Thursday February 1 2018, Daily News Digest

software hacks

News Comments Today’s main news: SoFi lays off 5% of workforce. BlueVine doubles invoice financing credit lines. Chime reaches 750K bank accounts, $2.5B transaction volume. SoftBank injects funding into Moven, who could be buying a bank. Zopa hits 3B GBP in lending. Crowd Genie kicks off ICO. Today’s main analysis: Coincheck’s recent hack could mean big changes in crypto lending, […]

software hacks

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United Kingdom

China

European Union

International

Australia

India

Asia

Bermuda

News Summary

United States

SoFi Lays Off 5% of Staff (WSJ), Rated: AAA

The San Francisco-based financial-technology company told staffers on Tuesday it is cutting around 65 jobs, roughly 5% of its 1,300-person workforce, the people said. The layoffs are centered in SoFi’s mortgage-operations centers in Healdsburg, Calif., and Cottonwood Heights, Utah.

He added that SoFi is currently looking to fill more than 175 open jobs.

‘A 401(k) of the future’: How SoFi wants to grow student loan refinancing with WeWork (Tearsheet), Rated: A

SoFi wants to sell its loan refinancing products to WeWork and its member companies by offering them an additional 0.125 percent discount.

growing number of companies have been adding student loan repayment as a workplace benefit. With $1.4 trillion in outstanding federal and private student loans, it’s a huge market.

SoFi’s Top 20 Law Schools Producing the Highest Salary Averages (JDJournal), Rated: A

SoFi examined the salary earned upon graduation from different law schools compared to the cost of the education. They looked at 60,000 student loan refinancing applications that had been submitted to them between January 2014 and December 2016. They took that data and formed SoFi’s Return on Education (ROED) Law School Rankings. The ranking uses the average salary and student debt load of the graduates three years out of law school that is reported to them by graduates looking to refinance their loans.

The top 20 law schools with the highest average salaries are:

  1. Cornell University – $183,377
  2. Columbia University – $177,962
  3. New York University – $177,203
  4. University of Chicago – $174,238
  5. Harvard University – $173,578
  6. Georgetown University – $173,464
  7. Northwestern University – $173,204
  8. Yale University – $171,779
  9. University of Pennsylvania – $170,954
  10. Duke University – $169,096
  11. University of Virginia – $166,396
  12. University of Michigan Ann Arbor – $164,713
  13. University of California Berkeley – $163,940
  14. University of Southern California – $161,823
  15. Fordham University – $160,590
  16. Stanford University – $158,088
  17. George Washington University – $153,302
  18. University of California Los Angeles – $152,469
  19. Vanderbilt University – $149,475
  20. University of Texas at Austin – $147,444

BlueVine doubles invoice financing credit lines to up to $ 5 million (Finextra), Rated: AAA

BlueVine has doubled the credit line size for its invoice factoring product to up to $5 million, underscoring the online business lender’s push to offer fast and flexible working capital financing to small and medium-sized businesses.

BlueVine also increased the limit for its business line of credit product to $200,000 from $150,000, making its Flex Credit product an even more attractive financing option for larger or fast-growing companies.

Court upholds constitutionality of Consumer Financial Protection Bureau (Politico), Rated: A

A federal appeals court has upheld the constitutionality of the Consumer Financial Protection Bureau’s structure, a decision that preserves the agency’s independence in the face of challenges from business interests and conservatives.

The D.C. Circuit Court of Appeals ruled 7-3 on Wednesday that a provision in the 2010 Dodd-Frank law that limits the president’s ability to remove the CFPB director during his or her five-year term does not violate the president’s authority to appoint and remove executive branch officers.

Chime Reaches 750,000 Bank Accounts, $ 2.5 Billion Transaction Volume (Business Insider), Rated: AAA

Chime is on track to open more than 100,000 bank accounts per month and expects to reach 1 million total this quarter. With more than 750,000 bank accounts opened to date and over $2.5 billion in total transaction volume, Chime has emerged as the clear leader in the challenger banking segment.

While most Americans pay more than $27 a month on average in bank fees, Chime doesn’t charge overdraft fees, monthly fees or foreign transaction fees. With its award-winning mobile banking app, Chime members avoided more than $225 million in potential overdraft fees from traditional banks in 2017 alone, while putting over $72 million into savings accounts with help from Chime’s automated savings tools.

Moven to receive funding from SoftBank, plans to buy bank (American Banker), Rated: AAA

Moven, the mobile-first “neobank” founded by Brett King in 2011, is getting a multi-million dollar infusion from the Japanese company SBI Group, owner of SoftBank. At the same time, Moven says it is pursuing the acquisition of a bank.

SBI Group will hold one of the six seats on Moven’s board, and the two companies will set up a joint venture in Japan.

At the same time, Moven is making major changes to its overall business, including splitting the company in two.

On one side will be the software provider that already develops digital banking software for TD Bank in Canada and Westpac in New Zealand.

On the other side will be the neobank, which will be called MovenBank.

Is Marcus Going to Launch a Credit Card? (Lend Academy), Rated: A

Ainsley Harris reported in Fast Company today that Goldman Sachs is acquiring the employees who built Final, a credit card startup based in Oakland. Final offered a unique kind of credit card, one that would create a different virtual card number for every merchant, thereby reducing the risk of credit card fraud.

It has been a busy couple of years for Goldman Sachs when it comes to their consumer facing business. This latest deal follows a long list of acquisitions for Goldman recently:

  1. Acquisition of GE Capital Bank – this jumpstarted GS Bank giving it a huge deposit base.
  2. Acquisition of Honest Dollar – the digital retirement savings app was acquired in March 2016.
  3. Launch of Marcus with debt consolidation loans.
  4. Acquisition of Genesis Capital – not really consumer facing but could add a real estate development arm to the bank.
  5. Bond Street – employees of the online small business lender moved to Goldman Sachs.
  6. Addition of home improvement loans to the Marcus offerings.

Why big financial firms are building robos instead of white labeling (Tearsheet), Rated: A

In November, Wells Fargo launched Intuitive Investor, its digital-human hybrid offering from Wells Fargo Advisors. The following month Morgan Stanley launched Access Investing and JPMorgan Chase launched JPMorgan Digital Investing. Goldman Sachs, Raymond James, YF Financial and ICBC are all currently developing their own.

The start of the robo phenomenon was meant to address small, do-it-yourself investors, said Tom Streiff, special consultant to HBW Partners.

“A lot of these big firms have a lot more small accounts than they’re willing to admit,” he said. “Robos were one answer to that. Now they want to have something that has more of their own mark on it … not just to get the technology but to get the smart people inside.”

Typically, the white label provider will take 15 basis points of the total and leave the rest to the bank for distribution, Saxena said. Pricing from independent players, like Betterment or Wealthfront, is competitive.

SmartBiz Loans Launches AI-powered Digital Advisor Tool for Small Business Owners (Digital Journal), Rated: A

SmartBiz Loans, the SBA loan marketplace and bank-enabling technology platform, today announced the launch of SmartBiz Advisor, the first, AI-driven, online education tool that makes the financial insights and analysis provided by a typical CFO available to small businesses at no cost.

SmartBiz Advisor is an intelligent online platform that allows small business owners to easily and quickly learn how banks typically evaluate their business on key criteria before applying for a loan.

The Future of Real Estate, Part 2: A Crowdfunding Revolution? (GuruFocus), Rated: A

A well-managed crowdfunding platform should provide a range of deals, after having done sufficient due diligence itself so as to not place potential investors in financial jeopardy, and itself in legal jeopardy. When dealing in investment assets, whether equity or real estate, investors are still expected to be sophisticated and have the means to weather losses that are part and parcel with any private investment deal.

A growing cast of players

Interestingly, even as equity crowdfunding in startup companies has been slow to take off (Indiegogo’s platform raised just $7.53 million in equity investments during its first year of operation), real estate crowdfunding platforms have been popping up like weeds. RealtyMogul.com, for example, has an investor community of 150,000 people that have invested $318 million through its platform since it went live in 2012. The crowdfunder claims to have returned $70 million to investors thus far. RealtyShares, founded in 2013, has also posted big numbers, with platform users reportedly investing $700 million across more than a thousand deals.

A new breed of of private REIT

Private REITs are obviously opaque and potentially dangerous, but the crowdfunding platform has forged ahead all the same. Perhaps, with their interactive dashboards and high levels of investor transparency, these crowdfunded REITs will be able to correct some of the ills of their less technologically sophisticated forebears.

This College Grad Found an Affordable Way to Start Investing in Real Estate (The Penny Hoarder), Rated: A

The Fundrise Starter Portfolio would invest her money into two portfolios that support private real estate around the United States. It would do all the heavy lifting for her — and play landlord on her behalf.

She didn’t need to have hundreds of thousands of dollars stashed away, either. She could get started with a minimum investment of just $500.

Fundrise lists an average annualized return of 11.44% in 2017. Investors pay 1% in annual fees — a 0.85% asset-management fee and a 0.15% investment advisory fee.

Breaking down the barriers of real estate investment: A Q&A with Peter Vekselman from WeLend (AtlantaAgent), Rated: A

Q: What sort of problems were you experiencing when it came to financing real estate projects?

The problem is that behind the scenes the money is handled by hedge funds. All of the hedge funds on Wall Street do their own thing and no one knows who they are. So what happens is you have a potential investor and the first problem for them is finding the financing.

Q: How exactly does We Lend work, and how does it help solve some of the problems previously mentioned?

I’ve consolidated and cut deals to put all the hedge funds under one roof, so now investors don’t have to go through this huge undertaking to find the funds. They can came to us, and we can underwrite them and then figure out on the back end the best match.

It’s like LendingTree for the investor world.

Q: What types of projects and people does We Lend work with?

We work with small developers or a mom-and-pop builder that does five properties a year. And we mainly work with residential properties only because there are more residential opportunities than anything else.

In terms of price points, we try to stay as low as $50,000 per project.

On Deck Welcomes Paul Rosen & James Hobson As Two New Senior Vice Presidents (OnDeck), Rated: A

Today, On Deck announced the appointments of Paul Rosen as Senior Vice President of Sales and James Hobson as Senior Vice President of Strategic Partnerships and Platform Solutions.

Santander Consumer USA And AutoFi Team Up To Provide Car Buyers And Dealers With Fast And Easy Online Sales And Financing (PR Newswire), Rated: A

Santander Consumer USA Holdings Inc. (NYSE: SC, or the Company) today announced that it will work with automotive technology leader AutoFi to streamline and simplify the car-buying process for consumers, while giving dealers a robust digital sales channel.

Climb Credit Reveals A Solution To Student Lending Crisis (Climb Credit Email), Rated: A

A few key findings include:

  • The median student saw a 66.7% salary increase
  • For Climb students who have held two different jobs since attending their program, there is a median pay increase of 38.9% from the first to the second job
  • Nearly three out of four students surveyed said they would not have been able to attend their education program if they didn’t have Climb Credit as a financing option

House Approves New Payday Loan With 200 Percent Interest Rate (Indiana Public Media), Rated B

The Indiana House approved legislation Wednesday to create a new type of payday loan – with interest rates of up to 200 percent – that opponents argue amounts to predatory lending.

The legislation creates a loan of between about $600 and $1,500, with a term of up to 12 months.

Consumers warned not to borrow from unlicensed online lenders (International Falls Journal), Rated: B

The Minnesota Commerce Department warns Minnesota consumers not to borrow money from unlicensed lenders that advertise and offer short-term, payday or installment loans through the internet.

United Kingdom

Zopa hits £3bn lending landmark (P2P Finance News), Rated: AAA

ZOPA said that it now has more than 60,000 active investors and more than 300,000 borrowers.

It has now lent out more than £3bn since inception, Zopa said on its website on Wednesday, having lent more than £985m in the past 12 months.

Investors are lending on average £13,000 while the average loan amount is £6,000.

China

Chinese internet users grow to 772 million (Technode), Rated: AAA

China now has 772 million internet users according to a report published by the China Internet Network Information Center (CNNIC) today (in Chinese).

Growth rates of internet users have remained steady. During 2017, a total of 40.74 million new netizens were added with a growth rate of 5.6%. Internet penetration rates have reached 55.8% in China, more than the global average (51.7%) and the average rates for Asia (46.7%).

The number of mobile phone users in China has reached an impressive 753 million. The proportion of internet users using mobile phones rose from 95.1% in 2016 to 97.5% in 2017.

Since the end of 2016, the proportion of internet users that pay with their phones rose from 50.3% to 65.5%.

There was another number that went up at an impressive rate. The number of internet users buying internet financial products in China has reached 129 million, up 30.2% from the same period last year.

Alibaba-backed online lender MYbank owes cost-savings to home-made tech (Reuters), Rated: A

MYbank expects double-digit increases in all growth measures in 2017 due to lower costs enabled by technology, the bank’s president, Huang Hao, said in an interview at his office in Hangzhou, in the eastern province of Zhejiang.

As a result, the cost of approving a small business loan can be as little as 2 yuan, compared to at least 2,000 yuan ($317.97) at a traditional bank, according to data provided by the bank.

European Union

Remarks by Vice-President Dombrovskis at the European Financial Forum 2018 in Dublin (Europa.eu), Rated: AAA

 

Our immediate priority is to complete the Banking Union. For this, we should move in parallel on risk reduction and risk sharing. All elements are on the table. On risk reduction, this includes our November 2016 bank reform package and our ongoing work to reduce Non-Performing Loans. On the risk sharing side, we recently came with ideas on how to unblock negotiations on the European Deposit Insurance Scheme. And we have broad support to finalise the work on the backstop for the Single Resolution Fund. So the time is ripe to move at political level on completing the Banking Union.

The second immediate priority for deepening the EMU is setting up the Capital Markets Union. Deeper capital markets across Europe will increase risk-sharing among private investors and improve the shock-absorption capacity of the economy. In the past three years, we have taken fundamental steps towards deeper and more integrated EU capital markets. Of the 33 actions we announced in 2015, 25 have now been completed.

One strength of Ireland’s financial sector is asset management. As of September last year, Irish fund managers had more than €4.2 trillion assets under management. A true Capital Markets Union would enable Irish fund managers to further benefit from the full scale of the single market. In March of this year, revised rules for the EU venture capital label – EuVECA – will enter into application. Large managers can then run EuVECA funds, providing economies of scale and trusted brands. We have also expanded the range of eligible assets, and decreased the costs associated with cross-border marketing.

We are also looking more broadly at the rules for offering funds across the EU. This market is still predominantly organised along national lines. For example, 70% of the assets under management are held by funds available for sale in only one EU country. The share of alternative investment funds that is marketed in more than three countries is very low – only 3%.

Europe has what it takes to develop a globally competitive Fintech sector. We can rely on our strengths in research and engineering. For example, we have 32 artificial intelligence research institutions in the world top 100, which is more than the US or China. I also see great Fintech potential here in Ireland, with its strong information technology culture.

We will also present a legislative proposal to enable EU-wide crowdfunding and peer-to-peer lending.

