up to 50% of the property’s value to fund the renovation.

China

 

China Construction Bank opens robot-run branch (Fintech Futures) Rated: AAA

China Construction Bank (CCB) has opened a branch in Shanghai run solely on the power of pure technology.

According to the South China Morning Post (SCMP), the branch has no human staff and instead uses facial recognition, artificial intelligence (AI) and virtual reality (VR) to provide the bank services.

SCMP says it is hyped as a first for the Chinese banking industry, and the Beijing-based bank says it has installed 1,600 smart machines at its 360 branches in the city to ramp up its appeal to tech-savvy customers and trim staff costs.

CreditEase’s Hou outlines allocation outlook (Asian Investor) Rated: A

Beijing-based CreditEase, a peer-to-peer P2P lending platform and wealth management platform, has been busy building its roster of mutual fund, trust and insurance products.

European Union

iZettle squares up to Square with e-commerce platform launch (Fintech Futures) Rated: A

Swedish mobile payments firm iZettle is taking on Square with the launch of its new e-commerce platform that will allow merchants to sell in-store and online.

Called iZettle E-commerce, it lets small business owners set up and customise a new webshop or start selling across channels online, including social media, blogs and existing websites.

International

Digital banking’s key trends: Demand, competition, mobile on the rise (American Banker) Rated: AAA

Two global studies — a study of 150,000 consumers polled by Gallup for the World Bank for its Global Findex Database, and a survey of 5,200 consumers by the tech giant Oracle — found complementary trends in the use and adoption of digital banking.

For example, 60% of customers globally want to open a bank account online, according to Oracle’s survey.

Many are already there: Sixty-seven percent of customers globally are on digital banking platforms now, according to Oracle; the World Bank reports that 515 million customers worldwide opened a banking account through a mobile money provider in the last three years.

 

More Than Half Of Cards Issued Globally Were EMV-Enabled (PYMNTS) Rated: A

Data from EMVCo shows that 54.6 percent of all cards issued globally by the end of 2017 were EMV-enabled.

In addition, the number of EMV payment cards in circulation around the world increased by 1 billion over the previous 12 months — to a total of 7.1 billion.

“Both EMV chip card issuance and EMV chip transactions surpassing 50 percent globally is testament to the increasing maturity of the worldwide infrastructure, and [is] a significant milestone for the payments community,” EMVCo Executive Committee Chair Jack Pan commented.

 

Australia

Australia’s top bank says it charged dead clients for advice (CNN) Rated: AAA

Australia’s top bank has admitted to charging fees to clients it knew had died years previously.

Commonwealth Bank of Australia (CBAUF) told a government inquiry Thursday that the practice of billing deceased customers for financial advice stretched back years. In one instance, an adviser at the bank’s financial planning business was collecting fees from a client more than a decade after they had died.

The revelations emerged as part of a Royal Commission, or public inquiry, into malpractice in Australia’s financial services industry.

One winner from the banking royal commission (The Australian) Rated: B

The peer-to-peer lending space may be a major beneficiary of the poor practice scandals coming out of the Royal Commission, according to one non-bank lender.

ME hikes home loan interest rates: does this mark the end of super low rates? (MOZO) Rated: A

Online lender ME has announced it is increasing home loan interest rates across its variable mortgage range effective today, citing increased funding costs as the reason – and it’s not the first to do so.

ME hiked its standard variable rate for existing owner-occupier principal-and-interest borrowers with an 80% LVR by 6 basis points, bringing it to 5.09% p.a. (5.11% comparison rate).

Existing investor principal-and-interest borrowers were hit with a bigger increase of 11 basis points, while interest-only borrowers saw the biggest increase of 16 basis points.

Source: MOZO
Asia

 

High investor FOMO about P2P lending in SE Asia: Funding Societies co-founder Kelvin Teo (Deal Street Asia) Rated: AAA

Your Series B round is likely the largest for a P2P lender in the region. Is that a measure of how strong the investor interest in this space and the potential for the sector in Southeast Asia?

P2P lending is a promising sector in Southeast Asia. We see strong investor interest, but perhaps too much, especially for emerging markets like Indonesia where the fear-of-missing-out (FOMO) is high. SME lending is a technical and a very localized business, and Southeast Asia apparently is not easily understood. We did not realize the significance of them until we started speaking to investors for Series B. In all candour, it was slightly painful to interact with investors who do not know Southeast Asia and/ or lending business.

Is $25 million the amount that you were looking to raise? 

We have a trust-based relationship with our shareholders. Our early discussion with our Series A lead investor Sequoia was to raise US$ 10M – 15M.

Alternative investment opportunities in Việt Nam (Viet Nam News) Rated: A

Access to and use of formal financial services is low in Việt Nam compared with other countries in the region, with only 31 per cent of all adults having formal bank accounts in 2016, according to the World Bank.

In 2016, 14.6 per cent of Vietnamese had saved money with a formal financial institution, 18.4 per cent had a loan with a formal financial institution, and only 26.5 per cent had access to a debit card. Interestingly, about 30 per cent of adults borrowed from friends or family in 2016 in Việt Nam, against 18.4 per cent who have borrowed from a financial institution.

Latin America

Creditas investment a Brazilian first for Santander InnoVentures (Bankless Times) Rated: AAA

Santander InnoVentures, the fintech venture capital fund of Santander Group, announced today an investment in the startup Creditas, a Brazilian secured lending platform. This is Santander InnoVentures’ first investment in Brazil and second in Latin America.

Creditas also announced today an increase of its Series-C funding round to $55 million with the addition of Santander InnoVentures and Amadeus Capital Partners. The round was led by Vostok Emerging Finance (VEF), a company focused on early and growth stage fintech companies across emerging and frontier markets, based in Sweden. Current investors also participated in the round, including Kaszek Ventures, Quona Capital, QED Investors, International Finance Corporation and Naspers Fintech.

Authors:

George Popescu
Allen Taylor

Wednesday February 21 2018, Daily News Digest

LendingClub originations by funding source

News Comments Today’s main news: Lending Club losses extend to Q4 2017. LendingClub to settle lawsuit for $125M. Groundfloor launches online public offering. Even Financial gets backing from American Express. LendInvest launches buy-to-let calculator online. Today’s main analysis: Lend Academy reviews LendingClub’s Q4 2017 results. Today’s thought-provoking articles: Equity sharing and home ownership. How millennials move emerging markets. Why Australia needs […]

LendingClub originations by funding source

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Lending Club extends losses for fourth straight year (Financial Times), Rated: AAA

Lending Club lost money for a fourth year in a row last year, as it wrote a big cheque to settle class-action lawsuits connected to its governance glitches of 2016.

The San Francisco-based company, the biggest listed online lender in America, said on Tuesday that net losses for the fourth quarter almost tripled from a year earlier, to $92m, as it agreed a $125m settlement to resolve civil suits stemming from the loan-mis-selling scandal that blew up almost two years ago. About $48m of the sum would be covered by insurance, the company said, with the remainder to be paid from liquid assets of about $650m.

The loss for the full year came to $154m, wider than the previous year’s $146m.

LendingClub agrees to settle shareholder litigation for 5M (American Banker), Rated: AAA

Under the agreement, which was announced Tuesday, the San Francisco-based online lender expects to pay $77.25 million. An additional $47.75 million is expected to be covered by LendingClub’s insurance, bringing the total payout to $125 million. The deal is subject to court approval.

LendingClub Corp (LC) Shares Sink on Q4 Earnings Miss (InvestorPlace), Rated: A

Lending Club also underwhelmed in its revenue as the company raked in $156.5 million during its fourth quarter, below Wall Street’s consensus estimate of $157.6 million, according to FactSet. The figure did increase 20% compared to the year-ago quarter.

On an adjusted basis, the company posted earnings of a penny per share, compared to a loss of 2 cents in the year-ago quarter.

The company also experienced a 23% annual growth in originations, which reached over $2.4 billion.

LendingClub Q4 2017 Earnings Results Review (Lend Academy), Rated: AAA

LendingClub delivered another record quarter of $156.5 million in revenue up slightly from their previous quarter. Originations were slightly down from the third quarter at $2.436 billion. They reported a GAAP net loss of $92.1 million in the fourth quarter which was affected by the class action litigation settlement expense.

Source: Lend Academy
Source: Lend Academy

LendingClub provided the below guidance for Q1 2018 and reaffirmed their guidance for 2018:

First Quarter 2018

  • Total Net Revenue in the range of $145 million to $155 million
  • Net Income (Loss) in the range of $(25) million to $(20) million
  • Adjusted EBITDA in the range of $5 million to $10 million
  • Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $19 million, and depreciation and amortization and other net adjustments of approximately $11 million

Full Year 2018

  • Total Net Revenue in the range of $680 million to $705 million
  • Net Income (Loss) in the range of $(53) million to $(38) million
  • Adjusted EBITDA in the range of $75 million to $90 million
  • Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $77 million, and depreciation and amortization and other net adjustments of approximately $51 million

Stocks making the biggest moves after hours (CNBC), Rated: B

LendingClub stock plunged 10 percent after the bell. The peer-to-peer lending company reported earnings and revenues that missed Wall Street estimates.

Groundfloor Launches Online Public Offering Amidst Increased Stock Market Volatility (PR Newswire), Rated: AAA

Groundfloor, the first issuer qualified by the U.S. Securities & Exchange Commission to offer real estate based payment dependent notes that are available to non-accredited investors, today announced that it has raised a total of $4.3 million from 687 participating investors in a combination of two recent financings, a private online bridge note closed late last year and an initial closing of its online public offering of equity. In each case, the company kicked off the invitation-only raises to customers and friends of the company with a $1M target, surpassing that in under 48 hours. Due to increased growth opportunities and strong demand, the company has today expanded the equity raise to the public.

Groundfloor is offering a total of up to 530,000 shares of Common Stock at $10 per share in its online public offering. Investor benefits include: no investor fees for life2; access to regular shareholder-only loan offerings; and invitations to attend annual Groundfloor shareholder events.

Recently increased expectations that the Fed may raise interest rates in the future has investors rebalancing their portfolios, with a shift out of equity into debt, as bond yields are expected to increase. Twelve-month bond yields have recently inched up to 1.97 percent.

By comparison, Groundfloor investors have earned an average of 13.6 percent per year over the past three years, which represents over 6x the yield of a current one year Treasury note, and over 1,000 percent more than they would have made if their money had been in a CD or savings account over this period.1 Groundfloor’s retail investors create their own portfolios of real estate debt investments in the fix and flip residential housing market, and the loans on which the investments are based are secured by a first lien position against the underlying real asset.

Real Estate Equity Crowdfunding: A New Investment Opportunity for the Investors (EIN News), Rated: A

Talking in context of real estate, there are 3 ways to invest in a crowdfunded real-estate property:

• Equity crowdfunding
• Syndicated debt crowdfunding
• Platform-issued (‘pre-filled’) debt crowdfunding

Following are the pros and cons of going for equity crowdfunding in real estate:

Pros

• High yield potential
• Lower barrier to entry: Even if you have a very less amount of money, you can still invest even in large commercial real estate projects through equity crowdfunding and enjoy the benefits of the real estate i.e., strong returns and lower volatility.
• No self-employment taxes
• Higher returns

Cons

• The risks. An investor should know how to evaluate the risk factors like local economy volatility and chances of higher than expected construction costs. Due diligence is what is required.
• Liquidity constraint: These investments need to be held up for a period of five years or so, and hence one should go for this option if this much bandwidth is available, lack of liquidity is not there, and an investor is comfortable with the invested amount to be tied up for several years.
• It’s still an early option: It is still an early option to be considered as the performance track record and validation is still not complete and individual investors are still trying to figure it out.
• Lack of control: Since it is a passive investment, the investors are not involved in the day to day activities and therefore have limited ability and control over the operations required.

RealyInvest App Empowers Beginners to Invest in Commercial Real Estate (PR Newswire), Rated: A

In a rising tide of fintech apps, RealyInvest is emerging as a new way for beginning investors to access the high-priced world of premier commercial real estate right from their smartphones.

RealyInvestors can purchase fractional shares of REITs (Real Estate Investment Trusts) for as little as $5. Investors can also own shares of commercial real estate NNN Assets, such as a building long-term leased to Starbucks, for as little as $20.

All investments, rental income and dividend earnings can be managed right on your smartphone. Fees range from $1 to $3 per month, depending on investment options.

Silicon Valley Explores a New Investment: Your Home (WSJ), Rated: AAA

A handful of companies, including those backed by marquee Silicon Valley names such as Andreessen Horowitz and Mark Zuckerberg’s philanthropic organization, are experimenting with a product that essentially lets them take an ownership position in a house along with the homeowner. The agreements, called shared-equity contracts, provide a new way for investors to get exposure to rising home prices across the U.S.

Shared-equity products are aimed at new buyers who need help with a down payment, or current homeowners looking for an alternative to a cash-out mortgage refinancing or a home-equity loan. The first use has caught the attention of mortgage-finance giant Freddie Mac ,which recently agreed to buy loans on properties where one firm,Unison Agreement Corp. , contributes to the down payment.

Landed Inc. offers these down-payment contracts to teachers and other educators. Last year, the Chan Zuckerberg Initiative , a philanthropy co-founded by Facebook Inc.’s chief executive, gave Landed $5 million to start a new fund.

The length of the contracts can vary from a few years to 30. Homeowners can repay early, including if they sell their house before the term ends. How much they end up owing depends on how the value of their home changes. Because the funds are equity, not a borrowing, they don’t require monthly payments.

Even Financial inks $ 3 mln (PE Hub Network), Rated: AAA

Even Financial, the technology platform powering financial services online, has secured a strategic investment round totaling $3 million. The round includes an investment from American Express Ventures, the strategic investment unit of American Express, as well as Plug & Play and Arab Angels.

With this investment, Even Financial will expand its team and advance its proprietary technology, which allows financial institutions and other partners to scale customer acquisition and remain competitive in the growing online financial services industry.

Fundrise Reports 2017 Performance. Total Return for the Year Stands at 11.44% (Crowdfund Insider), Rated: A

In brief, this is what Fundrise reported;

“In 2017, Fundrise investments earned an 11.44%* total return on investment, including over $16 million in dividends paid out to investors. Delivering attractive, consistent cash flow is a core part of our mission to offer you a better way to invest.”

Online SMB lending platform Yalber closes $ 20M senior credit facility (Bankless Times), Rated: A

SMB lending platform Yalber closed a $20 million senior credit facility this week, the company announced today.

Blinker Joins With Ally To Enhance The Auto Industry’s Only Peer-To-Peer E-Commerce Platform (PR Newswire), Rated: A

South by Southwest Interactive Innovation Award winner and 2018 LendIt Fintech Industry Award finalist Blinker, the only peer-to-peer e-commerce platform that provides an end-to-end solution for anyone buying, selling or financing cars, announced two major milestones for its business today:

  • Blinker is now available in the largest car markets in the US – Beginning today, Blinker is expanding its proprietary e-commerce and loan origination platform from Texas and Colorado to California and Florida, allowing millions of customers to buy, sell and finance vehicles easier, quicker and safer with other people. Thirty percent of vehicle sales across the US every year are between people, yet private-party marketplaces including Craigslist, Letgo, Autotrader, Cars.com and Facebook Marketplace don’t have services such as integrated financing or lien payoff support. Leveraging artificial intelligence and machine learning, Blinker customers get guidance and tools to complete the entire purchase process themselves, from instant vehicle valuation to real-time auto loan approval to e-signing documents to secure funds transfer, all for free within Blinker’s mobile app.
  • Blinker joins with Ally to offer best-in-class auto protection products – Blinker will now give customers the option to add Ally’s vehicle protection coverage, including Ally Guaranteed Asset Protection (GAP) and Ally Premier Protection vehicle service contracts, for their vehicle purchases in the app. GAP covers the difference between the cash value of a vehicle and what Blinker customers still owe on their loan if the vehicle is totaled or stolen. Ally vehicle service contracts cover the repair cost for over 7,400 mechanical, electrical, safety or digital components, as well as some related expenses like trip interruption, rental car coverage, towing and 24/7 roadside assistance.

Zelle users are finding out the hard way there’s no fraud protection (TechCrunch), Rated: A

Scammers have taken to Zelle, the Venmo alternative backed by U.S. banks, to defraud consumers who believe the service includes the same protections they’ve come to expect from PayPal. A number of customers report having lost hundreds, or even thousands of dollars, over Zelle, when they used it for transactions with people they didn’t know – like tickets bought off a Craigslist posting, for example.

Cyberattacks took $ 56B from U.S. economy in ’16 (American Banker), Rated: A

Malicious cyber activity cost the U.S. economy between $57 billion and $109 billion in 2016, the White House said Friday.

The estimate comes in a Council of Economic Advisers report on the impact of cyberattacks on U.S. government and industry. The report details the range of threats that U.S. entities face from actors including corporations and countries such as Russia, China, Iran and North Korea.

The council’s estimate represents between 0.31% and 0.58% of the 2016 U.S. gross domestic product. For comparison, the report cites a Center for Strategic and International Studies report that estimated the cost of malicious cyber activities against U.S. entities at $107 billion in 2013, 0.64% of GDP that year.

BlockFi Raises 1.55M in Seed Funding (Finsmes), Rated: A

BlockFi, a New York-based fintech company whose first product is a loan for cryptoasset owners, raised $1.55m in seed funding.

Backers included ConsenSys Ventures, Kenetic Capital, PJC, SoFi, Purple Arch Ventures and Lumenary.

The 2018 World’s Most Innovative Companies (Fast Company), Rated: A

03 Square

For extending the benefits of banking

19 Social Capital

For putting values into its ventures

26 Kakao Bank

For marrying social messaging with banking

31 Paytm

For pioneering the cashless economy

42 Stripe

For writing the new startup manual

47 CommonBond

For offering payback

‘Pinterest will get even bigger for us’ says fintech lender Elevate Credit (The Drum), Rated: A

Speaking to The Drum in the final instalment of a four-part video series with Falcon.io exploring social media strategies, she admitted that while it can be a challenge, using data to understand her audience’s wants and needs has helped her shape content which is likely to resonate.

Fox says she has been finding success on the unlikeliest of social media platforms – Pinterest.

“All our content is more lifestyle focused than finance focused,” she explained.

