Impact of Interest Rates on P2P Lenders

bank of england base rate

Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering […]

bank of england base rate

Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering effects of the rising interest rates on three of the biggest P2P markets in the world: the UK, US, and China.

United Kingdom

Last year, Bank of England (BoE) reduced the interest rate by 0.25 percent along with a sling of monetary policies to encourage growth. But in October of this year, BoE increased the interest rate, though only marginally by 0.25%. Both of these times, banks and other financial institutions immediately reviewed the mortgage and saving rates, and the effect was passed on to customers. But the change is too small to have any damaging effect on P2P lenders.

Source:

 

Moreover, P2P lenders do not fall directly under the scope of BoE, hence, are not immediately affected by the BoE base rate. Lender return is directly proportional to the demand and supply in the market. For the short term, P2P lenders will not be making any headline-grabbing changes to their rate structure. If the rate does end up crossing 2%, the P2P market will definitely ring up some changes in their rate structure.

Zopa, the pioneering UK-based P2P platform, was able to thrive even when rates were above 5%. But the real reason P2P gained a substantial foothold in the UK was because of the low yield environment. With saving rates below inflation, money lost its value over a period of time when held in savings accounts. This prompted people to go for P2P platforms as alternative saving options even though it had a way higher percentage of risk attached to it. If rates do reach a certain level, the lender might go for the safer option of saving accounts returns rather than the high-risk high-profit approach offered by P2P platforms. But if P2P lending is considered an investment, the yield will always be attractive for a certain class of investors.

United States

During the last decade, the US economy endured the worst financial recession in 80 years. And to counter that, the Fed dropped the rates to 0-0.25% for an extended period of time. But with US unemployment rates at multi-decade lows, the rate has been slowly yet steadily hiked to a range between 1%-1.25%.

Impact of increase in the interest rates

Lending Club, the largest P2P platform in the United States, has mentioned in its prospectus the adverse effect hike in interest rate will have on its business

“… fluctuations in the interest rate environment may discourage investors and borrowers from participating in our marketplace, which may adversely affect our business.”

Many retail investors use the P2P platform as an investment option. Since they lend directly to the borrowers, the non-involvement of the intermediaries allows them to enjoy handsome returns as compared to returns they get for depositing into saving accounts.

Source:

As the chart above clearly depicts, a number of delinquencies are directly impacted by the increase in the interest rate. The higher the interest rates, the higher are delinquencies. Thus, the low rate environment had led to lower delinquencies. But now, there is a growing fear that a hike in interest rates will be detrimental to peer-to-peer lending platforms.

Ben McLannahan of the Financial Times believes that an increase in Fed rates can actually devastate the nascent peer-to-peer lending industry.

  1. Increasing default rates for peer-to-peer lending notes might trigger an exodus by institutional investors, thus triggering liquidity concerns and
  2. Traditional investment options would see returns revert to historical means, rendering moot the allure of higher returns offered by the p2p industry. (Source)

China

China is one of the biggest markets in terms of size and population. Even new regulations and the crackdown by authorities cannot halt China’s P2P market juggernaut. In March this year, it crossed $130 billion (Rmb 900bn), and it is widely expected that lending will cross Rmb 1 trillion mark this year.

With outstanding loans weighing heavy on the balance sheets of lenders, the regulatory body PBOC is worried this will lead to yet another economic recession, and that is the reason it is clamping down on the P2P industry. For the most part of its journey, the P2P industry in China has been unregulated. The sudden onslaught of regulators led to a major decline in the number of players. Case in point: There were 2,281 P2P platforms in the country, and now the number has come down to 331.

Interest Rates

The basic interest rate is hovering around 4.35 percent. Chinese regulators believe the global economic situation is still shaky, therefore, raising the open market rate is much more appropriate than raising the benchmark rates. In February this year, PBOC raised the interest rate on open market operation to reverse repurchase agreements (repos) by 10 basis points, and furthermore, it increased the lending rates on standing lending facility (SLF). The overnight rate for the SLF loan was raised to 3.1 percent from 2.75 percent. The SLF rate acts as a de facto ceiling for interbank lending.

Source:

A change in short and medium lending rates were executed to address the rapid build-up in debt and to safeguard the economy against the consequent financial risk. Increase in interest rates along with regulatory reforms being put in place by PBOC will help the industry to grow in a safe and structured environment.

Conclusion

Rising interest rates pose a threat to the P2P industry as the initial adoption was triggered by the low yield offered by traditional banks. P2P lenders were able to circumvent this and offer a win-win for both borrowers and lenders. With interest rates inching up, many feel the P2P lenders will be facing higher delinquency and lower investor interest. But this does not take into account the evolution of the industry; the players have been extremely nimble and understand the predicament facing them. Many have tightened lending norms, and almost all players now have long-term institutional money on board. With credit algorithms leveraging artificial intelligence and machine learning, profitability for the nascent industry is not a distant dream. In such a scenario, interest rates offered by P2P lenders will adapt to the demand-supply ratio in the market.

Author:

Written by Heena Dhir.

Friday July 21 2017, Daily News Digest

RateSetter

News Comments Today’s main news: SoFi CEO: why Etherium is worth more than Bitcoin. Affirm has 1,000 retail partners. Wells Fargo joins digital mortgage revolution. AutoGravity has half a million users. LendInvest launches retail bond offering. N26, Lydia support Apple Pay in France. Borrowell raises $57M in Canada. Today’s main analysis: RateSetter moves to protect users. Today’s thought-provoking articles: Takeaways from […]

RateSetter

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Canada

News Summary

United States

Why Ethereum Is Much More Valuable Than Bitcoin (Fortune), Rated: AAA

As lending startup SoFi expands from student loans to full-service banking, it is also venturing into one of the trendiest areas among big Wall Street banks at the moment: blockchain.

An upstart cryptocurrency, Ethereum’s price has surged so dramatically in recent months that it now commands nearly as much market share as Bitcoin itself. Driving that rise is excitement about the way Ethereum allows its blockchain technology to be used to develop myriad other projects, as Cagney described.

In particular, SoFi, which is valued at more than $4 billion, is exploring a way to use blockchain to revolutionize title insurance, a standard requirement for many home buyers.

How SoFi is developing its financial services offerings (Tearsheet), Rated: AAA

SoFi has always been as much about culture and brand before product and tech. Now that it’s postponed its initial public offering in December (it raised $500 million in private funding shortly after) it has the luxury of time to develop its financial services offerings.

“While we run positive contribution margins around our credit products… it pales in comparison to what the lifetime value of that relationship is worth,” CEO Mike Cagney said at Fortune’s Brainstorm Tech conference in Aspen, Colorado Wednesday morning. “Not having that deposit product means that the bank, if it has that deposit product, is going to constantly try to cross sell [customers] and pull them back to the bank. That introduced this vulnerability in the business.”

There are also no branches planned for the non-bank financial services company, he confirmed, citing that in the 40 SoFi events he’s hosted and attended almost all other attendees have said they haven’t walked into a branch in the last five years, he claims.

SoFi is also in the exploratory stages of how to use alternative data like cell phone data for credit scoring as well as distributed ledger technology for title insurance.

U.S. banks are valued at between $2,000 and $100,000 per customer. SoFi currently has 250,000 members today and anticipates 500,000 by end of year. Cagney said it’s not unrealistic to get two million customers at “$25,000 to $50,000 per customer, which gets us in the $50 to $100 billion valuation range.”

Affirm now has 1,000 retail partners (TechCrunch), Rated: AAA

Today Affirm has announced it has more than 1,000 merchants signed up to offer its financing options at checkout, helping to reduce the friction around making large purchases and, by extension, increasing sales for its partners.

While promoting its most recent milestone, Affirm is also trying to get across the message of how it’s different — and frankly, better — than point-of-sale financing options of the past. As a result, the company is pushing a marketing campaign around “honest finance” to enumerate the ways in which Affirm helps consumers by providing more access and better terms for big-ticket items.

Affirm Challenges Retailers, FIs To Practice ’Honest Finance‘ (PYMNTS), Rated: AAA

“Finance is pretty broken.”

So started Affirm’s Co-Founder and CEO Max Levchin’s remarks at his firm’s first-ever AFFIRMation conference for its retail partners in San Francisco yesterday.

He’s on a mission to fix a system that he believes doesn’t really serve anyone’s long-term interest nearly as well as it could or should. When it comes to the extension of credit, Levchin says that customers often lose out, retailers end up with angry customers who frequently feel ripped off and FI’s alienate their customer base.

Broken by the Numbers

“Sixty percent of Americans fear credit cards,” Levchin noted.

“[Most consumers] think getting involved with using a card will cost them a lot more than they bargain for. A third fear they will overspend. And they are right; that’s what happens, and the industry does very little to help them create necessary guardrails.”

Bad Faith

In fact, Levchin noted, the industry doesn’t want to create guardrails, because a lot of players have literally built products that bet against the consumer.

Deferred interest — the “dirty little secret” of consumer credit that bears a retailer’s logo and accompanies those too good to be true offers — means that even one day late on a payment 59 months into a 60-month loan, means interest gets calculated back to day one.

Bad Long-Term Thinking

Last quarter, on the occasion of its one millionth consumer installment loan, Affirm reported a 75 percent increase in purchase value on purchases made using Affirm, a 20 percent lift in POS conversion and a repeat rate of 25 percent of borrowers returning.

And Affirm’s net promotor score: It’s 82, slightly trailing Starbuck’s 85, but not by much.

Affirm is looking to retailers across the country to join in pledging to abandon “predatory consumer credit practices” and has also challenged the nation’s financial institutions to do the same.

Nation’s largest lender finally hops on digital-mortgage bandwagon (Mortgage Professional America), Rated: AAA

Wells Fargo CEO Tim Sloan said that the bank expects to launch a digital mortgage application tool by the end of next year, according to a report by the Charlotte Business Journal. Sloan made the announcement during an earnings call on Friday.

Sloan told investors that Wells Fargo doesn’t currently have as many online loan products as it would like, the Charlotte Business Journal reported. He said that employees are currently testing the online mortgage tool, and that the bank plans to run a test with customers this year before a full rollout in 2018.

AutoGravity Now Has Over 500,000 Users (Crowdfund Insider), Rated: AAA

AutoGravity says it has now surpassed 500,000 in just one year. AutoGravity is an App-based online lender targeting the auto financing space. Pick the car and request a loan all on your smartphone. It’s that simple.

Additionallly, AutoGravity shares that more than $500 million in financing has been requested through the AutoGravity platform.

Fundrise Officially Announces New eFunds (Crowdfund Insider), Rated: A

Fundrise, a leading online marketplace for real estate investing, has officially announced the availability of their new eFunds.

The “featured” eFund starts with the Los Angeles market. The LA eFund aims to provide housing for the underserved millennial homebuyer.

Fundrise has also launched a DC eFund.

PayPal Completes Acquisition of TIO Networks (BusinessWire), Rated: A

PayPal Holdings, Inc. (NASDAQ:PYPL) and TIO Networks Corp. (TSXV:TNC) today announced that PayPal has completed its previously announced acquisition of TIO Networks. In accordance with the terms of the Arrangement announced on February 14, 2017, PayPal acquired all of the outstanding shares of TIO for $3.35 CDN ($2.64 USD) per share in cash or an approximate $302 million CDN ($238 million USD) equity value.

LendKey Announces Series C Funding (PR Newswire), Rated: A

LendKey, the leading lending-as-a-service solution for banks and credit unions, today announced $13 million in Series C funding, $8 million in equity and $5 million in debt financing. North Atlantic Capital, based in Portland, ME, led the round with participation from each of LendKey’s existing investors including DFJ, Updata Partners, Gotham Ventures, and TTV Capital.

The Series C funding will enable the company to expand its services and staffing. LendKey plans to grow its regional office in Cincinnati, Ohio and expand its account development and sales teams.

Mobile savings and investment service Acorns is on track to do 1 billion trades in 2017 (TechCrunch), Rated: A

The company now boasts more than 2 million investment accounts (with 600,000 opened in 2017 alone) and is on track to do 1 billion trades in 2017 through the proprietary broker-dealer that it created.

Still, the numbers were impressive enough to attract Bain Capital Ventures to commit another $35 million to the company, bringing Acorns total Series D financing to $70 million. Previous investors PayPal, Greycroft Growth Fund, e.Ventures Growth Fund, NYCA, Capital Group, Rakuten, Point72 and Ashton Kutcher’s Sound Ventures also participated in the round.

Unifund CEO Consumer Credit Caution: “Time To Stop Getting Lost In The Averages” (PYMNTS), Rated: A

Fifty years ago, when customers thought about using credit, it was in the context of buying something expensive that they really needed — a refrigerator, a washer/dryer, a car — with the intention to pay off that loan balance quickly.

Credit as a Currency

For super-prime customers — those for whom credit cards are basically payment cards because those consumers pay them in full monthly and never accrue any interest — Rosenberg said that card “borrowing” is an incentive-driven system. The customer gets cash back, rewards points, airline miles, hotel stays — and those incentives have very successfully attracted consumers to use them to buy things. Rosenberg noted that for a large segment of consumers, buying something without using a credit card is almost a foreign concept because the card offers them access to a more valuable form of currency.

But a more artificial intelligence-driven, machine learning system, Rosenberg said, will allow those customers who are locked out of the credit market today to be seen more clearly by creditors, and to be given incentives that are more explicitly tailored to their wants.

A Better Subprime Experience

The problem with the categorizations of “prime” and “sub-prime” borrower is that they are somewhat less hard and fast than people like to think they are. Rosenberg explained that there aren’t simply two classes of buyers — those who pay their bills and those who don’t.

But, Rosenberg said, the truth is most people pay bills in the order of absolute necessity, and when things get bad financially because a job was lost or an economic catastrophe has happened, that order gets very utilitarian. Car payments get paid, because car companies have no sense of humor and will repossess a car. But eviction from a house takes longer, which means a person with a more pressing need would rather skip their mortgage for a few months than not buy medication they need. And credit card bills? Those quickly fall to the bottom of a pile.

Bank of America Unveils New Mobile Capability to Apply for Business Advantage Term Loans and Credit Lines (BusinessWire), Rated: A

Bank of America today announced enhancements to its mobile app experience that add on-the-go convenience to small business banking and lending. With the suite of updates, Bank of America small business clients can now apply for a Business Advantage Term Loan or Business Advantage Credit Line from any Bank of America digital platform – including the Bank of America mobile banking app, and bankofamerica.com.

More than 1.3 million small business clients are active users of the Bank of America mobile banking app, an increase of 14 percent over the past year.

December 2016 Fed Rate Hike: Most Consumers Fared Well, But It’s a New Dynamic for Consumers and Lenders Alike (TransUnion), Rated: A

TransUnion (NYSE:TRU) released an analysis today showing that most borrowers were able to absorb their increased monthly payment obligations after the Federal Reserve Board rate hike last December.

TransUnion’s study identified these 63 million consumers because they carried debts for which the minimum monthly payment due was tied to the market interest rate, such that a rise in rates from the December rate hike could cause an increase in payments required. TransUnion used its CreditVision® aggregate excess payment (“AEP”) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to identify 10.6 million of these consumers who were at elevated risk of not having the capacity to absorb a rate increase of 0.25%.

Banks That Don’t Invest in Technology Risk Falling Behind Permanently (Forbes), Rated: A

Wack points to a new study of mortgage lending, Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks, co-written by business school professors at the University of Chicago, Columbia Business School and Stanford Graduate School of Business.

The researchers found that some banks find themselves trying to play catch-up to competitors that long ago allowed borrowers to apply for mortgages online. The institutions that have been slow to adopt online applications for mortgage lending are losing market share to their competitors. Meanwhile, non-bank lenders have grabbed a substantial piece of the market; so-called “shadow banks” lend money but don’t use bank deposits to finance the transactions. They now write 38% of all home loans — almost triple their share in 2007. Further, the shadow banks now originate three-fourths of all loans to low-income borrowers insured by the Federal Housing Administration (FHA).

I’m a banker and I say let SoFi into the club (American Banker), Rated: A

As the president of a small community bank, I feel the need to respond to certain misleading comments that have been made by banking industry representatives and community activistsrecently in opposition to the Social Finance application to charter an industrial bank.

