Tuesday April 17 2018, Daily News Digest

Tuesday April 17 2018, Daily News Digest

News Comments Today’s main news: dv01 to expand into mortgages. Zopa prepares for next-gen bank launch. JD Finance raises over $2B. Moody’s assigns ratings to Prospa. Namaste Credit raises $3.8M. Today’s main analysis: Venture capital reaches record high. Today’s thought-provoking articles: Interview with Prosper’s CFO. Fintech lenders give mortgage borrowers an edge. Hexindai’s IPO prospectus. Where top European banks are investing. What Aussie […]

Tuesday April 17 2018, Daily News Digest

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News Summary

United States

dv01 Announces Expansion Into Mortgages; Signs As Loan Data Agent For CSMC 2018-RPL2 (Crowdfund Insider) Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Friday it participated in its first mortgage securitization and acted as loan data agent for CSMC 2018-RPL2, a securitization of $275 million re-performing loans serviced by Select Portfolio Servicing (SPS). The company revealed it introduced the role of Loan Data Agent in 2016 and provides Loan Data Agent services for an aggregate securitized collateral balance in excess of $25 billion of online lending loans.

CFO Usama Ashraf Talks Borrowing and Investing with Prosper (LEndEDU) Rated: AAA

Recently, I had the privilege to pick the brain of the Chief Financial Officer (CFO) of an industry leading company in the fintech space. Usama Ashraf is the CFO of Prosper, the first peer-to-peer platform in the US that connects people who want to borrow with individuals and institutions that are looking to invest in consumer credit.

Q: What are some unique challenges that come with the job of managing the finances of Prosper?

A: If you look at our business today, we have a 10+ year track record. We launched in 2006, and we’ve done over $12 billion in cumulative loan originations. A key differentiator in this space is the ability to generate cash flow, and last year, we were cash flow positive for three consecutive quarters starting in Q2.

Q: How has the health of the personal loan market in the recent past impact Prosper’s growth?

A: 2017 really allowed us to stabilize the business. We had stable funding. We had growth of over 30% on the platform, and as mentioned, we generated cash for three consecutive quarters. So, the business is now on a healthy footing, and we’ve returned to strong growth.

Q: Are you optimistic about the overall market in the next few years?

A: The total consumer credit market today is over $10 trillion. When you look at our originations last year, we did about $3 billion. The consumer credit space is a massive market, and it’s also a key element of growth in GDP in the US. 70 percent of GDP comes from consumer spending, so consumer credit and spending is a massive part of the US economy. Since the US economy is mostly expected to grow over the next several years, we are optimistic about the opportunities that growth presents for us.

How fintech lenders give mortgage borrowers an edge (Market Watch) Rated: AAA

 

  • Fintech lenders reduced the time it takes to process a loan by roughly 10 days as compared with the average processing time for mortgages. For refinances, they’re nearly 15 days faster than more traditional lenders.
  • In instances where a lender is seeing greater demand for loans, tech-based lenders are better at handling the larger inflow of applications. Double the application volume raised the loan processing time only by 7.5 days for fintech lenders, versus 13.5 days for traditional ones. Moreover, the researchers found that tech-based lenders lower their denial rates when there’s a higher volume of applications.
  • In parts of the country where fintech lenders have a greater presence, existing borrowers are more likely to refinance. But the efficiencies created through their platforms make it more likely that borrowers will see an optimal result from a refinancing, including getting the market interest rate.
  • The default rate on Federal Housing Administration loans originated by fintech lenders is roughly 25% lower than traditional ones.

Cross River Selected As Two-Time Winner In LendIt Fintech Industry Awards (PR Newswire) Rated: B

Cross River has been selected as the nation’s Most Innovative Bank for the second year in a row at the LendIt Fintech Industry Awards, the world’s leading annual event in financial services innovation, held in San Francisco at LendIt Fintech USA. Other nominees included BankMobile, CBW Bank, Marcus by Goldman Sachs and HSBC.

 

Mastercard Eyes Blockchain for Fighting Fake Identities (Coindesk) Rated: A

In an application released by the U.S. Patent and Trademark Office (USPTO) last Thursday, Mastercard describes a system in which a semi-private or private blockchain would be used to receive and store identity data, the pieces of which could include a “name, a street address, tax identification number” and more.

The company states in the filing, which was originally submitted in September 2017, that the tech could help it block the use of fake identity data within its systems.