OpenClose Bolsters Software Integration and Support Teams (Send2Press), Rated: B

OpenClose, an industry-leading multi-channel loan origination system (LOS) and mortgage fintech provider, announced that it has added staff to its integration and customer support departments. The new hires will help enhance OpenClose’s existing software products, facilitate digital mortgage processes, produce fintech-level innovation and provide excellence in customer support. The company also recently added three senior software engineers to its development team.

3 Loans for Students You Should Avoid Like the Plague (Student Loan Hero), Rated: B

1. Payday loans

You usually have only a couple of weeks to repay the loan, and the typical APR is almost 400.00%, according to the Consumer Financial Protection Bureau. If you can’t pay it back and have to take out a new payday loan to pay off the first, you could end up stuck in a vicious cycle of predatory debt.

What you should try instead: payday alternative loan (PAL).

2. Auto title loans

The reality is these short-term loans also have three-digit APRs, and you typically have between 15 and 30 days to repay the loan.

What you should try instead: A short-term campus loan.

$20 / $2,000 = 1%
1% x 365 days = 3.65
3.65 / 60 = 6.08% APR

3. Cash advances

This type of loan isn’t as costly as a payday loan or an auto title loan, but it’s not ideal for two reasons:

  1. Credit cards charge a fee, typically 5% of the advance amount. So, if you withdraw $500, you’ll have to pay $25 upfront.
  2. There’s no grace period with cash advances, so interest starts accruing immediately.

What you should try instead: A 0% APR promotion. Some credit cards offer a 0% APR promotion on new purchases for a period.

United Kingdom

Funding Circle to launch two new mobile apps this year (P2P Finance News), Rated: AAA

The business lender, which currently only has an iPhone app for investors to access, monitor and manage their accounts, is now advertising for a global mobile apps product manager and for an Android developer.

Both positions are based in the UK.

“We have an ambitious roadmap for this year and want to launch two new apps (Android and iOS) for our investors,” the job advert on the Funding Circle website said.

LendInvest Announces Launch of Buy-to-Let Online Calculator for Intermediaries (Crowdfund Insider), Rated: AAA

On Tuesday, LendInvest announced the launch of its new buy-to-let (BTL) online calculator for intermediaries.

 

P2P business lending up 51% (Bridging&Commercial), Rated: A

The value of P2P business lending grew by 51% during 2017, according to new research from the British Business Bank (BBB).

The report also found that the value of SME asset finance deals was up 12%.

Although net bank lending volumes remained positive (£700m in 2017), it was weaker than in both 2016 (£3bn) and 2015 (£2bn).

The BBB found that there had been a significant increase in both the value and number of SME equity deals, up 79% and 12% respectively.

Online lenders and banks may operate as ‘joint ventures’ (P2P Finance News), Rated: A

ONLINE lending platforms may partner with banks to fund and market credit products in the future, even sharing the approval process and compliance, in one scenario outlined by global banking regulators.

A number of peer-to-peer lenders have already partnered with banks on a smaller scale. For example, Metro Bank has lent through Zopa’s platform and Santander has referred borrowers to Funding Circle. However, these tie-ups have not gone as far as the report’s scenario suggests in terms of becoming a joint venture.

Crowdfund sites ‘are not explaining the dangers’ (The Times), Rated: A

Square Pie, which started life as a stall in London’s Old Spitalfields Market, expanded with the help of a “pie bond” that promised 8% annual interest over four years. The bond was offered through one of Britain’s biggest crowdfunding platforms, Crowdcube.

A total of 324 investors signed up, lending more than £650,000 to fund Square Pie restaurants and its efforts to improve supermarket sales. Square Pie has gone into administration — the first failure of a business that issued a mini bond on a crowdfunding site.…

Crypto lending platform nears launch (AltFi), Rated: A

Lendingblock is one such business. The soon-to-launch platform is, in its founder Steve Swain’s words, “an open exchange for cryptocurrency loans”.

Lendingblock is in the middle of a three-stage Initial Coin Offering that will conclude in March. The first phase has already been completed, raising the equivalent of $500,000. The offering has a hard cap of $10m.

Number of farming building conversions falls 20 percent in a year (FarmingUK), Rated: B

The number of conversions of farm buildings into new homes dropped 20% in the last year, denting hopes that these conversions could help solve the rural housing crisis.

According to Lendy, one of Europe’s largest peer-to-peer lending platforms, only 1,511 agricultural-to-residential conversion applications were approved in 2016/17.

China

The New Year to Bring a New Flood of IPOs (CapitalWatch), Rated: A

Golden Bull Ltd., an online peer-to-peer lending platform in China, plans to offer up to $9 million in shares on Nasdaq under the ticker symbol “DNJR.” The Shanghai-based company, which was founded in 2015, provides borrowers access to short-term loans.
European Union

Finnest Expands Online Financing to Larger Corporations, Adds Institutional Investors (Crowdfund Insider), Rated: AAA

Finnest is an interesting online lender operating in the DACH countries. The peer to peer platform was launched to provide SME funding supported by individual investors but the company is now expanding by providing loans of €10 million and higher. Institutional investors such as insurance companies, funds, family offices and banks will now be able to invest in large SMEs on “FinnestPro.”

Why it’s OK that the majority of consumers don’t know about Open Banking – for now (AltFi), Rated: A

The new EU legislation on payment services – PSD2 – and the introduction of Open Banking in the UK seem to have passed the vast majority of people in the country by, according to an AltFi News article last month.

This referred to a report by Which saying that 92 per cent of consumers hadn’t even heard of Open Banking.

International

How Millennials are Moving Emerging Markets (Morningstar), Rated: AAA

Millennials in advanced economies have come under pressure in recent years, thanks to stagnating wages, rising house prices and escalating student debt. But an altogether different trend is taking place in many emerging markets where millennials are seeing their prospects rapidly improve. This in turn is creating an investment opportunity, as millennials in these countries are becoming hugely influential on the prospects for emerging market equities.

Millennials will account for half of the global workforce by 2020, meaning they will be one of the most influential groups in shaping the economy and society, including consumption habits, policy and how companies may want to market and brand themselves. They are disrupting traditional industries and companies are having to adapt. This presents investment opportunities, but it also presents new investment risks.

Latest ICO Updates on VLR Token – Valorem Foundation ICO is LIVE! (TechBullion), Rated: A

Based on ERC-20, the multilayered cryptocurrency platform will host a marketplace that allows developmental phases. The first phase focuses on micro loans (small loans), rent payments, student loans and peer-to-peer payment processing.

As trust grows on the platform, phase 2 will be implemented to cater to sales distribution, global small business investing and global commercial and residential real estate crowdfunding while the third stage will serve charity and insurance. The final phase will be dedicated to maintenance and future developments that may include additional currency adoption, feature adding etc.

Valorem (VLR) is the token offered. The exchange rate stands at 1 ETH= 1000 VLR. There is a total supply of 200 million tokens of which 150 million are available during the ICO and 50 million will be kept in reserve. Valorem will not be mined.

Wealth managers must go digital (Raconteur), Rated: B

People born between roughly 1982 and 2002 are set to receive the biggest inheritance boom of any post-war generation. The Royal Bank of Canada (RBC) estimated the figure will be around $4 trillion in the UK, Canada and United States.

An Interview with Kirill Suslov – The CEO at Finom and TabTrader Founder (NewsBTC), Rated: B

NewsBTC: Now it seems that you have no experience with banking services yet. How do you plan to cover this area?

Now I can say we understand confidently how banking works and how it should work in the crypto industry. By 2020, we’re going to have a licensed bank and transform it into a crypto one with a network of crypto terminals.

A bit sooner, in 2018, we plan to release crypto e-wallets with linked debit cards. Miners will be able to use recently mined coins right away, transferring them to their wallets immediately. We’re also designing a platform for peer-to-peer lending.

Australia

Peer To Peer Lending Increasingly Popular In Australia (compare dinkum), Rated: AAA

Australian investors and borrowers are increasingly adopting peer to peer lending platforms according to the results of survey undertaken by ASIC. The results of the survey suggest that as much as $300 million of personal and business loans were underwritten by peer to peer lenders over the course of the last fiscal year. That represents a doubling in the amount that was lent on such platforms during the 2015/2016 financial year.

Why Australia needs a better system for credit scores (The Converstion), Rated: AAA

Australia’s credit rating system is failing both borrowers and lenders. Many borrowers are unaware of their own credit scores and our research shows they have trouble applying for suitable loans. Lenders are also struggling with too little information, causing them to extend loans to those they shouldn’t and restrict loans to worthy borrowers.

Upcoming changes to Australia’s credit reporting system could remedy these issues.

Under the new credit reporting regime, both lenders and borrowers will have access to more data, such as monthly payment histories on loans and credit cards.

More innovation ahead in mortgage lending

For higher-risk borrowers, novel techniques to assess credit risk (such as analysis of social media accounts) may be the answer to distinguish good borrowers from bad.

But prior experience from an over-reliance on credit scores in the United States shows that careful assessment of borrowers remains vital.

India

Refer to these fintech startups for range of medical loans (Business Standard), Rated: A

Among all the personal the medical loan is the most crucial one which is often required on an urgent basis by the applicants.

Recently a host of Financial technology(Fintech) and Non-financing related start-ups have been launched in providing a variety of medical to the clients.

Canada

They couldn’t get loans from their banks so turned to a legitimate-looking lender online (The Star), Rated: AAA

Unable to qualify for a loan from her bank, Johnston searched online for private lenders and found a website for what appeared to be a legitimate company calling itself North Clear Credit.

Everything about it — the variety of loans offered, the glowing testimonials, the company description — seemed professional. In fact, a customer who later reported North Clear Credit to police says an officer told her the website looked legitimate.

For Johnston and Mood, the terms were appealing. The money could be paid back monthly over five years at an interest rate substantially lower than what they would be charged elsewhere.

Johnston completed an online application and was approved for a $20,000 loan.

Within a few days, Johnston and Mood had lost $3,500, and two North Clear Credit “representatives” with whom Johnston had been corresponding had disappeared.

Blackchain Announces Private Placement (Stockhouse), Rated: A

Blackchain Solutions Inc. (the “Company” or “Blackchain”) (CSE: BIS), announces a private placement of up to 3,400,000 units at a price of $0.18 per unit, for gross proceeds of $612,000.  Each unit consists of one common share and one share purchase warrant.  Each warrant is exercisable at a price of $0.22 per share for a term of two years.

Proceeds generated from this financing will be used to initiate and support the filing of multiple patents and trademarks related to the Blackchain Crypto Credit Rating API and P2P Lending Platform.

Authors:

George Popescu
Allen Taylor

Thursday January 25 2018, Daily News Digest

blockchain equity rounds

News Comments Today’s main news: SoFi to roll out checking accounts. Zopa re-opens to new customers. Roostify integrates with LendingTree. China regulator says credit market should adopt blockchain. ETHLend hits 1M GBP in P2P crypto loans. Borrowell launches free Equifax credit report monitoring. Brazilian payments company sets post-Snap IPO record. Today’s main analysis: Blockchain equity funding vs. ICOs. Today’s thought-provoking articles: […]

blockchain equity rounds

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Egypt

Canada

South America

News Summary

United States

SoFi will roll out checking accounts this spring (Tearsheet), Rated: AAA

SoFi is rolling out checking accounts without a banking license, demonstrating the new reality that a company doesn’t have to be a bank in order to bank customers.

By partnering with the Wilmington, Delaware-based WSFS Financial, SoFi will roll out a fee-free checking account and debit card this spring in a bundle it’s calling SoFi Money, designed to address the pain points customers have with day-to-day banking products, like high fees and clunky digital interfaces, executives said at a media gathering in New York Tuesday morning. SoFi Money will include peer-to-peer transfers between SoFi customers, mobile check deposit and high yield interest rates on deposits (0.75 to 0.85 percent). It will be available first to current SoFi members before the broader rollout.

Five challenges facing SoFi’s new CEO (American Banker), Rated: A

Reforming SoFi’s culture.

Determining when to go public. SoFi has a number of key shareholders who might like to access wealth that is tied up in the company’s shares. That list includes the Japanese conglomerate SoftBank, which led a $1 billion equity financing round in 2015, and the venture capital firm Silver Lake Partners, which led last year’s $500 million round. That round reportedly valued the privately held company at more than $4 billion.

Deciding how to grow. But while student loan refinancing proved to be an excellent way to find new customers during a period of low interest rates, that opportunity is now shrinking, as rising interest rates reduce the spread between what borrowers pay the federal government and what SoFi can offer.

Yes or no on a bank charter? 

Proving that he has the right background. Noto does not appear to have any experience in consumer financial services, which could be viewed as a weakness.

Roostify Announces Integration With LendingTree (BusinessWire), Rated: AAA

Roostify, a provider of automated mortgage transaction technology, today announced that it has integrated its online mortgage platform with LendingTree (NASDAQ: TREE), the online loan marketplace. The new integration makes it easier than ever for consumers to locate and apply with the right lender.

Lenders can utilize the new integration to create a seamless path for consumers to search, select, apply for, and close a loan online. Consumers selecting an offer on LendingTree from a lender using Roostify will be able to authenticate into the lender’s Roostify-powered online experience, with all information securely pre-populated. The consumer can move from shopping around to getting their loan in just a few clicks, streamlining the experience and improving lead quality for lenders.

The integration will enter general availability in Q1 2018 for all joint clients of Roostify and LendingTree.

2018’s Best Online Checking Accounts (WalletHub), Rated: AAA

More than 6 in 10 people don’t realize that online-only banks offer better rates and lower fees than their counterparts with branch access, according to WalletHub’s 2018 Banking Survey. But it’s true. What online-only accounts lack in terms of face-to-face interaction, they make up for with superior terms. For example, the average online checking account costs 47% less than its branch-based counterpart, according to WalletHub’s latest Banking Landscape Report. And the average online savings account pays 457% more interest than the branch alternative.

Best Online Checking Accounts – Editors’ Picks

Best For… Online Checking Account Best Feature
Overall Aspiration Summit Account APY up to 1.00%
Highest APY Consumers Credit Union Free Rewards Checking APY up to 4.59%
Debit-Card Rewards Bank5 Connect High-Interest Checking Account 1 point per $2 spent
No Monthly Fee BofI X Checking


Capital One 360 Checking Account

No ATM fees


No ATM fees

International Travel Charles Schwab High Yield Investor Checking No foreign fee
Money Management Tools PNC Bank Virtual Wallet Spending analysis

RealtyMogul Boosts REIT Cred with Hire of Industry Veteran Aaron Halfacre as President (Crowdfund Insider), Rated: A

RealtyMogul, a leading real estate crowdfunding platform offering Reg D (accredited) and Reg A+ (both accreds and non-accreds) investment opportunities in commercial and residential property, has hired a new President to help lead the firm. Aaron Halfacre, a 20 year real estate executive, has joined RealtyMogul bringing in institutional expertise including in the hot REIT sector.

Aaron Halfacre Becomes RealtyMogul’s First President (Bisnow), Rated: A

A former Campus Crest president and chief investment officer, Halfacre took a year and a half break after the publicly traded student housing REIT was acquired by Harrison Street Real Estate Capital in a $1.9B deal.

As president of RealtyMogul, Halfacre will be responsible for creating a strategy, growing assets and augmenting business growth. He will serve as a voting member of the firm’s investment committee, which has invested in more than $1.4B of real estate since 2013, the company reports.

Juvo Receives Investment from Samsung to Boost Smartphone Usage Among Underbanked (Finovate), Rated: A

Mobile identity company Juvo has received an investment from Samsung NEXT, an off-shoot of Samsung that launched in 2013 to create new software and foster a startup culture at Samsung. The amount of the investment was undisclosed and adds to the San Francisco-based company’s $54 million in equity funding.

The bigger story here is that the investment is a strategic one. Samsung will bring Juvo access to billions of underbanked prepaid users across the globe. This will help Juvo enable MNOs to increase smartphone adoption among prepaid mobile subscribers.

The challenger bank Chime says it has 750,000 millennial customers (American Banker), Rated: A

Chime, a mobile-only neobank for millennials, said Tuesday that it has opened 750,000 accounts to date and is signing up users at a brisk pace this month.

The growth is extraordinary. While there are many other mobile-only challenger banks in the U.S. — including Qapital, Digit and, more recently, Varo and Douugh — few have racked up large numbers yet. Chime touts a low-fee checking and savings account with a debit card and an app that provides automated savings and real-time notifications; there are no monthly or overdraft fees nor minimum-balance requirements. The Bancorp Bank holds the federally-insured accounts.

The reason why most people get rejected for a personal loan (Yahoo! Finance), Rated: A

LendEDU, a marketplace for loans and financial products, just released data showing that 76% of people who apply for a personal loan are declined. One of the main reasons for rejection? A low credit score. The average American has a credit score of 687. Meanwhile, the average FICO credit score of an approved applicant was 741.

Of those who do get approved, LendEDU predicts that just 35% went on to accept the personal loan.

Currently, 16 million consumers have an unsecured personal loan. According to a TransUnion, personal lending balances grew a steady 10.8% in the second quarter of 2017, totaling $108 billion.

Back in 2010, fintech only made up 3% of personal loan lenders. In 2015, Transunion says that number jumped to 30%.

Why fintech is still a way off disrupting lending (Financial News), Rated: A

But of the many things that banks do, lending to small and medium sized companies (‘SME’ lending) is one of the more complex areas to emulate. It is also politically charged. As such, there is some evidence that the disruption attempted in the area of lending is itself being disrupted by the practicalities of a complex area of finance.

Citi’s mobile app is lagging behind its peers (Tearsheet), Rated: A

The fourth-largest bank by assets grew its total active mobile users 21 percent year over year to nine million, the bank reported last week in its fourth-quarter earnings.

By contrast, Chase reported 30.1 million users, Bank of America 24.2 million and Wells Fargo 21.2 million.

Citi’s growth rate for 2017 was stronger though, at 21 percent year over year, than its peers’. Chase reported 13 percent growth, Bank of America 12 percent and Wells Fargo 8 percent.

Mulvaney outlines new CFPB governing philosophy (The National Law Review), Rated: A

In a memorandum to CFPB staff and a Wall Street Journal article, Mr. Mulvaney described his governing philosophy for the CFPB’s exercise of its authority.