I feel the need in particular to respond to comments as reported in the press by a representative of the Independent Community Bankers of America, an industry trade association I support. In essence, this individual stated opposition to SoFi’s recent application based on his assertion that industrial banks don’t follow the same rules as other banks. This assertion is not accurate.

The banking industry is evolving. Doesn’t it make more sense to focus on how to evolve with it rather than how to reduce competition?

Ga. banks less stressed, but lending slowdown a worry (myAJC), Rated: A

Across the nation, bank lending has slowed for most types of loans since the presidential election. Business lending declined in the first quarter and is still crawling at close to its slowest pace since 2011, according to Federal Reserve data.

Overall loan growth is a bit better, but across the board, lending has slowed for debt ranging from auto loans to credit cards to financing for factories, office buildings and small businesses, according to the Fed.

That has made for stiff competition for bankers hunting for loan customers, and because interest rates are still low, banks’ profit margins on their total loan portfolios remain tight.

Last week, Columbus-based Synovus Corp., the second largest bank headquartered in the state, with $31 billion in assets, said its total loans grew by $314 million in the second quarter, up 5.2 percent compared to the first quarter. Synovus banked a $73 million profit during the quarter, 27 percent higher than a year ago.

Synovus’ consumer loans grew at a 16 percent annual pace during the recent quarter, accounting for $2 out of $3 of Synovus’ new loans.

Credit Risk Startup James Closes $ 2.7M Funding Round (Finsmes), Rated: A

James (formerly known as CrowdProcess), a New York-based credit risk startup, closed a $2.7M funding round.

The round was led by Gaël de Boissard with participation from Henry Richotte and BiG Start Ventures. As a result of this deal, Mr. de Boissard has joined James’s Board of Directors.

Investors Approach Investing Differently Across Generations (Plan Adviser), Rated: A

The Dreyfus study found that investors tend to take different approaches to investing based on age. Sixty-one percent of investors 55 years of age or older indicated they have not, or will not, reevaluate their investment approach in today’s existing investing environment. Meanwhile, 65% of Millennials, defined in the study as people between the ages of 21 and 34, had already evaluated their investment approach at the time of the survey. These actions are reflected among 51% of those between the ages of 35 and 54, as well as for 39% of those at least 55-years-old.

OCC FinTech Charter in Trump Administration Cards (JD Supra), Rated: A

In his remarks to the Exchequer Club in Washington, D.C., President Trump’s Acting Comptroller of the Currency, Keith Noreika, came strong to the mic, roundly stating the charter is a “good idea” and flatly saying “yes”, the OCC has the authority to grant the FinTech charter in the face of legal challenges by the New York Department of Financial Services and the  Conference of State Bank Supervisors.

Here are three other takeaways from the Acting Comptroller’s remarks:

  1. The FinTech charter promotes the dual banking system.
  2. The OCC is having informal meetings with interested FinTech companies.
  3. Existing OCC bank charters may be an option now.

Access Anytime, Anywhere Powers Better Consumer Lending (Blend), Rated: A

That’s why we’re harnessing the power of technology to bring consumers closer to their loan officers (LOs) and launching Blend Mobile, the first native mobile application allowing LOs to manage their businesses, including borrower requests and applications, anytime and anywhere.

Robos are offering SRI, so shouldn’t live advisers? (Investment News), Rated: A

“SRI has been one of the most consistent personalization requests we’ve had,” said Dan Egan, Betterment’s director of behavioral finance and investments. “It allows people who want to buy a better world to put their money where their mouth is.”

The nation’s largest robo adviser, Vanguard Personal Advisor Services, which has $80 billion in assets, offers clients a proprietary fund on its digital platforms that tracks a benchmark that screens companies on social, human rights and environmental criteria. Schwab Intelligent Portfolios, which has $19.4 billion in AUM, does not offer an SRI option.

Mastercard Enhances Artificial Intelligence Capability with the Acquisition of Brighterion, Inc. (BusinessWire), Rated: A

Mastercard (NYSE:MA) today announced it has entered into an agreement to acquire Brighterion, Inc., a leading software company specializing in artificial intelligence. This acquisition will further expand its suite of capabilities that deliver an enhanced customer experience and security.

Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act (H.R. 3299) (Factory Email), Rated: B

Passing the Protecting Consumers’ Access to Credit Act into law is critical for the consumer lending industry. We are pleased that forward looking legislators aim to remove the regulatory and capital markets uncertainty caused by court cases such as Madden vs. Midland.

Lead by the Second Circuit Court’s decision, other state regulators are attempting to erode a core tenet of our federal banking system. “Both the ‘valid when made’ doctrine and the exportation of usury rate have facilitated nationwide lending for over a century by allowing the rate of interest on certain loans to remain unchanged after transfer of the loan,” said Gilles Gade, President and CEO of Cross River, an FDIC insured New Jersey State chartered bank and leader in marketplace leading origination. “The ability for banks to sell loans to non-banks is vital to the capital markets ecosystem in general, and to consumers in particular who are getting hurt as access to credit is made more difficult and more expensive. The perenniality of this tenet hinges on a healthy secondary market, increased liquidity, and the securitization of debts ranging from mortgages to credit cards, all of which help facilitate emerging innovations and provide capital that makes credit more accessible and affordable for millions of Americans. We applaud the bipartisan reintroduction of this bill and look forward to its expeditious review and passage.”

Comment by William M. Bell of Factory.

LendingTree Announces Promotion of Sam Mischner to Chief Sales Officer and Head of Mortgage (PR Newswire), Rated: B

LendingTree® (NASDAQ: TREE), the nation’s leading online loan marketplace, today announced that Sam Mischner has been promoted to Chief Sales Officer and Head of Mortgage.  Previously, Mischner served as SVP, Sales and GM, Mortgage.

United Kingdom

Fintech lender LendInvest to launch retail bond offering (AltFi), Rated: AAA

LendInvest, a leading alternative lender in the property space, is launching a retail bond. The bond will offer investors a fixed rate of 5.25 per cent, due 2022.

It is expected to be listed on the London Stock Exchange once the subscription period closes. LendInvest is targeting an initial raise of £50m, and the company expects this to be the first of a number of bond issues over the coming years. The bond has a minimum investment amount of £2,000.

Interest from the bond will be paid semi-annually on 10 February and 10 August each year. The net proceeds will be used to fund the origination and/or purchase of loans which satisfy the company’s eligibility criteria.

RateSetter moves to protect its investors (Business Insider), Rated: AAA

UK marketplace lender RateSetter has given more details on a series of interventions it has made to protect the company’s 50,000 retail investors from adverse consequences related to its lending decisions in the last two years.

Here are the three measures RateSetter has now explained in greater detail:

  • Buying two subsidiaries in a motor finance company. 
  • Wholly buying Adpod, an advertising company. 
  • Ending its partnership with George Banco, a consumer lending platform. RateSetter is withdrawing from the partnership, remaining only as a passive investor, after reviewing the strategy more closely. RateSetter added that George Banco is still repaying its £32 million ($42 million) loan.

Monzo gently rolls out current account (Banking Tech), Rated: A

The bank, which received its full UK banking licence in April, says it’s been using the current account internally and today (17 July) is now inviting some of its customers to join and “help put it through its paces”.

Its aim is to offer a current account to all existing customers by the end of the year. Towards that goal, over the next three months it will roll out between 10,000 and 20,000 current accounts to existing customers. As you probably guessed, users can register their interest on its site. Investors get priority access.

TransferWise’s cofounders have swapped the CEO role between themselves again (Business Insider), Rated: A

Kristo Kaarmann is taking over from Taavet Hinrikus as the boss of the international money transfer business, according to a blog post on Medium that was written by Hinrikus and published on Tuesday.

Next-gen Credit Scorer Aire Raises $ 5m in Series A Funding from Deep-tech VCs (Fintech Finance), Rated: A

Aire today announces the closing of a $5m Series A funding round, led by Sunstone Capital alongside White Star who previously led Aire’s Seed round in 2016.

Aire today announces the closing of a $5m Series A funding round, led by Sunstone Capital alongside White Star who previously led Aire’s Seed round in 2016.

The Lines Are Blurring Between Alternative, Traditional SME Finance (PYMNTS), Rated: A

Alternative lending has shifted from a competitor of traditional FIs to a collaborator, often lending a digital hand to banks in need of upgrading their systems to provide faster, more agile financing to SMEs. A new report from the state-backed British Business Bank (BBB), however, suggests alternative lenders are becoming an increasingly important part of its operations in a different way, highlighting how the lines between alternative finance (AltFin) and traditional finance continue to blur.

The annual report said the BBB facilitated more than $930 million in SME loans last year, and, according to the data, every year more of that money is landing at small businesses thanks to collaboration with alternative lenders like RateSetter and Funding Circle. According to reports, in 2014 the percentage of BBB funds that went through a P2P platform was 79 percent; in 2015, it was 90 percent.

Permira Joins Payments Rush by Buying Into Sweden’s Klarna (U.S. News), Rated: A

Private equity group Permira has bought a stake of at least 10 percent in payments firm Klarna, one of Europe’s most highly valued tech startups, the companies said on Friday.

Permira will acquire the Klarna stake from existing shareholders General Atlantic and DST Global, and the Sweden-based firm’s co-founder Niklas Adalberth.

General Atlantic and DST Global will cease to be shareholders in Klarna after the deal, they added in a statement.

Bank of England opens up payments systems to spur fintech (Tribune), Rated: A

The Bank of England has widened access to Britain’s interbank payments system to increase competition from new fintech firms in the financial system, where the “Big Four” high street banks have long dominated.

The changes, which in practice will come into effect in 2018 once legislative changes have been completed, will enable such non-bank payments services providers (PSPs) to compete better with banks, the BoE said.

There is no ‘existential crisis’ challenge for banks from fintech, HSBC’s digital chief says (CNBC), Rated: A

The idea that big banks are facing an “existential crisis” from financial technology (fintech) challengers is “overblown”, the digital chief of HSBC told CNBC.

Crowdfunding: the stable option in 2017? (The C Suite), Rated: A

Research conducted by Beauhurst on 2016 UK funding deals for non-listed high-growth businesses concluded that crowdfunding outperformed private equity and venture capital. Whilst 2016 saw a decline in the total number of deals financed by equity investors, activity on the leading crowdfunding platforms increased. Crowdcube (launched in 2011) and Seedrs (launched in 2012) accounted for 21% of such equity investment in the UK last year.

According to Beauhurst’s research, Q1 of 2017 has seen a small increase of 2.7% in equity funding in non-listed, high-growth companies. However deal numbers are still 6.72% lower than the same quarter in 2016. The growth has primarily been driven by crowdfunding platforms, with an 11% growth in deal numbers.

Boost for UK fintech as Receipt Bank secures huge $ 50 million in funding (Business Insider), Rated: A

Accountancy software startup Receipt Bank has raised $50 million (£38.4 million) in a Series B funding round led by a New York venture capital firm.

Perfect storm for Scots property borrowers (Scotsman), Rated: A

By 2018, loans from alternative finance schemes such as crowdfunding, peer-to-peer lending and private debt, will be as cost competitive as the retail banks, blowing the finance market wide open for loans in the £500,000 to £10 million range.

Naturally, because alternative lenders such as Funding Circle, The Route and Folk to Folk are settling loans for higher loan-to-value (LTV) ranges (between 60 and 75 per cent), they absorb the risk by charging higher interest on both short- and medium-term loans – currently between 6 and 12 per cent a year.

LTVs in retail banking property loans are settled at around 55 to 60 per cent, but they offer lower loan costs of between 2.5 and 5 per cent. This is all set to change in 2018 – with increased availability of finance for lenders, such as innovative finance ISAs (IFIsa), the cost of capital is set to fall and this will encourage alternative lenders to reduce their interest rates.

Zopa’s Home Improvement Index Reveals: A New Kitchen Can Deliver Over 50% ROI (Crowdfund Insider), Rated: A

On Wednesday, peer-to-peer lender Zopa released its latest Home Improvement Index that indicated a quart of British homeowners looking to improve their homes this summer are choosing to renovate their kitchens and are seeing a 51% return on investment as a result. According to research, 25% of British homeowners undertaking a home improvement are opting for a new kitchen, with the renovation boosting the value of a home by an average of 10%.

Zopa noted that the research found that the average home improvement would increase the value of a home by 9% or nearly £24,000 (£23,837) – based on homeowner’s estimates. The average return on investment was 50%, based on the total amount spent by homeowners.

Opinion split on best P2P marketing techniques (P2P Finance News), Rated: B

Property P2P platform Lendy has recently announced sponsorship of the Cowes Week sailing regatta, while business lender Ablrate has been announced as a sponsor of the PGA EuroPro Tour’s £100,000 Shoot-Out competition.

Other firms such as RateSetter have used adverts on the London Underground and Crowdstacker has run adverts in print publications, while Zopa and Funding Circle have used TV campaigns.

But Frazer Fernhead, founder and chief executive of The House Crowd, prefers to invest in digital marketing.

China

Yirendai Limited: A Growth Play At Deeply Discounted Valuations (Seeking Alpha), Rated: AAA

The ADR has returned a solid 250%+ in a year and a half since then. In comparison, Alibaba stock is up by 83% while NetEase is up by 16% and JD.com has risen just 27.5%. In other words, Yirendai has been the best performing Chinese stock/ADR ever since the company was listed in the US.

Yirendai reported quarterly revenue of $148.42 million for Q1 2017, which grew 75% year-on-year. On the earnings front, the company reported earnings per ADR (EPADR) of 84 cents, a 147% improvement over 34 cents EPADR in Q1 2016. On a trailing twelve month (NYSE:TTM) timeframe, the revenue has grown from $265.2 million in Q1 2016 to $544.6 million in Q1 2017, a 105% year-on-year growth.

We believe that, based on Yirendai’s earnings history and the historical valuation multiples, the stock should easily trade in the $43.4 – $57.7 range, which represents a 65% upside at the higher end.

European Union

N26 and Lydia announce Apple Pay support in France, but major banks are still missing (TechCrunch), Rated: AAA

Apple Pay hasn’t really been a major success in France so far. France’s biggest banks still don’t plan to support Apple’s payment service. But two companies announced today that they were going to add Apple Pay support before the end of the year — Lydia and N26Crédit Mutuel Arkea’s banks also recently announced that they were working on that feature as well.

Crowdfunding and Crowdlending (Soundcloud), Rated: A

Get a unique insight into what crowdfunding and crowdlending are and find out how you can participate in it – either as an entrepreneur or as an investor. Responsible for crowdfunding in DNB, Lars Marthinsen, and CEO of Kameo, Sebastian Martens, are guests at #pengepodden .

International

Finstar commits $ 150m to fintech investment (Finextra), Rated: A

Private equity outfit Finstar Financial Group is planning to pump $150 million into fintech startups over the next five years.

The money will be used to buy stakes in promising fintech startups in Europe, Latin America, Southeast Asia and South Asia, as well as on research and development within portfolio companies.

Baloise invests in insurtech company Trov (Baloise), Rated: A

Baloise is investing in the Californian insurtech company Trov. The start-up offers on-demand insurance for personal items and has already launched in the UK and Australia, and will roll out in the U.S. later this year. For Baloise, this is the first investment arising from its partnership with Anthemis.

Baloise’s investment is part of the Series D financing secured by Trov in April 2017.

Australia

Factor in the robo-advice (The Australian), Rated: A

The disruption is well under way in the US, where two giant companies – Betterment and Wealthfront – have emerged, each with a valuation of more than $5 billion. In recent months Betterment has seemed to outpace Wealthfront in terms of size and growth. Betterment, which has cheaper services, now boasts a client list of 188,000 while Wealthfront has 90,000.

ANZ has put its $4.5 billion wealth advice unit on the block, in a move that followed UBS’s decision to sell its wealth management arm in Australia a year ago. And Platinum Asset Management, the one-time king of specialist overseas fund managers in the local market, has announced a dramatic cut in its fee charges.

In Australia, the SMSF Industry Association tacked a robo-advice questionnaire onto one of its recent surveys and found that 18 per cent of its members – higher than in the general population (13 per cent) – would be willing to try robo services.

Online Lender Prospa is NSW State Winner in 2017 Telstra Business Awards (Crowdfund Insider), Rated: B

Prospa, an online lender to Australian small business, has been awarded the 2017 Telstra New South Wales Medium Business Award in the 2017 Telstra Business Awards.

