Thursday February 14 2019, Weekly News Digest

OnDeck revenues

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

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

OnDeck revenues

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United Kingdom

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News Summary

United States

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

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

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

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

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

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

Source: Federal Reserve, PeerIQ

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LoanStreet’s new lending features include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LendIt Fintech USA 2019 (LendIt), Rated: B

April 8-9
Moscone West
San Francisco

HIGHLIGHTED KEYNOTES

Sallie Krawcheck
CEO & Co-Founder
Ellevest

Rob Frohwein
CEO & Co-Founder
Kabbage

Steven Streit
CEO
Green Dot

Mike Cagney
Co-Founder
Figure

United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Learn more about 4th Way here.

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

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

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

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

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

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

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

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

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

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

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

European Union

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

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

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

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

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

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

It issued new loans totaling €551 million last year.

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

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

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

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

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

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

International

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

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

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

As Bloomberg reported last year:

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

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

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

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

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

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

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

Australia

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

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

Zip Co. (ASX: Z1P)

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

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

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

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

India

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

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

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

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

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

Asia

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

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

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

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

Canada

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

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

Authors:

George Popescu
Allen Taylor

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

Thursday March 1 2018, Daily News Digest

JPMorgan

News Comments Today’s main news: RateSetter opens IFISA to new investors today. Amazon customers would bank with e-tailer. Zopa’s VC firm raises 500K GBP in 24 hours. Collateral goes off line. Auxmoney hits profitability. Credy raises $1.4M. Today’s main analysis: Is JPMorgan’s tech investment paying off? Today’s thought-provoking articles: Presenters at LendIt Fintech USA 2018. Klarna’s end-of-year report. Asia’s fintech investment drops. […]

JPMorgan

News Comments

United States

United Kingdom

European Union

International

Asia

Canada

News Summary

United States

Many Amazon customers would welcome banking services (RetailDive), Rated: AAA

  • More than half of 1,000 U.S. Amazon customers recently surveyed said they would be willing to use an Amazon-created virtual currency for purchases, according to a survey conducted by student loan marketplace LendEDU.
  • Among other findings, the survey (which questioned consumers, including some Amazon Prime members, that made purchases on Amazon within the previous 30 days) found that 44.5% said they would also keep their primary bank account with Amazon if the e-commerce giant offered such a service.
  • Furthermore, about half of respondents said they would seek personal loans from Amazon if they were available, and roughly 45% said they would use an auto loan offering from the company. Another 30% claimed they would be ready to take out an Amazon-created mortgage.

Broad Mix of Thought Leaders to Present at LendIt Fintech USA 2018 (Lend Academy), Rated: AAA

Lending

  • Jay Farner, CEO, Quicken Loans
  • Max Levchin, Co-Founder & CEO, Affirm
  • Anthony Noto, CEO, SoFi
  • Renaud Laplanche, CEO, Upgrade

Digital Banking

  • Yolande Piazza, CEO, Citi FinTech
  • Suresh Ramamurthi, Chairman & CTO, CBW Bank
  • Luvleen Sidhu President, Co-Founder & Chief Strategy Officer, BankMobile
  • Jeremy K. Balkin, Head of Innovation, HSBC Bank USA
  • Nicolas Kopp, U.S. CEO, N26 Inc.

Blockchain for Financial Services

For 2018 we looked at one of the biggest new trends in financial services, blockchain and decided to create an event within our event. We are debuting our new blockchain event Blockfin by LendIt.

  • Tim Draper Founder & Managing Director DFJ
  • Richard Craib, CEO, Numerai
  • Tom Ding, Co-founder & CEO, String Labs/Dfinity
  • Vincent Wang, Chief Innovation Officer, China Wanxiang Group
  • Kathleen Breitman, Co-Founder, Tezos
  • Catherine Wood, CEO/CIO, ARK INVEST

Will JPMorgan’s splashy tech investment pay off? (American Banker), Rated: AAA

“Retail distribution is like a muscle,” Chief Financial Officer Marianne Lake said in discussing the company’s recently announced plan to open 400 branches in up to 20 new markets. “You have to exercise it or it goes to waste.”

Nonetheless, the New York megabank raised eyebrows when it said it would invest an additional $1.4 billion in technology in 2018 — the driving factor in projections for noninterest expenses to rise 6% in the year ahead.

Fintech Platform Current Announces Strategic Investment from Fifth Third (Crowdfund Insider), Rated: A

Current, the fintech platform that allows teens to connect their money with the people, brands and experiences they value, announced on Tuesday that Fifth Third Capital, a direct equity investment subsidiary of Fifth Third Bancorp (NASDAQ: FITB), has joined the recently announced Series A funding, led by QED Investors.

Leasing App Honcker Plans Expansion With $ 23M Funding From IAC (Auto Finance News), Rated: A

Vehicle leasing startup Honcker secured $23 million in series A funding this week and is using the capital injection to expand nationwide and bring some added features to its app, founder and Chief Executive Nathan Hecht told Auto Finance News today.

