Tuesday January 2 2018, Daily News Digest

Yirendai

News Comments Today’s main news: Rumor: Former SoFi CEO Mike Cagney is planning a comeback with new HELOC startup. Funding Circle preparing 1B GPB float. Morgan Stanley to offer robo-advice. New bill could make IRS use API. Spice Mobility to invest $1.95M in P2P lending startup. Today’s main analysis: Yirendai still growing, and at a good price. Today’s thought-provoking […]

Yirendai

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United States

The SoFi CEO who was ousted amid sexual harassment allegations is already back with a new startup (recode), Rated: AAA

Cagney has been approaching investors in recent weeks about a new fintech startup with a plan to raise about $25 million, according to multiple people familiar with his outreach. He has pitched investors such as Peter Thiel along with several others who were backers of SoFi, a company that Cagney pushed to become worth almost $5 billion.

Cagney is starting the new company alongside his wife, June Ou, who previously served as SoFi’s chief technology officer, the people said. The company does not yet have a name and has yet to be publicly announced — Ou’s LinkedIn page says she will serve as the COO of a “#newCo.”

The company is said to focus on HELOC, or home equity lines of credit, though the people said the idea was in the early stages and still required more sharpening. Ou this month shared a job posting on GlassDoor for engineers at a company soon to launch.

Morgan Stanley enters robo-advice investment market (Financial Times), Rated: AAA

Morgan Stanley has made a late push for dominance in the fast-growing market for “robo-advice” in America, launching an automated service aimed at the offspring of its well-heeled customers.

Funds managed by software will grow to $385bn by 2021, according to Cerulli Associates, more than quadrupling from today’s levels.

Morgan Stanley is the latest to pitch in, offering a choice of ETFs, mutual funds and seven themed portfolios, among them sustainability, gender diversity and next-wave technology. The new online tool, known as Access Investing, is designed to appeal to a younger generation, many of them members of wealthy families.

How a simple tech upgrade at the IRS could transform the economy (TechCrunch), Rated: AAA

Our credit system runs on the power of data. A simple IT upgrade at the IRS would put more of this power in your hands.

The IRS Data Verification Modernization Act of 2017, recently introduced in Congress by Rep. Patrick McHenry (R-NC) and Sen. Cory Booker (D-NJ), would set up an application programming interface (API) at the IRS.

This API would turn a cumbersome, manual process into an automated one. An API would allow the agency to provide your transcripts the instant you give your authorization. Credit providers would then have more information to make better decisions about your approval and rate. This could cut financial fraud and improve credit prices, speed and access for everyone.

Consumers Want Biometrics – How Will Payments Respond? (PYMNTS), Rated: A

recent study by Visa showed that, unsurprisingly, consumers are ready to say goodbye and good riddance to passwords, both because of the friction they create when trying to remember them – and the inevitable stutter step that the “forgot password” prompt creates – and because in the aftermath of the Equifax breach, the public has never been more conscious of how far passwords fall short in preventing fraud and keeping their data secure.

It was one of the big drivers, Nelsen said, behind the development of Visa ID Intelligence. Nelsen said that ID Intelligence is an ecosystem of authentication solutions to which issuers connect via a single API.

Over the last four years, Nelsen said there’s been an enormous increase in credit applications – a healthy portion of which are from fraudsters who’ve stolen legitimate credentials and have attempted to use them to open new accounts. Banks now recognize that the best way to combat new account fraud is to put knowledge-based authentication in their rearview mirror, in favor of using tools like identity documents and device data to help determine whether an identity is legitimate, stolen or synthetic.

Ebullient Equity And Credit Markets (PeerIQ), Rated: A

2017 has been a great year for equity and credit markets. The S&P500 ended the year up 20%, while CDX IG and CDX HY spreads tightened 46bps. ABS markets enjoy record issuance and all-tight time spreads.

Best of PeerIQ: 

Five ways financial laws could change in 2018 (The Hill), Rated: A

Republicans have made limited progress on President Trump‘s pledge to “dismantle” the Dodd-Frank Act, which the GOP had hoped to gut by the end of 2017. But the GOP and independent regulators could still make critical changes to key parts of the law’s legacy.

Senate Majority Leader Mitch McConnell told reporters last week that he’d like to hold a vote on a bipartisan Senate Banking Committee bill to exempt small and mid-size banks from aspects of Dodd-Frank.

House members from both parties have lined up behind a Congressional Review Act resolution to repeal the CFPB’s October rule Cyber breaches of financial companies reach across several committees of jurisdiction, and senators on the Banking Committee have expressed interest in a bill meant to protect credit-reporting information.

During the Banking panel’s markup of bipartisan Dodd-Frank rollback bill, Sen. Brian Schatz (D-Hawaii) sought to add language meant to boost accountability and transparency when credit reporting agencies are breached.

CFPB’s Payday Loan, Auto Lending Rules in Jeopardy (Manatt), Rated: A

As we have previously reported, the Bureau’s final rule on payday, vehicle title and other so-called high-cost installment loans created new consumer protections for a wide variety of short-term loans and provided official staff interpretations of the rules. Nearly 1,700 pages in length, the rule was issued on Oct. 4.

One of the more controversial provisions of the rule declares it an “unfair and abusive practice” for any lender to make covered short-term or longer-term balloon-payment loans, including payday and vehicle title loans, before reasonably determining that consumers have the ability to repay the loans according to their terms. Pursuant to the rule, it would also be an unfair and abusive practice to make attempts to withdraw payment from consumers’ accounts after two consecutive payment attempts have failed, unless the consumer provides a new and specific authorization to do so.

Now the rule—which is currently set to take effect Jan. 16, 2018—may see the same fate as the arbitration rule. H.J. Res. 122, introduced by Rep. Dennis Ross (R-Fla.), states “That Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Payday, Vehicle Title, and Certain High-Cost Installment Loans’ and such rule shall have no force or effect.” Significantly, H.J. Res. 122 includes Democratic co-sponsors.