The future of finance will not only be digital, it will also have to be green.

• Third, we could boost green investments and loans by introducing a so-called green supporting factor. This could be done at first stage by lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages or low-carbon cars. However, this exercise would be delicate. Green does not mean risk-free. Any measures would have to be carefully calibrated, and based on a clear EU classification.

CreditEase Founder, CEO Ning Tang Spoke at the World Economic Forum Annual Meeting 2018 (PR Newswire), Rated: B

CreditEase, a Beijing-based leading financial technology conglomerate specializing in inclusive finance and wealth management, announced that its Founder and CEO, Mr Ning Tang, participated and spoke at the World Economic Forum Annual Meeting 2018 in Davos-Klosters, Switzerland.

Under the central theme of “Creating a Shared Future in a Fractured World”, this year’s meeting has drawn an estimated 2,500 participants, including a record number of heads of state and leaders from politics, business, academia, and civil society.

“Technology has greatly improved access to financial services for Chinese consumers and small businesses in the past decade, and we expect more progress to be made in the SME lending space with the help of FinTech in coming years,” said Mr Tang. “Financial services like angel investing and VC/PE, powered by technology, will bring more high-quality growth to the Chinese economy.”

International

IOU Financial partners with CDE solutions in funding CDE’S network of 26,000 convenience store owners (PR Newswire), Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), an online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Marietta, GA-based POS solutions provider CDE (CDEsolutions.com).  Through this strategic partnership, CDE’s network of 26,000 convenience store owners nationwide will be able to access IOU’s fast, convenient, non-collateral funding solutions.

Crebit: Blockchain DLT in wave of transforming P2P financing (NewsBTC), Rated: A

Adopting Blockchain and DLT for P2P lending system can facilitate capital mobilization within the financial system through flat-out transfer of monetary values from parties unrestricted by barriers-to-entry. Thus, the potential for P2P lending in support of free international financial flows remains vastly untapped.

Ipsos MORI veracity Index shows 75% of investors complain about banks data provision, but rather P2P investment groups maintain a credible and transparent operation.

Crebit is a blockchain-empowered network provider that offers global microfinance lending collateralized by crypto assets, based on the artificial intelligence credit scoring system. This microfinancing solution leverages blockchain technology to finance through top cryptocurrencies such as Bitcoin, Ethereum and Ripple against up to 80% of investors collateralized crypto assets value. Crebit leads the way into crypto financing by building P2P lending agreements on smart contracts in the secured and decentralized Ethereum blockchain. The platform matches funding gaps for crypto holders, traders as well as multiple exchanges and transaction solutions. Crebit aims to provide businesses and individuals a decentralized credit scoring database for innovative and trustless transaction solutions unrestricted by geographical boundaries.

Australia

Trial by fire in an untested market (CMO.com.au), Rated: AAA

But this is precisely why Rebecca James, Prospa’s new chief marketing and enterprise officer, took the job almost five months ago.

“In just five years, the team has lent over $500m. But there are 2.1 million small businesses in Australia, and over half need cashflow support to take advantage of opportunities, to grow, or to cover an unexpected cost. My hope is to take the Prospa proposition and meet the growing needs of this audience. We’re just getting started.”

Launched six years ago, Prospa is now Australia’s number one online lender for small business, providing loans to more than 12,000 small businesses across the country. In November, it placed second in the AFRFast 100 for 2017 thanks to a 239 per cent average revenue growth since 2013-14. Last year, Prospa secured over $50m in equity and debt funding, and doubled the size of its loan book.

Online Cash Flow Loans Australia Announces Unsecured Cash Flows Loans Up To $ 500k (PRWire), Rated: A

Online Cash Flow Loans is a fast emerging player in the online cash flow loans marketplace. The organization is an arm of Magnolia Finance that specializes in offering low cost business loans to small businesses in Australia.

These cash flow loans are tailored to meet the growing business finance needs of businesses operating in the hospitality, retail, construction, medical and agribusiness. Basically any small business operating in Australian and in need of unsecured business loans can apply for business loan online on the company website.

Loan terms from 3 to 24 months
Same day funding
Flexible repayment options
Redraw facility available
India

Budget Reaction Rajat Gandhi, Founder & CEO, Faircent. com (Faircent Email), Rated: AAA

Hon. Finance minister budget speech reflects the government’s intent to increase the credit access for the MSME sector and women entrepreneurs under MUDRA scheme. P2P lending is using technology and new-age data and diligently working towards taking organised credit to the non and under-banked segments of the Indian economy. This is an opportunity for the government to directly invest or co-fund through registered P2P Lending Platforms and ensure credit access for MSMEs, New-To-Credit as well as female entrepreneurs. P2P lending is an asset class ensuring flow of investments from those with surplus to those in need. Hence it’s important that the lenders are supported through tax incentives. We look forward to working with the govt towards common goal of financial inclusion.

The popular FinTech platforms serving MSMEs in India (KNN India), Rated: A

Keeping in view the credit crunch faced by the micro, small and medium enterprises (MSME) sector in India due to various reasons, new FinTech platforms are coming up to improve loan disbursal to the sector.

According to a media report, there are four popular FinTech platforms that are helping in robust loan disbursal – CreditMantri, Aye Finance, CoinTribe and Faircent.

P2P Lending Set to Explode in 2018 And Beyond (CXO Today), Rated: B

RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders.

Asia

MAS Regulated Peer to Peer Lender Crowd Genie Announces Initial Coin Offering (Crowdfund Insider), Rated: AAA

Crowd Genie Financial Services Pte Ltd, regulated by the Monetary Authority of Singapore (MAS), has announced an initial coin offering (ICO) via their related entity CGSPV Pte. Ltd. The peer to peer lender states that it intends on issuing 60 million Crowd Genie Coins, or CGCoins, for a soft cap of USD $5 million. The public sale commences today and 400 CGCoins may be purchased for a single ETH. Bonus CGCOINs, between an additional 5% and 25%, will be given to early buyers as an incentive.

Coincheck’s recent hack could mean big changes in the crypto space (Business Insider), Rated: AAA

Japanese cryptocurrency exchange Coincheck revealed on Friday that its 

Source: Business Insider

Online lenders join gold rush into SE Asia (Ecns.cn), Rated: A

Chinese online peer-to-peer (P2P) lending companies have been rushing into Southeast Asian countries in recent months to cash in on untapped and lightly regulated markets that feature huge potential, as growth in the domestic market slows amid tightening regulations.

While much of Southeast Asia offers a promising future for these lenders given its huge population and underdeveloped financial services industry, most of the Chinese companies are betting on short-term gains rather than long-term growth, an industry expert noted on Wednesday.

Over 50 Chinese online lenders have launched overseas operations, with Southeast Asian countries such as Indonesia and Cambodia being the top destinations, the 21st Century Business Herald reported on Wednesday.

In Indonesia alone, there are more than 50 Chinese consumer lending apps at the moment, up from 30 just a month ago, the report said.

Here are the new services launched by startups in Indonesia this week (e27), Rated: A

Peer-to-peer (P2P) lending platform Investree on Tuesday officially launched a sharia-based P2P lending programme.

The programme has been tested since November 2017. The startup claied that by January it has managed to channel IDR2.7 billion (US$200,000) worth of loan from 1,340 lenders to 313 borrowers.

Bermuda

Peer-to-Peer Lending & Equity Crowdfunding (Bernews), Rated: AAA

A Bermudian expert on information technology, asset and risk management tools is today celebrating the global launch of her book on peer-to-peer lending and the securities crowd funding industry.

“The book, entitled ‘Peer-to-Peer Lending and Equity Crowdfunding: A Guide to the New Capital Markets for Job Creators, Investors and Entrepreneurs,’ highlights the inequality gap is widening and persists worldwide,” a spokesperson said.

“The book not only describes how debt and equity crowdfunding works but also explains investment approaches, secondary markets, governance and compliance, transparency, and risk models that are necessary for investors to make informed decisions.

The book is available here.

 

Authors:

George Popescu
Allen Taylor

Friday January 19 2018, Daily News Digest

data breaches

News Comments Today’s main news: SoFi Professional Loan Program hits $720M on first offering. Roofstock reaches $1B in transactions. When Zopa will open to new investors. PPDai to invest in research. Linked Finance sees profitability. Revolut launches geolocation-powered travel insurance. Harmoney partners with DataRobot. Today’s main analysis: The most and least competitive homebuyer markets. Fundrise or Vanguard: Which is the better investment? […]

data breaches

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United States

United Kingdom

China

European Union

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Australia/New Zealand

India

Asia

News Summary

United States

SoFi’s Professional Loan Program at $ 720 Million for First Offering (LendEDU), Rated: AAA

Social Finance’s Professional Loan Program 2018-A has reached $720.1 million, which is just a bit lower than the final deal it had in 2017.

In this latest program, three portions of senior Class A notes worth $677.3 million will be issued. Of that figure, one $55 million Class A-1 portion is mostly secured by floating-rate loans, and it has a variable-rate interest rate, which will be calculated based on one-month Intercontinental Exchange London Interbank Offered Rate (LIBOR).

Fixed-rate student loans will mostly back the $358.5 million in Class A-2A notes, as well as the $236.8 million in Class A-2 notes.

Why open banking and cybersecurity need each other (Tearsheet), Rated: AAA

The industry’s desire for greater security and protection of customer data seems at odds with its desire for more open banking; by definition, open banking requires banks to share data with third party service providers.

In the U.S. banks are striving to get ahead of their own regulators by creating data exchange standards. API-based data sharing agreements like the deals Fincity signed with Wells Fargo and Chase last year are evidence of those efforts. But banks need to move beyond those one-on-one agreements if they’re going to create a full suite of financial services to offer customers through a true open banking platform.

Source: Tearsheet

PeerIQ CEO Ram Ahluwalia: 2017 Saw a Resurgence of Growth in Online Lending (Crowdfund Insider), Rated: AAA

Ahluwalia told me;

“2017 has seen a resurgence in investor growth and confidence in online lending. ABS issuance is up about 83%.  Execution spreads have tightened substantially. This performance is all on the ABS loan side but has not translated yet into the equity valuations. “

He added that he expects to see continued attention on credit performance in 2018 as they are still seeing normalization of credit performance.

He expects 30% growth in ABS issuance for next year while adding that PeerIQ underestimated the growth for 2017.

LendingTree Ranks Most Competitive Homebuyer Markets (PR Newswire), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, has released the findings of its study on where homebuyers will face the fiercest competition to achieve their dream of homeownership in 2018.

LendingTree looked at 1.5 million purchase mortgage loan requests that came through the LendingTree marketplace in the 100 largest cities in 2017. The study ranks cities using three criteria:

  • The share of buyers shopping for a mortgage before identifying the house they want. Buyers with financing in place are more appealing to sellers and can compete with cash buyers.
  • Average down payment percentage. Having a higher amount of money saved for a down payment can enable you to borrow more money or be offered a lower interest rate, allowing you to make a stronger offer.
  • Percentage of buyers who have prime credit (above 680). Borrowers with higher scores have more financing options to make more competitive offers. The cities/markets below are ranked for 2018 using the criteria noted above, including the relative data used to determine the ranking along with the market’s overall rank from the prior year.

California markets dominate the top 10.

Six of the top 10 most competitive housing markets are in CaliforniaSan Francisco and San Jose lead the rankings in 2018, with a vast number of credit-worthy and well-heeled borrowers making it one of the most challenging markets for prospective home shoppers.

Real Estate Marketplace Roofstock Hits $ 1 Billion in Transactions (Crowdfund Insider), Rated: AAA

On Thursday, real estate marketplace Roofstock announced it has surpassed $1 billion in property transactions since the launching of its marketplace in 2016.

Roofstock Announces $ 7 Million In Additional Funding (Benzinga), Rated: A

Roofstock announced Thursday that the venture capital arm of Silicon Valley Bank had joined its latest funding round, bringing the property investing startup’s funding total to $42 million.

Gary Beasley, CEO: Roofstock is the first online marketplace created exclusively for buyers and sellers of cash-flowing, single-family rental homes that already have tenants.

Who are your investors, if any?

Roofstock has raised $68,250,000 to date, with a recent $35M Series C investment led by Canvas Ventures in October 2017. Other investors since Roofstock’s launch include Lightspeed Ventures, Bain Capital Ventures, Khosla Ventures, Hone Capital, QED Investors, Nyca Partners, and several angel investors.

Vanguard vs. Fundrise: Which is the Better Investment Option? (Fundrise), Rated: AAA

We often get the question, “What makes a Fundrise eREIT worth investing in over the Vanguard REIT ETF?” It’s a fair question that we expected when we created the eREIT. The short answer is that Fundrise eREIT investments are lower in cost for investors than those of the Vanguard REIT ETF and also come with the potential for better returns — how our costs are lower than Vanguard requires a longer answer.

Source: Fundrise

Some of the largest REITs in which the Vanguard REIT ETF owns shares are Simon Property Group(shopping malls, worth approximately $50 billion), Equinix (office buildings, worth approximately $34 billion), and AvalonBay Communities (apartment buildings, worth $25 billion).

Vanguard charges no brokerage commissions and carries only a low investment advisory fee of 0.30%, which it reports to be lower than the industry standard of 1.02%. In addition to the advisory fee, Vanguard charges its REIT ETF investors an asset management fee of 0.11% as well as reimbursement of “expenses.”

The Fundrise Approach

Where public market investments rely on several financial organizations to perform various services from acquisition and development to offering diversified portfolios of REITs, Fundrise uses technology to consolidate these functions and reduce the number of intermediaries in the value chain.

Source: Fundrise

The real estate investment trust designation of the eREIT does not equate the services or value creation offered by the eREIT with that of a public REIT — it simply allows Fundrise to pass at least 90% of the eREIT’s earned income to investors without paying taxes at the corporate level.

Fundrise investors can invest directly into an eREIT and only pay an 0.85% asset management fee at the eREIT level. Investors who want to diversify across multiple Fundrise investments, including eFunds, can do so through one of the investment portfolios. For example, rather than choosing one eREIT or more, investors can invest in the Starter Portfolio with a minimum investment of $500. For this service, investors are charged an investment advisory fee.

Chase joins AutoFi platform (Asset Finance International), Rated: A

Chase, the US consumer and commercial banking business of JPMorgan Chase & Co, has become the first US national bank to partner with fintech company AutoFi to help customers select and finance vehicles through dealers’ websites.

The move comes after the bank’s research showed that nearly half of consumers would purchase and finance vehicles online if they had the opportunity.

ForUsAll Reaches $ 500m in Assets and Raises $ 21m in Venture Capital (Business Insider), Rated: A

ForUsAll, the technology-driven 401(k) advisor to small and mid-sized businesses, today announced it has reached $500m in retirement assets under management and secured $21 million in second round financing led by Ribbit Capital, a leading global investor in financial technology. Existing investor Foundation Capital joined the round, bringing the company’s total funding to $34 million. ForUsAll will use the funds to grow the company’s customer base, accelerate technology development and hire additional staff.

