- Today’s main news: CFPB issues first no-action letter to online lender. SoFi defends its mortgage underwriting standards. Was SoFi’s FICO-free zone really FICO-free? RealtyShares raises $28M for commercial real estate investing. Betterment partners with Goldman Sachs, BlackRock. JustUs receives full FCA authorization. Raisin offers term deposits to businesses. Earthport partners with Cross River Bank. Reserve Bank of India waiting for government notification before releasing P2P norms.
- Today’s main analysis: Why self-sovereign identification is imperative. ZhongAn plans an acorn in China.
- Today’s thought-provoking articles: Credit markets need legislative guidance after Madden decision. A battle for the soul of P2P lending. SoFi’s defense of mortgage practices.
- CFPB issues first no-action letter to online lender. AT: “Upstart will be required to report alternative data to CFPB. I’m not sure that’s a good idea.”
- SoFi defends mortgage standards denying Fast Company’s allegations. AT: “These allegations put SoFi on the defensive and will likely be a bigger public relations bruise for the company than the sexual harassment allegations that recently came to light. In fact, there seems to be a shift away from the salaciousness toward the actual business practices of the company, and that’s a good thing. But not for SoFi.”
- SoFi’s FICO-free zone may not have been so FICO-free. AT: “This is an interesting allegation and may not actually be as bad as it seems. Depending on the timing of SoFi’s announcements to revert back to using FICO scores, it could have just been the case of a company changing its mind. However, erasing all evidence of making the announcement in the first place is a bit suspect. I have a feeling this is going to be in the news cycle for a while.”
- Did SoFi close early mortgages without appraisals?
- SoFi’s response to the New York Times.
- RealtyShares raises $28M for commercial real estate investing. AT: “Congratulations.”
- Credit markets need legislative guidance after Madden decision. AT: “Brian Knight makes some good points in this response to Adam Levitin’s earlier op-ed (clickable link).”
- Betterment partners with BlackRock, Goldman Sachs. AT: “The portfolio partnership with Goldman Sachs is interesting given the larger company’s interest in online lending through Marcus. I wonder why they didn’t just roll out a product of their own to compete with Betterment and Wealthfront.”
- The imperative of self-sovereign identification. AT: “This is one of the most interesting ideas I’ve read on data security yet. I’m suspicious of biometrics. I can’t really see that they’re a lot more secure than passwords (maybe a little). And, of course, with digital technology, there is no 100% secure solution. I’m sure some smart hackers will figure out how to break the blockchain. Nevertheless, this idea seems much more practical on the surface. If we could just get widespread adoption of the blockchain.”
- Anuj Nayar leaves PayPal and joins Lending Club.
- A recap of Goldman’s summer siege on fintech lending.
- Open the door to new loan opportunities without sacrificing security.
- Employers may soon pay off student debt to be more competitive in talent searches.
- Mosaic to sell $300M in solar loans to Goldman Sachs.
- These market sectors are not overheated.
- How a LendUp-Beneficial State Bank partnership is tackling financial inclusion.
- CommonBond recruits CFO from Deutsche Bank.
- eOriginal appoints Timothy Wall as chief revenue officer.
- Credit unions are original disrupters in financial services.
- GDS Link welcomes Lend360 to Dallas.
- Both sides of the aisle on the future of fintech.
- JustUs receives full authorization from FCA.
- A battle for the soul of P2P lending. AT: “This brings out an interesting question on institutional investing. Is it really a ‘betrayal’?”
- 36% of UK adults did not save or invest last quarter.
- Archover CEO says SMEs have wrong attitude about financing.
- LendInvest property academy receives public support.
- FCA praises regulated bridging market.
- Why investors are excited about Birmingham.
- Earthport partners with Cross River Bank.
- How fintech is solving the global unbanked problem.
- Top fintech innovations to look out for next year.
- No FundCoin tokens in U.S. AT: “The headline implies a joke, but I don’t see anything funny. It appears that this company is not going to allow U.S. token sales. I’m sure there is a reason.”
- Virtual money shifting global trading trends.
- Reserve Bank of India waiting on government notification to release P2P lending norms.
- Investree to develop online transaction system for state securities.
- How demonetization has benefited India.
- Types of crowdfunding for real estate.
- IOU Financial the 4th fastest-growing company in Canada. AT: “Excellent news. Congratulations.”