How US banks are preparing for the GDPR (Tearsheet) Rated: A

On May 25, EU companies will no longer be able to collect and use personal data without the individual’s consent, under the General Data Protection Regulation. U.S.-headquartered banks and fintech companies with global operations are anxiously preparing to comply with the new rules, anticipating a time when U.S. customers will demand the same protections from their home institutions.

Stash Teams with Green Dot to Become a Challenger Bank (Finovate) Rated: A

Mobile financial services company Stash first revealed its plans to launch banking services in October of last year, positioning itself as a challenger bank with mobile-centric investment and retirement capabilities. And, as with all U.S.-based challenger banks, Stash will house the funds at a traditional bank. Today, the New York-based company announced it has selected Green Dot and its subsidiary bank, Green Dot Bank, Member FDIC, to keep user’s funds safe.

Through the partnership with Green Dot, Stash will deliver debit cards with no overdraft fees and provide access to a network of free ATMs across the U.S. The app will also share insight into clients’ financial health, with actionable advice on spending, saving, investing, and retirement via Stash Coach.

‘In this market, it’s disrupt or die’: The innovations local banks are using to stay ahead (Orlando Business Journal) Rated: A

Many Central Florida bank customers nowadays want more than just the ability to move money around. David Stahl, senior vice president, SunTrust: We acquired an online lender called LightStream two years ago and that has been a huge opportunity for us. Personally, I used it. There is a need out there for consumers.

Plaid Assets and Day 1 Certainty: a win-win solution for digital mortgage (Plaid) Rated: B

Today, we’re thrilled to announce that our Assets product is out of beta and Plaid is officially approved to supply asset verification reports to Fannie Mae as part of their Day 1 Certainty initiative. This means that lenders can embed Plaid directly into their application experience and provide borrowers with a fast, seamless experience, reduce the time it takes a loan to close, and have peace of mind offered by Fannie Mae’s protection against repurchase for key loan components. It’s a win-win solution.

Using Plaid, borrowers can now share with lenders the data they need, directly from the source, including:

  • Bank account, transaction, and bank account owner information from multiple accounts and institutions in a single, standardized JSON report delivered via API
  • An auditable PDF version of the same information, also via API
  • The ability to permission secondary investors like Fannie Mae to securely retrieve the same data directly from Plaid, enabling programs like Day 1 Certainty

 

United Kingdom

Bank and P2P boards take shape as Zopa prepares for next gen bank launch (Global Banking and Finance Review) Rated: AAA

Zopa, the pioneering financial services company, has today announced a governance restructure in advance of launching its next generation bank.

The re-structure will establish separate boards for the Zopa P2P business, proposed bank (subject to banking licence approval) and Group in order to facilitate the increasing scale of the business, ensure good corporate governance and protect the interests of its customers.

The changes come with the appointment of two new board chairs as well as two new independent non-executive directors to the proposed bank. Christine Farnish will be chair of the P2P board and Peter Herbert will be chair of the proposed bank.

Ratesetter review: peer-to-peer lender’s best rates, risks and more (Love Money) Rated: AAA

RateSetter was founded in 2010 by Rhydian Lewis (pictured) and has been used by more than 62,633 lenders, to lend more than £2.4 billion.

RateSetter will lend to either individuals or businesses. You start by deciding how much to lend: the average amount invested is £14,299, but you can start with £10.

You can borrow between £1,000 and £25,000 – depending on your circumstances.

Finastra brings mortgage solutions to the cloud with Microsoft Azure (Finastra) Rated: A

Finastra is bringing its mortgage lending solutions to the cloud via Microsoft Azure. As part of the strategic alliance between the two companies to use Microsoft’s enterprise-ready, trusted cloud platform as a base for a selection of Finastra’s payments and retail banking technology, Finastra’s Fusion MortgagebotLOS product is now available via the Azure cloud. As of today, US clients that access this service will realize streamlined access to their data, improved operational control and increased productivity.

Government chooses fintech start-up to lead UK tech mission to China (Internet of Business) Rated: B

Fintech start-up Nuggets has been chosen by the UK government and the Mayor of London to embark on two trade missions to China this year.

The company – which has developed a blockchain-based, e-commerce payments and ID platform – will help represent the Department for International Trade, the Greater London Authority, and the City of London Corporation on the trips.