CFPB Signals Shift by Dropping Payday Lender Lawsuit (Bloomberg), Rated: A

The Consumer Financial Protection Bureau is dropping a lawsuit against a group of payday lenders associated with an American Indian tribe in a sign the regulator is changing direction under Mick Mulvaney, the acting director appointed by the Trump administration.

The agency had accused the lenders of deceiving consumers and failing to disclose the true cost of the loans, which carried interest rates as high as 950 percent a year. The agency asked for the case in federal court in Kansas to be dismissed in a court filing on Thursday, giving no details about its reasoning.

The CFPB lawsuit had targeted four companies owned by the Habematolel Pomo of Upper Lake tribe.

Foreign and Domestic Condo Buyers Tap $ 300 Million Fund To Close On New Condo Purchases (PRWeb), Rated: A

Three leading South Florida real estate-related companies with robust real estate experience, deep capital markets relationships, and a proven track record of originating and servicing end-user loans have joined forces to provide senior mortgage loans to non-traditional real estate buyers. The joint venture, named Pebb Yale Truss Lending, (“PYT Lending”) is comprised of Pebb Capital, GPC Truss, and Yale Mortgage. Already the enterprise has commenced loan closings for approximately 20% of the units at Echo Brickell, a luxury condominium development by Property Markets Group (“PMG”) in Miami, FL.

The First Blockchain ETFs Launched on Nasdaq, NYSE Today (coindesk), Rated: A

Reality Shares Advisors and Amplify Trust ETF launched the first blockchain-based exchange-traded funds (ETFs) on Nasdaq and the New York Stock Exchange Arca today.

Both funds went live on their respective exchanges at 9:30 a.m. EST. Reality Shares’ Nasdaq NextGen Economy ETF (BLCN) opened at $24.20, while Amplify’s Transformational Data Sharing ETF (BLOK) started closer to $20.

What are some of the crowdfunding basics you need to know about? (Born2Invest), Rated: A

Crowdfunding is the opposite approach to business finance.

Crowdfunding is defined as a way of raising capital with the collective effort of friends, family, customers, and individual investors.

While crowdfunding is the umbrella term for this new way of investing and doing business, there are several types of crowdfunding.

  • Reward-based crowdfunding
  • Peer-to-peer lending – People who are risking to lend out money to strangers can create loan portfolios.
  • Donation-based crowdfunding
  • Equity crowdfunding – Equity crowdfunding has the most room for change in terms of how people invest their money.
  • Real estate crowdfunding
  • Human capital – If investors want to put in money on top athletes, there are crowdfunding available for this purpose. For instance, Fantex said it would offer an IPO on investments that track the brand value of top sports stars. Another crowdfunding site named Upstart provides money for college without piling on debt.

AI, blockchain, enhanced encryption: The fintech trends Chicago’s top techies are watching (Built in Chicago), Rated: A

Here’s what Chicago’s fintech leaders are watching in 2018.

Morningstar

Which emerging technologies will have the biggest impact on the industry in 2018?

Security technologies around encryption and voice will start to take shape. Investor and consumer trust in the markets, credit and technology suggest people aren’t satisfied with the norm. There aren’t enough heuristics used to encrypt data at rest and in transit, and the emergence of unique voice pattern activation — led by Amazon and Google — will start to drive changes in the industry.

Enova

Which emerging technologies will have the biggest impact on the industry in 2018?

AI and machine learning continue to grab headlines, and for good reason: they have the potential to improve every aspect of business.

PEAK6 Investments

Which emerging technologies will have the biggest impact on the industry in 2018?

Luke Peeler, software engineer: Blockchain technology.

The Future of Financial Services for the Underbanked: Tradition, Innovation, Regulation (LendIt), Rated: B

Traditional services used by the underbanked include check cashing, cash advance loans, and money transfers. Many view these services as overly expensive and behind the times, and an emerging ecosystem is leveraging fintech innovation to provide improved offerings. However, there’s a strong case made by industry researchers that the traditional, non-bank financial providers remain attractive to their customers, especially compared to the costs of a using a bank account.

  • Joe Coleman, CEO of RiteCheck
  • Rishi Kumar, Founder of Kashable
  • Cathy Mahon, President & CEO of the National Federation of Community Development Credit Unions
  • Lisa Servon, Professor of City Planning at the University of Pennsylvania

Guidewire Partners With Plug and Play to Foster Innovation in P&C Insurance (Business Insider), Rated: B

Guidewire Software, Inc. (NYSE: GWRE), a provider of software products to Property and Casualty (P&C) insurers, today announced it has joined Plug and Play’s ecosystem to advance P&C insurance innovation and collaboration. Plug and Play is a global startup ecosystem and venture fund specializing in the development of early-to-growth stage technology startups in 12 verticals. Guidewire joins as a Corporate Partner focused on the Insurance vertical.

VPC recruits Kushman as principal and capital markets head (PE Hub Network), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Todd Kushman joins as a principal and head of capital markets. Kushman is based in New York.

Kushman will lead the firm’s capital markets initiatives, which includes optimizing and identifying new alternative investment product offerings.

BB&T creates $ 50m fintech investment fund (Retail Banker), Rated: B

BB&T, a US-based bank holding company, has decided to set aside $50m to invest in or buy emerging digital technology firms as part of its strategy to boost its competitive profile and trim operational expenses.

United Kingdom

ZOPA LENDING QUEUE: WHEN WILL ZOPA RE-OPEN TO NEW INVESTORS? (Orca), Rated: AAA

There was extensive media coverage in October of last year surrounding Zopa, the largest consumer-focused peer to peer lender in the UK, and when it will re-open its doors to new investors who have been waiting in the Zopa lending queue – some since early 2017. It’s the turn of 2018, and some members in the queue may be seeing signs of promise.

There are 26,000 people in the Zopa “wait list” (as of 9th January). With approximately 60,000 active customers, this influx will represent a 43% increase in lenders at the platform; impressive, given the time it’s taken the platform which was founded in 2005 to acquire its existing customer-base.

U.K. Fintech Nuvo Launches Facebook Chatbot For Financial Advice on Mortgages (Bank Innovation), Rated: A

AI-powered fintech Nuvo today launched a Facebook chatbot that helps people find the best mortgage deal.

Network ROI completes employee buy-out thanks to ThinCats £1m funding (Insider.co.uk), Rated: A

A Midlothian-based IT firm has completed an employee buy-out after receiving £1m in funding from alternative finance specialist ThinCats.

Founded in 2003 by Sean Elliot, Network ROI employs 32 people providing managed IT and connectivity services to organisations throughout the UK.

Fintech to help first-time buyers with Rent Recognition Challenge for startups (City A.M.), Rated: A

A new competition has been launched to get innovative startups using technology to help renters use this payments history as a record of credit worthiness. The idea is that a tool or service can be used by lenders and credit reference agencies as part of an assessment for a mortgage.

First announced in the Autumn Budget, the Rent Recognition Challenge is now open for entries, with a potential prize of £2m for fintechs working on this idea.

Six proposals will get £100,000 each to get started on a prototype between March and October, after which that will be narrowed down to three by a panel of judges with more cash up for grabs.

 

IFA launches investment service for dormant clients (FT Adviser), Rated: A

IFA firm Symphony is offering a white-label version of provider FinchTech’s non-advised robo-service to allow its clients to invest through its website without having to pay for advice.

For a platform fee of 0.25 per cent, investors are given access to four mainstream investment portfolios and four socially responsible investment portfolios via FinchTech, with equity/non-equity weightings ranging from a ‘cautious’ 35/65 split to the ‘adventurous’ 85/15.

BUSINESS SHOWCASE : IGNITION WEALTH IRELAND (Irish Tech News), Rated: B

Ignition Wealth Ireland is the European subsidiary of Australia’s leading digital financial advice provider Ignition Wealth. We assist large financial institutions integrating new technology into their current processes and systems  and we help them to reimagine how their customers navigate the financial advice experience.

China

PPDai to invest in research institute (Shanghai Daily), Rated: AAA

PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said yesterday that it will invest 1 billion yuan (US$156 million) within three years to set up a new research institute.

The money invested in the new PPDai Smart Finance Institute will be used to fund artificial intelligence, blockchain, finance cloud and Big Data sectors, said Zhang Jun, co-founder and chief executive of Shanghai-based PPDai.

European Union

Linked Finance eyes profitability as revenue and lending levels jump (The Irish Times), Rated: AAA

Linked Finance, the peer-to-peer (P2P) lending platform which has signed over 1,200 loans for Irish businesses, has said it is on track to be profitable this year.

The company, which is seeking to become the biggest non-bank lender to SMEs in Ireland, recorded a €1.1 million net loss in the 12 months to the end of April 2017, compared to a €1.2 million loss in the previous year.

Shareholders’ deficit amounted to €2.7 million at the end of the reporting period, as against €1.7 million a year earlier as accumulated losses increased from €2.2 million to €3.3 million.

FinTech, Robo Advisers, and the Soul of Swiss Banking (Mises Institute), Rated: AAA

As one Swiss economics journal put it, the most contentious conflicts (and partnerships) will be between “startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations and total disruption of established technology & processes”. That is to say:

  • Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks will always retain the cachet of security and stability. Online-only banks, however, are asserting themselves more aggressively in claiming to offer the same services with higher rates and lower fees.
  • Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
  • Traditional Asset Managers vs. Robo-Advisors: Companies like Betterment feature robo-advisors offer lower fees and lower minimums; meanwhile, the larger traditional asset managers are creating their own robo-products while providing the kind of personalized attention for which high net worth clients are willing to pay quite generously.
  • Traditional Wealth Management vs. Automated Advice: a plethora of new software platforms and apps feature digital options, including mobile telephone payment services, automated wealth management advice, price comparison apps, tailored social media groups and crowdfunding systems. On the other side, the exclusivity of one-on-one attention is forever and very possibly will take on even more cachet as the somewhat sterile egalitarianism of digital banking erodes the cultural hierarchy of status.
  • Traditional Clearing Systems vs. Blockchain. This latter can store and distribute crypto-currencies (such as Bitcoin) and digital contracts (such as land deeds) without the need for banks or formal clearing systems. Proponents of Blockchain maintain that it promises “to reduce fees, improve security and bypass the volatility of central bank controlled fiat currencies”. Major technology firms such as Google, Amazon and Alibaba are also joining this trend.

CoinLoan ICO Reaches Major Milestones as it Launches MVP and Enables Direct Fiat Investment (Coin Telegraph), Rated: A

Peer to peer fintech startup, CoinLoan, recently rolled out the first version of their peer-to-peer lending platform. Investors were thrilled with the results (try it for yourself here, and are eagerly awaiting the end of the ICO and listing on exchanges soon after.

CoinLoan has also recently enabled direct fiat investment in their ICO. This unique option enables investments of $5,000 or more in USD or EUR in exchange for CLT tokens.

CoinLoan has created a system of secured peer-to-peer lending, where borrowers deposit various crypto assets for a loan in their preferred fiat currency.

International

Revolut launches geolocation-powered travel insurance (TechCrunch), Rated: AAA

Fintech startup Revolut is launching international medical and dental insurance. You can subscribe using the company’s app for £1 per day or more depending on the options.

By default, insurance coverage costs £1 per day for medical and dental insurance. You can add an option for winter sports and you can also cover your friends and family.

Australia/New Zealand

AI helps Harmoney improve ability to assess credit risk (CIO), Rated: AAA

Harmoney is working with DataRobot to improve the performance of its credit risk assessment process.

“With our deployment of DataRobot, we’re now using artificial intelligence to reduce risk for our lenders,” says Brad Hagstrom, joint-CEO of Harmoney.

Nine launches financial advice website 9Saver.com.au (Mumbrella), Rated: A

9Saver.com.au will aggregate the cost of living and shopping segments run across Nine News, Today, Today Extra, A Current Affair and 60 Minutes every week.

India

Startup eco-system looks forward to the budget for addressing tax dilemma (ET Rise), Rated: A

The Indian startup eco-system is looking forward to the union budget eagerly for addressing the tax dilemma. With high-quality entrepreneurs, good ideas and the very important funding ecosystem, startups have become an integral part of the India’s economic growth and job creation.

Asia

Banks, regulators lack skills to cope with pace of fintech innovation (Nikkei Asian Review), Rated: AAA

Both regulators and industry officials lack the right analytical and data skills to cope with the wave of disruption washing over the financial industry, according to the technology officers at leading financial companies at Thursday’s Nikkei Asia300 Summit in Singapore.

Jonathan Larsen, chief innovation officer of Ping An Insurance (Group) Company of China, said there are “definitely no” people with up-to-date skills among the regulators, which is slowing down the pace of change for traditional institutions.

Authors:

George Popescu
Allen Taylor

Thursday January 11 2018, Daily News Digest

consumer loan mpl abs

News Comments Today’s main news: Vanguard’s robo-advisor passes $100B AUM. YieldStreet raises $113M. RateSetter, Funding Circle join FSB funding platform. Funding Circle looks at Autumn for flotation. ETHLend launches secondary blockchain partnership. Modalku hits $7.4M in total crowdfunding. Today’s main analysis: KBRA 2017 consumer loan marketplace lending year in review and 2018 outlook. Today’s thought-provoking articles: LendingTree survey: Survey takers […]

consumer loan mpl abs

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

Canada

 

News Summary

United States

Vanguard’s Digital Advice Platform Is First to Pass $ 100B in AUM (Investopedia), Rated: AAA

Vanguard reached another milestone that should keep competing robo-advisors on their toes: it is the first firm to have a digital advice platform to surpass the $100 billion mark in terms of assets under management. And that comes with Vanguard having launched the service in 2015, just three years ago.

According to Stokes, 90% of the platform’s $101 billion in assets under management as of the end of 2017 are from existing clients. Vanguard’s assets under management beat those of Charles Schwab, which has $25 billion in assets under management for its Intelligent Portfolios, Institutional Intelligent Portfolios and Intelligent Advisory services, as well as Betterment’s $10 billion in assets, noted FinancialPlanning.

KBRA Releases 2017 Consumer Loan Marketplace Lending Year in Review and 2018 Outlook (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) released its 2017 Consumer Loan Marketplace Lending Year in Review and 2018 Outlook. The accompanying research report highlights the fact that 2017 was a notable year in the consumer loan marketplace lending (MPL) space in many respects. Total ABS issuance topped $7.8 billion in 2017, up from $4.6 billion in 2016, a year-over-year increase of 71%. SoFi led the way in 2017 in terms of number of ABS deals and total securitization volume, having completed six securitizations for $3.2 billion in total notes. Prosper completed three securitizations totaling $1.5 billion under their PMIT program followed by four deals from LendingClub’s prime and near prime shelves totaling $1.2 billion and three from Marlette’s MFT shelf totaling $919 million. Avant completed two securitizations totaling $480 million while Upstart issued its inaugural securitization in June 2017 followed by a subsequent deal in November. Investor demand strengthened with orders exceeded total deal size and a larger number of investors participated in the deals.