  • While observing that there will be times when “dramatic action” is needed to protect consumers and that, at such times, he expected the CFPB “to be vigorous in [its] enforcement of the law,” Mr. Mulvaney stated that “bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed.”
  • In using its enforcement authority, the CFPB will focus on “quantifiable and unavoidable harm to the consumer” and when such harm does not exist, the CFPB “won’t go looking for excuses to bring lawsuits.”  In addition, there will be “more formal rule making and less regulation by enforcement”  because “the people we regulate should have the right to know what the rules are before being charged with breaking them.”
  • CFPB priorities should be guided by data such as 2016 complaint data which showed that “almost a third of the complaints” received by the CFPB related to debt collection and “[o]nly 0.9% related to prepaid cards and 2% to payday lending.”
  • In light of the Dodd-Frank Act requirement for the CFPB to “consider the potential costs and benefits to consumers and covered persons,” CFPB decisions should be driven by quantitative analysis.  Although qualitative analysis can play a role, it should not be to the exclusion of measurable “costs and benefits.”

Read the memo for yourself here.

What you thought you knew about millennials is wrong (American Banker), Rated: A

Sixty-three percent say they are saving money. This is very close to the rate of Gen Xers (64%) and baby boomers (75%).

Fifty-four percent of millennials say they are on a budget, the same level as Gen X and only slightly below the rate of boomers (57%).

They are diligent about savings and budgeting: 67% of millennials who have a savings goal stick to it. And 73% of millennials on a budget adhere to it regularly.

And 59% say they feel financially secure, compared with 54% of Gen Xers and 63% of baby boomers.

Making it in GR: Lessons in crowdfunding (Rapid Growth), Rated: A

Last month’s “Making it in Grand Rapids” article focused on the ever-expanding alternative financing options for entrepreneurs, such as: impact investment funds, peer-to-peer lending solutions and crowdfunding platforms. Grand Rapids entrepreneur Don Rhoads is Owner/Inventor of At Last Industries (At Last), which created the BedBud Alarm. He is also Head of Development at Cut Through Creative. Rhoads shares his progression from having an idea through the development and launch of his Kickstarter campaign—and the insights he learned along the way.

RG: A recent Small Business Credit Survey reported that “70 percent of startup applicants are in need of funding to support [their growth]” and that “52 percent of startups [have] applied for financing.” Did you pursue any avenues before deciding on crowdfunding?

DR: Yes. I actually applied for and presented at a 5×5 Night. Unfortunately, I didn’t win that one, but as much as I was disheartened, I was still [determined to] fulfill the product. Also, through traditional bank loans, I applied through my current bank. It was a little bit difficult. In a startup, it is difficult to put a value on a business. [Banks] want capital behind it because most startups fail anyway, so they want some substance behind you so they can get their money back. I was told I would need to be a little bit further down the line to get additional funding.

Technology and the Future of Financial Advice (Janus Henderson), Rated: A

Technology arrives in waves and is embraced over an adoption curve. These waves are growing stronger – in large part because technology is becoming ever more powerful. Over time, we have seen these waves play out in financial planning, too.

It is worth looking at two of the challenges faced by the industry now. The first is demographics. Clients have grown older and wealthier, but they are not being replaced within the market for traditional advice services. This is creating an advice gap for firms who need to replenish their client bases.

The second big issue is that consumer engagement is challenging. Long-term thinking hurts. As Daniel Kahneman articulated in Thinking, Fast and Slow, human beings do not easily think about the future in an analytical way and there remains room for improvement in financial literacy among the public. Add to that the low levels of customer trust for the industry and many consumers are not switched on to the benefits of financial advice.

Source: National Financial Literacy Test Results.
United Kingdom

P2P platform Zopa re-opens to new customers (Financial Times), Rated: AAA

Zopa, the UK’s first peer-to-peer lender, has reopened its platform to new customers after having to close to new money last year amid high demand for its new Innovative finance Isa (Ifisa) product and a long-running imbalance between lenders and borrowers.

Fintechs impatient as British banks seek extra time to open up (NASDAQ), Rated: A

Financial technology firms were supposed to start breaking into mainstream banking this month when new rules forced Britain’s nine big banks to loosen their grip on the industry.

But many fintech companies are still waiting with frustration on the sidelines after the banks delayed making the changes.

Financial technology firms were supposed to start breaking into mainstream banking this month when new rules forced Britain’s nine big banks to loosen their grip on the industry.

But six of the nine banks have asked Britain’s regulator for an extension to the January 13 deadline for putting in place the ‘open banking’ regulation, which overlaps with a new European Union directive known as PSD2.

UK fintech takes the lead in the Forbes 30 under 30 (AltFi), Rated: A

The gender balance has been particularly notable in the finance sector this year, as Forbes named Starling Bank’s Chief Platform Officer, Megan Caywood, and Lendable co-founder Victoria van Lennep alongside her business partner Martin Kissinger, as ones to watch.

In the technology category, Monzo co-founder Jonas Huckestein and the co-founders of digital receipts startup Flux all found themselves highlighted by Forbes.

China

China’s Banking Regulator Pushes Blockchain Adoption for Credit Market (CoinDesk), Rated: AAA

Blockchain technology should be adopted as part of a plan to boost development of China’s secondary loan market, according to a paper by the China Banking Regulatory Commission (CBRC).

Published on Jan. 19, the paper, drafted by a special committee, covers a variety of topics around developing and regulating financial technologies. In a section on the future development of China’s credit market, it suggests the country should double down its adoption of blockchain technology.

Download and read the report yourself here (in Chinese).

Ant Financial and the Greening of Fintech (The Diplomat), Rated: A

Ant Financial, an affiliate of Alibaba, is one clear example of a company using fintech to encourage a greener world.

Ant Forest is the world’s first largescale, bottom-up pilot in greening citizens’ consumption behavior through the use digital technology and social media. It is an app that Ant users can voluntarily engage with to reduce their carbon footprint and encourage their social networks to do the same. Users that perform carbon-reducing activities, such as paying bills online or walking to work, relative to a predetermined benchmark, are rewarded “green energy” points. As users accumulate enough points virtually, a real tree is planted. To date, Ant Forest has planted saxauls, willows, and Scots pine trees in Inner Mongolia and Gansu.

Ponzi scheme sparks protests (The Standard), Rated: B

Chinese authorities are struggling to quell protests after the collapse of an investment scheme that took about 30 billion yuan (HK$36.7 billion) from millions of depositors.

Hundreds of people marched on Monday in Nanjing, where Qianbao started in 2012, shouting for officials to act. But a video shows police grabbing investors as others yelled about being beaten up.

European Union

Ten User’s Pain Points Digital Banking and FinTech Should Care Of (Finextra), Rated: AAA

Studies have shown that users tend to quickly switch products and services. This also concerns banks as the competition and the number of Open Banking services increase due to the implementation of the European Directive PSD2.

1. Onboarding

Onboarding becomes particularly important in digital era. It can be a productive introduction to a new service or a challenging obstacle that deters customers. The banks of the future should provide a full digital onboarding.

2. Authentication

Log in difficulties or problems shouldn’t create obstacles for the customer. After all, no one would go to a restaurant with a locked door.

5. Transactions

Users should be able to fully control their banking. It is crucial for them to find a certain transaction and download a payment slip. View transaction history is among the TOP 3 customer scenarios. This function should be simple and understandable. Users want to filter their transactions to find specific items, view detailed information, report a violation, check payment status, export and save them, etc.

6. Payments

We are pleased to see that bank payment interfaces are becoming simpler each year. Digital technologies allow us to move complex banking procedures to the background. Challenger Banks ar a good example here.

The purpose of payment limits is to ensure the user’s security. The user should have online access to a flexible configuration of any financial transaction.

8. Notifications

There shouldn’t be too many notifications, only relevant ones.

Conclusion

Being in the users’ shoes and finding pain points in products and services will be a crucial competitive advantage. Companies recognising this issue will take a leading position in the future financial market.

International

ETHLend hits £1m crypto-P2P loans milestone (P2P Finance News), Rated: AAA

CRYPTO-BACKED peer-to-peer lending platform ETHLend has funded $2m (£1.4m) of loans in just over a month since launching.

The platform, which lets investors back business and personal loans worldwide n the Ethereum (ETH) digital currency, only went live in December but says it has already facilitated 438 loans.

Its biggest loan so far was for 83ETH, equivalent to £58,681.

Blockchain Startups Absorbed 5X More Capital Via ICOs Than Equity Financings In 2017 (CB Insights), Rated: AAA

In Q1’17, 19 ICOs closed for about $21M. Three quarters later, in Q4’17, over 500 ICOs closed for almost $3B. According to CB Insights, 2017 saw over 5x more capital deployed in ICOs than in equity financings to blockchain startups. Q4’17 alone saw that number jump to 7x.

In total, ICOs raised over $5B across nearly 800 deals in 2017. To put those numbers into context, equity investors deployed $1B in 215 deals to the sector.

GDS Link Acquires Fraudscreen, the UK’s Leading Provider of Analytics to Predict Payment Intent (GDS Link Email), Rated: A

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business lending and leasing, today announced that it has finalized the acquisition of 

Finastra sees accelerating FusionFabric.cloud adoption (Finastra Email), Rated: A

At its regional flagship thought leadership event, Finastra Universe Paris,Finastra today welcomed new companies to the FusionFabric.cloud open architecture. Among the early adopter Fintechs, consultants, banks and academics using the platform to develop and deploy innovative apps are Efficiency MC, Conpend and BankBI. In addition, Thomson Reuters joins Finastra’s innovation ecosystem as a data provider.

Thomson Reuters is currently embedding its instrument reference data into FusionFabric.cloud.

Paris-based system integrator, Efficiency MC, is using the platform to develop an interest rate derivatives pricing model app.

European Fintech, Conpend, is using FusionFabric.cloud to develop apps for corporate banking.

Cloud focused Fintech, BankBI, has a Performance Management and Analytics application for FusionFabric.cloud to complement the Finastra retail banking solutions, including C-suite dashboards.

Australia

The everyday Aussie is increasingly choosing a peer to peer personal loan – here’s why (mozo), Rated: AAA

ASIC’s second marketplace lending survey revealed that $300 million worth of personal and business loans were written by peer to peer lenders during the last financial year – almost double the amount commissioned during the 2015/2016 financial year.

The snowballing popularity of these types of loans is measured by the fact that, as of June 2017, the industry had 7,768 investors and a further 18,746 borrowers – numbers that had doubled over the preceding 12 months and are only set to grow in the new year.
Comparatively, at the lowest peer to peer rate in the Mozo database of 6.99% (on offer from Harmoney), the average Aussie borrower would pay just $5,634 in interest on the same loan – saving more than $4,000 in the process.

Stuart Stoyan is FinTech Australia’s new chair (Business Insider), Rated: B

Stuart Stoyan, the founder and CEO of Melbourne-based fintech MoneyPlace, which in 2015 became Australia’s second fully licensed marketplace lending platform, has become FinTech Australia’s new chair.

India

RBI Directions On Peer To Peer Lending Platforms: Frequenly Asked Questions (Mondaq), Rated: AAA

2.2  Electronic platforms connecting banks and NBFCs to borrowers

The RBI has clarified that electronic platforms that assist only banks, non-banking financial  companies (“NBFCs”) and other regulated All India Financial Institutions (“AIFls”) to identify  borrowers will not be considered peer to peer lending platforms  (“P2P Lending  Platforms”).   However, in cases where,  apart from banks, NBFCs and AIFls, or other retail lenders use the  electronic platform for lending, the platform will have to register separately as a non-banking  financial platform –  peer to peer lending platform (an “NBFC-P2P”).

2.3  Leverage ratio and investible funds for an NBFC-P2P

The RBI has clarified that for an NBFC-P2P, customers’ funds lent or borrowed by using the platform  is not reckoned as an outside liability of the NBFC-P2P, for the purpose of determining the  leverage ratio of the NBFC-P2P.

(a)  Do the P2P Lending Platforms have to fulfil the 50-50 test issued by the RBI to fall  within the purview of the P2P Directions?

The RBI, with its clarification that an existing NBFC cannot operate as an NBFC-P2P, has clarified  that the 50-50 test set out by the RBI to qualify as a non-banking financial company is not  applicable to an NBFC-P2P.

VC Firm 3one4 Capital Announces Second Fund With An Initial Corpus Of $ 39 Mn (Inc42), Rated: A

With closed commitments for $39 Mn, the 3one4 Capital team will look to enhance its deep involvement model across its investment domains. The fund will invest early stage startups with ticket sizes of $250K to $2 Mn.

Asia

Tryb Group raises $ 30M to develop fintech platforms for Southeast Asia (TechCrunch), Rated: A

Tryb Group, a Singapore-based organization focused on fintech services in Southeast Asia, has landed a $30 million investmentfrom Makara Capital.

For a Western comparison, Tryb aspires to be like LendingClub with a focus on digitizing the predominantly analog systems of financial services and banking in Southeast Asia, a region of over 600 million consumers.

“There’s strong demand to start buying ASEAN credit, with Japanese, Chinese, American and other investors looking to buy up $50-100 million worth. But they don’t know where to start since it’s all on paper,” he said.

Currently, the Tryb business doesn’t make direct revenue. It holds stakes in a number of businesses — including MC Payment which is in the process of going public in Singapore — but Gnirck said it has two acquisitions that he expects to finalize in the coming months.

Genie ICO Adds Cryptocurrency Heavyweight David Drake and Other Experts to Its Advisory Board (CoinTelegraph), Rated: B

Joining the Crowd Genie advisory board is David Drake, Founder and Chairman of LDJ Capital, who is also a global pioneer in the cryptocurrency industry and has written for more than 100 publications on innovative investing. Also joining the board is serial entrepreneur Petter Sehlin, who is a Founding Partner of global angel fund True Global Ventures and founder of the Polarchain blockchain. The founders of one of the world’s most comprehensive online cryptocurrency databases and information resources, AllCoinWiki, Anders Larsson and Joakim Holmer have also joined the board.

MENA

Egypt’s fintech startups are growing in number, value, and specialization (wamda), Rated: AAA

Financial inclusion is critical in reducing poverty and achieving shared economic growth, as mentioned The Global Findex Database 2014: Measuring Financial Inclusion around the World’: When people can participate in the financial system, they are better able to start and expand businesses, invest in their children’s education, and absorb financial shocks.

According to figures shared with Wamda by the World Bank Global Findex database, only 14 percent of adults in Egypt have an account as of 2014, and eight percent use an account to make digital financial payments. The Findex said that about 86 percent of adults in the country do not have an account and are therefore considered unbanked.

The model of Fawry, has demonstrated the validity of such business models, and has driven several concepts to launch.” Fawry, which was launched in 2008, provides payment solutions through ATM machines, mobile wallets, and retail points.

Egypt-based fintech startup Moneyfellows raised $600,000 from a group of investors led by Dubai Angel Investors and 500 Startups. This web and mobile-based platform founded in December 2014, allows users to create, manage, and track money circles (group money lending) online with members of their social networks. The startup makes money by charging users a small fee when they withdraw their payout from their money circle. So far, the startup has around 2,600 paying users and about 240 active circles.

Vapulus, which launched in December 2017, partners so far with 400 retail and F&B merchants in the country, and aims to reach 16,000 within one year of operation. The startup is a mobile app and mobile POS service for both individuals and sellers.

Canada

Borrowell launches free Equifax credit report monitoring, a Canadian first (GlobeNewswire), Rated: AAA

Borrowell today announced that it is providing Canadians with free access to their Equifax credit reports. For the first time, Canadians will be able to monitor important information in their Equifax credit report on a monthly basis, including credit utilization, inquiries and credit account history, for free online.

To date, Borrowell has provided credit information to nearly half a million Canadians.

Canada Venture Capital 2017 (CB Insights), Rated: A

Annual funding to Canada hits high in 2017

  • Total annual funding reached $2.7B, distributed across 333 deals in full-year 2017.
  • Total funding increased 7%, while deal activity decreased by 12%.
Source: CB Insights
South America

NYSE’s Biggest IPO Since Snap Is $ 2.3 Billion for Brazil Fintech (Bloomberg), Rated: AAA

PagSeguro Digital LTD, a payments company owned by Brazilian media group Universo Online SA, raised about $2.27 billion in an initial public offering on the New York Stock Exchange, according to Bloomberg data.

The company, which has a similar model to Jack Dorsey’s Square, sold shares at $21.50 each, above the top of the price range of $17.50 to $20.50 in the offering prospectus, with demand higher than underwriters expected. The equity offering is the largest on the New York Stock Exchange since Snap Inc in March 2017. Investors warmed to the stock, which rose as much as 36 percent to $29.25 in early trading.

Authors:

George Popescu
Allen Taylor

Monday December 4 2017, Daily News Digest

mortgage delinquencies by credit score band

News Comments Today’s main news: Lending Club closes first-of-kind MPL transaction. Zopa the first P2P lender to lend 100M GBP in one month. Marcus’s personal loan hits the mark. China issues new rules for cash loan market. Lexinfintech delays IPO. China Rapid Finance posts quarterly earnings. Today’s main analysis: Mortgage delinquency case study. International P2P lending volumes. Today’s thought-provoking articles: China […]

mortgage delinquencies by credit score band

News Comments

United States

United Kingdom

China

International

Australia/New Zealand

India

Asia

Canada

Africa

News Summary

United States

LendingClub Closes First-of-Its-Kind Transaction in Marketplace Lending (PR Newswire), Rated: AAA

LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, today announced that it has closed a first-of-its-kind transaction in marketplace lending — a whole loan transaction structured as a tradeable, pass-through security called a CLUB Certificate*. This first milestone transaction totaled $25 million with an institutional investor seeking a liquid vehicle with which to access the consumer credit asset class.

The CLUB Certificate transaction consisted of whole loans structured as a pass-through security. The instrument trades in the over-the-counter market with a CUSIP and is efficiently cleared through the Depository Trust and Clearing Company (DTCC).

Lending Club diversifies with pass through deal (Global Capital), Rated: A

The $25m transaction was purchased by an institutional investor seeking “a liquid vehicle with which to access the consumer credit asset class”, chief capital officer Patrick Dunne told GlobalCapital, though he declined to reveal pricing information or the buyer’s identity.

The inaugural CLUB certificate consists of whole loans structured as a pass-through security, and trades in the over-the-counter market with a CUSIP number, and cleared through the Depository Trust and Clearing Company (DTCC).

Unlike a securitization, the certificate only pools three year and five year loans of a particular grade that the investor is looking for.

Goldman Sachs’ Marcus Personal Loan Hits the Mark as Other Lenders Struggle (LendEDU), Rated: AAA

When Goldman Sachs launched Marcus, a personal loans product, a little over a year ago, it set an aggressive goal: lend $2 billion by the end of 2017. And while competing online lenders have reported a series of losses since then, Goldman announced this month that Marcus has hit that milestone.