Auto Finance—Another Bureau rule may soon be on the road to CRA repeal after the Government Accountability Office (GAO) wrote to Sen. Pat Toomey (R-Pa.) in response to a query about CFPB Bulletin 2013-02.

Umpqua’s next transformation (Banking Exchange), Rated: A

The long-term vision of the company has not changed: to provide banking products and services to people when they want it. We call it personalized banking for all—anytime, anywhere.

But how do you create a human relationship when more and more business is being done electronically?

So we’ve decided as a long-term strategy to combine the human element with digital components. We call it “human-digital banking.”

What does that mean? We have a new retail application in pilot called BFF—Best Financial Friend—created by Pivotus Ventures [Umpqua’s Palo Alto, Calif.-based fintech/research unit], that customers download on their phones. The first phase of the pilot was a centralized hub. Now we’re rolling it out in stores in the Portland [Ore.] market, training associates to serve as a BFF digitally in addition to working with customers in person. Our intent, as a more robust application becomes available early in 2018, is to introduce it into other metropolitan markets.

Using the app, customers pick a banker in the bank who will be kind of their personal concierge—almost like a personal shopper. They will help the customer do anything with Umpqua except get cash.

 

Always Search for the Best Option (Scotsman Guide), Rated: A

More than 53,000 single-family homes and condos were flipped nationwide in the second quarter of 2017 alone for a home-flipping rate of 5.6 percent of second-quarter home sales, according to Attom Data Solutions. The estimated total dollar volume of financing for homes flipped in second-quarter 2017 was $4.4 billion, the highest level since third-quarter 2007, nearly a 10-year high.

More than 35 percent of homes flipped in second-quarter 2017 were purchased with financing, according to Attom. That’s the highest level since third-quarter 2008, or a nearly nine-year high.

A joint study by the University of Cambridge and the University of Chicago suggests that the alternative lending sector, which includes crowdfunding, “hit a stride” in 2016 and has plenty of room for growth. Total market volume in 2016 for alternative financing in the U.S., Canada, Latin America the Caribbean was $35.2 billion, up 23 percent versus 2015. Real estate crowdfunding accounted for just 2.3 percent of the alternative lending market in 2015, but its volume rose by 70 percent in 2016.

OnDeck Line of Credit: What You Need to Know (Fundera), Rated: A

And finally, short-term lines of credit are more expensive than products that you’d get at a bank. The exact interest rate you’d get on an OnDeck line of credit, for instance, depends on the exact qualifications of your business, but in general, you can expect them to range from 10% to 80%.

3 Other Investments You Should Consider Making in 2018 (LearnBonds), Rated: B

There are several ways you can invest in small businesses. Peer-to-Peer (P2P) lending is a popular way that you definitely need to look into. This lending system eliminates middlemen completely and lets you connect with small businesses across the country with ease.

United Kingdom

Funding Circle, the UK’s biggest peer-to-peer lending platform, is preparing to hire advisers to oversee a £1bn-plus London flotation.

Sky News has learnt that the company has told investment banks that it will hold a beauty parade towards the end of the first quarter of 2018, with a listing possible as soon as the late autumn.

A Brave New World – Will Open Banking Boost The UK Fintech Sector? (Forbes), Rated: AAA

Open banking is coming to the UK. To be more precise, from January 13, 2018, Britain’s nine largest banks and one building society will be required to make customer account data available to approved rivals. If all goes according to plan, the new regime will herald a bold era of competition by allowing up-and-coming challenger banks and fintech (financial technology) businesses to compete on a more-or-less level playing field with  the giants of the financial services industry.

In the business loans market, peer-to-peer platforms have become increasingly accepted as a source of debt finance. For instance, in the three months to September, pioneering peer-to-peer platform, Funding Circle rang up £114m in new net lending to small businesses. This compared with £95m in new net lending by the big four banks.

According to a survey conducted by Decision Technology, 43% of bank retail customers would consider  sourcing a personal loan from a fintech provider. Although consumers were less amenable to opening savings accounts (only 26% would do so).

Mitty Group Secures Nearly £2 Million in Funding From Assetz Capital (Crowdfund Insider), Rated: A

Earlier this month, Liverpool-based property developer Mitty Group secured £1,982,000 worth of funding from UK-based peer-to-peer lender Assetz Capital to develop two new residential and leisure sites in Merseyside.

According to Assetz Capital, Mitty Group has secured a £942,000 loan from the online lender to fund its Regency Court Development in the Old Swan area of Liverpool.

Assetz Capital also reported that Mitty Group secured a £1,040,000 loan to fund its Burscough Street Development in Ormskirk town center.

Becoming a property investor – the crowdfunding option (LinkedIn), Rated: A

Real estate crowdfunding is becoming increasingly popular and it was valued at $3.5 billion in 2016. It is also projected to have the value of $5.5 billion by the end of 2017. It is a great time to think of investing in property UK using the crowdfunding option. However, it is important that you proceed with caution. Here are a few tips to help you make savvy decisions about real estate crowdfunding.

  1. Understand the rules.
  2. Real estate crowdfunding can be risky too.
  3. Take baby steps.
  4. Know your investment company.
  5. Always remember that real estate crowdfunding is generally the same as other investments.The higher the returns, the higher the risks. Try to limit your investment to 5% of your earnings, or 10% for higher net worth individuals.

Players who swapped the bit parts for starring roles (The Times), Rated: A

Satoshi Nakamoto is the anonymous coder, or group of coders, who created bitcoin as a stateless digital currency nine years ago. It’s a pseudonym. Her/his/their true identity remains a mystery, but, as cryptocurrencies continue to rise in influence and as investors lose faith in traditional institutions, that influence is more than likely to grow.

Imagine, for a moment, what it means to be Satoshi Nakamoto. You are, at least digitally, one of the 50 richest people alive and one of the most important people in the financial world.

Robo advisers recognise the need for human touch (Financial Times), Rated: A

Robo advisers promised to shake up the UK investment market by using algorithms to deliver low-cost automated services to the masses. However, British investors have found a bug in the system — when it comes to managing their money, they want to speak to human beings too.