- United States
- CFPB Issues First No-Action Letter To Online Lender (Law360), Rated: AAA
- SoFi defends mortgage standards, denies Fast Company allegations (Housingwire), Rated: AAA
- SoFi’s “FICO-Free Zone” Loan Process Was Maybe Actually Rather Full Of FICO (Dealbreaker), Rated: AAA
- Eager to please, did SoFi close early mortgages without appraisals? (Housingwire), Rated: A
- Here is SoFi’s Response to NYT Article that Criticized Operations & Culture at Fintech Firm (Crowdfund Insider), Rated: A
- RealtyShares raises $ 28 million for commercial real estate investing (TechCrunch), Rated: AAA
- Credit markets need legislative guidance after Madden decision (American Banker), Rated: AAA
- Betterment struck a deal with 2 Wall Street giants to provide its 270,000 users more investment options (Business Insider), Rated: AAA
- The imperative for self-sovereign identification (get lost Equifax) (TheFinanser.com), Rated: AAA
- Anuj Nayar Leaves PayPal For Lending Club (Holmes Report), Rated: A
- A recap of Goldman’s summer siege on fintech lending (AltFi), Rated: A
- Open the door to new loan opportunities without sacrificing security (CUInsight), Rated: A
- Got Student Debt? Soon Your Employer Might Help With That (Buzzfeed), Rated: A
- This Startup Is an ATM for the Money You Haven’t Been Paid Yet (Inc.), Rated: A
- Mosaic Will Sell $ 300 Million Worth of Solar Loans to Goldman Sachs (GreenTechMedia), Rated: A
- Market Overheated? Not These Sub-Sectors (Seeking Alpha), Rated: A
- How A Bank And A FinTechs Are Jointly Cracking The Code On Financial Inclusion (PYMNTS), Rated: A
- CommonBond gets new CFO from Deutsche Bank (India Times), Rated: A
- eOriginal Appoints Timothy Wall Chief Revenue Officer (Broadway World), Rated: B
- Ex-U.S. Representative Nussle: credit unions are the ‘original disrupters’ in financial services (Radio Iowa), Rated: B
- GDS Link Welcomes 2017 LEND360 to Dallas (PR Web), Rated: B
- Hear from Both Sides of the Aisle on the Future of Fintech (Business Insider), Rated: B
- United Kingdom
- JustUs Receives Full Authorization From the Financial Conduct Authority (Crowdfund Insider), Rated: AAA
- A Battle For The Soul of Peer-To-Peer Lending (Forbes), Rated: AAA
- 36% of UK adults did not save or invest last quarter (Bridging&Commercial), Rated: A
- ArchOver CEO: SMEs have “wrong attitude” in eschewing finance (P2P Finance News), Rated: A
- LendInvest property academy receives public support (Mortgage Introducer), Rated: A
- ASTL conference: FCA praises regulated bridging market’s ‘rosy picture’ (Mortgage Solutions), Rated: A
- Why Investors are Excited about Birmingham (Landlord News), Rated: A
- Lawmaker urges FSC to curb online lending bad debt (Taipei Times), Rated: AAA
- ZhongAn Plants a Fintech Acorn for China (Bloomberg), Rated: AAA
- European Union
- Wealth Products Marketplace Raisin Takes a Leap Forward with Term Deposits for Businesses (Crowdfund Insider), Rated: AAA
- Earthport strengthens US network with Cross River partnership (Finextra), Rated: AAA
- Fintech to the rescue for the world’s unbanked (City A.M.), Rated: A
- Top Fintech Innovations To Look Out For in 2018 (Finovate), Rated: A
- Lol a FoHFs ICO, srsly (FT Alphaville), Rated: A
- Virtual money shifting global trading trends (BusinessDay), Rated: A
- ‘RBI AWAITING GOVT NOTIFICATION FOR COMING OUT WITH P2P LENDING NORMS’ (Daily Pioneer), Rated: AAA
- Investree to develop online transaction system of state securities for retail investors (e27), Rated: AAA
- Demonetization in India shines a light on the digital future (The Asset), Rated: A
- Types of crowdfunding and why it is beneficial for real estate sector (Moneycontrol), Rated: A
- IOU Financial Ranked Fourth Fastest-Growing Company in Canada (Business Insider), Rated: AAA
CFPB Issues First No-Action Letter To Online Lender (Law360), Rated: AAA
The Consumer Financial Protection Bureau on Thursday issued its first no-action letter to online lender Upstart Network Inc., allowing the company to continue using alternative credit data to evaluate borrowers in exchange for providing data to the federal consumer finance watchdog.
SoFi defends mortgage standards, denies Fast Company allegations (Housingwire), Rated: AAA
SoFi, also known as Social Finance, adamantly said it doesn’t shy from criticism, stepping up to defend itself amid the recent negative news coverage on the company’s alleged toxic workplace environment.
Included in Fast Company’s coverage of the fintech company is a bold claim that “in the first round of SoFi mortgages, some homes lacked appraisals.”
According to a SoFi spokesperson:
In late 2014, we tested a simplified version of our home mortgage product that used paystubs for income verification and did not require home appraisal. The test did not proceed into a launched product, and we launched our mortgage product with requirements for full income verification and home appraisal, which is still the case today. All of these mortgages met the ability-to-repay standards promulgated by Dodd-Frank and none of these pilot mortgages were ever sold to investors, and we continue to hold those loans on our balance sheet.
SoFi’s “FICO-Free Zone” Loan Process Was Maybe Actually Rather Full Of FICO (Dealbreaker), Rated: AAA
It turns out that when SoFi executives and employees weren’t banging the “collateral” out of each other in parked cars or office bathrooms, they were being less than honest with loan applicants about how their loan applications were being evaluated.
According to conversations with numerous former SoFi employees, the company’s “FICO-Free Zone” loan product actually relied quite heavily on evaluating applicants by their FICO score. After very publicly announcing in early 2016 that SoFi would no longer use FICO scores to evaluate loans, sources tell Dealbreaker that the company saw defaults tick up and made the internal to decision to reintegrate FICO data. No announcement of the shift back was ever made, the “FICO-Free” language disappeared from the website and some evidence of the SoFi’s move away from FICO was even scrubbed from the company’s blog.
Eager to please, did SoFi close early mortgages without appraisals? (Housingwire), Rated: A
I’ve sat on panels that discuss all the benefits the aforementioned Silicon Valley approach brings to housing. Having SoFi around isn’t one of them, if their underwriting standards are as bad as some claim.