KBRA’s 2017 year in review and 2018 outlook provides:

  • KBRA’s outlook for 2018
  • Information behind the growth in the consumer MPL market
  • Detailed loan origination and ABS issuance volume by platform
  • Securitization performance and rating trends
  • Comparison of collateral characteristics, lending license arrangements platform servicing strategies and funding sources
  • Synopsis of legal and regulatory developments affecting the sector
  • Summary of significant equity raised by fintech companies

Read the full report here.

LendingTree Survey Reveals Optimistic Outlook for Personal Finances in 2018 (PR Newswire), Rated: AAA

LendingTree recently conducted an online survey among 1,025 Americans to gauge financial expectations, concerns and overall sentiment regarding personal finances for 2018. According to the results, two out of three Americans have an optimistic outlook for the year ahead, with millennials being even more optimistic.

According to the survey, almost half of Americans (45%) feel that 2017 was at least somewhat better than 2016 in terms of personal finances. Approximately one third (34%) earned more in 2017 than they did in 2016, 24 percent put more into savings in 2017 compared to 2016, and 21 percent improved their score over the past 12 months. However, only 16 percent reduced their total credit card debt, making debt reduction a priority in the year ahead.

Additional positive expectations for 2018 include:

  • 46% expect income to increase
  • 28% expect to pay off credit card debt
  • 35% plan to make and/or stick to a budget in 2018
  • 35% also expect to improve their credit score
  • 18% expect to save for a down payment on a house
  • 27% plan to build an emergency fund
  • 26% expect to save for a savings/purchase goal

To view the rest of the survey results, visit 

Spike in delinquency rate mars outlook for personal loans (American Banker), Rated: A

U.S. consumers are falling further behind on loans commonly used to consolidate debt, the latest sign that monthly payment burdens have become unsustainable for more households.

In the third quarter of 2017, 1.9% of all bank-issued personal loans were at least 30 days delinquent, according to data released Tuesday by the American Bankers Association. That was a notable jump from the second quarter, when the delinquency rate was 1.52%.

YieldStreet Raises $ 113 Million Financing Round to Disrupt Alternative Investing (BusinessWire), Rated: AAA

YieldStreet, the alternative investment platform working to change the way wealth is created, today announced that it has closed a $113 million financing round. The round includes $12.8 million of Series A equity financing co-led by Greycroft and Raine Ventures, as well as a revolving credit facility of $100 million from a New York based family office (the “Family Office”). Additional equity investors include Saturn Ventures, Expansion Venture Capital, the Family Office and FJ Labs.

The equity capital will help enable YieldStreet to accelerate the transformation of wealth creation by investing in further product innovation and growing its loyal community of investors. The raise comes as YieldStreet reached a tipping point in 2017, almost tripling prior year originations and surpassing $250 million raised by retail investors at the end of the year.

Alan Patricof, co-founder of Greycroft and one of the pioneers of modern private equity as the founder of Apax Partners, will join the YieldStreet advisory board. Ian Sigalow of Greycroft, Gordon Rubenstein of Raine Ventures and a representative from the Family Office will join YieldStreet’s board.

It’s Time to Talk About Alternative Assets (ThinkAdvisor), Rated: A

While many high-net-worth investors get advice from friends, family and sources on the internet, the majority — 72% — rely on financial professionals such as their advisors for investment information, according to research by Millennium Trust. In fact, financial professionals are over three times more relied on and trusted than the next trusted investment source: 51% of HNW investors trust financial professionals more than competing sources, including family, which is the most trusted source for only 13% of investors.

When advisors discuss potential investments with clients, they often focus on traditional options like stocks, bonds and mutual funds. As our research shows, however, many HNW investors are interested in alternative investments, such as hedge funds, private equity, real estate, commodities, marketplace lending and crowdfunding.

For example, 63% are moderately or extremely interested in investing in real estate and 46% report the same level of interest in private equity. But when it comes to discussing those investments with their broker or advisor, the numbers are significantly lower: Just 25% have discussed residential rental properties, 20% commercial rental properties, 23% real estate investment trusts, and 27% real estate limited partnerships, whereas 38% have discussed private equity.

Ryan Feit, CEO of SeedInvest, Updates on 2017 Progress & Crowdcube Partnership (Crowdfund Insider), Rated: A

SeedInvest is one of the most selective investment crowdfunding platforms in the US.

Today, SeedInvest is a full stack platform allowing companies the ability to sell securities under each of these exemptions.

How were your numbers for 2017? Can you share some top line detail?

Ryan Feit: We had another record year at SeedInvest.  We invested around $50 million into startups during 2017 (more than in our prior four years combined).  By our calculations we did at least twice as much investment volume as the next largest US-based equity crowdfunding platform that is open to all investors.

During 2017, what were some of the highlights for SeedInvest?

Ryan Feit: Here are a few additional highlights for 2017:

  • HelloMD completed the largest Regulation CF Side-by-Side round fundraise in history, raising $3 million.
  • Knightscope completed the largest pure Equity Crowdfunding round in history, raising $20 million.
  • We launched Auto Invest to help investors easily diversify in up to 25 startups and so far, 470 investors have made 3,300 auto investments into startups.
  • We launched LIVE Fundraising at events around the world and through our partnerships with LAUNCH Festival/Scale and
  • TechCrunch Disrupt, $10 million was raised from 5,800 people on SeedInvest.
  • SeedInvest had 14,000 startups apply to raise capital (vs. 1,500 in 2015).
  • SeedInvest had 2.5 million site visitors (vs. 400k in 2015).
  • SeedInvest processed 20,000 investments (vs. just 275 in 2015!).

Petal Card Raises $ 13M Led by Thiel’s VC Firm (Bank Innovation), Rated: A

Petal, the card designed to serve the credit invisible, has raised $13 million in funding that it will use to double its employees as the young startup tries to meet the demand of its growing user-base.

The Series A funding round was led by Peter Thiel’s VC firm, Valar Ventures.

U.S. News & World Report Names LendingPoint One of 2017’s Best Personal Loan Companies (BusinessWire), Rated: A

LendingPoint, the company working to revolutionize access to consumer credit, was named one of nation’s six best personal loan companies by U.S. News & World Report.

The media company evaluated personal loan companies in five key areas, reviewing data on eligibility, loan terms, fees, repayment methods and additional features. LendingPoint was cited as 2017’s top lender for people with fair to good credit, who have merit-based qualifications beyond FICO scores that make them worthy loan candidates.

Alkami raises $ 70 million for mobile banking software (TechCrunch), Rated: A

Plano-based Alkami has developed a white label service that credit unions and banks use across digital platforms.

And Alkami’s 4.5 million users have generated enough revenue for the company to justify a $70 million Series D round, led by General Atlantic, with participation from MissionOG. Existing investors include S3 Ventures and Argonaut Private Equity.

Chase Partners with AutoFi to Deliver Digital Car-Buying for Dealerships across the Country (BusinessWire), Rated: A

Chase announced today a partnership with AutoFi, a financial technology company that helps customers select and finance vehicles through their automotive dealers’ website and reduce the time it takes to complete the sale. Chase is the first national bank on the AutoFi platform.

The AutoFi digital retailing platform connects dealers with buyers and lenders. Chase will deliver financing terms online through the AutoFi platform, often within seconds.

Nearly half of consumers want to purchase and finance vehicles online, Chase’s research has found.

CECL compliance dragging small banks toward automation (American Banker), Rated: A

Like many small-to-midsize banks, Bank Independent in Sheffield, Ala., calculated its monthly allowance for loan and lease losses the hard way: setting aside a week every month to complete a largely manual, Excel-based model.

Download Your Guide to LendItFintech USA (LendIt), Rated: B

Discover who attends, why you should attend, andmore.

Ascentium Capital Exceeds $ 1 Billion in Funded Volume During Fiscal Year 2017 (Ascentium Capital), Rated: B

Ascentium Capital LLC, the nation’s largest private-independent finance company, announced it surpassed $1 billion in annual funded volume for the first time in the organization’s history.

 

Real estate investing startup Cadre partners with Goldman Sachs (Reuters), Rated: A

New York-based real estate investment company Cadre has partnered with Goldman Sachs Group Inc (GS.N) to allow the bank’s private wealth management clients to invest through the startup’s platform.

Goldman Sachs clients have committed to investing $250 million in properties through Cadre’s platform so far, the companies said on Wednesday.

Better Saves Homeowners $ 2.7 Million in Mortgage Refinancing Costs in 2017 (Better Email), Rated: A

PeerStreet: A Group Of Surfers Out To Revolutionize Real Estate Investing (Benzinga), Rated: A

PeerStreet is an investment platform that enables accredited investors to easily invest in high-yield, short term, real estate backed loans. PeerStreet sources its loans from non-bank lenders across the nation. They underwrite both the lenders and the loans using advanced algorithms, big-data analytics, manual processes and on-the-ground due diligence to filter and select high quality loans.

Who are your investors, if any?

Our investors include: Andreessen Horowitz, Felicis Ventures, Rembrandt Venture Partners, Montage Ventures, ThomVest, The Kaiser Family Foundation, Colchis Capital, Toba Capital, Le Frak, and many notable individual investors including Dr. Michael Burry, Adam Nash, Ron Suber, D. A. Wallach, etc.

Is there anything else Benzinga should know about your company?

PeerStreet is entrenched in the financial technology and lending industries at large. PeerStreet has been named by American Banker as one of the “Best Places to Work in Financial Technology” in 2018 and one of the “10 Best Startups in Los Angeles” in 2017 by Zippia. PeerStreet is a member of the Marketplace Lending Association and has partnerships with over 150 private residential real estate lenders in over 30 states.

Q&A With Chief Investment Officer Chris Fraley (RealtyMogul), Rated: A

Q: How do you intend to translate your experience from Rockwood Capital to your role at RealtyMogul?

In 2018, I see RealtyMogul expanding the size of its investment transactions, something I have direct experience in managing and find very exciting. I believe RealtyMogul is entering its third phase of growth as a business, evidenced by its recent acquisition of Serendipity Apartments this past September. Due to the ability to invest larger amounts of equity, we were able to maintain a majority, controlling interest in a $24M apartment community. While providing opportunities in preferred equity, mezzanine debt and smaller, passive limited partner interests will still be a critical aspect of our business, I’m hopeful that our real estate team’s substantial institutional background will help us acquire and successfully manage properties with larger transaction values.

Q: Do you think RealtyMogul will impact the traditional institutional investing model?

Absolutely. The institutional world is already starting to sign on to the concept of direct investing because the typical closed end fund model is broken, inefficient and fraught with possibility of misalignment of interests.

Surprisingly, most institutional investors do not want to invest in value add real estate investments in the bottom of a cycle until there is clear evidence of a market recovery. This was evident in the last downturn by the paucity of institutional allocations to value add strategies in the 2008-2012 timeframe. When the market starts to recover, institutional investors should start to make allocations. This may take a year or two. They lock up allocations with 3-4 year investment periods, oftentimes at the peak of cycle. Now is a perfect example of this disconnect.

Direct investment platforms allow investors to move in and out of market more efficiently and avoid an extra layer of fees to the investor. I believe this is the future of our industry and RealtyMogul is poised to lead.

RealtyMogul Hires New Chief People Officer (RealtyMogul), Rated: B

RealtyMogul, a unique commercial real estate private markets investing platform, today announced the addition of Soley Van Lokeren as Chief People Officer.

Stressing About When And How To Pay Your Debts? Pefin’s AI Assistant Is Here To Help (Benzinga), Rated: A

Pefin is the world’s first Artificial Intelligence (AI) financial advisor. The platform provides intelligent, unbiased and personalized financial planning and advice. Pefin’s mission is to look after the financial best interests of users in a way that embraces the unique individuality of their lives.

The platform offers:

  • 1. Long-term Financial Planning services, including a complete Financial Plan
  • 2. Financial Advice, including savings and debt management strategies
  • 3. Investment Advice and Portfolio Management Services
  • 4. Real-time monitoring, updates, and curated financial literacy content for each user

Tech advances force advisers to adjust — or else (ROI-NJ), Rated: A

There’s a machine-versus-human calculus that’s going on in the world of money management.

It may not yet be that more financial advice is provided by machines than humans, but to say the industry is on that path isn’t hyperbole. Investors themselves — particularly those of a younger demographic — have shown they are willing to trust a robot for advice.

John Babcock, president of Peapack-Gladstone Bank’s private wealth management division, sides with the humans, but understands automation is quickly changing the face of his business.

ProShares and VanEck are withdrawing their requests for bitcoin ETFs (Business Insider), Rated: A

Two financial services giants — ProShares and VanEck — are withdrawing requests to the Securities and Exchange Commission to list bitcoin ETFs.

 

US Banks Rely on Fintech Firms to Overcome Legacy Systems (Payments Journal), Rated: A

Legacy systems are preventing nearly two thirds (64%) of US commercial banks from developing Fintech applications, research commissioned by Fintech provider Fraedom has revealed.

Interestingly, 82% of the respondents that highlighted this concern were shareholders. Over half of those polled also noted a lack of expertise within banks as an important concern (56%), just ahead of limited resources (53%).

Commercial banks outsourcing services to a Fintech provider is clearly a trend on the rise, with only 22% of US banks revealing that they do not outsource any payment services compared to 30% of their UK counterparts.

How a Fintech Startup Aims to Take the Fear Out of Investing (Wharton), Rated: A

Riskalyze CEO Aaron Klein talks to former Wharton visiting professor Vinay Nair about his startup’s business model and path to growth.

Nair: Can you give us a sense of what your Risk Number model is and why advisors are attracted to it?

Klein: We built the technology on top of the academic framework that won the Nobel Prize for economics in 2002 — Daniel Kahneman and Amos Tversky’s work on prospect theory. We had a team of academics do a deep dive into the methodology and they said, ‘On the one hand, there are a lot of novel things in what you’ve done. On the other hand, a lot of what you’ve done is taken stuff that we’ve been working on in the labs for 15 years to 20 years and figured out a way to make it commercially viable and understandable by the average human.’

Listen to the podcast here.

Can taking out a loan be a good experience? (WGN Radio), Rated: A

Kabbage has enough experience with small businesses to say providing loans to small businesses can make for a good experience. John Parise is the Head of Customer and Partner Marketing and has been following company journeys for years now. His way of making loans a positive experience is by offering flexibility.

Listen to the podcast.

Fintech Startup Apruve Partners With MSTS For Credit Card Alternative (Benzinga), Rated: B

B2B fintech companies MSTS and Apruve announced Wednesday a payment process obviating the need to leverage capital and resources to provide credit and payment terms.

The new service enables automated instant credit approval, buyer onboarding, billing, customer service and collections services while allowing business clients to eschew the high transaction fees of credit cards.

4 of the 5 Biggest IPOs in 2017 Bombed. Here’s Who Won (Madison), Rated: B

The number of companies going public in 2017 surged 52% over the year ago period, hitting 160 deals, with the proceeds from the IPOs reaching $35.6 billion, double the amount in 2016, according to an analysis by Renaissance Capital.