Marcus offers loans from $3,500 to $30,000 on an unsecured basis, meaning they don’t require collateral such as a car or house. Borrowers must make monthly fixed payments, and interest rates range from 6.99 percent to 23.99 percent. On the Marcus website, a sample loan of $15,000 at 13 percent APR is estimated to cost a borrower $19,312 at the end of a 48-month term.

While Marcus has been soaring, other online lenders have been struggling. Lending Club, Prosper, and OnDeck all reported losses over the past 18 months.

Donuts at the CFPB, LC’s Pass-Through Security, Mortgage Delinquency Case Study (PeerIQ), Rated: AAA

On Friday, Lending Club completed a first-of-its-kind transaction in marketplace lending by selling a whole loan pass through security. The transaction size was for $25 Mn and was sold to a single institutional investor. LendingClub held 5% to comply with risk retention rules. The transaction is notable for the following reasons:

  • Expands the market. The pass-through security reflects the same risk and return characteristics of a whole loan pool.
  • Lower Financing Costs. Additionally, as market liquidity grows, the CUSIPs may enjoy lower-cost repo financing as an alternative to higher-cost credit facilities.
  • Secondary Markets. The product addresses certain investors’ demand for secondary market liquidity.
  • Valuation. The price discovery generated from markets in CUSIPs will enable valuation agents such as PeerIQ and Duff & Phelps to calibrate pricing to observed trades in the market.

Mortgage Delinquencies and the 2008 Crisis

Following the integration of TransUnion’s deep datasets on the PeerIQ platform, we examine the historical delinquencies for mortgages over the last 15 years. As seen below, we find that Mortgage delinquencies increased meaningfully, across all credit scores, one-year before the financial crisis.

Source: PeerIQ, TransUnion

We also show that the rise in delinquency levels above corresponds to the rise in Debt-to-Income levels (and other underwriting statistics – not shown) leading up to the crisis.

Source: PeerIQ, TransUnion

There’s a gift for student lenders in the education bill (American Banker), Rated: A

After the 2016 elections, there were high hopes that student lenders (and servicers) would benefit from a more favorable environment regulatory environment and expanded lending opportunities.

Until recently, however, there was not much to show in either respect. While the industry cheered the Department of Education’s decision in August to stop sharing servicing data with the Consumer Financial Protection Bureau, higher education did not appear to be a high priority for the Trump administration.

Ethan Senturia of Dealstruck (Lend Academy), Rated: A

Our latest guest is Ethan Senturia. He was the CEO and Co-Founder of Dealstruck, an online small business lender that was founded in 2013 and shut down in late 2016. Ethan talks about his journey as the CEO of Dealstruck and what led to its demise. He does not sugar coat anything and he takes a great deal of personal responsibility for everything that happened.

His has written a book about this journey called Unwound: Real-time Reflections from a Stumbling Entrepreneur and it is being released on Amazon today.

Beware Those Sketchy Loans Advertised on Instagram (Lifehacker), Rated: A

We’ve warned readers before about new, slick credit companies like Affirm, which want to replace credit cards with on-the-spot loans integrated right into online purchase pages. For all their talk of helping consumers, these companies aren’t much more than friendly loan sharks, re-branded to offer a “premium experience,” but still dangerous and even predatory.

But as Cagle points out, Affirm’s median interest rate of 19 percent is above the median credit card rate, and retailers use the company to build, and then aggressively advertise, the model of buying expensive products on credit. For all of Affirm’s talk of responsibility and helping consumers make better choices, their third most-popular buying category is fashion.

Affirm seems to be making the problem worse. As Cagle puts it: “Affirm is not just meeting a demand, but creating one, encouraging shoppers to buy and spend more. Affirm claims an average 75 percent boost in order values across all its merchant partners.”

MiaDonna Lifts AOV 36%, Repeat Purchases 17% With Financing Option (Retail TouchPoints), Rated: A

With a young, tech-savvy consumer base, MiaDonna, an online jewelry retailer specializing in ethically sourced lab-grown diamonds, wanted to be up-to-the-minute with its payment options as well. The retailer selected financing company Affirm, enabling shoppers to pay in three-, six- and 12-month increments.

MiaDonna, which now makes approximately 20% of its sales through Affirm, noted that shoppers using the service are both spending more and coming back. Affirm users make 17% more repeat purchases, with average order values (AOV) that are 36% higher compared to non-users.

The company’s target consumer is females aged 18 to 34 who are in a relationship and are close to getting engaged or married (within six to 12 months).

Marketplace Lenders Should Remember Experience Can Be Replicated, Experts Say (Bank Innovation), Rated: A

“The borrower experience at a marketplace lender is better than [the experience] at a bank, and that’s why it’s here to stay,” Don Davis, portfolio manager for Prime Meridian Capital Management, said today. during a panel discussion at the 3rd Annual Investors conference for Marketplace Lending, pointing to the ease of the online lending experience for borrowers.

Coinsource Adds 18 Bitcoin ATMs in Atlanta, Among Ten Most Unbanked US Cities (Bitcoin.com), Rated: A

The Texas-based bitcoin ATM network, Coinsource has deployed 20 new machines in the state of Georgia, marking its single largest installation to date. 18 bitcoin ATMs have been installed in the city of Atlanta, and 2 machines in the nearby college town of Athens.

survey by the Federal Deposit Insurance Corporation (FDIC) found that 7% of households (9 million) in the US are unbanked and an additional 19.9% of households (24.5 million) are underbanked.

“Atlanta, Georgia is in the top ten of most unbanked cities in the country, and more than one in ten households have no involvement with traditional banks. Around 30% of residents are underbanked, meaning they might have to check accounts, but have to rely on other kinds of services like pawn shops, check-cashing and payday loan companies to get cash and credit,” Clark said.

To maximize exposure to potential clients, the ATMs were set up near high traffic areas, as well as close to the Georgia State University and Emory University in Atlanta, and the University of Georgia in Athens. 16 of the new machines are for buying bitcoin only, while 4 have both buy and sell functionality.

The state of Georgia now has a total of 101 bitcoin ATM kiosks, making it the third largest US market for bitcoin ATMs behind the cities of Chicago and New York.

Data Science is Becoming the Most Important Skill in Fintech (Lend Academy), Rated: A

The world generates some 2.5 quintillion bytes of data every day.

Chris Skinner penned this interesting piece last week claiming the critical importance of data in banking:

Data is the new air, and the banks that breathe the best will win. In other words, banks that really get data analytics, and can apply machine learning to gain deep customer insights are the ones that will survive.

Data scientists are going to be needed in many areas of fintech businesses such as customer acquisition, cybersecurity, customer service – even compliance. For online lending businesses the other two critical areas are underwriting and collections.

Glassdoor releases an annual 50 Best Jobs in America report and for the second year in a row Data Scientist had the top spot.

Elevate Credit, Inc. to Present at KeyBanc Capital Markets Consumer Conference and Jefferies Consumer Finance Summit (BusinessWire), Rated: B

Elevate Credit, Inc. (NYSE:ELVT), today announced that it’s CEO Ken Rees and CFO Chris Lutes will present at the following upcoming conferences:

CU urges lawmakers to oppose repeal of CFPB’s payday loan protections for consumers (ConsumersUnion), Rated: A

Consumers Union, the policy and mobilization division of Consumer Reports, today urged Congress to not repeal a rule adopted by the Consumer Financial Protection Bureau (CFPB) in October that would protect consumers who take out high-cost payday, installment and auto title loans. Under a Congressional Review Act resolution introduced today in the House of Representatives, the CFPB’s new rule could be repealed by lawmakers before it goes into effect in mid-2019.

New House bill would kill consumer watchdog payday loan rule (CNBC), Rated: B

A congressional resolution introduced Friday in the House would kill the CFPB’s new rule aimed at making sure borrowers of so-called payday loans can afford to repay their debt.

Consulting for regulatory approvals to open a peer to peer lending platform in USA (Upwork), Rated: B

I need an expert who can help with regulatory approvals to open a peer to peer lending platform in USA. You can be a lawyer or financial consultant who have experience in the domain and knows what’s involved. You must have experience related to lending industry.

United Kingdom

Zopa zooms ahead to become the first peer-to-peer group to lend out £100m in a month (City A.M.), Rated: AAA

The financial services firm lent £100m to low-risk borrowers in the UK last month, a 48 per cent increase on November 2016.

Zopa said it has lent more than £900m in 2017 to the end of November, with the increase in lending volumes being driven in part by its integration with price comparison websites.

It expects to have lent out £3bn in total by January 2018.

P2P platforms rush to launch innovative finance Isas (Financial Times), Rated: AAA

Peer-to-peer lenders including Funding Circle and RateSetter have set dates for the launch of their innovative finance Isas, but high demand and a clampdown from providers on the highest risk borrowers will slow the process for new investors.

This week, Funding Circle became the latest to launch an IF Isa.

Yet the platform, which facilitates lending to small businesses, will not be rolling out its IF Isa to new investors immediately to make sure it can match new loans to borrowers. Instead, it is opening access to its 74,000 existing lenders in batches. Those who have used the platform for the longest and who lend most frequently will be offered first chance to apply.

RateSetter also confirmed this week that it had set a February launch date for its IF Isa after receiving authorisation from the Financial Conduct Authority (FCA) in October. The platform, which facilitates loans to businesses and consumers, says it expects to raise £500m in the first full tax year after opening, but would only offer the IF Isa to existing investors in the short term. The platform said it had made that choice to reward loyal customers.

No Christmas cheer for P2P sector as Brexit pushes FCA review into 2018 (P2P Finance News), Rated: A

PEER-TO-PEER lending platforms will need to wait until at least the new year for the outcome of the Financial Conduct Authority’s (FCA) post-implementation review as Brexit and other market issues have taken priority at the City watchdog, Peer2Peer Finance News has learned.

However, it can also be revealed that a snippet of the industry data compiled by the Cambridge Judge Business School’s Centre for Alternative Finance (CCAF) for use in the FCA report will be unveiled before Christmas.

Crowd For Angels Launches £50 Million Bond Investment Opportunity (Crowdfund Insider), Rated: A

On Thursday, peer-to-peer lending platform Crowd For Angels reportedly announced the launch of its £50 million bond investment opportunity. This news comes less than a year after Crowd for Angels launched its first crowd bonds, which are described as specially created secured, high-interest products act are eligible for the platform’s IFISA.

According to P2P Finance Newsthe online lending portal is looking to raise the funds for a Liquid Crypto Bond, which will pay investors 3% over five years. The investors will then receive cryptocurrency tokens through an Initial Coin Offering (ICO) that may be traded on external exchanges or used for project investments on the Crowd For Angels peer-to-peer lending platform.

Brits to spend £1bn worth of work hours planning for Christmas (London Loves Business), Rated: A

With less than a month to go for Christmas, a new research from online lender Sunny has found that the number of hours Brits spend planning for Christmas and buying gifts online while at work are worth £1bn, with over 15m Brits admitting to planning for Christmas during work hours.

Whether at work or at home, Sunny’s research demonstrates a clear gender divide, with women most likely to take on the task of planning for Christmas. Almost a third (31%) of men admit they don’t spend any time planning meals and a quarter (24%) say they don’t do any cooking or preparing of meals, compared to only one in seven (15%) women. Men also don’t make time for Christmas cards, with a fifth (20%) not giving any time to writing them versus fewer than one in ten (9%) women.

Money saver Men who have tried this Women who have tried this
Shopped around online for gifts to make sure I’m getting the best deal 35% 51%
Started next year’s shopping in the January sales 12% 22%
Re-gifted presents 9% 26%
Used coupons/vouchers to buy food and drink for the Christmas period 24% 36%
Participated in secret Santa rather than gifting everyone 7% 16%


P2P platform appoints ex-Barclays manager
(Bridging&Commercial), Rated: B

RateSetter Business Finance has appointed Richard Steele as its regional manager for the Midlands.
The peer-to-peer lending platform said Richard brought experience to its team having previously served at Barclays as a relationship manager and BCRS Business Loans as a business development manager.

Revealed – the 25 people doing the most to spread the PropTech word (EstateAgentToday), Rated: B

This year the list was compiled in association with the UK PropTech Association, the trade body set up in February; in addition to property investment platform LendInvest, two UKPA figures – chairman Eddie Holmes and Estate Agent Today contributor and PropTech consultant James Dearsley – were on the judging panel.

Dan Hughes, director of data and information product management for RICS, has been named the top PropTech Influencer of the Year.

Professor Andrew Baum of Oxford University took second place, after authoring PropTech 3.0, a much-discussed document in the field of PropTech.

Third was digital strategist Antony Slumbers, while fourth was Gary Chimwa, the organiser behind Future:PropTech events.

You can see the full list of 25 here and the top 10 International Influencers here.

RICS director tops proptech influencer list (Development Finance Today), Rated: B

Dan Hughes of the Royal Institution of Chartered Surveyors (RICS) (pictured above, right) has topped LendInvest’s PropTech Influencer List for 2017.
In fourth place was Gary Chima, the organiser behind Future:PropTech events, and in fifth was Dominic Wilson, managing partner of proptech start-up incubator Pi Labs.
China

China issues new rules to clean up runaway cash loan market (SCMP), Rated: AAA

China on Friday issued new rules to clean up its controversial cash loan and online micro lending market, including prohibiting lending to people without an income and putting a curb on the total charges on runaway credit, according to an official notice seen by the South China Morning Post.

It ordered therefore, that with immediate effect, all organisations and individuals must obtain a licence to conduct lending business. All lending institutions must also state clearly a comprehensive charge, which includes interest rates and various fees charged for different categories of offerings for the loan.

The tightened controls attempt to curb a common practice where online lending platforms bypass the maximum legal interest rate charge of 36 per cent with additional add-on fees.

Lenders are also banned from rolling over the credit more than twice and must put a cap on the cost of each loan.

Funds from online micro loans are also banned from being used to speculate in stocks and pay for property down payment. In addition, asset management products offered by financial institutions and banks are disallowed to invest in products securitised by cash loans, campus loans – loans granted to students with no regular incomes – or property down payment loans.

Online micro lenders expanded by 23 per cent in two years to 452.4 billion yuan (US$68.4 billion) by the end of 2016.

China’s debt crackdown hits cash loan providers (Reuters), Rated: A

On Friday, China’s financial regulators introduced new measures aimed at restricting the industry, which is estimated to be worth 1 trillion yuan ($151.5 billion).

The number of repeat borrowers is rising, which could signal financial stress on borrowers, analysts say. The companies, however, say the repeat lending is just a sign of the attractiveness of their platforms.

Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for over 85 percent of all such activity globally last year, according to a recent report by the Cambridge Centre for Alternative Finance.

The boom in micro-lending comes as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to data from the central bank, which says about half a billion consumers don’t have a credit score.

And the online cash loan sector is projected to reach 2.3 trillion yuan by 2020, according to the research firm iResearch.

Outstanding household debt in China equalled 45.5 percent of gross domestic product at the end of the first quarter, according to the Bank of International Settlements, compared to 27.9 percent five years ago.

Lexinfintech delays U.S. IPO pricing as China reins in micro-loan sector (Reuters), Rated: AAA

Chinese consumer lending firm Lexinfintech will delay the pricing of its planned Nasdaq IPO to conduct more due diligence, a source with direct knowledge of the situation said – a move that comes after Beijing issued new rules to tighten control of the micro-loan sector.

The source, who was not authorized to speak to the media and declined to be identified, did not say how long the IPO was likely to be delayed.

China Continues Its Quest For A Credit Ranking System (PYMNTS), Rated: AAA

China is on the hunt for a homegrown alternative to the U.S.-based FICO score credit ranking system as it attempts to keep up with the rapid expansion in consumer loans being offered through mobile.

Lacking such a single system, online lenders instead use a patchwork of methods to assess consumer credit worthiness, including things like online questionnaires and analysis of consumer data such as individuals’ eCommerce purchases.

The National Internet Finance Association of China — a two-year-old agency closely aligned with China’s central bank — is tasked with the job, but has offered little in the way of specific detail about how the three-year-old search for a system is progressing — past noting in a brief report late Monday that “this would complete an important rung in procedural order.”

China’s “Social Credit System” Will Rate How Valuable You Are as a Human (Futurism), Rated: AAA

In a contentious world first, China plans to implement a social credit system  (officially referred to as a Social Credit Score or SCS) by 2020.

Every citizen in China, which now has numbers swelling to well over 1.3 billion, would be given a score that, as a matter of public record, is available for all to see. This citizen score comes from monitoring an individual’s social behavior — from their spending habits and how regularly they pay bills, to their social interactions — and it’ll become the basis of that person’s trustworthiness, which would also be publicly ranked.

The companies that are implementing SCS include China Rapid Finance, which is a partner of social network giant Tencent, and Sesame Credit, a subsidiary of Alibaba affiliate company Ant Financial Services Group (AFSG). Both Rapid Finance and Sesame Credit have access to intimidating quantities of data, the former through its WeChat messaging app (at present with 850 million active users) and the latter through its AliPay payment service.

According to local media, Tencent’s SCS comes with its QQ chat app, where an individual’s score comes in a range between 300 and 850 and is broken down into five sub-categories: social connections, consumption behavior, security, wealth, and compliance.

THE CHINA RAPID FINANCE LTD – (XRF) POSTS QUARTERLY EARNINGS RESULTS (Bangalore Weekly), Rated: AAA

China Rapid Finance Ltd – (NYSE:XRF) announced its quarterly earnings results on Thursday. The company reported ($1.01) EPS for the quarter. The company had revenue of $10.46 million during the quarter.

Alibaba launches $ 7bn bond issue (Capital.com), Rated: A

Chinese e-commerce giant Alibaba has launched a bond issue aimed at raising $7bn just three years after selling $8bn of debt.

The bonds are being offered in five tranches – 5.5-year, 10-year, 20-year, 30-year and 40-year.

Proceeds from the sale will be used to invest in long-term growth.

Private equity funds found to be investing in banned digital currencies offerings (SCMP), Rated: A

Beijing’s municipal financial regulator has warned private equity (PE) funds not to continue investing in initial coin offerings (ICOs), a practice banned by the mainland’s central bank three months ago.

Huo Xuewen, chief of the Beijing Bureau of Financial Work, said in a report published on Sunday that some of the funds had been found taking part in ICOs – fund-railings by the issuers of digital currencies such as bitcoin – outside the regulatory framework and he pointed out it was a wrongdoing that the regulator would seek to weed them out.

