Thursday September 13 2018, Daily News Digest

funding circle

News Comments Today’s main news: OnDeck tops $10B in small business lending. KBRA assigns preliminary ratings to Consumer Loan Underlying Bond Credit Trust 2018-P2. Robinhood looking to IPO. Faircent approved by Reserve Bank of India. Today’s main analysis: A credit card debt study from Wallet Hub. Today’s thought-provoking articles: Should the next billion dollar financial platform be for […]

funding circle

News Comments

United States

United Kingdom

India

Other

News Summary

United States

OnDeck Small Business Online Lending Tops $ 10 Billion (PR Newswire) Rated:AAA

OnDeck has achieved a milestone in the Financial Technology (FinTech) industry, becoming the first non-bank online lender to surpass $10 billion in total loans originated to small businesses. OnDeck, with operations in the United StatesCanada and Australia, is the world’s largest non-bank online lender to small business by total loan volume.

The achievement by OnDeck, a pioneer of the FinTech lending industry, is the latest indication that small businesses increasingly prefer to seek financing online. According to the Small Business Credit Survey from the Federal Reserve, small business owners are turning to online lenders in record numbers. In 2017, 24 percent of small businesses seeking credit applied online, up from 21 percent the previous year.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P2 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P2 (“CLUB 2018-P2”). This is a $270.30 million consumer loan ABS transaction that is expected to close September 27, 2018.

Source: Business Wire

Robinhood is targeting an IPO (Business Insider) Rated: AAA

Fintech unicorn Robinhood, which offers zero-fee stock, option, and crypto trading, has begun preparations to go public, Baiju Bhatt, the company’s chief executive, revealed at TechCrunch Disrupt SF last week. The US-based firm has raised $539 million in funding, and it’s currently valued at $5.6 billion.

Source Business Insider

In preparation for the initial public offering (IPO), the five-year-old company is in the process of hiring a chief financial officer (CFO), as well as undertaking audits from the Securities and Exchange Commission (SEC) and FINRA, a US securities markets watchdog.

The Next Billion Dollar Financial Platform – Baby Boomers (The Sociable) Rated: AAA

If you’ve immersed yourself in the world of Silicon Valley and you keep up with current trends, then it comes as no surprise that ageism in the U.S. tech world is an ongoing debate. The job search engine Indeed reports that 43% of workers in the tech industry worry about losing their jobs due to their age. While the general population is aware of the issue, its resolution is slow-moving.

The characteristics of Generation Z – those born after 1996 – are still being discovered. We don’t know enough about them yet to understand what kind of impact they will have. The Millennial Generation and Gen X have arguably been the main sales focus during the rise of Silicon Valley. Millennials in particular have overtaken the market, with 83% of today’s managers belonging to that generation. Finally, we have the Baby Boomers. Whether it’s because Millennials believe that older generations can’t use new tech – or that they inherently cater to people their own age by nature – Boomers are falling by the wayside.

People aged 50+ are the largest demographic in the United States, encompassing one third of the total population at 110 million. This age group is responsible for spending 50% of the total disposable income in the country.

Credit Card Debt Study: Trends & Insights (Wallet Hub) Rated: AAA

Americans repaid $40.6 billion in credit card debt during Q1 2018 – the second-largest quarterly payoff ever. But we added almost $30 billion back to our tab in Q2 2018. We also began the year owing more than $1 trillion in credit card debt for the first time ever, after adding a post-Great Recession record of $91.8 billion to our tab in 2017.

Only four times in the past three decades have we overspent so much in a year. And in each case, the charge-off rate – currently near historical lows – rose the following year. That’s true so far, as charge-offs are up nearly 3% from Q4 2017 to Q2 2018.

Source: WalletHub

Source: WalletHub

College Ave Student Loans Announces Completion of Second Successful Securitization (Crowdfund Insider) Rated: A

Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $199 million securitization of private student loans, its second successful securitization. According to the platform, the CASL 2018-A transaction completed over the summer, achieved higher ratings than College Ave’s inaugural securitization, receiving an ‘AA’ rating from DBRS and an ‘A’ rating from S&P for its senior notes. 

According to College Ave, the transaction was heavily oversubscribed attracting a broad and diverse group of repeat investors and nine new participants. Barclays and Credit Suisse were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.

White Oak Global Advisors raises $ 2.1 billion for its Direct Lending Strategy (Globe Newswire) Rated: A

White Oak Global Advisors, LLC (“White Oak”) is pleased to announce the close of the White Oak Yield Spectrum Fund (the “Fund”) to outside investors. The Fund and other associated vehicles raised concurrently approximately $2.1 billion of total commitments, exceeding the $1.75 billion fundraising target. White Oak’s previous flagship fund, the White Oak Summit Fund, closed with approximately $1.3 billion of commitments in March 2016.

The capital for the White Oak Yield Spectrum Fund was raised from a diversified group of institutional investors worldwide. In particular, the Fund attracted very strong support from public and private pension funds, insurance companies and global family offices. White Oak currently manages over $5.6 billion of committed assets.

The Fund will primarily invest in first-lien, directly originated lending strategies, including term loans, asset-based loans, and equipment financing.

‘Fintech Charter’ Has No Early Takers as Lawsuit Looms (Wall Street Journal) Rated: A

A national banking regulator is offering cutting-edge financial firms a new pathway into the traditional banking system. So far, few of them are biting.

The lack of immediate interest from the likes of LendingClub Corp. LC +0.00% , Square Inc., and others comes in large part from uncertainty about what activities the Office of the Comptroller of the Currency’s so-called fintech charter will allow, what regulatory requirements it will carry, and whether it will hold up in court.

That uncertainty grew Wednesday when the Conference of State Bank Supervisors, a group of state regulators, said it intends to file a lawsuit challenging the OCC’s authority, renewing a previously unsuccessfully legal challenge.

2018 Fed Rate Hike Survey (Wallet Hub) Rated: A

Source Wallet Hub

Opendoor Buys Open Listing To Create End-to-End Marketplace (PYMNTS) Rated: A

In a press release, Opendoor said the acquisition of Open Listings, which operates a platform that aims to make it easier and lower-cost to find, tour and buy any home on the market, will enable it to create an end-to-end marketplace for the buying, selling and trading of homes. According to the company, 71 percent of home sellers are also looking to purchase a home.

With the acquisition, Opendoor customers will be able to line up a purchase of any home on the market via a trade-in transaction. Buyers who use Open Listings will get a discount on the home purchased through a commission rebate of up to 50 percent, the company said in the press release.

Via mobile phone or computer, customers can tour and submit an offer on any home on the market, get an offer on their existing home and align the timing of both transactions. By integrating Open Listings with Opendoor‘s mortgage, title and homes services, the company said conducting a real estate transaction will be as easy as booking a flight or making an online purchase.

Fintech out to start national bank clears one hurdle but faces more (American Banker) Rated: A

Varo Money in Salt Lake City is one step closer to becoming a national bank.

The fintech firm, which aims to lower the cost of banking through a mobile-only platform, recently received preliminary and conditional approval from the Office of the Comptroller of the Currency. Varo still needs to apply and receive approval from the Federal Deposit Insurance Corp. and the Federal Reserve.

Colin Walsh, Varo’s co-founder and CEO, is optimistic that the company will be operating as a bank within a year. He characterized the OCC’s decision as a pivotal moment for banking — one that shows regulators are more willing to consider nontraditional models.

State regulators renew push to block OCC’s fintech charter (American Banker) Rated: A

State regulators said Wednesday they intend to refile a lawsuit against the Office of the Comptroller of the Currency in an effort to block it from offering a new federal bank charter for fintech firms.

The Conference of State Bank Supervisors said its board recently decided to proceed with another round of litigation against the national bank regulator now that the agency said July 31 it would offer a so-called special-purpose national bank charter to fintech firms.

This will be the state regulators’ second attempt at blocking the OCC in court.

Millennials in this American city are carrying the most debt (Ladders) Rated: B

New data from online loan marketplace LendingTree shows that San Antonio is the American city where Millennials have “the most debt,” with a median debt balance of $27,122 — not including mortgages.

Researchers took a look at “anonymized credit report data of My LendingTree users who live in the 50 biggest metro areas in the U.S.” to compile the data. They were born anywhere between the years 1981 and 1996.

The 10 cities where Millennials have the most debt

Here they are, plus the average percentages of what highly contributes to Millennials’ “total debt balances.” Again, these don’t include mortgages:

  1. San Antonio: median balance of $27,122, with car loans making up 43.2% of “total debt balances”
  2. Pittsburgh: median balance of $26,403, with student debt being 45.7% of all debt
  3. Austin: median balance of $26,164, with 18.1% of all debt being from credit cards and 37.1% being from car loans
United Kingdom

Stress testing at Funding Circle (Funding Circle) Rated: AAA

This means building a sustainable platform that allows investors to earn attractive and stable returns by lending to creditworthy businesses, during every stage of an economic cycle. Since 2010, globally we’ve improved access to affordable capital for more than 50,000 businesses, and opened up a new asset class for over 80,000 investors.

Source: Funding Circle

Fed stress parameters included:

Adverse Scenario Severely Adverse Scenario
GDP Falls 2 ¼ percent below Q4 2017 Falls 7 ½ percent below Q4 2017
Unemployment Rises to 7% Rises to 10%
Home Prices Falls 12% Falls 30-40%
Source: Funding Circle

Thinking of buying into the Funding Circle IPO? Read this first (AOL) Rated: A

Peer-to-peer lender Funding Circle fired the starting gun on its much-anticipated plans to go public earlier this month. The company, which is only eight years old, is looking to attract a value of £1.7bn and raise £300m in the process.

Since its founding, Funding Circle has transformed the market for business financing, matching everyday investors who have money to spare with businesses looking for funding to expand. In total, the company has put together £5bn in loans for small businesses since 2010.

However, if you’re thinking of buying into the IPO, there are several issues you need to consider first.

Barclays opens up mobile banking app to rival accounts (Fintech Futures) Rated: A

Barclays has become the “first” UK bank to allow customers to bring their other current accounts into its mobile banking app.

Barclays says this new feature gives customers a way to get a clearer picture of their day-to-day finances within its app. It uses API technology – all powered by open banking.With competition in UK banking tougher than an East End gangster, banks are trying to stand out and play a game of constant one-upmanship.

It’s also a riposte to the many fintech start-ups offering a similar service. For example, last month London-based personal finance app Bippit launched with the offer of an account connecting and savings service.

Monzo: When is a bank not a bank? (FT Alphaville) Rated: A

Monzo is frequently hailed as one of the most exciting challenges the tech industry poses to high street banks.

Wikipedia calls it a “digital, mobile-only bank”. Mashable summed it up as the “bank that’s apparently so cool it’s become a chat up line in London’s bars”. Its own stated ambition is to “build a better bank”. In April 2017, it acquired a banking licence.

But does Monzo actually behave like a bank?

Banks, under one interpretation, are economic inventions which create liquidity from an array of otherwise illiquid assets. Douglas Diamond, the US economist, describes a bank as “a lender financed with demand deposits”. Depositors sacrifice higher returns for the privilege of immediately being able to withdraw their capital whenever they want.

iwoca: We are the UK’s Fastest Growing SME Finance Provider (Crowdfund Insider) Rated: A

Online lender iwoca says it is UK’s fastest growing SME finance provider. The claim comes following the publication of the Sunday Times Hiscox Tech Track 100 which ranked iwoca 30th on the list.

The Sunday Times Hiscox Tech Track 100, published last Sunday, 9th September 2018. Ranked No. 30 on the ilst – which ranks Britain’s tech firms in regards to the fastest-growing sales. iwoca joins a group of prominent UK Fintechs recognized by the Times.

Proptech Startup Unmortgage Raises £10M in Seed (FinSMEs) Rated: A

Unmortgage, a London, UK-based proptech startup, raised £10m in funding.

Backers included Anthemis Exponential Ventures, and Augmentum Fintech plc.

The company intends to use the funds to expand operations and finance the part of the homes it purchases.

Crowdfunding – looking beyond equity investment (What Investment) Rated: A

At a time when banks were increasingly adopting the ‘computer says no’ approach, entrepreneurs and those involved with company start ups sought different ways of financing their ambitions.

Crowdfunding platforms including CrowdCube and Seedrs emerged, using technology to bring investors and companies thirsty for cash together.

Ten years later there are more crowdfunding platforms than ever, the top 10 crowdfunding platforms in 2018  as listed by What Investment.co.uk’s sister website Growth Businessinclude names such as Seedrs, CrowdCube plus RateSetter, Trillon Fund and Funding Circle.

P2PFN celebrates its second birthday (Peer2Peer Finance) Rated: B

PEER2PEER Finance News launched two years ago today!

The progress that has been made in two years is staggering. Most P2P platforms have become fully FCA authorised and many of them have launched IFISAs – which attracted £290m in the last tax year.

The UK’s largest P2P firms have cumulatively lent out more than £11bn, Zopa is getting closer to its bank launch and Funding Circle is floating on the main market of the London Stock Exchange next month.

China

China’s tech is addicted to debt (Technode) Rated: AAA

China has become addicted to debt. Now, its tech industry is hooked too.

It started innocently enough. Back in 2008, when the fallout of America’s own debt binge was giving the whole world a hangover, China engaged in a decisive and robust economic stimulus, injecting RMB 4 trillion into key sectors of its economy. Banks, mostly state-owned in China, were directed to lend more, particularly to other state-owned firms. As a result, China recovered quickly from the global financial crisis, even as the US and Europe struggled to get back on their feet.