InterActive Corp. (IAC) — the media investor behind Investopedia, Tinder, Vimeo, and many others — is making its foray into the vehicle marketplace with this funding round to take a minority stake in the company. Honcker partners with dealers and plugs into their existing lender network to provide an online leasing marketplace.

How Are Fintech And Proptech Changing The Real Estate Industry In 2018? (Forbes), Rated: A

2. Ability To Reach New Investors Online

The ability to raise capital online and reach new accredited investors through online portals is still in its infancy.

5. Data Analysis To Drive Investment Decisions

Really use data analysis to drive your investment decisions, don’t just look at the headlines. Utilize big data and predictive analytics to dig into what is responsible for the migration of renters, and what those renters are seeking in their new apartment.

7. Reduced Friction In Buying, Owning And Selling

We are constantly pushing to incorporate or develop technologies to improve our business and customer experience by reducing cost, friction and time, as well as improve transparency and security. Some of these we develop ourselves, like application of machine learning and AI to develop a national neighborhood rating system. Others we adopt, like animated 3D visualization software. –

LA tech startup InvestFar’s innovative platform spearheads globalization of real estate investing (Digital Journal), Rated: A

Rising LA startup InvestFar; recently launched its signature mobile app to help aspiring investors with informed investment decisions. Titled as “InvestFar”, the app is the first platform to boast all the tools and resources needed for successful investments in long-distance or local markets nationwide.

Built in LA, this real estate tech startup is on a path to innovating how real estate and investors in this industry scale and manage their investments beyond local markets, especially in markets like Los Angeles, San Francisco and New York – where we often see inflated housing prices and shrunken inventory given increasing foreign investment.

Small construction companies lukewarm on tech investment (ConstructionDive), Rated: A

  • A recent customer survey from small business funding siteKabbage revealed that fewer than 35% of small construction companies planned to make investments at some level this year in technologies that could help their businesses and further bring them into the digital age.
  • More than 65% of contractors who responded to the study did not have a plan to invest in tools like big data solutions or mobile technologies, and the same percentage was either neutral, against or not likely to spend more than 20% on social media advertising.
  • Kabbage also found that even with well-publicized cyber attacks and other computer-related crimes, not even 40% of small construction firms planned to invest in cybersecurity.

ACA International Responds to Misleading ACLU Report on Debt Collection Industry (ACA International), Rated: B

Last week, the American Civil Liberties Union (ACLU) released a misguided and heavily misleading report accusing private debt collectors of using the criminal justice system to “punish” and “terrorize” consumers. This is absolutely false and undermines the commitment and integrity of the professional debt collection industry.

Legitimate debt collectors work with consumers to help recover outstanding debt on behalf of businesses, nonprofit organizations and governmental entities.

Tiny Kansas bank bets big on fintech (American Banker), Rated: B

Nbkc bank in Overland Park, Kan., is comfortable sitting at the same table as many of the banking industry’s biggest innovators.

The $632 million-asset bank, a unit of Ameri-National Corp., recently participated in a $16 million investment in Greenlight Financial Technology, which offers debit cards for kids that parents can control from their phones. Other investors included the Amazon Alexa Fund, SunTrust Bank and Ally Financial.

United Kingdom

RateSetter to open IFISA to new investors on Thursday (P2P Finance News), Rated: AAA

RATESETTER is opening up its Innovative Finance ISA (IFISA) to new investors on Thursday, meaning that two out of the ‘big three’ lenders will be offering the tax wrapper outside of their existing customer base.

Industry onlookers argue that the IFISA will only begin to move into the mainstream once the largest P2P platforms offer the product to new investors.

VC firm behind Zopa raises £500,000 for fintech fund in just 24 hours (P2P Finance News), Rated: AAA

A FINTECH venture capital firm that has a stake in Zopa has surpassed a £500,000 fundraising target for a new investment company in the first 24 hours.

Augmentum Capital, which has a 7.4 per cent holding in peer-to-peer lender Zopa worth £18.5m, is looking to raise £100m through an initial public offering (IPO) alongside a crowdfunding listing on Seedrs.

What’s Up at Collateral? (P2P-Banking), Rated: AAA

A question concerned investors have been speculating on for over 36 hours now, since the website of UK p2p lending platform Collateral went down around 7pm two days ago and is showing a maintenance message. Investors criticize that there was no pre-announcement of this maintenance and worse that Collateral seemed to have ceased all communications to investors and did not react to any phone or email messages.

With no communications from the platform whatsoever investors wondered what to do. Some investors reported the incident to ActionFraud squad of the police while another contacted the FCA to voice his concern and seek advice.

1) How should a p2p lending platform communicate in a crisis?

In my view not communicating at all is the worst choice.

2) What can concerned investors actually do to react, if the platform is seemingly unreachable/unresponding over a longer period of time?