He added the authorities now plan to set up a strict monitoring system to track operations and investments by PE funds.

P2P Lender Hexindai: A Discussion with CFO Johnson Zhang Regarding the Recent IPO (Crowdfund Insider), Rated: A

Hexindai (NASDAQ:HX), a China based peer to peer lender, became the most recent Chinese online lender to trade on a US exchange early last month. The company will report fiscal year results this coming Tuesday before markets open. Last month, Hexidai become another Chinese online lender to list their shares on the US markets in a successful IPO that raised approximately $50 million with each ADS priced at $10/each. The market cap of Hexindai stands at over $550 million today with shares in the company having traded between $10.90 and $17 since the IPO.

We asked Zhang why his company decided to list on the NASDAQ.  Zhang explained that in comparison to Hong Kong the US capital markets is wider and has more comparitive companies. Zhang noted that Yirendai and other online lenders now trade on US exchanges.  NASDAQ was selected because Hexindai is more tech focused. 

Zhang said a key component of their competitive advantage is their sophisticated risk management. Their application pass through rate is equal to just 25% of submitted applications and their default rates are very low.

Their second competitive advantage is their extended off line channels. For example, if a customer goes to a travel agency and wants to book a trip, the agency may say they have a financing solution and will provide the application to Hexindai and then they will determine whether or not they should provide a loan to the borrower.

“For our last fiscal year there were 200,000 borrowers and 110,000 active investors. An average loan size is 80,000 RMB. The typical use of the loans are for personal use like overseas traveling, continuing education or housing renovation. We believe loan proceeds are for self investment. Their life. For their job to become better. We help the emerging middle class.”

International

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

Funding Circle reaches the milestone of 3 billion GBP loans originated since launch.

I removed Comunitae, because of the stop due the fraud case.

Source: P2P-Banking

The Market Maker’s Guide to Decentralized Exchange (Airswap), Rated: AAA

Market making is generally an ongoing process that includes ingesting data, generating a price, and placing an order on an exchange.

Source: Airswap

Decentralized exchange promises two major benefits:

  • Security and control
  • Global marketplace

Unlocking the ability to transact globally, through a decentralized exchange, will affect society in profound ways. Global information transfer birthed the term “globalization”. Global asset transfer will birth some new term that we all haven’t yet thought of, and in the end the borders that blockchain break down will be greater than the borders we saw the internet break down.

Decentralized exchanges will succeed, likewise, when there is liquidity and usability, both of which do not exist yet on any solution.

Source: Airswap

Micro-finance: do good and turn a profit (MoneyWeek), Rated: A

The ultimate example of this is the “micro-finance” movement. The idea is that you lend money to a micro-finance institution that in turn lends the money to ordinary folk (frequently women) in the developing world for practical projects that generate returns for investors. Investors hope to get back all of their money plus a return – net returns of around 2% a year aren’t uncommon.

The only trouble is that while micro-finance does score highly in terms of “impact”, it is often not so much crowd-based as “command-and-control” in style. In other words, it’s usually a credit institution making the actual lending decisions and you invest via their pool of funds.

Now, however, we have the crowd revolution and the rise of alternative finance and peer-to-peer (P2P) lending. In the Netherlands, this has given rise to companies such as Lendahand, which provide a marketplace for investing in individual projects for a defined return, usually via some form of bond. Over here in the UK, Ethex provides a similar marketplace for investors to back individual projects with real impact.

So, why not marry micro-finance, the crowd, and renewable energy into one product? That’s the idea behind a relatively new website called Lendahand, a joint venture between the Dutch platform and Ethex. The platform is working with local providers such as SolarNow in Uganda as part of its Energise Africa initiative to provide finance for solar panels. This is done via unsecured bonds that pay out 5%-6% a year for a period of between one and three years, with interest usually paid every six months (along with some of the debt, which is amortised as it is repaid).

Top 100 fintech companies revealed (Banks.am), Rated: A

First, second and third place, on this year’s Fintech100, are occupied by Chinese fintech firms: Ant Financial, which owns Alipay payments platform; ZhongAn, which uses big data to automate online property insurance; Qudian, an online electronics retailer offering monthly instalment re-payments.

The fourth and fifth places are occupied by Oscar, which seeks to radically transform health insurance through technology and Avant, the fastest-growing marketplace lending platform for short-term consumer credit.

The sectorial breakup of the Fintech100 is as follows: 32 lending companies, 21 payments companies, 15 transaction and capital markets, 12 insurance companies, 7 wealth companies, 6 regtech (regulatory technology-Banks.am) & cyber security companies, 4 blockchain and digital currencies companies, and 3 data and analytics companies.

Fintech100 includes a broad range of fintech companies from 29 different countries.

SelfKey Will Greatly Aid the Expansion of the FinTech Sector (Cryptocoins News), Rated: B

One blockchain based startup, SelfKey, is creating a blockchain-driven decentralized digital identity system that gives users full control over their personal information. The platform allows individuals to create their own secure personal identity wallet that stores important identity documents. This wallet also stores KEY tokens, which can be used to purchase services on the SelfKey marketplace. These services, which range from passport applications to opening bank accounts, don’t control users’ data–users do.

Users have the key, so to speak, that releases their own data.

Australia/New Zealand

CollinStar Holdings to Acquire BiWang Group in a 100 Million US Dollars Buyout (BusinessWire), Rated: AAA

On December 2, 2017, CollinStar Holdings paid $ 100 million US dollars to acquire the entire BiWang Group, including BW.COM.

AUSTRALIAN FINTECH LAUNCHES ALTERNATIVE FUND (Money Management), Rated: A

Australian fintech and fully licensed marketplace lender, Zagga has launched its Alternative Growth Fund aimed at wholesale investors, including self-managed super funds (SMSFs), which will target net returns of 6.5 per cent per annum.

The fund, which would have the minimum investment for wholesale investors of $50,000, was designed to add scale to the Zagga business model which uses a bespoke algorithm to match wholesale investors with borrowers, the firm said.

Banking gap widens as tech-savvy consumers look to new products (News.com.au), Rated: A

Peer-to-peer lender RateSetter has examined big bank profit margins and found that while they are paying record low rates on deposits their lending rates for personal loans and credit cards continue to climb.

“You can drive a bus through the spread between bank deposits and consumer lending rates,” said RateSetter CEO Dan Foggo.

“Publicity stunts such as dropping fees on ATMs are little more than a smokescreen for the poor value,” he said.

  • Online savings account rates have dropped from 6.55 per cent to 1.6 per cent;
  • Bonus saver account interest rates have fallen from 4.8 per cent to 1.85 per cent, but;
  • Credit card interest rates have climbed from 18.6 per cent to 19.75 per cent, and;
  • Unsecured personal loan rates rose from 13.8 per cent to 14.5 per cent.

FMA statistics show the fledgling NZ P2P lending sector is serving banks and fund managers well (Interest), Rated: A

But the Financial Markets Authority’s first statistical report on P2P lending, issued this week, highlights just how little actual P2P lending there has been in NZ to date.

The useful and informative FMA report details that there are 20,744 investors registered with licensed P2P services. At 207,230, there are about 10 times as many borrowers registered with P2P services. The volume of investors, or savers, versus borrowers sounds unbalanced and it is. But the bulk of money being lent through P2P platforms is coming from banks and institutional, or wholesale, investors.

Far and away the biggest NZ P2P lender is Harmoney. According to the FMA report, as of June 30 the total value of Harmoney loans outstanding was just under $239 million. The five other active P2P lenders had a shade under $50 million worth of outstanding loans between them.

India

Customers without credit scores can take the digital journey to get loans (livemint), Rated: AAA

Mumbai-based CreditVidya, a fintech start-up, uses alternative data sources to assess fraud and risk. It has recently raised $5 million Matrix Partners and had previously raised $2 million from Kalaari Capital. The money is being used for product development and hiring manpower. A lot of the investments are going into research and development and setting up the team right, which will include data scientists from the US. The plan is to have a total of 146 employees by end of 2018, said the founders of the company.

Currently you work with over 20 banks and non-banking financial (NBFCs) who are looking to assess customers of small unsecured credit. What is the quality of these banks and NBFCs?

Rajiv Raj: We have a mix of small and big banks and NBFCs. We have big banks such as State Bank of India, ICICI Bank Ltd and Axis Bank Ltd. There are many micro services that these companies use.

Abhishek Agarwal: We are also in talks with an MNC (multinational corporation) banks. Right now, 10 relationships are with large banks and NBFCs, out of the 27, and remaining are in mid- and small-sized banks. Every bank is focused on retail loans and in that pie on unsecured lendings. Personal loans, consumer durables and two-wheeler loans are the segment where there has been a tremendous rise.

Recently, P2P regulations came out. These companies will have to start reporting to credit bureaus. Has any P2P platform approached you to use alternate data?

Agarwal: We are currently working with three P2P lenders. Here again, it is for risk assessment of first-time borrowers. People who are digital savvy and want to access this facility, are first-time borrowers and under 35 years. Cibil’s (a credit bureau in India) penetration in the 25-35 age group is poor. Hence, 75-80% of the cases will have a no Cibil score.

Raj: These are thin-file customers who don’t qualify for loans.

Why are the traditional credit bureaus not using alternative or digital data to assess customers?

Raj: One, there is a regulatory issue. Two, they have never done this before.

Agarwal: Experian (a credit bureau) in the US has been around for the last 40 years. Digital lending in the US exists for the last 12 years. Experian never used alternative data in the US. It is not in their DNA. All the traditional bureaus in India are heavily influenced by their parent companies in the US. There is no product that the bureaus have launched in India that is only for the Indian market. They haven’t done anything that is new and specific to India.

While analysing customers, what parameters do you use to evaluate credit worthiness?

Agarwal: You look at five types of fingerprints—social finger print (anything you put on social media), device fingerprint (such as SMS), browser fingerprint (anything that identifies your device), click stream fingerprint (how fast you type) and biometric fingerprint (the physical fingerprint).

Fintech Trends to Watch Out for in 2018 (Entrepreneur), Rated: A

With a continuation to the credit line onboarding the digital trend, the next year will see more and more people borrowing using data, believes Vikram Sud, former APAC operations and technology head of Citibank and also ex-group COO of Kotak Mahindra Group.

Algorithm-based investments will see a hike, interactive brokers too will grow in numbers, while the cost of availing them will keep dropping.

While the majority of fintech users today rely on wallets and prepaid investments for transactions, many in the industry believe that that is set to change.

Citing a 360 degree financial inclusion and a future of uniform payments globally, Himaghna Dey Sarkar, Chief Expansion Officer, ToneTag spoke about how they are enabling sound-based payments. The app listens to the frequency of tones in the existing EVC machines, and enables transactions directly to the merchant’s bank account.

Sud believes that we are moving closer to a stage where the cards business is at a risk. With more and more retail lending options like buy now and pay later, Sud said that the line of credit will become more prominent.

A little bit of data can go a long way! (ETCIO), Rated: A

Imagine there being minimal record of your existence – your credit history and identification papers being almost non-existent. Unfortunately, this is not a movie plot but a reality that millions across the world have to grapple with. Both developing and under-developed economies have their fair share of people who have no formal credit footprint. These are people who have never borrowed from or interacted with formal banking channels in their lives. This lack of interaction with banking channels is one of the primary reasons that these people do not possess sufficient format documentation, a primary requirement of banks. The repercussion of this is that there is minimum information available about their credit history and when they do approach a lender for capital; more often than not they are deemed ineligible and are turned away.

Over the last few years, digital lending platforms have emerged as viable sources of credit for such borrowers.

By 2022, over 70% of India’s population is expected to own a smart phone. With a current smart phone user base of 300 million, smart phone penetration in rural India is growing at a much faster pace as compared to the urban India. This means that each one of us is generating reams of digital data giving online lenders a glimpse into our habits and preferences.

Asia

Integrated finance services in e-commerce (TelecomAsia.net), Rated: A

Again there is speculation in the US over whether companies like Amazon, Facebook, Apple or Wal-Mart could acquire a banking license.

If you go to buy items online, you might need finance for your purchase. The easiest solution nowadays is probably to use a credit card to make the payment. Then, depending on your card, you have more time and flexibility to make the payment. The problem is the actual annual interest rate of the card is easily 30% to 40%. You could get a loan with much lower interest rates, but it is complex to get a loan quickly when you are buying something.

Now we see a situation FinTech that integrated finance solutions are easily available for all kinds of retail services and they offer also a smooth customer experience. This is part of a much bigger development in the finance industry. Finance services are no longer their own isolated islands, but they can be components in any service.

Fintech competitiveness depends on AI technology (The Korea Times), Rated: A

Limiting individual investment in peer-to-peer (P2P) financing at 10 million won ($9,220) is a typical one. The ban on non face-to-face contracts on discretionary investments in the asset management field also limits the domain of fintech startups online. It is necessary to change perspectives in modifying regulations to something that will help new fintech companies.

Fintech can be classified into three areas: well-known money transfer and payment; P2P finance represented by cloud funding; and asset management represented by robo-advisors. The common technology necessary for all three is artificial intelligence (AI).

In P2P lending, supervised learning can be used in P2P for credit scoring and anticipation of expected returns. For asset management firms, reinforcement learning can be used for automated portfolio building.

Canada

National Bank of Canada capped off a better fiscal year with strong fourth-quarter profit as the Montreal-based lender enters a new phase of an aggressive plan to redefine itself.

And chief executive officer Louis Vachon said the bank is now shifting from a phase of heavy cost-cutting and job losses to one that reduces costs by using technology to automate more of its processes.

The bank is spending a total of $750-million a year on technology, about $350-million of which goes to new projects.

Profit from the core personal and commercial banking segment was $239-million in the fourth quarter, compared with $191-million a year earlier, as loans and deposits grew and deposit margins improved. The wealth-management arm also posted a 29-per-cent increase in profit to $110-million.

Provisions for credit losses – the money set aside to cover bad loans – rose to $70-million in the fourth quarter, from $59-million a year ago. But the increase effectively belonged to Credigy Ltd., a U.S. subsidiary that specializes on buying distressed loans at discounted prices.

The bank expects Credigy will continue to grow, but is tapering its appetite for unsecured consumer debt as it winds down an agreement that saw the firm buy $1.3-billion in prime loans from Lending Club, a U.S.-based online lending firm. Credigy will instead look at doing more deals for secured loans with lower spreads but also lower losses.

Africa

Kenyan, Nigerian startups make global Fintech 100 (Disrupt Africa), Rated: AAA

They include two Nigerian startups, namely payments company Flutterwave and financial management app Riby. Kenyan insurtech startup GrassRoots Bima also makes the list.

Authors:

George Popescu
Allen Taylor

Monday November 27 2017, Daily News Digest

fintech TransUnion

News Comments Today’s main news: Ant Financial bans high-interest consumer loan products. Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS. Funding Circle to launch Isa next week. Zopa reforms how returns are displayed. Robo-advisors in China must be licensed. CreditEase to pioneer fund of funds for direct real estate purchases. New Zealand publishes first P2P/crowdfunding statistical returns. Today’s main […]

fintech TransUnion

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS (Asset Securitization Report), Rated: AAA

LendingClub’s third self-sponsored securitization of online marketplace loans is benefiting from the company’s recent tightening of credit standards.

The loans backing the $330 million Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 involve borrowers with higher FICO scores that have allowed LendingClub to reduce its credit enhancement levels on the deal.

CLUB Credit Trust 2017-P2 has a collateral pool of 22,062 prime, consumer loans with a cumulative net balance of $368 million, or an average balance of $16,681.

TransUnion Study On FinTech Market; PayPal Enters Robo Advice Market (PeerIQ), Rated: AAA

The Federal Reserve Bank of New York reports that household debt totaled $12.95 Tn last quarter – the 13th straight quarterly increase. As a share of GDP however, household debt stands at 66% below a peak of 87% in early 2009.

PayPal continues to expand the range of its consumer offerings. PayPal started with payments initially, moved to personal and small business loans, and is now delivering asset management solutions. The partnership will offer Acorns a unique channel for customer acquisition and allow Acorns to compete with Betterment and Wealthfront. Paypal led a $30 Mn investment round in Acorns Grow in April 2016.

FinTechs are Growing and Taking Market Share

FinTech’s market share has grown from virtually zero in 2012 to 30% in 2016. The outstanding balances on personal loans have doubled to over $100 Bn in 2017 from late 2013, with 128 lenders making more than 10,000 personal loans annually. FinTechs compete with banks to originate loans to prime consumers, and FinTech’s originate 30% of their loans to non-prime consumers where there is less competition from banks.

Source: TransUnion

FinTechs Have The Most Robust, Risk-Based Pricing

Source: TransUnion

Brian Dally of Groundfloor (Lend Academy), Rated: A

In this podcast you will learn:

  • Where the idea for Groundfloor come from.
  • Why Brian decided to start in the real estate asset class.
  • How many states they are operating in today for both borrowers and investors.
  • How they go about sourcing real estate deals.
  • Why they decided to focus on non-accredited investors.
  • How their securities offering is structured.
  • The minimum investment allowed per deal.
  • How returns have been for investors.
  • Which side of the marketplace is constraining growth today.
  • How they differentiate themselves from their competition.
  • The performance of their loan book to date.
  • Their business model and how they make money.
  • Details of their first institutional investor and why this is good for retail investors.
  • Their goal for an institutional/retail investor mix.
  • What the future holds for Groundfloor.

Online lenders pull out the popcorn, as the Trump administration fights to control the CFPB (TechCrunch), Rated: AAA

Republican lawmakers have long sought to reduce the CFPB’s oversight. Now dueling appointments put its immediate future in question. Last night, President Trump named his budget director, Mick Mulvaney, as acting director of the agency hours after its current leader, Obama-appointed Richard Cordray, announced he would leave the job.

To counter the administration’s plans, on his way out the door, Cordray named his chief of staff, Leandra English, as the agency’s deputy director.

Under the law, the appointment should make English the agency’s acting director, though the White House says that Mulvaney plans to show up at the CFSB Monday morning anyway. The White House further says Mulvaney will keep his current job as head of the Office of Management and Budget.

If the Trump administration follows through on its threats, Mulvaney will lead both agencies until a permanent head of CFPB is chosen and confirmed by the Senate.