However, even as the Chinese economy recovered, the banks continued to lend, and Chinese companies continued to invest, most notably in infrastructure projects. Not only did they invest, they invested A LOT.

Source: TechNode
European Union

Spotcap Issues Quarter of a Billion in Credit Lines to Businesses (Spotcap) Rated: AAA

Global fintech lender Spotcap has issued more than EUR 250 million in credit lines since its launch in 2014.

The company combines robust credit assessment principles with innovative technology to offer a smooth and straightforward loan experience. The fintech undertakes cash flow based, rather than credit-score based underwriting, resulting in a fair assessment of the real-time performance of a business.

In the last 12 months, Spotcap experienced more than 100 percent year-on-year growth in the volume of credit lines it provided, growing at a faster pace than the alternative finance industry, which recently experienced 41 percent year-on-year growth in Europe.

International

Fintech investment powerhouse Ribbit Capital aims for $ 420 million with its latest fund (Tech Crunch) Rated: A

Ribbit Capital, the financial technology investment firm whose portfolio includes hits like the no-fee mobile investment platform Robinhood; cryptocurrency wallet and marketplace provider Coinbase; and Root Insurance, the automotive insurance platform that just joined the billion-dollar startup club; is raising $420 million for its latest fund, according to a filing with the Securities and Exchange Commission.

The fund would be Ribbit’s fifth foray out with limited partners and its $420 million target is only a nominal increase from the $300 million it had set out to raise for its fourth fund last year.

Coinbase alone is now worth at least $8 billion on paper, and no one laughs when chief executive Brian Armstrong says that his company’s goal is to become the New York Stock Exchange of crypto securities.

Robinhood, another one of Ribbit’s portfolio darlings, is flirting with a $6 billion valuation after its latest funding round earlier this year — and has become synonymous with stock trading for a new generation of investors (despite some criticism about its business model).

 Australia

Fintech Prospa Ranks 6th in LinkedIn Top Startups List (Crowdfund Insider) Rated: AAA

Prospa says it has been named 6th on the 2018 LinkedIn Top Startups List. The list marks the 25 best startups to work for in Australia. Prospa adds that it is the top Fintech on the list as well.

Prospa is an online lender catering to small business. Prospa allows SMEs access to loans between $5,000 and $250,000, with approval and funding within as little as 24 hours.

Now in its sixth year, Prospa has established itself as delivering consistent high growth with a solid customer satisfaction NPS score averaging 77 and customer repeat rates of 69%.

Small business lenders pledge fairness under ASIC’s gaze (The Sidney Morning Herald) Rated: A

Fintech lenders say they’re moving quickly to review and amend any unfair contract terms before the watchdog comes knocking, but there are still questions about best lending practice.

Last week, alternative lender Prospa confirmed it had changed a number of contract clauses after receiving a query letter from the Australian Securities and Investments Commission (ASIC) back in June that arrived just days before the startup put the brakes on its planned ASX listing.

India

Authors:

George Popescu
Allen Taylor

Monday April 30 2018, Daily News Digest

LendingClub

News Comments Today’s main news: GreenSky files for IPO. LendingTree hits $181M consolidated revenues. KBRA assigns preliminary ratings to Morgan Stanley resecuritization. Zopa says savers are abandoning cash ISA. KBRA assigns first European ratings. Today’s main analysis: FTC vs. LendingClub, dueling unicorns. Today’s thought-provoking articles: JD Supra on LendingClub’s FTC issues. Aussie borrowers should embrace for rate hike. Brazil’s amended payment […]

LendingClub

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Fintech Firm GreenSky Files for IPO (Wall Street Journal) Rated: AAA

Financial-technology firm GreenSky Inc., a provider of point-of-sale financing and payments technology, disclosed plans to go public.

The Atlanta company, which operates a lending platform that enables retailers, health-care providers and home contractors to offer loans to their customers, filed preliminary documents Friday for an initial public offering with the Securities and Exchange Commission.

FTC Sues Lending Club For Deceptive Advertising (JD Supra) Rated: AAA

According to the FTC, this deception is made worse by the fact that Lending Club never adequately discloses the up-front fee to consumers during the entire online application process.  The fee is only mentioned once—inside an explanatory “pop-up bubble” that only appears if the applicant happens to click or tap on a relatively small and inconspicuous icon. Because applicants are not required to click or tap on the icon in order to move forward with their loan application, many applicants never saw the disclosure at all.

LendingTree’s 1Q consolidated revenue grows to record $ 181m (Mortgage Professional American) Rated: AAA

Online loan marketplace operator LendingTree saw its consolidated revenue rise to a record $181m during the first this year – up 37% from the same period in 2017, according to a financial statement released Thursday.

January to March revenue from mortgage products stood at $73.5m, up 17% from the first three months of 2017. In particular, purchase and refinance revenues went up 13% and 18%, respectively. Citing the Mortgage Bankers Association, LendingTree said originations industry-wide were projected down 4% in the comparable period.

KBRA Assigns Preliminary Ratings to Morgan Stanley Resecuritization Pass-Through 2018-SC1 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class of notes issued by Morgan Stanley Resecuritization Pass-Through Trust 2018-SC1 (“MSRP 2018-SC1”). This transaction represents the securitization of the consumer loan asset-backed trust certificates issued by SoFi Consumer Loan Program 2015-1 Trust (“SCLP 2015-1”) and supported by a portfolio of prime unsecured personal loans (“Underlying Loans”) that were originated by SoFi Lending Corp (“SoFi”).

Preliminary Ratings Assigned: Morgan Stanley Resecuritization Pass-Through 2018-SC1

Class Preliminary Rating Initial Class Principal
B BBB (sf) $36,700,000

 

Diversify Into Real Estate With Your IRA Or 401(k) (Forbes) Rated: A

The IRS does allow 

Navient Reports Greater Earnings and Fewer Student Loan Charge-Offs (Lend EDU) Rated: A

On April 24, Navient stated from its earnings report in the first quarter that it had $500 million of originations in private education refinance loans, a 43 percent fall in private education loan charge-offs and a 32 percent jump in business processing fee revenue year over year, according to a press

Business processing earnings: Earnings were $10 million in the first quarter, compared to $3 million in 2017’s first quarter.

Consumer lending earnings: Earnings were $50 million in the first quarter, up from $38 million in 2017’s first quarter. This jump came from a $7 million increase in net interest income, an $18 million decline in loan losses provision and a $9 million fall in income tax expense.

Federal Education Loans earnings: Earnings were $141 million, up from $129 million in 2017’s first quarter.

Unitus Ventures Marks The First Close Of Its $ 45.2 Mn Fund II With $ 15 Mn (Inc42) Rated: A

Unitus Ventures (formerly known as Unitus Seed Fund), an impact venture fund investing in early-stage startups, has announced to have raised $15 Mn (INR 100 Cr) towards the first close of its $45.2 Mn (INR 300 Cr) Unitus Ventures Fund II.

The fund will be utilised for onward investing of $753K – $2.2 Mn (INR 5 Cr -INR 15 Cr) each to 25 to 30 startups specialising in education, healthcare and inclusive fintech.

Yolande Piazza of Citi Fintech (Lend Academy) Rated: A

In this podcast you will learn:

  • The origins of Citi Fintech and the goal of their group within Citi.
  • How they have created a new and innovative culture within Citi Fintech.
  • Why Citi Fintech released a global open banking API.
  • Citi’s Canvas platform that is their internal sandbox product.
  • How they create these products hand in hand with their customers.
  • Why this is about more than just creating mobile offerings.
  • What Citi’s newly announced national digital bank means for the overall bank.
  • How Citi will help non-bank customers as well as their own customers.

 

Mastercard: Serving The Financial Needs Of The ‘New Middle Class’ (PYMNTS) Rated: A

Whether an applicant has recently immigrated and lacks the background data to be approved, or is recovering from a drastic life event such as a divorce or death of a spouse, demonstrating their creditworthiness is often impossible by traditional means – i.e. the FICO score – leaving as many as 160 million Americans up the creek with no paddle.

Haymond said Mastercard has already put its philosophy into practice by partnering with CreditStacks, a FinTech that focuses on providing credit to new Americans, as well as launching its Inclusive Futures Project in December 2017 to address the needs of gig and on-demand workers.

Mastercard Meets Elevate

Some of the features of the new product will include purchase and fraud alerts, credit score monitoring, a full-service mobile app and on/off functionality for the credit card. Cards will be awarded based on the analysis of data from alternative sources, Haymond said, which can fill in the blanks to evaluate a customer’s creditworthiness when traditional data points are not present or don’t meet requirements.

Millennials now more bullish about finances than baby boomers — study (Spears Magazine) Rated: A

Almost nine in ten (88 per cent) HNW millennials feel more confident about their finances than a year ago- but less than half of baby boomers (47 per cent) shared the same sentiment.

A new study from SunTrust Bank also found that millennials are more confident than their generation X counterparts, of whom 66 per cent are more confident than last year.

Some 16 per cent of those surveyed attributed their increased optimism to ‘having a great investment firm’, while 13 per cent cited increases in income and assets.

Possible Finance launches with small, short-term loans designed for low-income borrowers (Geek Wire) Rated: B

Tony Huang was inspired to create Possible Finance because “it’s so damn expensive to be poor.”

Possible Finance customers can apply for small loans and receive approval quickly using a mobile app. Customers can build credit when they make payments, unlike traditional payday loans, which typically do not report to credit agencies unless a borrower misses payments.

LendingPoint is the fastest-growing company in metro Atlanta (Atlanta Business  Chronicle) Rated: B

Being a successful financial technology (fintech) lender requires focusing more on the lender portion of your business than the fintech portion. That’s the way Tom Burnside, CEO and founder of LendingPoint, runs his company, the number-one overall fastest-growing private company in the metro area.

 

 

United Kingdom

Zopa executive: “Savers are abandoning the cash ISA en masse” (Peer2Peer Finance) Rated: AAA

SAVERS are “abandoning the cash ISA en masse”, as the personal savings allowance (PSA) makes the tax-free wrappers less relevant for consumers, a Zopa executive has said.

New data from UK Finance showed that investment in cash ISAs fell from £773m in March 2017 to just £332m in March 2018 – a decrease of 42 per cent.

Immigration rules ‘could choke fintech’, says lobby group Innovate Finance (The Times) Rated: A

The prospect of tighter immigration rules after Brexit risks choking off a boom in Britain’s burgeoning fintech industry, according to a new study by lobby group Innovate Finance.

The report says the financial technology sector is on course to top 100,000 employees by 2030, with 30,000 jobs set to be created.

The result would be a shortfall of 3,200 highly skilled workers by 2030, at a cost to the fintech sector of £361m, the report said.

Investment trusts back “substantial opportunity” in alternative lending (Peer2Peer Finance) Rated: A

Victory Park Capital Specialty Lending (VPC) and P2P Global Investments (P2PGI) released their annual reports on Friday morning, insisting there were still opportunities for online lending and consumer credit as banks continue to scale back.

VPC reported a NAV return of 3.07 per cent for 2017, up from 0.95 per cent in 2016 but below its eight per cent target.

Similarly, P2PGI posted NAV total returns of 3.03 per cent for 2017, down from 4.1 per cent in 2016 and below its target of six to eight per cent.

Is there still life left in P2P investment trusts? (Peer2Peer Finance) Rated: A

But four years on from the launch of P2PGI, the investment trust has admitted in its 2017 annual report that historic performance was ”more volatile than we would like.”

But P2PGI still sits at a discount to NAV of 17.5 per cent and VPC is at 12.5 per cent.

Putting Your Bitcoin Investments to Work (Coinspeaker) Rated: A

One pioneer in the field to consider is Nebeus, a crypto bank that brings together cryptocurrency opportunities and a standard bank service. Its Nebeus trading platform supports peer-to-peer (P2P) lending and a multi-cryptocurrency wallet. The platform enables customers to buy, sell, store, remit, lend and borrow cryptocurrency funds.

Nebeus offers two cards that allow holders to spend their cryptocurrency at their convenience online, offline, or to get cash at ATMs, and the convenience and protection this card offers is hard to beat.

The Nebeus Exo Card lets users top up their card with all major cryptocurrencies and spend that money with over 30 million merchants online. Users can make $1,500 ATM withdrawals per day, worldwide. And they get 3% cashback In NBTK tokens monthly. There is no monthly fee for the card for NBTK holders.

China

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

On April 23, China’s leading financial inclusion platform FINUP filed a listing application for the Hong Kong Exchanges and Clearing Limited (HKEX).

Ant Financial Invests in Bangladesh-based Fintech Startup bKash

On April 26, Bangladesh-based mobile financial service provider bKash and Ant Financial jointly announced a strategic partnership to promote the development of financial inclusion for the unbanked and underbanked communities in Bangladesh.

NIFA Establishes e-Contract Standards for Online Lending

On April 23, the National Internet Finance Association of China released a draft of standards on “Safety Regulations for Internet Finance Contracts”.

With $ 1.9 Billion Investment, Former Baidu Unit Challenges Fintech Rivals (Wall Street Journal) Rated: A

Baidu Inc.’s former financial-services unit has attracted a $1.9 billion investment from firms including U.S. private-equity giants TPG and the Carlyle Group, giving it fresh ammunition to compete in China’s increasingly crowded financial-services space.