Collateral investors in limbo after lender shuts down site (P2P Finance News), Rated: A

Meanwhile, it emerged that the three limited companies listed on the Financial Services Register that have traded under the name of Collateral have not had regulatory permission to operate as a consumer credit business for at least 11 months and have all now been dissolved.

Cash4Assets, which traded under the name Collateral, had cancelled its interim permissions with the Financial Conduct Authority (FCA). A permission end date is given of 23 March 2015.

Regal Pawnbroker, which also listed Collateral as one of its trading names, saw its interim permissions lapse on 31 March 2016.

And Goldmann and Sons saw its interim authorisation lapse on 31 March 2016.

Assetz Capital introduces manual lending Isa (Bridging&Commercial), Rated: A

The P2P lender recently announced it had registered 2,000 investors for its Innovative Finance Isa(IFIsa) since it launched in December last year.

So far, Isa users have invested £14m, with one third coming from transfers from other Isa providers.

Funding for finance start-ups hits all-time high in threat to big banks (The Telegraph), Rated: A

Major fundraisings in the UK last year included digital insurance distributor BGL Group getting $900m, while payments venture TransferWise got $280m. Elsewhere Monzo raised £93m in two separate rounds, while Revolut got $66m.

Britain’s two biggest lenders, Lloyds and RBS, announced £5.5bn worth of investment programmes between them last week, with online banking a primary focus of their spending plans.

Banks scramble to be open as clients shrug (Royal News 24), Rated: A

Open banking, as this particular revolution is known, was introduced on the second weekend of January, forcing Britain’s biggest banks to provide third parties with access to the accounts of any customers who authorise it.

A Citigroup analysis published last week finds three reasons why disintermediation of the established order is likely to be delayed. One is slow consumer adoption. A second is the fragmentation of the market for new “open banking” services in early stages of the regime. The final one is the ability of established payment providers to adapt to the new rules.

European Union

Klarna year-end report January – December 2017 (Cision), Rated: AAA

July – December 2017
● Compared to last year, total sales volume grew by 43%
● Total operating revenues increased 32% to SEK 2,474m (1,868)
● Operating income for the period was SEK 203m (35)
● Net income for the period amounted to SEK 117m (17)

January – December 2017
● Year over year growth in total sales volumes was 42%
● Total operating revenues increased 27% to SEK 4,526m (3,561)
● Operating income amounted to SEK 524m (168)
● Net income for the year amounted to SEK 346m (113)
● 26,000 new merchants, Group total now 89,000
● 19 million new consumers used Klarna this year

Highlights from the year
● Bank license was obtained in June
● BillPay GmbH was acquired in September
● Additional tier 1 capital was raised in May and a senior unsecured bond was issued in September

German fintech lender auxmoney hit profitability in 2017 (AltFi), Rated: AAA

Its origination volumes rose by 75 per cent during the course of the year, with over 40,000 loans and €316 million funded. Auxmoney has now disbursed more than 100,000 loans in its history, with a cumulative funding total of around €700m.

BNI Europa eyeing up further P2P lending deals (P2P Finance News), Rated: A

BANCO BNI Europa is eyeing up further deals in the alternative finance space to diversify its portfolio and widen its product offering for clients.

The Portuguese online bank has announced several funding deals over the past year, including peer-to-peer lenders Funding Circle in Germany and Raize in Portugal, and UK P2P invoice finance platform MarketInvoice.

JSC VIA SMS Group interim twelve month report for year 2017 (GlobeNewswire), Rated: B

The Group has closed the reporting period with a net turnover of EUR 20 141 087 that shows 21,5% increase in comparison with the same period in 2016. The largest net turnover was reached in Spain where the net turnover has increased by 63%; the second largest turnover was reached in Sweden – by 55%, the third – in Poland where net turnover increased by 17% in comparison with data reported to December 31, 2016.  Company’s EBITDA in 2017 has reached EUR 2 779 456 and has ensured the net profit of EUR 835 542.

International

Cerberus Capital Management to Acquire Bluestone Group’s Australasian Operations (PR Newswire), Rated: B

Cerberus Capital Management, L.P. today announced that one of its affiliates has entered into an agreement with Bluestone Group, the international financial services business based in the U.K., to acquire its Australasian mortgage lending and portfolio servicing operations (“Bluestone Holdings Australia”).

India

Credy raises US$ 1.4 million in seed round (Tech in Asia), Rated: AAA

The online lender secured the funding from Y Combinator, Khosla Ventures, and Vy Capital, in addition to several Silicon Valley-based angel investors. It will use the capital to expand its loan book, build partnerships with institutional lenders, enhance its underwriting technology, and hire new team members.

Asia

ASIA SEES MASSIVE DROP IN FINTECH INVESTMENT AS CHINA LOSES MOMENTUM (CFO Innovation), Rated: AAA

Total fintech funding in Asia was US$3.85 billion in 2017—a massive drop-off from the more than US$10 billion invested in 2016 while the amount in Q4 2017 declined to US$748 million across 38 deals after a solid US$1 billion+ in Q3, said KPMG.