If this article at Fast Company proves true, this explosive headline is correct: At SoFi, The Problems Go Way Beyond Its Toxic Workplace.
Ainsley Harris writes: “In the first round of SoFi mortgages, some homes lacked appraisals.”
Why on earth would a lender not get the value of the collateral it was lending to? Did SoFi think in-depth valuations where unnecessary? Do investors know that SoFi doesn’t know how much these homes are worth in the event of an REO?
Let me say this, whatever the reason to potentially forego appraisals, SoFi’s investors will disagree with that decision. The Fast Company revelation is so baffling that SoFi’s plan for an IPO will be delayed, perhaps indefinitely.
Let’s hope so. A company that plays fast and loose with its own people is shameful. A company that plays fast and loose with prudent lending practices is downright dangerous.
Here is SoFi’s Response to NYT Article that Criticized Operations & Culture at Fintech Firm (Crowdfund Insider), Rated: A
SoFi has published a public letter addressing the allegations leveled by NYT.com earlier this week.
The letter is republished in its entirety below. (Ed. Note: Excerpted by Lending-Times)
Mortgage: The story cites unnamed sources saying there was some period where we were “not doing enough” to validate income for mortgage borrowers. This is an incredibly vague claim, and we have no idea what this means. We underwrite our mortgage loans consistent with market standards, which includes rigorous income verification, and consistent with the ability to repay requirements put in place by Dodd-Frank.
Personal Loans: The story implies that our personal loans business grew in part because of a change in the way loans were approved: that customer service reps were approving loans rather than underwriters. That view reflects a lack of understanding of our business. We underwrite loans using a highly automated platform where all credit decisions are made by a pre-defined algorithm that analyzes each applicant’s credit profile and ability to pay.
A Thriving Business: The story did mention our business performance, and indeed, SoFi is thriving. Since inception, we have funded more than $20 billion in loans, $3.1 billion in the second quarter alone. In Q2, we had $134 million in revenue, up 67% year over year, with adjusted EBITDA of $61.6 million, up 60% year over year. We have more than 350,000 members, and they like what we do – our products run Net Promoter Scores in the 60-80 range, among the highest in financial services.
RealtyShares raises $ 28 million for commercial real estate investing (TechCrunch), Rated: AAA
RealtyShares is raising a $28 million Series C round led by Cross Creek Advisors, with participation from existing investors including Union Square Ventures, General Catalyst Partners, and Menlo Ventures.
Founder and CEO Nav Athwal says that RealtyShares has over 120,000 users on the platform. The startup says it has deployed over $500 million across more than 1,000 properties since it was founded in 2013.
Credit markets need legislative guidance after Madden decision (American Banker), Rated: AAA
In a recent op-ed in American Banker (derived from a longer blog post), professor Adam Levitin argues that the recent legislative proposals to “fix” the repercussions of the United States Court of Appeals for the Second Circuit’s Madden v. Midland Funding decision are “overly broad and unnecessary and will facilitate predatory lending.” The legislation Levitin opposes would restore the ability of banks to sell loans to nonbanks and have the loans remain valid on their original terms, the type of transaction on which the Madden decision has cast doubt. I disagree, at least with regard to marketplace lending. There are compelling legal and policy arguments to undo the Madden decision that Congress should consider.
Levitin is certainly right that the Nichols case and the similar 19th-century cases reflect a different fact pattern than was presented in Madden. It does not necessarily follow, however, that the principle of valid-when-made should not also apply under the Madden facts.
The issue at question in Madden, the interest charged on the loan, was set by the bank at the loan’s inception. The borrower got the benefit of the federal regulatory regime, which includes the incorporation of the bank’s home state usury law, when the loan was created, and the relevant characteristics did not change. So why is there suddenly a problem?
The impact of Madden on innovative credit is harmful to borrowers
Madden also appears, as would be expected, to be reducing access from marketplace lenders to credit for borrowers with lower credit scores. Contrary to Levitin’s argument, a recent study shows a reduction in credit availability not just for borrowers with FICO scores under 625 (though that is where the reduction is most pronounced). The study indicates that borrowers in New York and Connecticut with FICO scores under 700 saw a reduction in availability relative to comparable borrowers outside the Second Circuit.
For example, it is important to keep in mind that the majority of marketplace loans are used to pay off bank-issued credit cards (which are not subject to borrower state usury laws) or consolidate existing debt. Denying borrowers access to these loans does not leave the borrowers unencumbered by debt; it leaves them in the situation they view as worse than taking out this new loan. This is especially true given that there is evidence that marketplace lenders can help provide expanded access and competition, services in areas that have few banks, and better pricing for some borrowers than they would receive from banks. Cutting off access isn’t protecting borrowers, it is leaving them with fewer, perhaps inferior, tools to protect themselves.
Usury caps can lead to loan arrangements being distorted in ways that make the loans legal but worse for the borrower. We see examples of this in the shift from payday to “payday installment” and subprime auto loans, where lenders bound by interest rate caps change the loan principal amount or repayment schedule to make the loans viable. These loans can actually be more expensive in total because the lower interest rate is applied to a higher principal over a longer time period. Larger loans also can be more expensive for borrowers if they pay them off early or go into default. Borrowers also could be forced into using suboptimal options like pawn shops or illegal loans, or find themselves without credit altogether.