Nobody Knows Who the Consumer Financial Protection Bureau’s New Boss Is (New York Magazine), Rated: A

On his way out, he appointed his chief of staff, Leandra English, to take over the CFPB, citing the Dodd-Frank Act, which states that the agency’s deputy director will take over the agency if the director leaves. Trump responded by naming Mulvaney as expected, pointing to the Federal Vacancies Reform Act as justification for his move.

The eventual director must be confirmed by the Senate; Trump’s pick is expected within weeks.

3 trends powering the rise of financial robo-advice (VentureBeat), Rated: A

1. Availability of data

We generate more than 2.5 billion GB of data every day.

In one notable example, JP Morgan and Intuit earlier this year announced their companies will make data available via the Open Financial Exchange API. Their goal is to make it easier and more secure for consumers to use their data across various financial apps and websites.

2. Increased power and storage

  • Google Tensor Processing Unit.
  • Nvidia Volta.
  • Huawei Kirin.

3. Advancements in AI

In particular, deep learning and boosting models enable significant leaps forward in the application of machine learning. These include design concepts such as Google’s Capsule Network, which offers an alternative to traditional neural nets, and replicative and transfer learning, which enable pattern discoveries and accuracies impossible by human counterparts.

The results of studies using these ideas are impressive. In one example, University of Mannheim researchers showed how ontologies help some machine learning models validate data 50 times faster. And Google’s AutoAI demonstrated it can create better machine learning code than the researchers who made it.

Student debt relief trumps other benefits (Employee Benefit Adviser), Rated: A

Student loan repayment programs are climbing the pantheon of employee benefits, suggests a recent survey of full-time workers with student loan debt.

Pollfish found that 23% would gladly give up healthcare benefits for a student loan repayment benefit. In addition, 46% would relinquish paid time off and 33% would do the same for retirement benefits in exchange for a repayment benefit. Also, 53% said they’d consider a salary cut in exchange for a student loan repayment benefit.

Of 1,000 college graduates polled by SoFi, an online personal finance company, 90% were more willing to accept a job offer at a new company if their employer offered a student loan contribution benefit. In the Pollfish survey, 84% gave the same response.

The Most Well-Funded Fintech Startup In Each State (CB Insights), Rated: A

State Company Total Equity Funding ($M)
Arizona CampusLogic $ 17.5
Arkansas LumoXchange $ 0.2
California SoFi $ 2,040.5
Colorado IP Commerce $ 54.7
Connecticut PayVeris $ 14.2
DC Fundrise $ 52.6
Delaware College Avenue Student Loans $ 50.0
Florida YellowPepper $ 34.0
Georgia Kabbage $ 490.0
Idaho VisitPay $ 18.4
Illinois Avant $ 655.0
Indiana Allied Payment Network $ 2.6
Iowa Dwolla $ 39.1
Kansas C2FO $ 99.7
Kentucky Inked Brands $ 4.0
Louisiana Zlien $ 7.2
Maryland Regent Education $ 39.7
Massachusetts Toast $ 138.0
Michigan Clinc $ 7.5
Minnesota Bright Health $ 240.0
Missouri Clearent $ 27.5
Nebraska D3 Technology $ 35.6
Nevada Filament $ 31.8
New Jersey Billtrust $ 104.5
New York Oscar Insurance Corporation $ 727.5
North Carolina AvidXchange $ 558.2
Ohio Aver $ 23.2
Oklahoma CreditPoint Software $ 1.1
Oregon NVoicePay $ 21.5
Pennsylvania InstaMed Communications $ 101.9
Rhode Island Upserve $ 191.5
South Carolina Ceterus $ 10.2
South Dakota ReliaMax $ 3.9
Tennessee Digital Reasoning Systems $ 75.6
Texas BigCommerce $ 164.5
Utah MX $ 54.1
Virginia StreetShares $ 18.9
Washington Avalara $ 253.0
Wisconsin Dynamis Software Corporation $ 4.3
Source: CB Insights

Bridge loan helps borrowers as they pursue graduate degrees (SFGate), Rated: B

The sellers wanted to accept the offer but were concerned about the VA financing with an online lender who was unresponsive to the listing agent’s calls. The Realtor advised the couple that if they could find a local lender who could preapprove them with conventional financing, their offer would be accepted.

Wyatt held a video conference with the couple to clarify the structure of the file and learned that both clients were pursuing their graduate degrees and took time off work to attend classes. In addition, the co-borrower had recently received an employment offer for a salaried position.

United Kingdom

Funding Circle Isa to launch next week (Bridging&Commercial), Rated: AAA

Peer-to-peer platform Funding Circle has announced that it will start rolling out its Isa account to all current investors from next Thursday (30th November).

UK peer-to-peer lenders plan to raise millions from ISAs (Financial Times), Rated: A

Britain’s largest peer-to-peer lenders plan to raise hundreds of millions of pounds from savers in the coming weeks even as many of them say they will reduce higher risk lending in case there is a downturn.

“We expect a lot of demand,” Samir Desai, chief executive of Funding Circle, told the Financial Times. “We have done lots of surveys and a huge proportion of the base told us they would like to put all of the money they invest with us through the ISA.”

Zopa addresses default concerns by reforming how returns are displayed (P2P Finance News), Rated: AAA

ZOPA is working on improving the way long-term returns are displayed so investors do not become overly concerned with monthly defaults in their portfolio.

The peer-to-peer lender said it is working on a prototype that would show investors their current portfolio performance, a range of what their returns will be and what their target rate is.

The display, currently in testing, includes a graph showing portfolio growth, and the net cash earnings after losses, a range of what the returns will be that narrows closer to maturity and what the target rate is in comparison to what was advertised.

Welendus launches new £150,000 crowdfunding campaign (P2P Finance News), Rated: A

PEER-TO-PEER payday loan platform Welendus has launched a new crowdfunding round on Seedrs this morning to raise an additional £150,000.

The lender, which raised £100,000 from investors during a Seedrs fundraise in March, has already reached 92 per cent of its target by attracting funding from the existing crowdfunding backers.

NatWest joins the robo-advisers (This is Money), Rated: A

High-street bank NatWest has launched a fully regulated robo-advice proposition charging £10 for customers seeking to invest sums as low as £500.

Unlike some rival robo-advisers that offer guidance based on responses to just a few questions, or simplified advice that doesn’t factor in your complete financial position, NatWest said its process will offer full-fat advice akin to the traditional face-to-face process but online.

57% of SMEs support European Free Trade Agreement (Bridging&Commercial), Rated: A

More than half of small business owners (57%) are supportive of joining the European Free Trade Agreement (EFTA), a new survey has revealed.
Research by peer-to-peer platform Funding Circle has found that the key reasons cited by businesses for wanting to join the EFTA included the ease of exporting and importing (59%), a larger customer base (46%) and lower tariffs (42%).

 

Was the Budget boom or bust for personal finance? (P2P Finance News), Rated: A

PEER-TO-PEER lenders are split about the outcome of the Budget for people’s finances.

RateSetter said there was “a notable absence of measures to help people put away more for the future” in Wednesday’s fiscal event, but Lending Works called it “a boost for personal finance”.

Rethinking bricks and mortar: alternatives for property investors (Your Money), Rated: B

A mismatch of supply and demand has made UK property more unaffordable than ever for would be buyers. Property investors pursuing the buy-to-let route are also facing challenges due to a recent crackdown in tax legislation. Against this backdrop, peer to peer (P2P) and equity crowdfunding have grown in popularity as alternative ways to access the property market.

Key considerations before picking an investment route

 

  • Investment risk
  • Debt or equity
  • Liquidity
  • Who’s the provider

RateSetter Appoints Richard Steele Regional Manager of Midlands (Crowdfund Insider), Rated: B

UK-based peer-to-peer lending platform RateSetter announced on Friday it has appointed Richard Steele as its regional manager for the Midlands. According to the online lender, Steele has more than 15 years of business lending experience and prior to joining RateSetter, he held the relationship manager position at Barclays and business development manager at BCRS Business Loans.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

On November 17th, top financial regulators in mainland China (including PBOC, CBRC, CSRC, CIRC and SAFE) released a new set of rules covering the country’s asset management market. It is the first time that the regulators designated one of the articles to Robo-advisors.

According to the article, financial institutions that conduct Robo-advisory services or AI-driven investment programs should be granted license from financial regulator before carrying out any operations.

Here Comes Tencent Credit

Two years ago, Ant Financial, the financial affiliate of Alibaba, launched its own credit scoring system Sesame Credit. This week, Tencent, Alibaba’s main rival in China, finally followed suit by launching a similar and competitive product, Tencent Credit. The credit score ranges between 300 and 850.

Sesame Credit Ceases Cooperation with Cash Loan Platforms

On November 21st, a cash loan platform told the media that they had received a notification from Sesame Credit, the credit scoring services of Ant Financial. According to the notification, Sesame Credit will cease to cooperate with cash loans from December 12th of 2017 due to some of its illegal behavior regarding interest rate setting and debt collection.

Chinese fintech firm CreditEase to pioneer funds of funds as alternative to direct real estate purchases (SCMP), Rated: AAA

CreditEase, one of China’s largest financial technology companies, has set its sights on funds of funds focusing on real estate projects as founder and chief executive Tang Ning anticipates a new property investment scenario.

At present, high-net-worth individuals in China seeking returns from property investment often directly buy and own residential or commercial units, betting on the appreciation of assets.

CreditEase, which specialises in lending to small businesses and consumers as well as wealth management for affluent investors, plans to set up a clutch of funds of funds that will allocate capital to leading global real estate funds managed by big names such as Blackstone and KKR.

China Online Lender Qudian’s Latest Plunge Knocks CEO From Billionaire Ranks (Forbes), Rated: A

Qudian lost 24.3% on Friday to end at $12.22, the worst close since it listed at $24 on Oct. 18.  Friday’s decline left Luo’s fortune at $776 million.

Luo, 34, ranked No. 255 on the 2017 Forbes China Rich List published on Nov. 16 with an estimated fortune of $1.48 billion.

Shares in Qudian, which is 11% owned by Alibaba Group affiliate Ant Financial, and other Chinese online lenders have been falling on reports that regulators plan to tighten restrictions on microlenders. On Friday, Qudian said it would cap charges and costs to customers linked to Alipay at an annual interest rate of 24% (see announcement and details here).  Qudian also said it is working to extend credit through its own app where it can charge up to an annual rate of 36%.

Alibaba Affiliate Bans High-interest Consumers Loan Products (ValueWalk), Rated: AAA

Ant Financial, the financial arm of Alibaba, has barred consumer loanswith an annual interest rate above 24% on its Alipay platform.

Ant Financial stated that it has increased monitoring of the financial service providers on Alipay and its credit platform, Sesame Credit, and found some inappropriate collection methods and interest rates above legal limits, according to Reuters. Further, Alibaba’s Ant Financial stated that it would withdraw cooperation with some cash loan providers. Sesame Credit is a proprietary credit scoring system, which gives Alipay e-wallet users a credit score.

China Fintech Firm Is Said to Mull Fate of $ 500 Million IPO (Bloomberg), Rated: A

LexinFintech Holdings Ltd., owner of Chinese online lending platform Fenqile, plans to meet advisers this weekend to discuss the fate of its proposed U.S. initial public offering, people with knowledge of the matter said.

The company aims to decide whether to imminently start its IPO roadshow or wait for a later date when market sentiment may be better, according to the people.

Yirendai Awarded ISO 27001 Certification (Business Insider), Rated: A

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) announced today that it has been awarded certification to the international standard for Information Security Management (ISO 27001) from British Standards Institution.

The ISO 27001 certification is an internationally recognized best practice framework for an information security management system (“ISMS”) and specifies the requirements for establishing, implementing, maintaining and improving information security management within an organization. It also takes into account risk assessment and risk treatment with regards to security of information.

Tencent to set up fintech lab in Xiongan (ECNS.cn), Rated: B

Tencent Holdings Ltd, Asia’s most valuable firm, is planning to set up a financial technology lab and digitize public medical services in the Xiongan New Area, as part of a broader push to gain a foothold in China’s latest economic zone.

European Union

One Idea to Make Europe Bigger in Tech Is to Pay Employees More (Bloomberg), Rated: AAA

Europe isn’t producing the kind of large, globally-influential technology companies like those coming out of the U.S. and China. A perennial question is why?

One reason might be that European startups don’t give employees as much of a chance to strike it rich, according to a new study by the European venture capital firm Index Ventures. While startup employees in the U.S. are often rewarded with stock options — allowing them to cash out handsomely if a company is sold or goes public — young firms in Europe don’t offer the same scale of incentives.

In an analysis of 73 companies, Index found that European employees own on average about 10 percent of the startup where they work, compared to 20 percent for U.S. workers. European companies often skew stock options to executives rather than rank-and-file employees.

A tech VC explains why Revolut is such a hot ticket as the fintech app hits 1 million users (Business Insider), Rated: A

Revolut announced the milestone on Friday, saying that customers have now completed 42 million transactions on its app worth a combined $6 billion (£4.5 billion). The company began as a foreign exchange app linked to a pre-paid card but has since branched out into broader financial services, such as current accounts, insurance, and investments.

Revolut, which is applying for a full European banking license, said that 42% of its customers are aged 25-35, “a clear indication that traditional banks are no longer meeting the needs of younger, tech-savvy generations.”

Flender closes in on £2m funding round (Independent), Rated: A

Dublin-based peer-to-peer lending business Flender is close to raising more than €2m in its latest funding round.

Some €400,000 of the money has been raised from its own platform – the first peer-to-peer equity investment on an Irish platform. Terms are close to being agreed for the remaining balance of a £2m (€2.25m) round.

CS Invests in Swiss Fintech (finews), Rated: B

Credit Suisse has bought a majority stake in Tradeplus24, a Zurich-based fintech firm specialized in small- and mid-sized business loans. The Swiss bank bought into a series A1 financing through its subsidiary, SVC, the bank said in a statement.

International

2 investment trusts for income investors seeking reliable high yields (The Motley Fool), Rated: AAA

With interest rates still near historic lows, it can be hard to find mainstream investments that will pay out a significant yield.

But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector. It’s an investment trust that offers investors a ready-made and diversified portfolio of peer-to-peer loans, saving time from building a portfolio from scratch and enabling investors to earn income straight away. At its current share price, it has a trailing 12-month dividend yield of 6%.

ETHLend – A Fully Decentralized & Democratized P2P Lending Platform On The Ethereum Blockchain (Chipin), Rated: A

The main feature of ETHLend is the financing options available in ETH, which allows users to borrow or lend ETH using ETHLend’s digital tokens in an efficient manner or by using ENS domains as a collateral.

The ETHLend platform can be also used as a tool for both B2B and B2C transactions.

An interesting aspect of ETHLend is that both borrowers and lenders will receive 0.1 credit tokens (equal to 1 ETH) each for every loan that is repaid successfully.

These credit tokens can then be used as collateral for loans on the platform or sold for profit.

Here are the details of the upcoming LEND token sale:

Token name: LEND

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th November, 2017 – 27th December, 2017

Token sale target: 37,600 ETH (hard cap)

Token exchange rate: 1 ETH = 25,000-27,500 LEND (depending on period of sale)

Celsius – The P2P Decentralized Credit Protocol Built On Smart Contract Technology (Chipin), Rated: A

The modern credit system is a mess, particularly for millennials and the Generation X youths.

Celsius is a P2P and blockchain-powered global credit network designed to improve the efficiency of modern credit and financing systems.

There are 4 types of loans in the Celsius platform:

    • The platform will enable millennials to establish a digital credit score and be issued a credit line; the credit can then be accessed by a sponsored credit card from Celsius.
    • Celsius will also allow the platform’s users to expand their credit limit against their own cryptocurrency asset holdings they have at Celsius. The extended credit can be easily accessed through several options.
    • Members can also choose to lend any cryptocurrencies they own and earn up to 5x the normal interest rates they get from banks. Finally, members can borrow cryptocurrencies in a secure and transparent manner
    • To safeguard the platform’s ecosystem, both lenders and borrowers on Celsius are verified and carefully selected to prevent fraud.

Here are the details of the upcoming DEG token sale:

Token name: DEG

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th of January, 2018 – TBA (pre-sale is currently LIVE)

Token sale target: $100,000,000 (hard cap)

Token exchange rate: $0.20 = 1 DEG

Australia/New Zealand

Why SocietyOne needs more than its billionaire backers (Financial Review), Rated: AAA

The other is it’s in the midst of what is expected to be its last funding round before listing the business, raising up to $20 million in equity based on a valuation of up to $200 million, which is based on a multiple of one times its loan book.

The raising, managed by Venture Advisory and due to close late this month, is part of a long-term, highly anticipated plan to target a sharemarket listing in 2018.

SocietyOne is expected to need a book worth $500 million or so before it starts breaking even.

Chief executive Jason Yetton has said previously the company is eyeing a 2 per cent to 3 per cent share of the $105 billion consumer finance market in the long term, of which credit card debt comprises $42 billion.

Fortress backs $ 120m capital raising by MoneyMe (Financial Review), Rated: AAA

Global credit investor Fortress Investment Group will invest $100 million in debt capital to support MoneyMe’s consumer lending growth as the fintech considers an initial public offering in early 2019.

Fortress’s investment is part of a $120 million asset-backed securitisation deal, which also includes a $20 million bond, issued by Evans & Partners, which was oversubscribed.

MoneyMe, which has made $150 million in personal loans to 70,000 customers in the past four years, is both cash flow positive and profitable, very rare for an Australian fintech.

Of its $150 million in lending, $80 million has been advanced in the past 12 months.

New Zealand’s Financial Markets Authority Publishes First Peer-To-Peer/Crowdfunding Statistical Returns (MondoVisione), Rated: AAA

The Financial Markets Authority (FMA) today published its first statistical reporton peer-to-peer lending and crowdfunding in New Zealand.

The data shows $259.9 million is currently loaned to individuals and $29.5 million loaned to businesses through peer-to-peer lending in the year ending 30 June 2017.

A total of $74.2 million was raised from investors through crowdfunding, including wholesale investors, in the same period.

Tic:Toc to undercut broker distribution in white label play (TheAdviser), Rated: A

Mortgage brokers are facing a double threat from online lender Tic:Toc, which is seeing a surge in demand from consumers and interest from banks and non-bank lenders looking for cheaper distribution.

The fintech started lending four months ago and has received approximately $330 million of applications in that time, with conversions hovering around 17 per cent this month.

Financial regulator shines light on P2P lending, crowdfunding (Stuff), Rated: A

Kiwis have nearly 17,000 loans through “peer-to-peer” lending platforms, but more than one in 12 borrowers were behind on repayments, according to the Financial Markets Authority.

