Launching an Online Lending Business: A Blueprint for Taking Off

consumer loans

Consumer lending in the US reached nearly 1.5 trillion dollars in 2018, according to the Federal Reserve Board of Governors, and European banks reported a demand growth of 25% in the second quarter of 2018. Needless to say, it’s a good time for lending. While banks are still paying out the lion’s share of the […]

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consumer loans

Consumer lending in the US reached nearly 1.5 trillion dollars in 2018, according to the Federal Reserve Board of Governors, and European banks reported a demand growth of 25% in the second quarter of 2018. Needless to say, it’s a good time for lending.

While banks are still paying out the lion’s share of the loans, alternative lenders are gradually moving in to fill holes in the ever-increasing lending market.

Fintechs Exploit the Growing Market

The traditional banking sector is entrenched in their old way of doing business. Banks and customers alike expect a certain customer experience and style of operational management. While this may appeal to some customers and lending institutions, it comes at a significant cost. Each teller or call-agent interaction at a traditional bank costs an average of four dollars compared to merely ten cents for a mobile interaction.

While the profits of running a fintech are clear, the process of getting up and running is not without its challenges.

Practical Steps for Setting up a Lending Company

Lending markets vary from country to country depending on regulations, legislation, and consumer behavior. This simple roadmap outlines the general process to get started.

Point One: Becoming A Legitimate Enterprise

In order to start lending online, business owners need to create a legal entity. This is the vehicle that all lenders will use to navigate red tape. As this process varies greatly from business to business, it may take as little as 1% or as much as 20% of your initial startup budget.

The basic steps include:

One possible way of circumventing this is to purchase an already existing bona fide legal entity or lending franchise. For example, the largest franchise lender in the US is Liquid Capital. The short-term costs may run a bit higher, however, the long-term benefits of using an existing household name could potentially pay large dividends.

In addition to the unique requirements for lending entities, regular business costs will often crop up as well. Among others, these could include hiring and administrative overhead and office rental. On average, these costs could take anywhere from 10%-12% of your startup budget.

Point Two: Raising Funds

Raising capital to lend out is the primary operational challenge for any lending startup.

Usually the best way for a startup to begin lending is with their own capital, but when that is not possible (or favorable) funds can be raised in the marketplace. Recently, institutional lenders have become much more comfortable with providing capital to lending startups following the rise of the P2P model.

Any lending company funded by public investors will have to factor in the cost of hiring a Certified Public Accounting firm to perform an audit to certify all financial data including their business plan, valuation, and other financials.

Point Three: Using the Right Technology Platform

The core of any modern lending company is the technological platform it runs on. The platform is the brain of the business and takes time to nurture and grow. It is best to do this in parallel with the other points as it is the primary capital asset of the operation.

When it comes to platforms, there are two main options: building your own from scratch or purchasing an existing platform from a vendor. This crucial decision will have a long-term impact on the business and will greatly affect setup and operational costs. Each option comes with pros and cons:

  • Building a lending system from scratch is more time-consuming, and can take up to 12 months. It requires a substantial upfront investment as you will need both financial and technological expertise to pull it off. Additionally, time-sensitive shifts in the market could be a factor, so timing your release is of paramount importance. While this option could be risky, it gives lenders full control over the product they build.
  • Purchasing an existing lending platform is generally less expensive and faster. There are a wide range of solutions both out-of-the-box and fully-customizable. The options fall into two general categories: traditional core banking systems (eg. Oracle, Temenos, and Infosys) or fintech-focused solutions (eg. HES Lending Software).

There are number of software challenges that digital lender should consider when choosing a platform:

  • In order to optimize productivity, systems often require further customization.
  • Some systems only cover a single or hand-full of loan management aspects like underwriting, loan origination, or loan servicing, and do not support many back-office functions.
  • Systems often do not integrate with the majority of third-party services, so lenders might end up needing to mix and match software to run their business.
  • Some systems do not extend well into new markets or product segments.
  • Some systems require license upgrades to increase the loan volume or number of user accounts.

In Conclusion

With a good understanding of the industry, thorough planning, and about $200,000 to $1,000,000 of startup capital, a state-of-the-art lending business can be launched. Not only do these businesses financially benefit their owners and investors, but they come with the satisfaction of knowing that every loan issued has great potential for improving the lives of the borrowers and their communities.

Author:

Natalie Pavlovskaya is the Chief Marketing Officer at HES (HiEnd Systems), a fintech company behind comprehensive lending and credit scoring solutions. She is a Marketing Executive with international business experience in CIS, EMEA, and US, working for more than 7 years in digital marketing.

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Thursday January 24 2019, Weekly News Digest

millennials loan money

News Comments Today’s main news: Funding Circle, Stripe partner on small business expansion. Goldman, Citi drop Chinese P2P lenders. RateSetter attracts 75K investors. MarketInvoice gets 56M GBP in equity, debt funding. Hexindai shares credit data with Baihang Credit. Today’s main analysis: PeerIQ on bank earnings. Today’s thought-provoking articles: The link between marketplace lending and personal bankruptcy. 10 best places to […]

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millennials loan money

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Goldman, Citi Drop Chinese Peer-to-Peer Lenders After Crackdown (Bloomberg), Rated: AAA

First came a sweeping government crackdown and a surge in defaults and failures at thousands of China’s peer-to-peer lenders. Now, in another troubling sign for the industry, some of the biggest investment banks have stopped taking them public.

Wall Street firms including Goldman Sachs Group Inc. and Citigroup Inc. walked away from U.S. initial public offerings of Chinese P2P lenders in recent months, people with knowledge of the matter said. Their concerns mainly stemmed from the timing of the deals, with an uncertain outlook for P2P companies and a slumping market knocking down valuations. In each case, the businesses went ahead with their offerings after finding new underwriters.

Marketplace Lending & Personal Bankruptcy: Cause and Effect (Lend Academy), Rated: AAA

A national wave of personal bankruptcies that began in 2008 reached a peak in the year ending September 2010, when nearly 1.6 million bankruptcies were filed.

Filings fell by 1.8 percent for the 12-month period ending March 31, 2018, compared with the year ending March 31, 2017. The data continues a national trend of declining bankruptcy filings since 2010-2011.

An interesting white paper (The Real Effects of Financial Technology: Marketplace Lending and Personal Bankruptcy) co-authored by Dr. Piotr Danisewicz, University of Bristol and Ilaf Elard, Assistant Professor of Finance at Shanghai University of International Business and Economics was released last summer.

Among the many additional conclusions Danisewicz and Elard reach in the white paper are:

  • The Madden win triggered Lending Club and Prosper, the two largest U.S. marketplace lenders, to reduce lending in the states affected by the verdict.
  • The co-authors attribute the increase in the incidence of personal bankruptcy following Madden to the reduction in marketplace lending. This hypothesis is supported by a number of further results.
  • The consequences of Madden are limited to the enforceability of marketplace loans and suggest that the increase in bankruptcy rates following Madden arises predominantly from changes in marketplace lending.
  • Danisewicz and Elard also rule out that the rise in bankruptcy following the verdict could be the result of an increase in defaults by marketplace borrowers in the affected states. This may occur if marketplace borrowers are over-indebted and default after being unable to obtain additional marketplace loans in the affected states.

Strong Bank Earnings (PeerIQ), Rated: AAA

Banks had a rough quarter for trading revenues. FICC revenues at MS dropped by 30% YoY and by 18% YoY at GSBank of America’s 15% YoY drop in trading revenues was offset by a 10% increase in consumer banking revenuesRevenues at Wells Fargo dropped by 5% YoY driven by lower consumer loan balances. WFC faces a regulatory asset cap until the end of 2019 which is hampering loan growth. JPM was the only bank where the provision for credit losses increased, driven by a reserve build for credit cards due to loan growth.

Source: PeerIQ

10 Best Places to Pay Down Debt (LendingTree), Rated: AAA

Americans’ debt balances continued climbing in 2018, with total consumer debt tracking to top $4 trillion by the end of that year. With balances climbing high, many borrowers will want to use the new year to take their debt down a peg. For those who do so, prioritizing paying off debt can bring major rewards both in the near and long distance future.

86 Million Americans Fear Maxing Out Plastic on Large Purchases (WalletHub), Rated: AAA

The holiday shopping season is over now, and many Americans are seeing the impact on their credit card bills and bank statements. During the holidays, people often make a lot of large purchases, and sometimes max out their cards in order to do so. In a nationally representative survey conducted by WalletHub, 34 percent of respondents say they worry about maxing out their card with a large purchase.

Source: WalletHub

Credit Line Increases Drive Consumer Engagement and are Most Likely to Happen at the Beginning of the Year (AP News), Rated: A

According to a new study from TransUnion (NYSE: TRU), consumers are 50% more likely to receive a credit line increase (CLI) between the months of January and May. However, credit line decreases (CLD) occur at twice the normal rate during the month of January.

Lendio Provides More Than 5,000 Kiva Loans to Support Women-Owned Businesses Around the World (Lendio), Rated: A

Lendio announced today that through continued efforts to support business growth around the world, the Lendio Gives program has funded more than 5,000 Kiva microloans. To-date, Lendio’s employee contribution and employer matching program has provided more than $130,000 in loans to underserved business owners in 78 countries.

Lendio Franchising Named No. 1 Financial Services Brand in Entrepreneur’s Franchise 500 (Lendio), Rated: B

Lendio Franchising recently ranked in Entrepreneur magazine’s Franchise 500, the world’s first, best and most comprehensive franchise ranking. Named #1 in the Business Financial Services category for the second year running, Lendio Franchising was recognized for its outstanding performance in areas including unit growth, financial strength and stability, and brand power. Placement in the Franchise 500 is a highly sought-after honor in the franchise industry; Entrepreneur received more than 1,000 applications this year, making it one of the company’s most competitive rankings ever.

Commercial Real Estate Finance Platform CrediFi Milestone: Total Capital Raised Has Surpassed $ 29 Million (Crowdfund Insider), Rated: A

CrediFi, a fintech and commercial real estate finance platform, on Wednesday it has raised an additional $6 million in funding. This funding comes on the heels of the $13 million previously raised in Series B funding. The company reported that the total amount it has raised has surpassed $29 million.

Lending Express Celebrates $ 100M Lending Milestone & California’s Golden Opportunities (Crowdfund Insider), Rated: A

Lending Express, an Israeli tech company dedicated to creating a better world of funding for SMBs, has surpassed $100 million in financing facilitated between small and medium business owners and online lenders. Lending Express also obtained state permission to open for business in California.

Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers (OAOA), Rated: A

Fundation announced that it has recently launched a digital lending solution in partnership with Banc of California, enabling the California-based bank to offer a new, streamlined end-to-end solution for small businesses seeking a business loan or line of credit. The solution enables small businesses to apply for loans and lines of credit through a simple online application at Bancofcal.com and receive funds in a little as one business day.

Entrepreneurs Take Note: Success Is Within Reach (WWD), Rated: A

With insight from 600 “thriving” U.S. small business owners, a study by global financial services platform Kabbage, Inc. reveals one-third of small businesses started with less than $5,000 in start-up capital.

According to the report, particularly scrappy or thrifty entrepreneurs may want to consider starting a business in one of the three categories costing $5,000 or less “during the first six months.” Accounting; at 45 percent, online retail; at 44 percent and construction and landscaping; at 39 percent represented the least amount of start-up capital, or lowest entry barriers.

Officials caution federal workers of predatory online payday lenders during federal shutdown (News 8), Rated: A

Attorney General William Tong and Department of Banking Commissioner Jorge Perez cautioned federal workers on Wednesday to avoid predatory online payday lenders who may seek to exploit the struggling workers during the partial government shutdown.

Most People Would Not Loan Their Loved Ones Money to Start a Business (Fundera), Rated: A

The time and effort it takes to raise the funds for your startup can quickly get out of hand, which may be the reason that 29% of new small businesses run out of cash and fail.

In fact, 38% of startups are funded by friends and family members.

We surveyed 1,000 Americans on whether or not they would loan a friend or family member money to start their business and found that 82% of people would not loan a friend or family member money to start a business.

Source: Fundera

No Pay Stub? No Problem. Unconventional Mortgages Make a Comeback (WSJ), Rated: A

Lenders issued $34 billion of these unconventional mortgages in the first three quarters of 2018, a 24% increase from the same period a year earlier, according to Inside Mortgage Finance, an industry research group. While that makes up less than 3% of the $1.3 trillion of mortgage originations over that period, the growth is notable because it came as traditional home loans declined. Those originations fell 1.2% over the same period and were on track for a second down year in 2018.

North Capital Launches REITless Impact Income Strategies (PR Newswire), Rated: A

North Capital Investment Technology Inc. recently launched a new investment vehicle, REITless Impact Income Strategies (REITless), focused on lending and strategic debt investments to primarily single- and multi-family real estate development and redevelopment projects that aim to produce positive social impact in communities nationwide. The impact initiatives targeted by the company are energy efficiency, employment generation, affordable housing, and green-housing improvements that promote environmental sustainability. REITless is managed by North Capital Inc., an SEC-registered investment advisor (RIA).

BFS Capital Achieves $ 2 Billion in Financing (BusinessWire), Rated: A

BFS Capital, a leading small business financing platform, today announced it has now issued more than $2 billion in financing to over 22,000 small businesses across the United States, Canada and, through its United Kingdom subsidiary, Boost Capital.

KeyBank To Acquire Online Lending Business Laurel Road (PR Newswire), Rated: A

KeyBank National Association today announced that KeyBank and Laurel Road Bank have entered into a definitive agreement for the acquisition by Key of Laurel Road’s digital lending business; Laurel Road’s three bank branches located in southeast Connecticut are not part of this transaction. Through the acquisition, Key will enhance its digital capabilities with state-of-the-art, customer-centric technology and will leverage Laurel Road’s proven ability to attract and serve professional millennial clients.

GROUNDFLOOR Launches Real Estate Investments Specific To Georgia Residents During Federal Shutdown (PR Newswire), Rated: A

Today, Atlanta-based GROUNDFLOOR is launching new investment opportunities specific to Georgia residents. The crowdsourced real estate investing and lending platform regularly offers investment opportunities to accredited and non-accredited investors throughout the country. Due to the federal shutdown and furloughs at the Securities and Exchange Commission, GROUNDFLOOR is now resurfacing state-by-state securities to continue to offer investors the opportunity to invest on a fractional, self-directed basis in Georgia real estate.

Is community banks’ loan growth too much of a good thing? (American Banker), Rated: A

Total loans at publicly traded banks with assets of less than $20 billion rose 9.2% in the fourth quarter from a year earlier, based on Jan. 18 data compiled by FIG Partners. Publicly traded banks above that threshold have reported a 2.7% increase in loans.

Breakout Capital Finance expands Board of Directors, appoints Neil Gurvitch and Firoze Lafeer (PR Newswire), Rated: B

Breakout Capital Finance, a leading fintech innovator, announces the expansion of its Board of Directors by appointing Firoze Lafeer, company CTO, and Neil Gurvitch as an independent director.  In making the appointments, Carl Fairbank, Breakout’s Founder and CEO, said, “We continue to see rapid growth in our lending- and technology-focused endeavors.  Adding more seasoned leadership continues our expansion and growth plans.”

Samsung NEXT, NBKC Executives and Ellie Mae Veteran Join ProPair Advisory Board (BusinessWire), Rated: B

ProPair, a Silicon Valley innovator using machine learning and predictive decision-making to change how mortgage lenders are assigning and prioritizing their leads, today announced the additions of Leo Chang, Chad Cronk and Nick Hedges to its advisory board.

United Kingdom

RateSetter attracts over 75,000 investors (Bridging and Commercial), Rated: AAA

RateSetter has announced that over 75,000 investors have put money into its platform.

Since its launch in 2010, investors have earned £120m through the P2P lending platform at an average interest rate of 4.4% per year.

RateSetter currently has £830m of investment under management, including £170m invested through its Isa.

MarketInvoice secures £56m equity and debt funding (MarketInvoice), Rated: AAA

Fintech business MarketInvoice today announced it has raised £26m in new equity funding. This Series-B funding round was led by Barclays and Fintech fund, Santander InnoVentures with significant participation from European venture fund Northzone, an existing investor in the company. Technology credit fund Viola Credit, who also participated in the equity round, will provide a debt facility of up to £30m. The facility will help scale the MarketInvoice business loans offering that sits alongside their core invoice finance solutions.

Goldman Sachs’ Marcus platform reveals AUM (AltFi), Rated: A

The US investment giant said its digital bank attracted has more than £5bn in UK savings just three months after its launch.

The US investment giant debuted its online lending and deposit platform, Marcus, in the UK at the end of last summer, and pulled in 100,000 customers and £5.4bn in the final quarter of the year.

Metro Bank shares crash after loans blunder revealed (The Guardian), Rated: A

Metro Bank has revealed a major blunder in how it classifies its loan book, an admission that drove its share price down by nearly 40% on Wednesday, wiping £800m off the value of the company.

The bank, which has been opening new branches as established rivals cut back, revealed that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms, and should have been among its “risk-weighted assets” (RWAs).

Glenhawk grows team with LendInvest hire following strong start to 2019 (Property Funds World), Rated: B

Having originated GBP28.4 million of potential loans since the start of the year, and completed on just over GBP4 million, early indications are that 2019 will see accelerated demand for Glenhawk’s fast and flexible short term property finance. Wareham joins Glenhawk’s 20-strong team of real estate professionals, supporting an increasingly diverse range of borrowers across the South of England and Midlands.

China

Hexindai Begins Sharing Credit Data with Baihang Credit (PR Newswire), Rated: AAA

Hexindai Inc. (NASDAQ: HX) (“Hexindai” or the “Company”), a fast-growing consumer lending marketplace in China, announced today that it has connected its systems and begun sharing credit data with Baihang Zhengxin (“Baihang Credit”).

China crackdown aims to push peer-to-peer lenders out of the industry (Australian Financial Review), Rated: A

Chinese authorities have further tightened controls on the peer-to-peer lending industry, aiming to clear out as many P2P platforms as possible, according to an official document seen by Caixin.

Microlenders need to obtain licences from the regulators and meet certain minimal capital requirements. For instance, a microlender in Shanghai needs to register its business with more than 200 million yuan ($41.2 million). P2P platforms usually don’t have to meet such requirements.

Chinese investors try to storm company after P2P lender failure (Business Times), Rated: A

In the latest sign of turmoil in China’s once booming peer-to-peer (P2P) lending sector, around 80 investors in failed lender Xinhehui protested outside the Hangzhou headquarters of a related company on Tuesday, demanding a US$330 million bailout.

Mrs Xue, who would only provide a surname for fear of retaliation, said she arrived at 8am with around 80 other investors from Zhejiang and neighboring provinces, demanding payment for 2.26 billion yuan (S$452 million) of products that Xinhehui had sold, including 860 million yuan (S$172 million) worth that were due for repayment on Jan 6.

Xi Tells Cadres to ‘Prevent and Control’ Risks as China’s Economic Woes Mount (The Epoch Times), Rated: B

At a high-level meeting of senior Chinese Communist Party officials held in Beijing, Chinese leader Xi Jinping gave an opening speech on Jan. 21 that hinted at the severity of China’s economic downturn.

European Union

Fellow Finance Launches Peer to Peer Lending in Denmark (Crowdfund Insider), Rated: AAA

Finland based peer to peer lender Fellow Finance is now operating in Denmark. The company says it will offer Danish consumers access to credit while Fellow Finance investors will be able to fund Danish loans. Currently, Fellow Finance provides consumer loans in Finland, Germany, Poland, and Sweden.

Note to Irish and US parents: college not the only path for your cherished offspring (Irish Central), Rated: A

According to the student loan marketplace www.lendEDU.com, the average debt per borrower at a public college is $26,872. This rises to $31,710 if you’re inclined to a private college experience. For graduate school students – whose parents have by now presumably said, “Time to pay your own way, sunshine” – the average debt is a staggering $57,600.

International

Funding Circle partners with Stripe to help small businesses expand (PR Newswire), Rated: AAA

Funding Circle, the global small business loans platform, today announced that it has joined the Stripe Partner Program, providing businesses using Stripe with access to affordable business financing through Funding Circle. As a verified extension partner, Funding Circle now enables Stripe users to import their data directly and securely to apply for a business loan up to $500,000 — making the process faster and easier so they can get back to running their businesses.

Boost Capital ups firepower as US parent hits $ 2bn lending milestone (AltFi), Rated: A

Small business lender Boost Capital has refinanced its credit facility lifting its funding capacity to $60m, as its US parent targets European growth.

The Chelmsford-based platform, which provides business loans and merchant cash advances, said it upped its credit firepower from $40m after signing a deal with New York-based investment firm Atalaya Capital Management.

India

Matrix Partners invests in P2P lending platform LiquiLoans (Techstory), Rated: AAA

Mumbai based peer to peer lending platform LiquiLoans, one of the few players to have secured a P2P license, has now secured an undisclosed amount of funding from some of the existing investor that is Matrix partners India.

Fintech startup floated by ex-Lendingkart execs MoneyOnClick raises funding (VC Circle), Rated: A

Two former executives from online lending platform Lendingkart have quit the firm to set up a new venture in the alternative lending space, catering to consumers.

According to their respective LinkedIn accounts, the startup, which has been operational since October 2018, has already raised $2.25 million (Rs 16.02 crore at current exchange rates) as part of its first institutional funding round from undisclosed investors.

Women, non-metros topping up on credit, says BankBazaar survey (MoneyControl), Rated: A

Non-metro cities have emerged as the bigger market for unsecured credit in terms of volume than the metros in 2018, according to BankBazaar Moneymood 2019 report.

The average personal loan ticket size in non-metros is Rs 2.80 lakh compared to Rs 2.55 lakh in metros. The unsecured credit portfolio includes personal loans and credit cards which are used more for consumption activities than secured loans.