Betterment struck a deal with 2 Wall Street giants to provide its 270,000 users more investment options (Business Insider), Rated: AAA
Betterment, the largest roboadviser with $10 billion under management, has enlisted the support of financial juggernauts Goldman Sachs and BlackRock for two new portfolio options.
The portfolio managed by Goldman Sachs is a smart-beta option, providing users with a more aggressive alternative to Betterment’s core portfolio, which allocates money to stocks and bonds, according to Arielle Sobel, a spokeswoman for the firm. It will be more exposed to emerging markets and REITs, according to a press release.
Wealthfront, Betterment’s San Francisco rival, announced an in-house-built smart-beta portfolio in June, according to a company spokeswoman.
The other portfolio option is an income-based portfolio, managed by BlackRock, the largest fund manager in the world with $5.7 trillion under management. It provides investors a more conservative option and delivers target income.
The imperative for self-sovereign identification (get lost Equifax) (TheFinanser.com), Rated: AAA
As we have known for a long time now, it is no longer good enough to use customer’s personal information for account access. After Ashley Madison and so many other incidents (Tesco Bank, Lloyds Bank, JPMorgan Chase, SWIFT, the Federal Reserve, the IRS, the Department of Homeland Security eBay, Yahoo, Google, Adobe, Target, Neiman Marcus, Home Depot …), surely we should be moving away from this antiquated system. Bear in mind it’s been used for almost two decades, it’s no wonder the system is no longer working.
So the banks add second-factor authentication (2FA) with secure entry pads and PINs, but they still rely on personal information for account access when you ring their call centres, and this is just annoying.
Is there a solution?
First is biometrics and TouchID, voice, eyes and more can easily be used for authentication via a smartphone. Why banks aren’t incorporating these into their onboarding and access mechanisms beggars belief …. or maybe not, as banks would need modern systems to use such radical authentication techniques, and that’s a big ask. Far easier to rely on name, address, date of birth and all the information the hackers stole from Equifax.
Emerging technologies (particularly blockchain, although not exclusively) are making the development of “self-sovereign identity” a real possibility.
The basic idea behind self-sovereign identity is that rather than have our information held by third parties (often without us even knowing what that information is) and used to guarantee our identity and make decisions that affect us; we could turn the entire model on its head and give each individual control over their own digital identity.
With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.
Anuj Nayar Leaves PayPal For Lending Club (Holmes Report), Rated: A
PayPal’s global head of product communications Anuj Nayar has left to become head of communications at peer-to-peer investment company Lending Club.
In his new role that starts on Monday, Nayar will be in charge of the team running all internal and external communications, as well as social media, for the $2.5 billion publicly-traded fintech company.
A recap of Goldman’s summer siege on fintech lending (AltFi), Rated: A
Last night we learned that Goldman Sachs is poaching roughly 20 employees from online lender Bond Street, which seems to have paused making new loans, according to The Wall Street Journal.
It is indicative of Goldman’s strategy that the bank has forced its way onto the AltFi (“Alternative Finance”) homepage three times this week. Those incursions were tied to its £100m investment in UK employee benefit lender Neyber, its $300m deal with home solar financing firm Mosaic, and the announcement that it plans to launch an online bank in the UK.
So its latest decision, to nab 20 workers from the dormant Bond Street, is not without precedent. But Bond Street is not a consumer lender. It offers term loans of up to $1m to small businesses. Could Goldman, then, be sizing up an expansion into small business lending for Marcus?
Open the door to new loan opportunities without sacrificing security (CUInsight), Rated: A
Year-to-year, community financial institutions have become more conservative about consumer lending. So as to not open themselves up to additional risks, many of these institutions tend to only service consumers with prime and super prime credit. However, consumers with non-prime credit make up a solid portion of the consumer lending market, so this desire to stick with “safer” loans leaves quite a few loan opportunities on the table. And when many community financial institutions are dropping their rates to as low as 0% in order to compete with large national lenders for prime and super prime consumers, missing additional revenue opportunities for your loan portfolio is not a small matter.
Market disruptors like retail lenders (i.e. Costco), mobile lenders (i.e. AutoGravity), and peer-to-peer lenders (i.e. Lending Club) are finding ways to bypass the existing banking system, credit bureaus and financing requirements to lend to this highly sought after demographic.
Got Student Debt? Soon Your Employer Might Help With That (Buzzfeed), Rated: A
Fidelity Investments introduced a program Thursday that will let employers make regular payments to their employees’ student loan accounts, much the way companies already pay into their workers’ 401(k)s or health care savings accounts.
Some smaller financial services companies already facilitate this type of benefit program, such as First Republic Bank and startups like Student Loan Genius and SoFi.
But the entry into the market of Fidelity Investments — one of the country’s biggest mutual fund, money management and financial planning companies — is a sign that student debt relief may soon become a mainstream benefit that employers will have to offer to remain competitive.
This Startup Is an ATM for the Money You Haven’t Been Paid Yet (Inc.), Rated: A
If you’re living paycheck to paycheck, on the other hand, even small unexpected expenses can put you in the red. The two weeks between paychecks is an eternity for an hourly worker whose credit card is already maxed out, or who doesn’t have one to begin with. Every parking ticket and hospital co-pay is a potential crisis. By the time payday comes, it’s too late — the next crisis has already arrived.