The new breed of “robos” are morphing their business models to provide over-the-phone and face-to-face advisory services, recognising that more of a personal touch is needed to win over customers.

Scalable Capital, the European online robo-advice company backed by BlackRock, is launching over-the-phone and face-to-face consultations for a one-off fee of £200 from January after finding a number of clients wanted to talk to human advisers rather than answering its online questionnaire alone.

57 Insights from leading brands and experts on what it takes to deliver a Wow customer experience (Customer Think), Rated: B

Andrew Lawson, Chief Product Officer of Zopa.com, a UK online personal finance peer-to-peer lending company, believes that Wow service/experience starts with the customer and solving a problem they face. Too often customer service is a team that is set up to solve the problems that are inherent within the products/services that have been created.

China

Yirendai Limited: Still Growing, Still At A Good Price (Seeking Alpha), Rated: AAA

  • Emerging fintech player Yirendai Ltd. is well positioned in the expanding Chinese P2P lending industry.
  • P2P lending has a potentially huge market in China that could actually be enhanced by the government’s development of its Social Credit System.
  • Yirendai has strong revenue growth, a good return on equity, an attractive valuation, a nice cash flow, is free of debt, and plans on continuing to pay a dividend.
  • An uptrend is on the company’s price chart, reinforced by 50-DMA, 200-DMA, and Relative Strength technical indicators.
Source: Seeking Alpha

China looks for right balance between financial innovation, risk (Xinhuanet), Rated: A

But it has also made things easier for scammers. QR codes are so accessible that a simple scanning of an unidentified barcode can lead to a loss of huge money or massive personal information leakage.

For instance, while offering credit support for small and micro-sized enterprises who may not have enough collateral or sound balance sheets is still a headache for the banking sector, banks now can make better loan decisions by evaluating their conditions more precisely with technologies like big data and blockchain.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Last month, a number of private banks (except WeBank, MYbank and XWBank) received notification from CBRC that they should stop offering online lending services, which caused quite a stir within the industry.

On December 23rd, a charity-crowdfunding campaign from Fenbeichou received profound attention and donations on China’s leading social platform WeChat. People were encouraged to donate and help underprivileged children who have same birthday as themselves. Applause for the campaign’s creativity didn’t last long when journalists found that there were some beneficiaries on the platform who were labelled with different names (but for the same picture) or even non-existent date of birth (e.g. 2017.2.29). People suspected this “Same-Birthday Crowdfunding” campaign was a fraud.

On December 28th, the Nanjing Municipal Public Security Bureau posted on its official Weibo that the head of online finance platform Qbao.com had surrendered himself to the local police.

On December 27th, a new range of rules were released to ramp up the security in the mobile payment sectors.

Mobile payment scale rises in 3rd quarter (Xinhuanet), Rated: A

The scale of mobile payment in China exceeded 29 trillion yuan (4.5 trillion U.S. dollars) in the third quarter of 2017, a report indicated.

According to the report released by internet research agency Analysys, the amount is a quarter-on-quarter increase of 28.02 percent.

International

The Biggest Fintech Stories of 2017 (Crowdfund Insider), Rated: AAA

Online lending, including marketplace lending or peer to peer lending, is entering a new era. Goldman Sachs and their Marcus platform is schooling early entrants with good tech and access to low cost of capital that is hard to beat. Big tech is moving in too, as companies like Square, PayPal and Amazon are now providing loans. In the US, early online lenders are rushing to launch new verticals and update models to remain competitive and relevant. Elsewhere, such as the UK and China, models are becoming more established as the focus has been different and the regulatory environment more welcoming.

Equity-based crowdfunding is now accounting for 17% of all seed and venture stage equity investment in the UK. Peer-to-peer business lending provides 15% of all new loans lent to small businesses by UK banks.

Today, the Fintech Charter has not moved an inch forward and is arguably in retreat. And why is that? Because the States do not want to lose relevance and Congress is unable to do anything about it. Who loses out? Consumers and small business, of course.

In early 2017, the Governor of the Bank of England Mark Carney delivered a pointed speech where he said Fintech could “signal the end of universal banking as we know it.” Why is this important? Because it is the Bank of England: the second oldest central bank in the world.

Australia gets a huge shoutout for being consistently vocal in their advocacy of Fintech from both the private and public sector. FinTech Australia has accomplished quite a bit in a short time as the advocacy group promoting the virtues of financial innovation.

The UK’s impending divorce from the European Union is still meandering down the negotiation path.

The shocking downfall of Mike Cagney, founder of unicorn darling SoFi – a company that once envisioned itself as the future of banking, rocked the Fintech world.

The dramatic rise of cryptocurrency and initial coin offerings (ICO) is nothing short of spectacular.

Australia

Lowest loan rate since 1956 sparks regulatory fears and raises pressure on debt (Financial Review), Rated: AAA

Borrowing rates have fallen to their lowest level for 62 years, triggering debate that Australia’s increasing household debt will force regulators to raise further speed limits to contain new lending, despite an already slowing investor market.

Other lenders, including online lender ING and Newcastle Permanent, the nation’s largest building society, are also targeting the owner-occupied fixed-rate sector with cuts pushing the headline rate to below 3.8 per cent.

Mortgages are a key profit generator for lenders, accounting for about 55 per cent of bank loans and 30 per cent of cash earnings.

India

Spice Mobility to invest $ 1.95 mn in P2P lending startup (VC Circle), Rated: AAA

BK Modi group company Spice Mobility Ltd is set to pick up a 30% stake in Luharia Technologies Pvt. Ltd, which runs peer-to-peer lending platform anytimeloan.in, for Rs 12.5 crore ($1.95 million) in an all-cash deal.

 

Spice Mobility to buy 30% stake in P2P lending startup for ₹12.5 crore (TechStory), Rated: A

Spice Mobility Ltd is buying 30% stake in Luharia Technologies Pvt. Ltd which operates P2P lending platform anytimeloan.in, in all cash deal of ₹12.5 crore ($1.95 million), the company said in a stock exchange filings.