Online rental marketplace Sacorooms Rises fresh funding Pre-Series A (Times of India), Rated: A

Sacorooms, a start-up that is building co-living spaces, has closed a pre-Series A round of funding for an undisclosed amount from Mr. Broadway. The investment comes after a strategic round led by Incubate Fund and a group of investors from the real estate industry this year.

Asia

OJK Zero Down Payment Policy Drives Multifinance Growth (Tempo.co), Rated: AAA

The recent policy of zero percent down payment for vehicle credit issued by the Financial Services Authority (OJK) believed to be able to drive the performance of the multifinance industry. Businesses are confident that multi-finance companies will perform better with the new regulation.

Chairman of the Indonesian Financing Company Association (APPI) Soewandi Wiranto, said that the business expansion stated in the new regulation can increase financing industry growth. Based on APPI’s calculation, industrial asset growth for 2019 can reach up to 9 percent while the growth rate of receivables is predicted to be in a range of 6 to 7 percent.

Authors:

George Popescu
Allen Taylor

The post Thursday January 24 2019, Weekly News Digest appeared first on Lending Times.

Thursday October 25 2018, Daily News Digest

Funding Circle Holdings PLC

News Comments Today’s main news: SoFi CEO explains how market volatility, rising interest rates create opportunities. Amazon debuts no-fee AmEx card for small businesses. Funding Circle broker channel hits 1B GBP lending. China Rapid Finance is expected to break even. Today’s main analysis: Funding Circle’s short-lived rally. Today’s thought-provoking articles: Is student loan debt creating a millennial class […]

Funding Circle Holdings PLC

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

SoFi CEO Anthony Noto: Market volatility, rising rates create ‘opportunity for us’ (CNBC) Rated: A

Rising interest rates and market volatility, while feared on the Street, create an opportunity for online lending platform SoFi to gain new customers, according to CEO Anthony Noto.

“When the markets pull back, people evaluate: ‘Where am I putting my money from an investment standpoint?'” Noto said on CNBC’s “Closing Bell” on Tuesday.

Made conscious decision to focus on quality, not quantity of loans: SoFi CEO Anthony Noto from CNBC.

Amazon Debuts No-Fee AmEx Card to Lure Small-Business Spending (Bloomberg) Rated: AAA

Amazon.com Inc. and American Express Co. are upping the ante in their bid for small-business spending.

The two companies unveiled a new co-branded card for small businesses on Tuesday. Cardholders with an Amazon Prime membership will be able to choose between an interest-free loan for 90 days or 5 percent back on purchases made at Amazon.com, Amazon Business, Amazon Web Services and Whole Foods Market, the companies said in a statement. The no-fee metal card will also offer 2 percent back on purchases at U.S. restaurants and gas stations and on mobile-phone services.

Student-Loan Debt Is Bringing on Millennial Class War (Vice) Rated: AAA

MagnifyMoney, an independent service that compares financial products and is affiliated with the loan marketplace LendingTree, recently analyzed 2016 data from the Federal Reserve and estimated the average millennial with student debt had 75 percent less net worth than their debt-free peers. Though many of the stats they calculated might have been skewed by extremes—think people with debt loads of $200,000 and trust-fund kids worth seven figures—they were able to reach some pretty startling conclusions. For instance, the median net bank account balance (checking and savings) of all grads under 35 who had loans, they found, was $5,500, while it was some $10,180 for those who didn’t.

So what’s the most meaningful difference between those with loans and without?
The one that’s really most costly is when you look at the retirement savings. On that side, the average grad under 35 with debt has around $21,000 in retirement savings. Someone who doesn’t have student loans has an average of almost $40,000.

Credit Card Stats & Studies (Hub Wallet) Rated: AAA

Source: Hub Wallet

Building Loyalty with Gen Z and Millennials Starts with a Better Experience (Globe Newswire) Rated: AAA

In particular, changes in the credit card market have been heavily influenced by the youngest generations. While TransUnion studies have found that consumers generally have a much higher propensity of opening their next credit product with a lender with whom they already have multiple relationships, this doesn’t appear to hold true for Gen Z. Younger consumers are engaging with new lenders rather than going to existing lenders for new products. In the report, Gen Z respondents indicated that they were the least likely to open a new credit product with a financial institution as a result of an existing relationship with that lender.

While consumers are carrying more credit cards in their wallets today than in 2010, the industry has seen five straight quarters of declining year-over-year origination growth. The study also found that the average duration for which a credit card remains open has shortened across the majority of age groups, which would indicate shifting loyalty.

Source: Trans Union

The Fintech 250: The Top Fintech Startups Of 2018 (CB Insights) Rated: AAA

The financial services industry is being transformed by insurgent startups. From capital markets to insurance and digital banking to wealth management, the Fintech 250 are among the most promising of these companies globally.

The entire 

Lendio Named to the 2018 CB Insights Fintech 250 List of Fastest-Growing Fintech Startups (PR Newswire) Rated: A

CB Insights today named Lendio to the second annual Fintech 250 list, a prestigious group of emerging private companies working on groundbreaking financial technology.

“It’s an honor for Lendio to be listed among the innovative companies driving the fintech industry forward,” said Brock Blake, Lendio CEO and founder. “Lendio is doing its part to power the economy by bridging the financing gap for small businesses. We are committed to shaping the future of marketplace lending to help business owners unlock their financial potential.”

Lendio, the nation’s leading marketplace for small business loans, recently announced it has facilitated over $1 billion in financing to more than 51,000 small businesses across the U.S. Through access to this growth capital, Lendio’s small business customers have generated an estimated $3.8 billion in gross economic output and created more than 25,000 jobs nationwide. Lendio’s milestone comes after an 80 percent increase in loans funded through its platform in the last year.

As Rates Rise and Recession Threatens, Alternative Lenders Batten Down the Hatches (Bank Innovation) Rated: A

The CEOs of Prosper Marketplace, Lending Club, and Social Finance Inc. all spoke to a common theme – preparing for the coming storm and choosing loans for quality, not quantity. JPMorgan Chase has predicted a 60% chance of recession by 2020, and it’s not clear how traumatic an event it will be.

JPMorgan signed a deal with Plaid for customer data sharing (Business Insider) Rated: A

JPMorgan on Monday signed an agreement with Plaid, a technology company that connects bank accounts with fintech apps like Robinhood, Venmo, and Acorns, that will give its customers better control over their personal data.

Plaid will access JPMorgan’s customer data through a secure application programming interface or API, allowing customers to share their financial information more easily and safely. Banks including JPMorgan have pushed back against so-called screen scraping, another way for fintech apps to companies to access customer data that generally is viewed as less secure.

Goldman shifts Marcus digital bank to its wealth unit (American Banker) Rated: A

Goldman Sachs Group is shifting a heavily touted business line into its wealth management unit as the bank eyes expansion through products that can be pitched to the division’s customers.

The firm is handing oversight of the Marcus business — its retail-banking effort, which offers personal loans online — to its $1.5 trillion investment management division, according to a memo seen by Bloomberg. The move is aimed at starting new business offerings under the Marcus brand that can be sold to the unit’s expanding roster of clients.

A spokesman for Goldman Sachs confirmed the contents of the memo.

U.S. ‘Unbanked’ Population Continues to Fall (Wall Street Journal) Rated: A

The number of U.S. households without a bank account fell to 6.5% in 2017, according to a federal government survey, as the improved economy helped bring mainstream banking services to more people.

The Federal Deposit Insurance Corp. said Tuesday the number of ”unbanked” households reached its lowest level last year since the regulator began the biennial survey in 2009. The share of households without an account at a federally insured financial institution was down half a percentage point from 7% in 2015.

We’re Closer Than you Think to Autonomous Finance (Lend Academy) Rated: A

Autonomous finance isn’t a well known term within fintech, but it may be the biggest innovation in the consumer finance space in recent years. Ken Lin, the CEO and Co-Founder of Credit Karma talked with us recently on the Lend Academy podcast about this concept of autonomous finance, a concept that is slowly turning into reality.

Credit Karma is in the unique position to capitalize on this idea, particularly when it comes to the lending business, which still relies heavily on credit scores. The company has built a platform in which users can track their credit score over time and get suggestions on products based on their financial life. From my perspective Credit Karma has a monopoly of sorts on this business with no other serious competitors at scale. Due to their sheer size and the engagement with their members, Credit Karma is a significant lead generator for the major online lenders that exist today.

New UltraFICO score stokes concerns about data privacy (American Banker) Rated: A

A new credit score that includes a consumer’s cash flow alongside their credit score — dubbed UltraFICO — is winning praise for its potential to help expand access to credit but also stoking concerns about its data privacy implications.

FICO announced this week that it is testing a new credit score with Experian and data aggregator Finicity that draws on several months’ worth of data from consumers’ bank accounts. The idea, according to FICO, is to create a “second chance” score that could allow consumers who’ve been denied credit due to the traditional model another shot at obtaining it.

Short on Cash? Use Your Employer as a ‘Payday Lender’ (Nerd Wallet) Rated: A

In recent years, startups from Silicon Valley and beyond have stepped up to offer payday alternatives through the workplace. Some, including Earnin and PayActiv, have put a new twist on the two-week pay cycle to give people access to their wages as soon as they’ve earned them. Others, such as HoneyBee, SalaryFinance and TrueConnect, allow employers to offer low-cost emergency loans as an employee benefit.

Paycheck advances in the modern workplace

What technology companies like Earnin and PayActiv say they offer is a streamlined approach for employees that retains the employer’s traditional two-week pay cycle.

Navient eyes end of non-compete with Sallie Mae in January (Asset Securitization Report) Rated: A

Navient Corp. has been ramping up origination of refinance student loans even as rising interest rates reduce the potential savings for borrowers. Earnest, the online lender it acquired late in 2017, originated $903 million of refinance loans in the third quarter, bringing year-to-date originations $2 billion. But so far, the servicing giant’s ability to expand has been limited because of a non-compete agreement with the largest private student-lender, SLM Corp., better known as Sallie Mae.

Under the terms of their split in 2014, Navient is unable to refinance either private student loans made by Sallie Mae or any federally guaranteed student loans held by Sallie Mae.

The non-compete clause expires in January, and Navient CEO Jack Remondi doesn’t plan to waste any time. On a third quarter conference call Wednesday, Remondi made it clear that he sees plenty of potential to refinance loans made or held by Sallie Mae.

Kabbage Extends Access Of Small Business Lending (Benzinga) Rated: A

Kabbage is now lending over $10 million per day to small businesses, in congruence with the company’s recent addition of 30,000 customers in 2018. The company reported its first $500 million quarter this year, according to the press release.

The lender serves up to 1,400 businesses daily and has demonstrated a 68 percent increase of working capital accessed by Kabbage on mobile devices, as well as a 283 percent growth in use of the Kabbage Card since 2017.

“It was a great growth quarter for the company, and is a direct result of developing flexible and convenient solutions that simplify accessing capital for small businesses,” Kabbage CFO Scott Rosenberg told Benzinga.

Beyond Kickstarter: 10 Niche Crowdfunding Platforms for Startups (Entrepreneur) Rated: A

1. CrowdStreet

If you’re building a real-estate investment business — or developing real-estate projects — check out the online crowdfunding opportunities on CrowdStreet.

4. FundThatFlip

If your business is remodeling and reselling homes, FundThatFlip offers a place to get quick cash to fix up and resell. Investors put in a minimum of $5,000.

Guaranteed Rate Ranks as the Best Mortgage Lender for Online Mortgage Service by U.S. News & World Report (Bankless Times) Rated: A

Guaranteed Rate, an industry leader in technological innovation, tops the list of the Best Mortgage Lenders of 2018, according to U.S. News and World Report. The Chicago-based retail mortgage lender was named the Best Lender for Online Service with its groundbreaking advances to make the mortgage experience fast, simple and secure with its digital platform.

US News & World Report recommended the Guaranteed Rate mortgage process as best for borrowers who:

  • Want to complete most of the mortgage process online
  • Want help figuring out the right product for their situation
  • Want access to a variety of home loan options

Bought Mega Millions Tickets? Here’s What You Could Have Made If You Invested That Money Instead (Time) Rated: A

Americans spend a lot of money playing the lottery. Approximately 370 million lottery tickets were sold between Saturday and Tuesday before the Mega Millions drawing, according to a lottery official. The U.S. generated nearly $73 billion in lottery sales in 2016 and CNN reports that in 2017, U.S. residents spent about $73.5 billion on tickets. The average American spends about $223.04 per year on lottery tickets, loan marketplace LendEDU found in a report that calculated its average by dividing the 2016 lottery revenue by the U.S. population (325.7 million).

Milwaukee, Cincinnati and Minneapolis Are the Most Promising Places to Open a Restaurant (PR Newswire) Rated: A

LendingTree, the nation’s leading online loan marketplace, today released its study on the best cities to open a restaurant. The study found that while traditional foodie destinations like New York and San Francisco are saturated with restaurants, up-and-comers have room to grow. The restaurant population in cities like MilwaukeeCincinnati and Minneapolis cities is less dense than in other areas, and labor costs are lower.

LendingTree analyzed the 50 largest U.S. cities to see which offer prospective restaurateurs the best shot at success. Many top spots are in once-overlooked Midwestern cities now experiencing urban renewal. The least promising cities have historically been the restaurant industry’s most competitive.

Nav and Clover Partnership Streamlines Access to Business Credit Scores & Financing (PR Newswire) Rated: A

Today, Nav and Clover, a subsidiary of First Data, formally announced an integrated, multi-year partnership to deliver U.S.-based Clover users access to their free business credit scores, as well as custom-tailored business financing and credit card options.

The Federal Reserve Bank and other surveys consistently report around 70 percent of small business loan applicants are denied by their bank. As credit data is a primary way that banks and other financial institutions evaluate business loan applicants, the integration of business credit scores and insights directly into Clover’s dashboard enables these merchants to manage this important data.

Memorial Healthcare System Taps ezCarePoint to Provide Instant Online Financing for Patients’ Out-of-Pocket Medical Costs (AP News) Rated: A

Patients at facilities run by South Florida’s Memorial Healthcare System (MHS), one of the nation’s largest public healthcare systems, can now easily and quickly finance their out-of-pocket medical fees online, thanks to a new program powered by ezCarePoint, a next generation medical financing technology platform created by ezVerify, a Sunrise, Fla. based company and LendingPoint, a Kennesaw, Ga. based company.

RealtyFolio Updates Its Platform for a Big 2019 (PR Newswire) Rated: B

RealtyFolio, the online real estate investing platform has updated its interface, including a redesign, rebrand, and upgraded features. The upgrade was meant to “make it even more comfortable for clients to navigate the platform and for clients to be able to invest in real estate projects, quickly and easily,” according to the company’s CEO, Jonathan Klein. He went on to say that they “expect a very big year in 2019, with many projects in the works, and a lot of demand from clients.”

RealtyFolio is ushering in the future of real estate investing by allowing you to build a real estate portfolio online. With over 30 years of real estate investing and management experience on its team and a vast network of strategic partners across the United States, in cities such as New YorkMiami and Los AngelesRealtyFolio gives everyone a chance to swim with the sharks.

Tamarack Hires Seven and Expands Headquarters (ELFA) Rated: B

Tamarack, a leader in providing independent software solutions in the equipment finance and commercial lending industry, has moved to a new headquarters in the North Loop, doubling their space, and added seven new positions over the past three months to meet the growing demand.

With over 25 years of Leasing and Lending experience and an expert in InfoLease®, Tamarack hires on George Burke. Burke adds extensive experience to Tamarack’s back office software engineering team.

White Oak ABL Appoints Griffith to Managing Director (ABL Advisor) Rated: B

White Oak ABL, LLC, an affiliate of White Oak Global Advisors, LLC, announced the appointment of Clark D. Griffith to Managing Director, based in San Francisco. Griffith joins from Encina Business Credit where he held the position of Senior Managing Director in charge of West Coast originations, offering lines of credit and term loans from $5 million to $50 million.

PNC to offer online business loan option in 2019 (Delaware Business Now) Rated: B

PNC announced that in 2019 it plans to begin offering fully digital business lines of credit, up to$100,000.

PNC will partner withOnDeck and use its Platform-as-a-Service to simplify and accelerate the conventional lending originations processes for PNC Bank’s small and medium-sized business customers.

PNC will combine its expertise with ODX’s online origination technology and professional services to create PNC Small Business Lending.

TickPick Announces Affirm Partnership, Expands Payment Options at Checkout (PR Newswire) Rated: B

TickPick, the no-fee ticket marketplace that is transforming the industry, announced today a partnership with Affirm, the company founded by entrepreneur Max Levchin to provide fair and honest alternatives to traditional credit. This new payment option makes TickPick the first and only secondary marketplace to offer Affirm, which allows customers the ability to spread out the cost of their purchase over time through simple monthly payments.

United Kingdom

Funding Circle’s broker channel reaches £1bn lending milestone (Bridging and Commercial) Rated: AAA

After four consecutive record-breaking quarters, the in-house broker team has supported the growth of 9,600 British businesses.

Prior to the lending milestone, the P2P platform promoted Tom Shave to head of broker.

Tom has assisted in developing a diverse network of introducers, big and small, across the country.

UK regions come to the fore in producing $ 1bn tech companies (London Loves Business) Rated: A

The UK’s leading tech clusters are competing head to head with European capitals, according to new analysis of company growth, in a sign that the success of the UK tech sector is pushing far beyond its London heartland.

Following the IPOs of Farfetch and Funding Circle, the UK is now home to 15 unicorns and six cities have produced so-called unicorns – $1bn tech companies – according to research prepared for Tech Nation and the Government’s Digital Economy Council by venture capital analytics company Dealroom.co. This latest research is published ahead of the Secretary of State for Digital, Culture, Media and Sport’s first meeting with the Digital Economy Council on 24 October 2018.

Looking at the creation of $1bn tech companies, Oxford and Cambridge combined have produced more fast-growing tech companies than both Paris and Berlin.

China

Loss-Making China Rapid Finance Limited (NYSE:XRF) Expected To Breakeven (Simply Wall St News) Rated: AAA

China Rapid Finance Limited’s (NYSE:XRF): China Rapid Finance Limited, through its subsidiaries, provides a consumer lending marketplace for lenders and borrowers in the People’s Republic of China. The US$156m market-cap posted a loss in its most recent financial year of -US$122m and a latest trailing-twelve-month loss of -US$49m shrinking the gap between loss and breakeven. As path to profitability is the topic on XRF’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for XRF.

European Union

Klarna Talks Split Payments at Money2020 Conference (Cheddar) Rated: A

Klarna is launching a new ‘Slice it in 4’ product, allowing users to split up payments. Michael Rouse, chief commercial officer of Klarna, explains how it works.

INDOCHINO Chooses Klarna to Give Consumers the Power to Pay Over Time (PR Newswire) Rated: B

INDOCHINO shoppers can now Slice it at the checkout by using Klarna’s online consumer financing to easily spread the cost of their purchase over 6-36 months. Slice it has a simple 4-step credit application process, real-time decisioning and is offered within the merchant’s own website – no re-directs – for a frictionless and fast purchase experience.

By taking the premium made-to-measure experience direct to the consumer, INDOCHINO has created a superior alternative to off-the-rack clothing at ready-to-wear prices. Their immersive multi-channel experience enables customers to order their custom garments with ease online or in-person at one of 30+ showrooms across North America

German fintech poster child N26’s major security gap (Handelsblatt) Rated: A

Germany’s fintech darling N26 is potentially vulnerable to money laundering and terrorism financing, according to research by Handelsblatt’s sister magazine WirtschaftsWoche, which exposed a security gap at the online banking startup.

The apple of discord is how easily someone can open an account with a fake ID. A WirtschaftsWoche correspondent saw first hand how a man, Milo T., scanned a friend’s ID, added his own passport photo to the ID, printed it out and stuck it atop of a white plastic card that was the same size as the office ID card in his country. He cut the edges to make them round and voilà: a new identification card.

It took five minutes and the result is so blatantly a forgery that it would fail to convince even the laxest of nightclub doormen. None of the holograms or other security features found on original IDs can be seen on the fake. Regardless, Milo effortlessly used this ID to set up an N26 account, and this wasn’t a one-off occurrence. WirtschaftsWoche documented how several people opened N26 accounts using forged papers.

Robo.cash welcomes new loan originator (Peer2Peer Finance  News) Rated: B

LATVIAN peer-to-peer payday lender Robo.cash has added a loan originator from Kazakhstan to its platform.

Z-FINANCE provides short-term private lending in Kazakhstan with an average loan size equivalent to €60 (£52).

Investors on the Robo.cash site can now invest in these loans, which have a repayment period up to 30 days and an expected interest rate up to 12 per cent per annum.

Z-FINANCE was launched in July this year and currently lends through a network of 102 sales branches in Kazakhstan.

International

ID Finance Group reports 61% revenue growth for the nine months of 2018 (Fintech Finance) Rated: AAA

ID Finance Group has reported 61 per cent revenue growth and revenues of $141.3 million for nine months of 2018 following strong growth in Europe and Latam. The data science, credit scoring and digital finance company issued $215.7m in loans in the first nine months of the year, a 64 per cent increase on the same period last year.

Its European and LatAm operations comprising Spain, Poland, Brazil and Mexico demonstrated exceptional growth experiencing a 197 per cent revenue growth and revenues of $32.6 million for the nine months of 2018. It issued $63.8 million in loans, a 142 per cent increase on the same period last year, and has also grown its customer base to over one million registered users with 20,000 new users joining weekly.The Group has now separated its European and LatAm operations from its CIS businesses (comprising Russia, Kazakhstan and Georgia) and it is functioning as a separate entity under the ID Finance name.