Prospa said it was the first Fintech company to be awarded the accolade.

India

How Fintech Revolution Is Making Way For A Potential $ 5 Bn Online P2P Lending Empire In India (Inc42), Rated: A

Currently, at a nascent stage, the P2P lending landscape in India is also poised to grow into a $4 Bn-$5 Bn industry by 2023. The domain’s origin actually dates back to 2012, when the first peer-to-peer lending company i-Lend was launched. At present, the P2P lending space is populated by more than 30 players including Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, i2iFunding and many more.

One factor that has played an integral role in the rise of an alternative fintech industry is demonetisationinstated on November 8, 2016. Post the ban on INR 500 and INR 1,000 notes, bank deposits underwent a discernible slowdown. Loans to SMEs and MSMEs reached an abrupt halt, forcing many businesses to seek other methods of financing. Last year, for instance, around 34% of P2P borrowers were actually business owners looking to expand without having to rely on banks.

Singapore Based Bridge Data Centres Looks To Pour $ 500 Mn Into India (Inc42), Rated: B

Bridge Data Centres is looking to invest $500 Mn in India over the next two years. As per reports, the investment will enable the Singapore-based data centre outsourcing (DCO) company to gain a stronghold of the country’s fast-growing market for data centres.

In June 2017, Alibaba revealed plans to set up two new cloud data centres in India and Indonesia, in an attempt to strengthen the company’s computing resources in Asia. Earlier in January 2017, US-based data storage and management firm NetApp launched its Global Centre of Excellence in Bengaluru, as part of a $155 Mn (INR 1,000 Cr) investment. In December last year, Amaravati-headquartered Pi DATACENTERS raised $23 Mn from Epsilon Venture Partners. It was reported that the funds would be used to roll out state-of-the-art data centres across India.

Multinational alternative investment firm Bain Capital recently infused $10 Mn in Bengaluru-based consumer leasing startup RentoMojo has raised $10 Mn in Series B funding round led by Renaud Laplanche. Existing investors Accel Partners and IDG Ventures also participated in the round.

Because the construction and maintenance of data centres is a capital-intensive activity, an increasing number of businesses in India are  enlisting the help of data centre service providers.

Canada

Borrowell raises $ 57M in New Funding to Expand Credit Education and Lending (GlobeNewswire), Rated: AAA

Financial technology company Borrowell announced today it has secured $12 million (CAD) in equity funding and $45 million in new credit facilities. The Series A equity round is being led by Portag3 Ventures LP, Equitable Bank and White Star Capital, with participation by FirstOntario Credit Union and other new and existing investors, and brings the company’s total equity financing to $16.7 million. The credit facilities are being provided by Concentra and FirstOntario Credit Union for the purpose of funding ‘one click’ loans to prime consumers. This latest round of funding will allow Borrowell to provide free credit information and loans to more people.

More than 300,000 Canadians have a Borrowell account, with thousands more signing up each week.

Authors:

George Popescu
Allen Taylor

Wednesday July 5 2017, Daily News Digest

abs market overview

News Comments Today’s main news: SoFi to shut down Zenbanx. Red Ventures to buy Bankrate website for $1.24B. BofE to get tough on consumer lending. UK P2P lending surpasses 10B GBP. China re-thinks social credit. Korean P2P lending passes 300B won. LendInvest out of P2P lending. Today’s main analysis: US ABS market overview. Traditional wealth management challenged by robo boom. Today’s thought-provoking […]

abs market overview

News Comments

United States

  • SoFi to shut down Zenbanx. GP:”We do not know the details of the acquisition but we assume part of the due diligence SoFi was aware of this issue and therefore they didn’t purchase Zenbank for their customers or services, but perhaps for their team and know how?”AT: “I suspected this would happen. If they have the technology and the talent, what else do they need?”
  • US ABS market overview. GP:”steady growth in all segments except maybe auto”
  • How the market pushed Realty Mogul out of residential fix and flips. GP:”I continue to believe that fix and flip is highly correlated with the economic cycle and if a company relies on it there will be years with no origination in that market at some point.”AT: “Markets, and market conditions, change. This looks like a smart move for Realty Mogul. A good rationale, at least.”
  • Ally Bank online savings APY increases to 1.15%. GP:”Goldman Sachs online Bank increased it, Ally increased it… perhaps the FED rate adjustment is having an impact or perhaps the competition for savings dollars is increasing. Or both.  “AT: “If consumers can get better savings interest rates at online banks, why wouldn’t they?”
  • Inside the arms race between banks and startups. AT: “Focuses on negatives for banks. Seems a bit one sided. I don’t believe banks are out of the picture just yet, but we will likely see a steady decline soon. The survivors will be those banks that adapt and adopt the technology of online lenders.”
  • LendingTree, LeadsCon unveil first $25K startup innovation spotlight.
  • Tide raises $14M. GP:”Congratulations!”
  • Lifshitz&Miller investigate LendingClub. GP:”All public companies have an ongoing litany of lawsuits as soon as their stock does something un-usual. This is normal life for a public company in the US.” AT: “I don’t understand why now, a full year after the Renaud Laplanche issues.”
  • Red Ventures to buy Bankrate website for $1.24B. GP:”This is big news, and an amazing valuation. There is money in customer acquisition for fintech.”
  • Goldman raises $1B for real estate fund. GP:”Goldman has been in the real estate funding business for long time. focused on large commercial properties. Perhaps a good usage of the savings capital from Goldman Sachs bank could be real estate crowdfunding as well in the same way as Marcus works for unsecured personal lending? $1B for Goldman is not much money, this is not big news anyway. “
  • Suretly launched initial chocolate offering. GP:”Very amusing, but looks a little desperate.”

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

News Summary

United States

Six months after acquisition, SoFi is shutting down Zenbanx (TechCrunch), Rated: AAA

Online lending company SoFi is closing down Zenbanx, the online banking provider it bought earlier this year. In an email sent to Zenbanx customers, the company announced that it will close all accounts at the end of next month.

According to a SoFi spokesperson, Zenbanx had a partnership with Wilmington Savings Fund Society (WSFS) that expired this month and, rather than renew it or find another partner, the company decided to just close existing accounts.

US ABS Market Overview (Finsight.com), Rated: AAA

Recent New Issue

The Market Pushed Us Out of Residential Fix and Flip (Realty Mogul), Rated: AAA

If you are like many investors, you loved our residential loan product. Short term investments with high yield (9-12%) and monthly distributions, what’s not to love? And as much as our investors love them, you will no longer find them on RealtyMogul.com. We stopped originating them.

The purely local nature of fix and flip lending changed with online lenders having nationwide reach and access to tremendous amounts of capital, either from retail or institutional investors. At one point, RealtyMogul.com had in hand nearly $1 billion in capital commitments to purchase fix and flip loans from institutional buyers – that’s a lot of homes!

In late 2015 we started to notice a market shift. Fix and flip loan pricing started to drop. First it was 11%, then 10%, then 9%, and in many major markets it dropped to 8%. Throw in the cost of servicing these loans and on an 8% loan, investors’ estimated return is 7%.

At 8%, there should be a relatively lower risk profile to a loan. But in fact, the opposite was true. The dramatic increase in capital in the market meant that riskier loans were demanding lower and lower rates. Borrowers with great experience, credit and lower leverage were able to get rates in the 4-5% range from banks, whereas the 9-12% loans were only available in markets where there were no alternatives and the risk was fairly high.

Ally Bank online savings APY increases to 1.15% (Reddit), Rated: A

Chat rep said that my account should reflect the new rate by the end of today.

Peek Inside The Fintech Arms Race Between Banks And Startups (International Business Times), Rated: A

Capital One is opening Capital One Cafes in major cities across the U.S., with hip decor and more laidback consulting vibes than traditional branches. JPMorgan is trying the same idea with its Manhattan technology hub. Bloomberg reportedthe bank’s $9.6 billion technology budget coincided with new startup-style offices featuring foosball tables, open workspaces and snacks. But it might be too little, too late.

While, money transfer apps like Apple Pay, Venmo and WorldRemit garner widespread adoption, some experts predict banks could also lose well over half their retail profits to fintech startups. Flashy offices won’t change the fact that the days of traditional banking are over.

Nubank looks beyond traditional credit scores, using cellphone data and driver’s license information to find creditworthy customers who would never meet the requirements of a traditional bank. Like SoFi mortgages in the U.S., Nubank interest rates are flexible and can change as the customer’s financial security increases. Combine that with a lack of fees plus a smooth mobile experience, and traditional credit cards seem very outdated by comparison.

According to a Gallup poll, the amount of Americans who feel confident in U.S. banks dropped from 49 percent in 2006 to just 27 percent by 2016.

A nationwide survey of 500 chief financial officers byWEX Virtual Payments found 55 percent consider mobile payment options very important, in addition to 54 percent who say to same of blockchain solutions.

53 million Americans aren’t served by the current credit score market,  but have great cash flow,” Thomas told IBT. Nubank in Brazil and the fintech startup Tala, which has distributed around 2 million micro-loans in places like in Kenya and Tanzania, prove there’s no need to restrict loan eligibility to traditional metrics.

LendingTree, LeadsCon Unveil First-Ever $ 25,000 Startup Innovation Spotlight (IT Business Net), Rated: A

LendingTree, the online loan marketplace, and Access Intelligence, a business information and marketing company, today announced a new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

The “LendingTree Startup Innovation Spotlight” at LeadsCon’s Connect to Convert will recognize the most innovative fintech startups across the consumer lead generation, call center and customer experience sectors. Startups around the world can apply today at  a chance to receive exposure, bragging rights and $25,000 in cash. Finalists will be announced in August and selected live on stage amid 1,000 industry executives at LeadsCon’s Connect to Convert industry conference and expo, August 21-23 at the New York Hilton Midtown.

Banking startup Tide raises $ 14 million to ‘give small businesses back their time (Business Insider), Rated: A

Banking startup Tide raised $14 million in one of the largest Series A funding rounds closed by a fintech company this year.

Tide, a digital-only banking app aimed at small businesses, has also partnered with online lender iwoca, in a move to allow small companies access to loans of up to £100,000.

The funding round was led by specialist fintech investor Anthemis, along with Passion Capital, LocalGlobe and Creandum, the company that backed Spotify.

Lifshitz&Miller LLP Announces Investigation of LendingClub Corporation (PR Newswire), Rated: A

Lifshitz & Miller announces investigation on behalf of LC investors concerning whether LC’s former CEO, Renaud Laplanche, engaged in improper loan transactions and personal investments as a result of material weaknesses in LC’s internal controls.

If you are an LC investor, and would like additional information about our investigation, please complete the Information Request Form or contact Joshua Lifshitz, Esq. by telephone at (516)493-9780 or e-mail atinfo@jlclasslaw.com.

Bankrate website to be bought by Red Ventures for $ 1.24bn (Financial Times), Rated: A

Bankrate, the US personal finance website, is to be bought for $1.24bn by Red Ventures, a digital marketing company which is expanding its footprint in financial services.

Private equity-backed Red Ventures has agreed to pay $14 per share in cash for Bankrate, which produces online content focused on financial advice and research, such as mortgage and savings calculators and credit card and insurance comparison tools.

Goldman Raised $ 1B For A Real Estate Fund (Bisnow), Rated: B

Documents filed with the Securities and Exchange Commission show that the investment bank has raised $1B for a new real estate fund, Broad Street Real Estate Credit Partners III. Further documents show it is on the road looking to raise more capital for the fund, with a source indicating to Bisnow that it is looking to pull in the same amount again over the coming months.

Around $600M came from U.S. investors and the rest from overseas, the documents show. Goldman typically puts around 20% of the equity into the funds it manages.

Suretly launched an Initial Chocolate Offering (Newsbtc), Rated: B

NYC-based startup Suretly, which raised $350K during preICO round this May, launched an Initial Chocolate Offering.

The event took place in Copenhagen, Denmark during Money2020 conference. All guests, who has visited Suretly’s booth, were gifted with a chocolate souvenirs shaped in SUR-token. Each token was packed in the individual memorable wrapping with the future Suretly ICO information.

United Kingdom

The Bank of England is preparing to get tough on consumer lending (Business Insider), Rated: AAA

The Bank of England ordered British banks and other lenders on Tuesday to prove by September that they are not taking on too much risk with their increased lending to consumers.

The BoE’s Prudential Regulation Authority did not set out any new rules on Tuesday but its move was the first time it has ordered firms it supervises to apply consumer credit rule more conservatively.

The PRA said it was “requesting evidence from all firms with material exposures to consumer credit of how they will – across consumer credit portfolios- ensure” they are not taking too much risk after years of low interest rates.

Lenders will have until September to respond and could then be asked to fix any specific areas of weakness by the PRA.

ORCA celebrates peer to peer lending uk surpassing £10 billion mark (Orca Money), Rated: AAA

Peer-to-peer lending has reached a significant milestone since Zopa launched the world’s first P2P platform in 2005. Over £10 billion has been cumulatively lent across 23 UK P2P platforms. In the first half of 2017 alone, over £2 bn was invested through P2P.

Take a look at the UK alternative lending ecosystem.

Traditional wealth management challenged by robo-adviser boom (Raconteur), Rated: AAA

Survey after survey shows that millennials, and indeed most potential investors aged under the age of 60, are happy to entrust their savings to a digital platform or mobile app, so long as it’s credible, secure, trustworthy, capable of offering them a range of low-cost funds and some personal investment advice.

Of the robo-advisers in the UK, the largest is Nutmeg. Launched in 2012, it has so far raised £71 million in five funding rounds from venture capitalists and others. Nutmeg has more than £600 million under management, though it remains loss making, and escalating marketing and advertising costs meant that in 2015 its losses widened from 2014.

Other UK players include Wealthify, launched in 2015; MoneyFarm, launched in Italy in 2012, and in the UK in 2016; and Scalable Capital, launched in 2016.

Brewin Dolphin has launched a robo-adviser that allows customers with between £10,000 and £200,000 to invest in one of six model portfolios at a cost of 0.7 per cent of invested assets, plus underlying charges of between 0.11 per cent and 0.16 per cent.

 

LendInvest out of P2P sticks to managing funds (Anonymous Email), Rated: A

Our sources reported that LendInvest cancelled their FCA application due to their decision to completely exit the p2p lending space.

As can be seen on the FCA website:

Firm name: Lendinvest Limited
Interim Permissions reference number: 658890

 

Permission Description Status Limitation Against Permission Permission End Date
Consumer credit business Entering into a regulated credit agreement as lender; and exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement. Inactive 02/06/2017
Credit brokerage Credit broking
Or
Credit broking limited to credit intermediation
Inactive 02/06/2017
No right to canvass off trade premises

It appears that this decision was due to the 36(H) legal rules around peer top peer in the UK . It has apparently become “more difficul to stay within the new 36(H) rules without becoming a bank or fund manager”. As LendInvest was already a fund manager, the company has decided to remain a fund manager and focus on that structure as opposed to applying for FCA p2p regulation.

In a similar fashion the online lender Wellesley has taken a similar approach having ‘paused’ P2P yet still shows as active.

This change makes Assetz Capital the 2nd largest business and property lender who is P2P in Europe. See

Of £295m lent, c £290m is P2P retail investors.

Kuflink Debuts Property-Backed Innovative Finance ISA & New Investment Options (Crowdfund Insider), Rated: A

UK-based peer-to-peer lending platform Kuflink has launched its Innovative Finance ISA (IFISA) and also two investment options. This news comes just a few months after the online lender received full authorization from the Financial Conduct Authority (FCA).

Assetz Capital bids to lend £300m after profitable year (Bridging&Commercial), Rated: A

Assetz Capital has revealed that it made a seven-figure pre-tax profit during the 2016/17 financial year, while revenues have now reached over £10m pa.
The peer-to-peer lending platform saw a total of £126m lent through it to SMEs between April 2016 and March 2017 with £38m of that total being achieved in the final quarter.

Assetz Capital claimed it would lend over £60m during the first quarter of this current financial year as it bids to reach £300m of lending for the whole of the year.

It’s time to bring ghost houses back to the land of the living – Lendinvest (Mortgage Solutions), Rated: A

As the Council of Mortgage Lenders has previously pointed out, even if the government managed to push the building industry into producing 300,000 homes across the UK each year, 90% of the housing stock that will exist by 2025 has already been built. If we are to tackle the housing issues we face, it’s not just down to increasing the rate at which new developments spring up – we need to make far better use of the houses we already have, too.