Start-ups all geared, it may well be time for India to make ‘Digital leap’ (Financial Express), Rated: AAA

THE YEAR 2017 has been somewhat of a twilight zone for digital in India.

India is the world’s second largest online market with 460 million internet users and more than 1 billion mobile subscribers. But internet penetration is still south of 20% of our overall population.

I read recently that over 2.4 billion brand-related conversations happen online every day. In one significant trend, consumers are undergoing digital saturation amidst the social media and marketing barrage. As many as 83% of consumer respondents in a recent survey felt that brands didn’t handle their emotions well across different touchpoints.

Good or bad in 2017, there is lot of hope for Indian startups in 2018 (Tech Observer), Rated: AAA

For some startups, especially for Fintech firms like Paytm, 2017 has been an incredible year as they were most ready to reap the benefits of disastrous demonetisation policy announced by Prime Minister  which forced the people to rely on  wallet firms for making payment for even their tea. Further, implementation of GST has push an environment wherein individuals and SMEs are looking to go digital.

Lohia says that 2018 will see scaling up of players in the lending space especially in small business lending.

On the other hand, for peer to peer (p2p) lending platform – OMLP2P – that brings investors and borrowers together for a seamless and transparent loan disbursal experience, the year 2017 was a mile stone year because on October 4, 2017, RBI came out with the guidelines for the P2P industry, which paved the way for the P2P players to get themselves registered as “ NBFC- P2P” with RBI.

For starups like CreditMantri, 2017 has been a good year as they were able to reach out to 3.8 million Indians with their CreditMantri platform.

For Pune based startup Loantap, which focuses on providing lending platform to Salaried Professionals, 2017 has been a good year. He bets that 2018 is going to be great year for LoanTap and his firm will cross 100 crore Loan Book within first few months.

Year 2017-FINTECH Collaboration Kick-start Year (the Banking Finance Post), Rated: AAA

In 2017, Banks have targeted below areas to practice Innovation –

  • Architecture to innovate: Challenges around quick interfacing between systems through API Banking.
  • Operations Overheads: Improvement areas in Operations and Cost optimisation through Robotic Process Automation
  • Skillset Availability: Creation of skillset around new technologies was always main Agenda in 2017
  • Traditional Banking: Banking Services on limited channels for Customers, It’s very important to provide Banking services through many other non-Banking Channels
  • Fintech Experimentations: Challenges around quick partnering with external partners. Availability of API Management interfacing for third-party partnering
  • Agility in Solution: Availability of quick solutions for payments & other Banking Services
  • Remove Barriers of digital transformation like lack of skills, lack of technology, lack of adoption
  • Innovative Culture building for of business Team to drive innovation or digital transformation
  • Digital banking Enhance of channels to drive digital services e.g. Customer Onboarding, customer serving, customer engagement, custom education

So far Bank has conducted 5 Hackathons which is something Unique in the banking industry.

Main achievements through Innovation Carnival

  • 1st Bank in INDIA: DCB BANK – First Bank to conduct National Hackathon in 6 Cities
  • Digital Culture Building at DCB bank – This program touches on all entities in the organisation
  • Corporate Partnering & Training – Model to train participants e.g. by IBM, Redhat, NPCI etc Corporate conducted Sessions
  • Established Mentorship Collaboration with 60+ Fintech Mentors in various areas added value to boost true evaluation
  • 18 Innovation Themes: It keeps motivated internal team thru idea generation for 18 Themes
  • Both Virtual & 6 Physical hackathons: It keeps touch with external parties thru Hackathon, Summit
  • Meeting Bank’s Strategy Goals: It’s helping to execute the strategy for our Bank and to grow bank
  • Unique India Collaboration: Building Innovation Community among Government, Accelerators, Institutes, Corporate, Banks

Indian Startup Funding Of The Week [25-30 Dec] (Inc42), Rated: A

Lendingkart Finance: The Ahmedabad-based SME lending startup raised $3.8 Mn (INR 25 Cr) in debt from the State Bank of India. The latest influx of funds will be utilised to bolster Lendingkart’s loan book. The fresh capital will also enable the startup to expand its geographical reach to over 950 cities.

Foyr: Virtual reality-based prop-tech startup Foyr raised $3.8 Mn in Series A funding led by property consultancy JLL and other individual and non-institutional investors.

Anytimeloan.in: Spice Mobility is gearing up to buy 30% stake in Luharia Technologies, which owns and operates P2P lending platform Anytimeloan.in.

Top fintech trends that India can expect in 2018 (Economic Times), Rated: A

Fintech lending
The fast-paced digitization has unlocked fresher avenues for fintech players, especially the ones associated with SME-based lending.

Virtual agents
With everything going digital, loan officers can’t be too far behind.

Machine Learning and user experience
2018 will also be the year for adoption of new regression models driven by Machine Learning.

Automated Personalization

All of this is being done through automated algorithms that scrape everything from historic transactions, preferences, and supply chain partnerships, down to critical metadata embedded into user information.

IndiaChain
Our nation has taken a giant stride in the realm of technology by developing its own blockchain network.

Open Banking
UPI (Unified Payment Interface) and AEPS (Aadhaar-enabled Payment System) have paved the way for an open banking channel in 2018.

Physical and Digital Merger
In India, despite a commendable effort to bank the unbanked, a majority of the Indian population is still deprived of access to banking services till date. Businesses, on the other hand, have enough data to prove their creditworthiness but fail to acquire credit because of conventional scoring mechanisms that banks use. Lately, fintech startups have begun collaborating with banks and helped them in making good use of their data and increasing ..

The 7 Key FinTech Trends To Watch Out For In 2018 (Inc42), Rated: A

EY’s Fintech Adoption Index (2017), a survey of more than 22,000 digitally active consumers, ranks India second (52%) behind China (69%) in terms of percentage of the digitally active population.

Digital payments reached 1,162 crore transactions between April and November and are expected to exceed 1,800 crore in the current fiscal.

Wallet Usage To Rise

2017 has been the year which saw e-wallets and digital payments come to the fore, placating the masses post demonetization. Come 2018, this trend will likely mature as more and more Indians turn to the digital side of things.