Chinese VC Firm Sky9 Capital Reaches Final Closing Of $ 200M For New Fund (China Money Network) Rated: B

Sky9 Capital, a venture capital firm founded by a former partner at Lightspeed Venture Partners, announced today that it has completed the final closing of a new fund with total commitments of US$200 million.

Sky9 Capital Fund III, L.P. will invest mainly in China-based businesses with a focus on early-stage companies in the Internet, enterprise, and deep technology sectors.

European Union

KBRA Issues First European Ratings (Business Wire) Rated: AAA

Kroll Bond Rating Agency Europe Limited (KBRA) is pleased to announce its first published European Structured Finance ratings. KBRA issued its inaugural published European ratings on Small Business Origination Loan Trust 2018-1 DAC (“SBOLT 2018-1”), a £206.6 million ABS transaction collateralized by unsecured loans made to small and medium-sized enterprises (“SMEs”) incorporated in the United Kingdom (“UK”). This transaction represents the second ABS securitisation collateralised by unsecured loans to SMEs originated through the online lending platform operated by Funding Circle Limited (“Funding Circle”). The full rating report can be accessed here.

This is KBRA’s first publicly rated European ABS securitisation after being registered as a Credit Rating Agency by ESMA in November 2017.

International

The FTC vs LendingClub, Banking through the Post Office, Dueling Unicorns (PeerIQ), Rated: AAA

On Thursday, Amazon reported $3.27 EPS earnings well above the $1.26 estimates. The stock jumped 7% to record highs in reaction to the beat. The news comes just days after Amazon invested $22mm into Capital Float, India’s self-proclaimed largest online lender. We recently discussed Amazon’s path to the banking sector via its reported partnership with JP Morgan.

The lines between tech and banking continue to blur. Square announced the acquisition of Weebly for $365 Mn.

Dueling Unicorns

Source: PeerIQ, Company Websites, Crunchbase

FTC vs LendingClub

On Wednesday, the FTC charged LendingClub with deceiving borrowers.

In response to the lawsuit, LendingClub posted a detailed rebuttal, refuting the FTC’s claim. As seen in the image below from LendingClub’s blog post, the company believes they provide borrowers multiple opportunities to understand the Origination Fees mentioned in the FTC’s lawsuit. LendingClub goes on to refute each claim made by the FTC individually.

Source: LendingClub

In a post on Lend Academy, Peter Renton questions the cause of this lawsuit, and points to the fact that only two of the five FTC Commissioner seats were occupied at the time of the complaint, and one of the two left on Friday. Renton’s understanding is that LendingClub and the FTC were cooperating and this lawsuit “came out of left field.”

Are You Ready To Give Fintech A Try? (Forbes) Rated: A

In just three years, Germany’s 

Blockchain Startup ShareRing is Facilitating the Adoption of Cryptocurrency (Coinspeaker) Rated: A

ShareRing will achieve this by employing a dual-coin mechanism through its own ShareLedger blockchain that will operate with two distinct tokens. The first – ShareToken (SHR) – will be the utility token of ShareRing. SHR will drive the consensus algorithm and act as a tradable coin on cryptocurrency exchanges.

The second currency, SharePay (SHRP) will be pegged to fiat and can be purchased directly from the ShareRing app using a credit card. A user can then use their SHRP to buy sharing services within the ShareRing application. ShareRing foresees a wide range of partners for the platform, sharing not just apartments and cars, but time, labor, as well as peer-to-peer lending and group tours.

FintruX Network (FTX) Will Be Listed In 3 Exchanges in their first week of token unlock (satPRNews) Rated: B

Qryptos exchange was the first exchange to list FintruX (FTX) On April 22, Bancor network quickly followed suit by listing Fintrux on April 24.

Potential investors, who missed their ICO, will now be able to buy the tokens on Qryptos, Bancor Network and HitBTC as well.

Australia

Borrowers should ‘brace’ themselves for rate hikes (The Adviser) Rated: AAA

After online lender ME claimed that it was “forced” to hike interest rates on its owner-occupier and investor loans as a result of increased funding costs, comparison site finder.com.au asked a panel of economists whether they believed other banks would follow.

According to the finder.com.au survey of 17 economists, 78 per cent said that they expected more lenders would raise their rates out of cycle as a result of rising US interest rates.

 

India

Fintech Startup Rubique Raises Fresh Round Of Funding (Inc42) Rated: AAA

Kalaari Capital-backed online lending marketplace Rubique has raised fresh funding led by Japan’s Recruit Group and Russian venture capital management company Emery Capital.

Blacksoil and existing investor Kalaari Capital also participated in the funding round. Apart from this round, the startup is also in the final stages of closing another tranche’ of funding, to be led by a couple of marquee investors

The startup plans to use the funds to hire more data scientists, enhance technology and reach a monthly revenue of $1.8 Mn (INR 12 Cr) by September.

Crowd Genie Opens India Office to Expand Asia-Pacific Asset Exchange (BC Focus) Rated: A

Crowd Genie Financial Services Pte. Ltd. is incorporated in Singapore and was granted a “Dealing in Securities” license by Monetary Authority of Singapore (MAS) in March 2017. This makes Crowd Genie one of the handful licensed platforms in Singapore.It is a peer-to-peer lending online platform that lets Singapore-based SMEs obtain financing from investors.

Crowd Genie is contemplating to establish a blockchain based Asia-Pacific asset exchange. It recently started an office in Bangalore, India and named Kunwar Singh as its Chief Technology Officer. The company completed its CGCOIN token sale in March this year. It intends to work on the regulatory elements to drive India centric assets onto its exchange.

A primer on crowdfunding (The Hindu BusinessLine) Rated: A

P2P lending is when individuals lend to small businesses/individuals for either a social or a commercial initiative. P2P lending can also be for non-income-generating activities. The consideration here is the interest on the amount lent. The return varies with the risk associated with the business and the individuals running the business — higher the risk, higher the return. Some of the prominent P2P platforms include Milaap, Kiva, Faircent and Cashkumar.

P2P platforms insist on KYC fulfilment for both lenders and borrowers. Diligence exercise is done on borrowers to assess credit-worthiness, genuineness and repayment capability.

Crowdfunding for non-financial consideration is of two types — social lending/donation crowdfunding and reward crowdfunding. Here the return or consideration may or may not be commensurate with the money raised.

 

Latin American

Brazil: Amended payment method regulation (IFLR.com) Rated: A

On March 26 2018, the Brazilian Central Bank enacted amendments to the existing regulation on payment methods, proposing more flexible rules on payment arrangements, payment institutions and on interchange fees charged to issuers of debit cards. The Central Bank expects these changes to foster competition among market players and as a result provide reduced debit card costs for end users.

This new regulation follows an international trend already observed in several developed and developing countries. In the US and Mexico, for instance, maximum limits for interchange fees charged in debit cards transactions led to average cost reductions on such fees of 40% and 50%, respectively.

Authors:

George Popescu
Allen Taylor

Monday September 11 2017, Daily News Digest

Zopa trailing 12-month net return

News Comments Today’s main news: Equifax cybersecurity breach. Goldman to take on UK retail banks. China cracks down on online lenders, cryptocurrency dealers. Klarna is testing credit cards with employeees. Today’s main analysis: CECL overview. Today’s thought-provoking articles: Consumers who go to Equifax for help after data breach may not be able to sue. The data behind Zopa’s lowered return […]

Zopa trailing 12-month net return

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

News Summary

United States

Equifax Cyber Incident (Equifax Email), Rated: AAA

At Equifax, we recognize that consumers and customers expect us to provide superior data security, and we work hard to do that every day. Unfortunately, on September 7th, 2017, we announced a cybersecurity incident involving consumer information.  This cybersecurity incident strikes at the heart of who we are and what we do.  Above all else, our first priority is to support consumers and you, our customers, by doing what we can to make this right.

What happened?

On July 29, 2017, Equifax identified a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Equifax discovered the unauthorized access and acted immediately to stop the intrusion. We promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. We also reported the criminal access to law enforcement and continue to work with authorities.

What information may be impacted?

The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. Criminals also accessed credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.

Additional Information:

We have found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.  In addition, we have found no evidence that this cybersecurity incident impacted Equifax’s core consumer or commercial credit reporting databases, including,  ACRO, Workforce Solutions, including The Work Number payroll data, NCTUE, IXI and  CFN.

Where can I learn more?

We have set up a dedicated website at www.equifaxsecurity2017.com:

  • To see if you are potentially impacted, you can click on the Potential Impact Tab
  • To enroll in complimentary identity theft protection and credit file monitoring services and how to find out if your personal information may have been impacted, you can click on the Enroll Tab.
  • To learn more about the complimentary offering, you can click on TrustedID Premier Tab. TrustedID Premier provides you with copies of your Equifax credit report; the ability to lock your Equifax credit report; 3-Bureau credit monitoring of your Equifax, Experian and TransUnion credit reports; Internet scanning for your Social Security number; and identity theft insurance.

To speak to someone directly, we have also established a call center at 866-447-7559, available every day (including weekends) from 7 a.m. – 1 a.m. EST, for individuals to ask questions.

Consumers Who Go to Equifax for Help After Data Breach May Lose Their Right to Sue (Money), Rated: AAA

On Thursday credit bureau Equifax said a data breach put personal information of 143 million people at risk. Now its response is drawing more outrage, as lawmakers and others accuse it of encouraging consumers who come to it seeking answers to sign away their chance to seek recourse in the courts.

Following the breach, which compromised tens of millions of Social Security numbers and other valuable data, Equifax set up a website to help worried consumers determine whether or not their information was at risk. That website encouraged visitors to sign up for a program known as TrustedID Premier, the company’s credit monitoring service, which provides automated alerts to credit changes and up to $1 million in ID theft insurance. That’s where the trouble began.

TrustedID’s terms of service include an arbitration clause, insisting that customers agree “all claims, disputes, or controversies…shall be finally settled by arbitration” rather than a court of law. Such clauses aren’t unusual for credit monitoring services — or indeed many other consumer products. But in this circumstance, it created the impression that Equifax was asking consumers it had harmed to surrender their legal rights — including becoming part of a class-action law suit — before it would agree to help them.

One key legal avenue that arbitration clauses typically close off for consumers is the class-action lawsuit. That could be significant for Equifax — at least on one proposed class-action lawsuit was already filed against the company late Thursday, according to Bloomberg.

Equifax free credit monitoring service has some concerned (News Channel 6 Now), Rated: A

The 143 million Americans whose information was compromised by the Equifax data breach may still be on edge even with the free credit monitoring service being offered by the company.

Everything from names, addresses, social security numbers and credit card numbers were hacked in the Equifax data breach.

Kuehner said right now the company is sending out letters letting people know if they have been potentially affected. They can also check online at equifaxsecurity2017.com.

However, it is not only the breach that has consumers concerned, it is the company’s response.

“We’re taking unprecedent step of offering every U.S consumer in the country a comprehensive package of identity theft protection, ecredit file monitoring at no cost,” said Rick Smith, Equifax Chairman, and CEO, in a statement released online.

CECL Overview (PeerIQ), Rated: AAA

This past Wednesday, FASB released an update to the current expected credit losses methodology (CECL) for estimating credit loss allowances. This new accounting standard, which was initially published in June 2016 (in conjunction with regulators such as the FDIC, OCC, and NCUA), will apply to financial assets carried at amortized cost, including loans held for investment and held-to-maturity debt. Once in place, these assets must be held on the balance sheet net of an expected loss account. Changes are effective for fiscal years beginning after Dec 15, 2019, for all for-profit companies that file with the SEC.

Once firms adopt CECL, management will have increased discretion around forecasts and ultimately net asset carrying value. This represents a dichotomy for investors. Assets should be carried at more accurate levels and better reflect the organization’s financial position. However, management estimates will significantly affect the balance sheet and income statement.

The major change with the CECL methodology is that organizations are expected to include forward looking information when determining credit losses. Banks will need to calculate expected credit loss at the loan level for the entire life of the loan and then aggregate with similar instruments.

Since ECL is calculated for the life of the financial asset, rather than the annual rate, almost all held-to-maturity instruments that are not risk-free will have a credit loss allowance. These long-dated assets may appear more volatile than financial statement users are accustomed to because their impairment has large implications for the balance sheet and income statement. Under the new regulation it will be more important to have correct, auditable, and explainable expected credit losses.

Source: PeerIQ, FASB, FDIC

Overall, we applaud the coming changes to US GAAP and expect investors to respond favorably.

Square Becoming a Bank Is Brilliant. Here’s Why (Inc.), Rated: A

However, there is much more to this story. In fact, this strategic decision could be one of the best moves the company has made. Square’s decision could start a revolution and revamp the entire financial institution structure to address the changes in the transaction and lending environment.

Square essentially is proving how the traditional bank is no longer necessary. By becoming their own bank, they do not have to seek out a separate institution as a strategic partner. They don’t have to add specific business banking services to their portfolio.

Although the banking sector has tried, most banks still have too many fees and capital requirements to provide business accounts with their needs. Numerous freelancers or startups just can’t satisfy those requirements because banks are still designed with the larger business in mind.

More small businesses need smaller sized loans to tap into for their launches and expansion. Recognizing how peer-to-peer lending has grown together as an entire industry illustrates how ripe the financial industry is for more competition. Peer-to-peer lending is more personal, with a much needed boost to the financial sector in watching to find new ways to provide the much-needed financial support of smaller entities and businesses.