5. Qudian (down 47.8%)

United Kingdom

RateSetter and Funding Circle added to FSB Funding Platform (P2P Finance News), Rated: AAA

RATESETTER, Funding Circle and Assetz Capital are some of the peer-to-peer lenders that have been included on the Federation of Small Businesses’ (FSB) new business funding platform.

The FSB Funding Platform, developed by Finpoint, matches potential borrowers with more than 100 lenders through the use of Artificial Intelligence (AI).

FSB launches AI-led business finance aggregator (P2P Finance News), Rated: A

THE FEDERATION of Small Businesses (FSB) has launched a new business finance aggregator that uses Artificial Intelligence (AI) to match potential borrowers with more than 100 lenders.

The trade body unveiled the FSB Funding Platform on Wednesday, after it was trialled on FSB members in three UK regions.

The new platform has been developed for the FSB by Finpoint and is regulated by the Financial Conduct Authority.

Funding Circle eyes autumn flotation, report claims (The Digital Banking Club), Rated: AAA

UK peer-to-peer lender Funding Circle is set to hire investment advisers as part of preparations to float on the London Stock Exchange.

UK Businesses Enter 2018 Vulnerable to Economic Shocks (CL News), Rated: A

These are unpredictable times for the UK economy. The great financial crisis remains fresh in the memory of business owners and its effects are still being seen in the form of relatively low wages growth and lagging productivity. Meanwhile, the ongoing talks on Britain’s future relationship with the European Union are a reminder that the future too is uncertain. Against this backdrop, a significant number of Britain’s SMEs are acutely vulnerable to any downturn in trade, according to a survey by the business lender, Nucleus Commercial Finance.

Small business owners were more or less evenly split on the question of whether the UK should remain in Europe, but as the survey indicates, the possibility that current trade talks will lead to a poor outcome is now a major concern,  trumping both the possibility of another major financial crash or the threat of digital attack by hackers.

And almost half of the businesses taking part in the survey said they are financially exposed to any event that impacts on trade, with 47% admitting they wouldn’t last a month on the basis of their current cash reserves. 30% said they wouldn’t last two weeks.

After 2017’s European Brexodus companies want to know the UK is open for business (Verdict), Rated: A

The first Morgan McKinley London employment monitor of the new year has revealed a 37 percent decrease in jobs available year-on-year while there are 30 percent fewer people seeking jobs in the capital.

Month-on-month there was a 52 percent decrease in jobs available, while the number of people seeking jobs in London fell by 40 percent.

China

WeChat shows messaging is the future of financial services ‘platforms’ (Tearsheet), Rated: AAA

WeChat could be the next big broker-dealer among high-net-worth Chinese investors.

Its parent company, Tencent, now has a license that allows it to sell mutual funds on WeChat and give the popular messaging app’s 980 million users more options to help boost funds sold on the platform. It also gives Tencent more sway in deciding which financial products third-party companies can sell on its different platforms.

WeChat is showing that messaging channels, at least in China, are where people like making financial transactions.

European Union

Berlin-based FinTech startup Penta accuses TransferWise to have stolen its debit card branding (EU Startups), Rated: A

The London-based FinTech giant TransferWise just announced its borderless current account, which enables users to spend money in a choice of up to 28 foreign currrencies with a debit card. Tranferwise’s choice of a neon green colour for its first debit card was met with anger by Berlin-based SME challenger bank Penta, which turned to Twitter to express its anger at the striking resemblance to its own neon green card.

Looking at the two card designs, you’ll notice that it’s really just about the colour, and chances are high, that TransferWise picked the similar colour “by accident”.

International

Crypto P2P lender ETHLend launches secondary blockchain partnership (P2P Finance News), Rated: AAA

CRYPTO-BACKED peer-to-peer lending platform ETHLend has partnered with a technology provider to help record and store transactions more securely.

ETHLend, founded by Finland-based Stani Kulechov, is a P2P lending platform funding business and personal loans in the Ethereum digital currency.

Central banks are experimenting with blockchain technology — here’s why (Business Insider), Rated: A

So, blockchain can be quite resilient, it can also be a way to create greater transparency into central banking, more credibility because of the rules a blockchain-based system enforces.

Blockchain based BABB Kicks Off Initial Coin Offering to Create the “World Bank for the Micro Economy” (Crowdfund Insider), Rated: A

BABB, a banking platform based on Blockchain based in London, is launching its initial coin offering (ICO) on January 15th with a pre-sale. The general token sale of BAX will commence immediately following the pre-sale seeking to raise a hard cap of USD $20 million. Once their app is live, BAX will be used to pay for services, fees and licensing costs; so if an individual or business wants to use a BABB account, they will use BAX to pay for it. BAX tokens can also be used for other services.

The money raised by the ICO will be used for BABB to deliver: a smartphone app with bank account capability and international money transfer functionality; a European banking license in the appropriate jurisdiction for their go-to market strategy; and a partnership with a leading retail or central bank in an emerging market, to open corridors for international transactions.

Finova’s FNVA to Become the First Equity-linked Token (BTCManager), Rated: A

Finova Financial is growing as a trusted online lender enabling people to access affordable loans quickly. The platform is recognized as part of the “Fintech 100 list of the world’s leading financial technology innovators for 2016.”

Finova’s FNVA tokens are unique because these tokens are linked with a share of equity in Finova Financial itself. Also, it utilizes the ERC-20 Ethereum token standard that will be traded on cryptocurrency exchanges that are SEC approved and has the backing of assets of a US corporation. Therefore, the token sale is like a hybrid between an ICO and IPO.

These tokens will soon be available through FrontFundr investment platform.

The token price structure of the sale is displayed below, where the price will increase over time. A total of $18.5 million worth of tokens will be sold, on a sliding scale between $0.75 and $1.56 as the supply of FNVA increases.

 

Source: BTCManager
Australia/New Zealand

Auswide Bank sells stake in MoneyPlace, only two years after investing in online lender (The Courier Mail), Rated: AAA

BUNDABERG-based bank Auswide is offloading its 62 per cent stake in online lender MoneyPlace only two years after making an investment to “take a position” in the hi-tech sector.

Mom and pop investors fleeing property rental business (Scoop), Rated: A

Increasing numbers of mom and pop landlords are contemplating giving up on property investment and exploring alternative investments due to reasons such as the increasing pressure they feel from what can be a capital-intensive investment, changes to the legal environment (such as the Healthy Homes Guarantee Act 2017) and fears of how methamphetamine contamination could ruin their retirement planning.

CEO of New Zealand’s largest peer-to-peer mortgage lender Southern Cross Partners, Luke Jackson, says a string of inquiries about alternative investment options that don’t stray too far from property have been received by his team in recent weeks.

India

Existing NBFC cannot operate as peer-to-peer lender (IIFL), Rated: AAA

The Reserve Bank of India (RBI) notified that existing non-banking financial companies cannot operate as peer-to-peer lenders. Further, new applicants for peer-to-peer lending license will need to provide the list of promoters and the source of funds for the minimum capital requirement of Rs20mn, the regulator said.

RBI further clarified that electronic platforms that assist only banks, non-banking financial companies and other regulated financial institutions to identify borrowers for lending will not be classified as peer-to-peer lending platforms. Only electronic platforms that also cater to retail lenders can register separately as such platforms, the central bank said.

The future of online financial advice and mutual funds (hubbis), Rated: A

Kunal Bajaj points out India is a large country without sufficient financial advisors to serve the population’s needs. With most people simply finding a financial advisor close to their home or place of employment, financial advice in India is primarily limited by geography which is not an ideal situation. As an added problem, many people find that their advisor has persuaded them into choosing a product which did not meet their needs. “Clearfunds eliminates this issue by delivering a bespoke solution for each customer which uses our internet platform.” Bajaj explains.

Traditional financial advisors try to channel every client into one of 21 possible portfolios (0-100 Debt-Equity or 100-0 Equity-Debt, in five-percent steps) or outcomes, often through first impressions or physical factors. With an online financial advisor, this is not possible, and therefore more work is put into finding out more about the person themselves and their individual requirements by asking periodic psychometric questions about the stability of their employment and income stream.

Bajaj has seen Clearfunds go from strength to strength in the 12 months since the platform has been online. “We have customers across 400 cities and around $10 million in assets under management.” He says. “Betterment and WealthFront took over a year to gather their first $10 million in the USA but now they both have billions in assets. Nutmeg has been in business for 7 years and has around 40,000 accounts and a billion dollars of assets under management.”

APAC

Indonesia P2P Startup Modalku Milestone: Hits $ 74 Million in Total Crowdfunded MSME Loans (Crowdfund Insider), Rated: AAA

Modalku, an Indonesia-based peer-to-peer lending fintech startup, successfully surpassed $74 million (Rp 1 trillion) in total crowdfunded MSME loans.

Canada

Mike Novogratz is planning a crypto version of Goldman Sachs (Business Insider), Rated: A

In a statement out Tuesday, Novogratz said he is looking to raise $200 million for Galaxy Digital LP, a “best-in-class, full service, institutional quality merchant banking business” for the crypto market. Novogratz also plans to list the company on TSX Venture Exchange, a Canada-based exchange for small cap companies.

The new bank will be born out of Canadian-based First Coin Capital, which Novogratz plans to buy and then merge with Bradmer Pharmaceuticals. Its main businesses will include trading, advisory services, asset management, and private equity-like investing.

Authors:

George Popescu
Allen Taylor

Thursday August 24 2017, Daily News Digest

corporate bond credit spreads

News Comments Today’s main news: Walmart getting closer to a deal with Afffirm. AutoFi raises $10M. Zopa reports diminishing losses, rising revenues for 2016. Landbay closes 2.4M GBP round on Seedrs. USAmeriBank goes live on Finastra. Today’s main analysis: After shallow sell-off, corporate credit spreads stabilize. Today’s thought-provoking articles: A call for more considered critiques of P2P lending. What’s behind […]

corporate bond credit spreads

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

Walmart reportedly closes in on pilot deal to offer Affirm loans (Retail Dive), Rated: AAA

Walmart reportedly is closing in on an agreement with loan services startup Affirm for a pilot program under which Affirm would offer the retailer’s customers installment loans for purchases, sources familiar with the matter told The Wall Street Journal.The pilot could start as early as this fall.

Why are retailers so enamored with Affirm? Giving customers the option to take out an installment loan to finance a purchase gives customers more choices, making it more likely that they actually will make the purchase. Millenials and other younger demographioc consumers are often loathe to carry mountains of personal debt that way previous generations have.

However, it also has to do with the inflexible and sometimes excessive terms of store credit cards, which generally charge higher interest rates than the lowest portion of Affirm’s rate range. Still interest revenue and late fees from store cred cards contribute a significant amount of money to retailers’ bottom lines, making it difficult for them to commit to giving their customers more financing choices.

Overall though, retailers, banks and credit card companies are all starting to understand that at a time of massive change in how and where people shop, they need to make it easier for shoppers to close the deal. Mastercard may recognize this as well as Walmart does. The card network aligned with Verifone late last year to begin offering instant installment financing at the point of sale.

You can now buy 0 pants with a subprime loan (The Outline), Rated: A

Affirm may be a relatively new company, but the service it offers isn’t particularly innovative: It’s taking the concept of layaway, a type of no-interest payment plan that became popular during the Great Depression that lets you pay for things in fixed installments and take them home once you’ve paid for it in full, and twisting it for millennials.  Unlike layaway, Affirm delivers your purchases instantly — but the cost of instant gratification is interest rates as high as 30 percent.  The service is basically a cross between credit cards and layaway, combining the worst aspects of both.

Once your Affirm loan is approved, you can choose to pay it off in 3, 6, or 12 months, and interest rates range from 10 to 30 percent. The average customer takes out a $750 loan with a 21-percent interest rate and pays it back in nine months. Compared to credit cards, which have an average APR of 17 percent, and personal loans that typically have interest rates ranging from 5 to 36 percent, Affirm isn’t a particularly good deal.


Wal-Mart Stores To Exacerbate Synchrony Financial Woes With Affirm Deal (Baystreet), Rated: A

Affirm and Walmart have been in discussion about the possibility of teaming up since last year. Talks appear to have picked pace this year as the retailer continues to explore ways of giving customers access to a wide range of financing options to boost sales and shrug off competition posed by e-commerce platforms.

However, the move would also spell trouble for Synchrony Financial (NYSE:SYF) which is the retailer’s exclusive U.S card issuer.

The fact that Affirm offers loans could significantly reduce the number of people who apply for Synchrony credit cards.

After shallow sell-off, corporate credit spreads stabilize (Morningstar), Rated: AAA

Credit spreads in the corporate bond market stabilized last week after a brief sell-off the prior week pushed spreads higher. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 2 basis points to +113, and the average credit spread of the BankAmerica Merrill Lynch High Yield Master Index tightened 2 basis points to +398.

Earlier this month, British American Tobacco (BBB, stable) decided to issue $17.25 billion worth of bonds to fund its acquisition of Reynolds Tobacco. This transaction is the second-largest corporate bond deal Page 3 of 22 Morningstar Corporate Credit Research Highlights | 21 August 2017 | See Important Disclosures at the end of this report. Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 issued this year, surpassed only by AT&T’s (BBB/UR-) $22.5 billion transaction, which itself was the third-largest corporate bond deal in history. The proceeds from the AT&T transaction will be used as the final installment for the permanent financing of its pending acquisition of Time Warner (rating: BBB+/UR-). In addition, McCormick & Co. (A+/UR-) had issued $2.5 billion of new bonds two weeks ago to finance its acquisition of Reckitt Benckiser’s food division.

Through the week ended Wednesday, Aug. 16, investors pulled $2.3 billion of assets out of the highyield market. Among the open-end funds, investors withdrew $1.0 billion of funds, and across the highyield exchange-traded funds, there was $1.3 billion of net units redeemed.

AutoFi Raises $ 10 Million Series A To Make It Easier To Get A Car Loan (Forbes), Rated: AAA

AutoFi has raised $10 million in its quest to make it easier to take out a car loan.

The San Francisco-based financial technology company said on Thursday it has completed a Series A funding round, with investors including Crosslink Capital, Ford Motor Credit Company and Lerer Hippeau Ventures.

AutoFi makes a white-label technology platform that allows car dealers to offer faster, online financing to customers. It recently partnered with Ford Motor Credit and is in the midst of launching at select Ford and Lincoln dealerships.

How TD Ameritrade tackles security in Facebook Messenger chatbot (Financial-Planning), Rated: A

A common refrain in financial services these days is that companies need to go where customers are, not wait for people to come to a banking app or brokerage website.

TD Ameritrade is following that advice with a Facebook Messenger chatbot that will give customers instant updates on their portfolios and trades. The bot, unveiled Tuesday, will require the unit of Toronto-Dominion Bank to work through the privacy and security issues financial firms face whenever they communicate with customers via third-party platforms such as Messenger and Amazon’s Alexa.