Moven Enterprise Expands Availability of AI Smart-Banking Solution with Global Launch (Business Wire) Rated: A

Moven Enterprise, the smart-banking solutions division of Movencorp, Inc, today announced that it has expanded its footprint globally to help banks deepen their digital customer engagement and drive new revenue streams while significantly reducing attrition and acquisition costs.

After working successfully with TD Bank (TD) in Canada, Westpac in New Zealand, and others, Moven is now bringing its AI-driven digital banking platform to banks across LatAm, APAC, Africa, the Middle East and Europe. The global expansion is well-positioned as Moven Enterprise received investment from SBI Group to enhance Moven’s footprint in Asia earlier this year. This included the formation of a joint venture, SBI Moven Asia. The company’s innovative platform leverages a bank’s data and uses proprietary algorithms to create contextual, individualized smart-banking experiences for consumers; providing them the right advice at the right time with the right offer and helping them move towards a better financial lifestyle.

The Complete Beginner’s Guide to Becoming a Private Lender—Pros & Cons (NuWire Investor) Rated: A

Private lending has picked up the pace in recent years. This is despite high-interest rates charged by private lenders. Many reasons have pushed lenders into this space including tightened requirements by banks.

In addition, banks tend to shy away from lending money to small businesses and startups. As a result, many borrowers look for other ways of funding, and such opportunities provide opportunities to private lenders.

However, starting out as a private lender is no easy walk in the park. Numerous risks lurk in the business, and you need to tread with caution. In this article, you’ll learn how to become a private lender and some of the pros and cons involved, so if you have an interest in becoming “a bank,” read on.

Fintech Streamlines Socially Responsible Impact Investing Via Robo-Advisors (Investor Place) Rated: A

What makes an investment socially responsible? There are several criteria. For instance, SRI investing avoids tobacco companies as their products cause health problems and death. Typically, a company’s social responsibility rating is based on its performance in three categories: environmental, social and governance (ESG). Positive practices across one or more of these spheres can land a company in the socially responsible category.

At the same time, robo-advisors are digital investment managers designed to grow your wealth through investing with models are based on sophisticated computerized algorithms, including ESG consideration. These fintech darlings have answered the call for socially responsible robo-advisors with a host of diverse options. Of course, you could choose a socially responsible mutual fund or ETF on your own. But, for the busy investor, let one of the many robo-advisors take charge of your investing, in line with your personal values.

Uphold Joins Crypto Lending Platform Cred for New Lending and Earning Solutions (Coin Speaker) Rated: A

In today’s business community, partnership has become one of the most promising tools on the way to new amazing developments and interesting projects that are aimed at offering customers really unique experience and opening new opportunities for them.

News about recently established collaborations regularly appears here and there. This time the headlines are made by Uphold which is a major global digital money platform, that has conducted transactions worth over $4.0 billion across 184 countries, and Cred that is a crypto-backed lending provider with over $250 million in credit facilities.

Joint Projects

Having announced their partnership Uphold and Cred have revealed their plans to launch two cutting edge blockchain-based consumer finance products: Uphold Earn and Uphold Borrow. Both products are aimed at helping customers to earn interest from stablecoin holdings and borrow money against the cryptocurrencies they have.

India

Indian P2P Lending Operators forms Association to Make P2P Industry More Credible (Indian Web2) Rated: AAA

After the Reserve Bank of India unveiled guidelines last October recognizing the need for peer-to-peer lending platforms as NBFC-P2P in the country, the regulatory authority had issued first license in May 2018 and since then 9 players have been recognized as NBFC-P2P companies. More than 12 companies are in the process of getting approval from the regulatory authority. Some of them are at advance to mid-level stage.

To represent the NBFC-P2P industry at various front as well as to represent country’s P2P lending industry at international forums, most of existing & new players have teamed-up and formed a registered body – Association of NBFC P2P Platforms.

The association has been registered under The Society Registration Act, 1860. Mr. Pramod Akhramka has been elected as President, Mr. Rajiv Ranjan as Secretary and Mr. Mukesh Bubna as Treasurer of the association.

Choose bank or online lender based on nature of loan (DNA Online) Rated: A

Unexpected expenditures often come knocking on your door when you want them the least. The reasons could range from maintenance for your vehicle to your old washing machine that needs to be replaced. The plus point of such expenses cropping up during the festive season is that you can always get a good bargain online (or at the store nearby). The fact still remains that these are expenses nevertheless. And that too when your festive expenditure is already lined up, leaving no financial bandwidth.

At times like these, loans bring a sigh of relief. But with so many options available in the market, whom should you approach with your loan requirement- banks or digital lending platforms?

Today, Indian consumers are benefitting from a range of financial products and financial institutions (FI) such as banks, non-banking finance companies, online lending platforms, etc, available at their disposal. If you are planning to take a loan or feel like there’s a possibility of availing the same in the near future, you must primarily understand that every lender has its own unique pros and cons. Some are quick in terms of loan approval and disbursal, some are cost-effective, some offer greater flexibility to their customers, while some offer innovative products that are more relevant for an applicant.

Authors:

George Popescu
Allen Taylor

Tuesday September 4 2018, Daily News Digest

Marketplace lenders have fared substantially worse on the stock market than other fintechs

News Comments Today’s main news: Zuckerberg, Bezos, Gates back Wagestream. Funding Circle plans 300M GBP IPO. P2P lenders take in 300M GBP in second year of IFISA. Hong Kong receives 29 bids for virtual bank licenses. Today’s main analysis: Does fintech has a vicious funding circle? Today’s thought-provoking articles: Samir Desai discusses Funding Circle’s IPO as plan to […]

Marketplace lenders have fared substantially worse on the stock market than other fintechs

News Comments

United States

United Kingdom

China/Hong Kong

Other

News Summary

United States

As Wonga Collapses, Zuckerberg, Bezos & Gates Back A Fairer Alternative To Payday Loans (Forbes), Rated: AAA

Samir Desai On Funding Circle’s $ 2 Billion IPO And His Plan To Conquer America (Forbes) Rated: AAA

Funding Circle has already facilitated over £5 billion ($6.37 billion) in loans since launching in 2010, mostly from its home U.K. market.

Funding Circle facilitated over £1 billion in loans to small businesses during the first six months of 2018 alone.

It’s now on track to become London’s biggest fintech IPO since global payments giant WorldPay’s bumper £4.8 billion ($6.1 billion) listing in 2015.

Source: Funding Circle

In the U.K. just 5% of businesses say Funding Circle when asked where they would go for finance, according to the company’s data, and 95% continue to chose their banks.

The Risk of a Vicious Funding Circle in Fintech (Bloomberg) Rated: AAA

There are fintechs, and then there are fintechs. Cheerleaders point to payments startups like Jack Dorsey’s Square Inc., whose stock has soared 242 percent in a year, as evidence of a Silicon-Valley-style revolution in the making. But there are sob stories, too: loan platforms LendingClub Corp. and On Deck Capital Inc. are still trading well below their IPO prices. Promises of break-neck expansion often crash into the reality of regulated finance.

Source: Bloomberg

Lending Earnings Insights (2018 Q3) (PeerIQ) Rated: AAA

We remain in the late stages of the credit cycle. The US consumer has benefitted from record low unemployment, rising incomes and home prices, and a lower tax rate. The supply of credit and competition to offer loans is increasing. Lenders are optimistic about consumer spending and debt levels, and are reserving for potentially higher losses in the future.

We see divergent credit performance across FinTech asset classes. Enova (Subprime) and OnDeck (Small Biz) are seeing near cycle-low charge-offs, while LendingClub (Prime) is seeing higher delinquencies on newer vintages. LendingClub also increased its charge-off estimates across loan grades by ~40 bps QoQ.

Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Loan loss provisions are increasing at roughly twice the rate of loan growth across card issuers, but overall reserve levels are still low.

Scratch Introduces First Loan Servicing Platform To Align Financial Interests of Lenders and Borrowers (Scratch Email) Rated: A

Scratch, a new financial technology company started in 2015 to transform the antiquated business of getting America’s $13 trillion household debt repaid, introduced the first loan servicing platform to align the financial interests of lenders and borrowers.

The Scratch loan servicing platform empowers borrowers with a simple web application for understanding, managing and paying back their loans while providing lenders accurate, real-time portfolio insights. And, by automating the back-office complexities of loan management, Scratch can devote more resources to giving borrowers the attention and guidance they deserve.

Loan Servicing Crisis Persists

U.S. household debt composed of mortgages, student loans, auto loans, credit cards, home equity lines of credit, and other consumer loans, is at an all-time high and growing daily.

Today, household debt is at a high of $13 trillion and 8 out of 10 Americans carry some type of debt, including mortgages, credit cards, student loans, and auto loans. And everyone who has a loan has a loan servicer.

United Kingdom

Funding Circle plans to raise £300m in London IPO (Financial Times), Rated: AA 

Funding Circle has announced plans to become the first of Britain’s new generation of financial technology companies to go public, in a deal expected to raise £300m and value the peer-to-peer lender at more than £1.5bn.

The initial public offering of Britain’s biggest peer-to-peer lender will provide a significant test of investor appetite for the breed of fintechs that have sprung up in the past decade to challenge high-street banks.  Funding Circle has arranged £5bn of loans to small companies in the UK, the US, Germany and the Netherlands since its launch in 2010 by connecting businesses looking to borrow money with retail and institutional investors willing to lend them money. 

However, the company’s prospective value of more than £1.5bn is above the current value of US-listed peers OnDeck and Lending Club, which have both suffered tumbling share prices since their lPOs.

Funding Circle IPO will be open to platform’s existing investors (Peer2Peer Finance) Rated: A

FUNDING Circle has said it expects its existing investors will be able to become shareholders in the company after it goes public.

Funding Circle said that its initial public offering (IPO), if it goes ahead, would aim to raise around £300m, with at least 25 per cent of the company’s issued share capital to be placed on a free float.

In a blog post on its website, also on Monday, the P2P lender said that its customers would have the opportunity to apply to participate in the IPO and become a shareholder in Funding Circle via an intermediaries offer.

Don’t be blinded by the wizardry of tech darling Funding Circle (London Evening Standard) Rated: A

Given that Funding Circle’s flotation comes just days after the collapse of that other trailblazing fintech, Wonga, it’s hard not to compare the two.

Both were launched to fill the gaps in the lending market where traditional banks feared to tread. Both used tech wizardry to check they were lending to the right people at the right price. Both brilliantly deployed digital technology to make their services simple and fast to use.

Hopefully, for future investors, the similarities end there.

Funding Circle to host cryptocurrency event to promote women in fintech (Peer2Peer Finance) Rated: B

FUNDING Circle is to host a panel event focusing on cryptocurrency, described by the organisers as “one of the most interesting but least understood areas of fintech.”

The event is being held in connection with FinTechWomen, a London-based meet-up group, and is sponsored by Funding Circle.

UK sub-prime lenders shrug off political cloud (Nasdaq), Rated: AAA

UK sub-prime investors are shrugging off Wonga’s cloud. Customer complaints and a regulatory clampdown forced the payday lender to stop making loans. The likes of Amigo Holdings and Non-Standard Finance have different models, and regulators’ blessing. Yet, with Wonga out of the picture, they too risk becoming the focus of public ire.

Investors love it. Amigo’s return on equity will be around 40 percent this year, using Thomson Reuters I/B/E/S, while it and Non-Standard Finance should grow revenue on average by more than 20 percent each year up to 2021, analysts reckon. NSF, which has a more diversified business including unguaranteed loans, is valued at over 17 times forward earnings. Amigo’s shares were priced at 12 times forward earnings even after a selloff promoted by disappointing results on Thursday. The consumer finance sector on average trades at less than 11 times forward earnings, according to Eikon.

Hedge fund Kreos Capital is first in line for Wonga payout deal after lending the collapsed payday loan company around £34m (This is Money) Rated: A

A Mayfair hedge fund is at the front of the queue to be paid by collapsed Wonga as fears grow that thousands of its hard-up customers will get nothing.

Kreos Capital lent Wonga about £34million two years ago and is understood to be still owed around £10million by the payday loan company.

Under the arrangement, it is thought to be in line to collect that sum ahead of other creditors.

P2P lenders record £300m intake in second year of the IFISA (P2P Finance News), Rated: AAA

ALMOST £300m was invested across Innovative Finance ISAs (IFISA) in the previous tax year, HMRC data reveals.

The latest ISA statistics from the taxman shows £290m of subscriptions in IFISA for the 2017/2018 tax year across 31,000 accounts.

P2P lenders saved £9,355 on average.

Zopa revealed it received more than £150m in its IFISA during the previous tax year.

The data shows that savers subscribed to 10.8 million Isa accounts during the 2017-18 tax year, down from 11.1 million in the previous tax year. This represents a fall of 10%.

P2P marketing clampdown ‘may restrict IFISA takeup’ (P2P Finance News), Rated: A

Stuart Law, who heads up the business P2P lender, warned that the strong take-up of the IFISA could be hampered by the FCA’s proposed marketing restrictions for the sector.

Under the proposed changes, platforms would be restricted to marketing to those who are certified as sophisticated or high-net-worth investors or those that certify that they will not invest more than 10 per cent of their net portfolio in P2P agreements.

Northern Irish housebuilder secures £250,000 from P2P platform (Development Finance Today), Rated: A

County Down Developments has received a £250,000 facility from Blend Network for the development of four luxury apartments in Bangor, Northern Ireland.

The loan from Blend Network came after the housebuilder was turned down for a loan by Barclays.

Mattress start-up Casper offered credit in UK without permission (Financial Times), Rated: B

A US online mattress start-up backed by rapper 50 Cent has been forced to stop offering credit to UK customers, after it emerged it had been doing so without permission from the regulator.

Casper, a five-year-old company that is on a major European expansion drive, was allowing UK customers to buy on credit from Swedish bank Klarna.

China/Hong Kong

China’s Fintech Giants Have The Money And Means To Dominate Despite The Wider Slowdown (Forbes), Rated: AAA

China has experienced a fintech explosion in recent years, with top companies dominating the industry. It’s not an accident that 

HKMA Receives 29 Bids for First Round of Virtual Bank Licences (Regulation Asia) Rated: AAA

Standard Chartered, WeLab, Zhong An Bank and HKT among several banking, technology and telecom firms applying for virtual banking licenses.

Twenty-nine financial and technology firms, including Standard Chartered and WeLab have submitted applications to obtain Hong Kong’s first online-only banking licenses.

Tencent-backed Airwallex to join push for Hong Kong virtual bank license (SCMP) Rated: A

The company shifted its headquarters to Hong Kong from Melbourne earlier this month as it prepares to submit a virtual banking license application, along with partners, ahead of Friday’s deadline.

Airwallex co-founder and chief executive Jack Zhang said the company will team up with a traditional bank and other local partners as part of the application process, although he declined to reveal their identities.

Another reason for the relocation to Hong Kong is proximity to major clients, including Tencent, online travel operator Ctrip, e-commerce JD.com as well as traditional lender Bank of East Asia.

Stable earnings growth expected by mainland banks, but bad-loan worries linger (SCMP), Rated: A

And Beijing’s crackdown on the peer-to-peer lending sector – the shadow banking system that saw rampant illicit and risky behaviour continue in the first half of this year – has helped increase demand for corporate lending levels too.

The country’s big four banks – Industrial and Commercial Bank of ChinaChina Construction BankAgricultural Bank of Chinaand Bank of China – reported profit rises of between 5.2 and 7.9 per cent in the three months ending June.

China’s state banks to boost lending as Beijing fans economy (Nikkei), Rated: A

First-half earnings showed the lenders rallying after several years of low growth. Collective net profit rose 5.7% year on year to 532.1 billion yuan ($77.9 billion), while the lenders’ average ratio of bad debt fell 0.06 percentage point in six months to 1.52% at the end of June.

European Union

INSTANTOR OPENS UP BANK API – PROVIDING UNIQUE ACCESS TO HALF A BILLION PEOPLE (Fintech Finance), Rated: B

Today Instantor, the Swedish fintech company making financial decisions easy, announces, WDSK, The World Domination Starter Kit. The WDSK is an initiative to support start-ups and scale-ups to develop next-generation products by giving them access to Instantor´s Bank API with no associated costs for new Instantor customers. By using Instantors bank API, developers will have access to transactional data from over 300 banks in 25 countries, with the potential to reach half a billion people. Instantor´s bank API has an unrivaled reach, and the WDSK initiative includes access to several markets outside new Open Banking legislation. The authentication and the end user’s interaction with banks are handled by Instantor, and the data can be accessed once the end user has given their consent.

International

Robo-advice not dead: GlobalData (Financial Standard) Rated: A

The analyst suggested robo-adviser may be ahead of their time, given high net-worth demand for robo-advice is on the rise among the next generation of investors.

“While robo-advice is here to stay, it will take time to cement itself. The digitally-savvy next generation will embrace an automated service and big banks should capitalize on this. However, a big brand is not enough to justify much higher fees,” Woldemichael said.

To succeed, incumbents will have to provide a level of service, and prices, that are genuinely competitive with those offered by startups.”

Australia

Collapse of UK payday lender Wonga sounds warning for Aussie fintech vigilance (Australian Financial Review) Rated:AAA

The collapse of Wonga, one of Britain’s most high-profile fintech lenders, provides salient lessons for Australia, which considers the UK a template for financial technology policy and where tighter laws to protect vulnerable customers from payday lenders appear to have stalled.

Wonga, built around a slick app allowing customers to get expensive loans via their mobile phone, was “notorious for its extortionate interest rates and was a toxic symbol of Britain’s household debt crisis”, said The Guardian last week.

The payday lender “failed because it was too greedy and at times crossed the ethical line”, it said, quoting prominent UK financial columnist Martin Lewis, who described Wonga’s loans as “the crack cocaine of debt – unneeded, unwanted, unhelpful, destructive and addictive”.

Micro lender makes big difference (Latrobe Valley Express) Rated: A

Her heartfelt story was told at Good Money’s one-year anniversary last week during what Carol described as a “life-changing event” after borrowing money to buy essential appliances like a new fridge and washing machine.

The low to no-interest lender was set up in July last year in partnership with Good Shepherd Microfinance and the National Australia Bank, following a $2.3 million investment from the state government.

More than 2900 people made enquiries in the hub’s first year, and the store has provided more than 500 no and low-interest loans for household appliances, car-related expenses, household furniture and costs such as medical and education expenses.

India

China’s FinUp, existing investors back digital lending startup SlicePay (VC Circle) Rated: AAA

SlicePay, a digital lending platform which caters to college students and young professionals, has raised an undisclosed amount in an extended Series A round of funding led by Chinese firm FinUp Finance Technology Group.

The company said in a statement that existing investors Blume Ventures, Japan’s Das Capital, and Russia’s Simile Ventures had also participated in the round.

A person close to the development who did not wish to be named pegged the deal at $14.9 million (around Rs 105 crore at current exchange rates).

Asia

Southeast Asia’s startups suffer from Series B funding crunch, says Kredivo’s Gar (Deal Street Asia), Rated: AAA

Having recently raised what is estimated to be the largest Series B funding round for a fintech firm in Southeast Asia, Indonesia-focused lending platform Kredivo says the process was far from smooth sailing.

The company was forced to look beyond the region to raise the majority of its fund, as it found that there were simply very few investors in the region that specialized in doing Series B investments.

MENA

Tel Aviv Climbs on List of Top 10 Undergraduate Programs for Entrepreneurs (CTech) Rated: B

Tel Aviv University is among the top ten global undergraduate programs in terms of producing venture capital-backed entrepreneurs, according to a report published last week by Seattle-based market research company Pitchbook. Pitchbook ranked Tel Aviv in eighth place, up from ninth last year, above Yale, Princeton, and Brown.

Two other Israeli universities made the top 50 list: the Technion-Israel Institute of Technology came in at 14, while the Hebrew University of Jerusalem placed at 35.

Authors:

George Popescu
Allen Taylor

Monday August 13 2018, Daily News Digest

Reasons for Personal Loan Inquiries July 2018

News Comments Today’s main news: OnDeck CEO says online lending is the future of SMB lending. SALT Lending now in 35 states. LendInvest debuts exclusive 5-year fix product through buy-to-let club. Weidai files $100M IPO in New York. Wonga says $3M African loans are unaffected by UK woes. Today’s main analysis: LendingTree Personal Loan Offers Report for July 2018. […]

Reasons for Personal Loan Inquiries July 2018

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

OnDeck Capital CEO says online lending is the future for small businesses, talks strong earnings (Proactive Investors) Rated: AAA

CEO Noah Breslow tells Proactive Investors the small business lending company has provided over US$9bln to small businesses, crossing the US$10bln mark this fall, saying online lending is the future for small businesses and consumers.

U.S. Cryptocurrency-Backed Lending Platform Now Available in 35 States After Passing Stringent Regulations (Crypto Disrupt) Rated: AAA

The cryptocurrency-backed lending firm, SALT, has released details that it is now operational across 35 states in lieu of passing crypto regulations and will be expanding its network to 20 new locations.

SALT is based in Colorado and is one of the few companies that allows borrowers to leverage their held crypto as collateral for loans. As more people than ever before hold crypto, it is important that cryptocurrency-backed lending firms pass regulatory checks to offer more competition to potential crypto borrowers in the safest possible manner.

SALT is planning to move into 20 new states, which will include North Carolina, Oklahoma, Florida, and Virginia. Crypto users in all but 15 states can now leverage their crypto to receive personal cryptocurrency-backed lending packages.

Tesla and Spotify say public markets have major flaws. Do they have a point? (Quartz) Rated: AAA

According to two prominent executives this week, the stock market isn’t all that it’s cracked up to be. Initial public offerings are broken, according to Spotify CFO Barry McCarthy (paywall). Tesla CEO Elon Musk says stock investors are too focused on the short-term, and his threat to take the company private sent tradersbankersfans, and government watchdogs into a tizzy.