With these products, it makes sense that the company could become a one-stop shop for financial needs. To become a one-stop service requires obtaining a bank charter, which is what the company has now applied for under the moniker, Square Financial Services Inc.

King of fintech defined by optimism (San Francisco Business Times/Ron Suber Email), Rated: A

Source: San Francisco Business Times

PeerStreet – Real Estate Investing for Rich Millennials (Nanalyze), Rated: A

While your average American doesn’t have much in the way of savings, the younger “millennial generation” is actually saving at a higher rate than any other generation. More than 80% of those “investment professionals” will then go on to underperform the market and get paid anyway.

If all of this sounds too daunting already and you want the easy way out, use Betterment.

Founded in 2013, Los Angeles startup PeerStreet has taken in just over $21 million in funding from investors that include Andreessen Horowitz to build “a marketplace that provides unprecedented access to high quality real estate loan investments“. Before you start getting too excited, take note that you’re going to need some cash to bring to the table. PeerStreet shows you some dropdown boxes when you create your account and unless you choose the one that says you make $300,000 a year or the one that says you have $1 million in assets, you’re not going to be allowed in. Those of you who were smart enough to major in a STEM subject are more likely to be squared away here while those of you who majored in underwater basket weaving should probably just stop reading right now.

Right away we can see that this is a property that is out of reach for the majority of Americans with a hefty $3.78 million price tag.

This means that the amount of money we could get from selling our property falls to around $3 million which still makes it very easy to pay off a $2 million loan. In fact, the only point we would start to worry is if property prices fell more than -53% over an 18-month period. This would represent a “black swan” type of event which has a very low probability of occurring. Of course there’s always the risk of PeerStreet going under but then you still have the property as collateral for the loan and you are first in line to receive payback should their property portfolio be liquidated. For providing everyone with this great service, PeerStreet takes a reasonable .75% fee which is paid each month alongside the interest payments.

The first thing to note here is that the price of entry is an extremely attractive $1,000. You’d be joining the 295 other investors who have already plunked down an average amount of $6,169 which brings the loan up to 91% funded. If you then went out and found 9 other properties to invest in, you’d have a nice little diversified portfolio of 10 various property investments that are transparent and relatively simple to understand (provided you took the time to understand the risks as we have done with this example), all for just $10,000.

Source: Nanalyze

Lend360: Fintech is No longer a Boutique Financing Option, but a Key Component of Lending Market (Crowdfund Insider), Rated: A

The early days of peer to peer lending have morphed into a far more complex and data driven credit service that is competing against not just innovative Fintech startups but traditional lenders seeking to maintain relevance. Crowdfund Insider recently asked Lend360 organizers a few questions on their perspective of the online lending industry and what has changed – and what they expect going forward.

What has changed in the lending environment in the past 12 months?

The biggest change is that Fintech is no longer just viewed as a boutique financing option, but a key component of today’s lending market. For proof of this change one only needs to look at the push for a national Fintech charter.

Where do you see current opportunities?

As long as there is a demand for credit, there will be an opportunity for Fintechs to step up and fill the void.

 

Unexpected expenses hit non-prime Boomers hard (Banking Exchange), Rated: A

New research, “The unGolden Years: Non-prime Baby Boomers,” from the Elevate Center for the New Middle Class indicates that non-prime Boomers are borrowing against their 401k accounts three times as frequently as prime Boomers do. The survey found that 4% of prime Boomers have 401k loans, while 13% of non-prime Boomers have borrowed against these retirement plans.

Less than half—43%—of the non-prime Boomers in the company’s research feel comfortable with their ability to manage their day-to-day finances, let alone prepare for retirement. Not that prime Boomers all feel confident, either, with 76% saying they can manage daily financial needs.

Elevate’s study, based on a survey of over 1,000 prime and nonprime consumers, found that non-prime Boomers are 14 times as likely as prime Boomers to have difficulty predicting monthly income—and 4 in 10 say they live paycheck to paycheck. They also tend to have difficulty predicting monthly expenses and are therefore more likely to experience unexpected expenses, the research says.

Among non-prime boomers, 7 in 10 run out of money at least once a year, in spite of generally decent employment levels—frequently, in fact, with more than one job apiece.

The study asked respondents how they would meet an emergency need for $1,200. Among the non-prime Boomer respondents, nearly half had difficulty coming up with a source of funds—1 in 8 could think of no solution at all.

  • 22% of non-prime Boomers could cover the $1,200 surprise through savings—about half of the portion of prime Boomers who could do so.
  • 22% said they could use a credit card to cover the surprise, but less than a third said they could pay off that borrowing before it began to accrue interest.
  • 11% said they could tap family or friends for the money. Interestingly, only 2% of prime Boomers would go that way.
  • A small portion—4.4%—of non-prime Boomers would use payday lenders, deposit advances, or overdraft programs. Interestingly, in a separate question, 13% of non-prime Boomers said they’d used a payday loan in the previous 12 months.

HedgeCoVest Rebrands, Pivots Toward a TAMP (Wealth Management), Rated: A

HedgeCoVest is pivoting away from being a platform to help investors access hedge funds in favor of being a turnkey asset management platform. To reflect the change, the company is rebranding as SmartX Advisory Solutions.

And as part of the change, SmartX is bringing on 27 new investment strategies from firms like Blackrock, Morningstar Investment Management and Nasdaq Dorsey Wright. The models will cover strategies including ETFs, income portfolios, international equities, global/macro investing and U.S. equity strategies.

RIA in a Box Introduces Trade Monitoring

The technology company has a new employee trade-monitoring tool for its MyRIACompliance software platform that RIA in a Box says will help firms comply with Rule 204A-11, which requires the submission of securities holdings and transaction reports. The new tool digitizes the process, provides an interface for employees to electronically link applicable personal brokerage accounts, and provides chief compliance officers with supervision, administration and reporting capabilities.

Cryptocurrency IRAs

CoinIRA, a subsidiary of Goldco focused on digital currencies, is launching Digital IRA Bundles, new investment products that come prepackaged with combinations of popular cryptocurrencies such as Bitcoin, Litecoin and Ethereum.

Commonwealth Selects Quovo for Aggregation 

Commonwealth Financial Network announced the completion of an upgrade to the account-aggregation features within Investor360 using Quovo.

Don’t Fall for Loan Sharks Just Because They Have Hip Branding  (Lifehacker), Rated: A

We all know payday lenders, loan sharks, and credit cards profit when you go into debt and, therefore, they can be dangerous. But many of these companies conceal their danger with clever marketing. Beware: a debt trap by any other branding is just as dangerous.

Over at the Outline, writer Gaby Del Valle discusses one such company, Affirm. v

The difference between this service and a typical subprime loan seems to mostly lie in the marketing. Unlike other loans, Affirm is a bit more upfront about the terms you’re getting into.

Everyone is picking on Affirm here, but the issue is not unique to them. This reminds me of the recent fiasco with Navient, the student loan servicer that was sued by the Consumer Financial Protection Bureau (CFPB) over shady business practices like misapplying student loan payments. In the lawsuit, Navient said they have no obligation to act in their customers’ best interest. But that’s not exactly the message that comes across on their “Financial Tips Blog.” These companies use financial literacy to hook you into making bad financial moves.

How to Use a Peer-to-Peer Loan to Pay off High-Interest Debt (Forbes), Rated: A

High-interest debt, such as credit cards, sometimes seems impossible to pay off.

Peer-to-peer loans are unsecured — you don’t have to tie any collateral to them. They’re attractive to borrowers with high-interest rate debt because they provide concrete payoff dates and an option for a fixed — and potentially lower — interest rate.

In fact, according to peer-to-peer platform Lending Club, its borrowers — on average — secure a 24% lower interest rate when using its peer-to-peer loans to consolidate debt.

SS&C Announces Major New Release of Precision LM Loan Management Solution (Business Insider), Rated: A

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced the availability of Precision LM™ 3.0, the latest version of the company’s loan origination, servicing, accounting and asset management solution. The new version marks the culmination of significant input and engagement from Precision LM clients as well as SS&C’s proven ability to execute on its comprehensive development roadmap.

Pefin, a fintech start-up, is using A.I. to offer financial advice. Just don’t call it a ‘robo advisor.’ (CNBC), Rated: A

Automated financial advice is becoming more commonplace in the hunt for bigger returns, yet Pefin bills itself as “the world’s first [artificial intelligence] financial advisor.” The company aims to use machine learning to deliver a range of financial planning and investment advice via a chat interface.

“I started Pefin mainly because when you think about less affluent people, there’s really no access to financial advice aside from robos,” Joseph told CNBC in an interview recently.

“Robos are trying to execute a transaction, while we are trying to manage your finances. Investing is optional with us, and we’ll help you if we think it’s the right move for you” rather than generating fees for the company, she told CNBC.

Pefin Welcomes Catherine Flax as Chief Executive Officer (Benzinga), Rated: A

Pefin, the world’s first Artificial Intelligence (AI) financial advisor, welcomed Catherine Flax as Chief Executive Officer today.

Flax has had a multi-decade, distinguished career on Wall Street, as the Managing Director and Head of Commodity Derivatives, Americas at BNP Paribas and as Chief Marketing Officer of J.P. Morgan. She was named the Most Influential Woman in European Investment Banking in 2012 and one of the 100 most influential women in European Financial Markets in 2010 and 2011. Flax has been a leader in the FinTech space, as a Board Member of leading blockchain company, Digital Asset Holdings, and for the last two years, as an Advisor to Pefin in matters of Marketing, Regulation, Business Development and International Growth.

CoverWallet, Benzinga Fintech Award Winner, Appoints OnDeck’s Paul Rosen As COO (Benzinga), Rated: B

CoverWallet, the winner of Best Insurtech Solution at the 2017 Benzinga Global Fintech Awards, has hired Paul Rosen, formerly the chief sales officer at On Deck Capital Inc ONDK, as its chief operating officer.

Insurtech reminds Rosen of what fintech looked like five to six years ago, he told Benzinga.

Former OnDeck Director Joins Pearl Capital as Chief Revenue Officer (Monitor Daily), Rated: B

Pearl Capital Business Funding, a provider of direct financing to small and midsize businesses, announced Jared Kogan joined the company as chief revenue officer.

Kogan joined Pearl following a 10 year career in the fintech space, most recently serving as the director of OnDeck’s broker division where he funded 10,000 loans for over $650 million in volume and was able to grow production from $14 million to over $40 million per month. Prior to OnDeck, Kogan served as vice president at Newtek, the largest non-bank SBA lender in the country.

Bad Credit? Business Loan Options For Entrepreneurs (Business Computing World), Rated: B

Online Lending Platforms

Typically, these lenders operate only on the web and promise quick assessment and disbursal with less bureaucracy. Some specialist bad credit lenders are ready to structure loans according to your convenience. You can also look at peer-to-peer lending platforms that give you access to individuals who are looking to invest their money in different ventures. Again, these platforms can get cash relatively more quickly into the system.

United Kingdom

Goldman Sachs to take on UK retail banks (Financial Times), Rated: AAA

Goldman Sachs is looking to expand its retail banking business to the UK, replicating its mass-market offering in the US, as it continues a steady march from Wall Street to Main Street.

The New York-based investment bank began to pivot in the US about 18 months ago, offering high-interest online savings accounts for a deposit of as little as $1. Last October it took a step further by launching Marcus by Goldman, a digital consumer-lending platform that seeks to rival the San Francisco trio of Lending Club, Prosper and SoFi.

Now Goldman is taking it international, aiming to launch an online deposit business in the UK about the middle of next year. According to Stephen Scherr, the bank’s head of strategy, the lender plans a greenfield start in the UK under the Marcus brand, but could look to buy a book of deposits — as it did in the US — if the opportunity came its way.

The data behind Zopa’s lowered return projections (AltFi Data Email), Rated: AAA

Zopa has an enviable track record of delivering net returns as evidenced by a more than 10 year track record of delivering 4-7% returns  (after losses and fees).

Source: AltFi Data
Source: AltFi Data

Investors value projected returns over track record (P2P Finance News), Rated: A

INVESTORS rank the expected rate of return as the most important factor when choosing an investment provider, research shows.

Analysis by bond provider Minerva Lending, based on a poll of 1,000 adults with more than £50,000 to invest, found 61 per cent consider the rate of return as the most important factor when choosing who to trust their money with.

The research, released on Friday, does not refer to peer-to-peer lending but investors appear to be looking for many factors that P2P firms offer.

Zopa’s Andrews warns on post-Brexit skills shortage (P2P Finance News), Rated: A

THE UK is facing a technology skills shortage that may worsen because of Brexit, Zopa’s co-founder and chairman has warned.

Giles Andrews (pictured) said that the peer-to-peer consumer lender’s decision to open a hub in Barcelona was partly due to a concern that it would be harder to recruit top tech talent following the UK’s departure from the EU.

Assetz signs for Manchester Green office (North West Place), Rated: B

Assetz Capital, part of the Manchester-based Assetz Group, has relocated from Newby Road in Hazel Grove where it occupied 3,000 sq ft of a 6,000 building, to take the newly refurbished Building 3 on a 10-year lease.

China

Cryptocurrency dealers and online lenders feel heat in China (Nikkei), Rated: AAA

On Friday, Caixin, a Chinese business news outlet, reported that financial authorities have decided to shut down virtual currency exchanges.