An obvious problem with some of these ‘ghost homes’ is that in their current condition nobody would want to live in them. They may have been ignored for years, falling into disrepair to the extent that they may actually be unlivable.

But these are exactly the sorts of properties that savvy investors may be looking for, the worst house on the street which can be done up, turned into a nice, respectable home and then sold on at a profit.

Londoners Borrowed £17B in New Mortgages in 2016, Wimbledon & Wandsworth Top Borrowers (Crowdfund Insider), Rated: A

Londoners borrowed another £17 billion in new mortgages last year as the affluent southwest London neighbourhoods of Wimbledon and Wandsworth topped the borrowing league table and and 17 of the top 20 areas for new mortgage lending last year are in London, reported European P2P lending platform Lendy.

The highest non-London area among for new mortgages is Maidenhead, which placed 11th out of the 2,717 postcode areas in the study.

AI savings platform launches £700,000 crowdfunding campaign (P2P Finance News), Rated: A

AN ARTIFICIAL intelligence platform that has partnered with RateSetter to help people save and invest is looking to raise £700,000 through crowdfunding.

The fintech firm, Plum, has launched a crowdfunding campaign on Seedrs, to build its team and platform.

NatWest trials AI compliance tool to ensure financial advice is spot on (Internet of Business), Rated: A

The UK bank will use the Recordsure compliance tool based on artificial intelligence (AI) from regulatory risk specialist TCC Group in order to record face-to-face and telephone conversations between the bank and its customers – with those customers’ consent, naturally.

The AI technology is able to analyze an interaction and then classify sections of the conversation, according to Recordsure’s creators. For example, it could determine which aspects of the conversation were general chitchat, which involved financial advice, and what topics were discussed.

P2PFA Announces New Associate Membership, Publishes Names of First New Members (Crowdfund Insider), Rated: A

The Peer-to-Peer Finance Association (P2PFA) has created a new category of membership to boost its ranks and add perspective to the association that represents the UK’s top online lenders.

These new members include:

  • Alterest – Provides non-bank lending markets with loan intelligence infrastructure that enables: seamless exchange of lending data in a secure and timely manner, and flexible analysis of performance and risk of any loan pool or exposure.
  • Altus Consulting: A specialist provider of consultancy services to the financial services sector.
  • Equifax: A global information solutions company that uses data, analytics, technology and industry expertise to power organisations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.
  • Fox Williams LLP: A City law firm with one of the leading Fintech practices in the UK, acting for over fifteen P2P lending platforms.
  • Grant Thornton UK LLP: A global consultancy that is part of a network of over forty-thousand people in 130 countries. In the UK they are led by 185 partners and more than 4,500 people.
  • Orca Money: A platform that is driving the mainstream adoption of peer-to-peer lending by providing research, analysis and tools to empower investors.
  • Simmons & Simmons: An international law firm with a Fintech team that comprises a range of multi-disciplinary lawyers from across their European, Middle Eastern and Asian offices.
  • TLT LLP: Supports large corporates, public institutions and high-growth businesses on their strategic and day-to-day legal needs.

Hive Project Launches Blockchain-Based Invoice Financing Platform, Targets SMEs (Finance Magnates), Rated: A

Despite being the backbone of every economy, small and medium-sized businesses have traditionally faced challenges in securing access to short-term financing from traditional lenders. To resolve this issue, the Hive Project today announced the development of a cryptocurrency invoice financing platform to help SMEs overcome the hurdles they face when trying to get the financing they need.

WiseAlpha Founder & CEO Rezaah Ahmad Comments on Successful Crowdcube Round (Crowdfund Insider), Rated: B

WiseAlpha, a UK first online lending platform that gives investors access to high yield institutional bond and loan investments, has overfunded its £500k target on Crowdcube by 258%, raising £1.29 million.

The largest single investment was £150K.

“We’re thrilled to have overfunded our original target and glad that the 1452 people who have invested in us so far are backing our vision of a fairer investment world where everyday investors aren’t shut out from accessing the biggest and best investments.”

UK P2P Lender RateSetter Update: Targets New Business Borrowers (Crowdfund Insider), Rated: B

Now the lender is planning to boost its direct marketing methods to diversify its new business borrowers sources, according to Peer2Peer Finance News.

Lewis appointed on b2b brief for p2p lending platform (PR Week), Rated: B

Lewis has been appointed by ArchOver, a peer-to-peer lending platform for UK SMEs, to run a campaign aimed at business audiences.

China

China changes tack on ‘social credit’ scheme plan (Financial Times), Rated: AAA

Beijing has pulled back on plans to license big technology companies to develop “social credit” scores for consumers, based mainly on their online activity, because of concern over conflicts of interest, industry analysts said on Tuesday.

The People’s Bank of China, the central bank, selected eight tech companies in 2015 — including e-commerce group Alibaba’s Ant Financial and game developer Tencent — to develop pilot programmes to give consumers credit scores.

The pilots, which monitored spending patterns but also personal behaviour and social media activity, initially raised concerns about consumer privacy. Some of their metrics were seen as irrelevant, including proposals to factor in exercise routines or what time of day people went online. Others were considered more sinister, such as efforts to rate “honesty” or “trustworthiness” by linking credit scores to friends’ social media posts.

Beijing has now decided not to award any licences this year after regulators expressed increasing concern about the potential for conflicts of interest.

MYbank Deepens Push for Business Big Banks Won’t Touch (Bloomberg), Rated: AAA

MYbank, the two-year-old Chinese online lender that already has 3.5 million small-business customers, plans to push deeper into a segment that’s long been shunned by the country’s largest banks.

MYbank wants to capitalize on its links to billionaire Jack Ma’s Alibaba Group Holding Ltd. by offering loans to the more than 10 million smaller merchants that use the company’s e-commerce platforms, MYbank President Huang Hao said in a June 29 interview. Ant Financial, Alibaba’s financial affiliate, owns 30 percent of the online lender.

Formally known as Zhejiang E-Commerce Bank Co., MYbank was able to more than quadruple its lending through 2016, taking its outstanding loans to 33 billion yuan ($4.9 billion).

Its nonperforming-loan ratio was around 1 percent, Huang said, lower than the national average of 1.74 percent. The bank’s technology, which runs loan applications through more than 3,000 computerized risk-control strategies, has kept delinquencies in check, he said.

Still, last year’s lending explosion came at a cost, dragging its capital adequacy ratio down to 11.07 percent by December from 18.51 percent a year earlier.

Chinese tourists are driving mobile payments across the globe (IBS Intelligence), Rated: A

The number of Chinese tourists abroad hit 122 million in 2016, with a vast majority of them paying via their mobile phones. That’s according to a new study from Kapronasia and CANCAN. The survey pool contained 1,000 Chinese consumers abroad and 60 global merchants.

While 67% of respondents reported that they use Alipay or WeChat Pay for overseas purchases. This represents about 41% of overseas consumption and tourists used mobile payments for more than 10% of total transactions.

The report also highlights how Chinese tourists are spending more and more in retail ($900 on average in 2016), instead of luxury items. Only 5.7% spent more than $6,288, with a total amount of $109.8 billion throughout 2016.

80% of merchant respondents cited consumer demand as one of the main reasons for adopting mobile payments, with 70% adding that mainland Chinese consumers were their largest source of global revenue. Clothing, makeup, skincare, food and beverages top the list of goods purchased with mobiles, with travel and accommodation not far behind.

UAV Startup Clobotics Raised its First Round of Financing from GGV Capital (Xing Ping She), Rated: A

Recently, a Shanghai-based Unmanned Aerial Vehicle (UAV) startup—— Clobotics finished its first round of financing from GGV Capital, the amount was not disclosed. According to George Yan, the founder and CEO of Clobotics, this round of financing will focus on developing and iterating their products and technology, expanding the marketing layout, and accelerating the development of Clobotics in the key vertical field.

Set up in November 2016, Clobotics is a provider of business intelligence (BI) and visualizing data, focus on the research of UAV machine vision, industrial big data acquisition, and cloud big data processing and analysis. Unlike many of the domestic manufacturers that focus on hardware plane, Clobotics is good at using leading software, technology and platforms to embed advanced technologies in the field of artificial intelligence, so as to fully explore the value of UAV-collected data.

Police Arrest 32 Employees of Company Behind ‘Straddling Bus’ (Sixth Tone), Rated: B

The test site of China’s fantastical traffic-straddling bus was dismantled in June, and now the peer-to-peer financing company that backed the project is being investigated for illegal fundraising.

Following reports of unlawful conduct, a total of 32 suspects at Beijing-based Huaying Kailai Asset Management Co. Ltd. have been arrested, according to an announcement Sunday by Beijing police on their Weibo microblog.

European Union

Investor protection vs Access to Finance: The Growth of Alternative Finance (Crowdfund Insider), Rated: AAA

Clearly in Europe (Brexit aside) the UK has led sector growth. A combination of a culture of entrepreneurship and risk taking has combined with a supportive government and a regulatory body tasked with a mission of fostering competition – perhaps to the frustration of traditional financial firms. The rise of internet finance in the UK has engendered few occurrences of fraud to date. Growth has been sustained. Perhaps the Brits have gotten the balance right so far?

But which country has the largest alternative finance market in the world? China, of course.

Kleverlaan points to Italy as a country that has stumbled out of the gate. Something the country is attempting to rectify with recent rule changes specifically targeting equity crowdfunding.

View the full report on alternative finance here.

The European Investment Bank Pledges €18.5 million to Finance Continental European SMEs through Lendix (Crowdfund Insider), Rated: A

The European Investment Bank Group (EIB) through the European Investment Fund (EIF) has announced that it will provide €18.5 million to back a joint investment fund designed to lend money to SMEs through crowdlending platform Lendix.

Swedish tech elite’s darling startup Karma just bagged $ 4 million for its hyper-growing food waste app (Business Insider), Rated: A

Swedish startup Karma has built an app that helps restaurants, grocers and cafés reduce their food waste by selling their surplus to consumers at reduced prices.

The company has now raised between 30 and 40 million SEK ($3,5 – $4,7m) to take on Europe after a booming start in its Swedish home market.

The seed round comes from Swedish investor Eequity and global VC fund e.ventures, which has also backed the hyped Swedish fertility app Natural Cycles.

P2P Lender VIAINVEST Hits €10 Million in Funded Loans (Crowdfund Insider), Rated: A

Newly launched peer to peer lending platform VIAINVEST has announced topping €10 million in loans. The 7 month old Latvian platform said consumer loans issued by VIA SMS Group, came from the Czech Republic, Poland, Latvia and Spain.

Australia/New Zealand

Xpress Super and Australian P2P lender RateSetter announce partnership (Finder.com), Rated: A

RateSetter, Australia’s largest peer-to-peer lender, and self-managed-superannuation-fund (SMSF) administrator Xpress Super have today announced a partnership.

Through the partnership, SMSF investors will now have direct access to their RateSetter account via the Xpress Super platform, making it easier for SMSF investors to lend to creditworthy borrowers.

Introducing HashChing – an online marketplace for home loan deals (sa real estate news), Rated: A

Based in the heart of Sydney, HashChing is Australia’s first online home loans marketplace for broker-negotiated home loan deals.

All mortgage brokers are verified and rated through the website Artificial Intelligence Algorithm, selecting the brokers who offer the best services and then recommending them to borrowers in their area. Similar companies that had paved the way before HashChing had simply listed rates to the consumer through the bank or lender’s website.

Home loan rates on HashChing start from 3.59% p.a. and consumers can browse through the home loan deals page to see what offers are available.

Currently the company has helped over 14,500 borrowers with their home loan enquiries, all worth more than $7 billion dollars combined. Of which, $6 billion has come in the last 12 months alone, and the company also currently lists more than 600 verified mortgage brokers – including 30 mortgage brokers from SA.

Colliers’ alternative to bank funding (True Commercial), Rated: B

A new Colliers International service is providing an alternative to traditional bank funding by matching commercial property investors to development and investment opportunities.

The Capital Sourcing unit was established by Tim Lichtenstein, who has a track record in capital raising for commercial real estate assets.

India

UrbanClap Raises $ 21M in Series C (BW Disrupt), Rated: A

Home services start-up firm UrbanClap has raised $21 million in a series C funding round led by Internet investment fund Vy Capital. Led by Alexander Tamas, Dubai-based Vy Capital is a major investor in Zomato.

Early investors SAIF Partners, Accel Partners and series B investor Bessemer Venture Partners also participated in the round. Existing investors also spent approximately $1 million more to buy shares held by some employees and a part of stakes of angel investors Kunal Bahl and Rohit Bansal, the founders of Snapdeal, UrbanClap co-founder Abhiraj Bhal told LiveMint.

Reliance Capital arm invests $ 1 mn in P2P lending platform Billionloans (VC Circle), Rated: A

Billionloans Financial Services Pvt. Ltd, a Bengaluru-based fintech startup that operates a peer-to-peer (P2P) lending platform, has raised $1 million (around Rs 7 crore) in seed funding from Reliance Corporate Advisory Services Ltd, a wholly owned subsidiary of Reliance Capital Ltd.

Asia

Peer-to-peer loans pass 300 billion won for first time (Korea JoongAng Daily), Rated: AAA

The number of peer-to-peer loans more than doubled in just six months, going from 96.9 billion won ($84.5 million) in June last year to over 300 billion won in December.

The change represents a 220.5 percent increase, according to data provided by the Financial Supervisory Service and Financial Services Commission.

The number of users also surged 116.6 percent to 6,632 in June compared to December’s 3,062.

Singapore fintech startup Instarem raises $ 13 mn to expand payment infra (VC Circle), Rated: A

Instarem, a Singapore-headquartered cross-border payments company founded by Indian-origin entrepreneur Prajit Nanu, has raised $13 million in a Series B funding round led by Chinese venture capital firm GSR Ventures, a company statement said.

Singapore fintech startup Validus Capital raises US$ 2.9M to grow SME lending platform (e27), Rated: A

Singapore-based fintech startup Validus Capital has raised S$4 million (US$2.9 million) from Vertex Ventures.

It will use the newly-raised round to expand regionally and grow its online lending platform.

Chinese investors eye Indonesia’s P2P lending marketplace Investree for Series B (udaipur kiran), Rated: A

Indonesian peer-to-peer lending marketplace Investree announced recently that Chinese investors have initiated discussions for an investment in the company for its next Series B round.

If successful, the deal will become one of the first international investments in Indonesia’s fintech space. Previously, the startup has raised an undisclosed Series A round in 2016 from local venture capital Kejora which typically invest US$2 to US$5 million in their portfolio firms.

Authors:

George Popescu
Allen Taylor

Friday June 23 2017, Daily News Digest

fintech Australia

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-4. Lending Club closes $279.4M self-sponsored securitization. Wellesley directors paid over 900K GBP last year. Renren’s Q1 results. Harmoney hits $500M. Vindi, Smartbill merge. Today’s main analysis: Recent Fed credit survey exposes clear small business financing opportunities Today’s thought-provoking articles: How the P2P sector has fared […]

fintech Australia

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

Africa

Latin America

News Summary

United States

Kroll Bond Rating Agency Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-4 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two class of notes issued by SoFi Consumer Loan Program 2017-4 LLC (“SCLP 2017-4”). This is a $499.5 million consumer loan ABS transaction that is closing on July 5th, 2017.

Initial credit enhancement levels are 22.69% for the Class A Notes and 12.77% for the Class B Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A Notes), excess spread and a reserve account funded at closing.

Preliminary Ratings Assigned: SoFi Consumer Loans Program 2017-4

Class Preliminary Ratings Principal Balance
A AA (sf) $443,000,000
B A (sf) $56,500,000

LendingClub Closes $ 279.4 Million Self Sponsored Securitization (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC) has announced its first first self sponsored securitization deal had closed. Announced after the market closed, Lending Club issued $279.4 million in notes backed by consumer loans originated on the LendingClub platform. The Consumer Loan Underlying Bond (CLUB) NP Credit Trust 2017-NP1 (CLUB 2017-NP1) was described as marking the start of LendingClub’s securitization program as Sponsor, Servicer and Administrator.