The Future of Simple (Simple.com), Rated: A

Over the last few years, we have been focused on rebuilding Simple’s technology on our new partner bank, Compass. Our focus on infrastructure and supporting customer growth means we haven’t been fully invested in building new technology that helps people feel confident that they’re doing money right. We have not made good on our promise to change an industry that is failing them.

We have been focused on growth instead of innovation. We have been acting like a bank instead of a technology company. And that changes today.

Today, we are recommitting to being a technology company that is completely focused on product. We are re-designing our team so that everything we do is in support of this focus. We will be ruthlessly dedicated to identifying customer problems and building products that solve them.

SuperMoney’s Auto Loan Offer Engine Will Change the Way You Buy A Car (Supermoney), Rated: A

After debuting its personal loan offer engine at Finovate in April 2017, SuperMoney today unveiled an automotive focused loan offer engine where its lending partners compete in real-time with customized auto loan offers.

The new auto loan offer engine allows borrowers to submit a single, easy, online application and receive multiple auto loan offers back. The tool makes apples to apples comparisons easy when shopping for the best auto financing rates, fees, and terms.

Only 31.6% of car buyers negotiate the interest rate on their loan

A recent survey by the Federal Reserve reported that 76.1% of car buyers negotiated the purchase price with the seller, but only 31.6% negotiated the interest rate on their loan. It gets worse. 27.1% of car buyers considered the monthly payment on their auto loan as the most important factor, but only 6.1% considered the interest rate on the loan as the most important factor (source).

 

 

Lending as a service (LaaS) and why it matters (CIO), Rated: A

Banks today are turning away more loan applicants than in recent memory thanks to stricter regulations and lingering memories of the recent financial crisis. Younger entrepreneurs who have little or no credit history often find themselves rejected from these financing options.

Even when they are accepted, the loan process can be arduous and needlessly complicated, taking longer than business owners can afford. Applications take several visits to the bank, credit checks, records requests and weeks’ worth of back-and-forth communications just to reach the underwriting phase.

The major catalyst for this new lending paradigm has been the rapid pace of online technology innovation over the last decade. Improvements in cloud infrastructure and artificial intelligence systems enable fintech companies to create reliable evaluation and matching systems for loans. Companies can now examine a potential borrower’s financial records in minutes instead of weeks. Thanks to this compressed timeline, approval can now happen in as little as one day.

Instead of multiple meetings with bank lenders over the course of many weeks to compare options, users can often be approved in under a day by a reputable LaaS company.

LaaS platforms such as Ezbob promise to approve a business loan for companies and deliver funds in under thirty minutes. The company’s algorithm examines more than credit scores, evaluating company financials and records to quickly distribute capital to those that require it most.

New Report on Fintech from the World Economic Forum (Lend Academy), Rated: A

Today, the World Economic Forum released a report titled, Beyond Fintech: A Pragmatic Assessment Of Disruptive Potential In Financial Services, that was the result of those and many other discussions they had with leaders from around the world. The report aims to answer the question about whether fintech companies will really change the financial landscape.

Below are some of the key findings from the report:

  • Fintech start-ups have so far fallen short of their ambitions to upend the competitive landscape in finance, driving innovation but struggling to capture market share in mature markets.
  • What fintechs have done is define the direction and speed of innovation across most areas of financial services; they have also set new and higher bars for user experience.
  • Large technology firms like Amazon and Google may represent the largest competitive threat to financial institutions, as their AI and cloud computing services become more central to the sector, and customer data rises in importance.
  • Models of financial services innovation around the world are diverging, benefitting local firms and making it harder to co-ordinate a regulatory response.

Douugh Rises to Challenge with AI-Powered Banking (Paybefore), Rated: A

Banking challenger Douugh has unveiled its artificial intelligence (AI)-powered financial platform, guided by “Sophie”—a 24/7 personal assistant for finances, reports Paybefore sister publication Banking Technology.

Douugh plans to use Sophie to help consumers make better financial decisions by:

  • Connecting a user’s existing bank accounts and credit cards, Sophie will collate, organize and inform on spending habits all in one place;
  • Using Sophie as their own personal banker to perform transactional tasks—such as paying and splitting bills, requesting money, saving, tracking and management of spending and savings goals;
  • Integrating with Alexa and Siri for voice activation.

Rebundling financial services is aspiration of startup Douugh (American Banker), Rated: A

“You are 0% of the way to your retirement goal! You have plenty of time, keep up the good work.”

This message I recently received from the Wela app reminded me to kick my retirement saving efforts into gear. It’s an example of the kind of personalized financial advice many banks and fintechs are trying to provide right now, often with artificial intelligence engines analyzing customers’ account data, predicting future trends and making recommendations.

Based in San Francisco, Douugh strives to use artificial intelligence to help the 25-to-35-year-old set reduce their credit card and student loan debt and make better spending and saving decisions.

Ripple- Just As Good If Not Better (Investing.com), Rated: A

If you could buy a wristwatch that is the same quality as a Rolex or a Cartier for $350, would you wear it?

A company called Filippo Loreti aims to deliver just that. The level of support that the young company is receiving from alternative investors is truly inspiring.

Thanks to the power of the Internet this watchmaker has already raised $6 million in two rounds of funding making it one of the most successful crowdfunding projects in history.

Smart Solutions for Smart Cities (JD Supra), Rated: B

Property “consumers” will be able to compare real-time information on a wide range of variables affecting property assets – for example, energy efficiency, connectivity and traffic noise.  Banks will no longer be the only source of funds, with fast availability of internet peer-to-peer lending speeding up the time taken to put a deal together.

Blockchain or distributed ledger technology raises a number of opportunities in this field, from mortgage valuations, to rental and service charge payment systems. Smart contracts will replace the traditional approach to conveyancing – the main incentives being that the technology will expedite the process, reduce fraud and offer total transparency.

SCORE: Dos and don’ts for crowdfunding small businesses (PostBulletin), Rated: B

To help make a rewards-based crowdfunding effort successful, Dargie offers these dos and don’ts:

Do:

  • Understand the differences between rewards-based crowdfunding, equity crowdfunding and peer-to-peer lending.
  • Pick the right platform for your rewards-based campaign.
  • Follow through on your promises. Watchdog groups and state and federal consumer protection bureaus have begun to shift their attention to deceptive crowdfunding campaigns.

Don’t:

  • Fail to manage the expectations of your campaign’s backers.
  • Launch a campaign without the liability protection of a properly formed business entity.
  • Forget about taxes.

“When We Decided to Sell the Company, it Became Apparent that RealtyShares Was the Right Choice” (Crowdfund Insider), Rated: B

Last month, Real estate crowdfunding platform RealtyShares announced it acquired technology-first, marketplace platform Acquire Real Estate.

Now, less than 30-days later, Director of Business Development at RealtyShares and former CEO of Acquire, Josh Klimkiewicz, is sharing more details about the acquisition.

“The mission doesn’t end here. I will join the RealtyShares team as the director of commercial business development to lead that channel as RealtyShares continues to scale. In my new role, I will concentrate on building long-term relationships between RealtyShares and real estate owners across the country.”

Wealth Management vs. Financial Advice: They’re Not the Same (Kiplinger), Rated: B

Wealth management is one of the terms that is most overused, and it’s often misunderstood. But it’s actually pretty straightforward. Wealth management takes things up a notch, with an adviser or advisory team providing a full range of services for the client in three distinct ways.

  1. Investment consulting
  2. Advanced planning
    • Wealth enhancement: This is the use of strategies to deal with cash-flow issues and liquidity concerns, mitigate taxes and maximize growth.
    • Wealth transfer: Advisers look for the most efficient ways to pass your wealth on to your heirs in a way that lets your beneficiaries keep most or all of the money.
    • Wealth protection: For those who are subject to a lot of liabilities, there are strategies that can help protect hard-earned savings and avoid any blind spots.
    • Charitable giving: With proper planning, donating to a charity or charities can be a win-win, maximizing support for a favorite cause while making the most of certain tax advantages.
  3. Relationship management

How to Win an Argument (Mental Floss), Rated: B

To persuasively drive your point home, follow the tips below, provided by online lender CashNetUSA’s SavingSpot blog and spotted by Entrepreneur.

United Kingdom

Zopa Reports Diminishing Loss as Revenues Rise for 2016 (Crowdfund Insider), Rated: AAA

Zopa, the first peer to peer lender to set up shop in the UK, has filed its annual accounts for 2016, and according to their numbers business is looking better.

Top line revenue improved by 61% jumping to £33.2 million for 2016. The operating loss stood at £5.9 million for the year, an improvement over the £8.9 million from year prior.

A call for more considered critiques of P2P lending (AltFi), Rated: AAA

Between RateSetter’s wholesale lending saga and subsequent withdrawal from the Peer-to-Peer Finance Association, Zopa’s heightened loss expectations, and Funding Circlesignalling an end to manual investment, industry detractors are hardly short of fuel for their fires.

And yet we continue to endure spurious headlines that seem to be born of a broad desire to bash P2P, on the basis of seemingly anything.

Anyway. The latest episode of this kind comes courtesy of The Financial Times, which reported on Monday that peer-to-peer lending websites are “struggling to attract UK customers who want to borrow money”.

Source: AltFi

Landbay Closes £2.4M Crowdfunding Round on Seedrs (Finsmes), Rated: AAA

Landbay, a London, UK-based buy-to-let mortgage lender, has closed a £2.4m crowdfunding round.

The funds were raised via Seedrs.

The company, which has raised approx. £7m to date via the crowdfunding platform, intends to use the funds to continue to expand operations and launch new products.

IFAs still most influential source of financial advice (P2P Finance News), Rated: A

INDEPENDENT financial advisers (IFAs) are the most trusted source of external investment advice, but investors are still more likely to trust their own judgement, new research claims.

A survey by property finance firm Minerva Lending found that almost three quarters (72 per cent) of active investors prefer to take the advice of an IFA. However, the vast majority of active investors (77 per cent) said that they would rather trust their own judgement. Three in five (60 per cent) said that they would be more likely to trust word of mouth.

The survey also found that investors still prefer traditional investment advice over newer fintech solutions. Only 12 per cent of the investors surveyed said that they would trust a robo-adviser to offer financial guidance, and just 22 per cent would trust a standalone piece of software.

Should more banks form partnerships with alternative lenders? (Bridging and Commercial), Rated: A

More banks should be forming partnerships with alternative lenders, one business finance provider has stated.

In the bank referral scheme, the UK’s biggest banks pass on the details of SMEs that have been turned down for loans to three SME finance platforms, which then share their details with alternative finance providers.

Almost £4m of funding was accessed by 230 SMEs under the matchmaking scheme.

Chirag Shah, CEO of Nucleus Commercial Finance, felt there were clear benefits to the collaboration between banks and alternative lenders, but also urged for transparency.

Debunking the peer-to-peer lending myths (City A.M.), Rated: A

So let’s look at some of the common arguments raised and try to filter out the fact from the fiction.

P2P will suffer in an economic downturn

Yet the oldest UK platform Zopa – which launched in 2005 – managed to survive during the financial collapse of 2008.

Admittedly the default rates jumped to 4.2 per cent from 0.4 per cent the year before, but figures from Zopa show that investors were still able to earn a four per cent annual return during the financial crash, compared to six per cent in 2007.

P2P platform Landbay commissioned an independent report in 2015 to find out how it would perform in poor economic conditions.

While the loss rate on Landbay’s loans is 0.03 per cent in normal economic conditions, the loss rate was estimated to hit 0.48 per cent if times got tough – that is, if GDP was down 3.5 per cent, unemployment rose to nine per cent, and UK house prices fell by 20 per cent. So even if the economy shrinks, investors would not have lost money.

An interest rate rise will kill the P2P industry

But Lucy Bott, head of customer operations at RateSetter, points out that interest rates on P2P platforms are not set by the banks, but by the supply of and demand for money.

P2P is for young people

He points to a report from Nesta, which found that more than half of P2P lending investors are aged 55 and over, while a third of lenders are aged 35 to 54, and just 12 per cent of investors are under 35.

P2P Lending Sites Not Quite Wooing UK Customers (PYMNTS), Rated: A

Among 1,100 British consumers polled by consultancy firm EY, only 7 percent indicated they had used such a service to borrow money this year. A separate poll of 1,050 Brits by Blumberg Capital revealed just 4 percent of them had utilized alternative lending platforms over the previous year, according to the Financial Times.

Where FinTech firms worldwide attracted $20 billion in investments over the first half of 2016, that number dropped to just $12 billion during the first six months of 2017.

The lower funding amounts could be attributed to banks having joined the peer-to-peer lending landscape, creating their own technologies or joining forces with startups to stay current, thus broadening the competitive field.

China

Fintech in China: What’s Behind the Boom? (Brink News), Rated: AAA

The country makes some of the world’s largest investments in the sector, and it has adopted fintech technologies faster than anywhere else. Companies such as Alipay, Lufax and ZhongAn Insurance have made their names across the globe by using fintech to develop some of the most disruptive business models. These players have enjoyed the fruits of fintech’s unprecedented growth by filling the gaps in China’s structurally imbalanced financial system in an open regulatory environment.

We believe the development of fintech in China has reached an inflection point. From this point, technology will be the key driver of value-chain disruption in an increasingly data-driven industry.

For example, it took four years for peer-to-peer transaction volume to exceed $5 billion in the U.S., while it took only two years in China. Lufax, a Chinese peer-to-peer lending platform founded in 2011, reached an annual loan origination amount of 9 billion yuan in just two years, compared to five years for Lending Club, the biggest peer-to-peer lending company in the U.S.

A global block chain summit was spot inspected, caused shock on ICO market (Xing Ping She), Rated: A

Recently, the Market Supervision Bureau of Shanghai Pudong New District has raided a global block chain summit that is suspected of false propaganda. According to the investigation, 35 companies set up booth to promote technology and financial products on the spot, and nearly 2,000 people attended the summit. The organizer is a Shanghai-based software technology company. The company referred to “bitcoin” technology and has developed a digital cryptocurrency ETP (entropy) on its own, which was traded on its platform.

On the spot, Law enforcement officials ordered the meeting to be halted immediately and interviewed with the parties involved. And in the same day, this news triggered a nearly 200% shock in the value of related tokens on some trading platforms, reflecting the growing risk of the ICO market. Now the company is still under investigation for alleged violations.

European Union

Klarna co-founder seeks to spur European tech giving (Financial Times), Rated: AAA

In the US, technology magnates from Microsoft’s Bill Gates to Facebook’s Mark Zuckerberg have started a long line of high-profile, high-minded initiatives often aimed at combating disease and helping the poor.

But in Europe, where many of the unicorns — start-ups valued at more than $1bn — are of a more recent vintage, many founders are still thinking of how to make money rather than spend it.

Two years ago, Mr Adalberth had become bored with what he describes as “the constant chasing of the next goal or achievement” at Klarna. So he stepped aside from the group and its relentless attempt to conquer the digital payment world by becoming a bank and attracting Visa in as an investor.