Beijing appears eager to eliminate money laundering and choke off capital outflows by shutting down bitcoin exchanges and other virtual currency trading platforms. It is also tightening its grip on peer-to-peer lending, in which individuals privately contract to borrow and lend.

Some exchanges have temporarily halted trading in response to the report. Investors rushed to sell their digital currencies for cash, sending bitcoin about 20% lower versus the yuan at one point on Saturday, compared with the day before, to below 24,000 yuan ($3,703).

Report Casts Doubt on Future of China’s Bitcoin Exchanges (Coindesk), Rated: A

Regulators in China are said to be considering a move to close all domestic bitcoin and cryptocurrency exchanges.

As of now, no official announcements from regulators have been seen. However, there are reasons to believe the report may be authentic.

The work group was first launched by China’s State Department in 2016 to tackle market risks in the country’s financial technology industry such as p2p lending.

Emerging Digital Payments are Crowding out the Banking Market (Xing Ping She), Rated: A

According to report from the Central Bank, in the second quarter of 2017, banking financial institutions have handled 36.247 billion electronic payment services, amounting to 545.58 trillion RMB, which was down about 4.4% from the same period of last year.

Actually, non-bank payments including Alipay and wechat Pay are growing rapidly. The Central Bank’s data also shew that in the second quarter of 2017, the scale of non-bank payment market reached to 570.95 trillion RMB. Compared to the amount of 23.35 trillion in the same period last year, it has significantly increased 34.87 percent.

 

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China.

On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China. According to WeChat Pay, users of the new product will be able to make payments and transfer, send Hongbao, pay back credit card debt and be awarded with interest on their digital wallet balances.

As response to the latest regulation, NEO Council announced it would offer refunds for NEO purchased through its ICO.

On September 4th, China’s leading digital payment service Alipay announced to expand its operation to Norway.

Early this week, Proptech BBT announced that the platform had managed to secure RMB 60 million Pre-A funding from Hongdao Capital at the beginning of August.

European Union

Klarna is reportedly testing its own credit cards among employees (Business Insider), Rated: AAA

Since Klarna received its full banking license this summer, there have been many questions as to how exactly it would be leveraged. One among many speculative scenarios includes launching the company’s very own credit- and bank cards.

Now there are some initial reports indicating that the credit card rumours are for real. Referring to internal documents it has been able to access, Breakit reports that the Swedish e-invoicing giant, valued at $2,5 bn, is testing credit cards in-house.

A memo sent through the company’s intranet has supposedly given Klarna’s Swedish employees the opportunity to test proprietary payment cards for a limited amount of time.

Knowledge is power in Grid Finance’s revolution (Independent.ie), Rated: A

SME lender Grid Finance is expanding its offering to include a digital pension product targeted at the owners of small businesses. The company has engaged Conexim to provide the back office infrastructure on the product – as well as the regulatory umbrella – while Grid will act as distributor.

It is the latest piece of innovation being undertaken by the company, which is looking to build what chief executive Derek F Butler calls “a small business bank in all but name”.

10 Swiss Fintech Startups to Watch (LinkedIn), Rated: A

The 10 selected entrepreneurs reflect the acceleration of the Swiss fintech scene in the recent years and the impressive quality of its startups. They will join the intense journey taking place from September 10 – 16 in New York.

  • Advanon, Phil Lojacono: Advanon in its basic version is an online platform that allows SMEs to pre-finance their open invoices directly through financial investors.
  • Algo Trader, Andy Flury: The startup provides an algorithmic trading software that allows automation of complex, quantitative trading strategies.
  • Creditgate24, Teddy Amberg: CreditGate24 is an independent Swiss company and a fully automated platform for lenders and borrowers which offers efficient, transparent and scalable credit processing at high quality.
  • KiWi (eBOP), Christian Sinobas: KiWi transforms merchant’s phone into a smart point of sale.
  • Monito (Global Impact Finance), François Briod: Sending money abroad? Monito is the Booking.com for money transfers, helping migrants and expatriates find, review and compare money transfer services.
  • OneVisage, Christophe Remillet: OneVisage is a leading cyber-security company developing biometric solutions to help financial services eliminating identity theft and increasing user’s digital experience.
  • SONECT, Sandipan Chakraborty: SONECT enables every shop in the neighborhood to act as a virtual ATM.

Should you let a ‘robot’ manage your retirement savings? (BBC.com), Rated: A

Consultancy firm Accenture found that 68% of global consumers would be happy to use robo-advice to plan for retirement, with many feeling it would be faster, cheaper, and more impartial than human advice.

Joe Ziemer, vice president of communications at Betterment, a US robo-adviser with more than $9bn under management, says: “The Betterment service takes your information and uses a series of algorithms to create an asset allocation plan, which might be, for example, 90% equities and 10% bonds for a retirement saver.”

Wealth Wizards, for example, typically charges £65 for investments up to £30,000, and 0.30%, or £300, on a £100,000 investment pot. Betterment charges 0.25% a year.

That’s peanuts compared to human advisers’ fees, which come in at about £580 for advice on a £200-a-month pension contribution, or £1,000-£2,000 for guidance on what to do with your £100,000 pot when your retire, according to UK adviser network Unbiased.

Robo.cash Reports Steady Growth in European P2P Lending (Crowdfund Insider), Rated: A

The young lender says the total amount of investments now exceed €1.8 million. Approximately €400,000 in loans were added in August. The average invested amount per investor gained 2.2% to the previous month at €3,270 in August. In regards to the number of investors using the platform, in August Robo.cash added 188 users. Currently, there are more than 900 investors in total who have joined the platform in the first six months of operation.

Source: Crowdfund Insider
International

Mitek Unveils Mobile Verify® for Lending (Globe Newswire), Rated: A

For the first time at FinovateFall, Mitek (NASDAQ:MITK) (www.miteksystems.com), a global leader in mobile capture and identity verification software solutions, will demonstrate Mobile Verify® for Lending. This new, five step digital lending experience enables lenders to verify identity and bank account information in real time for fast loan decisions with a simple process for borrowers.

When applying for a consumer loan from a desktop computer, the borrower will first log into their online bank account and agree to have their account information shared with the lender. A text message is then sent to the borrower’s smartphone directing them on how to take four photos: front and back of their driver’s license, a selfie and a photo of their pay stub or other trailing document, to complete the loan application process. This new digital experience is quick and easy for the borrower and provides the lender with real-time identity and bank account verification.

Moroku lands on the BNP Paribas Radar (Moroku Email), Rated: A

Dear friends

Last week Moroku was identified as one of the top 4 Fintech’s globally best positioned to take on the battle for Millennials 

Fintech has transformed payments but not savings, says BlackRock’s chief executive (SCMP), Rated: A

The financial technology boom has transformed the way over a billion people engage with financial services, particularly when it comes to making payments, but Larry Fink, chief executive of BlackRock, the world’s largest money manager, said that no company has yet managed to use technology successfully to get people investing for the long term.

Both in China, and in Europe and North America, a plethora of investment platforms and robo advisory services are evolving, but none has yet reached critical mass.

Memorandum of Understanding Signed with GoldMint (LSE), Rated: B

Eurasia, the platinum, palladium, iridium, rhodium and gold production company, is pleased to announce it has entered into a Memorandum of Understanding with GoldMint PTE (“GoldMint”), a Singapore based Limited Company.

Australia/New Zealand

Broker numbers to swell in SME space (AustralianBroker), Rated: A

More brokers will diversify into the SME loan space due to increased competition in traditional markets and growing demand from clients, the lender’s head of sales Michael Burke said.

“Brokers are not only looking to move into online lending because of the speed and ease of doing business it offers, but because their time-poor customers are demanding a more convenient solution involving faster turnaround times.”

As well as providing a digital platform to facilitate the loan process, OnDeck’s underwriting policy also helps ease the broker’s burden, Burke told Australian Broker.

PledgeMe joins Equitise in eyeing Australian market (Scoop), Rated: A

PledgeMe, the equity crowdfunding and peer-to-peer lending platform, has joined rival Equitise in signalling plans to enter the Australian market ahead of a law change coming into effect across the Tasman this month.

Co-founder Anna Guenther will relocate to Brisbane for six months to establish the Wellington-based company’s Australian arm, according to a PledgeMe blog post. PledgeMe will participate in the Queensland government’s HotDesQ programme, which provides networks, support, and funding for companies to relocate to the state.

India

SoftBank Vision Fund makes second bet in two months; fintech remains investors’ favourite baby (Yourstory), Rated: A

SoftBank Vision Fund, the world’s largest pool of private capital, placed its second major bet on an Indian startup in a span of two months with its investment in OYO Rooms. The $250-million funding has taken OYO’s valuation from $460 million in August last year to between $850 million and $900 million.

APAC

This Not-for-profit Fintech Hub Wants To Impact The Unbanked Population (BLLNR), Rated: A

Allow me to set the scene: in the wider region of Southeast Asia that surrounds Singapore, where Lattice80, our not-for-profit fintech hub that we launched last year is based, there is a huge unbanked population. KPMG estimates put the number at about 438 million. In poor countries like Cambodia, the population with a bank account falls to just 5 percent.

McKinsey did a similar study in 2010 on the world’s 2.5 billion unbanked. Asia’s emerging markets were identified as a hotbed of unbanked. The same study suggests that reaching the unbanked population in ASEAN could increase the economic contribution of the region from US$17 billion to US$52 billion by 2030.

Multi-asset funds offer ‘all-in-one solutions’ (Straits Times), Rated: A

Q WHAT IS THE ATTRACTION OF MULTI-ASSET INVESTING?

It is the ability to combine a range of asset classes with different and largely independent economic drivers in order to achieve consistent return and reduce downside risk.

Years of central bank intervention in markets have depressed interest rates and left investors hunting for reliable yield. More asset classes beyond traditional equities and bonds have become more accessible in the past decade.

Q WHAT IS THE COMPOSITION OF YOUR MULTI-ASSET PORTFOLIOS?

More recently, we added peer-to-peer lending, mortgage and corporate funds that offer excess return over corporate bonds for a similar level of risk, litigation financing and credit funds. The world’s largest institutional investors have already diversified into these assets. Now, smaller institutions and individual investors can too, through our multi-asset strategies.

Authors:

George Popescu
Allen Taylor

Wednesday August 30 2017, Daily News Digest

Prosper

News Comments Today’s main news: Prosper performance update for July 2017.Top Mozido executives quietly left company.White House OKs delay of fiduciary rule.Funding Circle kicks off 12M marketing campaign with TV ad.LATTICE80 to open London fintech hub.Klarna profits up 130%+.RateSetter hits 2,000 broker milestone. Today’s main analysis: Millennials prefer auto, personal loans to credit cards. Today’s […]

Prosper

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

South America

Canada

Africa

News Summary

United States

Prosper Performance Update: July 2017 (Prosper), Rated: AAA

Today we are sharing performance data from the Prosper portfolio for July 2017.

Our risk team implemented a credit tightening in July aimed at removing certain populations of borrowers from originations on a go-forward basis. As a result of this credit tightening, the overall distribution of the book shifted slightly towards lower risk loans. This slight shift resulted in an overall portfolio coupon decrease of 45bps and an overall return estimate decrease of 26bps.

Additional highlights from the July Update include:

  • Charge-off levels in 2016H2 vintages continue to show meaningful improvement compared to 2016H1 vintages.
  • Periodic delinquencies moved higher for 2016 and 2017 vintages.
Source: Prosper

The Top Executives Of Former Fintech Unicorn Mozido Have Quietly Left The Company (Forbes), Rated: AAA

The top two executives of Mozido, a financial technology company that raised some $300 million to develop a mobile payments business, have quietly left the company.

On its web site, Mozido currently lists Todd Bradley as its CEO, but Bradley said in a brief interview that he left the company in June. Bradley’s departure appears to have left Mozido without a chief executive officer. Bradley has also left Mozido’s board but the company’s web site still lists Bradley as a director.

Scott Ellyson, Mozido’s chief financial officer who is listed on Mozido’s web site as its second-most senior executive, has also left the company, according to Bradley. Ellyson’s LinkedIn page currently does not mention his time at Mozido. He did not respond to a request for comment.

Three weeks ago, Michael Liberty, the founder of Mozido, was sentenced to four months in prison and a $100,000 fine by a federal judge. Liberty pleaded guilty in November 2016 to making illegal campaign contributions.

Digitalization Among Factors Pushing Millennial Credit Preferences Toward Auto and Personal Loans (NASDAQ), Rated: AAA

As the first generation to be fully immersed in mass-market digitalization, Millennials are slowing their credit card usage while increasingly using other credit products such as personal loans. A just-released TransUnion (NYSE:TRUstudy found that Millennials are carrying on average two fewer bankcards and private label cards than Generation X (“Gen X”) consumers at the same respective ages. Conversely, Millennials’ appetite for new auto and personal loans has grown at a faster rate than Gen X borrowers at the same age points.

Credit Cards Out of Fashion; Cars and Personal Loans in Style

The study found that, in addition to carrying fewer credit cards than Gen X consumers, Millennials also are maintaining lower balances on those cards. TransUnion analysts believe that this is partly driven by the CARD Act of 2009, which limited the marketing of credit cards on college campuses. The increased use of debit cards also plays a role in this shift. The study pointed to recent Federal Reserve data, which found that debit card transactions grew from 8 billion in 2000 to 60 billion in 2015. In contrast, credit card transactions only increased from 16 billion to 34 billion in that same timeframe.