Kroll rated the securities that included $162.4 million of Class A notes rated “A- (sf)”, $41.2 million of Class B notes rated “BBB (sf)” and $75.7 million of Class C notes rated “BB (sf)” backed by approximately $337 million of collateral.

In a separate note, LendingClub also announced that Brad Coleman, Principal Accounting Officer and Corporate Controller, will be resigning from his position as Principal Accounting Officer to pursue other opportunities, effective on August 10.

There’s A New Way To Pay For IVF, But No Guarantee It’ll Pay Off (BuzzFeed), Rated: AAA

Future Family, which officially launches on Thursday, aims to make the complicated, expensive, and emotionally fraught world of fertility treatments “accessible and affordable,” in the words of CEO Claire Tomkins, a former SolarCity executive. “We think of it as modern insurance for a woman,” she told BuzzFeed News.

Because most insurance plans don’t cover these services, fertility patients tend to have high incomes to begin with. In one survey by FertilityIQ, an online advice resource for patients, 42% reported yearly earnings between $100,000 and $199,999. But not everyone has necessarily saved enough to comfortably afford IVF, which costs around $20,000 on average, according to FertilityIQ. In a 2015 Prosper-commissioned survey of 213 US women, 84% said they had financial concerns about their treatments, and nearly half said that those concerns affected how much treatment they pursued.

Future Family’s standard IVF plan, which covers one cycle, is $250 a month, with no down payment. Customers can sign up for a minimum of 5 years and a maximum of 10 years, making the total cost at least $15,000. That would be cheaper than the national average cost of $20,000. The top-tier plan, which covers one cycle as well as egg storage, costs as much as $33,000 ($275 a month for up to 10 years).

Meanwhile, Future Family’s top-tier egg-freezing plan costs as much as $21,000, at $175 a month for up to 10 years of storage. FertilityIQ’s Anderson-Bialis estimates that, nationwide, egg retrieval and freezing costs average $16,000, while storage costs about $3,700 for five years.

Two years ago, Prosper, a peer-to-peer lending service, purchased, for $21 million, a lender with loans for fertility and other non–insurance-covered medical procedures. And in 2014, LendingClub spent $140 million on a similar acquisition. Its fertility loans range from $2,000 to $50,000, while Prosper’s go as high as $100,000.

One year in: How JPMorgan is transforming small-business lending (Tearsheet), Rated: A

For JPMorgan Chase, small business is big. The bank is among the third top lender of Small Business Administration loans by unit in the U.S.

As of May, Chase approved 2,375 loans in 2017 for a total $679 million. But beyond SBA loans, the bank also extended more than $24 billion in credit to 4 million small business customers in 2016 through its business banking, Ink from Chase credit card and commercial term lending. In each of the last four years, it’s extended more than $19 billion in new small business loans.

After the recession, the largest U.S. banks, Chase itself included, halted most of their small business lending, later creating the opportunity for online lenders to enter the market — like Bond Street or OnDeck. Last year, JPMorgan began using OnDeck’s technology for its Chase Business Quick Capital product, a  short-term, quickly funded small business loan. It was one of the first banks to embrace a partnership-type relationship with a fintech startup, at a time when the industry narrative still focused on startups’ potential to displace banks.

Lending Club Decision Provides Guidance For Bringing Section 11 Claims Based on Weaknesses in Internal Controls (National Law Review), Rated: A

We have been following defendants’ motions to dismiss in the In re Lending Club Securities Litigation class action, No 3:16-cv-02627-WHA, in the United States District Court for the Northern District of California (“the Lending Club Litigation”).

As the Supreme Court noted in Omnicare, generally a plaintiff pursuing a claim under Section 11 “need not prove . . . that the defendant acted with any intent to deceive or defraud.”  However, defendants in the Lending Club Litigation argued that plaintiffs’ claims under Section 11 sounded in fraud because they employed the same factual allegations to allege fraudulent conduct under Section 10(b), and therefore needed to satisfy the heightened pleading standard of Rule 9(b), which requires plaintiffs alleging fraud to state with particularity the circumstances constituting fraud.

Plaintiffs argued that their Section 11 claims were not grounded in fraud and therefore did not need to satisfy the heightened pleading standard of Rule 9(b).

Despite this holding, the Court found that lead plaintiff had “met that heightened pleading standard with respect to three of its Section 11 claims.”  Id.  In particular the court held that lead plaintiff adequately pleaded its Section 11 claims relating to representations at the IPO regarding (1) the strength of Lending Club’s internal controls and financial reporting, (2) its relationship with Cirrix, and (3) its data integrity and security.[1]

Henry W. Ramsey Acquires 9,500 Shares of Elevate Credit Inc (ELVT) Stock (Transcript Daily), Rated: A

Elevate Credit Inc (NASDAQ:ELVT) insider Henry W. Ramsey purchased 9,500 shares of the stock in a transaction on Friday, June 2nd. The stock was acquired at an average cost of $7.17 per share, for a total transaction of $68,115.00. Following the completion of the acquisition, the insider now owns 9,500 shares of the company’s stock, valued at approximately $68,115.

Banks Going Digital – Transforming Branches, Apps and a Focus on Customer Experience (Lend Academy), Rated: A

The big banks have all started to understand that the traditional way of banking is a thing of the past. Keynote speaker Yolande Piazza, CEO, Citi Fintech talked about disrupting from within, changing how they operate to enable the customer and move to a mobile first approach. She explained how this approach is radical for a bank and the layers of compliance did not make the transition smooth. They have completely rethought how they hire, 50 percent of their fintech talent is from outside the company.

Other interesting areas to note while at the event were BioCatch’s innovations in cyber security with keystroke and mouse analysis along with behavioral biometrics. New payments provider Zelle launched with 40 partners, including 34 top level banks, to allow consumers to send and receive money in minutes. Banks are starting to become innovation hubs and fintech companies, once seen as competitors in the past, are helping the banks make this transformation.

Leading fintech companies like SoFi, Lending Club and OnDeck provide a template for a better customer experience and banks are taking notice.

Recent Fed Credit Survey Exposes Clear Small Business Financing Opportunities (Forbes), Rated: A

The Federal Reserve just published its 2016 Small Business Credit Survey examining the current small business conditions and credit environment. The Fed found that although big banks are still the major lenders, small business owners are having trouble accessing credit and are therefore looking elsewhere. However, while many small businesses are turning towards online lenders, SBA loans are largely underutilized.

Overall, 10,000 surveys were completed by employer firms across all 50 states. Of those surveyed, roughly half were profitable and almost two-thirds expected their revenues to grow over the coming year. Even job growth looked good, with 39% of small businesses expecting to add jobs within the next year.

PayPal has jumped into the alternative lending game and now finances as much as $3 billion in total small business capital. What’s more, PayPal recently increased its maximum financing limit to $125k, meaning that a majority of small businesses who applied for credit in 2016 could fulfill their financing needs with PayPal.

Online lenders like SmartBiz have a 62% approval rate, on average.

The Fed’s survey found that CDFIs had a 77% approval rate and small banks had a 67% approval rate. Both of these rates higher than many online lenders that are known to typically have some of the easier qualifications.

By comparison, the overall approval rate among larger banks is 54% and 46% among credit unions.

Banks should avoid replicating their millennial strategy for Gen Z (American Banker), Rated: A

Facebook chatbots (kids love messaging apps!), smartphone-enabled ATMs (they spend so much time on their smartphones!) and an on-demand ATM on wheels that will come to you (Uber is the only way to get around!). Not only are these investments failing to resonate with millennials, but the money spent is also failing to plan ahead for the next generation: Generation Z.

Born between 1995 and 2010, Gen Z consumers are looking for something more than simple digital updates: They are looking for a partner that offers them solutions for all pieces of their financial life, including their pressing concern over mounting college debt. In fact, offering “digital” solutions to traditional banking products will not be enough to impress Gen Z, as they are the first to grow up in the post-digital era, giving them high standards for technological capabilities.

Gen Z is also a highly skeptical generation with little brand loyalty; if they see a well-researched, proven option available to them, they will have no hesitation jumping ship or avoiding traditional providers altogether. Whereas 45% of millennials favor loyalty programs, only 30% of Gen Z consumers do. In fact, 41% of Gen Z say they would consider banking services from digital power players like Google, Amazon, Apple or Facebook because they are brands that they interact with daily and trust.

Acting comptroller’s wish list echoes long-held demands by banks (American Banker), Rated: A

In his first testimony to Congress, acting Comptroller of the Currency Keith Noreika is set to submit a laundry list of detailed proposals to loosen regulatory restrictions on financial institutions of all sizes — recommendations that appear to jibe with those made by the Treasury Department this month.

Noreika is offering 17 specific legislative proposals that echo the banking industry’s wish list for regulatory reform.

LendingTree Subsidiary Purchases MagnifyMoney (Crowdfund Insider), Rated: A

LendingTree, Inc. (NASDAQ: TREE) announced on Tuesday its subsidiary, LendingTree, LLC, has acquired the company behind consumer-facing media property platform, MagnifyMoney. This news comes just days after LendingTree announced it acquired DepositAccounts.com.

According to LendingTree, the acquisition purchase has a possible total consideration of $29.5 million, which consists of 29.5 million in cash at closing, and contingent consideration payments of up to $10 million.

A former cohead of tech at Goldman Sachs has joined a startup that wants to be the iOS of Wall Street (Business Insider), Rated: A

Paul Walker, the former cohead of technology at Goldman Sachs, has joined the board at OpenFin, a startup that helps electronic-trading firms build their desktop applications.

Bain Capital Ventures, Pivot Investment Partners, and Nyca Partners have already invested in OpenFin, as have the likes of Cris Conde, former CEO of SunGard, and Tom Glocer, former CEO of Thomson Reuters.

Walker retired from Goldman in 2016 after 15 years with the Wall Street titan. Walker joined the firm in 2001 as a vice president in FICC strategies. He made partner at the firm in 2008.

OpenFin is looking to become Wall Street’s version of what the iOS and Android platforms are to the mobile application space.

Orchard Platform Pivot? Not So Fast. (Crowdfund Insider), Rated: A

Earlier this week there was note circulating the Orchard was in the midst of a pivot.  Specifically, the report said Orchard was pivoting from a data/analytics platform to a loan trading platform. This was interesting as the secondary transaction platform for securities based on online loans has been in the works for quite some time.

“We have wanted to have a trading platform for years now,” said Matt Burton, CEO and co-founder of Orchard. “I am not certain where that came from. We have always wanted to facilitate [secondary] transactions. We still have the same vision.”

LENDonate Changes The Game of Nonprofit Financing by Creating Swift Access to High Quality Loans (PR.com), Rated: A

LENDonate, a fintech company, today announced the launch of its distinct hybrid, online lending platform for 501(c)(3) nonprofits. The first-of-a-kind, hybrid platform uses an innovative process that lets nonprofits source loans and donations simultaneously. LENDonate unites nonprofits with lenders, including financial institutions, philanthropic organizations, and accredited investors for quick funding of high-quality, low cost loans. LENDonate is the only marketplace lending platform that enables nonprofits to effortlessly expand their donor base while financing major projects or smoothing out uneven cash flow.

LENDonate was founded by Vivienne Hsu, CEO, a seasoned investment professional and nonprofit fundraiser. She was motivated by a desire to improve nonprofits’ access to the low-cost funding, while providing high-quality, socially impactful investment opportunities for banks and philanthropists.

Which Loans Can Help You Expand Your Small Business? (NASDAQ), Rated: A

Below is an exhaustive list of documents that your lender may request. Online lenders are less stringent and may ask for less, while traditional banks will want the entire suite. Also expect lenders to pull your personal credit score and your business credit score as part of the approval process.

  • Personal financial statement: This SBA form requires you to list your personal assets (cash, investments, real estate and cars) and liabilities (mortgages, other debts and unpaid taxes). Private lenders may ask for a similar statement.
  • Business certificate/license
  • Business plan
  • Loan application history
  • Income tax returns
  • Resumes
  • Business lease

The Small Business Administration (SBA)—which guarantees a percentage of the loan amount to banks rather funding directly—is particularly helpful for expansion loan options. The SBA will guarantee up to 85 percent of loans for as much as $150,000 and up to 75 percent of loans over $150,000. A small SBA loan of $25,000 or less can get an 8% interest rate with a payment term of fewer than seven years. The rate on a loan over $50,000 can drop to as low as 6.5% with the same payment terms. Some banks may offer private loans, but their requirements are even stricter than those of the SBA.

Online lenders offer loans with higher rates. But the online lenders often have a faster approval process than banks originating SBA loans.

Another borrowing source on the rise is peer-to-peer lending, or marketplace lending, for businesses.

OCC, CSBS Exchange Views on OCC’s Special-Purpose Charter (Banking Journal), Rated: A

The OCC’s proposed limited-purpose charter for fintech companies was the subject of a lively discussion at the American Bankers Association’s Payments Forum today, as regulators from the OCC and Conference of State Bank Supervisors exchanged at-times opposing views.

Margaret Liu, SVP and deputy general counsel at CSBS reiterated her organization’s view that in moving forward with the limited-purpose charter, the OCC overstepped its authority under the National Bank Act (the CSBS previously filed a lawsuit against the OCC on those grounds).

Kathy Oldenborg, director of payments systems policy at the OCC, emphasized that under the limited-purpose charter, fintech companies would be held the same high regulatory standards as banks, based on the products and services they provide to consumers. She added that while much of the focus around the OCC’s work on innovation has centered on the charter proposal, “the broader initiative was… the ability to signal to banks that it’s okay to innovate. You can work with fintech companies, you can partner with fintech companies, you can buy one if you want. There’s nothing that says you can’t work with fintech companies outside this whole chartering discussion.”

Home Point Financial Establishes Institutions Group (Marketwired), Rated: B

Home Point Financial Corporation (“Home Point”) a national multi-channel mortgage originator and servicer, today announced the formation of its new Institutions Group. This group will include Correspondent Lending, Capital Markets and Home Point’s wholly-owned warehouse lending subsidiary, NattyMac. Led by Maria Fregosi, Chief Capital Markets Officer, the Institutions Group will be able to efficiently and effectively serve correspondent clients with services and products that capitalize on the financial resources, technology and expertise of Home Point Financial.

Cross River on OCC Comptroller’s testimony calling on clarification of the applicability of the “Valid when Made” doctrine (Cross River Bank Email), Rated: B

Cross River Bank, a marketplace leading originator and pioneer in the banking financial technology space, released the following statement on the recommendation by acting OCC Comptroller of the Currency Keith Noreika to clarify the applicability of the “Valid when Made” doctrine.

It is of the utmost importance to deliver regulatory certainty and foster innovation while providing access to credit to all consumers in a compliant, safe, and sound environment. We commend Comptroller Noreika for his testimony this morning recommending clarification of the applicability of the “Valid when Made” doctrine. Cross River remains a steadfast supporter of the Comptroller’s, and the entire regulatory agency community’s, efforts to bring clarity to the regulatory framework and advance the interests of the consumers while ensuring their protection.

Aspire Retains SenaHill (Aspire Email), Rated: B

“Aspire Financial Technologies Inc. (“Aspire”) is announcing today that it has retained SenaHill Advisors LLC (

Crowdfunding Becoming Viable Way to Fund Real Estate (Realty Biz News), Rated: B

It’s estimated that by 2025 the crowdfunding real estate industry will be worth more than $300 billion. One of the reasons for this prediction is that it provides individual investors the opportunity to participate in large real estate deals even if they only have a small amount of capital to invest. Just a few years ago things were very different as crowdfunding had yet to gain traction. In 2010 the crowdfunding industry was worth $880 million but is now worth $34.4 billion which is an incredible rate of growth.

CFPB details complaint process at Comply2017 Conference (JD Supra), Rated: B

At the Comply2017 conference held earlier this week in New York City, Scott Steckel, a member of the CFPB’s Office of Consumer Response, gave a presentation in which he detailed the CFPB’s complaint process and how the CFPB shares complaint data through its complaint database.

United Kingdom

Wellesley directors were paid more than £900,000 last year (P2P Finance News), Rated: AAA

WELLESLEY & Co’s directors collectively pocketed £923,000 last year, while the property lender reported a full-year loss of £210,288.

Chief executive and founder Graham Wellesley was awarded the highest salary of £342,000, while co-founder Andrew Turnbull took home £244,000, according to the latest annual report filed with Companies House earlier this month.