McCarthy and Musk aren’t alone in their worries. The number of IPOs and listed companies in the US is shrinking: There were an average of 310 public offerings annually from 1980 to 2000, according to an analysis by Jay Ritter, a finance professor at the University of Florida. The average has slipped to 108 since then.

A common complaint is that public markets are too demanding. It’s expensive to comply with regulations, and these days there’s ample private money available for companies to tap without all the hassles of dealing with analysts, short sellers, quarterly reporting, and the rest of it.

Source Quartz

LendingTree Personal Loan Offers Report – July 2018 (Lending Tree) Rated: AAA

Offered loan amounts are down about 3.5% for all borrowers, while offered APRs inched up. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 64% of all loan inquiries.

Source Lending Tree

WV ranked 24th in US for student loan debt (Herald Dispatch) Rated: B

West Virginia schools rank 24th in the nation for the amount of debt its students graduate with, with Marshall University coming in sixth out of the schools tallied in a recent LendEDU report.

By licensing data collected from the annual Peterson’s voluntary financial aid survey, LendEDU, an online loan marketplace, completed its annual Student Loan Debt by School by State Report, a comprehensive analysis of student loan debt statistics for over 1,000 colleges and universities throughout the United States.

The total outstanding student loan debt now stands at $1.52 trillion, making it the second largest form of consumer debt behind only mortgages.

Average individual student loan debt up $ 313 in 2017 (UPI) Rated: AAA

The average amount of individual student loan debt owned by U.S. college students increased by more than $300 in 2017, according to a study by LendEDU.

The New Jersey-based online loan marketplace’s annual Student Loan Debt by School by State Report found the average debt per borrower for the class of 2017 was $28,288, up $313 from $27,975 in 2016.

“Student loan debt in the U.S. continues to be an issue of the utmost importance. The total outstanding student loan debt now stands at to $1.52 trillion, making it the second largest form of consumer debt behind only mortgages,” LendEDU said Wednesday.

The annual report uses data from the Peterson’s financial aid survey, which collects responses from 1,080 four-year public and private institutions to determine average individual student loan debt figures and rank states and colleges in terms of debt per borrower.

Who’s Departed, Who’s Left and Who’s Leading Among Robo-Advisors (Think Advisor) Rated: A

The second quarter of 2018 was a busy one for robo-advisors. Hedgeable announced its impending closure, WorthFM became history and LearnVest notified customers it was discontinuing its planning and online investment services.

During the same quarter, US Bank and Fifth Third Bank launched their robo-advisor platforms and SoFi, a fintech lender with a robo product, introduced checking accounts with debit cards, further blurring the lines between banking and digital advice. And U.K.-based Wealth Wizards, an independent digital advisor with AI capabilities, is exploring a talking robo-advisor.

What you need to know on Wall Street today (Business Insider) Rated: A

The crypto bear market has been a blessing for this bitcoin trading firm’s booming new business

Genesis Global Trading, a crypto trading shop based in New York,launched a crypto lending unit, Genesis Capital, earlier this year.That business originated $30 million in crypto loans on Tuesday, its largest amount ever, according to chief executive officer Michael Moro. The company typically lends out around $2 million per day on average.

In a sense, it could be a bearish indicator for the market. Many of the people who are borrowing crypto from the firm are doing so in order to take a short position on a given coin.

What happens when the government stops doing its job? (The Washington Post) Rated: A

It took almost two years for two dozen officials at the Consumer Financial Protection Bureau to pull together a case against Golden Valley Lending. The online lender was making small short-term loans at interest rates as high as 950 percent, violating laws in at least 17 states that cap interest rates.  Last October, the agency finalized a rule to stop “payday debt traps” by requiring lenders to determine whether people can afford to repay their loans.

Yet a few months later, it unceremoniously dropped the case, telling a federal judge in Kansas that it would “continue to investigate the transactions that were at issue.” Golden Valley is still doing business; its Web site says: “Get the money you need. It’s easy!”

Mulvaney has all but halted the enforcement of certain government regulations. He stripped the bureau’s fair-lending unit of enforcement power and redefined it as an advocacy office.

RealtyShares Launches New Brand Identity and Online Learning Center (SC Now) Rated: A

RealtyShares announced today the launch of its new corporate brand identity and online learning center. The brand changes come at a time when the company is continuing its focus on the commercial middle market, commercial transaction values under $50 million.

As part of the rebrand, RealtyShares is launching a new online learning center where investors can learn more about diversifying investments and the role that commercial real estate can play in an investment portfolio. This learning center includes guided learning paths and educational articles created and curated by RealtyShares’ expert professionals. The content is designed to help investors with a range of investing experience better understand the risks and rewards of investing in commercial real estate.

Kirill Bensonoff: 5 ways real estate can be transformed with a blockchain approach (Augusta Free Press) Rated: A

The real estate market has seen steady growth the past few years, and is showing no signs of slowing down. The commercial real estate industry alone is expected to reach $414 billion in commercial transactions next year.

This isn’t the biggest news in the real estate industry though.

According to real estate and cryptocurrency expert, Kirill Bensonoff, the most significant growth for real estate in the next few years will be how blockchain technology is applied to the market.

U.S. Fintech Even Opens New East Coast Headquarters In North Carolina After Securing More Than $ 40 Million in Series B Funding (Crowdfund Insider) Rated: B

Holistic financial health platform Even announced on Friday it has opened its new office in Raleigh, North Carolina. This news follows the company securing $40 million through its Series B funding round. Founded in 2014, Even describes itself as a mission-driven technology company working to help Americans escape the paycheck-to-paycheck cycle.

Even also reported that its mobile apps instantly budget so that users know how much is “okay to spend,” safely address cash flow issues with Instapay (on-demand access to wages), and help employees automatically save money out of their paycheck before it ever hits their bank balance.

Buy The Block: First Black-Owned Real Estate Investment Platform Allows Communities to Fight Gentrification (Digital Journal) Rated: A

Buy the Block founder Lynn P and her team have struck gold in the hills of Colorado for a second time in as many years with the release of their new app now available on Android and iOS platform. This app will expand the already extensive number of BlockVestor enthusiasts that populate the first Black-female owned FINRA and SEC regulated real estate crowd investing platform in the United States. The addition of the new app will rapidly expand a brand that is on the cutting-edge in alternative financing. This unique and innovative platform allows many inner-city residents a never-before available opportunity to invest with their peers and their communities.

Lowe’s Ventures backs Moved, a startup that makes moving less stressful (Tech Crunch) Rated: A

Moving can also be expensive, so the company has announced a partnership with Affirm, where Affirm’s financing will allow you to break up the moving costs into monthly payments.

To be clear, Moved isn’t doing the moving itself — instead, it’s basically connecting you to a marketplace of movers and other service providers. Pittenger said the company is “very strict about the suppliers and the vendors” and will remove them if customers aren’t happy with their experience.

Moved is managing all of this through a real, human assistant who can help you figure out what you need, handle the scheduling and serve as a “consumer advocate” who ensures that you’re not getting ripped off.

Take a Crash Course in Student Housing Investments (US News) Rated: A

As the back-to-school season gets under way, you may be shopping around for new investments for your portfolio. Real estate is a solid diversification tool and student housing is an under-the-radar sector to consider this fall.

“The student housing real estate investment market is virtually untapped,” says Jay Morrison, CEO of the Tulsa Real Estate Fund. An aura of exclusivity surrounds student housing investments but it’s a sector that’s far from fully realized, “which means there’s plenty of room for opportunity for new investors in this market.”

As a smaller niche within the commercial real estate market, student housing has long been the domain of institutional investors and people with a high net worth.

United Kingdom

LendInvest Debuts Exclusive Five-Year Fix Product Through Buy to Let Club (Crowdfund Insider) Rated: AAA

Following the recent changes on its marketplace lending platform, UK-based LendInvest announced the launch of an exclusive five-year fix product through the lender’s Buy to Let Club. The lender reported that the product is Designed for landlords who wish to utilize a higher fee, lower interest rate loan, and allows the borrower to leverage their cash flow.

According to LendInvest, the five year fixed rate of 2.75% is available up to 75% LTV through the distributor, with a product fee of 4.99% which can be added to the loan. Affordability is then calculated at an Interest Cover Ratio (ICR) of 140% for higher rate taxpayers; 125% for limited companies and basic rate taxpayers, at an assessment rate of 4.19% against the total gross loan amount. The mortgage is available on loans up to £500,000 for purchase and remortgages, and suitable for standard property types and HMO’s.

Business funding options – what choices do you have? (Estate Agent Today) Rated: A

When you are starting up a new business, it is unlikely that you will already have enough capital to invest. Taking out a business loan is the best option as this will give you the chance to get set up.

But which loan type is best for your business idea?

Peer to Peer Lending

As banks are increasingly wary about giving out business loans, peer to peer lending has become a more popular method for matching people who wish to invest their money and those who need to borrow. Though this method can be quite expensive and may be risky, it is quite easy to raise substantial funds this way.

Crowdfunding

There are two types of crowdfunding: equity-based and reward-based. Equity-based crowdfunding is where people contribute money to receive equity in your business; reward-based crowdfunding is where people contribute money for a reward.

Competition from alternative lenders driving growth in business lending (London School of Business and Finance) Rated: A

Competition from alternative lenders is driving banks to boost lending amounts for businesses, according to Conrad Ford, Chief Executive of SME finance aggregator Funding Options.

Barclays and NatWest/Royal Bank of Scotland are among the banks that are boosting access to finance for SMEs.

Growing competition

Competition from alternative lenders is thought to have been the driving force behind Barclays’ decision to increase its lending amount to £100,000.

Commenting on the trend, Ford stated that there is growing competition in this sector, adding that Barclays is not the only bank that is taking action, with RBS/NatWest launching their Esme loans service, a digital lending platform that enables SMES to access unsecured loans of up to £150,000.

The pros and cons of alternative property investment and crowdfunding (Buy Association) Rated: A

With tax changes and stricter lending rules making it harder for some to finance a property purchase, investors are increasingly looking to navigate the challenges in the buy-to-let sector.

It’s why setting up a limited company through which to buy and operate rental properties is growing in popularity.

Peer to peer lending has exploded in popularity because it offers investors high interest rates paid over relatively short time periods.

There is obviously a level of risk involved – the property is used as security, and if house prices drop suddenly then you risk losing some capital. That’s why it’s important to consider the loan to value ratio (LTV) – for example, if this is 75%, the borrower can borrow three quarters of the value of their property. This means house prices would need to fall 25% before the investor made a loss.

China

How peer-to-peer lending turned middle-class Chinese dreamers into angry protesters (Quartz) Rated: AAA

In recent years, many in China’s middle classes poured their savings into peer-to-peer lending platforms, known as P2P for short, drawn in by promises of high returns. But amid a larger effort to curb financial risk to China’s economy, financial regulators tightened rules for these platforms, leading many of them to collapse without returning investor money. In Li’s case, the main stakeholders of Yonglibao, which he had put his money into, suddenly disappeared in mid-July (link in Chinese), he told the South China Morning Post. By the time its founders abandoned its offices, the platform had amassed a transaction volume of 7.6 billion yuan ($1.1 billion). The other protester told Quartz he had lost the equivalent of $50,000 on a platform called iqianjin.com—its name is Love Money, though it can also be understood as “Get Ahead” or “Money Coming.”

Both hoped a protest in Beijing would compel the government to help people recover their money from the dozens of P2P platforms that stopped allowing fund withdrawals last month. Instead, they were foiled by hundreds of uniformed police who locked down the area, patrolling corners near the offices of the central bank and securities regulators, and checking identity cards. More than 120 buses were brought to the area to take the stealth protesters away, according to a reporter with AFP.

Chinese Peer-to-Peer Lender Weidai Files to Raise Up to 0 Million in New York (Capital Watch) Rated: AAA

Hangzhou-based peer-to-peer lending platform Weidai, which translates as “micro-lending,” filed its preliminary prospectus Friday seeking to raise up to $100 million in an initial public offering in New York.

The proposed IPO size shrinked significantly since the company first announced its plans in April. According to Bloomberg citing sources, Weidai was previously planning to raise nearly $400 million.

Launched in 2011, the online micro-lending platform has attracted multiple high-profile investments, including a $159 million series C funding in 2016 led by Vision Knight Capital. Among other key investors were Chinese billionaire Chen Tianqiao’s Shanda Group and Shenzhen-listed software developer Hakim Unique Internet Co.

HK is running out of runway (The Edge Markets) Rated: AAA

BRACE, brace. Hong Kong’s initial public offering (IPO) take-off is going to come to a screeching halt.

Source: The Edge Markets

Ascletis Pharma Inc, a Hangzhou-based maker of HIV drugs, has slumped 20% since making its entrance at the end of July (1).

Even the online insurer that sparked a revival of Hong Kong’s IPO frenzy is in the red. ZhongAn Online P&C Insurance Co, a company backed by Internet behemoths Tencent Holdings Ltd and Alibaba Group Holding Ltd, surged on its debut in September, but now stands 42% below its price on listing.

Two-thirds of IPOs that raised more than US$1 billion in the two years ended July 2017 were below their offer prices after six months; three-quarters had dropped after a year, data compiled by Bloomberg show. Ironically, the cause of the pain can be traced partly to measures Hong Kong Exchanges & Clearing Ltd has taken to fight back against a US market that was luring away China’s new-economy stars.

Hexindai Further Strengthens Risk Control to Better Protect Investors (Crowdfund Insider) Rated: A

Hexindai (NASDAQ:HX), a China-based peer to peer lender, announced on Friday it has further strengthened its risk control system to better protect investors throughout the entire process of borrower acquisition, risk-based pricing, post-loan management, and default risk coverage through its new comprehensive, stable and efficient asset security system, HX-CORE. Hexindai reported it established the system based on advanced risk control technologies that leverage risk control models and enormous volumes of credit data from cooperating partners and business data accumulated by the online lending platform.

According to Hexindai, the risk-based pricing is conducted by the Company’s proprietary risk control system, called Hurricane, which was developed by the lender and operates in cooperation with a number of credit information organizations and third-party Big Data risk management companies.

Ning Tang, CEO of CreditEase, Shares Insight into P2P Lending in China (Crowdfun Insider) Rated: A

Ning Tang, founder and CEO of CreditEase – a huge Chinese Fintech that started as just a peer to peer lending platform, recently spoke to Bloomberg in Asia. CreditEase is also the majority shareholder of US listed online lender Yirendai (NYSE:YRD)

Tang provided an interesting update on the Chinese P2P sector as it has been going through a transformational process. In July alone, it has been reported that over 100 peer to peer lenders shut down in China as regulatory authorities tighten operational standards to curb rampant fraud. The actions are to ensure a robust and sustainable sector of online lending.

Tang shared that revenues have not been impacted much by the regulatory actions as CreditEase has become more diversified with inclusive finance, alternative asset management, and wealth management.

China reduces risks of peer-to-peer lending (CGTN) Rated: A

Chinese authorities are taking immediate actions to reduce risks in the peer-to-peer (P2P) lending business and better protect the interests of private investors.

The latest moves by Chinese financial regulators include urging leading internet platforms to undergo self-inspection and fix problems. They will also guide unqualified P2P lending platforms in exiting the market and dealing with their assets and debts in a market-oriented way based on legal principles.

European Union

Sweden’s Largest Loan Marketplace (Killer Startups) Rated: A

Thanks to rapid technological development around the world, it’s now possible for consumers to sidestep banks and other unnecessary intermediaries and secure private loans more efficiently.

One nation where this hasn’t been an issue is Sweden.  Look no further than Lendify – the country’s largest peer-to-peer lending platform – for proof.

“Lendify is a marketplace platform that connects borrowers with investors, without the involvement of banks or credit card companies,” said Erik Wikander, the company’s Founder.  “Some of Sweden’s foremost entrepreneurs are a big part of the platform – and we’ve been granted full approval from Finansinspektionen (the government’s financial regulation agency).”

Schwarmfinanzierung: Deloitte Study on “Crowdlending” in Germany says Banks Win (Crowdfund Insider) Rated: A

Deloitte Germany has published research on the crowdfunding sector and when it comes to comparing new forms of online capital formation and old banks – banks win. That is, at least in the eyes of the Deloitte research.

Deloitte states that when it comes to providing finance to medium sized firms, the fabled Mittelstand, these companies have “little interest” in using this new form of finance. Simply put, their relationships with banks is too strong of a bond.

The research published by Deloitte was done in partnership with EFAM (Europäisches Forschungsfeld für Angewandte Mittelstandsforschung) at the University of Bamberg, the document said that the threat to traditional banks by crowdfunding or crowdlending has not panned out. This more recent study follows a similar one back in 2015 which stated that crowdlending was relatively unknown among company executives. Three years later, their survey of 250 medium size German firms appears to indicate little has change.

International

CreditRiskMonitor Announces Licensing Agreement with DBRS (Credit Risk Monitor) Rated: AAA

CreditRiskMonitor (OTCQX: CRMZ) today announced a new licensing agreement with DBRS, an independent, privately-held, globally recognized credit agency. DBRS is the fourth-largest ratings agency globally, with ratings on more than 2,400 issuer families and nearly 50,000 securities worldwide.

CreditRiskMonitor has also invested in cutting-edge technologies to improve the accuracy of its predictive scoring methods. The FRISK® score, a measure of bankruptcy risk in public companies, uses crowdsourced click patterns of risk professionals who subscribe to CreditRiskMonitor’s service. The PAYCE score, used for private company financial risk assessment, is formulated with deep neural network technology, a type of artificial intelligence.

Can Blockchain Revolutionize The Traditional Lending System? (Crypto Coin News) Rated: A

With the introduction of blockchain technology, there have been lots of projects built on blockchain that have attempted to improve the traditional banking system. This brings us back to the question; Can blockchain revolutionize the traditional lending system? The answer is unequivocally YES since there are projects already on the brink of achieving this. Also, the below features of blockchain technology is naturally what is needed to revolutionize the traditional lending system.

Ways blockchain technology edge the traditional lending system:

  • Accessibility
  • Time
  • Removal of intermediaries
  • Reduced risk

Assuring the future of financial services (Network World) Rated: A

The financial services industry is experiencing a period of dramatic change as a result of the growth in digitalization and its effect on customer behavior. In an emerging landscape made up of cryptocurrencies, frictionless trading, and consolidated marketplace lending, traditional banks have found themselves shaken by the introduction of new, disruptive, digitally-native and mobile-first brands.

With a reputation as being somewhat conservative and slow to innovate, many financial service providers are now modernizing and improving their systems, transforming their new business models and technologies in an effort to stay ahead of the more agile challengers snapping at their heels.

However, while this digital transformation brings significant opportunities, implementing these new technologies also presents challenges.

Australia

Blockchain P2P lender secures $ 1.35m to fund growth (Mortgage Business) Rated: A

BLOCKLOAN, a new blockchain-based marketplace lender headquartered in Sydney, has announced that venture capital fund Xplora Capital has purchased $1.35 million in tokens, as it continues its mission to provide “transparent, easy to understand, [and] real-time” access to personal finance on a global scale at more competitive rates than the banks.

The fintech said that by using cryptocurrency-backed loans on a global P2P lending marketplace, it aims to eliminate the “unnecessary” fees associated with traditional lending, while promising end-to-end loan origination, matching and management through the use of pooled smart contracts and an automated KYC and credit risk engine.

India

Are Digital Platforms Transforming Lending Decisions? (Entrepreneur) Rated: AAA

The effects of technology and the disruptions technology make, manifests itself in clearly perceivable ways. This is very evident in many sectors – in a short span (just eighteen months after its release) Google Maps had knocked out GPS navigation device makers and Amazon and Taobao (Alibaba) have disrupted how consumers shop for goods by moving them to online from offline (O2O). Enterprises are worried about being Uber-ed or Airbnb-ed as new age companies are challenging traditional ways of doing business.

Banking and Lending space have also gone through an amazing level of rapid innovation and disruption starting at the turn on the new millennium. Traditional banking monoliths can no longer feel impervious as they were protected by a myriad of government regulations which used to make it hard for fintech start-ups. Fintech start-ups don’t have to deal with the large legacy systems that drag down big banks and are nimbler and more suited to adapt to global trends and changing regulations. Internet only online banks with meagre to no brick and mortar branch presence have come up and have shaken up the large banks by offering better interest rates for deposits and borrowing than traditional banks. As an added benefit with the ubiquity of eKYC systems and adoption by fintech industry, accounts can now be opened in a matter of minutes and can be ready to transact than days and after an insane amount of paperwork that needed to be filled in earlier days.

Africa

Wonga faced collapse in the UK, but says its 3 million loans in South Africa are unaffected (Business Insider) Rated: AAA

An emergency cash injection of R178 million has saved microlender Wonga from collapse – for now.

The UK firm, which has operations in South Africa, is currently facing immense pressure after the British authorities forced it to write off loans worth R4 billion because Wonga failed to properly check whether customers could afford them.

Wonga’s shareholders, two venture capital funds, have pledged the money to prop up Wonga.

Mobile banking inevitable but ATM card will remain useful (The New Times) Rated: A

During a wide-ranging interview with The New Times at a recent GSMA M360 Africa Series in Kigali, Mr Akinwale Goodluck, Head of the Global Mobile Operators’ organisation in sub-Saharan, sought to dispel the myth that mobile money would cannibalise banks.

He pointed to the fintech synergy between telcos and banks, noting how the significant numbers of people across the region are using “phones to do proper mobile banking.”

This is true, and perhaps more pronounced in East Africa. The sub-region has the largest mobile money market on the continent, accounting for 56.4 per cent of total users in sub-Saharan Africa, according to GSMA.