There were 16,977 loans outstanding with P2P lenders at the end of June, it said, of which 1469 were in arrears. The average size of loans being taken out was $8771.

During the year, 833 loans with a total value of $8.5 million were written off.

Why banks and fin-techs need each other (NZ Herald), Rated: B

Chris Russell, HSBC New Zealand chief executive, said history was littered with banks who had spent large sums of money on developing new technology, only to find it had gone in another direction while it was working on it.

Globally Russell said HSBC was setting up innovation labs to work with financial technology firms and it was China and India where it saw the biggest sources of development.

In New Zealand it is also partnering with a local fin-tech, although Russell won’t name who yet.

India

The quick and safe way to build a credit score (livemint), Rated: A

If you are new in the workforce, you can start by getting a low-limit credit card from the bank where you have a salary account, said Sumit Bali, senior executive vice president and head-personal assets, Kotak Mahindra Bank Ltd.

Alternative credit scoring

While the RBI-regulated credit bureaus are currently not allowed to use alternative data for credit scoring; in other developed markets parameters like utility bill payments, insurance premium payments have been used for credit scoring (read more on it here.

However, financial institutions including top public and private sector banks and NBFCs in India, have started using alternative data in multiple verifications and validations across the credit value chain, Agarwal said.

Asia

Considering an ICO… then read this (The Star), Rated: AAA

The ICO euphoria is likely being fuelled by the fact that despite all the negative news surrounding ICOs and cryptocurrencies, the price of bitcoin has generally kept soaring, despite the many mini crashes it tends to suffer.

For sober markets like Malaysia and Singapore, the regulators’ stance is clear. They are not outlawing ICOs but making a simple statement: if fund-raising is your main objective, then please take note of existing securities laws, which have been built and refined over a very long time.

Malaysia should not become a hotbed for dodgy ICOs.

Asian regulators should focus on light touch for ICOs (Asian Review), Rated: A

China banned initial coin offerings in September as “a form of unapproved illegal public financing behavior.” South Korea followed suit a few weeks later. Regulators in Hong Kong, Singapore, the U.S. and other countries have also expressed concerns. What is it that has them so worried?

Africa

A Digital Transactions Takeover right under our nose – Cassava Fintech (Newsday), Rated: AAA

Cassava Fintech is a specialized Pan-African Fintech company that delivers innovative digital transaction solutions across the mobile ecosystem. Sounds fancy right? Not quite. Simply put Econet’s vision has expanded beyond Telecoms and our Zimbabwean borders. Econet’s premise sits within an inclusive connected future that leaves no African behind.

Fintech SMEs to drive 72% of bank innovation (The Star), Rated: A

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

81 per cent of financial institutions said they are currently partnering with start-ups or intend to in the next 12 months.

Authors:

George Popescu
Allen Taylor

Australia Peer to Peer Market

Australia alternative finance

The word “digital disruption” holds true meaning when we look at the online alternative lending sector. Marketplace lending is an amazing example of the evolution and transformation of the incumbent lending sector. Though alternative lending has been around for a decade, Australia has taken a while to embrace this revolution. Even though it is at […]

Australia alternative finance

The word “digital disruption” holds true meaning when we look at the online alternative lending sector. Marketplace lending is an amazing example of the evolution and transformation of the incumbent lending sector. Though alternative lending has been around for a decade, Australia has taken a while to embrace this revolution. Even though it is at a nascent stage in the land down under, with the recent entry of American players and big-ticket VC investments, it is a matter of time before it turns into a multi-billion-dollar industry.

Australia is now ranked as the second largest online alternative finance market in the Asia-Pacific region, behind only China. According to the first comprehensive study conducted in the Asia Pacific in 2015, the Australian online alternative lending market increased by 320% with a market value of nearly USD$350 million. From 2015 to 2016, the market size grew 53.6% and is now at USD$609.6 million. The chart below represents the growth the market saw between 2013 and 2015. Lack of funding options for SMEs, missing flexibility in personal loan products, and a highly regulated banking sector are some of the reasons why Australia has emerged as one of the most lucrative untapped lending markets.

Regulatory Framework: P2P lending

It has been mandated by the Australian Securities and Investment Commission that all P2P lending companies operating in Australia need to hold an Australian Financial Service License (AFSL) and Australian Credit License (ACL) to be able to engage and carry on financial services legally. In addition, P2P online platforms must operate as managed investment schemes, and that scheme needs to be registered if the investment is offered to retail customers.

Major players in P2P Lending Market

SocietyOne

SocietyOne was launched in 2012, by Matt Symons and Greg Symons. It has raised $55.24 million in various funding rounds from eight investors (Australian Capital Equity, Beyond Bank, Consolidated Press Holdings, Global Founders Capital, Justin Reizes, News Corp Australia, Reinventure Group, Seven West Media). Through its platform, SocietyOne enables savvy investors to diversify their investments based on their varying individual investment goals and degree of risk. Qualified borrowers can have access to unsecured loans ranging from $5000 to $35000, to be repaid over a loan term of 2, 3 or 5 years.

Since its launch, it has evolved rapidly and has a firm foothold in the consumer finance industry, and today the platform is among the largest provider of personal loans. Its philosophy to connect borrowers and investors through its Clearmatch technology (where a soft online credit check that does not affect the credit score is made to evaluate whether the borrower is eligible for the loan or not) platform is making a real difference in offering better deals than traditional banks. In 2015, it surpassed $50 million in total funded loans. As the chart below shows between January, 2016 and June, 2017 loan origination has increased by a staggering 345%.

Alongside such an impressive growth, it has became a popular choice among the investors as it offers a steady return of 9% and has a very low default rate of about 1.8% across the whole loan portfolio.

Marketlend

Marketlend was founded in 2014 by Leo Tyndall, a former executive at UniCredit, where he was handling securitization and capital market operations. Tyndall started the company with his life savings and in June, 2016 it raised USD $1 million from Jonathan Barlow and Mateusz Szeszkowski.

It is the first platform in Australia that facilitates combination of prompt lending with insurance and margin protection. The P2P structure of Marketlend comprises of three key strengths: providing an innovative solution for financing against unpaid invoices, improving insurance cover against risk and loss protection and ensuring securitization of loans to meet the needs of investors especially the institutional investors. It offers rate of returns upto 10.40% for investors.

Safety First

Marketlend gives top most priority to the security of its borrowers and investors. It accepts losses of at least 1% of the loan through its reserve fund and has even partnered with an insurance company to provide insurance cover under certain circumstances. Since its inception in 2014, it has funded $24 million of loans with zero default.

Bigstone

As per the study conducted by East & Partners on behalf of Western Union Business Services, it was observed that around 83% of the small and medium sized businesses are struggling to have access to credit. To exploit this opportunity, Boyd Pederson, a former managing director at Boston Consulting Group founded Bigstone in 2016. In August 2016, Bigstone raised USD $3 million from four investors (Cicada Innovations, CVC Capital Partners, Narith Phadungchai, and Paniti Junhasavasdikul). Low APR (8%-24%) makes the platform an attractive proposition in the highly competitive alternative lending market.

Bigstone provides loans ranging from $10,000-$250,000 to SME businesses with a maximum loan term of two years. The whole loan approval process is simple, easy and quick and loan is approved or rejected in minutes. On the other end of the spectrum, it enables the investors to spread risk by investing in diversified small loans offered to borrowers in real time.

DirectMoney

Online lending platform DirectMoney is Australia’s first P2P Company to be listed on the Australian Stock Exchange (ASX). It was launched in 2006 by Guy Baldwin and David Doust and at the time was considered a path breaker since it offered varied rates of interest to the borrowers depending upon their credit ratings whereas others provided a single rate of interest to all the borrowers. It raised an undisclosed amount as seed capital from Trevor Folsom, the co-founder of Investible.

DirectMoney connects the borrowers and investors through its pioneer platform and enables the investors to invest in secured and unsecured personal loans. Investors invest by buying the units in the DirectMoney Personal Loan Income Fund and after making deductions for loan losses and management fees, the interest charged from borrowers is the return paid to the investors.

Borrowers can apply for loans ranging from $5,000 to $35,000 to be repaid over 3 to 5 year with varied rates of interest applicable depending upon the credit worthiness of the borrower.

MoneyPlace

MoneyPlace is another innovative marketplace lender that develops a connection between creditworthy borrowers who are seeking to access personal loans with wholesale investor clients. This platform was launched in 2014 by Stuart Stoyan and has its headquarter at Melbourne, Australia. Investment in MoneyPlace is open only to wholesale and institutional investors who fund unsecured personal loans. Auswide Bank agreed to invest AUD $60 million over a stretch of five years and took a 20 percent equity stake in the start-up and in the beginning of this year Auswide increased its stake to 51 percent with the option of increasing it to 75%.

Risk-Based Pricing

Depending on the risk profile of the loans, investors can earn a rate of return varying from 7.7% to 15%. It offers four different investment options based on varying risk profiles namely; conservative, balanced, high yield or customized portfolio.

With a motive to minimize the risk factor involved in the loans, the loans are divided into fractions. The investors can buy the fractions of different loans and thereby spread their risk over a diversified portfolio of loans.

Conclusion

According to the research by Morgan Stanley, value of loans made by online lending platforms in Australia is expected to reach $22 billion in next five years. P2P lending to consumers is expected to reach $10.4 billion whereas P2P lending to small businesses is expected to reach $11.4 billion during the same period. These numbers clearly represents the opportunity for P2P lenders to establish a meaningful presence in the Australian market. Established fintech lenders like RateSetter (UK), OnDeck (US) are expanding operations in in Australia. This goes to show the importance of the Australian market and the potential it represents.

Author:

Written by Heena Dhir and Allen Taylor

Allen Taylor

Tuesday August 29 2017, Daily News Digest

Global fintech

News Comments Today’s main news: Has Float shut down? Ford to use alternative data for credit scoring. OnDeck Capital, Scale Operations Management finalize partnership. Money Dashboard raises 1.33M GBP. Mintos adds Georgian ID Finance loans. Today’s main analysis: HNA raises billions from shadow banks. Today’s thought-provoking articles: SoFi personal loans help people pay off over $5B in credit card […]

Global fintech

News Comments

United States

United Kingdom

China

European Union

International

Australia

Asia

Middle East

News Summary

United States

Rumor: Online Lender Float Has Shut Down (Crowdfund Insider), Rated: AAA

Online lending platform Float has allegedly shut down. Crowdfund Insider has heard from several different sources the digital platform has called it quits. Earlier today, Crowdfund Insider attempted to contact the platform but no response has been forthcoming.

Ford to Look Beyond Credit Scores in Sales Push (Fox Business), Rated: AAA

The company says it is looking at ways to increase loan and lease approvals for applicants with limited credit histories. These consumers are often denied credit because they lack a history of managing debt and as a result have low credit scores. Ford’s credit division plans to review new data to try to determine whether these customers, as well as those with more robust borrowing histories, are likely to repay their loans.

Ford’s U.S. sales are down 4.3% during the first seven months of the year compared with the same period a year prior, while total U.S. new auto sales are down 2.8%, according to Edmunds.com. Wells Fargo & Co.’s auto lending volume fell 45% in the second quarter from a year earlier due to tightening underwriting standards. Ally Financial Inc.’s auto loan originations fell 8.5% for the same period.

Ford Credit is among the largest U.S. lenders to say that it is looking at using alternative methods of underwriting, beyond the traditional factors that are mostly centered around credit reports.

SoFi Personal Loans Help People Pay Off More Than $ 5 Billion In Credit Card Debt (PR Newswire), Rated: AAA

Today SoFi announced its members have cumulatively paid off over $5 billion dollars in credit card debt using SoFi Personal Loans, getting them out of debt faster and at lower interest rates.

Members who used SoFi Personal Loans to pay off credit cards reduced their effective interest rate by 42% on average. They also saw their credit scores rise by 17 points on average due to reduced credit utilization, a key component of credit scores.

Credit card utilization has been steadily rising since the 2008 financial crisis. Americans’ credit card debt eclipsed $1 trillion this year, according to Federal Reserve data, and the average credit card APR inched up to an all-time high of 16.14 percent, according to CreditCards.com.

SoFi offers an array of options for Personal Loans, letting members find their rate, choose their loan amount (up to $100,000), and choose their term (three, five, or seven years) through a simple, fully-online application process. Loans are funded in less than a week on average. Though SoFi Personal Loans can be used for lots of purposes, more than 70 percent of SoFi members report using them for credit card refinancing and loan consolidation.

On Deck Capital Finalizes Funding Partnership with Scale Operations Management (Digital Journal), Rated: AAA

At one point in recent history – the internet was the wild west of commerce and industry. It seemed as if anyone with a computer and an idea could start a company from their home office. Two decades later, way after the dot com bubble burst; it is clear that the internet is becoming saturated and more competitive.

The competition for attention has led to increases in advertisement costs.

Doing business online went from a luxury to a necessity and budgets went from small to large.

Andrew Ukpabi, Founder of Scale Operations Management – a business management company with 15 Million in client assets under management; believes that this trend in the short term will only grow and he explains cheerfully how this has impacted the growth of his company:

“I’ve been on a signing spree lately. In the last week I’ve signed deals with CRMS’s, chargeback mitigation platforms, and processing companies.”

The partnership with On Deck Capital (ONDK) a NYSE listed company that boasts 4 Billion in funding to more than 40,000 small business customers in the US, Australia, and Canada; is the latest in his signing spree.

NEPC SURVEYS E&F MANAGERS ABOUT ALTERNATIVE INVESTMENTS (All About Alpha), Rated: A

NEPC, the investment consulting group that caters especially to endowments and foundations, has posted a survey about what such institutions think of marketable alternatives.

This broad category “marketable alternatives” includes direct hedge funds, funds of hedge funds, liquid alternatives, and global asset allocation.

Where are these allocations headed, near future? Not quite two-thirds of the respondents (65%) planned to maintain their current level of allocation in such investments. Sixteen percent plan to make a “modest change” increasing the allocation. Symmetrically, another 16% plan to make a “modest change” in the opposite direction. Only 3% plan to decrease the allocation “substantially,” and no respondents plan to increase it substantially.

As to what they have done over the past year: 18% have increased their allocation to such alternatives, 32% have decreased it, so the remaining half have kept it where it is.

Source: All About Alpha

There is a split on the question of the classification of marketable alternatives within a foundation or endowment’s portfolio, one that reflects a series of evenly divided binary choices. Not quite half (48%) of respondents say they have a dedicated allocation to this asset class, and that’s the end of the issue for them.

So that leaves 52% who do something else. A little more than half of them (about 28% of the whole) say that they have marketable alternatives both within a dedicated allocation and as part of an allocation to another class.

Should SoFi be granted a bank charter? Rep. Waters isn’t so sure (HousingWire), Rated: A

SoFi outlined in the application that the purpose of the charter is to provide its customers a FDIC insured NOW account and a credit card product. The bank will offer no other products or services.

In response to Waters’ comments, a SoFi spokesperson said, “We’re happy to discuss our application with Rep. Waters and other interested parties, and confident the FDIC will conduct its review of our application expeditiously and in accordance with the law.”

The Independent Community Bankers of America also sent a letter to the FDIC over the application, urging the FDIC to reject the application.

ICBA also stressed that Congress should close the ILC loophole, stating it not only threatens the financial system but creates an uneven playing field for community banks.

1 Popular Way Millennials Are Cutting Back on Living Expenses (and Why There’s Nothing Wrong With It) (CheatSheet), Rated: A

Co-living has been a popular option among young people just out of college. And now businesses are also jumping on the co-living bandwagon, hoping to make some quick cash from this idea.

The act of sharing housing, work, and commuting space is second nature to millennials. Co-living is just one more option young people have to stretch their resources and meet new people if they so choose.

Research shows more millennials are living with their parents than with a spouse. Living with parents is the No. 1 living arrangement among millennials, according to Census Bureau research. In 2016, 22.9 million (31%) young adults lived with their parents.

One company that joined the co-living movement is WeWork, which originally started out offering co-working spaces to individuals and companies. WeWork branched out to co-living spaces, called WeLive, in 2016.

Some co-living buildings, such as PodShare, even provide free food and fully furnished apartments, further helping their residents keep costs down.

Thinking of going the co-living route? Here are some of your options in three major cities.

Chicago

Los Angeles

New York

Malkiel Provides Investment Advice For IRA Allocations (Financial Advisor), Rated: A

Although the top leading robo-advisor firms grew by 65 percent in eight months to $19 billion assets under management in 2014, according to Financial Advice Market Review (FAMR), robo-advice is limited to assembling a group of stocks and bonds to avoid risk in a portfolio.

CAN WE ALL PARTICIPATE IN THE NEXT UNICORN? (All About Alpha), Rated: A

With the passage of the Title III portion of the JOBS Act, this paper tries to address a very critical question: can non-accredited investors find and invest in the next unicorn?

AltFi Data [2015], a data aggregator of equity crowdfunding, published a report on equity crowdfunding from 2011 through June 30, 2015 using the five most significant online platforms based on origination volume. These include Crowdcube, Seedrs, SyndicateRoom, CrowdBnk and Venture Funders. There were 431 investment crowdfunding rounds from 367 companies. The UK report indicates that crowdfunding has revolutionized the funding of small and medium sized enterprises involving both professional and small retail investors. It is reported that 62% of crowd funding investors describe themselves as retail investors with no previous investment experience.

3 Keys To Earning Up To 7% With Peer-To-Peer Lending (Forbes), Rated: A

Lending Club, the world’s largest P2P platform, has served over $55 billion in new loans in 2017. That’s a 40% growth in loan volume compared to last year.

Now, the likes of Goldman Sachs serve about 70% of all peer-to-peer loans.

P2P lending is still a place to earn market-beating yields of up to 7%. But private investors are now competing against the world’s biggest financial institutions.

  1. Spread Your Risk and Invest No Less Than $5,000
  2. Use Automated Rebalancing Tools – NSRInvest.com is a registered advisor that offers managed accounts to P2P investors. Investors can link their Lending Club and Prosper accounts to the website and have NSR experts invest for them based on their loan selection criteria.

Depending on the selected strategy, NSR users have outperformed the market by as much as 2.6% (average is 1.5%).

  1. Enhance Your IRA with P2P

Tell Us Who Your Favorite Fintech Companies Are: Forbes Fintech 50 Call For Nominations (Forbes), Rated: B

If you own or work at a fintech firm that you think is worthy — or if you’re a fan of one — please tell us about it. The only stipulations are that it be a venture-backed startup with operations in the United States. That means no publicly traded companies or their subsidiaries and no privately held established firms.