More Emphasis On Data Analytics And AI

Beyond payments, interest in fintech startups in areas like blockchainartificial intelligence andlending are just some of the focus areas that will garner attention.

Banks And Fintech Companies Collaborating

A Secure Digital India

The rise in digital payments and online lending also makes the sector exposed to hackers who are always on the prowl to feed on vulnerable security.

P2P Moneylending

Motivated by the intention of democratising financial services while aiming for exponential growth, these FinTech startups will come up with newer models for lending, especially in the P2P Lending space.

Instant Payments

Open banking – With initiatives such as Unified Payments Interface (UPI) and Aadhaar Enabled Payment System (AEPS), banking will become more ‘open’ in 2018.

Proliferation Of Chatbots

In 2018, we can expect more chatbots to be deployed with improved quality of interactions, the speed of responses and accuracy in decision-making.

P2P lending NBFCs to see a promising year ahead (MoneyControl), Rated: A

India will be more than USD 4-trillion economy by 2022. Out of this, USD 1-trillion would be digital economy—and it’s the most conservative estimate the government is working with. As Indians become digitally more aware, India’s emerging Peer-To-Peer (P2P) lending industry will flourish in 2018.

Here’re the top 5 trends to watch out for:

  1. P2P lending platforms to become an important contributor to India’s growth story… Micro, Small and Medium Enterprises (MSMEs) contribute about a third of India’s manufacturing output and provide employment to over 10 crore people. Despite this, the share of institutional lending in the total borrowings of MSMEs is less than 10%.
  2. Faster and cheaper loans to SMEs and self-employed borrowers
  3. Fund raising activities of the P2P lending platforms may gather pace… RBI has given 3 months to the existing players and 12 months to the new players for registration. The regulator has made it mandatory for an aspirant P2P lender to have a minimum net worth of Rs 2 crore.
  4. Personal loans to grow at a healthy pace
  5. Awareness about the P2P lending sector to grow among investors

What to Expect in 2018 in the Payments Industry (BW Disrupt), Rated: B

  • The infrastructure to enable digital payments has been strengthened through issuance of debit cards, roll-out of Point of Sale machines, launch of phone-based acceptance through the BHIM app and the Bharat 4.0 app that allows seamless acceptance of QR code and UPI based payment.
  • At the same time, incentives have been provided to merchants to accept digital payments through the new Merchant Discount Rate rules
  • The RBI is helping make digital payment instruments like Wallets more viable
  • Along with these initiatives, the Government has concomitantly undertaken a massive consumer education and information campaign.
APAC

PLDT fintech unit reaching out to unbanked Filipinos (Inquirer), Rated: AAA

FINTQ, the PLDT group’s financial technology (fintech) arm, seeks to bring insurance, investment and savings solutions to 30 million unbanked Filipinos by 2020 through a grassroots-based financial inclusion program KasamaKA.

Launched to veer Filipinos away from usurious informal lenders, KasamaKA enables members to earn by referring applicants to any of the digital financial services offered by Lendr, FINTQ’s digital loan platform.

Indian-led global fintech InstaReM looks at 600 percent growth (ANI), Rated: B

Singapore headquartered fintech start-up, InstaReM, which offers convenient and cost-effective international money transfers to individuals and businesses aims to grow 600 percent in financial year 2018-19.

Authors:

George Popescu
Allen Taylor

Thursday Auguest 17 2017, Daily News Digest

commercial loans

News Comments Today’s main news: Samsung to power Bank of America’s biometrics authentication pilot. FCA to overhaul mortgage applications. Aegon partners with Funding Circle. Yu’E Bao reduces upper limit. Klarna rebrands. Australian FinTech intros fintech jobs platform. Today’s main analysis: Business lending dynamics in the U.S. Today’s thought-provoking articles: SoFi Mortgage review. NAFTA talks may include discussion on fintech. Alibaba cashing in on […]

commercial loans

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United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

Canada

News Summary

United States

Samsung to Power Biometric Authentication Pilot for Bank of America (Finovate), Rated: AAA

Enterprise mobility and information technology company Samsung will launch a pilot program that enables Bank of America customers to log into their mobile banking app by taking a picture of their eye.

According to a report from American Banker’s Penny Crosman, half of BofA’s customers are using fingerprint authentication to log into their app, a feature the bank began offering in 2015. The other half of users login using their ID and password because they are either traditionalists, or hesitant to try the new login method for fear of a security breach.

Samsung debuted the iris recognition technology in March during its Unpackedevent. The company asserts that the technology is more secure than fingerprint scanning.

Business Lending Dynamics Across the United States (Orchard Platform), Rated: AAA

While consumer lenders still get the lion’s share of attention in the online lending universe, the reality is that there exists a great variety of non-bank fintech lenders and specialty finance companies who extend credit to businesses, and we are fortunate to work with so many of them.

Source: Orchard Platform

As we can see in the graph above, our dataset contains the most data on business in Retail, Construction, and Health Care. Next, let’s see how our data are distributed geographically. As we can see, our dominant states are California, Florida, Texas, and New York.

As we can see, construction lending seems to have the highest indexed concentration in places such as Florida, Texas, and Colorado. Lending to retailers seems to dominate the Northeast.  Healthcare lending is concentrated most highly in Florida.

Source: Orchard Platform

SOFI MORTGAGE REVIEW: ONLINE PRE-QUALIFICATION, TRADITIONAL LENDING (The College Investor), Rated: AAA

Here’s my review of SoFi Mortgage, and how they handled the process of getting pre-approved and starting the lending process. I strongly recommend everyone shopping for a mortgage compare multiple lenders. Using a service like LendingTree can make that really easy.​

SoFi Mortgage makes the process of applying for a mortgage online really easy.

After filling out the online application, we received our pre-qualification letter via email in minutes.​

The Rest Of The Process Was Not As Smooth

Sadly, we had to wait too long to get into contact with a loan officer from SoFi to proceed with them. After we submitted our information, and I uploaded all the documents, it took about 3 days before someone from SoFi reached out to even work on the pre-approval.