Source: TransUnion

Millennials and Mortgages

Among all major credit products, the mortgage market has been the slowest to recover from the Great Recession, with home ownership rates still below levels observed in 2009. Overall, homeownership is down 0.8% since the Recession, but this number grows to -1.6% for 35-44 year olds and -2.1% for those under 35.

As a result of credit access being limited and, per the U.S. Census Bureau, affordability being affected by income gaps between the two generations, TransUnion’s study found the percentage of Millennials opening mortgages between the ages of 21-34 (5%) is nearly half of the Gen X group (10%) when they were that age. TransUnion observed a smaller but still material gap (13% for Millennials vs. 16% for Gen X) within the Super Prime risk tier, suggesting that this dynamic is not driven solely by credit supply.

TransUnion’s study found that access to mortgages has declined dramatically for 21-34 year olds. In 2000, 39% of mortgage originations in this age range were comprised of non-prime borrowers.  In 2016, non-prime borrower originations declined to 20%.

Further impacting mortgage originations to Millennials are lower income levels. Per the U.S. Census Bureau, median household income of consumers ages 25-34 declined from $60k in 2000 to $57k in 2015.  The impact can be seen in the housing status of these consumers: a larger portion of younger adults ages 25-29 are living with their parents, rising from 15% in 2000 to 25% in 2014.

Despite these challenges, a TransUnion survey of 1,340 consumers in July 2017 found that nearly 75% of Millennials ages 23-37 said they plan on purchasing a home in the future.

White House OKs DOL Fiduciary Rule Delay (Financial Advisor IQ), Rated: AAA

The Office of Management & Budget of the White House has approved the Department of Labor’s request to push back the final implementation date of its fiduciary rule — originally scheduled for January — to July 2019, the Wall Street Journal reports.

Banks Send Warning Signs for Economy (WSJ), Rated: A

Being a key transmission mechanism for savings, investment and spending, the banking sector is worth watching as a barometer for the health of the overall economy. Lately it has been acting as one would expect toward the end of an expansion phase.

Most glaringly, after strong lending growth for several years, momentum clearly is slowing. In its quarterly report on the sector, the Federal Deposit Insurance Corp. found that total loans and leases by banks and other insured institutions rose by just 3.7% from a year earlier at the end of June. That is the third consecutive quarterly deceleration and is down from a 6.7% pace of growth a year ago.

After a period of strong lending, it is also typical for defaults to start ticking up as levels of indebtedness rise and bills come due. This is indeed happening, at least among consumers. Credit-card charge-offs soared by 24.5% in the second quarter, according to the FDIC, marking the seventh straight increase. Charge-offs on loans to commercial and industrial borrowers, however, declined by 9.7%, possibly due to a recovering energy sector.

‘Madden fix’ bills are a recipe for predatory lending (American Banker), Rated: A

Currently pending in both houses of Congress are versions of the Protecting Consumers Access to Credit Act of 2017 — bills that would “fix” the 2015 appellate court decision in Madden v. Midland Funding LLC. Unfortunately, these so-called legislative solutions are based on a faulty reading of case law.

The Madden case held that National Bank Act preemption of state usury laws applies only to a national bank, and not to a debt collector assignee of the national bank. The decision has potentially broad implications for all secondary markets in consumer credit in which loan assignments by national banks occur: securitizations, sales of defaulted debt and rent-a-BIN lending.

Unfortunately, the “Madden fix” bills are overly broad and unnecessary and will facilitate predatory lending.

The actual “valid-when-made” doctrine provides that the maker of a note cannot invoke a usury defense based on an unconnected usurious transaction. The basic situation in all of the 19th-century cases establishing the doctrine involves X making a nonusurious note to Y, who then sells the note to Z for a discount. The discounted sale of the note can be seen as a separate and potentially usurious loan from Y to Z, rather than a sale. The valid-when-made doctrine provides that X cannot shelter in Y’s usury defense based on the discounting of the note. Even if the discounting is usurious, it does not affect the validity of X’s obligation on the note. In other words, the validity of the note is a free-standing obligation, not colored by extraneous transactions.

Recovering Non-Performing Loans: Better Options (Lend Academy), Rated: A

A small business lender knows that a certain percentage of loans will become NPLs and typically has parameters the business must stay within to remain profitable. The lender may pursue NPLs on an in-house basis indefinitely past the charge-off date or turn them over to a collections agency at some point. Both options create problems in the fintech business model.

The best recovery option for online small business lenders is to manage NPLs in-house until they become charge-offs, then use the services of a reputable commercial debt buyer. This is how it works.

  • The lender works with the commercial debt buyer on a one-time basis, periodically, or in a forward-flow relationship where NPL information is sent regularly to the buyer.
  • A non-disclosure agreement (NDA) is signed and the lender provides information to the buyer on the pool of non-performing assets. This includes the number of accounts and amount of outstanding balances.
  • Buyer assigns a value to the NPLs and offers a price.
  • Lender signs the purchase agreement. Typically, buyers in forward-flow relationships will send payment within 24 hours.
  • Reputable buyers then work to collect the debts over time, without using the lender’s name and in a sensitive manner, and without reselling the debt.

TEN-X PARTNERS WITH MONEY360 TO OFFER FINANCING SERVICES FOR COMMERCIAL REAL ESTATE TRANSACTION MARKETPLACE (Money360), Rated: A

Ten-X Commercial, the nation’s leading online real estate transaction marketplace, today announced that it has partnered with Money360, a technology-enabled direct lender focused on commercial real estate (CRE), to offer financing for properties available for sale. The partnership will expand the investor pool for commercial properties listed on Ten-X by giving prospective buyers assurance they will be able to procure the necessary financing to fill the deal’s capital stack, while providing sellers and their brokers increased confidence that once terms are agreed upon, buyers will be able source a loan and close the deal.

Under the agreement, Money360 will work with Ten-X to determine which commercial properties listed on the Ten-X platform are appropriate for pre-arranged financing, and will then pre-underwrite bridge and/or permanent loans for qualifying properties. The lender’s offers will be listed on the Ten-X property detail page, informing prospective buyers about the available financing terms. After the property trades, Money360 will work with buyers to underwrite, process and close the loans to facilitate the transaction.

Non-Prime Boomers Struggle Financially, but Less So Than Other Generations (BusinessWire), Rated: A

Despite the widespread perception that Baby Boomers (ages 51-64) are struggling to make ends meet more than any other generation, new research from Elevate’s Center for the New Middle Class has found that Baby Boomers are actually struggling the least. In fact, Baby Boomers are the most likely to have steady employment and run out of money less often, compared to data from previous studies.

“These findings come as a surprise, as they are counter-intuitive to many of the trends we have seen widely covered around Baby Boomers,” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Recently, it was reported by the Federal Reserve that Baby Boomers are leaving the workforce in such large droves that they are skewing employment numbers, but we’ve found that 60 percent of non-prime Boomers have had no employment change in the last 12 months, compared with 59 percent of Gen-X and 43 percent of Millennials.”

But even though they struggle less than other non-prime generations, they are still facing challenges in the new economy, especially when compared to their prime counterparts. Non-prime Boomers are more likely to hold more than one job and are 10 times more likely to run out of money every month.

Additional key findings include that – compared to their prime cohorts – non-prime Boomers are:

  • 2.2x as likely to say that their finances cause them significant stress
  • 4x as likely to live paycheck to paycheck and 1 in 6 use payday loans
  • 14x as likely to express difficulty predicting monthly income and are 2.5x more likely to overdraft on bank account
  • 3x as likely to take a loan against their 401k
  • 46 percent less likely to go on vacation
  • More likely to be living in households with 3 or more working adults

How Gen Z Will Affect The Future Of The Peer To Peer Economy (Forbes), Rated: A

Born in the mid-1990s to late 2000s, Gen Z accounts for one-quarter of the U.S. population. They are considered the most diverse and most multicultural generation the U.S. has ever seen. The highly influential Gen Zers are the first digital native generation. They are already impacting the current peer-to-peer (P2P) economy and will have an enormous effect on how this economy evolves.

Gallup study found that about 8 in 10 students in grades 5 through 12 reported that they wanted to be their own boss rather than work for someone else.

Additionally, a millennial branding studyreported that 72% of high school students and 64% of college students want to start their own business.

PUBLIC COMPANIES MAKING ICO-RELATED CLAIMS (Investor.gov) Rated: A

The SEC may suspend trading in a stock when the SEC is of the opinion that a suspension is required to protect investors and the public interest.  Circumstances that might lead to a trading suspension include:

  • A lack of current, accurate, or adequate information about the company – for example, when a company has not filed any periodic reports for an extended period;
  • Questions about the accuracy of publicly available information, including in company press releases and reports, about the company’s current operational status and financial condition; or
  • Questions about trading in the stock, including trading by insiders, potential market manipulation, and the ability to clear and settle transactions in the stock.

The SEC recently issued several trading suspensions on the common stock of certain issuers who made claims regarding their investments in ICOs or touted coin/token related news.  The companies affected by trading suspensions include First Bitcoin Capital Corp.CIAO GroupStrategic Global, and Sunshine Capital.

RealtyShares Reports: $ 10.3 Million Raised for Industrial Real Estate Deals in San Francisco and Boston MSA (Crowdfund Insider), Rated: A

Online real estate marketplace RealtyShares announced on Tuesday the closing of two industrial real estate financing transactions in San Francisco and Boston MSA. The amount raised between the deals was $10.3 million.

RealtyShares stated it secured  $8.7 million industrial debt loan for a San Francisco located mixed-use, industrial warehouse and office space in the city’s South of Market (SoMa) neighborhood.

Westlake Financial Services Embraces Clarity Services’ Clear Fraud to Enhance Its Auto Lending Nationwide (BusinessWire), Rated: A

Following impressive results using Clear FraudTM to mitigate losses in targeted auto lending transactions, Westlake Financial Services has expanded its relationship with Clarity Services to strengthen its auto portfolio nationwide.

Westlake, which has a network of more than 50,000 new and used auto and motorcycle dealers throughout the United States, began testing Clear FraudTM a year ago in select markets. The California-based finance company has enhanced its profitability by using Clear FraudTM to provide loan terms that are more attractive to both consumers and dealers.

By incorporating Clarity’s credit data, Westlake is able to more accurately price and structure deals with profitable loan terms, and determine down payment requirements. Westlake’s use of Clear FraudTM helps the lender evaluate subprime applicants with credit scores below 600. Clear FraudTM also makes it easy to integrate scores into Westlake’s existing scorecard.

AirFox Closes $ 6.5 Million AirToken Pre-Sale Weeks Ahead of Schedule (News BTC), Rated: A

AirFox, the company making mobile data and the internet more affordable for millions of people, today announced it closed its $6.5 million ICO pre-sale weeks earlier than scheduled. The ICO will open at 10 a.m. ET on September 19, 2017. AirFox will use the ICO funds raised to further develop and launch its new blockchain consumer platform, AirToken (AIR), in order to tokenize mobile access by unlocking mobile capital from the smartphone for the underserved and underbanked prepaid mobile subscribers in emerging markets.

FinTechs Give Banks A Wake-Up Call With Loan Disbursements (PYMNTS), Rated: A

Not too long ago, when small- to mid-sized business (SMB) Orion First, a business credit ratings firm, needed a loan, its only option was to visit a local bank, fill out myriad application forms and wait several weeks or months to (maybe) get approved. Fast forward to today, and the small business lending process has undergone a significant overhaul.

With a growing number of FinTech players competing in the lending space, small businesses now have improved access to a range of loan options — and, in most cases, funds are disbursed in as little as 24 hours.

New services that can expedite the lending process for companies like Orion First are already gaining popularity with SMBs and consumers who need short-term loans. The Innovative Lending Platform Association (ILPA), a trade organization representing several companies in the space — including prominent players like small business loan provider Kabbage and financial consultant and insights provider PayNet — says its member companies have distributed more than $14 billion in capital loan disbursements to small businesses to date.

The millennial population is estimated at roughly 83 million, and a recent survey found almost half of millennials (49 percent) plan to start their own businesses within the next three years.

recent survey by YouGov found 81 percent of both retail consumers and SMBs who turned to digital lenders said the ease and speed of completing a loan application were the reasons they made the switch. In the same survey, 77 percent of respondents cited the rapid pace of loan decision making as the key appeal for these platforms.

3Q 2017 PitchBook Fintech Analyst Note: Marketplace Lending (PitchBook), Rated: B

Key takeaways & highlights:

  • Online lenders have faced increased competition from other more established fintech companies. Furthermore, banks such as Goldman Sachs have started their own lending arms
  • Publicly traded firms have made great strides in improving financials; the analyst consensus has Lending Club moving into positive GAAP earnings by year end in part driven by securitizations as a lower-cost source of capital
  • SoFi has made strides towards becoming more bank-like after adding mortgage loans, wealth management services and acquiring (and subsequently shuttering) online bank and money transfer service Zenbanx

Online Lenders Gain Traction By Partnering With Incumbents (ValueWalk), Rated: B

As the latest PitchBook fintech analyst note points out, some of the most notable companies are becoming more like banks, with SoFi the most prominent example, as it expands from student loan refinancing into unsecured consumer credit, wealth management and more. Yet as some online lenders establish a foothold, there are still significant hurdles to overcome.

United Kingdom

Funding Circle is kicking off a £12 million marketing bonanza with a Great British Bake Off TV ad (Business Insider), Rated: AAA

Online lender Funding Circle is kicking off a £12 million ($15 million) marketing campaign with a prime-time TV advert during the Great British Bake Off.