Decreased fintech investment in China accounted for much of the decrease in investment in Asia, KPMG explained. According to the firm, China saw just US$45.8 million in investment in Q4’17, while total investment in 2017 was US$1.33 billion.

The top five fintech deals in the region in Q4 are as follows:

  • WeLab (lending firm in Hong Kong): US$220 million, Series B
  • GoSwiff (payments/transactions firm in Singapore): US$100 million, M&A
  • BiWang Group (Institutional/B2B firm in Shenzhen, China): US$100 million, M&A
  • PolicyBazaar (Insurtech firm in Gurugram, India): US$77 million, Series E
  • Onlyou (Institutional/B2B firm in Shenzhen, China): US$45 million, late-stage VC
Canada

Katipult Named Among Industry Giants as Finalist for “Most Promising Partnership” Award (Cision), Rated: A

Katipult Technology Corp. (TSXV:FUND) is honoured to announce that it has been nominated, alongside Polymath Inc., for the Most Promising Partnership Award at the second annual Lendit Fintech Industry awards in April. The Katipult-Polymath partnership will be competing against some of the world’s finance and fintech giants including partnerships involving Goldman Sachs, Macquarie Group, Swedbank, and Lending Club.

National Bank CEO praises federal cybersecurity plan (Financial Post), Rated: A

The chief executive of National Bank of Canada said Wednesday that the federal government’s latest budget included “a big step forward” on cybersecurity.

The federal budget tabled on Tuesday proposed various cybersecurity-related commitments, including $155.2 million over five years so that the Communications Security Establishment could create a new “Canadian Centre for Cyber Security.”

Crypto KABN launches Blockchain-Enabled Biometric ID Validation (Yahoo! Finance), Rated: B

Crypto KABN Holdings Inc. (‘Crypto KABN’ or the ‘Company’) an innovator in financial services, technologies and products for the blockchain industry, is pleased to announce that it is launching a revolutionary Blockchain-enabled biometric validation platform, called ID KABN, as the first component of its suite of financial and technology services, at the FFCON18: Velocity Conference in Toronto on March 5, 2018.

Authors:

George Popescu
Allen Taylor

German Alternative Lending Market: An Overview

alternative finance

Post 2008, Peer-2-Peer lending has enjoyed a rapid rise all across the world. Quick accessibility to funds, easy processing and less paperwork means it has became the preferred choice for individuals and SMEs. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022; it […]

alternative finance

Post 2008, Peer-2-Peer lending has enjoyed a rapid rise all across the world. Quick accessibility to funds, easy processing and less paperwork means it has became the preferred choice for individuals and SMEs. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022; it is growing at a compound annual growth rate of 51.5% from 2016 to 2022, according to Research and Markets. North America is the largest P2P market in the world followed by Europe.

In 2015, the European alternative finance market grew by 92% to €5.4 billion.Though the UK is head and shoulders above the rest of Europe (representing 81% of the overall market in 2015 with a volume of €4.4 billion), continental Europe is rapidly catching up. Leading the charge for the rest of Europe are France, Germany, and Sweden.The combined market volume of the 3 countries was estimated close to 461.5 million Euros, representing roughly 74% of continental Europe’s P2P market.

Germany’s Alternative Lending Market

Post-Brexit, continental Europe has been in a frenzy as they try to attract beleaguered London-based fintech companies to establish a presence in their respective countries. Germany is trying to dethrone France from the top spot as the biggest alternative lending market in continental Europe. From 2013 to 2015, Germany’s alternative finance market volume increased from a meager €65 million to a healthy €249 million.

Source:

Most popular P2P Models

  • Peer 2 Peer consumer-lending – The most promising and fast growing model has been the consumer-lending model. From 2013-2015, this model has witnessed an average annual growth of 95%.
  • Peer 2 Peer business lending – Booming export-oriented economy and growing number of SMEs has allowed this model to witness significant growth in recent years.It grew by almost seven times in a span of one year, from a paltry €6.1 million in 2014 the transaction volume increased to € 48.2 million in 2015.
  • Equity-based crowdfunding – This is one P2P model that has endured quite a rough time lately and regulatory unrest has been the chief reason. This led to a fall from € 29.8 million in 2014 to €17.3 million in 2015.
Source:

Germany’s P2P Regulatory Environment

Though Germany is one of the biggest EU credit markets, the country has only very recently seen a surge in the alternative lending segment. The biggest factor for its slow growth stems from the stern and complex regulatory framework. Under German law (‘Kreditwesengesetz’), only banks may originate loans. To comply with this regulation, each P2P lending service has to partner with a bank that formally originates the loan and right away has to sell the rights to proceeds to the investors via the platform. This requires a complex legal (and technical) structure in which no direct contractual relationship is forged between the investor and borrower. This has also led to Germany’s P2P players being absent from the secondary loan market.