Source: The College Investor

Ting Reduces Customer Churn with Payment Plans (DMN News), Rated: A

Seventy-seven percent of Americans have a smartphone, according to Pew Research Center’s November 2016 data, and this figure has more than doubled since 2011.

As a result, many carriers and smartphone brands have started offering customers monthly payment options. After listening to its own customers, Ting – a mobile network and service provider with a quarter of million U.S. customers – decided to do the same and implemented financing solution Affirm.

Customers can visit Ting.com and shop for a new smartphone. Once they select their device, they’ll be asked to either sign into their existing Ting account or create a new account if they’re a new customer. The new account form asks customers to provide their name, email address, and phone number and invites them to opt in for Ting’s email and mobile notifications. They’ll also be asked to provide their address, so that Ting can verify if the brand services that area. When it comes to purchasing the device, new and existing customers can pay for the phone in full upfront via a credit card or Amazon Pay, or they can apply to pay monthly payments via Affirm. Then, customers will enter their shipping information, confirm their order, and complete the Ting portion of the checkout process.

Fifth Third Bank Enhances Its Partnership with ApplePie Capital (BusinessWire), Rated: A

The agreement enables Fifth Third to purchase loans originated through ApplePie Capital’s franchise loan marketplace, which provides franchise brands and their franchisees with a diverse range of financing options to efficiently grow their respective businesses. In addition, Fifth Third has also joined ApplePie Capital’s growing SBA lender network, and will receive referrals to SBA loan opportunities.

States developing single regulatory structure for fintech firms (American Banker), Rated: A

Faced with the prospect of a new federal fintech charter, state agencies are considering drastic new steps to streamline regulation across state lines.

FinTech Firm OppLoans Advances to #219 on Inc. Magazine’s 2017 List of 500 Fastest-Growing Companies (PR Newswire), Rated: A

OppLoans, the country’s leading socially responsible online lender, has achieved the rank of #219 on Inc. Magazine’s 2017 list of the 500 fastest-growing privately owned companies.

In the past year, OppLoans has launched major subprime borrower advocacy initiatives like OppU, a free online personal finance curriculum. The firm has also made enterprise-level technology improvements that help provide the fastest possible application and funding process for customers. Additionally, OppLoans has expanded their C-Suite with deeply experienced, innovative and highly respected industry professionals in the roles of COO, CFO, and VP of Business Development and Partnerships.

Currently rated 4.8 out of 5 stars on Google and LendingTree, OppLoans provides financial opportunity to the underbanked population, through socially responsible products and an unwavering commitment to customer service.

How to get down payment help if you don’t have rich parents (San Francisco Chronicle), Rated: A

Wannabe buyers who don’t have parents to help out have several options. They can borrow more than 80 percent of the purchase price with a first mortgage and pay private mortgage insurance. They can borrow some of the down payment with a home equity loan or line of credit.

Or they can go with a lesser-known option: giving up part of their future appreciation in exchange for down payment help from a government or private-sector program.

San Francisco’s Down Payment Assistance Program for market-rate homes is an example of government aid. First-time buyers can get up to $375,000 toward a home or condo in the city, but funds are limited and there are income restrictions. The application deadline this year is Aug. 21.

Unison, formerly known as First Rex, offers a private-sector alternative. There are no income restrictions and buyers don’t have to be first-timers, but they must live in the home, qualify for a loan and be in one of the 12 states (including California) where Unison operates.

In a typical Unison HomeBuyer deal, the buyer puts down 10 percent of the purchase price, gets 10 percent down from Unison and borrows 80 percent with a first mortgage, thereby avoiding private mortgage insurance. In exchange, Unison shares in 35 percent of any future appreciation or depreciation.

David Sacks: Cryptocurrency fulfills the ‘original vision’ we tried to build at PayPal (CNBC), Rated: A

David Sacks: After PayPal I never thought I would get interested in payments again. But bitcoin is fulfilling PayPal’s original vision to create “the new world currency.”

A payment is just a credit to one account and a debit to another. That’s a database entry. We believed that, if we could get enough people to participate, money would never need to leave the system. PayPal could become the database of money.

But cryptocurrencies like bitcoin are now fulfilling that original vision. They are doing it in a decentralized way (with a decentralized database called the blockchain) whereas PayPal tried to do it in a centralized way.

Minnesota Sues Online Lenders For Targeting Vulnerable Pensioners (CBS Local), Rated: A

Looking back in disgust, Schmelz now refers to the company as “snakes in the grass.” He’d soon learn he was charged 200 percent interest, and owed $27,000 for the full repayment, or 10 times his original principal.

He wasn’t alone. It is estimated that at least 120 Minnesota seniors and veterans have signed on with FIP and another lender: Future Income Payments, LLC, out of Delaware.

On Wednesday, Swanson held a news conference to announce that the state has filed suit against the two companies in Hennepin County District Court. The state’s lawsuit alleges that neither company is registered to do business in Minnesota, or licensed to make loans.

Finance Apps Have A Millennial Mobile Moment (Forbes), Rated: A

Last week’s tie-up between Acorns – the fastest-growing micro-investing app in the U.S. with over 2 million investment accounts – and Clarity Money, the rapidly growing personal finance app with 450,000 users founded by Adam Dell, brother of Dell Technologies CEO Michael Dell, is the latest in a raft of announcements by fintech startups determined to redefine personal finance.

Revolut, the app-based digital only bank, announced a partnership with pension manager PensionBee, allowing Millennials to combine their pensions in one plan, adding more pensions as they switch jobs. Starling Bank in the U.K. became the first in the country to partner with Transferwise, giving Starling customers direct, in-app access to TransferWise’s money transfer services. Stock trading app Robinhood, which already teamed up with StockTwits’ real-time social network for the financial and investing community, added TradeIt to its roster of partners, ensuring users can view brokerage accounts, place trades, and fund their account without exiting the experience, no matter which broker they use.