Financial technology startup DailyPay thinks giving people in this situation more frequent access to wages would go a long way toward solving this problem and putting them on the path to financial security.
DailyPay’s solution works like this:
1) The startup integrates with a company’s established payroll and time-tracking systems. Instead of going directly to an employee’s bank account, paycheck deposits are set up to go through DailyPay first.
2) An employee can withdraw wages he or she has earned but not yet received throughout the two weeks or month before formally getting the paycheck. DailyPay fronts the money for a small fee, and keeps the expense on its balance sheet.
3) Come payday, DailyPay deducts whatever money the employee has already withdrawn, and sends the rest of the paycheck through to the employee’s bank account.
Perhaps Lee likens his service to an ATM because the more obvious comparison — a payday loan provider — is often considered predatory.
One key difference is that DailyPay interfaces directly with employers, positioning itself as an HR benefit. DailyPay’s pitch to other companies is that flexible payroll reduces turnover, which is good for the bottom line, and the service is free to implement. One internal study of 20 DailyPay clients found that turnover shrank by 40 percent on average after they adopted it.
Mosaic Will Sell $ 300 Million Worth of Solar Loans to Goldman Sachs (GreenTechMedia), Rated: A
Solar loan provider Mosaic reached an agreement with Goldman Sachs in which the bank will buy $300 million in loans over time.
This deal will clear up space on Mosaic’s balance sheet to finance more loans, and signals a prestigious bank’s willingness to buy and own solar loans for itself.
Market Overheated? Not These Sub-Sectors (Seeking Alpha), Rated: A
Since I run an opportunistic portfolio that seeks out high upside “Fat Pitches” (soon to be a subscription service), it may seem as though I, too, would be stumped; however, I continue to find opportunities, albeit in sectors a bit off the beaten path.
While “value” and “high-growth tech,” may seem anathema to each other (wait till you see the next section), the three public fintech companies – Lending Club, Ondeck, and Elevate Credit – all seem undervalued today relative to their potential, and each have posted strong results in the recent quarter.
Ondeck, which lends to small and medium businesses, also recently decided to scale back its growth, raise rates, and cut staff. The company lowered orginations last quarter by 19% sequentially last quarter, but loss provisions as a percentage of revenues also fell from 8.7% to 7.2%. After implementing a $45 million cost reduction program, the company’s losses declined to only $1.5 million, down from $16 million in losses a year ago.
Speaking of acceptance, it may seem on the that the company that serves the subprime market – thought to be the riskiest of all – is the most profitable of the three. Elevate Credit has been doing everything right – though you wouldn’t know it by its languishing stock price. Last quarter, Elevate grew originations 29% and revenues by almost 19% (due to a higher mix of lower rate, but higher-quality loans), expanded its core RISE product to the state of Kansas—its 16th state, and was able to lower its interest rate on its high-cost funding from Victory Park Capital.
The teams at FinTech startup LendUp and Oakland-based Beneficial State Bank think very differently about that relationship. As LendUpCEO Sasha Orloff and Beneficial State Bank Co-CEO Kat Taylor told PYMNTS in a recent interview, banks and FinTechs need each other, and a very large segment of the population living on the margins of financial services in the United States need these two groups to work together as well.
That constituency, Orloff noted, isn’t always easy to serve – or to serve profitably – without relying on a business model that counts on its customers to fail and then charging sky-high fees for those failures. LendUp and Beneficial State Bank have a different approach: They want to invest and make money on their customers who are succeeding financially and are able to participate in the full spectrum of the financial system.
Fifty-six percent of Americans have a sub-prime credit score, meaning mainstream banks likely can’t approve them for their products; more than half of all Americans could not find $400 in the event of an emergency; and two-thirds of millennials have not started building any kind of credit score, in a system in which having no score or a poor score can cost a person $250,000 over their lifetime.
Lending money beyond what people can bear is the hallmark of predatory lending, she emphasized, and that’s not going to help the customer.
That alternative – the L Card, issued by Beneficial State Bank in partnership with LendUp – is a low annual fee card (starting at $0 and capped at $5 per month or $60 per year) that offers consumers a grace period for payments and even caps late fees (at $7). It has a higher interest rate – 19.99 percent to 29.99 percent – for a credit card than the national average, but according to The PEW Charitable Trusts, is a fraction of the payday lending rate, which is around 400%. Credit limits range from $300 to $1,000 based on credit score, and a year of timely payments and responsible behavior allow customers to double the limits.
CommonBond gets new CFO from Deutsche Bank (India Times), Rated: A
Jay Coleman, a Wall Street banker focused on equity raises and initial public offerings, has joined online lender CommonBondas chief financial officer, according to the company’s co-founder David Klein.
While still small, the company had lent about US$1bn to 12,000 borrowers as of May 1, according to Moody‘s Investors Service.
Coleman was poached from Deutsche Bank where he was head of private capital and equity capital markets execution, according to a CommonBond spokesperson. Prior to that he worked at Barclays, Lehman Brothers and Morgan Stanley.
eOriginal Appoints Timothy Wall Chief Revenue Officer (Broadway World), Rated: B
eOriginal, Inc., a rapidly growing financial services technology company, has named Timothy Wall Chief Revenue Officer (CRO).
As CRO at eOriginal, Wall will be responsible for all aspects of the company’s sales organization and revenue development, including direct sales, channel sales, sales engineering and customer success.