Apart from this, another challenge P2P players face is competition from traditional banks in terms of interest rates offered for unsecured installment loans. Currently, the monthly average real interest rate varies between 5.62% and 6.06 % p.a. in 2017. This hardly leaves any room for P2P lenders to compete with the banks. Use of credit cards is not as prominent as in the US or UK, so there is less opportunity to do high-interest refinancing.

But having said that, since the post-2008 financial crisis, traditional banks have lost public trust, and customers are now open to trying other financing alternatives. The rise of millennials and their reliance on smartphones and tablets is another reason the P2P market is beginning to thrive in Germany.

Leading P2P lenders in Germany

  • Auxmoney – A financial services company that provides an online peer-to-peer loan marketplace. It has raised $198 million in various rounds of funding. It is the largest P2P platform in the country. As of January 31st, 2016, the company had originated 441 million EUR in loans since launch with a monthly loan origination volume of 10.6M. It was founded by Philip Kamp, Raffael Johnen, and Philipp Kriependorf. It offer loans up to €25,000 with loan terms ranging from 12 to 60 months. They assign a proprietary credit score to each borrower and the rate of interest is based on that score.
  • Lendico – Founded in December 2013 by the incubator and venture capitalist Rocket Internet. Lendico is a multinational company that operates a peer-to-peer lending platform. The platform links lenders and borrowers with interest rates starting at 2.99 percent. Loans are available to borrowers for amounts between $1,360 and $34,000. Loan terms range from 6 months to 60 months. It also allows German investors to lend cross-border via Spanish loan listings. Arrowgrass Capital acquired it in July this year. It also operates in Spain, the Netherlands, Austria, Poland, and South Africa.
  • Zencap – Founded in 2014 by Dr. Matthias Knecht and Christian Grobe. Zencap used to offer business loans of up to €250,000 for durations ranging from 6 months to 60 months, and at the end of 2015 it was acquired by UK-based Funding Circle. Since inception, it has originated loans worth €66 million (approx).
  • SpotCap – Founded in 2014 by Jens Woloszczak and is based in Berlin. Rocket Internet backed Spotcap offers online business loans to companies in Spain, the Netherlands, the UK, and Australia. It has secured over €100 million in funding in various rounds. It has a high-profile list of investors that includes Rocket Internet, Access Industries, Holtzbrinck Ventures, Kreos Capital, Finstar Financial Group, and Heartland Bank.
  • Smava – Smava GmbH is a Berlin-based credit broker and founded by Alexander Artope. Since its launch in 2007, more than 15,000 investors and 6,000 borrowers have done business with each other through the smava.de credit market. It has raised almost $67 million in funding.
  • Main Funders – Commerzbank also launched its own P2P platform last year under the name Main Funders. It offers SME loans ranging from EUR 200 thousand to EUR 10 million for a maximum period of 5 years. Main Funders charges 0.45% of the loan amount from the borrowers and charges 0.2% from investors.

Apart from this, players from other countries are beginning to show interest in the German market. Recently, Finnish P2P credit marketplace Fellow Finance collaborated with Wirecard AG to offer loans to consumers in Germany. Likewise Advanon, a Switzerland-based P2P player, has started operating in the German market as well.

Conclusion

Even though the German fintech market is still in its infancy, the size of the economy makes it extremely lucrative. Considering it is one of the largest markets in EU, it is quite ironical that it is still untapped. But online lenders now seem to be focusing on Germany and are aggressively investing to lure borrowers. It is safe to say that the next few years will be very interesting for the German alternative lending market.

Author:

Written by Heena Dhir.

Tuesday August 1 2017, Daily News Digest

Charge offs

News Comments Today’s main news: Ron Suber joins Credible as Executive Vice-Chairman. Prosper pulls plug on anti-theft app. FCA extends credit assessment rules for P2P platforms. Klarna launches P2P payment app. Revolut’s Seedrs campaign oversubscribed. Harmoney loses 63% revenue. UIDAI launches mAadhaar app. Today’s main analysis: Vintage Analysis on loan performance with age. Elevates Q2 2017 results. Today’s thought-provoking articles: AI and the […]

Charge offs

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

South America

Israel

News Summary

United States

Ron Suber Joins Credible as Executive Vice-Chairman (Credible), Rated: AAA

Renowned fintech executive, advisor and investor Ron Suber has joined personal finance marketplace Credible.com as executive vice-chairman and a member of the board of directors.

“It’s been extremely exciting to see the Credible team turn a startup with a promising business model into a fast-growing company that’s respected by consumers, lenders and the industry” Suber said. “I have decided that now is the right time to help Credible seize their broader opportunity in the fintech ecosystem.”

Revisiting Vintage Analysis- How Loans Perform With Age (Orchard), Rated: AAA

The older vintages have longer lines, as they have more months of history. Using this data, we can examine how loans booked at different times compare to each other at equivalent periods in their life-cycle. This can help an investor evaluate their current portfolio and help them make comparative judgments about its performance.