East Africa is, however, only leading the way, but not for long.

Asia

Indonesian startups Akseleran, Pomona confirm recent funding (Deal Street Asia) Rated: AAA

Two Indonesian startups have confirmed raising a funding round earlier this year.

P2P lending startup Akseleran said it raised a pre-Series A funding round of $1.85 million, while adtech startup Pomona said it secured an undisclosed Series A funding round.

P2P lending startup Akseleran raises $1.85 pre-Series A funding Peer-to-peer lending startup Akseleran has confirmed raising a $1.85-million pre-Series A funding round backed by a New York-based family office, the parent company of PT Bintraco Dharma Tbk and several angel investors.

According to a press release, the startup plans to use the fresh funding for expansion by recruiting representatives in a number of cities in Java such as Yogyakarta, Solo, Surabaya and Semarang. It also plans to step up its marketing campaigns through various advertisements.

Authors:

George Popescu
Allen Taylor

Wednesday May 23 2018 Daily News Digest

Interest rates & new delinquencies on CC debt

News Comments Today’s main news: SoFi to get into crypto investing by 2019. How Goldman Sachs predicts economic slumps. How SoFi personalizes the mobile experience. A Monzo case study. Klarna acquires Shop.co. Today’s main analysis: More Americans are struggling to pay with credit cards. Today’s thought-provoking articles: 4 in 10 Americans can’t cover a $400 emergency expense, Fed survey […]

Interest rates & new delinquencies on CC debt

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

SoFi will get crypto investing by 2019, says CEO Anthony Noto (CNBC) Rated: AAA

SoFi CEO Anthony Noto says the “modern finance” company wants members to be able to invest in cryptocurrency as soon as 2019.

“We want to accelerate our investment in some new products, one of which is our wealth products, and we want to add cryptocurrency to that,” Noto said on CNBC’s “Power Lunch.”

Goldman Sachs has a novel method for predicting the next economic slump  (Business Insider) Rated: AAA

You might remember that Goldman Sachs is lending to subprime borrowers. Turns out, it’s all part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer-lending product had a FICO score of more than 660 at year end. The implication was that nearly 20% had a score of less than 660, placing them in a group often referred to as subprime.

In September, the bank said it saw a $1 billion revenue opportunity in the Marcus loan-and-deposit platform based on a $13 billion lending opportunity over three years. Whether it reaches that goal will depend in part on how those subprime borrowers behave.

More Americans are struggling to pay their credit cards (Business Insider) Rated: AAA

Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.

Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising along with interest rates.

Source: Business Insider

The Fed is set next month to raise its benchmark rate for the seventh time since late 2015.

Source: Business Insider

How SoFi is personalizing its mobile experience (Tearsheet) Rated: AAA

SoFi is personalizing its digital customer experience by fusing event planning, career services and personal finance insights inside its mobile app.

SoFi is joining a group of financial institutions that are letting customers aggregate accounts to get a full financial picture — even if they’re not with the same institution, with recent examples including Citi and HSBC.

As it grows its digital offerings, the company is adding services to meet the needs of a fast-growing customer cohort. SoFi currently has 500,000 customers — up 200,000 from last year.

 

 

 

50. SoFi (CNBC) Rated: A

This has been quite a year for SoFi (short for Social Finance).

The company claims to have 500,000 members and has made $25 billion in loans to date. SoFi has raised $2.1 billion in funding, including $500 million in a round led by Silver Lake Partners. In early interviews after taking over the top spot, Noto spoke about eventually taking SoFi public, but did not outline a timetable.

For millennials, it’s about having a house, children and retiring early (CNBC) Rated: A

Julia Boorstin live with SoFi CEO Anthony Noto discusses running what he describes as a “modern day” financial services company.

Watch the interview here

SoFi Makes Graduation From Student Debt An Epic Experience (PR Newswire) Rated: A

In a video released today on YouTube, SoFi made that moment of relief from student debt a grand occasion for one Midwestern woman. The company surprised Candice, a SoFi member who had refinanced her student debt, with an epic surprise “debt graduation” ceremony with friends, family, and some unconventional surprises planned by the company, together with production and entertainment studio GenPop.

Guaranteed Rate Partners with DocMagic to Cut Closing Time (Florida Newswire) Rated: A

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

First wave of neobanks resets for new offensive (American Banker) Rated: A

BankSimple (now just called Simple) was bought by BBVA and went through a painful process of migrating accounts to the big bank’s systems; its founder recently announced he’s leaving. Moven became a seller of software to large banks including TD Bank and Westpac, while still maintaining its own mobile banking service. Varo Money has been trying for almost a year to get a banking license. Chime remained independent (in partnership with The Bancorp Bank) but is going through growing pains.

This year, all are taking up their swords again, renewing an anti-bank message of helping consumers lead financially healthy lives, with fewer fees and more helpful products and software than traditional banks. Following is a look at how the neobanks are fighting back.

Cadre seeks at least $ 100M from SoftBank (The Real Deal) Rated: A

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

Lending Express garners $ 2.7 mln (PE Hub Network) Rated: A

Lending Express, the only AI-powered marketplace for business loans, today announced the securing of a $2.7 million investment round led by Entrée Capital, iAngels, and existing investors. The funds will be used to build out their innovative loan-matching technology and scale up operations in the United States and Australia.

How fintech gave this SBA lender an edge (American Banker) Rated: A

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast’s community banking executive.

Four in 10 can’t cover an emergency expense of $ 400, Fed survey finds (Market Watch) Rated: AAA

The Fed’s new survey of household economics and decision-making found 41% could not cover a $400 emergency expense using cash in 2017. That’s actually a slight improvement, since 44% could not in 2016, 46% could not in 2015 and only 50% could in 2013.

Those that couldn’t afford the expense turn to credit cards or borrowing from family or friends, while only 5% would turn to a payday loan or similar product.

Source: Federal Reserve

Read the full report here.

Why real estate tech won’t kill the middleman (The Real Deal) Rated: A

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

ENACOMM Adds FoneLogix as Ally to Bring Data-Driven AI and Phone Banking to Financial Institutions (Globe Newswire) Rated: B

ENACOMM—a fintech company that empowers banks, credit unions and credit card companies with solutions for improving the customer experience (CX), fighting financial fraud, and increasing operational efficiency—today announced a new reseller agreement with FoneLogix, an Atlanta-based provider of cloud-hosted VOIP Phone Systems, Solutions and Support.

Through the partnership, FoneLogix’s bank and credit union customers will be able to take advantage of ENACOMM’s VPA (Virtual Personal Assistant) Conversational Banking and the ENACOMM Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

AI Challenging Bank Lending Practices (Forbes) Rated: A

CultureBanx notes 

The Best Business Loans and Financing Options for Freelancers (The Entrepreneur) Rated: A

Most banks view freelancers as high-risk, and as such, may be unwilling to enter a loan agreement. Because a freelancer is considered a sole proprietor, he or she alone is liable for all losses and debts his or her business may incur. If the freelancer gets hurt or sick and cannot work — or is just terrible at running a business — the bank is left holding the bag.

Online lenders offer an interesting alternative. Typically, these non-traditional lenders have more relaxed loan approval criteria and a swifter approval process. Importantly, your personal income, assets and credit score are assessed for loan approval, not the value of your business. You should expect to pay higher rates of interest, a natural trade-off for the perceived risk you present.

First Tech Federal Credit Union Personal Loans: 2018 Review (Nerdwallet) Rated: A

First Tech offers unsecured and secured personal loans as well as personal lines of credit. Annual percentage rates start at 9% on unsecured loans, or 3% on secured loans, which can be backed by a First Tech savings account, First Tech share certificates, or stock you own in the company you work for or one listed on the NYSE, Nasdaq or Amex.

You can apply for a loan of as little as $500, making First Tech a good option for borrowers looking for small loans. Payments for unsecured and secured loans are fixed over two to seven years, and you can choose between monthly or biweekly payments.

 

 

Trump signs resolution overturning CFPB auto lending rule (Consumer Affairs) Rated: B

President Trump has signed a resolution, passed by Congress, overturning the Consumer Financial Protection Bureau’s (CFPB) auto lending rule, designed to prevent racial discrimination by dealers who finance purchases.

United Kingdom

Monzo Case Study (AWS) Rated: AAA

Monzo has grown from an idea to a fully regulated bank on the AWS Cloud. A bank that “lives on your smartphone,” Monzo has already handled £1 billion worth of transactions for half a million customers in the UK. Monzo runs more than 400 core-banking microservices on AWS, using services including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), and Amazon Simple Storage Service (Amazon S3).

Open banking regulations, which came in at the start of 2018, required the nine largest banks in the UK to provide an API for their users’ account information.

 

Meet the 35 most exciting young entrepreneurs, engineers, and advisors in UK fintech (Business Insider) Rated: AAA

Business Insider has covered UK fintech since our 2014 launch. The UK Fintech 35 under 35 highlights the most promising young entrepreneurs, engineers, marketers, and sector experts under the age of 35. It spans both startups and big banks operating in the sector.

35. Pierce Glennie, iwoca

The company has lent over £400 million since its founding in 2011. Glennie was one of iwoca’s first outside hires and just 21 when he joined the business.

27. Aneesh Varma, Aire

Varma, who started his career at JPMorgan, set up Aire in 2014. It is his second startup, having previously founded enterprise software business FabriQate in 2005.

24. Anil Stocker, MarketInvoice

MarketInvoice is an online platform that lets businesses borrow against unpaid invoices. The lender isn’t MarketInvoice itself but institutional investors and high net worth individuals looking for strong returns.

23. Karen Kerrigan, Seedrs

Seedrs is one of the UK’s first equity crowdfunding platforms, letting ordinary people invest in startup businesses. 600 businesses have raised over £320 million since the platform launched in 2009.

17. Simon Miller, Scalable Capital

Scalable Capital is one of a number of so-called “robo advisors” — online investment advisors and platforms — that have sprung up around the world in recent years. The company already has £600 million in assets under management and has attracted investment from asset management giant BlackRock.

13. Joe Cross, TransferWise

Cross was one of TransferWise’s first employees and has seen the international money transfer business grow from a small East London startup to business worth over $1 billion.

6. Megan Caywood, Starling Bank

She is now chief platform officer at startup, app-only bank Starling, which is trying to make a new kind of bank that functions more like an app store than a traditional lender.

5. Martin Ijaha, Neyber

Neyber works with employers to let staff borrow money then repay through salary deductions. Neyber was founded in 2012 and now works with 160 employers with a combined 1 million staff. Last year Goldman invested £100 million into the platform.

3. Tom Blomfield, Monzo

The fully licensed bank now has over 500,000 current account customers who have spent £1 billion on Monzo’s iconic hot coral cards. The company has raised over £71 million to date and is valued at £280 million.

2. Samir Desai, Funding Circle

Their platform has now lent over £4 billion to businesses across the UK, Germany, US, and the Netherlands. Desai was awarded a CBE for services to financial services in 2015 and his company is tipped to float on the stock exchange later this year with a price tag of at least £1 billion.

1. Nikolay Storonsky, Revolut

Revolut began life as a foreign exchange card linked to an app that offered rock-bottom FX prices. The company is less than three years old but the popularity of its product has already seen it hit 2 million customers and a valuation of $1.7 billion.

Proptech Startup When You Move Raises £3M in Funding (Finsmes) Rated: A

When You Move, a UK-based proptech startup, secured new funding which brings the total amount raised to £3m.

Backers included Fig, a proptech VC, and a hybrid network of friends and family, private HNW investors and incumbent shareholders.

The company intends to use the funds to build out it customer excellence teams, scale up the development team and solidify its position as the solution for professionals involved in property purchases.

The UK fintech economy will create different pockets of excellence all over the country (Computer Weekly) Rated: A

He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.

Mark Carney: Every household £900 worse off because of Brexit (The Telegraph) Rated: A

UK households are £900 worse off than they would have been because of Brexit, Bank of England Governor Mark Carney has claimed.

Mr Carney revealed in a Treasury Select Committee grilling that growth has been up to 2pc lower than the central bank had expected because of the UK’s decision.

Banks ‘charging more’ for overdrafts than payday lenders (BBC) Rated: A

Unarranged overdraft fees can cost borrowers up to seven times more than a payday loan, a consumer group warned.

Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high street banks with borrowing the same amount through a payday loan.

Ireland Issues Tax Guidance On Peer-To-Peer Lending (Tax News) Rated: B

A company that pays interest on finance raised via peer-to-peer lending or crowdfunding is obligated to withhold income tax at the standard rate of tax on interest payments made on the finance raised. The underlying lenders are liable to pay income tax on any interest they earn on which withholding tax has not been suffered.

‘Lenders need to be more transparent about portfolios’ (Bridging & Commercial) Rated: A

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that more than four out of 10 portfolio landlords are looking to expand their portfolios in the next 12 months.

China

Chinese fintech’s global future is arriving now (Financial Times) Rated: AAA

Ant Financial recently raised an oversubscribed $10bn round which values the firm higher than Goldman Sachs, American Express and BlackRock; the Alipay product has more than 500 million users and is incredibly simple to use; they have integrated into Alibaba’s retail operation and have the world’s largest money market fund with Yu’E Bao; they have begun expanding globally as well as they have built partnerships with firms in Africa and have tried to enter the U.S. market through an acquisition of MoneyGram which was blocked by regulators; regulators will need to figure out how handle a company that doesn’t look to fade from the financial scene anytime soon.

Legal concerns heat up for wanted Founders Group leader as partner testifies in China (Myrtle Beach Sun News) Rated: A

Liu’s partner in the Chinese company Yiqian Funding, a peer-to-peer lending business that seeks investors, testified May 3 in her fraud trial in Nanjing that Liu was in control of the company when it became unable to pay many investors what prosecutors estimate to be $1.17 billion — or 7.4 billion yuan.

 

European Union

Klarna acquires universal shopping cart Shop.co (Ecommerce News) Rated: AAA

Klarna has acquired Shop.co, a small German startup that wants to simplify online shopping by offering a universal shopping cart. There’s little known about the deal, but according to Klarna it’s mostly about the acquisition of intellectual property and taking over a mere Shop.co employees..

According to t3n, a purchase sum somewhere in the mid double-digit millions is also likely. But later on, Klarna told another media outlet, Tech.eu, that the purchase price is far lower than some media have been speculating. It also said that it’s most acquiring intellectual property and employees.

Keeping on Top of Emerging Payment Solutions – Q&A with Klarna (Retail Tech News) Rated: A

Luke Griffiths: Klarna’s approach to online commerce is very different from that of traditional providers. Our overarching philosophy is to give consumers the freedom and flexibility to decide how and when they want to pay. At Klarna, we offer three payment options that cover all consumer needs for seamless shopping: ‘Pay now’, ‘Pay later’, and ‘Slice it’.

Pay now enables straightforward and immediate online payment purchases. This option allows customers to pay for their purchases in full via Klarna’s speedy online checkout and payment service using a card. Many of our merchants choose the Klarna checkout as it is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Our second payment option, Pay later, allows shoppers to ‘try before they buy’. Customers have either 14 or 30 days to pay for their goods (depending on the merchant) after their items have been delivered, with no interest or fees – or they can return the items if they’re not what they expected.

EMaC launches ‘Drive Now Pay Later’ service for dealers (Motor Trader) Rated: B

EMaC, the service plan specialist, is widening the services it offers dealers and end consumers with the launch of a pay later credit facility for vehicle repairs and accessories.

The company, which is has also launched a new identity, has teamed up with credit provider Klarna to offer the “Drive Now Pay Later” service.

EMaC said its new Drive Now, Pay Later product would give dealers access to a credit facility to assist their customers in financing repairs and other vehicle related accessories.

Banks seek tech talent for digital shift (Financial Times) Rated: A

European Banks have increased advertising for IT and engineering roles by more than 10 times in the last 3 years; a new report by the Economist Intelligence Unit and Temenos shows for the first time that bank executives believe technology like AI and blockchain will have a bigger impact than regulation; being about 10 years removed from the financial crisis has help shift the view of banks to focus more of their time on digitization instead of regulatory compliance.

 

 

International

Meet the Goldman Sachs-Backed Fintech Startup Aiming to Take Over North America (Fortune) Rated: AAA

Now Plaid, which raised $44 million in a funding round led by Goldman SachsInvestment Partners nearly two years ago, is looking to expand internationally. The company announced Tuesday that Plaid is available in Canada for the first time—and compatible with both U.S. and Canadian dollars—a move designed to both support current clients’ Canadian expansions as well as attract new Canadian fintech players.

Companies use Plaid’s APIs (or application programming interfaces) as a foundation for building their own fintech products, depending on that secure way to link customers’ bank accounts. Its extension into Canada is a sign that the nascent fintech industry is gaining traction in more parts of the world. TransferWise, a London-based cross-border payments startup that uses Plaid, recently expanded into Canada as part of a global push. And Toronto-based Drop, a loyalty rewards app, is one of Plaid’s first Canadian clients.

Is Fraud a Solved Problem? (Lend Academy) Rated: AAA

But one statement stood out to me. Jeff Stewart, the Chairman and Co-Founder of LenddoEFL said that “fraud is a solved problem”.

That is quite a bold statement. So, I reached out to Jeff yesterday to get some more color on what he really means here. He stood by what he said on the panel at LendIt. While we can’t get rid of 100% of fraud what we can do is catch fake identities, fraud rings, and large-scale theft of identity.

It is not surprising that the type and amount of fraud varies between countries. We learned from Thomas Wang of China Rapid Finance in this same session that a staggering 97% of loan applications in China are fraudulent. Think about that for a moment. Only 3% of the applications that a Chinese online lender receives is from a real person. The rest is fraudulent activity often from established fraud rings.

Small Business Banking Catching Up in Innovation Race (Bank Innovation) Rated: A

There are quite a few lending solutions these days for small businesses — Funding Circle, OnDeck, Kabbage, and Square Capital, to name a just a few — but innovation and digitization are lagging in other areas, such as digital account opening. Enter Gro Solutions, a sales and marketing platform for financial institutions.

Australia

Understanding the SME mindset (Australian Broker) Rated: A

More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.

The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.

India

Payday loan firm EarlySalary acquires CashCare (Media Nama) Rated: AAA

Payday loan firm EarlySalary has acquired CashCare. CashCare sells loans to customers on websites like Infibeam and Shopclues, and accepts repayments in EMIs at annual interest rates ranging between fifteen and 25%, according to CashCare’s website. The service is offered to people who don’t have a credit card too.

While CashCare’s 15% annualized interest rate is not too different from what credit card companies charge, EarlySalary’s payday loans come at a steeper cost. Charging ₹9 for each dayper ₹10,000 borrowed, their interest rate comes out to over 30%, compared to the 1.5–3% annualized interest credit cards charge, as we’ve pointed out before.

Xiaomi to start lending operations in India; to target salaried professionals (The Economic Times) Rated: AAA

IPO-bound Chinese smartphone company Xiaomi has launched its first lending product in India on the lines of the microlending product Mi Credit that it offers in China.

The new credit product, launched in partnership with lending platform KrazyBee, has already gone live and will be officially announced in a few weeks, as per a person aware of the development.

Called CreditBee, the credit product is a payday loan starting from Rs 1,000 up to Rs 1 lakh for a period of 90 days, as per the person cited above. The credit will be offered at an interest rate of 3% per month and will be targeted at salaried professionals, the person said.

P2P lending startup Cashkumar secures angel investment (VC Circle) Rated: A

Cashkumar, a peer-to-peer (P2P) lending startup, has raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

The startup’s first external funding was led by Mohan Kumar, executive director at global investment firm Norwest Venture Partners, and telecom company Reliance Jio’s chief digital officer Vishal Sampat.

Capacity-building workshop by RBI (Tribune India) Rated: B

Rachna Dikshit, Regional Director, RBI, Chandigarh inaugurated the workshop. In the event, topics like RBI guidelines, credit guarantee architecture for MSME financing and recovery management, alternative tech driven approaches to financing MSMEs like big data, fintechs, P2P lending, TReDS, movable asset based financing, role of CERSAI, management of sick account, credit scoring and rating models for MSMEs, assessment of term loans and composite loans, effective communication were covered.

 

Asia

Fintech Firm Flywire Teams Up With SP Jain For New Student-Led Singapore-Based Startups Competition (Crowdfund Insider) Rated: A

Flywire, a fintech firm that provides global payment and receivable solutions for education, healthcare, and commercial enterprises, announced this week it has partnered with SP Jain School of Global Management to launch a startup competition, the Flywire Challenge, to power a new generation of transformative entrepreneurship in Singapore and the APAC region.

According to the duo, this competition, which is set to launch this month, solidifies Flywire’s dedication to partnering with powerful regional universities, government bodies and industry, and investing in education and the start-up space, as well as their long-term relationships with international educational and healthcare institutions as a leading payments solutions provider. Flywire will host, sponsor and evaluate a contest following an open call for teams to submit proposals for innovative start-up ideas. Any and all students and graduates, not limited to SP Jain students, will be invited to compete for three awards in the Health Technology, Education Technology and Travel Technology sectors.

Latin America

Mexican investors back microlending startup Vola (VC Circle) Rated: AAA

Bengaluru and US-based Vola, which offers an alternative lending platform for students, has raised $500,000 (Rs 3.4 crore) in a pre-Series A funding round from Mexican insurance and credit firm Credika and unnamed angel investors from the North American nation.

MENA

AI Business Loan Company Lending Express Raises $ 2.7 Million (CTech) Rated: AAA

Israeli business loan startup Lending Express announced on Tuesday it has raised $2.7 million in a seed investment round led by Entrée Capital and iAngels, among other investors.

The company said it would use the capital to further develop its loan-matching technology and scale up its operations in the U.S. and Australia.