Instead, Mr Adalberth became one of the first of the recent crop of European tech founders to think about giving away money. The result is Norrsken Foundation, which has a triple-pronged approach aimed at encouraging social entrepreneurship. His venture is risky but is likely to be closely watched by the growing ranks of multi-millionaire European founders to see if it can provide some kind of blueprint. “There is a trend in the US to give something back. This trend has come to Sweden and maybe Europe as well,” he says.

Rabobank constructs physical model to understand IT architecture (Finextra), Rated: A

Rabobank has built a 3D model of its own organisation and supporting IT systems to help visualise improvements that can be made as it embarks on its digital transformation programme.

As a banking co-operative operating at both local and regional levels, the Dutch bank runs a complex network of independent IT platforms often performing the same functions depending on local practices.

International

USAmeriBank live on Finastra hosted payments hub (Finextra), Rated: AAA

USAmeriBank selected Finastra’s hosted solution in order to have the flexibility to quickly add new payments rails and services, future-proofing its technology investment, while improving customer service and increasing straight-through processing.

In addition to quick time-to-market and ease of implementation, another benefit of using a hosted solution is a reduction of maintenance effort and total cost of ownership, as the technology and business services are maintained by Finastra.

In the coming months, the bank plans to add US ACH, and eventually real-time payments components, completing the bank’s journey to a fully-outsourced payment processing model.

AI Is the New UI – Exclusive Interview With Jake Tyler, CEO of Finn.AI (Let’s Talk Payments), Rated: A

 

LTP: Give us a high-level paragraph pitch for your company.

JT: The Finn Virtual Banking Assistant is a personal banking and financial management assistant, powered by artificial intelligence.

Finn delivers a personal banker within a customer’s favorite channels, including Facebook Messenger, Amazon Alexa, Google Assistant, SMS, iOS and Android apps, and web chat. We believe that AI is the new UI.

LTP: In a sentence or two, what specific problems are you solving today?

JT: We help banks connect with customers where they already are (in major instant messaging and voice platforms), adapt to a new paradigm of consumer expectations set by Apple, Amazon, Google and Facebook where deep personalization and simple conversational interfaces are the norm, and reduce costs by augmenting human customer care agents with AI.

LTP: What are the biggest challenges you face when building with AI and ML, being nascent technologies? How have you overcome, or are you overcoming, those challenges?

JT: The biggest challenge is data, both quantity and quality. We address this by going deep in one core vertical – banking. We have a large, pre-existing data model in this domain that grows daily as consumers use our assistant. As new banks adopt Finn they are able to leverage this data model to deploy a high-quality assistant with proven features much faster than they would otherwise be able to do.

India

RBI to harmonise NBFC regulations (India Times), Rated: AAA

There is scope for harmonisation of regulations covering non-banking financial companies (NBFCs) and the Reserve Bank is moving in that direction, Deputy Governor N S Vishwanathan said today.

He also said there is a need to create some new types of NBFCs to cater to the needs of the growing economy.

Guernsey consultation to update regs governing ‘non-regulated’ financial businesses (International Investment), Rated: A

The 103-page Lending, Credit & Finance Consultation Paper  is aimed jointly at enabling Guernsey to accommodate the growing number of “innovative, often digitally-enabled, financial services which don’t neatly fit into the boxes marked banking, insurance, investment or fiduciary covered by current laws”, as well as to better protect Guernsey consumers and investors, “particularly those who are less financially able, from unscrupulous lending practises”, the GFSC says, in a summary of the LC&FCP‘s contents.

The proposed legislation would replace this existing NRFSB Law.

To read and download the consultation paper, click here.

Asia

He also said there is a need to create some new types of NBFCs to cater to the needs of the growing economy.

Read more at:

The future of banking in Southeast Asia is in Cryptocurrency (Hero Email), Rated: B

There are an estimated two (2) billion people in the world who remain unbanked and underbanked. That’s roughly a quarter of the entire planet’s population who have little to no direct access to financial services most commonly found in banks and formal lending institutions.

In Southeast Asia, approximately only twenty-seven (27%) of the entire region are financially included, leaving the rest with little to no defense in times of economic crises.

Hero will build a blockchain-based credit algorithm and lending platform. Hero will be launching its own cryptocurrency coin called Hero Token through an upcoming token sale.

The majority of populations who suffer from financial exclusion live in emerging countries such as the Philippines, Indonesia and their neighbors in Southeast Asia. A notable fact about this region [SEA] is that it is the fastest growing Internet region in the world and is also the fourth largest.

Backed by an award winning group of experts, the organization started operating in the Philippines in 2015 as PawnHero, offering collateralized loans using an online platform, and since then has been helping thousands of Filipinos obtain access to affordable credit.

There will also be a ‘pre-sale’ wherein people can buy tokens prior to the actual token sale and get bonuses. During the pre-sale, Hero will offer 80% of all tokens to be created for purchase by the public in the Hero Initial Coin Offering under the ticker symbol Hero. The remaining 20% of all Hero tokens will be distributed to early believers, advisors and founders.

To participate in the Hero token sale people can send the following currencies – Ethereum (ETH), ETH Classic, BitCoin (BTC), Ripple, LiteCoin, and Waves from a wallet they directly control to the Hero wallet. Aside from these, extra tokens will be offered to those who commit early. Bounties are provided when the crowdsale ends. All payments received for Hero tokens in connection with this token sale will be held in escrow in a multi-signature address, with a multi-key structure.

For more information go to .

Authors:

George Popescu
Allen Taylor

The Future of Financing and Vehicle Purchases

The Future of Financing and Vehicle Purchases

One question LendIt attendees got answered for them this year is, “What is the future of financing and purchasing vehicles?” The auto lending industry is one that is in serious transition as we speak. A panelist of insiders discussed the question on the table and here are the highlights. How Cars are Researched and Bought […]

The Future of Financing and Vehicle Purchases

One question LendIt attendees got answered for them this year is, “What is the future of financing and purchasing vehicles?” The auto lending industry is one that is in serious transition as we speak. A panelist of insiders discussed the question on the table and here are the highlights.

How Cars are Researched and Bought Today

Brad Rogers, chief operating officer of RouteOne, LLC made the observation that “the way cars are researched today is not the same as it was five years ago.” Anyone who has purchased a vehicle in the last couple of years can vouch for that. RouteOne provides online application and financing solutions for auto dealers. They process 50 million credit applications annually, which is why Rogers can say that customers want more information up front.

AutoFi President and Co-Founder Jonathan Palan said the innovation process for auto financing is driven by players outside of the industry.

He could mean technology companies like AutoGravity, a company that connects auto dealers and financing options with consumers ready to buy through a mobile app. Serge Vartanov is the company’s chief marketing officer and co-founder. Based on how users interact with AutoGravity’s mobile app, he’s narrowed car buyers into two segments.

“Some car buyers are less brand loyal and more emotional,” he said. “They like to compare vehicles and dealerships then get out of the transaction quickly. The other segment is more brand loyal.” The brand-loyal segment will move from one BMW, or their favorite vehicle brand, to the next while other buyers will purchase a car from the same dealer three or four years in a row. “They still want a fantastic digital customer experience.”

Sam Ellis, co-founder and CEO of DriveUp, said it’s very important to be transparent with consumers and, of course, not to violate consumer finance laws. DriverUp is a web portal that connects dealers and financiers with car buyers through a search feature online.

Blinker is another mobile app that allows consumers to buy and sell vehicles seamlessly. Rather than a focus on dealerships, Blinker connects individual sellers with individual buyers. Danny Martinez, the company’s president, said, “Used cars are sold primarily through dealerships, but a third are sold privately. With the advent of technology, consumers can sell cars without dealerships and buyers are able to transact digitally.”

Martinez sees Blinker as a “thinner” intermediary than an auto dealer. Sellers can get a better value by selling their car to an individual than they’ll ever get on a trade-in. Meanwhile, buyers can get a better car at a better price.

Palan said the average time car buyers spend in an auto dealer is 3.1 hours. “Anything you can do reduce that is good,” he said.

The customer wants to see what they want digitally, but they also want to hop offline and talk to somebody without having information repeated,” Martinez said.

Since titling is different from state to state, Martinez said handling that transaction digitally is a huge challenge for the industry to overcome.

Will Lenders Offer Separate Direct, Indirect Buying Channels?

Moderaor Craig Schleicher of PwC asked the panel if lenders will ever offer separate channels for direct and indirect buying processes.

Palan said the direct channel can be misleading. “The car buyer can go to a website and get ‘flipped’, so there needs to be a standard platform that allows each lender to offer a loan.”

“The average consumer doesn’t know the difference between direct and indirect auto financing,” Vartanov said, “but every lender cares.” He also said consumers want financing approved and the vehicle ready before they enter the dealership, which is a feature built into AutoGravity. He loves the idea of car buyers searching for the vehicle they want while lying in bed and getting approved for a loan at the same time.

It’s pretty clear from the current slate of auto buying and financing technologies that the future of car buying, selling, and financing is here, but I’m convinced it will only get better. It’s time to make the consumer aware.

Tuesday January 24 2017, Daily News Digest

SMB loan borrower satisfaction

News Comments Today’s main news: Trigger breaches may magnify reputational risk for originators. LendingTree announces top customer-rated lenders for Q3 2016. Landbay, Octopus Choice receive HMRC ISA approval. Ppdai.com plans US IPO. Today’s main analysis: The state of online SMB lending. Is China’s FinTech sector just another knockoff? Today’s thought-provoking articles: Risk assets enter short-term […]

SMB loan borrower satisfaction

News Comments

United States

United Kingdom

European Union

Australia

China

News Summary

United States

Trigger Breaches May Magnify Reputational Risk for Originators (PeerIQ Email), Rated: AAA

Triggers are a structural feature that provide senior bondholders with protection against a reduction in credit support. Triggers applying pre-defined tests (e.g., minimum excess spread, cumulative loss levels, delinquency rates, violations of reps & warranties, etc.) and may re-direct cashflows to senior noteholders if one or more tests are violated.

A trigger breach may force originators/sponsors to divert capital to repay noteholders rather than re-invest precious capital into revenue-generating origination activities. Such a “double whammy” is associated with headline risk, which can leader to reputation damage, and negatively impact future financing activities, either in a warehouse facility setting or during ABS transactions.

Trigger breaches are a manifestation of unexpected credit performance, poor credit modeling, or unguarded structuring practice.

The average time to breach performance triggers for consumer MPL ABS deals was approximately 11 months as collateral losses ramped up within the deal.

The negative headlines associated with trigger breaches increases the cost of capital for originators, and reduces the availability of funding.

If an early amortization trigger is violated, excess spread (e.g., collateral cashflows less financing costs payable to noteholders) are diverted from equity investors to senior noteholders with the goal de-risking the senior noteholders as quickly as possible. Therefore, although senior noteholders may be structurally insulated from first loss-risk, senior noteholders are nevertheless exposed to high levels of prepayment and reinvestment risk.

From the equity investor’s perspective, tighter triggers allow higher potential equity returns in the absence of any collateral losses. However, if losses exceed the available cushion before the triggers are breached, cashflows to the equity investors will be cut off faster and cause a reduction in the expected equity returns.

Conversely, less restrictive triggers allow more cushion for losses before the coverage tests are breached.

Cumulative Net Loss (CNL) Rate Trigger Example: This prevalent trigger can be defined in a number of ways as issuers and originators work together in the deal structuring phase. Exhibit 2 illustrates a contrived trigger threshold profile. The trigger breach level is defined and increases with respect to the deal age. A trigger event occurs if the realized cumulative net loss rate exceeds the trigger threshold of the collateral.

The state of online SMB lending in 4 charts (Tradestreaming), Rated: AAA

It’s no wonder that SMBs aren’t optimistic about their futures. The median SMB holds 27 buffer days of cash in reserve, according to the JPMorgan Chase and Co. Institute. And when they look to access small working capital loans to improve their cash flows, they aren’t finding a lot of lenders willing to work with them.

It’s not like the average SMB has a major appetite for cash, either. 76 percent of loans that SMBs apply for are less than $250,000 and amost half of them are under $50,000, according to a paper co-written by authors at the Harvard Business School and business loan marketplace, Fundera.

As more SMBs turn to online lenders, they’re not always coming back happy. That’s mostly due to the high costs of some of these early loans.

Approximately one-in-six small businesses considering a loan will apply to an online lender this year. But because there’s a lack of data collection on overall loan originations in the U.S., it’s tough to accurately size the effect of new entrants in the SMB lending space.

LendingTree Announces Top Customer-Rated Lenders for Q3 2016 (Yahoo! Finance), Rated: AAA

LendingTree®, a leading online loan marketplace, released today its quarterly list of the top customer-rated network lenders for the third quarter of 2016. Winners were based on a five-star quality review system for overall customer experience as determined by actual LendingTree users. The list features the top lenders in LendingTree’s core financial marketplace categories: Home Lending, Personal Loans, Auto Loans, and Business Loans.

The top lenders of Q3 2016 by rank are:

Home Lending Category

1.    Veterans United Home Loans
2.    Triumph Lending
3.    Royal United Mortgage
4.    HomePlus Mortgage
5.    Wyndham Capital Mortgage
6.    North American Savings Bank
7.    Pulaski Bank Home Lending
8.    AmeriSave Mortgage Corporation
9.    ConsumerDirect Mortgage, A Division of FirstBank
10.  Insight Loans (tie)
10.  Seckel Capital, LLC (tie)

Personal Loans Category

1.    Lending Club
2.    OppLoans
3.    First Midwest Bank

Auto Loans Category

1.    rateGenius
2.    up2drive – a division of BMW of North America
3.    iLendingDIRECT

Business Loans Category

1.    Credibly
2.    RapidAdvance

Risk Assets Enter a Short-Term Holding Pattern (Morningstar Email), Rated: A

Between the uncertainty driven by the change in the administration and the arrival of fourth-quarter earnings season, risk assets entered into a short-term holding pattern last week. The average corporate credit spread of the Morningstar Corporate Bond Index, our proxy for the investment-grade bond market, was unchanged at +127 last week. In the high-yield market, the credit spread of the Bank of America Merrill Lynch High Yield Master Index was also unchanged at +402. In the equity markets, the S&P 500 was essentially unchanged for the week, declining 0.10%. Price action in the commodity markets was mixed, but overall price changes were modest.

A significant portion of investors’ caution toward the corporate bond market is the acknowledgment that corporate credit spreads are trading at very tight levels compared with recent and historical averages. The current level is the tightest that credit spreads have registered since late 2014 and significantly tighter than long-term averages. The average spread of the Morningstar Corporate Bond Index is 41 basis points tighter than the long-term average of +168 since the end of 1998. The average spread of the Bank of America Merrill Lynch High Yield Master Index is currently 178 basis points tighter than its longterm average of +580 basis points since the end of 1996.

In addition to the volatility that earnings can generate, with the change in the administration, many investors are treading cautiously in the market until there is greater clarity regarding the policies that President Donald Trump will pursue in the near term. As such, defensive issuers generally traded better last week, although there did not appear to be a significant sector rotation toward a defensive portfolio posture.