Source: Orchard Platform

Factors to Consider Within Vintage Analysis

Interest Rates

Source: Orchard Platform
Source: Orchard Platform

Credit Grade

Vintage analysis can also help us to see how loans within a particular credit grade perform over time. In our prior analysis, we examined the performance of the top graded loans (A for Lending Club and AA for Prosper). However, as time has passed, these two platforms have increasingly been lending to borrowers with credit just below the top grades.

FICO Score and Debt-to-Income Ratio

From the data below we can see how loans from Lending Club charge-off over time controlling for the debt-to-income ratio of the borrower.

Source: Orchard Platform

 

ELEVATE CREDIT ANNOUNCES SECOND QUARTER 2017 RESULTS (Elevate), Rated: AAA

Second Quarter 2017 Financial Highlights

  • Nearly 20% year-over-year revenue growth: Revenues totaled $150.5 million, an 18.7% increase from $126.8 million for the prior-year period.
  • Almost 29% year-over-year growth in loans receivable: Combined loans receivable – principal, totaled $481.1 million, a 28.7% increase from $373.7 million for the prior-year period.
  • Stable credit quality: Loan loss provision was 48.0% of revenues and within our targeted range of 45%- 55%. The ending combined loan loss reserve, as a percentage of combined loans receivable, was 13.8%, lower than the 15.7% reported for the prior-year period.
  • Customer acquisition costs within targeted range: The total number of new customer loans for the quarter was approximately 66,000 with an average customer acquisition cost of $294, within our targeted range of $250-$300.
  • Second consecutive quarter of net income: Net income of $3.0 million, or $0.08 per diluted share, versus a net loss of $7.5 million, or $(0.59) per diluted share, for the second quarter of 2016.
  • Adjusted EBITDA margin: Adjusted EBITDA totaled $19.8 million, up from $7.3 million in the second quarter of 2016. The Adjusted EBITDA margin increased to 13.2% from 5.8% for the prior-year period.

Second Quarter 2017 Business Highlights

  • Elevate IPO. On April 6, Elevate began trading on the New York Stock Exchange under the “ELVT” ticker symbol.
  • $200 Million in Outstandings for Elastic. Just a year after achieving $100 million in outstandings, Elastic surpassed $200 million in total principal outstandings, with more than 120,000 open accounts.
  • Elevate Labs Launched. The Company launched Elevate Labs, including its new San Diego-based Advanced Analytics Center, underscoring its approximately $40 million annual investment in state-of-the art technology and data science.
  • RISE Enters Kansas with Line of Credit Product. Bringing additional responsible loan opportunities to non-prime consumers and expanding its product offering, RISE entered its 16th state, Kansas, the first state where RISE offers a line of credit product.
  • Savings for Customers. The average effective APR of its products for the quarter was 131%, down from 148% in the same quarter last year. The Company estimates indicate that Elevate’s products – Rise, Elastic and Sunny – saved customers approximately $304 million in the three months ended June 30, 2017 versus payday loans.
Source: Elevate release q2-2017-release

Elevate Reports Net Income of $ 3 Million on 0.5 Million in Revenue (Crowdfund Insider), Rated: A

According to the company, revenues for the quarter totaled $150.5 million – an 18.7% increase versus year prior where Elevate delivered $126.8 million in revenue. Elevate reported net income of $3.0 million, or $0.08 per diluted share, versus a net loss of $7.5 million, or $(0.59) per diluted share, for the second quarter of 2016.

Combined loans received were said to total $481.1 million, an increase of 28.7% from $373.7 from year prior quarter.

Prosper pulls plug on anti-ID-theft app (American Banker), Rated: AAA

Prosper Marketplace, one of the largest marketplace lenders, is discontinuing the Prosper Daily app.

The app, formerly known as BillGuard and a favorite of many fintech insiders, helped users protect their identities and monitor their credit scores.

The online lender said it will no longer have access to users’ financial accounts once the app is discontinued and that it will reimburse annual subscribers.

Artificial Intelligence And The Future of Digital Lending (The Financial Brand), Rated: AAA

To be a digital lender, banks and credit unions must do more than provide a digital app. Internal lending processes must be transformed to eliminate friction and unneeded steps, with artificial intelligence (AI) supporting proactive loan decisions.

According to PwC, a financial organization must initially define what is desired from both a customer experience and operational efficiency basis around consumer lending. Next, banks and credit unions must build a digital lending strategy around the following organizational competencies. The path to becoming a true digital lending organization involves five steps.

  1. User-Centric Design
  2. Data-Driven Decision Making
  3. Flexible Infrastructure
  4. Effective Development Approach
  5. Organizational Agility

Digital Borrower Expectations

The expectations of the digital borrower have increased over the past several years, mostly based on marketplace offerings and digital experiences in other industries. While the interest rate and closing costs on loans are still primary considerations, the speed, simplicity, transparency and customer service of the entire process is important.