Authors:

George Popescu
Allen Taylor

Wednesday May 23 2018 Daily News Digest

Interest rates & new delinquencies on CC debt

News Comments Today’s main news: SoFi to get into crypto investing by 2019. How Goldman Sachs predicts economic slumps. How SoFi personalizes the mobile experience. A Monzo case study. Klarna acquires Shop.co. Today’s main analysis: More Americans are struggling to pay with credit cards. Today’s thought-provoking articles: 4 in 10 Americans can’t cover a $400 emergency expense, Fed survey […]

Interest rates & new delinquencies on CC debt

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

SoFi will get crypto investing by 2019, says CEO Anthony Noto (CNBC) Rated: AAA

SoFi CEO Anthony Noto says the “modern finance” company wants members to be able to invest in cryptocurrency as soon as 2019.

“We want to accelerate our investment in some new products, one of which is our wealth products, and we want to add cryptocurrency to that,” Noto said on CNBC’s “Power Lunch.”

Goldman Sachs has a novel method for predicting the next economic slump  (Business Insider) Rated: AAA

You might remember that Goldman Sachs is lending to subprime borrowers. Turns out, it’s all part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer-lending product had a FICO score of more than 660 at year end. The implication was that nearly 20% had a score of less than 660, placing them in a group often referred to as subprime.

In September, the bank said it saw a $1 billion revenue opportunity in the Marcus loan-and-deposit platform based on a $13 billion lending opportunity over three years. Whether it reaches that goal will depend in part on how those subprime borrowers behave.

More Americans are struggling to pay their credit cards (Business Insider) Rated: AAA

Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.

Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising along with interest rates.

Source: Business Insider

The Fed is set next month to raise its benchmark rate for the seventh time since late 2015.

Source: Business Insider

How SoFi is personalizing its mobile experience (Tearsheet) Rated: AAA

SoFi is personalizing its digital customer experience by fusing event planning, career services and personal finance insights inside its mobile app.

SoFi is joining a group of financial institutions that are letting customers aggregate accounts to get a full financial picture — even if they’re not with the same institution, with recent examples including Citi and HSBC.

As it grows its digital offerings, the company is adding services to meet the needs of a fast-growing customer cohort. SoFi currently has 500,000 customers — up 200,000 from last year.

 

 

 

50. SoFi (CNBC) Rated: A

This has been quite a year for SoFi (short for Social Finance).

The company claims to have 500,000 members and has made $25 billion in loans to date. SoFi has raised $2.1 billion in funding, including $500 million in a round led by Silver Lake Partners. In early interviews after taking over the top spot, Noto spoke about eventually taking SoFi public, but did not outline a timetable.

For millennials, it’s about having a house, children and retiring early (CNBC) Rated: A

Julia Boorstin live with SoFi CEO Anthony Noto discusses running what he describes as a “modern day” financial services company.

Watch the interview here

SoFi Makes Graduation From Student Debt An Epic Experience (PR Newswire) Rated: A

In a video released today on YouTube, SoFi made that moment of relief from student debt a grand occasion for one Midwestern woman. The company surprised Candice, a SoFi member who had refinanced her student debt, with an epic surprise “debt graduation” ceremony with friends, family, and some unconventional surprises planned by the company, together with production and entertainment studio GenPop.

Guaranteed Rate Partners with DocMagic to Cut Closing Time (Florida Newswire) Rated: A

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

First wave of neobanks resets for new offensive (American Banker) Rated: A

BankSimple (now just called Simple) was bought by BBVA and went through a painful process of migrating accounts to the big bank’s systems; its founder recently announced he’s leaving. Moven became a seller of software to large banks including TD Bank and Westpac, while still maintaining its own mobile banking service. Varo Money has been trying for almost a year to get a banking license. Chime remained independent (in partnership with The Bancorp Bank) but is going through growing pains.

This year, all are taking up their swords again, renewing an anti-bank message of helping consumers lead financially healthy lives, with fewer fees and more helpful products and software than traditional banks. Following is a look at how the neobanks are fighting back.

Cadre seeks at least $ 100M from SoftBank (The Real Deal) Rated: A

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

Lending Express garners $ 2.7 mln (PE Hub Network) Rated: A

Lending Express, the only AI-powered marketplace for business loans, today announced the securing of a $2.7 million investment round led by Entrée Capital, iAngels, and existing investors. The funds will be used to build out their innovative loan-matching technology and scale up operations in the United States and Australia.

How fintech gave this SBA lender an edge (American Banker) Rated: A

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast’s community banking executive.

Four in 10 can’t cover an emergency expense of $ 400, Fed survey finds (Market Watch) Rated: AAA

The Fed’s new survey of household economics and decision-making found 41% could not cover a $400 emergency expense using cash in 2017. That’s actually a slight improvement, since 44% could not in 2016, 46% could not in 2015 and only 50% could in 2013.

Those that couldn’t afford the expense turn to credit cards or borrowing from family or friends, while only 5% would turn to a payday loan or similar product.

Source: Federal Reserve

Read the full report here.

Why real estate tech won’t kill the middleman (The Real Deal) Rated: A

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

ENACOMM Adds FoneLogix as Ally to Bring Data-Driven AI and Phone Banking to Financial Institutions (Globe Newswire) Rated: B

ENACOMM—a fintech company that empowers banks, credit unions and credit card companies with solutions for improving the customer experience (CX), fighting financial fraud, and increasing operational efficiency—today announced a new reseller agreement with FoneLogix, an Atlanta-based provider of cloud-hosted VOIP Phone Systems, Solutions and Support.

Through the partnership, FoneLogix’s bank and credit union customers will be able to take advantage of ENACOMM’s VPA (Virtual Personal Assistant) Conversational Banking and the ENACOMM Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

AI Challenging Bank Lending Practices (Forbes) Rated: A

CultureBanx notes 

The Best Business Loans and Financing Options for Freelancers (The Entrepreneur) Rated: A

Most banks view freelancers as high-risk, and as such, may be unwilling to enter a loan agreement. Because a freelancer is considered a sole proprietor, he or she alone is liable for all losses and debts his or her business may incur. If the freelancer gets hurt or sick and cannot work — or is just terrible at running a business — the bank is left holding the bag.

Online lenders offer an interesting alternative. Typically, these non-traditional lenders have more relaxed loan approval criteria and a swifter approval process. Importantly, your personal income, assets and credit score are assessed for loan approval, not the value of your business. You should expect to pay higher rates of interest, a natural trade-off for the perceived risk you present.

First Tech Federal Credit Union Personal Loans: 2018 Review (Nerdwallet) Rated: A

First Tech offers unsecured and secured personal loans as well as personal lines of credit. Annual percentage rates start at 9% on unsecured loans, or 3% on secured loans, which can be backed by a First Tech savings account, First Tech share certificates, or stock you own in the company you work for or one listed on the NYSE, Nasdaq or Amex.

You can apply for a loan of as little as $500, making First Tech a good option for borrowers looking for small loans. Payments for unsecured and secured loans are fixed over two to seven years, and you can choose between monthly or biweekly payments.

 

 

Trump signs resolution overturning CFPB auto lending rule (Consumer Affairs) Rated: B

President Trump has signed a resolution, passed by Congress, overturning the Consumer Financial Protection Bureau’s (CFPB) auto lending rule, designed to prevent racial discrimination by dealers who finance purchases.

United Kingdom

Monzo Case Study (AWS) Rated: AAA

Monzo has grown from an idea to a fully regulated bank on the AWS Cloud. A bank that “lives on your smartphone,” Monzo has already handled £1 billion worth of transactions for half a million customers in the UK. Monzo runs more than 400 core-banking microservices on AWS, using services including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), and Amazon Simple Storage Service (Amazon S3).

Open banking regulations, which came in at the start of 2018, required the nine largest banks in the UK to provide an API for their users’ account information.

 

Meet the 35 most exciting young entrepreneurs, engineers, and advisors in UK fintech (Business Insider) Rated: AAA

Business Insider has covered UK fintech since our 2014 launch. The UK Fintech 35 under 35 highlights the most promising young entrepreneurs, engineers, marketers, and sector experts under the age of 35. It spans both startups and big banks operating in the sector.

35. Pierce Glennie, iwoca

The company has lent over £400 million since its founding in 2011. Glennie was one of iwoca’s first outside hires and just 21 when he joined the business.

27. Aneesh Varma, Aire

Varma, who started his career at JPMorgan, set up Aire in 2014. It is his second startup, having previously founded enterprise software business FabriQate in 2005.

24. Anil Stocker, MarketInvoice

MarketInvoice is an online platform that lets businesses borrow against unpaid invoices. The lender isn’t MarketInvoice itself but institutional investors and high net worth individuals looking for strong returns.

23. Karen Kerrigan, Seedrs

Seedrs is one of the UK’s first equity crowdfunding platforms, letting ordinary people invest in startup businesses. 600 businesses have raised over £320 million since the platform launched in 2009.

17. Simon Miller, Scalable Capital

Scalable Capital is one of a number of so-called “robo advisors” — online investment advisors and platforms — that have sprung up around the world in recent years. The company already has £600 million in assets under management and has attracted investment from asset management giant BlackRock.

13. Joe Cross, TransferWise

Cross was one of TransferWise’s first employees and has seen the international money transfer business grow from a small East London startup to business worth over $1 billion.

6. Megan Caywood, Starling Bank

She is now chief platform officer at startup, app-only bank Starling, which is trying to make a new kind of bank that functions more like an app store than a traditional lender.

5. Martin Ijaha, Neyber

Neyber works with employers to let staff borrow money then repay through salary deductions. Neyber was founded in 2012 and now works with 160 employers with a combined 1 million staff. Last year Goldman invested £100 million into the platform.

3. Tom Blomfield, Monzo

The fully licensed bank now has over 500,000 current account customers who have spent £1 billion on Monzo’s iconic hot coral cards. The company has raised over £71 million to date and is valued at £280 million.

2. Samir Desai, Funding Circle

Their platform has now lent over £4 billion to businesses across the UK, Germany, US, and the Netherlands. Desai was awarded a CBE for services to financial services in 2015 and his company is tipped to float on the stock exchange later this year with a price tag of at least £1 billion.

1. Nikolay Storonsky, Revolut

Revolut began life as a foreign exchange card linked to an app that offered rock-bottom FX prices. The company is less than three years old but the popularity of its product has already seen it hit 2 million customers and a valuation of $1.7 billion.

Proptech Startup When You Move Raises £3M in Funding (Finsmes) Rated: A

When You Move, a UK-based proptech startup, secured new funding which brings the total amount raised to £3m.

Backers included Fig, a proptech VC, and a hybrid network of friends and family, private HNW investors and incumbent shareholders.

The company intends to use the funds to build out it customer excellence teams, scale up the development team and solidify its position as the solution for professionals involved in property purchases.

The UK fintech economy will create different pockets of excellence all over the country (Computer Weekly) Rated: A

He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.

Mark Carney: Every household £900 worse off because of Brexit (The Telegraph) Rated: A

UK households are £900 worse off than they would have been because of Brexit, Bank of England Governor Mark Carney has claimed.

Mr Carney revealed in a Treasury Select Committee grilling that growth has been up to 2pc lower than the central bank had expected because of the UK’s decision.

Banks ‘charging more’ for overdrafts than payday lenders (BBC) Rated: A

Unarranged overdraft fees can cost borrowers up to seven times more than a payday loan, a consumer group warned.

Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high street banks with borrowing the same amount through a payday loan.

Ireland Issues Tax Guidance On Peer-To-Peer Lending (Tax News) Rated: B

A company that pays interest on finance raised via peer-to-peer lending or crowdfunding is obligated to withhold income tax at the standard rate of tax on interest payments made on the finance raised. The underlying lenders are liable to pay income tax on any interest they earn on which withholding tax has not been suffered.

‘Lenders need to be more transparent about portfolios’ (Bridging & Commercial) Rated: A

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that more than four out of 10 portfolio landlords are looking to expand their portfolios in the next 12 months.

China

Chinese fintech’s global future is arriving now (Financial Times) Rated: AAA

Ant Financial recently raised an oversubscribed $10bn round which values the firm higher than Goldman Sachs, American Express and BlackRock; the Alipay product has more than 500 million users and is incredibly simple to use; they have integrated into Alibaba’s retail operation and have the world’s largest money market fund with Yu’E Bao; they have begun expanding globally as well as they have built partnerships with firms in Africa and have tried to enter the U.S. market through an acquisition of MoneyGram which was blocked by regulators; regulators will need to figure out how handle a company that doesn’t look to fade from the financial scene anytime soon.

Legal concerns heat up for wanted Founders Group leader as partner testifies in China (Myrtle Beach Sun News) Rated: A

Liu’s partner in the Chinese company Yiqian Funding, a peer-to-peer lending business that seeks investors, testified May 3 in her fraud trial in Nanjing that Liu was in control of the company when it became unable to pay many investors what prosecutors estimate to be $1.17 billion — or 7.4 billion yuan.

 

European Union

Klarna acquires universal shopping cart Shop.co (Ecommerce News) Rated: AAA

Klarna has acquired Shop.co, a small German startup that wants to simplify online shopping by offering a universal shopping cart. There’s little known about the deal, but according to Klarna it’s mostly about the acquisition of intellectual property and taking over a mere Shop.co employees..

According to t3n, a purchase sum somewhere in the mid double-digit millions is also likely. But later on, Klarna told another media outlet, Tech.eu, that the purchase price is far lower than some media have been speculating. It also said that it’s most acquiring intellectual property and employees.

Keeping on Top of Emerging Payment Solutions – Q&A with Klarna (Retail Tech News) Rated: A

Luke Griffiths: Klarna’s approach to online commerce is very different from that of traditional providers. Our overarching philosophy is to give consumers the freedom and flexibility to decide how and when they want to pay. At Klarna, we offer three payment options that cover all consumer needs for seamless shopping: ‘Pay now’, ‘Pay later’, and ‘Slice it’.

Pay now enables straightforward and immediate online payment purchases. This option allows customers to pay for their purchases in full via Klarna’s speedy online checkout and payment service using a card. Many of our merchants choose the Klarna checkout as it is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Our second payment option, Pay later, allows shoppers to ‘try before they buy’. Customers have either 14 or 30 days to pay for their goods (depending on the merchant) after their items have been delivered, with no interest or fees – or they can return the items if they’re not what they expected.

EMaC launches ‘Drive Now Pay Later’ service for dealers (Motor Trader) Rated: B

EMaC, the service plan specialist, is widening the services it offers dealers and end consumers with the launch of a pay later credit facility for vehicle repairs and accessories.

The company, which is has also launched a new identity, has teamed up with credit provider Klarna to offer the “Drive Now Pay Later” service.

EMaC said its new Drive Now, Pay Later product would give dealers access to a credit facility to assist their customers in financing repairs and other vehicle related accessories.

Banks seek tech talent for digital shift (Financial Times) Rated: A

European Banks have increased advertising for IT and engineering roles by more than 10 times in the last 3 years; a new report by the Economist Intelligence Unit and Temenos shows for the first time that bank executives believe technology like AI and blockchain will have a bigger impact than regulation; being about 10 years removed from the financial crisis has help shift the view of banks to focus more of their time on digitization instead of regulatory compliance.

 

 

International

Meet the Goldman Sachs-Backed Fintech Startup Aiming to Take Over North America (Fortune) Rated: AAA

Now Plaid, which raised $44 million in a funding round led by Goldman SachsInvestment Partners nearly two years ago, is looking to expand internationally. The company announced Tuesday that Plaid is available in Canada for the first time—and compatible with both U.S. and Canadian dollars—a move designed to both support current clients’ Canadian expansions as well as attract new Canadian fintech players.

Companies use Plaid’s APIs (or application programming interfaces) as a foundation for building their own fintech products, depending on that secure way to link customers’ bank accounts. Its extension into Canada is a sign that the nascent fintech industry is gaining traction in more parts of the world. TransferWise, a London-based cross-border payments startup that uses Plaid, recently expanded into Canada as part of a global push. And Toronto-based Drop, a loyalty rewards app, is one of Plaid’s first Canadian clients.

Is Fraud a Solved Problem? (Lend Academy) Rated: AAA

But one statement stood out to me. Jeff Stewart, the Chairman and Co-Founder of LenddoEFL said that “fraud is a solved problem”.

That is quite a bold statement. So, I reached out to Jeff yesterday to get some more color on what he really means here. He stood by what he said on the panel at LendIt. While we can’t get rid of 100% of fraud what we can do is catch fake identities, fraud rings, and large-scale theft of identity.

It is not surprising that the type and amount of fraud varies between countries. We learned from Thomas Wang of China Rapid Finance in this same session that a staggering 97% of loan applications in China are fraudulent. Think about that for a moment. Only 3% of the applications that a Chinese online lender receives is from a real person. The rest is fraudulent activity often from established fraud rings.

Small Business Banking Catching Up in Innovation Race (Bank Innovation) Rated: A

There are quite a few lending solutions these days for small businesses — Funding Circle, OnDeck, Kabbage, and Square Capital, to name a just a few — but innovation and digitization are lagging in other areas, such as digital account opening. Enter Gro Solutions, a sales and marketing platform for financial institutions.

Australia

Understanding the SME mindset (Australian Broker) Rated: A

More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.

The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.

India

Payday loan firm EarlySalary acquires CashCare (Media Nama) Rated: AAA

Payday loan firm EarlySalary has acquired CashCare. CashCare sells loans to customers on websites like Infibeam and Shopclues, and accepts repayments in EMIs at annual interest rates ranging between fifteen and 25%, according to CashCare’s website. The service is offered to people who don’t have a credit card too.

While CashCare’s 15% annualized interest rate is not too different from what credit card companies charge, EarlySalary’s payday loans come at a steeper cost. Charging ₹9 for each dayper ₹10,000 borrowed, their interest rate comes out to over 30%, compared to the 1.5–3% annualized interest credit cards charge, as we’ve pointed out before.

Xiaomi to start lending operations in India; to target salaried professionals (The Economic Times) Rated: AAA

IPO-bound Chinese smartphone company Xiaomi has launched its first lending product in India on the lines of the microlending product Mi Credit that it offers in China.

The new credit product, launched in partnership with lending platform KrazyBee, has already gone live and will be officially announced in a few weeks, as per a person aware of the development.

Called CreditBee, the credit product is a payday loan starting from Rs 1,000 up to Rs 1 lakh for a period of 90 days, as per the person cited above. The credit will be offered at an interest rate of 3% per month and will be targeted at salaried professionals, the person said.

P2P lending startup Cashkumar secures angel investment (VC Circle) Rated: A

Cashkumar, a peer-to-peer (P2P) lending startup, has raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

The startup’s first external funding was led by Mohan Kumar, executive director at global investment firm Norwest Venture Partners, and telecom company Reliance Jio’s chief digital officer Vishal Sampat.

Capacity-building workshop by RBI (Tribune India) Rated: B

Rachna Dikshit, Regional Director, RBI, Chandigarh inaugurated the workshop. In the event, topics like RBI guidelines, credit guarantee architecture for MSME financing and recovery management, alternative tech driven approaches to financing MSMEs like big data, fintechs, P2P lending, TReDS, movable asset based financing, role of CERSAI, management of sick account, credit scoring and rating models for MSMEs, assessment of term loans and composite loans, effective communication were covered.

 

Asia

Fintech Firm Flywire Teams Up With SP Jain For New Student-Led Singapore-Based Startups Competition (Crowdfund Insider) Rated: A

Flywire, a fintech firm that provides global payment and receivable solutions for education, healthcare, and commercial enterprises, announced this week it has partnered with SP Jain School of Global Management to launch a startup competition, the Flywire Challenge, to power a new generation of transformative entrepreneurship in Singapore and the APAC region.

According to the duo, this competition, which is set to launch this month, solidifies Flywire’s dedication to partnering with powerful regional universities, government bodies and industry, and investing in education and the start-up space, as well as their long-term relationships with international educational and healthcare institutions as a leading payments solutions provider. Flywire will host, sponsor and evaluate a contest following an open call for teams to submit proposals for innovative start-up ideas. Any and all students and graduates, not limited to SP Jain students, will be invited to compete for three awards in the Health Technology, Education Technology and Travel Technology sectors.

Latin America

Mexican investors back microlending startup Vola (VC Circle) Rated: AAA

Bengaluru and US-based Vola, which offers an alternative lending platform for students, has raised $500,000 (Rs 3.4 crore) in a pre-Series A funding round from Mexican insurance and credit firm Credika and unnamed angel investors from the North American nation.

MENA

AI Business Loan Company Lending Express Raises $ 2.7 Million (CTech) Rated: AAA

Israeli business loan startup Lending Express announced on Tuesday it has raised $2.7 million in a seed investment round led by Entrée Capital and iAngels, among other investors.

The company said it would use the capital to further develop its loan-matching technology and scale up its operations in the U.S. and Australia.

Authors:

George Popescu
Allen Taylor

How Digital Lending is Changing With New Technologies

How Digital Lending is Changing With New Technologies

The evolving landscape of digital lending is turning traditional bank loans and credit analysis into a distant memory. The rise of big data and technological progress have led to alternatives or augmentations to Fair Isaac Corp.’s proprietary FICO score, the dominant credit score used to vet consumers’ creditworthiness. Now, a bill is making its way […]

How Digital Lending is Changing With New Technologies

The evolving landscape of digital lending is turning traditional bank loans and credit analysis into a distant memory. The rise of big data and technological progress have led to alternatives or augmentations to Fair Isaac Corp.’s proprietary FICO score, the dominant credit score used to vet consumers’ creditworthiness. Now, a bill is making its way through the U.S. legislative process that would require Ginnie Mae and Fannie Mae to consider credit scores beyond FICO. Although these proposals are focused on mortgages, one can infer that alternatives to FICO are welcome across the board, including consumer loans. And we now have the technical means to deliver.