PEERSTREET REVIEW: REAL ESTATE CROWDFUNDING VIA LOANS (The College Investor), Rated: A

Even today, hard money lending is a fractured and inefficient market. PeerStreet aims to change that. PeerStreet is the first online platform that helps investors to invest in hard money loans.

A typical loan on PeerStreet has a maturity around one year. Over the course of the last several years, PeerStreet’s entire portfolio of loans has earned 7-12% annually after the investment fees (of up to 1%).

PeerStreet also encourages investors to maintain a diverse portfolio of loans. With a $1,000 per loan minimum, most investors can diversify into a nationwide marketplace without too much difficulty. In fact, PeerStreet even makes it easy to invest automatically. Investors just input investment settings, and PeerStreet matches them with loan investment opportunities.

Finally, all loans on PeerStreet are backed by a hard asset (real estate), and the loans typically have a great loan-to-value ratio. In general, investors will find LTVs between 60-70% of the property’s value. The max LTV on the PeerStreet platform is 75%. Most people would call this a low risk loan.

Worst Parts Of PeerStreet

First, to invest on PeerStreet, you need to be an accredited investor.

Another drawback to PeerStreet is that it’s hard for an outsider to estimate risk. Real estate is highly cyclical. We’re in an expansionary real estate market. That means that default risk on real estate loans is low right now. However, at some point in the future, borrowers will start to default on the PeerStreet loans. Investors have no expectations for how much they can recoup when a deal goes belly-up.

It’s my opinion that PeerStreet oversells the safety of their investments.

Finally, PeerStreet is an expensive platform. PeerStreet charges a servicing fee of 0.25-1% on every loan that you invest in. That means that if your loan yields 10%, you’ll receive a 9% interest rate.

Source: The College Investor

What College Students Taught Us About Predicting Future Tech Trends (CB Insights), Rated: A

The CB Insights research team welcomed three interns this summer – Kristen Tilley, Jimmy Xue, and Alyce Ge  – who used the CB Insights platform to uncover and analyze early-stage trends in hot sectors.


Emerging Technology Trends: 2017 Intern Presentation from CB Insights

United Kingdom

FCA in talks to overhaul mortgage applications (FT Adviser), Rated: AAA

The founder of online mortgage broker Trussle is in talks with the regulator about creating an industry standard for mortgage documents.

Ishaan Mahli, who founded the online broker in 2015, believes standardisation would lead to greater efficiency during the application process and better outcomes for the borrower, while eliminating biases towards lenders with a more simple process.

The plan would involve standardising the amount of time for which documents are required for certain cases – for example, three months’ payslips – as well as the document format.

It could also involve harnessing Open Banking technology – an online communication standard that will enable the secure sharing of customer information with third parties such as lenders.

Aegon gives leg up to UK small businesses through online lending platform (Aegon), Rated: AAA

Aegon has entered a strategic partnership with online lending platform, Funding Circle. In the first year, the move will provide a cash boost for 2,600 small- and medium-sized companies, and create a potential 6,400 UK jobs.

The four-year strategic cooperation between Aegon and Funding Circle(external link) marks the first time that a Dutch financial service provider of its scale will provide direct loans to small businesses online.

Nesta Promotes Cross Border Equity Crowdfunding Alliance with China (Crowdfund Insider), Rated: A

China is the largest internet finance market in the world estimated at over $100 billion for 2015. Their peer to peer lending sector is absolutely enormous while equity crowdfunding is relatively small at around $829 million in 2015.

Nesta, the UK based non-profit foundation that focuses on innovation, believes the UK should work towards creating a cross border equity crowdfunding alliance with China.

Nesta outlines recommendations for the two countries to cooperate more closely when it comes to crowdfunding:

  • Create a China-UK equity crowdfunding alliance – Boost communication between the two countries to compare best practices. Perhaps the UK Crowdfunding Association and the National Internet Finance Association could become the first bridge.
  • Regulatory Knowledge Sharing – Some of this has already occurred but knowledge sharing between the two countries when it comes to rules guiding internet finance is mutually beneficial.
  • Foster a data framework and establish standards – Having good data is a catalyst for transparency. Nesta believes this could be a first step in a global initiative.
  • Government Backed Pilot programs – Have UK issuers raise money in the UK and vice versa. Why not? As long as the diligence is there and the structure is approved Nesta sees this as part of a “China-UK Fintech Bridge.”

Juniper Research: Top 10 Disruptive Technologies in Fintech 2017 (BusinessWire), Rated: A

Juniper’s Top 3 Disruptive Technologies:

  1. PSD2 (Payment Services Directive 2) & Open APIs (Application Programming Interfaces)
  2. Regtech
  3. Chatbots

Elevate’s UK Loan Product Sunny Named 2017 ‘Treating Customers Fairly Champion’ (BusinessWire), Rated: A

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced its UK loan product, Sunny was recently crowned the “Treating Customers Fairly Champion 2017” at the 2017 Consumer Credit Awards in Mayfair, London.

Run by Smart Money People, the Consumer Credit Awards are the largest consumer-voted awards program in the UK consumer credit industry. More than 1,400 Sunny customers showed their appreciation of Sunny’s customer-centric approach by voting.

Will new regulation drive fintech M&As? (Insurance Business Mag), Rated: A

Earlier this month we told you how much is being invested in financial technology in the UK. Now a new report says big names in technology could be snatching up fintech start-ups in a possible buying binge during 2018.

A report by CNBC cited Daniel Döderlein, chief executive of Norwegian fintech start-up Auka, who believes the likes of IBM and Capgemini would likely be interested in mergers and acquisitions amid a surge in fintechs.

China

The upper limit on Yu’E Bao account exists in name only ! (Xing Ping She), Rated: AAA

On 14th August, the capital limit on Yu’E Bao individual account was reduced from $37,450 to $14,980. However, the limitation was found useless!There are two methods to bypass the capital limitation.

Firstly, you can buy monetary funds in the ant wealth, choosing the payment of bank cards. The money will automatically return to the Yu’E Bao account after redemption, no matter if the limitation has been reached or not.