China

China: WeiyangX Fintech Review (Crowdfund Insider) Rated: AAA

According to a person with direct knowledge of the matter, JD Finance is nearing the closing of a new round of financing of over $2 billion (¥12.6 billion).

After this investment, the market valuation of JD Finance is expected to exceed $20 billion (¥126 billion).

CHINA SECURITIES led this financing, which was followed by Oriza Holdings and other institutional investors.

Hexindai: Don’t Miss Out On A Good Target Because Of Industry-Wide Concerns (Seeking Alpha) Rated: AAA

Hexindai Inc. had their IPO on NASDAQ on November 03, 2017, raising US$50 Million. HX is a fast-growing consumer lending marketplace facilitating loans to meet the increasing consumption demand of the emerging middle class in China.

This “online and offline” model led to significant business growth for HX since its inception. The total amount of loans facilitated through the online marketplace increased by 54.4% from Q2 2016 to Q2 2017. Also, the company has experienced a business shift from collateral loans (auto loans etc.) to credit loans, which drives the boost in the the company’s customer base growth:

Source: HX’s IPO prospectus
European Union

Where top European banks are investing in fintech – CB Insights (Fintech Futures) Rated: AAA

Research company CB Insights analysed the private market fintech investment activity of the top European banks and their venture arms, by assets under management (AUM), from 2012 to Q2 2018 (as of 11 April 2018).

According to the graphic below, created by CB Insights, European banks are placing strategic bets across wealth management, lending, payments and regulatory technology and also blockchain.

Source: Fintech Futures

New Company Opens Door to Malta’s Crypto Market (Nasdaq) Rated: B

Decentralised Ventures is a partnership between Malta-based Initial Coin Offering (ICO) specialist TokenKey and token research and Blockchain consultancy Strategic Coin.

Decentralised Ventures offers a complete list of end-to-end services for any organization involved in or looking to enter the token, crypto or peer-to-peer lending markets.

International

Venture capital investment in FinTech reaches record $ 27.4 billion high (Consultancy) Rated: AAA

Confidence in FinTech has accelerated venture capital financing in the industry to a record level of $27.4 billion in 2017 – a growth of 18% from 2016. According to a recent report from consulting firm Accenture, the growth in FinTech investment has been driven by a surge in deal value in the US, UK and India.

In the US, the value of venture capital investment deals jumped 31% to $11.3 billion in 2017. Meanwhile, in the UK, deal values almost quadrupled to $3.4 billion, while India saw a near quintupling of investment to $2.4 billion in 2017. The volume of global FinTech deals also rose greatly, from about 1,800 in 2016 to almost 2,700 in 2017.

Source: Consultancy
Source: Consultancy

BotBird – Your cryptocurrency investment partner for modern trading! (AMBCrypto) Rated: A

BotBird is introducing Social Peer-to-Peer Lending Market where the community members can make use of their digital assets as collateral to get cash. This involves no risk and is equally benefited to both the borrowers and lenders. The main goal of BotBird is to connect the lenders and borrowers across the world through the P2P lending marketplace.

Lenders can earn up to 50 percent monthly interest while trading.

Trends: More innovative mobile money services on the horizon (The Edge Markets) Rated: A

According to McKinsey & Co’s global banking report released last month, digital finance has the potential to reach more than 1.6 billion new retail customers in emerging economies and increase the volume of loans extended to individuals and businesses by US$2.1 trillion (RM8.1 trillion).

According to statistics provided by Bank Negara Malaysia, the national transaction value per capita for e-payments amounts to nearly RM613.6 million last year, up 11.4% from RM550.6 million in 2016. There was no data for the total number of mobile payments made in 2016, but the central bank stated last year that it came to about RM500,000.

4 Blockchain Startups to Keep an Eye On (Coin Announcer) Rated: B

2. Alchemy
Founded by 21-year-old entrepreneur, Justin Jung, the P2P lending platform is looking to take existing P2P concepts and completely disrupt them by creating a CDO (collateralized debt obligations) market that will allow tranched investments within the platform.

Australia

Online small business lender assigned Moody’s ratings (Australian Broker) Rated: AAA

Leading global ratings agency Moody’s has assigned ratings to Prospa’s Australian small business loan asset backed securities (ABS) trust.

This is the first rated ABS issuance backed by unsecured small business loans in the Australasian market. It is also one of the few that have been issued globally and rated by one of the big three credit rating agencies.