When it comes to consumer lending, lenders have traditionally relied upon a loan applicant’s FICO credit score obtained through a credit bureau such as Experian or Equifax to help determine an applicant’s creditworthiness. These three-digit scores are derived using a proprietary formula that uses data like payment history, credit history length, and credit line amounts. The lower the score, the less likely an applicant is to secure a loan. The exact formula is a trade secret, known only to Fair Isaac Corp. Hence, we are already relying on a proprietary “black box” to make a credit decision. We’ll get back to that point later when we discuss machine learning algorithms. Enter digital lending.

Digital Lending Creates a New Way to Vet Applicants

New credit models are based on the proposition that the old ways of approving applicants based on FICO credit score alone do not paint a complete picture of an applicant’s creditworthiness. The proliferation of new data points about consumers provides a wealth of raw data ready for analysis.

With the use of machine learning algorithms, and more broadly artificial intelligence, new models are looking at hundreds, and thousands of other data points, and not all are related to traditional financial risk. Enhanced use of personal information may include educational history, employment history, and even seemingly non-financial information such as bedtime, website browsing patterns, spelling on loan applications, social media data, and even messaging patterns.

While using big data could muddy the waters by creating more confusion than clarity, artificial intelligence could have a big impact on how alternative lenders perform.

Artificial Intelligence Streamlines Sales and Strategy

Savvy digital lending startups are testing the waters with machine learning to make underwriting decisions and enhance their loans. Machine learning algorithms can help to determine if applicants are telling the truth about income by looking at past employment history and comparing it to similar applicants. However, this technology can also favor the applicant by finding hidden patterns.

This data collection is advantageous for people with insufficient credit history, low incomes, and young borrowers who are typically charged with higher interest rates if they obtain credit at all. These methods may also appeal to mortgage companies looking to automate less risky applicants through a similar process.

Yet several challenges exist with these new credit models:

  • First is what we’ll call a slow rinse and repeat the cycle. Machine learning algorithms, like humans, learn by doing and repeating while making correctional adjustments along the way. Economic credit cycles can last 5-7 years. Even if we back test a model using historical data, how do we know it will work in the future? A cliche in finance is that “past performance is not indicative of future returns.” It may take a long time to prove that a model is right or wrong because the model itself, like an inexperienced loan officer, hasn’t seen enough credit cycles.
  • Second, models need to explain their black box to gain trust. FICO gets away with being a “black box,” but artificial intelligence cannot. Even if a model works, humans need to have some kind of explanation to feel comfortable with the output.
  • Bank regulators need to know what’s going on. Fair credit regulators require that lenders keep records for the reason that credit was denied. The applicant has a right to inquire about why they were rejected. Disclosing the reason for a rejection is easy to do with an old-fashioned credit scorecard, based on a transparent point system. But what would regulators or auditors do with machine learning model outputs? For now, the practical answer is to run a traditional model as a backup whenever a machine learning model rejects an applicant, and hope that they both give the same answer! If so, record the traditional model’s output as the reason for credit denial.

For now, the most beneficial result of machine learning is the ability to detect consumer fraud by analyzing customer behavior with baseline data of ordinary customers and singling out outliers, such as how much time people spend considering application questions, reading contracts, or looking at pricing options. This filter alone leads to more accurate underwriting decisions, which, in turn, reduces defaults for lenders and lowers interest rates for consumers.

Blockchain Changes the Future of Funding

Peer-to-peer lending platforms originated out of one simplistic idea, one peer borrower asks for a loan, and another peer lender will decide to fund the loan. Both parties benefited by “cutting out the middleman” – the borrow paid a rate lower than that of a traditional loan, and the lender received a rate higher than that of a traditional savings account. But the peer-to-peer, or “people helping people” model, changed as large lending companies and institutional investors entered the space to become lenders, and, in institutional parlance, “buy loans” in bulk. Moreover, peers lack the expertise or ability to perform proper credit risk on other peers. Peer-to-peer became institutional-to-peer.

However, what if blockchain or distributed ledger technology could return us to the original concept of peer-to-peer lending? Blockchain-based solutions are currently developing identity and reputation models. With blockchain, an entire loan process can live online. Many parties share a record of transactions and supporting documents eliminating the need for intermediaries and third parties. Once I transfer the ownership to you, it’s done. I no longer have it. Currently, we can transfer ownership, but we need someone to record the transfer.

Eliminating the Need for Third-Party Risk Managers

With distributed ledgers, you can create a smart contract on a public utility blockchain without the need for a third party to execute the contract.  This allows you to build a low-cost, high-trust platform that didn’t exist before. A handful of startups are designing platforms offering secured loans on a blockchain for those that are holding digital assets for the long term. Cryptocurrency investors will be able to earn interest on their holdings while the digital lender uses them as collateral for consumer loans.

Others are testing mechanisms for collateralized lending based on the value being stored in a smart contract on a blockchain. Collateral could be a security, a bond, a property, a title, data, or gold. The asset must have been digitized and recorded on a blockchain. For instance, the Perth Mint, Australia’s official bullion mint, announced plans to issue cryptocurrency backed by gold.

Author:
Mehul Agarwal is a Customer Success, Business Development and Marketing expert working with both users and creators of technologies to achieve their Engineering & Technology goals.

Mehul has worked with several startups, mid-size and large companies from the Valley and outside especially in the FinTech, Medical Devices, Connected Devices amongst others. He has generated over $45 Mil in revenue in the last couple years building one of the largest customer accounts for one of the companies he has worked with.

He mentors startups from around the world around Sales, Strategy, Growth & Marketing both as part of accelerator programs and independent companies.

On the education front, he has a bachelor’s and master’s degree in Economics from Pune University and also a Master’s in Customer Relationship Management from Symbiosis University.

Wednesday April 25 2018, Daily News Digest

banking the nonbanks

News Comments Today’s main news: Wells Fargo still the largest bank to lend to nonbanks. Digit adds credit card payments to app. UK finance chief calls for regulatory crackdown on tech giants. Humaniq implements smart biometrics identification. Today’s main analysis: World Bank releases Global Findex Database. Today’s thought-provoking articles: Credit history, debt ratio are biggest constraints for would-be homeowners. Lending […]

banking the nonbanks

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Wells Fargo Leaves a Potential Subprime Smudge on Its Way to Squeaky Clean (Bloomberg) Rated: AAA

Sloan provided some evidence for that argument last week when the bank paid a $1 billion fine to regulators to close an investigation into abusive practices in its auto lending and mortgage unit.

But a look at one of its lending businesses suggests that exposure to questionable practices isn’t so much an oversight as a business decision. Wells Fargo, according to reports over the past few years, is by far the largest lender among the big banks to payday loan companies and others that make high-interest loans to subprime borrowers, including some that regulators have accused of predatory practices.

Source: Bloomberg

Banks don’t have to report how much they lend to subprime lenders, which falls broadly into the category of nonbank lenders. Wells Fargo, at the end of last year, had by far lent the most to nonbank lenders, with $81 billion in outstanding loans. Citigroup was the bank with next largest exposure, with just $30 billion outstanding.

Source: Bloomberg

Credit History and Debt Ratio are Biggest Constraints for Would-Be Homeowners (PR Newswire) Rated: AAA

LendingTree today released the findings of its study on the cities with the highest rates of denied mortgage applications and why mortgage shoppers in those areas have been denied.

Since the financial crisis, mortgage lending standards have tightened as underwriting has become more stringent. There are numerous reasons why a lender could deny a loan, from poor credit score to prior bankruptcies, but other reasons can include a lender’s inability to verify a borrower’s employer.

Source: Lending Tree

LendingTree delved into data from more than 10 million mortgage applications using the most recent available Home Mortgage Disclosure Act data set to find out the main reasons would-be borrowers were rejected, and to see if location has any correlation for rejection.

Fintech firm Digit adds credit card debt payment to savings app (American Banker) Rated: AAA

Digit, maker of one of the first apps to help people save by automatically sweeping modest amounts of money from checking into savings, is turning its attention to credit card debt.

The app can now be set to automatically make an extra payment every month on a user’s credit card, the fintech announced Tuesday.

At the end of January, the Federal Reserve reported that U.S. consumers had $1.03 trillion in credit card debt.

Breaking Away From The Bi-Weekly Payroll Tradition (PYMNTS) Rated: A

Today, this payroll schedule means an estimated 70 percent of employees in the U.S. live paycheck-to-paycheck – and many struggle to make necessary purchases or payments in the days leading up to payday. It’s also linked to the rise in the payday loan industry, which has more U.S. storefronts today than McDonald’s, according to data from Pew. Lenders make a collective $7 billion in fees, according to analysts, and they stem from more than $46 billion worth of payday loans issued each year.

According to Steve Barha, CEO of Instant Financial, the rise of the payday loan industry and overdrafts certainly comes with its controversies, but it’s no mistake that the industry exists in the first place.

Unison Reports 1000% Growth Year over Year in Home Ownership Origination Volume (Crowdfund Insider) Rated: A

Unison, a unique financing platform for home ownership investments, is reporting strong year-over-year growth. According to the company, following a solid 2017, the origination volume for the first quarter of 2018 has grown and increased 1000 percent over the comparable period last year. This is due in part to an expansion of the management team and the availability of their service in ten new states.

Unison says these new hires will help extend their company into more states. In April alone, Unison HomeOwner and HomeBuyer programs will be available in 10 additional states including Florida, Georgia, Ohio, Michigan, Minnesota, Nevada, Colorado, North Carolina, Missouri and Delaware, bringing its total footprint to 22 states plus Washington D.C. Unison expects to broaden its reach over the course of 2018 to over 70 percent of U.S. single family residential housing units.

Mulvaney response to CFPB data security gaps baffles cyber experts (American Banker) Rated: A

Acting Consumer Financial Protection Bureau Director Mick Mulvaney has repeatedly pointed to data security as a defect in the agency’s supervisory program, but security experts are scratching their heads over the bureau’s response to such problems.

Mulvaney has said hundreds of CFPB-related data breaches justified his announcement in December that the agency would halt collecting personally identifiable information from companies it supervises.

Elevate vs. LendUp Payday Loans: Everything You Need to Know (Student Loan Hero) Rated: A

Pros of a LendUp payday loan
Getting cash fast is the main reason you’d choose a company such as LendUp. But they have some other benefits, as well.

  • If you pay your installment loan on time, you could boost your credit score.
  • The lender has an incentive program called the LendUp Ladder. You’re awarded points as you take out LendUp loans and repay them on time. As you accumulate points, the lender will reward you by allowing you to borrow at progressively lower rates.

For the sake of a side-by-side comparison, we’ll focus on Rise. Here are some pros of a Rise loan.

  • You can apply for a seven-day payment extension if you can’t pay on time.
  • The company will provide you with free access to your TransUnion credit score.
  • If you borrow from the company more than once, your interests rates could decrease.
  • Rates are lower than those offered by payday loans.
Source: Student Loan Hero

Chase customers can now use their voices to unlock their accounts (Tearsheet) Rated: A

Chase card members’ voices will soon be their passwords when they call for help.

The bank is debuting a voice-authentication feature for credit card customers dialing the call center this spring to reduce the customer burden of having to remember multiple passwords and answer cumbersome security questions. The initial launch would only be for credit card customers, but the bank plans to expand the feature to all customers by the end of the year, a spokeswoman said.

 

Hedge fund billionaire Steve Cohen’s venture capital group is on a fintech tear (CNBC) Rated: B

On Tuesday, Point72 Ventures will announce it led a $3 million investment in a startup called Extend, which has built mobile technology business owners can use to share their corporate credit cards with employees and freelancers without handing over the actual cards.

Earlier this month, the venture capital arm was a co-lead in a $29.4 million round for a New Jersey startup, DriveWealth, that has developed a mobile site for investing in exchange traded funds and stocks, and it led an $18.5 million investment in Silicon Valley-based DeepScale, which is developing autonomous driving technology.

United Kingdom

UK finance chiefs call for regulatory crackdown on tech giants Financial Times) Rated: AAA

Two of the financial technology executives involved in the FT debate — Funding Circle chief executive Samir Desai and Rhydian Lewis, his opposite number at RateSetter — agreed that GDPR was a welcome protection for consumers.

UK Fintech Humaniq Implements Smart bioID System to Further Strengthen Outgoing Transaction Security (Crowdfund Insider) Rated: AAA

UK-based fintech Humaniq announced on Tuesday it has implemented additional bioID settings that will act as an extra safeguard be integrated into Humaniq app, which the company reports has already had more than 100,000 downloads in the Google Play store.

Humaniq also revealed that the total transaction volume has reached 400,000 HMQ in more than 250,000 transactions per month. The company noted with the introduction of an additional layer of biometric authentication, this means over 10,000 transactions will be totally secured from fraud, benefitting over 100,000 users of Humaniq App.

Regtech start-up ClauseMatch lands £3.6m funding (Fintech Futures) Rated: A

ClauseMatch, a UK-based start-up in the regtech space, has raised £3.6 million ($5 million) in its Series A funding round.

ClauseMatch, specialises in smart document management. It is a graduate of Barclays’ accelerator programme, Techstars, and has Barclays and Intesa Sanpaolo on its customer list.

Could a credit card cap protect chronically broke Brits? (Guardian) Rated: B

A credit card cap is needed to protect “chronically broke” Britons struggling to make repayments on high interest loans, ministers have been told.

Labour’s Stella Creasy warned that credit card firms were pushing millions into debt in the same way payday lenders did before action was taken to prevent anyone having to pay back more than double what they borrowed.

The Walthamstow MP made the comments as she moved an amendment to the Financial Guidance and Claims Bill which would require the Financial Conduct Authority (FCA) to take tougher action on credit card firms.

Ministers must extend cap on payday loans to other high credit that’s targeting poor, vulnerable Brits, MPs say (The Sun) Rated: B

MINISTERS should “learn the lessons” of the payday loan cap and extend it to cover other forms of high-cost credit such as credit cards and doorstep lending, MPs have demanded.

In a boost for The Sun’s campaign to stop millions of families falling prey to doorstep and legal high street loan sharks, MPs called on the Government to take tough action to stop the nation “drowning in debt” and protect “chronically broke” Brits.

China

Hong Kong Approves Dual-Class Shares, Paving Way for Tech Titans (Yahoo Finance) Rated: AAA

Hong Kong Exchanges & Clearing Ltd. approved the biggest change to its initial public offering rules in two decades, putting it in a position to battle New York for some of the world’s hottest companies.

Technology firms that have shares with different voting rights will now be allowed to go public in Hong Kong, overturning rules that barred the likes of Alibaba Group Holding Ltd. from considering the former British colony. Businesses will be able to apply under the new regime starting April 30, HKEX said Tuesday.

 

European Union

Swedbank invests €3m in banking tech vendor Meniga (Fintech Future) Rated: AAA

Meniga, a white-label digital banking solutions provider, has received a €3 million equity investment from its customer, Swedbank.

The two firms partnered in 2017 to improve Swedbank’s digital customer experience through a personal finance activity feed and data aggregation platform. The new solution is intended to “give customers better control over their daily finances and a more personal, engaging experience than today”, according to Meniga.

The bank’s view of Open Banking (The Finanser), Rated: A

Another conversation about Open Banking, and an interesting point was raised by one bank. They said that they had been mapping financial moments – getting married, buying a house, having a baby, crashing your car, etc – and had started to reimagine the whole customer experience in those moments using APIs.

For example, I bring up my banking app 3-4 times a day. The bank probably thinks it’s love them as I bring up their app so often. Well I don’t love them at all. I’m just going into the app so regularly because, as a small business, I want to see if my customers have paid yet.

International

World Bank Releases the Latest Global Findex Database (Lend Academy) Rated: AAA

The Global Findex Database and accompanying report give a clear indication of how fintech is impacting access to financial services globally.

Source: World Bank

Globally, about 1.7 billion adults remain unbanked—without an account at a financial institution or through a mobile money provider. Because account ownership is nearly universal in high-income economies, virtually all these unbanked adults live in the developing world. Indeed, nearly half live in just seven developing economies: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan.

Fifty-six percent of all unbanked adults are women. Women are overrepresented among the unbanked in economies where only a small share of adults are unbanked, such as China and India, as well as in those where half or more are, such as Bangladesh and Colombia.

Read the full report here.

US fintech funding boomed at the start of 2018 — but early-stage funding is drying up in Europe (Business Insider) Rated: A

VC-backed fintech companies raised $5.4 billion across 323 deals globally in the first quarter, according to CB Insight’s latest fintech report, released on Monday.

The figures were supported by a big uptick in deal-making activity in the US. US fintechs raised $2.1 billion across 147 deals. Notable investments include a $165 million funding round for insurance startup Oscar in March and a $110 million capital injection for San Francisco’s Collective Health in February.

Source: CB Insights

While deal activity spiked in the US and Asia, it fell to a 5-quarter low in Europe with just 63 first quarter deals.

The slump was largely down to a decline in early-stage funding deals and came despite several $100 million-plus funding rounds for European challenger banks N26 and Atom. European fintechs raised $933 million in the first quarter.

 

Will Beijing Manage to Survive the US-Chinese Trade War? (Sputnik International) Rated: A

Beijing has kicked off a number of measures aimed at bolstering its economic growth, Chinese researcher Liu Dan told Sputnik. According to Liu, the country’s internal difficulties have not been triggered by the US tariff war unleashed by the Trump administration on China.

One should not overestimate the impact of Sino-American trade frictions on China’s economy, says Liu Dan, a researcher at the Chongyang Institute for Financial Studies (RDCY) of Renmin University of China.

Australia

Lending continues to rise Down Under for RateSetter Australia (Peer2Peer Finance) Rated: AAA

PEER-TO-PEER lending platform RateSetter continues to pass lending milestones in Australia as its loanbook reached A$250m (£136.5m).

The firm, which is the only Australian P2P lender open to retail investors, also announced that it now has more than 10,000 registered users on its site.

RateSetter has doubled its investor base in the country within a year, which it says is due to customer dissatisfaction with Australian banks.

P2P lender’s growth due to consumer ‘rebellion’ (Australian Broker) Rated: A

Peer-to-peer lender RateSetter has attributed its recent rapid growth to consumers actively rebelling against the big banks.

The amount invested by these investors has increased by 14% over the last 12 months, with average investment now sitting at close to $40,000.

Asia

House hunting? Soon you can crowdsource your downpayment via blockchain and smart contracts (E27) Rated: AAA

For millennials, this presents a major barrier to homeownership. While 70% of Chinese millennials have already managed to purchase their first real estate, only 35% of their Malaysian peers have followed suit according to HSBC data. For 64% of millennials around the world a combination of low income and soaring property prices make the prospects of owning a house rather gloomy. A lot of them also do not qualify for traditional loans and do not have the family support for making that downpayment.

Add to this new concept the technology of blockchain, and you have a method by which borrowers can access an alternative down payment funding source, and an immutable record of each borrower-lender agreement is permanently recorded. This serves four purposes:

  1. Blockchain eliminates the traditional borrowing method, with its middlemen and fees. The repayment details are worked out between the borrower and the individual lender.
  2. Blockchain democratises borrowing, because credit scores, history, etc., are not factors in obtaining the loans. If a borrower can show basic ability to repay, an individual lender will be willing to put up the money at an interest rate that is mutually agreed upon.
  3. The borrower-lender arrangement is codified and recorded in a blockchain that is secure and permanent. Both borrower and lender have the security of knowing that their agreement cannot be changed except by mutual agreement.
  4. Re-payments are also recorded in the blockchain environment, so there is never a question about the amount or the ultimate meeting of a borrowing obligation to any individual lender.

Authors:

George Popescu
Allen Taylor

Tuesday April 3 2018, Daily News Digest

FT Partners

News Comments Today’s main news: SoFi issues $2.6B in ABS notes in Q1 2018. GreenSky files for IPO. China’s P2P lenders brace for more regulations. FinanZero raises $3.6M. Today’s main analysis: FT Partners’ CEO alternative lending market analysis. Today’s thought-provoking articles: Cities with highest share of cash-out refinance borrowers. Retailers grow financial services capabilities. India’s unsecured instant loan interest rates […]

FT Partners

News Comments

United States

United Kingdom

China

International

Australia

India

Other

News Summary

United States

SoFi Issues a Record $ 2.6 Billion in ABS Notes in the First Quarter of 2018 (PR Newswire), Rated: AAA

SoFi announced today that it completed $2.6 billion in loan securitizations in the first quarter of 2018, a 35% increase over the prior-year period and its largest-ever quarterly ABS issuance volume.

In Q1 2018, SoFi completed a total of three securitization transactions: two student loan ABS offerings ($960 million SOFI 2018-A Notes and $869 million SOFI 2018-B Notes) and one consumer loan ABS offering ($774 million SCLP 2018-1 Notes). The SoFi 2018-B Notes marked the first time SoFi included medical residency loans as a part of the collateral.

LendingTree Ranks Cities with the Highest Share of Cash-Out Refinance Borrowers (PR Newswire), Rated: AAA

LendingTree today released the findings of its study on where cash-out refinancing was most prevalent in the past year.

Cities with the highest share of cash-out borrowers

Source Lending Tree

Cities with the highest cash-out loan amounts

Source Lending Tree

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

Financial-technology firm GreenSky LLC has confidentially filed paperwork with the Securities and Exchange Commission for a sizable initial public offering that could come as soon as this summer, according to people familiar with the matter.

The Atlanta company, which operates a lending platform that enables retailers, health-care providers and home contractors to offer loans to their customers, could seek to raise $1 billion at a valuation of roughly $5 billion, some of the people said.