If you are submitting a company for which you’re an owner or employee, please use this form.

If you’re nominating a startup of whose inner workings you have no knowledge, please fill this out.

The deadline for both sets of submissions is Friday, September 15, 2017. If we have more specific questions, we will be in touch.

United Kingdom

Money Dashboard Raises £1.33M in Equity Crowdfunding (Finsmes), Rated: AAA

Money Dashboard, an Edinburgh, UK-based personal finance management app, raised £1.33M in equity crowdfunding.

1708 investors have participated in the campaign via Crowdcube acquiring an equity stake of 9.55% in the company.

The company had a target of £1m at a pre-money valuation of £12.6m.

Half of UK businesses lack confidence in government’s Brexit strategy (Consultancy.uk), Rated: A

Now, a recent survey conducted by peer-to-peer finance platform Market Invoice found that 54% of 3,000 businesses polled said the government had lost its way in talks with Brussels and that Brexit Secretary David Davis lacked preparedness, while only 5% felt he was doing a good job.

Maintaining stability in the sterling was meanwhile considered important by just 7%, reversing a KPMG study of businesses performed earlier in the year. In response to the falling pound however, the UK is projected to lose as many as 40,000 investment banking jobs post-Brexit.

A total of 20% of firms voted against further financial support spent on marketing, and aim to reduce it in the nearby future. A 54% majority of small businesses have not yet witnessed Brexit leaving a negative impact on the hiring plans, as only 2% are predicted to reduce exposure to EU nationals with a further 6% being more reluctant to hire from the bloc.

Startup Accelerator Level39 Launches Cyber39 (LendIt), Rated: B

Level39 has launched Cyber39, a program focused on fighting cyberthreats in London.

China

Chinese Dealmaker Raises Billions From Shadow Banks (Bloomberg), Rated: AAA

A Bloomberg News review of more than 100 investment documents and corporate filings sheds light on how HNA has financed its remarkable run of deal-making, which has included acquiring multi-billion dollar stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc.

The documents, pieced together from fund prospectuses and disclosures to China’s Administration for Industry and Commerce, show how HNA has employed a network of trusts and asset management products, in addition to more conventional financing, to fund everything from takeovers to day-to-day expenses. Among the key findings: Units of the group have pledged more than $10 billion of unlisted shares to non-bank lenders and, in some cases, have paid interest rates on shadow debt that far exceed China’s benchmark rates for bank loans and bond issuance.

The documents, pieced together from fund prospectuses and disclosures to China’s Administration for Industry and Commerce, show how HNA has employed a network of trusts and asset management products, in addition to more conventional financing, to fund everything from takeovers to day-to-day expenses. Among the key findings: Units of the group have pledged more than $10 billion of unlisted shares to non-bank lenders and, in some cases, have paid interest rates on shadow debt that far exceed China’s benchmark rates for bank loans and bond issuance.

HNA’s parent company said in a response to questions that financing from non-bank institutions makes up a “small” portion of the group’s overall funding and that its credit limit from Chinese banks has increased by more than 100 billion yuan ($15 billion) this year. The company said its debt-to-asset ratio has dropped for the past seven years and added that HNA Group’s profitability and asset quality have been improving.

Source: Bloomberg

Taken together, the documents suggest that HNA’s main units have increased their use of shadow financing in absolute terms over the past two years.

China’s regulators preparing new rules for digital coin offerings (Reuters), Rated: A

Chinese regulators are preparing new regulations on digital coin offerings and may ban them until the rules are in place, the financial magazine Caixin reported on Monday, as interest in the new fundraising channel grows rapidly in a regulatory grey area.

Digital currencies, also called cryptocurrencies, such as bitcoin and a growing stream of alternatives, allow anonymous peer-to-peer transactions without the need for banks or central banks.

China’s top insurers ploughing billions into fintech (SCMP), Rated: A

China Life and Ping An Insurance, the country’s two largest insurers, have both been focusing heavily on investment in technology, and now it appears artificial intelligence (AI) may becoming more important than sales agents across the sector, as premium income continues to soar.

The nation’s largest insurer China Life still has 1.58 million agents, while number two Ping An has over 1.1 million, and both have previously made much of the fact they plan to expand those sales forces in future.

China Life said last Thursday it had teamed up with internet search firm Baidu to form a fund to invest 7 billion yuan (US$1 billion) in AI-related technology companies and internet finance operations. China Life will plough 5.6 billion yuan into the venture, with Baidu covering the rest.

European Union

Mintos Marketplace Adds ID Finance Loans Issued in Georgia (Crowdfund Insider), Rated: AAA

ID Finance, an emerging markets focused Fintech company, is now listing investment opportunities on the Mintos marketplace incorporating prime personal loans issued under its Solva brand in Georgia. Solva is a fully owned ID Finance subsidiary in Georgia that has disbursed 28,000 personal loans worth €12 million since late 2016.

The loan originator will offer a buyback guarantee for loans that are delinquent for more than 60 days. The share of non-performing loans for Solva is said to currently be at approximately 4%. ID Finance will keep at least 10% of each loan available on the Mintos marketplace on its balance sheet so its interests are aligned with investors.

PSD2 – What will happen in January 2018? (AltFi), Rated: A

With the inception of financial digitalization, we’ve seen new firms such as Goldman Sachs adapt their strategy to cover retail and embrace fintech, firms such as Citi and BNY Mellon have ventured into open banking and finance APIs and Vanguard has created a digital behemoth of their robo-advisor.

Open Banking is still a new concept and, as new concepts go, it will be refined by trial and error. Some banks are farther along than others, with e.g. BBVA already in commercial use with several APIs. Yet the roll out of new “API Markets”, as they are often called, will see a learning experience from both the bank providers as well as those looking to utilize them.

Swiss fintech launches first-ever mobile app for alternative investments (Opalesque), Rated: A

Opalesque Industry Update – Fundbase has announced immediate availability of Fundbase Mobile, a revolutionary application for qualified investors to source alternative investment products. With Fundbase Mobile, investors will have access to a globally diversified universe of high quality alpha producing alternative investments at their fingertips.

The majority of Fundbase users expect to improve their fund sourcing process with Fundbase Mobile by spending more time logged in, searching funds. Pancho Vanhees, of TFAL Investments, a Luxembourg-based investor, believes the mobile app will improve their systematic processes and quickly identify top performing emerging hedge fund managers while on-the-go.

Why Only Initial? Worldcore Aims to Use ICO to Conquer Blockchain Competitors (Coin Telegraph), Rated: A

In the past week alone, prominent investor Mark Cuban and entrepreneur Kim Dotcom have both signalled their involvement in ICOs.

Worldcore aims to undercut banks, banking disruptors such as TransferWise and FairFX, and soon the technologically innovative operators heavily involved with cryptocurrencies.

Offering both payments and consumer spending options such as a prepaid debit card, the company is already accepting Bitcoin as a funding option, the first step in a Blockchain rollout which will occur incrementally over several years as the technology improves.

Biometric account access in the form of face and voice recognition replaces passwords, while Blockchain offerings themselves will take the form of a payment gateway reminiscent of Ripple.

Worldcore’s fee structure, for example, is noticeably more complex than that of Bitcoin-based prepaid cards from Bitwala, ANX and others.

Fintech Can Contribute to the Quality of Country’s Financial Center (Crowdfund Insider), Rated: B

The Federal Council of Switzerland is out with a note regarding Fintech. Federal Councillor Ueli Maurer is apparently doing a swing through the Swiss Fintech scene to improve awareness and relationships.

Maurer is expected to visit Fintechs in Zurich and Zug – a fact finding mission to garner updates on current tech topics, risks, opportunities and challenges.

The Federal Council believes that a dynamic Fintech ecosystem can contribute significantly to the quality of Switzerland’s financial center – something that is strategically important. It can also boost its competitiveness around the world.

Credissimo – Contender for European FinTech Awards 2017’s Title of ‘European Innovator 2017’ (Digital Journal), Rated: B

Credissimo is the only Bulgarian company featured in the European FinTech Awards 2017 where it is nominated for the “Alternative Finance” category.

This prestigious nomination places Credissimo amongst lead European companies where it will compete with the largest FinTech organizations for 2017’s European Innovator award.

International

Alternative finance market in robust health, despite slight summer downturn (Opalesque), Rated: AAA

Opalesque Industry Update – The world’s first global Crowdfunding and Marketplace Finance Index (CAMFI) shows that the industry exhibited a slight downturn in July, dropping from 94.11 in June to 90.32 in July.

Key points:

  • The global crowdfunding and marketplace finance industry exhibited a slight downturn in July
  • Segment-wise, the Reward Sub-Index was the major cause of the July decline
  • Attribute-wise, the main declining driver was the market Scale measures
  • Industry Scale continued to shrink, most evidently in the Reward segment
  • Industry Efficiency improved significantly, with both Debt and Reward segments demonstrating growth
  • Industry Transparency underwent no noticeable changes
  • Debt has stayed relatively stable, which is expected given it is such a large and diverse market
  • Equity has seen had a significant downturn in trading
  • Rewards has had the biggest downturn, with significantly fewer campaigns, backers and amounts of money raised for each campaign during the July period

Despite the slight downturn demonstrated in June and July, data from TAB shows that the industry is growing rapidly year on year:

  • In 2014, campaigners in the UK raised over $2 billion via crowdfunding platforms. In 2016, they raised over $3.96 billion.
  • China is demonstrating huge growth, with companies raising $134 million via crowdfunding platforms in 2014. In 2016, they raised $2billion.
  • France is also seeing significant growth, with companies raising $70 million in 2014, and $159 million in 2017 to date.
  • In 2014, companies raised $5.4 billion in debt finance globally, increasing to $12.7 billion in 2016.
  • In 2014, companies raised $345 million in equity finance globally, increasing to $766 million in 2017 to date.
  • Rewards finance raised via crowdfunding globally has increased from $680 million in 2014 to $1.1 billion in 2016.
  • The Real Estate industry raised $1.2 billion via crowdfunding in 2014. In 2016, it raised to $3.8 billion.
  • The Capital Goods industry raised $751 million in 2014. This year to date, it has raised $1.4 billion.

Funding & Deals On Pace For A Record Year (CB Insights), Rated: A

Last quarter set a record for funding to VC-backed fintech companies, which raised $5.2B across 251 deals (as highlighted in the CB Insights Q2 2017 Global Fintech report). At the current run rate, deals are on pace to increase 5% this year, while investment dollars are on pace to grow 19%.

The quarter also saw new unicorn births, with 5 companies reaching new valuations of $1B+: online lending site Tuandaiwang (valued at $1.5B at the time of its unicorn round), invoice and payment company AvidXchange ($1.4B), online investment platform Robinhood ($1.3B), health insurance startup  Clover Health ($1.2B), and cloud-based communication platform Symphony Communication Services ($1B).

Source: CB Insights

Funding to global VC-backed fintech companies set a quarterly record in Q2’17, rising 83% to reach $5.2B. Deals experienced less dramatic growth, but still increased 2% from the previous quarter, reaching a five-quarter high of 251.

Source: CB Insights
Australia

Car finance drives P2P growth in Australia (P2P Finance News), Rated: AAA

CAR finance is one of the driving forces behind the growth of P2P lending among brokers in Australia.

According to new research from RateSetter’s Australian business, one fifth (20 per cent) of all broker-led loans on the platform are used for car and vehicle finance, with an average loan value of AUS$13,186 (£8,077).

Meanwhile, home improvement loans account for 19 per cent of the platform’s broker-led activity, with an average loan value of $14,299, while 12 per cent of loans are used for debt consolidation, and seven per cent are used for education.

Business borrowing accounts for nine per cent of total broker loans, but has the highest loan values with an average of $28,094 per loan.

CARS AND RENOVATIONS DRIVING GROWTH OF P2P LOANS IN THE BROKER MARKET (LendIt), Rated: A

Peer-to-peer lending is gaining traction amongst Australian brokers, with RateSetter today announcing that it has reached the milestone of 2,000 brokers accredited with the peer-to-peer lending platform. Lending volumes through the broker channel, largely driven by car and home improvement loans, are doubling approximately every six months according to RateSetter.

Vehicle financing is the most popular reason brokers are choosing peer-to-peer loans for their clients, followed closely by funding for home improvements and loans to consolidate high-interest credit card or other bank debt.

The milestone also coincides with RateSetter passing $150 million in loans facilitated since launching in 2014. Across both the broker and direct channels, lending has grown 50% in the last 5 months alone, after passing the $100m milestone in March.

An analysis of RateSetter’s loan data found that brokers are helping their clients finance loans worth an average $16,871, with an average loan term of 44 months at an average interest rate of 8.37% p.a.

Source: LendIt
Asia

Here’s How Chinese Tech Giants Including Tencent And Ant Financial Are Plowing Into Southeast Asia (CB Insights), Rated: AAA

Here’s a summary of the investment and M&A moves of the five Chinese internet giants within Southeast Asia:

Didi Chuxing: Chinese ride-hailing startup Didi Chuxing was the first among the Chinese tech giants to enter Southeast Asia, when it invested in Singaporean ride-hailing startup Grab’s $350M Series E round in 2015. It invested again in Grab in 2017, in its $2B Series B round.

JD.comThe Chinese e-commerce giant made an investment in leading Indonesian travel booking platform Traveloka this past year as part of its ongoing fund-raise, participating in $150M of its ongoing $500M round, along with Sequoia Capital, Hillhouse Capital Group, and East Ventures. Expedia contributed $350M.

TencentTencent recently invested in Indonesia’s Go-Jek, a company most widely known for its on-demand motorbike service. But Go-Jek is strategically similar to Tencent in a notable way: Like Tencent’s WeChat, Go-Jek is also developing a “super app” of sorts, which includes the ability to order food, massages, and other services, in addition to the development of its own mobile payments product called Go-Pay. In 2013, Tencent launched MNC Tencent, a joint venture with Indonesia’s MNC Media (not pictured in timeline). According to media reports, this venture was launched with the intention of pushing Tencent’s WeChat in the country. More recent reports claim that this JV hasn’t seen much traction.

Alibaba: Alibaba’s most recent investment into Southeast Asia was a $1.1B investment into Indonesian consumer-to-consumer e-commerce site Tokopedia in August 2017. This investment comes after months of rumors that JD.com was planning an investment into the company. Alibaba has also invested twice into Tokopedia’s competitor, Singapore-headquartered e-commerce site Lazada. First, in April 2016, it invested $1B in Lazada, valuing it at $1.5B. In June 2017, it upped its existing 51% stake to 83%, giving Lazada a valuation of $3.15B. It announced that this investment would leave its investments into the e-commerce site at a little over $2B.

Ant Financial: Ant Financial, Alibaba’s financial investment arm, operates Alipay and has made its fair share of investments into the region, across different countries and on different terms. In 2015, it invested in Singaporean cross-border trading platform M-DAQ. In 2016, it put money into Thai fintech company Ascend Money to help grow its digital and offline payments and financial services business. 2017 brought an entrance into the Philippines, with an investment into Globe Telecom-owned fintech company Mynt, and into Malaysia, where Ant Financial set up a joint venture with CIMB Group-owned Touch ‘n Go, which operates a smart card that works on transportation payments, like tolls and public transportation. According to reports, the joint venture would allow Ant Financial to build an e-wallet for Malaysia.

Source” CB Insights

Thai proptech startup Seekster raises seed funding from Digital Ventures, 500 Tuk Tuks and dtac Accelerate (e27), Rated: A

Seekster, an alumni from the dtac Accelerate programme batch 5, announced today it has raised an undisclosed seed funding from Digital Ventures, 500 Tuk Tuks and dtac Accelerate.

The startup is a company that connects properties to cleaning and maintenance service providers. While there are many on-demand cleaning companies, Seekster targets the commercial sector and SMEs. The startup says it facilitates about 5,000 to 6,000 jobs per month in Thailand.

Furthermore, the startup also announced it has inked a deal with real estate company Ananda Development to provide maids and technicians for its condos.

Middle East

Robo-advisory: Show me the money (Khaleej Times), Rated: AAA

Robo-advisory services describes a range of algorithm driven models that help sift and select investment options for individuals based on the investors’ requirements and risk appetite. Similar to P2P lending, this technology platform brings the customer closer to the investment. It enriches the information available through graphic rich dashboards and content that allow the investor to see how the portfolio is performing over time as well as versus benchmarks.

Deloitte’s report, The Expansion of Robo-Advisory in Wealth Management suggests that by 2020, the assets-under-management or more simply the amount of money invested via robo-advisors will be somewhere between $2.2 trillion to $3.7 trillion. By 2025, the number is expected to rise to $16 trillion or roughly three times the amount handled by the world’s biggest asset management firm, BlackRock.

Source: Khaleej Times

What I Know about the right time to crowdinvest: Eureeca’s Chris Thomas (Wamda), Rated: A

Unlike other crowdfunding platforms, Eureeca specializes in equity investment. If crowdfunding is the umbrella term for debt funding or reward funding, crowdinvesting describes the equity side of crowdfunding. At Eureeca, entrepreneurs and investors are put through a stringent vetting process before it is determined who can join the platform. For its first class of companies, Eureeca chose 60 businesses out of 3,000 applicants. With more than 14,000 active investors, the average investment amount is $5,800.

As the first company to obtain a crowdfunding license from the Dubai International Finance Centre, Eureeca – in the person of Thomas – laid out for Wamda everything from the right time for entrepreneurs to crowdinvest to what they should expect from the process.

Crowdfunding should not be your second or third choice. It should be the first place you go to try and fix your funding requirement. In the Middle East, the concept is still being socialized. Crowdfunding is essentially the online mechanism for raising money. If you are raising $100,000 or $10 billion, join a platform to see what they can do and you’ll be surprised at the support. By bringing the fundraising online, you reduce the amount of time and effort you put in and increase your reach to potential investors, including access to crossborder investments.

It works best for businesses with a consumer-facing element. People need to have an emotional connection with your business. It’s not going to work for a steel factory in Ras al Khaimah [an outlying emirate in the UAE]. If you have a product that’s already being distributed and there are people who know and love your product, they are the ones that can be converted from lovers of your business to investors in your business.

Regular fundraising prep applies. Be sure that you have a strong network and that you are constantly building your contact list.

Authors:

George Popescu
Allen Taylor