A 30-second TV spot of a woman drumming will run during the premiere of the smash hit baking show on Channel 4 on Tuesday evening.

Singapore Fintech Hub LATTICE80 Announces UK Expansion (Crowdfund Insider), Rated: AAA

LATTICE80, a fintech hub owned and operated by Singapore-based private investment firm Marvelstone Group, announced on Monday it is set to open a fintech hub in London as part of its global expansion. The organization revealed that as of August 2017, its UK entity has been registered, but a suitable hub space remains to be found. It is currently in talks with relevant parties in the private and public sectors, with plans to secure and open a hub by 2018.

The evolution of the UK receivables market (AltFi), Rated: A

In particular, the UK market has lots of new entrants (now in excess of 100 providers) but the number of clients seems to be static at about 40,000-45,000. In order to remain competitive, lenders are required to compete on price and terms, which increases their risk and often reduces their return.

Customers also have more choice in the market, in that they have access to working capital both from banks and alternative lenders such as peer-to-peer (P2P) platforms. Consumers are becoming increasingly aware of the non-traditional players in the market that are harnessing technology. The new generation of borrowers is more tech-savvy and more comfortable embracing P2P capabilities, which makes new players more attractive.

The funding pitfalls a small business owner needs to know (RealBusiness), Rated: A

Richard Spielbichler, ABL director North West, Independent Growth Finance

“The main pitfall to consider is whether the business has a USP that will protect their position in the market. Many businesses suffer from ‘me too’ syndrome, where their USP is very similar to an existing organisation.”

Angelika Burawska, COO, Startup Funding Club

“It depends on the type of financing. In the case of loans and various types of trade finance, the main pitfalls lie in payment terms, such as how much and when, late payment fees and what happens if a company fails to pay.

“In the case of equity funding, businesses have to pay attention to the valuation they raise which may be too high or too low; and the control rights they give to investors.”

China

There Is a Major Tech IPO Boom Happening, Just Not in the United States (TheStreet), Rated: AAA

In the first half, a total of 59 Chinese technology, media and telecommunication (TMT) companies sold shares through initial public offerings (IPOs), a surge from 10 a year ago.

In value, the firms raised a combined 25.8 billion yuan (US$3.9 billion) in the first six months, five times the amount a year earlier, said the accounting firm in Shanghai.

The trend is a continuation of a boom that began in the second half of 2016, when there were 58 IPOs of such companies raising a total of 33 billion yuan.

Embracing Auto Finance Wave, Zhushang Financial Raised Tens Million RMB in Series A (Xing Ping She), Rated: A

On 25th August, Zhushang Financial, a P2P lending platform specialize in providing auto financing services, announced the closing of Tens million RMB in series A funding. Toulang Capital led the round, with participation from Cailang Capital. The “Zhushang Financial” brand has been upgraded from the “Zhushang Dai” brand and announced with this round of financing.

Zhushang Financial is based in Chengdu, a developed city in west China, providing P2P auto financing services for small companies and individuals. Currently, it has established branches in many western cities, including Chongqing, Guizhou Province, Kunming, Xi ‘an, Taiyuan and Lanzhou. Also, the company has signed agreements on depository with both Zhejiang Mintai Bank and Hunan Rural Commercial bank (Youxian Branch). Up to now, the total volume of the platform has reached over 500 million RMB.

According to the report of Central Bank, China’s auto financing market reached 700 billion RMB in 2016 and may exceed 1.85 trillion RMB in 2018. Its rapid growth comes not just from the wave of “car service”, but also from the policy support. Actually, according to the policy issued last year, the net loan assets must be small and dispersed, and since then auto finance has become a new hotspot of P2P lending industry.

sources said the SFC on the ICO advice Jianzhao pyramid schemes (Yicai), Rated: A

August 29, the first financial reporter from a block chain technology business executives were informed that the China Securities Regulatory Commission recently to some of the block chain enterprises on the ICO (Initial Coin Offering, virtual currency initial public offering) for advice, the current In the stage of collecting comments and discussions, the SFC expressed particular concern about ICO projects for pyramid schemes in the name of virtual currency.

Net mass transfer will go to the US IPO official response (01Caijing), Rated: B

According to Bloomberg News, Fintech Quantifiers currently selected JP Morgan and Morgan Stanley as US financial adviser to the US IPO, the IPO size of about 200 million US dollars.

European Union

Profits Up More Than 130 percent In Klarna’s Half-Year Report (PYMNTS), Rated: AAA

Klarna, the online payments firm based in Sweden, and one of the unicorns that came of age with a more than $1-billion valuation, posted results Friday detailing growth for the first half of the year.

The company said that net profit came in at 228 million crowns, or about $28.4 million, up 138 percent year over year, on sales of 2.05 billion crowns.  Sales were up 21 percent.

Klarna Celebrates Year-Over-Year Sales, Profit Gains (Finovate), Rated: A

On Friday the company reported sales and profit results for the first half of 2017 that represented gains of 21% and 138%, respectively. The strong financials come amid a series of headlines that show the Swedish payments company making strides on a number of fronts. This includes rumors that Klarna is partnering with Stripe to better access the U.S. market. Such a partnership would make Klarna the only non-credit card option available on the platform, and enable customers to take advantage of Klarna’s signature “pay after delivery” service. A deal between Klarna and Stripe also would provide what an anonymous source quoted in Nordic Business Insider referred to as “potentially an important piece of the puzzle” of Klarna’s plan for expansion in the U.S.

Swedish Tech Bank Klarna Launches ‘Smoooth’ Brand (PR Newswire), Rated: AAA

Last year, Klarna launched the “Smoooth” campaign with a series of award winning and critically praised advertisements showing just how smooth payments should be. Now Klarna takes the next step by fully implementing the concept of “Smoooth” across all aspects of the brand. This includes not only a new logo, graphic identity and checkout touch-points but towards a completely new user experience – transforming rational payment transactions into an emotional shopping experience for consumers.

Ice-cream melting on warm car hoods, shampooed long-haired dogs and pencils being pushed into huge jelly pastries. Klarna`s new identity is definitely not your average bank speaking.

“We are on a journey to transform Klarna from a traditional payment provider to a stronger consumer brand. Our new identity is more modern and expresses our focus on the consumer experience, innovation and simplicity in payments. It’s time for a new kind of bank.” Sebastian Siemiatkowski, CEO of Klarna

This is not only an update of the visual identity of Klarna but also changing the way consumers interact with the company. The concept of “Smoooth” will be evident when watching an ad or pushing a button to pay in the Klarna app. Every Klarna touchpoint has a new unique graphic and will be smarter and more intuitive. That will ensure a better user experience for consumers, but will also support in driving growth, conversion and consumer loyalty for all  Klarna merchants.

There are three intuitive ways to shop with Klarna:

  • Pay now. – Pay directly at checkout. No credit card numbers or passwords to remember.
  • Pay later. – Try first, pay later. Klarna lets you have 14 days or more to decide if you want to keep your goods or not.
  • Slice it. – Get all your payments on one invoice and choose how much to pay each month.

As of today, Klarna has released all touchpoints that can be updated automatically, and over the coming months will continuously roll out “Smoooth” updates to the touchpoints of all merchants.

PitchIt @ LendIt Europe 2017 (LendIt), Rated: B

Submit your application to PitchIt, a competition for fintech startups, taking place at LendIt Europe–one of the largest international lending and fintech conferences in Europe. This exclusive programme will nurture emerging talent throughout the competition, provide selected finalists with unparalleled access to industry expertise as well as invaluable exposure, branding and more at the event.

Deadline for applications is 4 September 2017.

International

NEW REPORT: Faster Disbursement Services From Alt-Lending Players Put Banks On Notice (PYMNTS), Rated: A

The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.

The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.

Hike recently added a digital payments wallet to its app, allowing money transfers between customers using the country’s United Payments Interface (UPI) service. Skype is another messaging service helping users quickly send money to one another using popular payment option PayPal. The partnership between Skype and PayPal enables users to send money to fellow Skype users in 22 countries, including the U.S., Canada and more than a dozen nations in Europe, through PayPal in the Skype mobile app.

Australia

Australian SMEs are turning to alternative sources of funding (Finder.com.au), Rated: AAA

Australian businesses are turning to crowdfunding, peer-to-peer (P2P) lending and online loans for finance, according to new research from Businessloans.com.au. The Small Business Credit Surveyconducted by ACA Research, found that the most sought-after alternative funding source was equity finance (34%), followed closely by online lenders (30%) and P2P business loans(21%).

However, while small- to medium-sized enterprises (SMEs) are embracing alternative sources of capital, not all of them are receiving the loans they hope for. The survey revealed that while 84.1% of businesses were successful in their applications, less than half of those (38.9%) of those were approved for all of the credit they applied for.

It is interesting to note that the number of businesses which were declined a loan is only 1.6% of respondents. The remaining 14.3% of the “unsuccessful applicant” group was approved for less than half of the loan they had asked for. Over one-third of this group (35%) had applied for more than or equal to $250,000.

The survey found that a rejected application seriously affects a business. Respondents that did not receive the full amount applied for delayed or could not expand their businesses (34%), delayed or were not able to fulfil existing orders or contracts (27%) or did not hire new employees (17%).

 

P2P lender reaches 2,000 brokers (Broker News), Rated: AAA

Peer-to-peer lender RateSetter has accredited 2,000 brokers on its lending platform, amidst a rise in P2P popularity within the general public.

Lending volumes through the broker channel, especially in auto and home improvement loans, are doubling every six months, according to the lender’s most recent settlement figures.

Across the direct and broker channels, RateSetter has also passed $150m in lending facilitated since 2014. In the last five months alone, lending grew 50% across both channels, passing the $100m milestone in March.

Source:: BrokerNews.com
India

‘Future-ready’ Industrial Policy to be out in October (The Hindu), Rated: A

The other “illustrative outcomes” are developing alternatives to banks and improving access to capital for MSMEs through ‘Peer to Peer Lending’ and ‘Crowd funding’, providing a credit rating mechanism for MSMEs to provide them easier access to funds, addressing the problem of inverted-duty structure and also balancing it against obligations under multilateral or bilateral trade agreements, studying the impact of automation on jobs and employment, ensuring minimal/zero waste from industrial activities and targeting certain sectors to radically cut emissions.

Asia

Dianrong and FinEX Asia Launch Asia’s First Fintech Asset Management Platform (PR Newswire), Rated: AAA

Dianrong and FinEX Asia today announced the launch of Asia’s first financial technology (fintech) asset management platform. FinEX Asia was established in 2017 to connect Asian investors with US consumer lending assets, such as credit card loans.

FinEX Asia combines its risk management expertise with Dianrong’s advanced fintech capabilities to give Asian investors access to a diverse and attractive portfolio of U.S. consumer lending assets. FinEX Asia’s fintech solutions offer advanced risk modeling capabilities, blockchain data security, performance monitoring, and secondary marketplace liquidity.

Seminar: Regulating Peer-to-Peer Lending to SMEs (Asian Development Bank), Rated: B

Event | 12 September 2017ADBI, Tokyo, Japan

This seminar looks at the regulation of P2P lending in the US, People’s Republic of China, Japan, and the UK, and discusses how regulators can help develop P2P as a safe and effective source of financing for SMEs.

Register here.

South America

Top VC funds in Fintech in Argentina (TechFoliance), Rated: A

Currently, Argentina has four major investment funds that have Fintech companies within their portfolios.

  1. NXTP
  2. Kaszek – Founded in 2011, it recently announced the release of a third fund of $200 million to be used for young technology throughout the region. To date, Kaszek has invested USD 1.4 billion in 43 companies, including Nubank, Brazil’s largest digital bank.
  3. Wayra
  4. Incutex
Canada

RBC WANTS TO USE AI TO GIVE CUSTOMERS FINANCIAL ADVICE (Betakit), Rated: AAA

Canada’s largest bank has announced that its mobile banking app will soon provide users with “actual insights about our client’s financials and a fully automated savings solution that uses predictive technology to identify money in a client’s cash flow that can be automatically saved.”

Dubbed ‘NOMI Insights’ and ‘NOMI Find and Save,’ the services are currently in a pilot release. A full launch is expected later this fall.

IOU Financial Inc. Releases Financial Results for the Three and Six Month Period Ended June 30, 2017 (Newswire), Rated: A

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses, announced today its results for the three and six month period ended June 30, 2017.