Ex-U.S. Representative Nussle: credit unions are the ‘original disrupters’ in financial services (Radio Iowa), Rated: B
Former Iowa Congressman Jim Nussle today said Iowa’s 94 not-for-profit credit unions have filled a void as banks throughout the country and in Iowa continue to consolidate.
More than 1.1 million Iowans are members of a credit union and the state’s credit unions have about $16 billion in assets, according to Nussle.
Nussle indicated the “speed of change” and stress in the industry has been rather dramatic, not only because of the “Great Recession,” but because of incidents like Wells Fargo’s admission that its employees created fake accounts without customers’ permission. The recent growth of on-line “peer to peer” lending presents credit unions with an opportunity rather than a challenge, according to Nussle, because credit unions are member-driven.
GDS Link Welcomes 2017 LEND360 to Dallas (PR Web), Rated: B
GDS Link, a global provider of credit risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business leasing, announced its role in bringing the fourth annual LEND360 to Dallas.
“The LEND360 Dallas host committee, co-chaired by Ken Rees, Chief Executive Officer of Elevate Credit, Inc. and Paul Greenwood, President and Co-founder of GDS Link, and supported by other influential members of the fintech community, has been meeting since late 2016 to ensure a valuable attendee experience for the upcoming conference, assist with speaker development and engage innovative industry leaders to take part in the event,” according to a LEND360 press release.
Hear from Both Sides of the Aisle on the Future of Fintech (Business Insider), Rated: B
The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced its roster of speakers for the Second Annual Summit on Sept. 25 at the Renaissance Hotel in Washington D.C. The Online Lending Policy Summit provides an opportunity for industry participants to share insights, propose standards, and have an open dialogue with regulators and policymakers to build consensus viewpoints on the regulation of online lending. Keynote addresses will be delivered by the following four policy leaders:
- Keith Noreika, Acting Comptroller of the Currency. Mr. Noreika advocates for the need to embrace innovation while ensuring that new products and services do not present undue risk to the financial system. He will discuss how regulators and industry can work together on “responsible innovation” and with principles for governing the rapidly growing financial technology sector.
- Congressman Gregory W. Meeks (D-NY-5), now in his tenth term, serves one of the most diverse constituencies in the nation. Mr. Meeks is known for being an effective, principled, and commonsense leader. Congressman Meeks is a senior member of the U.S. House Financial Services Committee, and is the lead Democratic sponsor of important legislation dealing with the Madden v Midland Funding court case.
- Congressman Tom Emmer (R-MN-6) represents Minnesota’s 6thDistrict in the U.S. House of Representatives. He began his congressional career on January 6, 2015 and serves as a key member of the U.S. House Committee on Financial Services. Prior to his congressional service, Mr. Emmer practiced law for several years, and followed his entrepreneurial calling and opened his own law firm. In 2004, he was elected to the Minnesota House of Representatives and re-elected by overwhelming majorities in 2006 and 2008. After a narrow loss in the 2010 gubernatorial race, Tom entered the radio business as a conservative radio host.
JustUs Receives Full Authorization From the Financial Conduct Authority (Crowdfund Insider), Rated: AAA
Peer-to-peer lending platform JustUs announced this week it has received full authorization by the Financial Conduct Authority (FCA). The online lender revealed that the full authorization is a pre-requisite to offer the JustUs Innovative Finance ISA (IFISA) and registration forms have been submitted to HMRC with a planned launch of the ISA in October.
A Battle For The Soul of Peer-To-Peer Lending (Forbes), Rated: AAA
Crowd2Fund, a relative newcomer to the alternative finance industry, is accusing Funding Circle, one of the market leaders, of turning its back on the whole ethos of peer-to-peer lending.
The row follows an announcement last month by Funding Circle that it will no longer allow investors on its platform to choose which specific companies they want to lend their money to. Instead, the platform will automatically spread investors’ cash across a group of businesses looking for funds – much as a professional collective fund manager in any other asset class chooses investments on behalf of its investors.
Crowd2Fund said Funding Circle’s move reflected the larger platform’s increasing focus on large institutional investors in peer-to-peer lending, as well as concern about the growing regulatory scrutiny of the sector.
36% of UK adults did not save or invest last quarter (Bridging&Commercial), Rated: A
Over a third of UK adults (36%) have not saved or invested any money in the last three months, according to the second instalment of RateSetter’s quarterly tracker.
On average, people saved or invested £232 each month in the last quarter.
The research also revealed:
- men saved significantly more than women over the period (£296 a month, compared with £170)
- 25- to 34-year-olds put away the most over the period (averaging £278 a month), followed by those aged between 35 and 44 (£260 a month)
- young adults, aged between 18 and 24, put away the least (£154 a month).
ArchOver CEO: SMEs have “wrong attitude” in eschewing finance (P2P Finance News), Rated: A
ARCHOVER’S chief executive Angus Dent (pictured) has urged small business owners to be more confident in taking on debt, after new figures showed that 80 per cent of small- and medium-sized enterprises (SMEs) are refusing to apply for new finance.
The boss of the peer-to-peer business lender said that while their caution was understandable, it is the “wrong attitude” for SMEs that want to scale up.
LendInvest property academy receives public support (Mortgage Introducer), Rated: A
LendInvest has received public support from three major industry bodies for its property development academy.