Secondly, you can immediately cancel the transaction after buying a product such as a money fund. In this case, the money would not return to the bank card, but going to the Yu’E Bao account.

China’s global distribution of financial technology and then upgrade: Jiu Fu Group released international strategy (GMW.cn), Rated: A

August 16, “Jiu from this rich global” Jiufu international strategy release and Jiufu Ben Ben APP conference held in Shenzhen, in addition to the official release of Hong Kong, US stocks and other global market intelligence investment APP Jiufu Ben Ben, the conference also announced The future of Jiufu international strategy: Jiu Fu in the United States Silicon Valley investment in the chain chain company Wyre, and will set up AI laboratories; Southeast Asia, has conducted a thorough investigation, will be set up in Singapore, Southeast Asia headquarters. Combined with Hong Kong more than 30 years of Jiufu Securities, in order to form the United States Silicon Valley, Southeast Asia, Hong Kong “Trinity” overseas financial services system.

European Union

Klarna just unveiled a quirky new look and logo – designed to catch millennials’ attention (Business Insider), Rated: AAA

Now the company has unveiled an entirely new look to go along with the pivot towards B2C customers – complete with jelly cakes, afghan dogs and smashed ice cream cones.

The new look aims to convey the feeling of ‘smoooth’ payments (worthy of three o’s).

Klarna’s new logo.
International

NAFTA talks must include discussion on fintech: Mexican negotiator (Reuters), Rated: AAA

Talks to renegotiate the North American Free Trade Agreement (NAFTA) must include a discussion of new financial services, a Mexican negotiator said on Wednesday, singling out so-called fintech companies rapidly gaining ground in the region.

Talks to renegotiate the North American Free Trade Agreement (NAFTA) must include a discussion of new financial services, a Mexican negotiator said on Wednesday, singling out so-called fintech companies rapidly gaining ground in the region.

Euler Hermes Americas launches Surety in the U.S., Canada, Brazil (4-traders), Rated: A

Locally in the U.S., Canada and Brazil, Euler Hermes will partner with specialized surety agents and brokers and will focus on contract and commercial surety. Contract surety bonds are a common requirement in the construction industry, where Euler Hermes offers bid, payment, performance, supply and maintenance bonds for mid to large contractors, while commercial surety bonds may be required by local and state law to comply with state or federal regulations.

The Race Is On To Disrupt Traditional Banking (Forbes), Rated: A

Global fintech adoption has risen on average from 16% in 2015 to 33% in 2017.

Credit Suisse, for example, is well respected within the IT sector for being ahead of the curve in implementing digital transformation. The bank had started its revamp process out of Asia Pacific. According to Marco Abele, Credit Suisse’s digital transformation expert, the bank converted an old data center in Singapore into an innovation hub.

Citigroup, Banco Santander, and Goldman Sachs have completed some deals into fintech start-ups over the last five quarters. Another example would be BNP Paribas. The bank is planning to double the investment in technology over the next three years to adapt to changing consumer behavior and cut costs.

According to PWC almost 50% of financial services firms around the world plan to acquire fintech start-ups in the three to five years. BNP Paribas recently agreed to buy French digital bank Compte-Nickel for 200 million euros ($213 million), which was the biggest fintech acquisition ever in France according to a Bloomberg news report.

Australia/New Zealand

Australian FinTech opens fintech jobs platform (Finextra), Rated: AAA

The team behind the highly successful Australian FinTech website have soft-launched their FinTech employment marketplace platform, Australian FinTech Jobs.

AustralianFinTechJobs.com.au is Australia’s only dedicated platform for FinTech companies and Recruiters to promote FinTech, financial technology, financial services, banking, legal and IT employment opportunities in Australia.

Aussie small business lending platform secures AU$ 5million in Series-A funding (BizEdge), Rated: A

TruePillars, an online marketplace lender allowing everyday Australians to fund loans to small businesses, today announced it has raised a total of AU$5 million in a Series-A funding round.

The funding round was led by a long-term Melbourne-based private investor and includes both equity and commitments by shareholders to fund loans to Australian businesses on the TruePillars platform.

Asia

Alibaba to cash in on Japan’s nascent e-payment market (Asian Review), Rated: AAA

China’s e-commerce leader Alibaba Group Holding will bring a version of its hit smartphone-based payment platform to Japan as early as next spring, hoping the simple technology will convince many cash-reliant shoppers here to go digital.

The Japanese unit of Ant Financial Services Group, the internet giant’s financial arm, will offer a version of the Alipay digital payment system tailored for the Japanese market under a new brand. Shoppers will be able to load money into or link a bank account with a dedicated app on their smartphone, and scan QR codes issued by merchants to make a payment. Merchants can also scan codes displayed on a user’s phone to the same effect.

Canada

CIBC Scraps President’s Choice Partnership in Online Shift (Bloomberg), Rated: AAA

Canadian Imperial Bank of Commerce and grocery chain Loblaw Cos. are ending their 19-year President’s Choice Financial partnership as the country’s fifth-largest lender starts its own digital bank.

Simplii Financial will offer no-fee banking, mortgages and loans online and by phone, according to Mike Boluch, CIBC’s executive vice president of direct banking, innovation and payments. CIBC expects to take C$100 million ($78.4 million) of fees and charges before tax in the quarter ending Oct. 31 related to the transaction, the Toronto-based bank said Wednesday in a statement.

SelectCore Signs Licensing Agreement For Peer to Peer Lending With the Option to Purchase Source Code (GlobeNewswire), Rated: A

SelectCore will be rebranded as Fintech Select in an effort to continue expanding its financial payment services to its customers. The Company is pleased to confirm that it has signed an Agreement to license software as a service (SAAS) to enable peer-to-peer lending, including the option to outright purchase the source code.

Besides micro loans, the Company is also exploring other loan offerings that can be interconnected into the P2P platform from institutional entities and or private individuals. Our pre-paid card program will play a critical role within this new P2P platform, as it will allow borrowers to receive funds directly to their cards and/or mobile wallets.

Authors:

George Popescu
Allen Taylor