Diversification Strategies for Investors of P2P Lending (Equities.com), Rated: A

Peer-to-peer lending is gaining a momentum among investors. P2P loans have less volatility, a low correlation, and yield much higher returns compared to other fixed-yield investments. Median adjusted returns average 7% on a 36-month loan.

And this is not an asset basket into which you put too many of your investment eggs.

The low minimum investment at these services makes diversification easy. However, loan selection takes time, and speed is key to getting the best loans.

Although default rates are higher on grades D–G at Lending Club, and grades D–HR at Prosper, the ROI is higher too. Loan filtering can mean successful investing in these lower grades.

Beyond robo-compliance: How bots will soon permeate banking (American Banker), Rated: A

As banks become more comfortable with the relying on software robots to replicate the actions of a human interacting with machines to handle rote tasks, experts say they will be quick to deploy the technology companywide as a way to trim expenses and redirect employees to more crucial tasks.

This could include areas in finance departments that are heavily manual, such as accruals and managing and clearing payments. Human resources and administrative functions is also an area where robotics can be deployed.

Austria’s Raiffeisen Bank International AG is among the first to work with Accenture and Blue Prism to automate various business functions. Additionally, it is in the process of creating an in-house robotics center dedicated to experimenting with how the technology can be used in different functions at the bank.

The bank started out with four pilots implementing robotic process automation in tasks that had “low-to-medium complexity; rule-based processes with a logical order of steps, repetitive process patterns with clearly defined process options,” said Markus Stanek, head of group efficiency management at the bank.

With the center, Raiffeisen will experiment with how to implement robotics in in a whole host of banking functions.

FORD CREDIT, AUTOFI DEBUT PLATFORM FOR DIGITAL VEHICLE BUYING AND FINANCING (Ford), Rated: A

There’s a new way for customers to purchase or finance a new Ford vehicle in minutes – right from a dealership website from anywhere, on any device – through a new platform from Ford Motor Credit Company and financial technology company AutoFi.

In addition, Ford Credit has made an investment in AutoFi as Ford Credit continues pursuing technological advances to make the financing experience better.

The AutoFi platform can be used now at Ricart Ford in Groveport, Ohio, and will roll out over time to more Ford and Lincoln dealerships across the United States. The introduction comes as 83 percent of Americans say they would like to spend as little time at the dealership as possible when shopping for or buying a car, according to a new survey of more than 1,000 U.S. adults conducted online by Harris Poll on behalf of Ford Motor Company. Many of those same people, however, still want to touch and feel their new vehicle before signing on the dotted line. The new platform provides the best of both worlds.

Through the dealer website, customers have a transparent and seamless purchase and finance experience from anywhere on their mobile phone, tablet or computer. Once the online part of the transaction is complete, all customers need to do is sign the paperwork when they collect their new Ford.

Consumers may shop for a new Ford in the showroom or from anywhere via the Ricart Ford website. After selecting a vehicle, they can apply for credit and receive a decision, choose the financing terms that make sense for them, and then review and select optional vehicle protection products – completely online on their own time. Customers then can review a final summary of the financing terms and schedule time to complete the transaction and pick up the vehicle.

Why Banks and Alternative Lenders Will Play Ball in 2017 (deBanked), Rated: A

According to the Wall Street Journal last year, big banks have decreased the number of loans to small businesses by more than 38 percent since 2006.

But the recession helped pave way for another industry – alternative lending – which has significantly improved access to capital for small businesses. According to the Small Business Administration (SBA), the 2016 fiscal year was a record setting year for loans, with more than 70,000 approved that totaled $28.9 billion and supported nearly 694,000 jobs.

More and more headlines show that banks are shifting their strategies to keep up with America’s technology and alternative lending habits, making 2017 the year banks finally get back into the fray and play ball with alternative lenders to improve the lending process.

No longer content to be sidelined, banks are starting to play ball, and they will continue to do so at an even faster pace. The fact that banks are moving in now and increasing small business loans validates alternative lending.

Real Estate as an Alternative Investment for Non-Accredited Investors (Crowdfund Insider), Rated: A

So what are some of the options for both non-accredited, as well as accredited, investors today. Below we have highlighted several opportunities to invest in real estate assets online.

Today Fundrise has moved away from single property crowdfunding having trailblazed a new fund structure labeled the eREIT.  Using Title IV of the JOBS Act which updated old Reg to a more flexible security exemption called Reg A+, their eREITs have grown from one to now five (2 of them are sold out).

Small Change is on a mission to become the first real estate funding portal to utilize Reg CF. Created by Title III of the JOBS Act, Reg CF allows issuers the ability to raise up to $1 million online from both accredited and non-accredited investors.

Originally only for accredited investors, this changed when RealtyMogul.com created their MogulREIT (using Reg A+) to offer non-accredited investors the chance to join in on the real estate offers listed on their platform. Minimum investments used to be $2500 but have since been lowered to $1000 to facilitated a wider audience.

American Home Preservation or AHP purchases distressed mortgages at a discount. The platform reports the discount can be up to 50%. They then try to work out a sustainable solution for the home-owners in a win-win scenario.  The people keep their home and investors earn some income. AHP strives to pay a return 12% per year on invested capital in the fund (Reg A+). AHP not only has a unique approach to real estate investing but also has probably the lowest investment minimum at just $100.

2017 Americas Alternative Finance Industry Study (Crowdfund Insider), Rated: B

The Polsky Center and the Booth School of Business at the University of Chicago and the University of Cambridge Judge Business School are working together once again on their benchmark research on alternative finance.  The America’s study, first completed in 2016, will be reviewing sector growth in North, Central and South America.  Widely cited as the very best data available on the growth of Fintech, the study will quantify marketplace/peer to peer lending, crowdfunding and other forms of alternative finance.

While the research has been described as industry leading, there is a question as to how policymakers are using the data. Ziegler believes that regulators have recognized the value in academic and evidence based research that is unbiased.

Last year’s alternative finance report found that the Americas online alternative finance industry grew to $36.49 billion, a 212% annual increase from the $11.68 billion in 2014.

United Kingdom

Landbay and Octopus Choice Receive HMRC ISA Approval (Invezz), Rated: AAA

On Monday, the buy-to-let mortgage specialist Landbay announced that it had passed the 2nd step in regulatory proceedings allowing the P2P lender to offer IFISAs to its investors. Landbay was granted full FCA authorisation in December, making it a member of a niche, but growing, group of peer-to-peer platforms with full permissions – a necessity if a platform wishes to offer the IFISA. The P2P platform has facilitated over £42million worth of investments, in over 421 loans to UK property borrowers, since its inception.

Octopus Choice, a recent entrant into the UK P2P market (early 2016 launch), announced that it’s also been approved as an ISA manager by the Board of HM Revenue and Customs (HMRC).The product of Octopus Investments, the Choice platform has made waves in the P2P lending industry since inception, facilitating more than £45m worth of loans to asset-backed property borrowers, inside one year.

Goji Selected to Launch IFISA for Landbay, Downing, Peer Funding and UK Bond Network (Crowdfund Insider), Rated: A

Specialist provider of P2P and marketplace lending products and services, Goji, has announced that Landbay, bond investment platform UK Bond Network, crowd bond provider Downing, and SME-focused P2P platform Peer Funding have each selected their platform to offer the Innovative Finance ISA (IFISA). Goji said expectations were to launch the IFISAs before tax year deadline.

In an increasingly competitive crowdfunding market, Goji says that firms offering the new investment vehicle are finding themselves a step ahead of the competition as the IFISA quickly becomes an easy differentiator in the eyes of investors.

A peer-to-peer puzzle (Financial Times), Rated: A

Saving Stream is a “peer-to-peer” lending startup that provides “short-term bridging loans, secured against UK property” and is waiting to be fully authorised by the Financial Conduct Authority*.

Late last year, the P2P lender started to borrow money by issuing unsecured mini-bonds with three or five year fixed terms. The proceeds of the mini-bonds are used to fund the same loans that P2P investors snap up through its marketplace. But while P2P investors earn 12 per cent per year, mini-bond investors earn half that, six per cent.

But the question is still bothering us: why would anyone buy the bond? After all, passive management is meant to be cheaper, not more expensive.

A Whole Generation May Never Be Able To Retire From Work (Voice Online), Rated: A

Peer-to-peer lending platform Lending Works surveyed 1,500 non-retired adults in the UK (YouGov) and made some worrying discoveries.

Firstly, over 1 in 5 of those who aren’t yet retired – 22% – gloomily believe that they’ll never be financially secure enough to retire. This suggests they have visions of working until they drop, as they won’t be able to afford to stop earning money. This pessimistic view is highest in the 35-44 year old category, with 25% of them not seeing themselves as ever being financially secure enough to retire, although only 17% of 18-24 year olds, who technically have more time to start saving, agree. Countrywide, the outlook is bleakest in the West Midlands (27%), perhaps due to relatively high unemployment, compared to only 19% in London, where there are, theoretically, more jobs.

The main reason, of course, that we can’t see ourselves retiring is because we can’t afford to. Over a third of non-retired adults – 34% – don’t save a single penny towards retirement each month. Women are proving to be worse at saving than men, with 41% of non-retired females not saving towards retirement, compared to 26% of men.

Why investors are likely to see more robo-input from their financial adviser (Money Observer), Rated: A

The Treasury consultation highlighted that many people rely on digital services for information and guidance on key financial decisions and the new body will have a ‘well optimised’ website as well as telephone, webchat and face-to-face guidance.

We strongly believe that digital communications can help streamline the financial advice process and allow people to choose how they consume information, and are pleased to hear that the new guidance body will recognise this.

There is no question that there is a role for automated advice. To make advice more inclusive the industry needs to develop alternative distribution channels that potentially appeal to a new generation of customers.

In its current guise automated advice is perfectly positioned for those people who have simple investment needs, or who are not looking for a holistic financial review. It can offer a personal recommendation, which differentiates it from self-select or execution-only strategies.

European Union

ASOS partners with Klarna to launch pay after delivery in Nordics (Retail Times), Rated: A

Klarna’s pay after delivery allows retailers to bridge the gap between the online and offline shopping experience. When making a purchase on desktop or mobile, customers in the Nordics will now have the option to pay for their products up to 14 days after delivery – giving them the chance to try on their purchases before paying.

Australia

New Year’s gift for SMEs: Lending to small business in Australia looks set to improve (Australian Anthill), Rated: A

Until relatively recently, a bank rejection meant a business had to forsake growth, stretch its own payments or extend terms to the ATO. But more recently, business owners are being referred to a bank’s lending “partner” of choice, which typically charge interest rates of at least 20 per cent, and in some cases can even reach triple digits.

Luckily a new group of non-bank intermediaries is emerging to provide direct access to the extremely profitable asset classes that have long been solely the domain of banks. The combination of huge volumes of new data, virtually unlimited computing power, and omnipresent networks is enabling innovations like robo-advisers and marketplace lenders to provide lower cost, highly diversified investments for generating reliable, robust and lower capital risk returns.

Business owners and investors are beginning to take notice of the opportunity this represents. In 2014, there was $0 marketplace lending for business conducted in Australia, but according to Morgan Stanley, in 2015 the market reached $25million, and by 2020 it is forecast to grow to $11.4billion, representing 12 per cent of the total addressable market.

Marketplace lending addresses the concerns small business has with banks, and the needs for investors for stable fixed-income returns. Businesses can gain access to funding without the need for collateral, being subject to outdated models of risk, or enduring application processes spanning weeks. Sophisticated investors are empowered to take control of their own portfolios, choose the risks they are willing to take, and effectively “be the bank”.

China

Chinese Peer-to-peer lender Ppdai.com plans US IPO (South China Morning Post), Rated: AAA

Ppdai.com, one of the mainland’s largest online lending platforms, is reportedly planning to raise US$200 million in a US initial public offering (IPO) ahead of Beijing’s tightened regulation on the peer-to-peer (P2P) lending sector.

It would become the second mainland P2P firm to go public in the United States, following Yirendai.com’s US$75 million IPO in late 2015.

Is China’s FinTech Sector Just Another Knockoff? (TheStreet), Rated: AAA

The number of counterfeit products pumped out of China is unprecedented. Their total value adds up to $1.2 trillion, which accounts for 63.2% of the world’s total. Chinese make fake Gucci clothing and Cartier watches, open Apple stores that aren’t authorized retailers and have even duplicated global investment bank Goldman Sachs.

So whether China’s technology sector is another pirated import is a fair question. And the answer isn’t black and white.

Eight of the 27 fintech outliers in the world are located in China and are valued at more than $96 billion combined. The four largest outliers are Chinese. Antfinancial, which operates the payment affiliate of Chinese online retailer Alibaba, is the largest by a big margin. Meanwhile, the U.S. is home to 14 fintech outliers that are collectively worth $31 billion.

What’s Driving China’s Rise?

First, over the past few years, central banks have worked to develop digital finance in China by providing a supportive regulatory framework.

Surpassing the U.S. in 2013, China now makes up 47% of the world’s digital retail sales, and demographics suggest that share will continue to rise. The country has 721 million internet users (around 52% of the population). In comparison, 89% of the U.S. population uses the internet.

Third, a large segment of China’s population remains underserved by traditional banks.

Two Groups Are Accelerating the Process

As we can see below, 20% of Chinese adults do not have access to banking services. China has 8.1 commercial bank branches (and 55 ATMs) per 100,000 people. This is much less than the 28.2 branches (222 ATMs) in the U.S. and Canada, and the 28 branches (81 ATMs) in Europe.

Despite accounting for 60% of GDP and 80% of employment in urban areas, small and medium-sized enterprises (SMEs) get less than one-quarter of loans in China. In growing numbers they are seeking online finance solutions for their payments, credit, investments and insurance needs. Peer-to-peer lending networks make it possible for businesses to receive loans far faster than they could through a bank.

China’s fintech sector is particularly dependent on payment solutions. Currently, about 40% of China’s banking services customers use fintech platforms for domestic and international payments. Almost 58% of all internet users use fintech payment applications, meaning that 380 million Chinese people shop on the internet with their phones. Slightly less than 200 million people substitute their phones for a wallet for in-store payments.

China Rapid Finance Named a Finalist for LendIt “Innovator of the Year” Award (Yahoo! Finance), Rated: B

China Rapid Finance Limited (“CRF” or “the company”), China’s largest consumer lending marketplace in terms of number of loans facilitated, was named a finalist for “Innovator of the Year” honor at the first annual LendIt Industry Awards.

CRF is the only Chinese company nominated in this top category, which will honor the company that has demonstrated a strong culture of innovation, producing groundbreaking changes in the industry. CRF was selected as one of seven finalists, out of hundreds of applicants worldwide, by more than 30 industry experts who judged finalists representing innovation, emerging talent and top performers.

The company will compete for the honor at the LendIt Awards Ceremony on March 7, 2017, at the LendIt conference in New York City. LendIt is the world’s largest show in lending and fintech.

Authors:

George Popescu
Allen Taylor