FT Partners’ CEO Monthly Alternative Lending Market Analysis  (FT Partners), Rated: AAA

This month’s report features an exclusive interview with Manu Smadja, co-founder and CEO of MPOWER Financing, an alternative lender that enables high-potential international students to finance their education. In our conversation with Manu, he discusses the inception of MPOWER, along with the unique opportunities and challenges of lending to this market.

M&A

Source: FT Partners

Read the full report here.

Max Levchin To Participate In A Keynote Fireside Chat At LendIt Fintech USA 2018 (PR Newswire), Rated: A

LendIt Fintech announced today that Max Levchin, Co-founder and Chief Executive Officer of Affirm, a financial services technology company that is reimagining consumer credit and banking, will be featured in a keynote fireside chat on April 9. The world’s most prominent and emerging fintech CEOs from Wall Street to Main Street will gather April 9-11 at Moscone Center in San Francisco to focus on the hot-button topics and issues exploring the future of finance.

In a session titled The future of credit: Reimagining the financing ecosystem, Levchin’s keynote fireside chat will delve into how the retail industry has evolved and how retail experiences are continuing to grow beyond the capabilities of traditional credit and lending. Levchin will share his thoughts on why the industry needs to reimagine the financing ecosystem from the ground up in order to unlock the future of credit. Levchin will also discuss why Affirm is committed to reinventing credit, starting with the belief that it should help improve consumers’ financial lives in addition to financing their purchases.

Kabbage: Small Businesses Turning To Mobile Lending In Big Numbers (Payment Week), Rated: A

Sometimes, businesses need ready cash to get from “the latest bills” to “the next paid invoice,” and that’s where lenders are coming in. A new report from Kabbage says that small businesses are turning to mobile devices to get in on that lender funding in increasing numbers.

Kabbage surveyed almost 150,000 small businesses, and found that loans accessed by mobile device had increased better than three-fold, over 360 percent, of what they were back in April 2014. While the total numbers went through the roof, the value of the loans accessed went through the roof and over the treetops, having increased over 1,220 percent.

Why Marcus Has Changed Everything (Orchard Platform), Rated: A

Fast forward almost 18 months and Marcus is the fastest growing online lender in history. They have lent $2.5 billion in this time to 350,000 customers and have 700 employees spread across three offices. Not only that, but they have grand ambitions in the space. Goldman Sachs CEO Lloyd Blankfein has repeatedly talked about the importance of Marcus to the future of Goldman Sachs.

According to a recent article in the Wall Street Journal the consumer banking business of Goldman Sachs is expected to generate $1 billion in revenue for the firm by 2020. That is significantly more revenue than LendingClub is expected to generate in 2018 as an 11-year- old business.

We have heard that Barclays and PNC Financial will be launching their own lending platforms in 2018 and there are rumors that many other large banks are going to do the same.

Most people probably don’t know Goldman Sachs offers a savings account with excellent perks — and anyone can use it with just $ 1 (Business Insider), Rated: A

Marcus— named after the Goldman Sachs founder Marcus Goldman — allows any adult (except in Maryland, where Marcus is not yet available) to create a savings account.

The big selling point for Marcus is the 1.5% annual percentage yield offered. Whereas interest rates for many banks have plummeted to as low as 0.01%, Goldman Sachs’ savings accounts create significant interest.

There is also no minimum amount needed to open an account with Marcus, and a deposit of even $1 allows users to earn the 1.5% APY.

Ohio Insurtech Root Insurance Completes Series C Round With $ 51 Million in Funding (Crowdfund Insider), Rated:A

Root Insurance, an Ohio-based car insurtech company, announced last week it secured $51 million in funding through its Series C round, which was led by Redpoint Ventures, with Scale Venture Partners and existing partners Ribbit Capital and Silicon Valley Bank Capital Partners. 

Root will use the new funding to expand into additional states and continue to invest in technology that significantly improves the customer experience.

That Fast Online Loan Could Have Super-high Interest Rates and Hidden Fees That Bankrupt Your Business (Entrepreneur), Rated: A

recent lawsuit against fintech small-business lender Kabbage Inc., charging that it partnered with a bank in order to offer interest rates that exceeded the legal limit, highlights the need for more regulatory oversight of the growing number of online lenders signing deals with small businesses.

Online lenders are getting more scrutiny.

The recent Massachusetts federal case brought by a small business against Kabbage (and its partner Celtic Bank) highlights why non-bank fintech lenders should be regulated. The suit alleges that Kabbage used its relationship with Celtic — which “rented” its balance sheet to Kabbage — as a basis to charge interest rates that violated usury laws.

How Credit Karma is using data to become a central finance hub (Tearsheet), Rated: A

It’s not a bank, but it uses customer data to help banks find customers.

Currently valued at $4 billion, Credit Karma has 80 million customers — half of whom are millennials. The company joins a growing number of financial startups like Clarity Money, SoFi, Chime and Varo Money that are aiming to become one-stop shops for customers’ finances. The field is growing increasingly competitive. Meanwhile, banks are bundling personal finance advice into their mobile apps. But Credit Karma has two advantages its competitors often struggle with — scale and data — and it’s using a chatbot to lock in the relationship with the customer.

A Chase Sapphire experiment is getting revived and expanded after the trial run blew away expectations with millennials last year (Business Insider), Rated: B

Last year, ahead of the spring homebuying season — the busiest of the year — JPMorgan Chase engineered an experiment to gain an edge in the mortgage-lending competition.

So the bank targeted its Sapphire customers, offering another 100,000 in rewards points if they closed a mortgage with the bank — a bonus worth as much as $1,500.

HNW Clients Warming Up To Digital Advice (Financial Adviser), Rated: A

In its report, “The Cerulli Edge—U.S. Retail Investor Edition, 1Q 2018 Issue,” the researcher found that more than one-quarter of investors over 70 who have $2 million to $5 million in investable assets said they would consider online-only engagement. Beyond that, high-net-worth investors in general seemingly are more receptive to digital advice platforms.

In 2015, Cerulli found that 38% of investors with investable assets of $2 million to $5 million said they were willing to engage with digital providers. Last year, that number jumped to 46%. And among investors with $5 million-plus in investable assets, those numbers went from 30% in 2015 to 38% last year.

Why borrower experience will be the principal driver of bank revenue in the lending market (Lendit), Rated: A

Tech giants such as Google and Amazon have rewritten the rulebook for consumers when it comes to what they can reasonably expect from their service providers. Consequently, bank offerings are being judged to the same standard as the most innovative digitally native products in the world.

The benefits of improved customer experience

More generally, banks must focus on improving user experience to remain competitive as digitally native fintech products flood the marketplace. Focusing especially, the motivations for improving customer experience can be described as:

  •  Differentiation Financial services can no longer lean on long-standing relationships and brand positioning to generate new customer business.
  • Positive brand response in addition to research, some customers will also emphasize the emotive impression they receive from a product when making purchasing decisions.
  • Coping with an economic downturn During a recession or other global economic hardship businesses are placed under increased financial strain. Services viewed positively by their existing clients will stand a better chance of retaining their clients as well as growing their client base during the downturn.

Pindrop Introduces New Biometric Solution: Tongueprinting (Finovate), Rated: A

Banking Technology’s Anthony Peyton reports that the Atlanta-based anti-fraud and authentication specialist has unveiled Tongueprinting, a technology that analyses every person’s unique tongue as its newest biometric engine. Banking Technology is Finovate’s sister publication.

The idea is for Tongueprinting to stop fraudsters from taking over legitimate accounts by spoofing the call centre with automated bots, social engineering, and knowledge-based authentication questions.  

HomeUnion Launches Crowdfunding Platform for Individual Investors (Business Wire), Rated: A

HomeUnion, the leader in online residential real estate investing, has launched a crowdfunding platform that allows investors to purchase stakes in funds of single-family rental (SFR) properties on its website. Starting with a minimum investment of $10,000, retail investors now have the ability to acquire interest in the HomeUnion Fix-and-Flip Fund. The fund enables consumers to invest in SFR assets acquired for fix-and-flip purposes in seven HomeUnion markets: Atlanta, Austin, Charlotte, Chicago, Dallas, Raleigh and Tampa.

Upstart tests buyer appetite with riskier loans, more sub notes (Global Capital), Rated: A

Online lender Upstart is the latest marketplace loan company to broaden the risk profile of its ABS, announcing a deal this week offering more subordinate bonds and backed by a higher proportion of longer term loans.

The California-based lender, founded by ex-Google employees, uses an underwriting model which incorporates data points beyond borrowers’ FICO scores, utilizing other factors such as schools attended, areas of study, academic performance and work history.

Is low pay hurting banks in the battle for tech talent? (American Banker), Rated: A

Conversations about pay in the banking industry typically focus on whether executives at the top are paid too much or workers at the bottom are paid too little.

But new data available as a result of the Dodd-Frank Act is drawing rare attention to the compensation of employees in the middle. In what will become an annual exercise, publicly traded U.S. companies are now required to disclose annually the median pay of their employees.

Information and Data Integrity: A Two-Way Street (Lendit), Rated: A

For many businesses, data is an important aspect of decision management. When you are choosing with whom to do business, you rely on the validity of data to guide you. If it proves faulty, you may be steered into accepting bad customers or rejecting good ones, which can seriously affect your bottom line. For consumers, inaccurate data can be equally harmful—leading to the appearance of having bad credit, denials of services or products or worse, flagged as potentially fraudulent.

Spanning both digital and real worlds, and encompassing data about identity, financial characteristics, behaviors and more, an integrated view is the foundation of enhanced insights that can ultimately improve financial outcomes. TransUnion understands the importance of current, accurate data and gives its customers access to information—including both highly-regulated and publicly available forms of alternative data—that creates powerful, comprehensive views of consumers.

Here’s Why Millennials Are Choosing Personal Loans (Lendit), Rated: A

When it comes to millennial spending habits, it looks as though they’re rounding a corner to a new kind of credit. With the vast treasure trove of accumulated data available, credit bureaus like TransUnion are seeing spikes in personal loans compared to Generation X’s spending habits in the early 2000s. It’s a tremendous opportunity for marketers to capture a demographic that expects more from their lender.

The Overarching Trends

The newly minted adults of Generation Z are at the very beginning of their financial journey, but millennials are at the age where they’re expected to make major purchases. As they struggle with the economy and student debt, they’re making different financial choices along the way.

Adopting New Technology

Lenders are turning to financial technology (fintech) to help peddle their products, which millennials are all too happy to use. Ironically, applying for a personal loan without the face-to-face connection can be far more attractive than the traditional application process.

A Decline in Credit Card Usage

Right or wrong, credit cards have long been linked to perpetual debt in many people’s minds. In 2009, the CARD Act was introduced to place stricter limits on the marketing of credit cards at college campuses. Debit cards have become more of the rule as opposed to the exception, leaping from 8 billion transactions in 2000 to 60 billion in 2015.

Small Business Confidence Is Up, What Does that Mean? (Lendit), Rated: A

The year 2017 saw small business owners across the United States grow more optimistic about the future than they’ve ever been—at least since the creation of the Optimism Index by the NFIB in the 70s.  “2017 was the most remarkable year in the 45-year history of the NFIB Optimism Index,” said NFIB President and CEO Juanita Duggan.

The Tax Bill Could be a Boon for Small Businesses

Sole proprietorships, partnerships, and S corporations are all examples of what are called pass-through businesses; and make up roughly 95 percent of all U.S. businesses. They also happen to be many of our customers at OnDeck, and other online small business lenders. One of the main components of the new tax bill is a 20 percent tax deduction for those businesses, where business owners can “shield” 20 percent of their business income from flowing through to their personal income tax returns.

Cincinnati-based financial tech startup raises $ 1.2 million (Cincinnati Business Courier), Rated: B

A Cincinnati-based financial tech startup that aims to help users secure low-dollar loans without having to resort to a payday lender raised $1.2 million in venture capital.

Mayor proposes employee loans to offset predatory lenders (Santa Fe New Mexican), Rated: B

A few months after a new annual 175 percent cap on small-loan interest rates in New Mexico went into effect, Mayor Alan Webber is proposing a short-term loan program to help municipal workers avoid payday lending businesses viewed as predatory by consumer advocates.

BlockFi Gives Hodlers Another Option to Borrow Against Crypto Assets (BitcoinMagazine), Rated: B

Options for borrowing and lending with cryptocurrencies are on the rise. One of the latest start-ups to join the likes of SALT and Unchained Capital is BlockFi, a New York City–based startup that issues loans backed by bitcoin and ether to individuals, companies and institutions in 35 U.S. states.

BlockFi takes cryptocurrency as collateral, offering interest rates on loans of around 12 percent. This is generally lower than unsecured loans and higher than loans secured with traditional assets such as securities or real estate.

eBus to offer visitors financial advice, credit reports (The Repository), Rated: B

The eBus is a mobile classroom which is equipped with 14 personal computers and satellite technology staffed by Fifth Third bankers and representatives from nonprofit community organizations. On the bus, visitors can request a credit report and review it with a professional; receive a personalized evaluation of finances; receive internet banking and bill pay demonstrations; speak with nonprofits about housing, money management and business advice; receive consultation on foreclosure prevention; and conduct online job searches.

United Kingdom

Scots ‘side businesses’ generate £1.7bn a year (The Scotsman), Rated: A

More than 500,000 people living in Scotland have started a side business, generating a collective £1.7 billion a year out of more than £33bn UK-wide, according to new research.

Online lender Sunny said many of those north of the Border turning to side businesses are doing so to help with the cost of bills, savings and debts, and bring in an average of £272 a month on top of their main income.

That represents a 20 per cent increase from when they first started their business.

China

China’s P2P lenders brace for renewed regulatory crackdown (Financial Times), Rated: AAA

China will soon be rolling out new licensing requirements for p2p lenders; The system will kick off in April with approvals slated to come at the end of this month, but many lenders aren’t aware of the filing process; in 2016 and 2017 many p2p lenders shut down and according to data there are around 2,000 remaining; it is expected that many of the 2,000 will not pass the new requirements; the new rules won’t allow platforms to guarantee loan payments and also limit loans to individuals and businesses; it will also require that platforms use custodian banks.

China Rapid Finance Executives Selected to Speak at LendIt Fintech USA 2018 (PR Newswire), Rated: A

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF) announced today that the Company will participate as a sponsor and exhibitor at the upcoming LendIt Fintech USA 2018, to be held between Apr 9th and 11th in San Francisco, California.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On March 28th, cross-border payment company iPayLinks announced that it had completed, at the beginning of this year, a hundreds of million-yuan B1 round of financing led by Tencent and followed by Legend Capital.

NIFA Issues a Self-Discipline Convention for Debt-Collection Practitioners

The five-chapter convention is mainly applying to regulate the behavior of overdue debt collection within the Internet Finance industry by establishing several basic principles (e.g. observing laws and regulations, prudential regulations, protecting privacy, and strict self-discipline). In other words, the document outlines a framework of debt-collection regulation in terms of discredited punishment, business management, personnel management, information management, outsourcing management, and complaints.

China’s internet lenders fall foul of data privacy rules (Financial Times), Rated: A

More than half of Chinese internet finance lenders are failing to comply with data privacy regulations, research has found, raising risks for investors as China steps up the implementation of laws to protect consumer data.

The breaches include collecting phone numbers from users’ contact lists, which can be used to mount harassment campaigns and shame users into repaying debts.

The survey of 200 finance apps by Renmin University and Nandu Personal Data Protection Research Centre, a Beijing think-tank, ranked 111 apps as having “low” compliance.

It found that almost half — 95 apps — wanted to read users’ text messages, while 97 of them wanted access to users’ contact lists, despite such access not being necessary for the app’s functioning.

International

How retailers are growing their financial services capabilities (Tearsheet), Rated: AAA

Amazon isn’t the only retailer encroaching on the financial services space. It may be the scariest — just the rumor of it entering a company’s space will send its stock price down — but ultimately, Amazon only cares about getting more buyers and more sellers to join its platform.

Overstock’s Raj Karkara, vp of loyalty and financial services, echoed that sentiment earlier this year, saying that offering financial services or connecting customers with financial services providers is a natural extension of its retail function of buying and selling consumer goods.

Rakuten
Rakuten is Japan’s largest e-commerce site and has slowly been growing outside of the country. It has a footprint in media, video-on-demand, mobile messaging, e-books, travel, fashion, marketing and even sports. It also operates the largest online bank in the country.

Overstock
For the past few months, e-commerce company Overstock.com has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing; and, most recently, a discounted trading platform.

Sainsbury (and Tesco)
Amazon may not be interested in becoming a bank but that doesn’t mean it can’t succeed in stealing customer attention from them. The U.K.’s largest grocers have all opened banks attached to their brands —  Sainsbury’s and Tesco.

ETHLend (LEND) Token – Will It Go Down After Kyber Network Partnership? (Hot Stocked), Rated: A

ETHLend has recently partnered up with Kyber Network. The ETHLend (LEND) Token has reached a market capitalization of 45.69 Million US dollars in the last 24 hours. The token traded 9.50%higher against the U.S. dollar during the last 24 hours ending at 10:30 AM EDTon April 2nd. That rise might be as a result of the partnership. ETHLend aims to become another decentralized and secure financial marketplace, but targeting peer to peer lending agreements via Blockchain and Smart Contracts.

Source CoinMarketCap

 

Australia

SMALL BUSINESS LOANS IN AUSTRALIA: SHOULD YOU SEEK FINANCE FROM A BANK OR AN ONLINE LENDER? (Dynamic Business), Rated: A

Considering the small business sector employs nearly half the national workforce and contributes around $380 billion to Australia’s GDP [1], it’s easy to see why it’s frequently referred to as the ‘engine room’ of the economy.

Like all engine rooms, the sector requires sufficient fuel – in this case, working and growth capital – to not only keep running but also accelerate. However, poor access to capital remains a significant barrier to small businesses, accounting for a majority of failures in the sector.

Part of the reason is that banks are reluctant to lend to small businesses in circumstances where the borrower doesn’t have bricks-and-mortar security – especially if a short-term loan is sought.

APRA rejected CBA home loan data as inaccurate and incomplete (Financial Review), Rated: B

Commonwealth Bank was being pressured by the prudential regulator to appoint external consultants and fix its flawed home lending data almost 2½ years before the Hayne royal commission began exposing the big four for sloppy administrative errors and irresponsible lending.

The Australian Prudential Regulation Authority’s frustration with the failure of Australia’s biggest home lender to accurately identify what proportion of its loans were taken out by property investors and its level of exposure to big borrowers has been revealed in evidence tendered to the banking royal commission and published in a massive dump of more than 100 documents late last week.

India

Interest rates on unsecured instant loans are high (LiveMint), Rated: AAA

Financial institutions and fintech companies have launched multiple small credit products in India in the past 1-3 years. It is now possible to get loans even on your mobile phone. But how do you pay for this convenience?

P2P lending platform

Peer-to-peer lending companies such as Faircent, i2ifunding and Lendbox connect lenders and borrowers on their platforms. Usually, the lender is an individual and not a financial institution. The interest rates are between 15% and 36% per annum and the loan amount can range from Rs50,000 to Rs5 lakh. The interest rate is decided based on the credit profile of the customer. Usually, the P2P lending companies take into account your Cibil credit score. The loan tenure is 3 months to 24 months.

Fintech eco-system is moving to blockchain and AI: Rajat Gandhi, Faircent (Economic Times), Rated: A

A lot of players have come into the fintech space. There are wallet players, then there are PPI, P2B, crowdsourcing and other payment players as well. So, regulation is one of the key challenges the private players are going through. What is your take on it?

Surprisingly, the Indian regulators, I would say, are strict. You can see the example of NBFC P2P licences regulation. It is a good rule-based model. In fact, the players themselves were pushing for some kind of regulation because financial markets need them. It’s not like e-commerce or running a taxi where the risks are not that high.

India’s Finzy Raises $ 1.3 Mln At Pre Series A Funding (Reuters), Rated: A

Finzy, India’s fastest growing peer to peer lending platform, has raised USD 1.3 million in first round of Pre Series A from investors in the industry. A second round of fundraising is expected to close with pre-identified set of investors within the next 60 days.

Latin American

Brazilian Loan Marketplace FinanZero raises USD 3.6 million in Series A Funding Round (PR Newwire), Rated: AAA

FinanZero is a leading marketplace for consumer loans in Brazil. The business is an independent broker for loans, negotiating the customer’s loan application with several banks and credit institutions, to find the loan with the best interest rate and terms for the consumer. FinanZero handles the lending process from start to finish.

The Series A round was led by Swedish publicly listed investment company, Vostok Emerging Finance, with participation by other Swedish investors, including Webrock Ventures and Zentro Founders.

Africa

Fintech is central to Nigeria’s future success (Financial Times), Rated: A

Central to this opportunity is an acceleration in the development of a modern banking and financial services sector. We are already seeing huge breakthroughs in digital banking and the adoption of fintech-based services by Nigerian consumers — be they retail or business customers. But this expansion must be encouraged by policies that will see greater inclusion of women and rural communities into mainstream banking activity.

Asia

Meet the most disruptive fintech startup in South Korea (Forbes), Rated: AAA

Viva Republica is the most disruptive fintech startup in South Korea. Since the 2015 launch of its simple peer-to-peer payments app Toss, banks are finally revamping their user experiences and customers have easier access to financial products. South Korea’s mobile payments have more than quadrupled in that time to $4.6 billion, according to Bank of Korea data.

The startup, funded at $76 million, hasn’t stopped there. After PayPal joined a $48 million investment in Toss in March, Toss has grown from a simple money-transfer app to a diverse consumer-finance platform generating Viva Republica’s $20 million in expected revenue in 2017. Toss thus joins Asia’s ranks of fast-growing mobile P2P payment services, reaching a $12 billion transaction volume in 2017.

Authors:

George Popescu
Allen Taylor