The Centre for Entrepreneurs, Homes for Scotland, and the Home Builders Federation have each praised the academy, which was established in 2016 to help develop the skills of aspiring and new small-scale housing developers.
ASTL conference: FCA praises regulated bridging market’s ‘rosy picture’ (Mortgage Solutions), Rated: A
Data from the FCA showed regulated bridging customers contrasted strongly with the stereotypical version, with just 3.3% of bridging loans going to credit impaired clients.
The regulator found bridging customers ware typically wealthier, older, more likely to be self-employed and bought bigger houses than standard mortgage customers.
The FCA data revealed:
- Bridging is much more concentrated in London and the South East – around 40% of loans are in these regions compared to 26% for standard mortgage lending;
- Significantly less bridging lending takes place in the north of England, Scotland, Wales and Northern Ireland;
- Median bridging loan value is around £208,000, compared to £143,000 for a standard mortgage;
- Median property value is significantly higher at around £550,000 compared with a normal mortgaged property value of £230,000;
- Significantly more bridging loans are on detached houses – 51% compared with 23%;
- Average bridging customer age is 56, compared to 37 for a normal mortgage;
- Bridging customer are more likely to be self-employed – 31% vs 11%;
- Bridging customers are also significantly more likely to be retired at 28% vs 1% standard mortgage customers.
Why Investors are Excited about Birmingham (Landlord News), Rated: A
Birmingham, the site of LendInvest’s latest Property Development Academy, is a perfect example of this. Time and again we heard from attendees of just how exciting the city is for property development currently, and why they are so desperate to get cracking with their own development projects.
It’s notable that in last year’s Emerging Trends in Real Estate report from PwC and the Urban Land Institute, which looked specifically at which European cities present the best opportunities for investors, Birmingham was the best performing UK city. It ranked 22nd, ahead of cities like Manchester, Edinburgh, London, Brussels and Rome.
All of this has led to a thriving rental sector. Our most recent Buy-to-Let Index found that the city currently boasts a rental yield of a very strong 5.03%, with capital gains of 4.97% over the last year.
The latest UK Economic Outlook report from PwC named the West Midlands as one of the housing hotspots, predicted to see house price growth of 4.5% this year, compared to a UK average of 3.7%.
Lawmaker urges FSC to curb online lending bad debt (Taipei Times), Rated: AAA
Democratic Progressive Party Legislator Lin Chun-hsien (林俊憲) yesterday urged the Financial Supervisory Commission (FSC) to curb bad debts stemming from fraud and loan sharking on Internet-based peer-to-peer lending platforms.
Online lending platforms have existed for years in other nations and have caused many problems, Lin said, adding that in China they are blamed for generating an estimated 60 billion yuan (US$9.2 billion) of bad debt.
ZhongAn Plants a Fintech Acorn for China (Bloomberg), Rated: AAA
Like electric cars, whose era of global dominance has yet to arrive, the app-driven insurance industry is more of a concept than reality. That doesn’t mean investors should dismiss the Hong Kong initial public offering of ZhongAn Online P&C Insurance Co., despite its hefty price tag.
Bankers are currently sounding out investors for an IPO that could raise as much as $1.5 billion, giving ZhongAn a valuation of $11 billion. That’s well above CLSA’s $8 billion estimate, which already ranks the online insurer as China’s third-most valuable fintech company after Ant Financial, an affiliate of Ma’s Alibaba Group Holding Ltd., and Lufax, the peer-to-peer lender owned by Ping An Insurance (Group) Co.
ZhongAn is the world’s sixth-most-valuable e-finance company, at about $8 billion.
So here’s the bad news. ZhongAn is tiny. Its net written premiums were a mere 3.4 billion yuan ($520 million) last year, or 0.5 percent of China’s insurance industry, according to Bernstein Research analyst Linda Sun-Mattison.
It’s also expensive. The $11 billion valuation implies an adjusted price-to-book level of 4.3 times, Smartkarma analyst Ke Yan estimates.
Wealth Products Marketplace Raisin Takes a Leap Forward with Term Deposits for Businesses (Crowdfund Insider), Rated: AAA
Pan-European marketplace Raisin continues its trailblazing expansion. Having penetrated new geographies with international and localized services in 2016, the Berlin-headquartered startup is now broadening its offering to address a new customer segment: small and medium-sized enterprises (SMEs). Starting September 14, businesses can open term deposit accounts on Raisin’s German site www.weltsparen.de, or more precisely, on www.weltsparen.de/geschaeftskunden.
Earthport strengthens US network with Cross River partnership (Finextra), Rated: AAA
Earthport (AIM: EPO), the leading payment network for cross-border transactions, is pleased to announce its partnership with Cross River, a US-based bank, to provide inbound cross-border payment services across the US market, adding to its existing capabilities to process payments in the US.
The partnership will facilitate the execution of inbound ACH payments through Cross River, and further strengthen Earthport’s global payment network, enabling high volumes of low-value payments originating outside the US to be serviced more efficiently.
Fintech to the rescue for the world’s unbanked (City A.M.), Rated: A
Half the world is unbanked. That’s the provocative title of a 2009 research paper published by the Financial Access Initiative (FAI), a consortium of researchers from New York University, Harvard, Yale and Innovators of Poverty Action.