A total of $83.25million in debt securities were rated as follows: $64.8m Class A Notes assigned A3; $14.6m Class B Notes assigned Ba2 and $3.7m Class C Notes assigned B3.

How Australia’s fintech SME lenders have learnt from the US (Finder) Rated: AAA

Speaking at the AltFi Australasia Summit 2018, CEO of OnDeck US Noah Breslow discussed how it first launched in the US over a decade ago in 2007. And while it only launched its Australian lending business in 2015, the Australian small business lending market has traversed the same course as the US market in a markedly shorter time.

Source: OnDeck

While the actual alternative small business lending market remains largely unregulated, other initiatives put in place, such as the pursuit of open banking and comprehensive credit reporting (CCR), will have a marked impact on the sector.

In the US, 70% of SMEs perceived there to be more small business lending options than five years ago, but that number is only 30% in Australia.

Online small business lending growing fast (Australian Broker) Rated: A

The online small business lending market in Australia is growing at a faster rate than the US market did at a similar stage of development, the CEO of OnDeck Global has said.

Speaking at the AltFi Australasian Summit in Sydney, CEO Noah Breslow said it could reach more than $2billion in annual originations by 2020.

He said that despite over 6,000 banks offering small business lending options in the US, online lending to small businesses has flourished.

Australians getting short-changed for financial advice, inquiry hears (Rueters) Rated: A

Australia’s four biggest retail banks and wealth manager AMP (AMP.AX) have paid hundreds of millions of dollars in compensation to customers for poor advice over the past decade, a major inquiry into the financial sector heard on Monday.

Financial advice came under scrutiny at the start of a fortnight of hearings by the Royal Commission into corporate wrongdoing and abuse of power by Australia’s financial sector, which could lead to greater regulation and criminal charges.

 

India

Namaste Credit raises 25 crore (Business Line) Rated: AAA

Namaste Credit, a digital marketplace and technology platform for SME loans, has raised about 25 crore ($3.8 million) in a Series A round from Nexus Venture Partners. It will use the money to expand to new markets, improve its technology and data analytics platform and scale the business. The company plans to increase its channel partner programme across India and expand its technology licensing partnerships with leading lenders globally.

Finzy gets 8.5-crore funding

Finzy, a peer-to-peer lending platform, has raised about 8.5 crore ($1.3 million) in a pre-Series A funding round from industry investors. It hopes to close a second round of fund raising in two months. The company will use the money to speed up growth by investing in technology, making the process leaner and faster, and in building the team. It will also use a large part of the money to expand across Tier-I cities.

 (VCCircle) Rated: A

Indian peer-to-peer (P2P) lending startups are considering a private blockchain to facilitate sharing of information as a risk-mitigation strategy, and to identify fraudulent loan applications.

5 Benefits of Online Peer-to-peer Lending That You Didn’t Know (Entrepreneur) Rated: B

 

  • Easier and Faster
  • Lower Eligibility Criteria
  • Lower Interest charges
  • No hidden fees and charges
  • No penalty for repaying your loan before stipulated time

 

Africa

Meet FINT, the FinTech Company that wants to change micro-lending in Nigeria (Nairametrics) Rated: AAA

The guys behind FINT

FINT.ng is run by a team of 4; Chiwete John-Njokanma is the company’s Chief Executive Officer, Nnamdi Okeke is the Chief Technology Officer, Eskor Toyo is the Chief Operating Officer while Reva Attah is Chief Strategy Officer.

Who is it for?

The only restriction so far is that everyone who uses the platform must have a bank account that is linked to a BVN.  Users can borrow anything between N60,000 and N2 million at rates as low as 8% for 3 – 12  months, which in Nigeria is remarkable because in the current environment, a loan from a formal financial institution with 20% interest would be a good deal.

Personal Loan Products – Are they useful for repaying credit or a bad debt? (The South Africa) Rated: A

If you’re one of these people you might be interested in Wonga’s new personal loans. The personal loan offers a repayment plan lasting up to 6 months, affording customers more flexibility through small monthly repayment instalments.

Asia

Robo-advisor seen as a step forward for investors (The Malaysian Reserve) Rated: A

The issuance of robo-advisory licences by the Securities Commission Malaysia (SC) would allow regulators to provide high quality and cheaper investment advice for customers.