Former Lloyds Banking Group chief executive Eric Daniels, who stepped down as non-executive chairman at the end of May 2016, received £50,000. Daniels has now joined the board of Funding Circle.

How has the P2P sector fared in the year since the Brexit vote? (P2P Finance News), Rated: AAA

Funding Circle, which received full FCA authorisation last month, has seen new lending grow each quarter since the referendum, from £151,803 lent in the second quarter of 2016 to £182,854 in the third and £305,970 in the fourth. It lent £328,059 in the first three months of this year.

Similarly, Zopa, also now fully authorised, has seen lending increase each quarter, from £154m in the second quarter of 2016, to £175m in the third. There was £194.3m of lending in the fourth quarter and £246.4m at the start of the year.

RateSetter, the last of the big three still awaiting full FCA approval, has seen both consumer and business lending increase.

New business lending was at £59.8m in the second quarter of 2016, rising to £73.8m in the following three months before dropping to £60.5m at the end of the year. It bounced back to £72.5m at the start of 2017.

Landbay has been more mixed, with new lending dropping from £5m in the second quarter to £282,820 in the third and £193,800 in the final three months of the year. New lending was back up to £833,300 at the start of the year.

RateSetter has seen the biggest increase, taking on 9,573 up to the first quarter of 2017 to 44,402.

Funding Circle was a close second, taking on 8,604 to 59,740, while Zopa took on 6,091, taking the total number of lenders to 60,755.

Only MarketInvoice saw a drop by 47 to 220.

Zopa has taken on the most new borrowers at 41,310 since the referendum to 171,607 while RateSetter has taken 30,286 to 203,994.

Landbay and Thincats have taken on the least, at four and 34 respectively.

The FCA received 77 submissions for the second phase of the regulatory sandbox, more than applied for cohort one. 31 applications met the sandbox eligibility criteria and were accepted to develop towards testing. The current cohort consists of the 24 firms that are ready to begin testing shortly.

AssetVault

AssetVault enables consumers to catalogue all of their assets in a secure online register and better understand their total value. AssetVault then works with insurance providers to protect the consumer and their assets with appropriate insurance products.

Beekin

Leverages artificial intelligence and data sharing to build transparency and liquidity in alternative assets (real estate, angel investments), and offers risk management and analytics services to small investors.

Experian

A mortgage eligibility tool that can be used to help consumers who are in the research phase of buying a home by increasing awareness of their eligibility, based on the lender’s affordability criteria.

FloodFlash

FloodFlash provides event-based flood insurance, even in high-risk areas.

Insure A Thing

An alternative insurance business model where the consumer makes payments at the end of the month, based on the exact cost of claims settled during that period.

Nimbla

Nimbla provides flexible trade credit insurance and credit and invoice management tools to UK SMEs, via an online platform

Paylinko A DLT-based payments solution enabling users to send and receive payments using a link.

We are now accepting applications from firms to be part of our third sandbox phase. Firms have until 31 July 2017 to submit their applications.

Departing Bank of England rate-setter takes swipe at Mark Carney in final speech (Belfast Telegraph), Rated: A

A departing rate-setter at the Bank of England has taken a final swipe at dovish Governor Mark Carney, saying record-low interest rates are no longer justified.

In her final speech as an external member of the Monetary Policy Committee (MPC), Kristin Forbes questioned the continued need for “emergency” level interest rates, as well as the “substantial amount of stimulus” rolled out in the wake of the Brexit vote, stressing that forecasts for a recession and higher unemployment after the referendum have failed to materialise.

No sign of decreasing P2P appetite, claims lender (Bridging & Commercial), Rated: A

There has been no sign of a decrease in demand for peer-to-peer finance, online platform RateSetter has told Bridging & Commercial.

“…We’ve seen steadily increasing demand from advisers, and the value of IFA-administered accounts on our platform has doubled over the last year.

“Although there are clearly hurdles – for example, direct investments in peer-to-peer lending are not currently available through investment platforms commonly used by IFAs to buy products on their clients behalf – we see no signs of decreasing appetite.”

Jane Dumeresque, CEO at Folk2Folk, explained that the FCA process was extremely tough and was not too surprised that some had withdrawn.

Peter McDermid: help to build (The Scotsman), Rated: A

Today marks the Scottish launch of the LendInvest Property Development Academy, an adult education course that puts development skills at the fingertips of aspiring house builders.

The first London course was ten times oversubscribed and to date more than 120 “students” have completed our courses. Now we’ve rolled out countrywide to satisfy demand.

Sessions are led by experienced and, as importantly, local advisers who know what it takes to get small-scale property developments delivered on time and on budget.

Development issues

Access to finance continues to be the biggest hurdle. A severe lack of lenders in Scotland is problematic.

Any experienced developer knows that applying for and awaiting planning permission can be a long, exhausting and expensive process. This is where it pays to do your research.

Structuring a professional team is one of the most important aspects of planning for a development, and a task that can be more complex than it first appears. There are various questions that a developer needs to ask: what are the key development costs? How long will a project take?What consultants are involved in a development project and how should they all work with one another? How do developers insure their teams against delays and accidents?

Sales and marketing are commonly regarded as an afterthought, something to worry about “later”, when in fact marketing needs to be in the forefront of a developer’s mind from the very beginning.

Three out of four investors refuse to pay for financial advice (Money Observer), Rated: A

A survey conducted by investment management company Legg Mason has found that only 24 per cent of investors would be prepared to pay the typical hourly fee for financial advice – which works out on average at £150 per hour, according to unbiased.co.uk.

Just 10 per cent of those who answered said they would be willing to pay £150 or more, while an additional 11 per cent agreed that they would pay between £50 and £149.

Over a third of respondents (36 per cent) said they would refuse to pay for financial advice outright, while 15 per cent said they were unsure what they would be happy to pay.

Why Financial Advisers Won’t Succumb To The Robots Any Time Soon (Huffington Post), Rated: B

Add to this, low levels of financial education, low levels of trust in financial services generally and overwhelming product choice (e.g. 2,000+ investments) and engaging customers without a human adviser is tough. That’s why, according to the industry’s regulator the FCA, of the £208 billion invested by consumers last year 78% was through advisers.

The vast majority of investment advice consumers now get from advisers is supported by online, model driven, financial technology (FinTech) which helps advisers more scientifically assess their risk profile and develop probability based investment strategies which give them a higher chance of meeting their goals at an acceptable risk level.

There are four developments now emerging, which will almost certainly change the game:

  1. Simple, automated advice
  2. Account aggregation
  3. Social networks
  4. Artificial intelligence
China

Renren Announces Unaudited First Quarter 2017 Financial Results (PR Newswire), Rated: AAA

  • Total net revenues were US$20.9 million, a 94.3% increase from the corresponding period in 2016.

    • Advertising and IVAS net revenues were US$11.6 million, a 90.2% increase from the corresponding period in 2016.
    • Financing income was US$9.3 million, a 99.7% increase from the corresponding period of 2016.
  • Gross profit was US$6.4 million, a 172.6% increase from the corresponding period in 2016.
  • Operating loss was US$17.6 million, compared to an operating loss of US$19.2 million in the corresponding period in 2016.
  • Net loss attributable to the Company was US$16.2 million, compared to a net loss of US$23.2 million in the corresponding period in 2016.
  • Adjusted net loss(1) (non-GAAP) was US$11.0 million, compared to an adjusted net loss of US$15.9 million in the corresponding period in 2016.

P2P Industry News (Xing Ping She Email), Rated: AAA

Internet Finance Giants Ant Financial, Baidu etc., working with bank for new opportunities on fintech. 

It seems a trend that internet financial giants working with traditional banks in China. Recently, Baidu built a strategic partnership with Agricultural Bank of China (ABC). The cooperation focuses on fintech areas, including co-building of financial brains and portraits of clients , precise marketing, customer credit evaluating, risk monitoring, robo-advising, etc.

Previously, both Jingdong Finance and Ant Financial Services Group have announced partnerships with banks. On 16th June, Jingdong signed a framework agreement on financial business cooperation with ICBC, planning to conduct cooperation in fintech, retail banking, enterprise credit, etc. While in the late of March, the CCB has signed a tripartite cooperation agreement with Alibaba and Ant Financial. According to the agreement, Ant financial would help CCB to boost the online credit card business. They are going to strength cooperation in offline & online channel and electronic payment business, so as to open up the credit system.

Bank of China Set Up the Inclusive Finance Division

On 20th June, the Inclusive Financial Division of BOC was founded officially. The new division aim at providing financial services in comprehensive coverage of rural and urban. According to reports, China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC) have all set up their Inclusive Financial Division at the general bank level.

Baidu and the Agricultural Bank reached a strategic cooperation in the layout of intelligent finance (Sina), Rated: A

In accordance with the strategic cooperation agreement, the cooperation mainly focused on the field of financial technology, including the construction of financial brain and customer portrait, precision marketing, customer credit evaluation, risk monitoring, intelligent investment, intelligent customer service and other specific applications, Around the financial products and channel users and other areas to start a comprehensive cooperation.

Bank of China Begin Fintech Move (AI Topics), Rated: B

Bank of China (BOC) and Tencent have established a joint financial technology laboratory, the lender said in a statement this week. The lab will work on cloud computing, big data, blockchain and artificial intelligence to promote financial innovations.

European Union

IDA ‘confident’ of Brexit investments pipeline, banking event told (Irish Times), Rated: A

IDA Ireland’s head of international financial services, Kieran Donoghue, has said he is “confident” that the Republic will secure a number of wins as his organisation “aggressively” pursues the opportunity to lure financial activity from London following Brexit.

Luxembourg’s politicians pin economic hopes on fintech drive (Financial Times), Rated: A

Britain’s planned departure from the EU has provided policymakers with an incentive to build a fintech hub in Luxembourg that could attract UK technology companies looking to maintain a foothold in the EU.

Prime minister Xavier Bettel has made the country’s digital transformation a priority since succeeding the long-serving Jean-Claude Juncker in December 2013. Mr Bettel launched the Digital Lëtzebuerg [Luxembourg] initiative the following year as a platform for encouraging new technology in the financial industry as well as society as a whole.

The flagship project to encourage fintech is the Luxembourg House of Financial Technology, opened with much fanfare in April with backing from the government and business groups.

Its focus is on insurance, banking and fund technology in areas such as digital investment and portfolio management, blockchain applications, payment platforms, data analytics, artificial intelligence, security and authentication.

International

How Fintech is Disrupting Banking for Businesses Around the Globe (Due), Rated: A

Same day bank transfers were rolled out in the United Kingdom almost a decade ago. NACHA, the regulatory organization responsible for the ACH system, announced efforts for faster transfers two years ago. However, very few banks are actually implementing faster transfers.

Digital wallets are a key concept in bringing financial services to the unbanked and underbanked.

Multiple large banks have added bot features to their customer service toolset, and there is no limit to how far it can go. Just a few months ago at LendIt I captured a video of someone asking a computer for help picking a credit card.

Over $36 billion were poured into FinTech ventures in 2016 alone, and about a quarter of that went to banking related ventures. Payments, investments, and wealth management were other major categories for 2016 FinTech investment.

Australia/New Zealand

Harmoney’s Marketplace Hits $ 500,000,000 (Scoop), Rated: AAA

Peer-to-peer lending marketplace Harmoney announced today that $500,000,000 in lending has been transacted through the platform in just under three years of operation. 30,000 Kiwis have made the choice to join the Harmoney community with additional support from two challenger NZ owned banks TSB and Heartland.

Kiwis have borrowed for all sorts of reasons;

  • 12,000 to pay off debt, mainly expensive Credit Card debt
  • 4,000 have completed home improvements and renovations
  • 3,000 have taken a special trip or holiday
  • Almost 2,000 have upgraded their car and;
  • 10,000 have borrowed for a vast array of other reasons, from dream weddings, book publishing to achieving their dreams at the Paralympics.

Consultation on personalised robo-advice (JD Supra), Rated: AAA

There is a clear demand, from both industry and the regulator, to allow personalised robo-advice to be provided ahead of the FAA reforms. As a result, the FMA is consulting on an exemption to allow this to happen – the exemption consultation can be found here.

The exemption will be subject to conditions but these are very similar to those that regulators have imposed in other jurisdictions (such as Australia) where our offices have been advising on for some time. We don’t expect there to be too much objection to these.

Limits:

  • Service: The exemption will be limited to financial advice or investment planning services and won’t cover the provision of DIMS under the FAA or the FMCA.
  • Product type: The robo-adviser will be limited to advice on financial products that are highly liquid or easily transferable. The FMA’s over-riding concern here is that consumers should be able to easily unwind their holdings if the robo-advice is poor or unsuitable. The proposed product list for robo-advice will be:
  • KiwiSaver and managed funds that are continuously offered and redeemed at a price based on the value of the scheme property
  • Listed equities and listed debt
  • Government bonds
  • General insurance products (home, contents and vehicle) and
  • Savings products and credit contracts (other than mortgages).

Conditions: 

  • Pre-notification procedure: A robo-adviser will need to give prior notice to the FMA setting out ‘good character’ declarations in relation to senior managers and directors and giving details of any criminal convictions in New Zealand or overseas. The FMA will need to issue a no objection confirmation in relation to the good character declarations before the robo-adviser starts business.
  • Status disclosure: The robo-adviser will need to clearly disclose that it is relying on the exemption and that the FMA has not in any way endorsed, approved or reviewed the service.
  • Disclosure: Before giving advice to a client, the robo-adviser will need to give the client sufficient information to make an informed decision, including:
  • The nature and scope of the service and whether the service is limited to a particular range of products. This will need to include:
  • Clarification of the extent of human involvement
  • Clarification that the advice provided will depend solely on the information provided by the client
  • An explanation of any limits on the advice or portfolios generated by the algorithm
  • A concise explanation of the benefits and risks of the service.
  • An explanation of the fees that must be paid.
  • Details of how the robo-adviser is paid and disclosing any actual or potential conflicts of interest that may influence the services provided.
  • An explanation of how complaints can be made.

Regulator seeks feedback on robo-advice exemption (NZ Adviser), Rated: A

The Financial Markets Authority (FMA) is seeking feedback on its proposals that would enable entities to provide robo-advice.

The current law, passed in 2008, did not contemplate digital advice, meaning that personalised advice, or advice that takes into account an individual’s financial situation or goals, can only be given by “a natural person”.

The purposes of the Financial Advisers Act (‘FA Act’) are aligned with the Financial Markets Conduct Act, which include “promoting innovation and flexibility in financial markets.”

Global Credit Investments gives OnDeck Australia A$ 22.5m financing (AltFi), Rated: A

Asset manager Global Credit Investments has hit up its network of rich Australian families and raised A$22.5 million to refinance OnDeck Australia’s small business loan book.

A press release issued by both companies said the capital raise was “significantly oversubscribed”, with wealthy Australians attracted to the returns offered by OnDeck‘s loans, typically in the high-single-digits.

FinTech Australia releases fintech ecosystem map (Fintech Australia), Rated: A

Australia’s fintech industry body today released its first member ecosystem map, which helps build domestic and international understanding of the nation’s fintech strengths and diversity, particularly in wealth generation and lending.

The ecosystem map shows that wealth and investment, and consumer and business lending, are Australia’s two largest fintech sub-sectors – an outcome that is consistent with findings from last year’s.

Online Lender Prospa Appoints Damon Pezaro as Chief Product Officer (Crowdfund Insider), Rated: B

Prospa, an Australian online lender for small businesses, has appointed Damon Pezaro as its first Chief Product Officer.

Pezaro joins Prospa from Domain, where as CPO he led major transformation across the business and, apparently, a dramatic period of growth.

Asia

Asian Fintech Scene ‘Leapfrogging’ Over US In Innovation (Benzinga), Rated: A

While fintech companies proliferate in the United States, driving the expansion of a well-established financial sector with flourishing credit card and personal banking industries, Orchard Platform CEO Matt Burton is turning an eye to the east.

“In a lot of Asia, that doesn’t exist whatsoever,” Burton said at Benzinga’s 2017 Fintech Awards. “The population there are getting loans for the first time ever. There’s no credit bureaus there, so any data set that you’re able to acquire is completely proprietary.”