According to the PwC report, Consumer Lending: Understanding Today’s Empowered Borrower, three out of four demographic segments prefer to be online for each phase of the lending process as opposed to traditional methods, such as in person or on the phone.

While some lender apps offer the higher-ranking features – such as the ability to calculate the loan amount that the borrower can afford and the ability to lock in an interest rate on a loan, most of the other features are still not offered by most organizations.

Being a Digital Lender is More Than Just Fewer Clicks

To become a digital bank, organizations need to think beyond ‘minimizing the number of clicks’, reducing manual data entry, and improving the speed of decisions.

The process of becoming a digital lender for the long-term moves investments from ‘digital features’ to a ‘digital mentality’ and process that can support changing digital lending options. It is a major move from investing in just digital output to investing in the digital input that works behind the scenes. It is a strategic framework for the future of digital lending.

PeerStreet Integrates with Personal Capital to Provide More Detailed Investment Overview (PeerStreet Email), Rated: A

PeerStreet, an award-winning platform for investing in real estate backed loans, has announced an integration with Personal Capital, powered by the Envestnet | Yodlee Data Aggregation Platform. Customers of both Personal Capital, an automated investment service with more than $4.8 billion assets under management, and PeerStreet can now view their PeerStreet positions within the context of their investment portfolio on Personal Capital.

Realty Mogul’s REIT Turns One (Realty Mogul Email), Rated: A

Celebrating its one year anniversary, MogulREIT I recently declared its twelfth consecutive month of 8% annualized return on investment. With ten assets across the country, MogulREIT I is a diversified portfolio of commercial real estate investments designed to provide consistent cash distributions, while protecting and returning capital contributions.

Money360 Closes $ 143M in Commercial Real Estate Loans in Q2, Marking a Record-Breaking Quarter (Markets Insider), Rated: A

Money360, a direct marketplace lender focused on commercial real estate, today announced that the company closed $143 million in loans in the second quarter, marking the lender’s best quarter to date. Money360 has now closed more than $350 million in total loans and is on pace to close more than $500 million by the end of the year. On average, the company is now closing $50 million in loans each month.

A few of the $143 million in loans closed in the second quarter include:

  • A $15.6 million bridge loan for a three-tenant medical office property in Grand Forks County, North Dakota.
  • A $11.1 million bridge loan for the acquisition of a multi-tenant retail property in Wayne County, Michigan.
  • A $9.7 million bridge loan for a two-story, 198-room hotel property in Cumberland County, North Carolina.

Read our analysis of Money360.

Wells Fargo Sued in Yet Another Public Embarrassment (Financial Advisor), Rated: A

The assault on the Wells Fargo brand continues, with a lawsuit accusing the bank of pushing almost 250,000 of its clients into delinquency by forcing them into auto insurance they didn’t need — or even ask for, Bloomberg reports.

The bank allegedly made millions of dollars off unsuspecting clients, according to the proposed class-action lawsuit filed in San Francisco federal court and cited by the newswire.

Wells Fargo allegedly didn’t check whether its clients taking out auto loans already had auto insurance, or ignored the fact that they did, Bloomberg reports.

Insurance CEOs Say Change Is Coming (CB Insights), Rated: A

Markel co-CEO Richard Whitt III on the $919M acquisition of State National

We, like a lot of people, are starting to look at the insurtech space. And State National, I think they are ideally situated to sort of be the go between the insurtech folks and sort of your standard insurance carrier types. It’s a clash of cultures there, I would say.

The insurtech folks are used to things happening lightening fast and with minimal regulatory issues and all that and that’s not insurance. So there almost needs to be a translator between insurtech folks and standard insurance folks. And that is a role that State National plays…And we see them helping us with our insurtech initiatives sort of being that translator between us and those folks.

Chubb CEO Evan Greenberg: “Change is coming”

But with that said, change is coming. And we are not alone in terms of carriers improving their capabilities, because of what technology brings that will lead that change. It’s around data, it’s around straight through process, it’s around data that improves the customer experience, while at the same time improving your ability to select risk and to do it quickly i.e. in seconds and to be able to then straight through process business.

You taking out a loan for your business and technology enables those other forms of distribution. The customer will buy it from a desktop, the customer will buy it from a mobile device, they will buy it any time anywhere and they will service it anytime anywhere.

Timothy Li of Fluid (Lend Academy), Rated: A

Into this void steps Fluid, the brainchild of Timothy Li, our next guest on the Lend Academy Podcast. He has found a unique way to provide students access to credit and consequently a way to start building their credit while they are in college. Fluid provides small loans of up to $500 at 0% interest. It is a fascinating idea that we explore in some depth on the show.

Are Technology Firms The Next Financial Service Providers? (Forbes), Rated: A

Financial system regulatory costs continue to climb in part due to it being rife with problems that led to 45% of financial intermediaries, such as money transfer services and stock exchanges, experiencing economic crime. Blockchain increases transparency and decentralizes the financial system with encrypted, unforgeable records embedded in a secure network. By reducing transaction costs and removing intermediaries, blockchain technology is poised to increase mass peer-to-peer collaboration, which could make existing financial organizations unnecessary.