FINANCIAL HIGHLIGHTS

  • Loan originations for the second quarter ended June 30, 2017 were US$26.2 million versus originations of US$31.8 million for the same period last year. Loan originations decreased by 17.8% due to changes made to the Company’s lending policies in response to increased delinquency levels. We anticipate that these changes will have a positive impact on our loan portfolio over the course of 2017. For the first half of 2017, loan originations amounted to $48.2 million, representing a decrease of 15.7% over the origination of $57.1 million for the same period last year.
  • As of June 30, 2017, IOU’s total loans under management amounted to approximately $65.7 million as compared to $79.6 million in 2016. On June 30, 2017, the principal balance of the loan portfolio amounted to $41.6 million compared to $35.5 million in 2016. The increase is consistent with the Company’s strategy to retain more loans on its balance sheet. The principal balance of IOU’s servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $24.1 millioncompared to $44.1 million in 2016.
  • IOU recorded gross revenue during the second quarter of $4.4 millionversus $3.5 million for the same period last year, representing a 24.5% increase. The increase in gross revenues was primarily driven by a 55.3% increase in interest income from $2.4 million in 2016 to $3.7 million in 2017, as a result of an increase in the size of the loan portfolio. For the six-month period ended June 30, 2017, gross revenues improved to $8.7 million compared to $6.8 million for the same period in 2016.
  • Interest expense during the three-month period ended June 30, 2017increased by 44.3% to $1.0 million, up from $0.7 million over the previous year. The increase is attributable to an increase in borrowings under the credit facility partially offset by a reduction in the cost of funds borrowed versus the previous year. For the six-month period ended June 30, 2017, interest expense amounted to $1.9 million compared to $1.3 million in 2016.
  • Provision for loan losses (net of recoveries) increased to $2.4 million for the three-month period ended June 30, 2017, up from $1.2 million for the previous year. The increase is primarily attributable to an increase in defaults by borrowers and partially due to an increase in the size of the loan portfolio. To improve loss performance, IOU Financial has made changes to its lending policies and deployed its next generation proprietary IOU Risk Logic Score. In addition, the Company has implemented certain process changes to improve its servicing and collections which includes an aggressive litigation process against businesses who intentionally default on their loan obligations. For the six-month period ended June 30, 2017, IOU recorded a provision for loan losses of $4.3 million compared to $2.0 million in 2016.
  • Excluding non-recurring costs, operating expenses decreased 18.1% to $2.5 million for the three-month period ended June 30, 2017 as compared to $3.1 million for the previous year. During the quarter ended September 30, 2016, the Company adopted a plan to reduce operating expenses. The Company is on track to achieve its target of quarterly operating costs of $2.0 million to $2.2 million on a normalized basis in the third quarter. In the second quarter, IOU recorded non-recurring costs of $0.5 million related to vendor contract cancellations and impairment of intangible assets. For the six-month period ended June 30, 2017, operating expenses amounted to $4.9 million, excluding non-recurring costs, compared to $6.0 million in 2016.
  • IOU closed its second quarter 2017 with a net loss of $2.1 million, or $0.03per share, compared to a net loss of $1.5 million or $0.02 per share during the same period of 2016. For the six-month period ended June 30, 2017, the net loss amounted to $3.1 million versus $2.8 million in 2016.
  • IOU closed its second quarter 2017 with an adjusted net loss of $1.3 million, which excludes certain non-cash and non-recurring items, compared to an adjusted net loss of $1.1 million in the second quarter of 2016. For the first half of 2017, the adjusted net loss was $1.9 millioncompared to an adjusted net loss of $1.6 million for the same period in 2016. Assuming the cost reduction plan was fully implemented on January 1, 2017, IOU’s pro forma adjusted net loss for the three-month and six-month period ended June 30, 2017 would have been approximately $0.8 million and $1.2 million, respectively.
Africa

Should established banks fight or assimilate to tech? (African Business Magazine), Rated: AAA

The same quandary that now faces established banks stood before landline telecoms operators 15–20 years ago. In terms of fintech, it seems likely that the answer will become clear over the next few years, as different banks adopt different strategies.

Global consultancy Accenture calculates that fintech threatens more than a third of traditional banks’ revenue. Due to the march of technological innovation and the emergence of more attractive investment regimes, the challenge posed by fintech is only likely to grow.

Fintech is not just a threat to established banks but also to other companies in the financial services sector. Visa, for instance, is built on technology developed during a previous financial technology revolution, and should be able to capitalise on the fintech boom.

Other attempts to integrate the two worlds include PayDunya, an online payments system that allows African e-businesses to accept payments from credit and debit cards, as well as mobile money wallets. Similarly, Yoco provides retailers with an integrated card acceptance and point-of-sale solution, incorporating a mobile app, and either wireless or plug-in card reader.

Some established banks have sought to compete by becoming incubators for fintech. Standard Bank and Barclayshave both launched startup support programmes, with the most successful companies taken under their wing at the end of their periods of support.

Authors:

George Popescu
Allen Taylor

Report: Auto loans, credit cards and personal loans reached new milestones in 2016

Report: Auto loans, credit cards and personal loans reached new milestones in 2016

Nearly 12 Million Consumers Gained Access to Credit Products Including Auto, Credit Cards and Personal Loans in 2016 TransUnion report finds personal loans continued to grow in popularity; Baby boomers make up largest share of consumers with a personal loan in 2016 Chicago, Feb. 16, 2017 – Auto loans, credit cards and personal loans reached […]

Report: Auto loans, credit cards and personal loans reached new milestones in 2016

Nearly 12 Million Consumers Gained Access to Credit Products Including Auto, Credit Cards and Personal Loans in 2016

TransUnion report finds personal loans continued to grow in popularity;
Baby boomers make up largest share of consumers with a personal loan in 2016

Chicago, Feb. 16, 2017 – Auto loans, credit cards and personal loans reached new milestones in 2016 as the number of consumers with access to these products continued to grow, according to TransUnion’s (NYSE:TRU) Q4 2016 Industry Insights Report. The report, powered by PramaSM analytics, found that balances rose across all credit products at year-end.

“The consumer credit market performed well at the end of 2016, and total balances rose across every credit product in the fourth quarter following a strong shopping season,” said Nidhi Verma, senior director of research and consulting for TransUnion. “For the past several years, auto lenders have been filling the pent up demand in the subprime risk tier and card issuers have been competing for share of wallet. We observed the results of these strategies manifest in higher credit card and auto delinquency rates at the end of the year. Personal loans continued to grow in originations and balances, and we expect this to remain a popular product for all consumers in 2017.”

Personal loans reached a new milestone at the conclusion of 2016 with total balances topping $100 billion for the first time ever.  While younger consumers have played a major role in the growth of these lending products, TransUnion’s Q4 2016 Industry Insights Report confirmed that, contrary to popular belief, mature borrowers are leading the charge on these loans.

Baby boomers comprised 32.8% of all consumers with a personal loan at year-end 2016 followed by Gen X (31.6%) and millennials (26.6%). In Q4 2013, millennials were just 23.5% of personal loan users, but their share has grown over the past three years to reach 26.6% at the end of 2016.

Consumers with a Personal Loan by Generation

The personal loan delinquency rate was 3.83% in Q4 2016, the highest Q4 reading since Q4 2013 and up from 3.62% in Q4 2015. Originations, viewed one quarter in arrears, declined for the second consecutive quarter. Originations dropped 5.7% from 3.75 million in Q3 2015 to 3.54 million in Q3 2016. “We’ve observed a decline in non-prime lending that we attribute to mid-year FinTech funding challenges and regulatory uncertainty in advance of the election,” added Laky. “We believe that the personal loan market is stabilizing, and have seen balances grow across risk tiers through the end of the year.”

“There is a perception that personal loan growth has been driven by younger consumers, but our data clearly indicate that these loans are appealing to older borrowers,” said Jason Laky, senior vice president and consumer lending business leader for TransUnion. “We believe some of this growth is occurring because interest rates may be lower than other type of loans for certain baby boomer segments.”

Total personal loan balances grew $14 billion between year-end 2015 and year-end 2016, reaching $102 billion. The number of consumers with a personal loan continued to climb steadily and ended 2016 at the highest level since at least Q3 2009. In Q4 2016, 15.82 million consumers had a personal loan.

With fewer millennials comprising the FinTech space than expected, TransUnion explored where they may be shopping for loans.  TransUnion’s data found that credit unions are seeing membership growth with the millennial generation. As of Q4 2016, of all consumers with a FinTech personal loan, just 26.3% were millennials, compared to 30% of credit unions’ personal loan customers. The average credit union personal loan was originated at $5,216, compared to $8,051 for FinTech personal loans. Banks originated the largest personal loans at $11,290.

“The distribution of millennial consumers across lender types represents a healthy, competitive market,” said Laky. “Likely due to their strong relationships with members, credit unions have a slightly larger share of the millennial personal loan borrowers, but our data show that they originate smaller loans than FinTechs and other lenders.”

The personal loan delinquency rate was 3.83% in Q4 2016, the highest Q4 reading since Q4 2013 and up from 3.62% in Q4 2015. Originations, viewed one quarter in arrears, declined for the second consecutive quarter. Originations dropped 5.7% from 3.75 million in Q3 2015 to 3.54 million in Q3 2016. “We’ve observed a decline in non-prime lending that we attribute to mid-year FinTech funding challenges and regulatory uncertainty in advance of the election,” added Laky. “We believe that the personal loan market is stabilizing, and have seen balances grow across risk tiers through the end of the year.”

Mortgage Delinquency Rates Stabilizes in Q4 2016

 Mortgage delinquencies continued to decline in 2016, however signs of plateauing are now evident. The mortgage delinquency rate concluded 2016 at 2.28%, and has now declined every quarter on a quarter-over-quarter basis since Q3 2013. While the delinquency rate dropped 7.3% in the last year, it remained nearly unchanged from Q2 2016 (2.29%) and Q3 2016 (2.30%).

“The mortgage delinquency rate has declined for several quarters, and we are observing a stabilization of delinquency rates. The data suggest, given the current state of credit accessibility, we are reaching a natural floor for delinquencies after years of year-over-year declines,” said Joe Mellman, vice president and mortgage business leader for TransUnion.

Mortgage originations, viewed one quarter in arrears, reached 2.23 million in the third quarter of 2016. A growth rate of 19.0% year-over-year propelled mortgage originations to the highest level since they reached 2.32 million in Q2 2013. The average mortgage balance also reached a post-Recession high of $194,415 in Q4 2016.

“Originations have continued to grow across all risk tiers, which suggests lenders may be warming up to originating mortgages to non-prime borrowers, even though that share of the market remains small at under 4%. In the third quarter, mortgage originations surpassed two million originations for the first time in three years as borrowers continued to take advantage of low interest rates and as economic indicators point to a well-performing economy with low unemployment and wage growth,” said Mellman.  “Throughout 2017, we will observe whether the rise in interest rates will impact mortgage market growth.”

Consumers with an Auto Loan Reach Highest Levels since 2009

The latest Industry Insights Report found that 80 million consumers had an auto lease or loan as of year-end 2016. This marks the highest level TransUnion has observed since at least Q3 2009 as approximately 4.3 million additional consumers took out an auto lease or loan in 2016.

Total auto loan balances continued to grow at the end of 2016, closing the year at $1.11 trillion. The total balance grew 8.3% during 2016, slower than the average growth rate of 11.0% between 2013 and 2015. The average auto balance per consumer also rose slightly to $18,391, up from $18,004 in Q4 2015.

“For the second consecutive quarter, total auto balances had a year-over-year growth rate below 10%, reflecting the slower growth that we are seeing in new car sales,” said Jason Laky, senior vice president and automotive business leader at TransUnion. “In the third quarter, auto originations declined year-over-year for the first time in six years. Prime plus and super prime originations continued to grow in Q3 2016, indicating lenders are beginning to shift their focus away from the riskiest segments, where we’ve seen strong competition among lenders that has put pressure on risk adjusted margins.”

Auto originations declined 0.8% to 7.46 million in Q3 2016, down from 7.52 million in Q3 2015. Subprime originations experienced the largest decline (-3.2%), and prime plus (+1.8%) and super prime (+1.7%) originations grew in the third quarter of 2016.

The auto delinquency rate reached 1.44% to close 2016, a 13.4% increase from 1.27% in Q4 2015. Auto delinquency is at its highest level since the Q4 2009 reading of 1.59%.

Total Credit Card Balances Reach $717 Billion at the End of 2016

TransUnion found that the number of consumers with a credit card balance rose 4.4% in Q4 2016 to 139.2 million, the highest level since 2009. Total credit card balances are now at their highest levels since Q3 2009. The largest growth in credit card balances came from the subprime risk tier where balances rose 10.8% between Q4 2015 and Q4 2016.

In addition, the average card balance per consumer grew 2.8% to $5,486, up from $5,337 at year-end 2015 and the highest level since $5,609 in Q4 2010.

“The credit card business hit several milestones in the fourth quarter as the number of consumers with a card balance rose to the highest level we’ve observedin seven years. Driven by a strong holiday shopping season and a steep rise in consumer sentiment, total credit card balances increased 8% year-over-year and surpassed $700 billion for the first time,” said Paul Siegfried, senior vice president and credit card business leader. “Originations continued to rise across all risk tiers, but subprime originations grew at a more moderate pace.”

Originations, viewed one quarter in arrears, grew 14.1% to 17.52 million in Q3 2016, up from 15.36 million in Q3 2015. Subprime originations grew at 8.6% year-over-year in the third quarter of 2016, compared to an average third quarter growth rate of 26.8% from 2013 to 2015.

The credit card delinquency rate reached 1.79% in Q4 2016, an increase of 12.6% from 1.59% in Q4 2015. This marks the highest Q4 delinquency reading since Q4 2011, when the delinquency rate reached 1.90%. The credit card delinquency rate remains more than a full point below its peak in Q4 2009 (2.97%).

“Card delinquencies experienced a deterioration in the fourth quarter of 2016 as lenders’ subprime portfolios matured and energy-dependent states experienced ongoing challenges,” added Siegfried. “However, we observed a significant slowdown of originations to subprime consumers, which could signal lenders are evaluating their risk management strategies in light of the rising delinquency rate.”

Please visit  George PopescuPosted on Categories Analysis, auto, Baby Boomers, Credit Cards, Featured, Gen X, Millennials, personal loans, Prama, Reports, Transunion