Main Street Capital Sdn Bhd CEO Julian Ng said through a robo-advisory licence, regulators are able to reach out to wider ranges of investors where previously only wealthy clients could afford the investment advice.

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

Taking On The Growing Online Lending Market in Australia

Australia online lending

Australia is fast emerging as a new hub of the online alternative lending market. It grew by a staggering 320% in 2015 with the market size at nearly USD $350 million. Now, Australia is the third largest online alternative finance market in the Asia-Pacific region behind China and Japan. Therefore, it comes as no surprise […]

Australia online lending

Australia is fast emerging as a new hub of the online alternative lending market. It grew by a staggering 320% in 2015 with the market size at nearly USD $350 million. Now, Australia is the third largest online alternative finance market in the Asia-Pacific region behind China and Japan. Therefore, it comes as no surprise why more and more start-ups are looking to tap the opportunity in this region. A look at the previous year’s growth rates will also highlight the exponential build-up in the sector.

Alternative Finance Benchmarking Report 2016. Figures in US Dollars.

One such start-up making its name in the Australian FinTech industry is Enably, which offers loans in the consumer lending and SMB space. Headquartered in Perth, Enably was founded by David Brennan as Loan Ranger in 2013 and recently rebranded as Enably under the management of the current CEO Andrew Kirkwood.

In its most recent round of funding, the company raised AUS $3.5 million equity and AUS $15 million for a debt facility, which can be further increased to AUS $30 million. The round was led by Corbin Capital, a New York-based investment management firm.

How Enably Enables Loans for Aussies

Brennan came up with the idea for Enably while studying the effects of change in customer demand and regulations in the U.S. and UK FinTech industries. He grasped the power of this disruptive technology and realized the methods used by banks to service customers are obsolete.

The loans Enably provides range from AUS $ 1,000 to AUS $ 10,000 for up to 24 months. Though it might look like an LC or Prosper copy, it is based on a different philosophy. Its product competes on price as well as service, but what sets Enably apart is it’s 100% balance sheet model.

Brennan was not content with consumer lending and looked at other markets to service, so he zeroed in on SMB. Since that was a young market, Enably played it safe by striking a licensing partnership with Kabbage and developing its own CRM in order to customize its credit engine per the needs and demands of the Australian small business market.

In a short span of time, Enably built two successful businesses under one roof. To avoid any confusion, both companies have different staff and target markets.

Since the Australian government promotes research and development and offers tax rebates for companies engaged in R&D, Enably developed a factoring product they plan to launch soon as Radiant Capital. This new arm of the business will provide loans against receivables of the R&D tax rebate. To keep the functioning of all three companies separate, different CEOs have been appointed. Brennan currently serves as CEO of SMB division.

Brennan’s companies are debt funded by American wholesale lenders. Though they have certain financiers from Australia, they are actively diversifying their funding sources and looking to reduce the cost of capital. The consumer lending arm has lent almost AUS $30 million. The SMB arm has done AUS $6 million in last 12 months and plans to expand its credit line to AUS $15 million. The new funding will allow Enably to move beyond payday lending and short-tenure loans to longer tenures and larger loans.

Keeping an Eye on Australian FinTech Opportunities

Australia is a great opportunity for FinTech companies. There are potentially 24 million customers not being served properly by the banks, but the Australian market has its own peculiar characteristics. Though there are over 15 serious players, the industry is still in the market education phase. Another issue is that credit card refinancing is not a big market, so it is standard for Australians to pay down their credit cards at the end of the month. This behavior, though good for the borrowers, keeps lenders from offering debt consolidation products. Instead, Enably focuses on financing holidays and major purchases for consumers.

The Australian regulatory scene has also cleared up. The sector has experienced significant oversight and regulatory changes in the last 3-4 years. Young lenders are held to the same standard as banks, which has led to several compliant operators leaving the market.

Brennan’s companies are in a sweet spot. The current consumer credit market is estimated to be over $170 billion in Australia. Morgan Stanley predicts that online consumer lending will grow to around $10 billion by 2020. The same report estimates that small business online lending should grow to $11 billion by 2020. The market is still developing, and getting in early will allow companies to establish a strong foothold in the market. Since Australians are tech savvy, it’s a matter of time before consumers shift to the hassle-free experience of online lending. With over $33 million of funding, Enably is in a prime position to become the leading player in the market.

Authors:

Written by Heena Dhir.