Automated investment services, sometimes referred to as robo-advisors, are emerging as an easily accessible, cost-efficient solution to managing assets with 24/7 availability and annual fees of .2% to .5%, making it substantially less than typical rates.

The financial technology upsurge is bringing accessibility and availability to the forefront, making existing banking options resemble archaic institutions. With apps that let you make quick, feeless transactions (such as Venmo) and peer-to-peer lending platforms (such as Lending Club), customers and millennials are welcoming these innovative platforms. According to a 2015 report, 75% of millennials visit bank branches either once a month or less than that, and 38% of them don’t use a branch to perform banking activities.

Fintech, however, is fostering financial inclusion and building public confidence, evidenced by mobile platforms such as M-Pesa reaching 80% of households within four years.

OCC files motion to dismiss fintech charter lawsuit (American Banker), Rated: A

The Office of the Comptroller of the Currency has filed a motion to dismiss a lawsuit by state regulators challenging the agency’s fintech charter.

2020 REI Group Launches REI Data Systems With Investorwell (Digital Journal), Rated: A

Dallas- based 2020 REI Group has announced the creation of a data services and technology division to further their mission of providing products and services to real estate investors nationwide.

The new division will be labeled as REI Data Systems and will be led by Mike Inman, Vice President of Technology for 2020 REI Group.  Inman was most recently IT Manager of Application Development for the City of Grand Prairie and has a vast background in cloud based applications, GIS mapping, mobile applications, and data analytics.

The official launch for InvestorWell will be mid-August. The platform will help real estate investors find funding for their projects based on eight simple questions.

The Role of Digital in Financial Planning (Insead Knowledge), Rated: A

Long-term saving is a classic case study in behavioural biases. These must be managed and mitigated – whether it is through digital or face-to-face advice.

Inertia is one such bias. While people will generally put off taking action, research has shown that if they are intimately involved in preparing a plan, they are more likely to stick to it. The most committed planners also tend to be the most financially literate.

While robo-advisors are getting lots of press at the moment, they are mostly just a delivery mechanism. A nice user interface should not be a substitute for solid advice that ultimately addresses a key financial and behavioural problem. Digital poor advice is still poor advice.

  • Users should be asked, in non-misleading terms, whether they want a basic, average or luxury retirement lifestyle.
  • The language should be free of jargon and go to the heart of the users’ problem.
  • The tool should allow users to be actively involved in making the trade-offs based on their unique needs, wants and circumstances.

Startups want to change what you insure and how you insure it (TechCrunch), Rated: A

In the real world, however, insurance coverage hasn’t kept up with the social and economic changes of recent years. Sharing economies have gained scale. Jobs have gone from full-time to gig-based. And the vast millennial generation has entered adulthood intent on completing any complex transaction in a couple of minutes online.

So far this year, insurance-focused startups have raised more than $700 million in venture funding, according to Crunchbase data, with significant backing from both traditional VCs and large insurers. The lion’s share of investment has gone to companies pioneering and popularizing coverage categories and delivery models, with a particular focus on millennial customers.

One of the most richly funded players in this space is Trōv, which has an app for quickly insuring personal and work items like laptops, smartphones and high-end cameras. The five-year-old company raised a $45 million Series D round in April led by reinsurer Munich Re, bringing total funding to nearly $90 million.

Cover, which just closed an $8 million Series A, offers a similar service. Customers take a picture of the item they want to insure and Cover offers a policy, underwritten by a partner insurance firm.

One of the most richly funded insurance startups over the past few years is Metromile, which insures based on how much customers drive. Rack up few miles, and pay little beyond a small monthly base rate. Drive more, and it goes up. U.K.-based Cuvva, meanwhile, has raised seed funding to build out insurance offerings for short-term use of a car, for people learning to drive and for people who drive very little.

Silicon Valley-based Hippo is also marketing itself as a new kind of homeowners insurance company, with policies that offer stronger protections for common valuables like home electronics.

For short-term rentals, meanwhile, Slice Labs is partitioning off a space.

Next Insurance, founded last year, sells coverage for yoga instructors, photographers, home contractors and others whose needs don’t always fit with standard insurance policies. The Silicon Valley company raised $48 million to date from VC and insurance industry backers. Bunker, which bills itself as an insurer for freelancers and independent contractors, is also scaling up. The San Francisco company closed a $6 million Series A round in May.

One is Ladder, which has raised $16 million to build out a platform for offering direct-to-consumer term life insurance online. Another, Brooklyn-based Fabric, has raised $2.5 million for its digital platform offering instant quotes on accidental death coverage, as well as broader life insurance policies.

An Attorney’s Take On Real Estate Crowdfunding (RealCrowd), Rated: A