Their study also provided an empirical grounding that, although it is possible to serve low-income communities at scale with financial services, there are still billions left to reach. According to figures from the World Bank, as of 2015 there are still 2bn people who lacked access to any formal financial services.
The advent of mobile technology along with increasing smartphone penetration, especially in developing countries, has opened up a new portal of possibilities.
This newfound access in countries across South East Asia and Africa has provided the perfect ecosystem to initiate financial inclusion.
Top Fintech Innovations To Look Out For in 2018 (Finovate), Rated: A
Nick Ogden – founder and Executive Chairman, ClearBank
The number one thing that’s going to occur in 2018 is fragmentation of the marketplace as we know it today. The days of big banks delivering everything and being specialists in everything are over. Some of them might still not accept that but the reality is that it’s happened.
Karen Kerrigan – Chief Legal Officer, Seedrs
Rather than looking at a specific technology, have a look at a particular sector. There are a lot of challenger banks out there at the moment – Starling Bank, ClearBank, Monzo, Tandem – and they’re all vying for the same space. They’re all doing things slightly differently, but ultimately are taking on the banks.
Lol a FoHFs ICO, srsly (FT Alphaville), Rated: A
Tokens may not be available to all persons in all jurisdictions as certain offering restrictions may apply. In particular, no tokens will be available in the US, Singapore or the EEA. Offering and trade restrictions, as well as the rights of holders of FundCoin, will be set out in further detail in the offering memorandum.
That little snippet is from the last page of the “whitepaper” for FundCoin, which deserves a spot in the pantheon of initial coin offerings (ICOs) to which regulators should be paying more attention. FundCoin is “the first private equity token ICO” and is the creation of Finles, a 40-year-old Dutch fund of hedge funds manager that has decided to turn to the crypto markets to raise money.
Virtual money shifting global trading trends (BusinessDay), Rated: A
Cryptocurrencies are the most undervalued asset class in the world, says Farzam Ehsani, leader of Rand Merchant Bank’s blockchain initiative.
The combined market capitalisation of all cryptocurrencies was only about $120bn, Ehsani said on Thursday at the Business Day/Financial Mail Investment Summit, held in partnership with Old Mutual Wealth.
By comparison, the market capitalisation of all stock markets is about $68.5-trillion, according to figures from the World Federation of Exchanges.
The price of a single bitcoin has surged from $605 to $3,487 over the past year, leading sceptics to label it a “bubble”.
‘RBI AWAITING GOVT NOTIFICATION FOR COMING OUT WITH P2P LENDING NORMS’ (Daily Pioneer), Rated: AAA
The Reserve Bank is waiting for a gazette notification from the Government on getting the peer-to-peer lenders under its regulatory ambit before coming out with guidelines on the sector, a senior official said on Wednesday. “Following up on the consultation paper we did last year, we are shortly going to come up with guidelines on peer to peer lending,” RBI’s executive director Sudarshan Sen said at an industry event here.
According to the official, the P2P lending interface will come under the purview of RBIs regulation by defining these platforms as NBFCs under the RBI Act by issuing a notification in consultation with the Government.
Investree to develop online transaction system of state securities for retail investors (e27), Rated: AAA
Indonesian peer-to-peer (P2P) lending platform Investree announced that it has been appointed by the country’s Ministry of Finance to run a pilot project that aims to develop online transaction system of state securities for retail investors.
According to a DailySocial report, through the project, users will be able to purchase state securities through the Investree platform.
Demonetization in India shines a light on the digital future (The Asset), Rated: A
India’s demonetization experiment has been declared a failure by economic pundits. However, it has expanded India’s tax base and fast-tracked the digitization of payments, which is a good thing.
Some nine-million-odd new taxpayers came into the fold thanks to the scheme. Around 20 million new bank accounts were created by Indians panicked by the possibility of having their cash holdings voided.
Second, the scheme accelerated the digitization of payments in India, with a vast swathe of merchants forced to accept digital payments in lieu of cash.
Types of crowdfunding and why it is beneficial for real estate sector (Moneycontrol), Rated: A
The global crowd-funding industry generated about USD 34.4 billion in 2015.
Apart from raising capital, crowdfunding is also a way to create awareness among the masses and support for a project from the people around you.
Crowdfunding has exploded new ways to raise funds for start-ups, social sector, real estate, inventions and so on.
In India, transaction value in the “Crowd-funding” segment amounts to a meagre USD 6 million in 2017.
Transaction value is expected to show an annual growth rate (CAGR 2017-2021) of 24.8 percent resulting in the total amount of USD 16 million in 2021.
The most used method for real estate crowdfunding is “equity crowdfunding” which helps individual become partial owners in distinct properties, allowing them to participate alongside real-estate companies who acquire, redevelop, or build.
Another type of crowdfunding used for real estate is syndicated debt crowdfunding. This fast growing platform takes some or all of an existing real-estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.
IOU Financial Ranked Fourth Fastest-Growing Company in Canada (Business Insider), Rated: AAA
IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that Canadian Business and PROFIT ranks IOU Financial as the fourth-fastest growing company on the 29th annual PROFIT 500, the definitive ranking of Canada’s Fastest-Growing Companies. Published in the October issue of Maclean’s magazine and at , the PROFIT500 ranks Canadian businesses by their five-year revenue growth.
IOU Financial makes the 2017 PROFIT 500 list as the fourth fastest growing company with five-year revenue growth of 8,600%.