Matt Burton, CEO of Orchard Platform, at the 2017 Benzinga Global FinTech Awards

Africa

End of the road for mobile money loan defaulters (Standard Media), Rated: AAA

Credit reporting firm TransUnion yesterday said it had introduced into the Kenyan market a mobile score card that profiles borrowers using mobile lending platforms, which it will be sharing with banks and other lenders.

TransUnion Kenya Chief Executive Billy Owino said the Mobile Score Card would enable lenders access predictive and customised risk views while offering consumers alternative access to credit and an opportunity to build a positive credit score.

This wil be made possible by making use of mobile lending platforms. He added that the mobile money ecosystem has outgrown necessity-based transactions and peer-to-peer lending and is now transiting into mobile credit and loans.

Latin America

Two Brazilian Companies Merged to Create a Super Fintech (Crossroads Today), Rated: AAA

Vindi, a Sao Paulo, Brazil-based provider of subscription/recurring billing and payment solutions, merged with Smartbill, a Sao Paulo, Brazil-based provider of a subscription management system.

The financial terms of the deal were not disclosed, but the merger of the two companies aims to consolidate the market of payments focused on the service sector in Latin America.

Companies like Thomson Reuters, Movile, B2W, Empiricus, Serasa Experian, Buscape, Smartfit, Editora Abril and the most important subscription businesses are using Vindi and Smartbill solutions.

Authors:

George Popescu
Allen Taylor

Tuesday May 9 2017, Daily News Digest

Lending Club

News Comments Today’s main news: OnDeck reports Q1 2017 results. dv01 partners with SoFi. Elevate Credit announces Q1 2017 results. SoFi lets employees sell 20% of vested stock. Crowd2Fund announces new venture debt product. Klarna, Trustly fight EBA on bar screen scraping. Today’s main analysis: LC may  have hit a dead end. The real returns for Prosper investors. Today’s thought-provoking articles: […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

India

Canada

News Summary

United States

OnDeck Reports First Quarter 2017 Financial Results (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK) today announced first quarter 2017 financial results, additional planned cost savings, and a target to achieve GAAP profitability in the second half of 2017.

Loans Under Management increased to $1.2 billion, up 25% from the comparable prior year period, driven primarily by the growth of originations over the period.  In the first quarter of 2017, originations were $573 million, up 1% from the prior year period, primarily reflecting the impact of credit tightening implemented during the quarter.

Gross revenue increased to $92.9 million during the first quarter of 2017, up 48% from the comparable prior year period.  The increase in gross revenue was primarily driven by higher interest income, partially offset by lower gain on sale revenue. Interest income increased to $87.1 million during the quarter, up 63% from the comparable prior year period, and primarily reflected the growth of average loans, which increased 66% versus the comparable prior year period.  The Effective Interest Yield for the first quarter of 2017 was 33.9%, down from 34.5% in the comparable prior year period, primarily reflecting changes in portfolio mix over the period, partially offset by recent price increases.

Gain on sale was $1.5 million during the first quarter of 2017, down 79% from the comparable prior year period. The decline primarily reflected a lower Gain on Sale Rate during the quarter and the decision to reduce the amount of loans sold through OnDeck Marketplace.  OnDeck sold $42.0 million1 of loans through OnDeck Marketplace at a 3.5% Gain on Sale Rate during the first quarter of 2017, compared to $123.7 million1 of loans at a 5.7% Gain on Sale Rate in the first quarter of 2016.  Loans sold or designated as held for sale through OnDeck Marketplace represented 9.0% of term loan originations in the first quarter of 2017 compared to 25.9% of term loan originations in the comparable prior year period.  To optimize long-term financial performance, OnDeck plans to reduce the percentage of term loan originations sold through OnDeck Marketplace to less than 5% for the remainder of 2017.

Net revenue was $35.4 million during the first quarter of 2017, down 13% versus the comparable prior year period. The decline in net revenue reflected the reduction of OnDeck Marketplace sales, which led to lower gain on sale revenue, and higher provision expense in the first quarter of 2017 versus the prior year period.

Provision for loan losses during the first quarter of 2017 increased to $46.2 million, up from $25.4 million in the comparable prior year period.  The increase in provision expense primarily reflected a 20% increase in originations of loans designated as held for investment in the period and the comparatively lower original loss estimate for loans originated in the prior year period. The Provision Rate in the first quarter of 2017 was 8.7% compared to 5.8% in the prior year period, reflecting that the credit tightening in the first quarter of 2017 was not in effect for the full quarter and the previously mentioned lower loss estimates in the prior year period.  The Provision Rate decreased sequentially from 10.2% in the fourth quarter of 2016.  OnDeck expects the Provision Rate for the remainder of 2017, taken as a whole, to be approximately 7%.

The 15+ Day Delinquency Ratio increased to 7.8% in the first quarter of 2017 from 5.7% in the prior year period and from 6.6% in the fourth quarter of 2016 due primarily to the continued seasoning of the portfolio.  At the end of the first quarter of 2017, the average term loan age in OnDeck’s portfolio was 4.5 months, up from 3.3 months in the prior year period and 3.9 months in the fourth quarter of 2016.  The Net Charge-off rate increased to 14.9% in the first quarter of 2017 from 11.2% in the prior year period and increased sequentially from 14.2%.

The Cost of Funds Rate during the first quarter of 2017 increased to 5.9% from 5.5% in the prior year period primarily due to the increase in short-term rates.

Operating expense was $46.7 million during the first quarter of 2017, up 5% over the comparable prior year period.  Operating expense in the first quarter of 2017 was favorably impacted by the company’s previously announced cost rationalization plan which is expected to produce approximately $20 million of annual savings relative to its 2016 exit operating expense run rate.  Additionally, operating expense in the first quarter of 2016 benefited from a $1 million release in the reserve for unfunded loan commitments and a $1 million gain related to changes in foreign currency values.  Without these benefits, operating expense between the two periods would have been relatively flat.  The company is implementing an additional $25 million of operating expense run rate savings compared to OnDeck’s 2016 exit run rate, the majority of which will be implemented over the remainder of 2017.  The savings are focused on the company’s U.S. lending operations and will be achieved primarily through a workforce reduction to be implemented in the second quarter of 2017.  Combined with the company’s prior workforce reduction, total headcount at the end of the second quarter of 2017 is expected to be approximately 27% lower than December 31, 2016 levels, due to both involuntary terminations and actual and scheduled attrition.

GAAP net loss attributable to On Deck Capital, Inc. common stockholders was $11.1 million, or $0.15 per basic and diluted share, for the quarter, which compares to GAAP net loss attributable to On Deck Capital, Inc. common stockholders of $12.6 million, or $0.18 per basic and diluted share, in the comparable prior year period.

Adjusted EBITDA* was negative $5.2 million for the quarter, versus negative $7.3 million in the comparable prior year period.  Adjusted Net Loss* was $7.6 million, or $0.11 per basic and per diluted share for the quarter versus Adjusted Net Loss of $8.8 million, or $0.13 per basic and per diluted share, in the comparable prior year period.

Unpaid Principal Balance was $1.03 billion at the end of the first quarter, up 57% over the prior year period.  The increase primarily reflected originations growth over the year and OnDeck’s decision to retain more loans on its balance sheet in connection with reducing OnDeck Marketplace loan sales.

Total Funding Debt at the end of the first quarter of 2017 was $788 million, up 69% over the prior year period, which primarily  reflected the growth of Unpaid Principal Balance as well as the increased utilization of debt facilities during the period.  OnDeck continued to expand its funding capacity in 2017. During the first quarter of 2017, OnDeck extended the maturity date of its asset-backed revolving debt facility with Deutsche Bank to March 2019 and increased the facility’s borrowing capacity to approximately $214 million. During the first week of May 2017, OnDeck extended the maturity date of its asset-backed debt facility that finances OnDeck’s line of credit offering to May 2019, increased the facility’s borrowing capacity to $100 million, and decreased the funding costs by 200 basis points.

At the end of the first quarter of 2017, cash and cash equivalents were $73 million, as compared to $80 million at December 31, 2016.

Guidance for Second Quarter and Full Year 2017

Second Quarter 2017

  • Gross revenue between $85 million and $89 million.
  • Adjusted EBITDA between negative $3 million and positive $1 million.

Full Year 2017

  • Gross revenue between $342 million and $352 million.
  • Adjusted EBITDA between positive $5 million and $15 million.

Adjusted EBITDA guidance for the second quarter and full year 2017 includes an approximately $3.5 million charge to be recognized in the second quarter of 2017 associated with the planned workforce reduction.

On Deck Goes From Hot Tech Startup to Dull Lender (WSJ), Rated: AAA

The online lender said Monday that it would put a renewed focus on achieving profitability by slowing growth and cutting costs. Shares fell by nearly 7% in response. Fundamentally, investors are finally waking up to the fact that On Deck is more of a niche financial company than a revolutionary technology platform.

Loan originations may decline by a fifth next quarter, and total originations will be lower this year than last.

If these sound like the business objectives for an ordinary bank, that’s no coincidence. The company plans to sell less than 5% of its loans through its online marketplace this year, Chief Financial Officer Howard Katzenberg said, down from 18% in 2016 and 34% in 2015. Of the rest, some will be securitized, but most will be held on its balance sheet.

On Deck’s shares are down 79% from their initial public offering in December 2014. At 1.2 times book value, it is now valued like a financial company and roughly in line with the average bank. This still looks a bit rich because it has no profits.

Lending Club may have hit a dead end (Business Insider), Rated: AAA

Despite the aftermath of a governance

Lending Club Keeps Pushing Its Comeback (PYMNTS.com), Rated: AAA

The last 12 months have undoubtedly been a difficult period for marketplace lending pioneer Lending Club.

But, as Q1 earnings hit last week, it seems clear that progress is happening — albeit at a fairly slow pace.

Retail investors also expanded, though more slightly — reaching 15 percent, up from 13 percent in the prior quarter.

Lending Club also announced $2 billion originations, surpassing $26 billion in total loans since inception almost ten years ago and 2 million total consumers served on its platform.

Moreover, investing in marketplace lending is not so profitable as it has been in the recent past, and returns to investors have dropped sharply.  Competition has forced down interest rates in the marketplaces to attract consumers with cheaper underwriting, and charge-offs have risen.

According to data from Orchard, a technology provider to the industry, total returns from an index of U.S. consumer loans came to 3.95 per cent last year, down from 8.71 per cent in 2014.

Lending Club’s stock performance has been flat over most of the last year, though it has lost roughly 60 percent of its stock value.

The firm has also seen a massive change-over in its staffing and leadership since its more scandalous days a year ago.  CEO Scott Sanborn cut and rehired 179 jobs and brought on a new CFO, COO, general counsel and chief capital officer.

Leading FinTech Analytics Platform dv01 Announces Reporting Partnership with SoFi (PR Newswire), Rated: AAA

dv01, the reporting and analytics platform that brings transparency to lending markets, today announced a reporting partnership with SoFi, a modern finance company taking an unprecedented approach to lending and wealth management. Institutional investors who use dv01 to conduct analysis on consumer loans and bonds will now have access to all SoFi securitizations, including student and personal loans.

Under the first phase of the partnership, dv01 will receive securitization data directly from SoFi, which it will normalize, format, and roll up for monthly level reporting. The data, which includes 23 historical deals, will be available through the Securitization Explorer, dv01’s online reporting and analytics portal for consumer securitizations.

Investors who have been approved to view SoFi data will have 24/7 access to updated loan level performance and composition details, as well as a suite of reporting and analytics tools. dv01 will be responsible for updating deal collateral data monthly, so investors can continue to track the evolution of a pool over time, even after the deal has closed.

dv01 has provided similar reporting services for several other online lenders, overseeing an aggregate securitized collateral balance in excess of $7 billion. The company launched its dedicated Securitization Explorer tool in February, and since then has also announced its role as Loan Data Agent for the Prosper Marketplace loan purchase consortium led by Jefferies LLC, Soros Fund Management, Third Point LLC, and New Residential Investment Corp, a Fortress Investment Group REIT.

Elevate Credit Announces First Quarter 2017 Results (Stockhouse), Rated: AAA

Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”) today announced results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights

  • 20% year-over-year revenue growth: Revenues totaled $156.4 million, a 19.6% increase from $130.7 million for the prior-year period.
  • Nearly 40% year-over-year growth in loans receivable: Combined loans receivable – principal, were $444.5 million, a 38.6% increase from $320.7 million for the prior-year period.
  • Stable credit quality: Loan loss provision was 52.9% of revenues and within our targeted range of 45%-55%. The ending combined loan loss reserve, as a percentage of combined loans receivable, was 15.7%, slightly lower than the 16.3% we reported for the prior-year period.
  • Record low customer acquisition costs: The total number of new customer loans for the first quarter of 2017 was approximately 53,000 with an average customer acquisition cost of $198, compared to approximately 41,000 customer loans and an average customer acquisition cost of $235 for the prior-year period.
  • Positive net income: Net income of $1.7 million, or $0.06 per pro forma diluted share, which was based on a 2.5 to 1 stock split and all preferred stock converting into common stock upon the IPO but it excludes the 14.3 million common shares issued in the IPO since this happened after quarter end.
  • Continued improvement in Adjusted EBITDA margin: Adjusted EBITDA was $24.9 million and the resulting Adjusted EBITDA margin was 15.9%.

Financial Outlook

For the full year 2017, the Company expects total revenue of $680 million to $720 million, net income of $13 million to $19 million and Adjusted EBITDA of $95 million to $105 million.

With an IPO on the shelf, SoFi lets employees sell 20 percent of vested stock (CNBC), Rated: AAA

Online lender SoFi is letting employees cash out a portion of their holdings to give them liquidity as the company waits to go public.

Last month, SoFi employees and ex-employees were permitted to sell 20 percent of their vested options in a secondary share sale that totaled $336.5 million, according to sources familiar with the matter. The offering priced the shares at $16.30, said one source, who asked not to be named because the deal was confidential.

The real returns for Prosper Marketplace investors (AltFi), Rated: AAA

Yesterday we learnt that leading US marketplace lender Prosper has been misstating investor returns, due to a system error.

The system error did not affect the money received by investors, only the calculation of their annual return.

Prosper has recently been equipping itself to represent its performance more accurately. The firm signed a deal with analytics firm AltFi Data in March, thus opening itself up to third-party scrutiny.

AltFi Data’s returns methodology gives Prosper a net return of 48.8 per cent over 5 years (up to 28 February 2017), equivalent to an annualised compound rate of 8.3 per cent.
<

Square is rolling out its first debit card (recode), Rated: A

Last month, Jack Dorsey teased the launch of a Square debit card. Today, the company started allowing some users of its Square Cash money-transfer service to order one of these cards for themselves.

The prepaid card isn’t linked to your bank account, but instead to the Square Cash app. That means you can only use it to spend money that you are holding in your Square Cash account.

A Square spokesperson said these signatures are screened before printing to prevent inappropriate words and drawings from making their way onto the cards. But there is obviously wiggle room to include your Twitter handle, if you want to be like Jack, or just a first name, too. The cardholder’s first and last names are printed on the back of the card.

Creating a deeper relationship with Square Cash customers might also open up other business opportunities in personal finance for the $7 billion payments company. Lending, anyone?

AI may just create the illusion of good credit decisions (American Banker), Rated: A

AI is also second only to blockchain technology as the most overused and overhyped term referring to technologies that are taking over banking and finance, particularly in credit decisions.

The reality is AI will make lending more consistent and efficient; however, it remains to be seen if it will make lending safer.

How will regulators ever know if the AI algorithms are performing in a nonbiased way? Humans are the programmers of the algorithms, and therefore human biases and tendencies cannot but leak into the overall decision process.

We know the saying “bad data in means bad data out.” AI should help to solve that challenge as it more accurately identifies the “bad” or not useful elements. However, the challenge with AI may not be with “bad data” but rather a lack of necessary data as the economic environment changes.

To this end, neural networks, which are self-learning and so complex that the humans who create them are unable to describe them, also present a number of problems. The foremost problem is: If you don’t know how the decision is made, you cannot be confident that the decision is being made correctly. Yes, you can judge by credit performance. But when a lender runs afoul of a regulation, the regulators won’t accept “We just don’t know how it works” as an excuse.

Affirm Looks To Launch Everyday-Use Virtual Cards (Bank Innovation), Rated: A

Affirm, the lending startup that provides loans at the POS, is looking into launching everyday-use virtual credit cards, Bank Innovation has learned.

The company, launched by a PayPal cofounder Max Levchin, provides point-of-sale loans that allow customers, particularly millennials, to finance purchases with participating merchants. Once approved, consumers receive a one-time use virtual card via Affirm’s app, which they can use for the purchase. Then, depending on individual consumers, Affirm splits the bill into monthly payments.

The Future of Fintech and the importance of payments to a SaaS business: WePay’s Week in Payments (Wepay), Rated: A

Scanning the news in the payments world this week was an interesting exercise because the two standout themes are very much aligned with what we do here at WePay and with the future of digital payments. The first theme is around the future of Fintech and where the nascent industry is headed and the second is around the huge impact of delivering payments as a an integrated part of a solution rather than as an afterthought.

David Dunn, of Braintree Europe, has a piece in ITProPortal about why payments are more than plumbing. It’s a good piece and makes a great case for integrating payments. He says that you can help your business by making it easier for your customers to get to a checkout and by making it easier to scale. We would argue that a SaaS business can go even further by using payments to better retain existing customers and help them grow, better adding new customers by scaling as Dunn mentions and also by optimizing revenue for the platform itself. The way to achieve these goals is via white-label payments.

Kabbage’s Next Growth Phase (deBanked), Rated: A

When you consider the recent milestones Kabbage has achieved it makes it difficult to think of the fintech lender as a startup. In recent weeks Kabbage surpassed a couple of major milestones comprised of extending $3 billion in funding to 100,000-plus small businesses. More than half of those loans were directed toward existing credit lines. Kabbage also recently priced a $525 million private securitization, which tips the company’s hand on strategy.

Kabbage is pursuing its growth plans all while performing a confidential search for a new chief technology officer, details for which are expected to unfold in the coming months.

At the LendIt USA 2017 event, Kabbage co-founder & CEO Rob Frohwein alluded to the online lender’s plans to reach new territories, details for which were scarce. Treyger shared, however, that Kabbage’s global growth plans are somewhat tied to the company’s pipeline of banking partnerships.

Kabbage already counts as partners household names including Santander, ScotiaBank, and ING, all of which license software from Kabbage. Meanwhile, as big banks are accessing smaller businesses, Kabbage’s growth blueprint includes serving larger ones.

How fintech startup Elsen helps anyone become a data whiz (Built in Boston), Rated: A

With less than $1 million in total funding, fintech startup Elsen may not have much by way of investments, but a recent partnership with Thomas Reuters should bring some star power to the burgeoning company.

Founded in 2013 by three Northeastern grads, Elsen is a platform-as-a-service company that enables anyone at large financial institutions to harness massive quantities of data for better decision making and problem solving.

Besides offering data storage to some of the largest vendors in the world, Elsen’s product uses machine learning and AI to speed up the testing of financial algorithms by way of backtesting, a process that sifts through historical financial data to see how an algorithm would perform at tasks like automatically picking stocks, for example.

Interim OCC chief should put fintech charter on ice (American Banker), Rated: A

One thing that Keith Noreika, the new acting head of the Office of the Comptroller of the Currency, could tick off of his to-do list is to pause the OCC’s efforts to develop a fintech charter. Noreika should then take some time to assess whether the charter is developing in a way that best serves the public.

Former Comptroller Thomas Curry deserves major credit for getting the OCC to think about how to encourage innovation in the banking sector. The fintech charter is an important piece of this effort. Unfortunately, based on the most recent information put out by the OCC, it appears that the previous leadership wasn’t thinking sufficiently outside of the box. The charter is shaping up to needlessly mimic many of the requirements of traditional depository institutions, even though those requirements do not make sense in the nondepository context.

For example, requiring firms to get OCC permission to change business plans, and to convince the agency that the firm will not fail, are not necessary.

However, the OCC should not press pause on its response to the lawsuit filed by the Conference of State Bank Supervisors challenging the charter.

‘If you change the rules we’re going to disconnect you, fintech’ (American Banker), Rated: A

As one of the banking industry’s largest vendors, FIS says it might be well suited to help banks effectively navigate the world of fintech.

ANTHONY JABBOUR:  When Apple Pay came out, banks weren’t running to Apple Pay because they thought it would drive new streams of revenue for them. A lot of them did it because they were afraid the bank across the street would offer it and they would suffer by not offering it.

One thing we’re trying to do that’s a little different is, if we believe there’s value for our customers, we want to have the disruptor connect to the FIS network and have our banks connect to it from the FIS network, so we can leverage our banks’ negotiating power with the fintech.

What are some of the types of companies you’re thinking of—alternative lenders, PFM app providers, billing companies?

JABBOUR: Payments would be one. The banks that I speak to look at lending and they say banks lost the lending franchise and exclusivity and other companies popped up over the years and took a major portion of that. And they look at payments right now and they feel strongly they can’t lose the payments franchise.

Do you think that banks can take back market share in U.S. person-to-person payments with Zelle?

JABBOUR: We think that has a lot of potential. We offer Zelle to our clients. I believe we can create a capability for P-to-P for our banks that would be better than any fintech’s because we could make it real-time and it would be accessible from an ATM. I could send you money and you can go to an ATM with your mobile phone and withdraw the cash without having a bank account. We could also tie it with prepaid cards, so instead of me sending you $500, I could send you a $500 Home Depot gift card as a housewarming gift. It’s P-to-P, but it’s more thoughtful because we’re integrating it with prepaid.

What does it take for a payment platform to work? It takes brand recognition so people know it exists, and it needs ubiquity, it needs to work in every place you would want it to work. It’s never about the technology. I like with Zelle that banks said look we have to find a way to solve the brand issue, and if we all use the brand Zelle, that’s going to help. And I think it will.

I could see that argument, but you could argue that banks are late to this P-to-P payment party and that PayPal’s Venmo is the clear leader. Do you think the Zelle brand can win hearts and minds?

JABBOUR: Without question, banks are late to a number of capabilities. When you look at P-to-P, Venmo is the brand, it’s a verb. Whether or not banks can catch up with Venmo comes down to how compelling they make the offer, what else they can wrap around it, how much do they ultimately invest in it. What I know is, if they hadn’t pursued Zelle, they would have fallen further behind.

Crowdfunding: Now Anyone Can Own a Skyscraper! (Inside Indiana Business), Rated: A

Have you ever wanted to own a skyscraper? How about an entire apartment complex? Well, good news, now you can! And, you don’t have to meet “accredited investor” requirements. How? It’s called crowdfunding!

According to the University of Cambridge Judge Business School, in 2015 crowdfunding real estate transactions topped $1.2 billion; over three times the amount in 2014.

Research the Crowdfunding Platform: Currently, more than 125 crowdfunding platforms exist. According to Jason Best, a partner at Crowdfund Capital Advisors, you’ll want to consider comparing associated fees, the quality of property management, and the sustainability of the platform. As with any new industry, it’s safer to choose among the larger more-established companies such as Realty Mogul, Realty Shares, and iFunding, to name a few.

If you’re interested in learning more about this topic, I suggest you listen to podcast Episode #108, “Investing in Real Estate Via Crowdfunding Platforms,” on J. David Stein’s website, Money for the Rest of Us.

Listen to the podcast below:

Robot or human financial advice field is changing (VC Star), Rated: A

What if a visit to the financial adviser was more like an impromptu coffee grab than a dental checkup?

Instead of a boring annual visit, imagine a quick call from you adviser in which he makes a couple simple suggestions to keep your portfolio on track.

That’s the future, according to Michael Kitces, research director for Pinnacle Advisory Group in Columbia, Maryland. Speaking to financial advisers attending last month’s Morningstar Investment Conference in Chicago, Kitces tried to reassure them that investors, rather than turning their money over to automated investment platforms, will continue to pay for advice if it’s relevant and timely.

In a future aided by software tracking customer portfolios and everyday spending, advisers will already know their clients’ problems and will use more frequent chats to figure out fixes, he said.

Is Fintech creating Neo-Luddites demanding a “robot-tax”? (Daily Fintech), Rated: A

A (hypothetical) documentary titled “Software has been eating the world” about Microsoft, would have to cover the first decade (‘75-‘86) before the company went public and the stunning and difficult to replicate nowadays fact that about 12,000 Microsoft employees became millionaires, in addition to the 3 billionaires.

So, when Bill Gates spoke in February about the idea of “the robot that takes your job should pay taxes”, the world reacted.

Just recently, the city of San Francisco announced a change in its public policy framework that will make it the first city to implement a robot tax (Business Insider May 2, San Francisco is considering a once unthinkable measure to offset the threat of job-killing robots).

In financial services, there were no such issues raised when ATMs, online brokerage and e-banking transformed the financial industry.

In this second wave that follows the accelerated pace of tech innovation of other sectors, we all agree that we don’t want a world in which no bank submits candidacy for the Global Finance awards  Call For Entries: Digital Bank Awards 2017. Or a world that has an increased tax for the winner and those shortlisted in the Euromoney Best Digital bank awards: for 2016, Singapore’s DBS Bank, and the short list included BBVA, Citi, and ING.  Or a world that taxes more startups providing the “picks and shovels” for the future of Invisible Finance, like:

–       Cloud banking platforms offering Banking as a Service, like Mambu

–       Cloud based investment financial app stores, like Investcloud

–       AI chatbot technology providers like Kasisto

–       Self-Sovereign identity solutions, like Uport

–       Mortgage enterprise solutions providers like Roostify

The Fintech ecosystem is still relatively un-bundled and it would seem even more problematic to develop and apply a framework for a “robot tax” for the Fintech space.

Billionaire investor Draper to participate in blockchain token sale for first time (Reuters), Rated: B

Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed to now: buying a new digital currency offered by a technology startup.

Draper, an early supporter of bitcoin and its underlying blockchain financial ledger technology, told Reuters in an interview he will for the first time participate in a so-called “initial coin offering” (ICO) of Tezos slated later this month.

Tezos, a new blockchain platform launched by a husband and wife team with extensive Wall Street and in hedge fund backgrounds, will launch the ICO on May 22. Draper will also invest in U.S.-based Dynamic Ledger Solutions Inc, the creator of Tezos, but did not disclose details.

Insight, JG Wentworth among top-rated on online marketplace (Mortgage Professional America), Rated: B

Insight Loans, JG Wentworth Home Lending and CBC National Bank have taken the top three spots in an annual ranking of mortgage lenders.

The league table from online loan marketplace LendingTree rates the lenders on its platform in three categories – mortgages, personal loans and auto finance – based on customer reviews.

CVC Credit Partners provides financing to support Wastewater Specialties, LLC (PE Hub), Rated: B

CVC Credit Partners (“CVC”) announced today that CVC’s U.S. Middle Market Private Debt business acted as Administrative Agent on a first lien senior secured debt facility provided to Wastewater Specialities, LLC (“WWS”). The proceeds were used to refinance existing debt and support future growth through equipment purchases.

United Kingdom

Crowd2Fund Announces New Venture Debt Product (Crowdfund Insider), Rated: AAA

On Friday, crowdfunding platform Crowd2Fund announced the launch of its new venture debt product, which is targeted towards early stage businesses that have a short term requirement to access cash to facilitate growth. The funding portal noted that the interest rates for the product’s loans range from 10% to 15%, with a borrow time period of normally no more than 12-18 months.

Crowd2Fund also noted those businesses that are suitable for the venture debt will be able to increase their value during the loan duration.

MOBILE BIOMETRIC PAYMENT VOLUMES TO TRIPLE IN 2017 TO NEARLY 2BN (Juniper Research), Rated: A

A new study by Juniper Research has found that the number of mobile payments authenticated by biometrics will rise to nearly 2 billion this year, up from just over 600 million in 2016.

The new research – Mobile Payment Security: Biometric Authentication & Tokenisation 2017-2021 – found that while Apple Pay had provided the catalyst for initial growth, other leading wallets including Android Pay and Samsung Pay were increasingly offering biometric solutions for authentication.

Furthermore, the size of the opportunity has been boosted by the greater availability of fingerprint sensors. According to the new research, around 60% of smartphone models are expected to ship with such sensors this year, with many Chinese vendors incorporating them into mid-range models.

The research emphasised the increasing momentum behind alternative biometric solutions. It recognised Mastercard as an early leader in this space through its Identity Check Mobile capability, due to go live later this year. Informally known as “selfie pay”, this allows users to scan their fingerprints and/or take selfies to validate their identities and thereby make payments.

PwC appoints leaders for Analytics, AI, Cybersecurity and FinTech arms (Consultancy.uk), Rated: A

In a bid to expand its footprint in the rapidly growing digital and technology-led innovation space, PwC, one of the major players in the field, has in recent weeks appointed a number of new senior technology positions in the UK wing of their group.

In another appointment aimed at driving growth in technology and financial technology (FinTech), Zubin Randeria, a PwC partner for 23 years non-consecutively, was unveiled as the new lead for around 200 cyber security experts in the UK, as the firm continue to focus on advising companies how to resist digital threats; a key concern of modern business.

Mark Leaver, PwC’s head of Financial Services Consulting since 2015, will meanwhile expand his existing role to include the multi-billion pound FinTech market in his scope. The FinTech space is growing fast, with interest in services particularly high among younger tech savvy users, and on the back of the spike global investments in FinTech companies grew to $25 billion last year, according to data from KPMG.

Bank of England criticised for fintech faux pas (Financial News), Rated: A

The Bank of England has come under fire for working with a fintech startup that was fined $700,000 by a US regulator for breaking banking secrecy laws.

Players in the fintech field have accused the central bank of appearing not to have conducted proper due diligence when selecting its partners after it emerged that Ripple, the startup chosen by the Bank of England to help research new blockchain technology, was fined for “willfully violating” several requirements of the Bank Secrecy Act.

RESCUE DEAL FOR MOTOR FINANCE PROVIDER (Insider Media), Rated: A

A Leicester-headquartered vehicle finance provider has been acquired out of administration.

Vehicle Trading Group called in administrators from Grant Thornton on 2 May 2017.

The company provided finance via its subsidiaries Vehicle Stocking Ltd and Vehicle Credit Ltd, which have now been sold to RateSetter.

China

11 Of The Largest Companies In China Dominate Chinese Fintech (Lend Academy), Rated: AAA

Of the 1.4 billion people in China, only about 300 million are in the national credit bureau, which means that more than a billion people have no credit profile.  Hundreds of millions of Chinese “unbanked” consumers are middle class, have high discretionary income, and would be considered prime or super prime borrowers. On top of that, the large Chinese banks have no history in making consumer and small business loans and were never designed for that purpose (they make infrastructure and commercial real estate loans).

We are seeing the leading Chinese companies from a diverse set of industries muscle their way into the fintech sector.  This article highlights some of the key players that have made the horizontal jump into fintech.

Ant Financial Services Group is owned by Alibaba Group, the largest e-commerce firm in the world.  Ant Financial is focused on serving small and micro enterprises as well as consumers. Ant Financial is the largest fintech company in the world.

JD Finance Group operates seven lines of business: supply chain finance, consumer finance, crowdfunding, wealth management, payment services, insurance and securities trading. JingBaobei is their microlending platform and Baitiao is their crowdfunding platform.

Baidu Jinrong is focused on many different verticals under different brands including consumer finance (Baidu Umoney), wealth and fund management (8 Baidu), payments (Baidu Wallet) and financial asset transaction platform services.

Greenland Group (Stock Code: 337.HK) is one of the world’s largest publicly traded real estate development companies with more than 15 million clients. They are the largest Chinese developer in the US. Greenland Financial was formed in December 2015 and it includes three main business sectors: an online wealth management platform for individual investors; a professional asset allocation and wealth management service for middle-class clients; and a cloud platform to provide internet technology and data analysis services.

Wanda Internet Finance Group leverages Wanda’s offline commercial platform to form a business division comprising of four activities: data application, credit service, online lending and payment, and creating an innovative financial offline-to-online model.

Lufax Holdings is one of the world’s largest and most successful fintech firms.  It is owned by Chinese insurance giant Ping An Group. The business consists of three divisions: Shanghai Lujiazui International Financial Assets Commodity Exchange Co (Lufax), Shenzhen Qianhai Financial Asset Exchange Company Ltd (QEX), and Puhui Financial.  Lufax offers wealth management and insurance services to its 23 million registered users, QEX focuses on institutional business and cross-border business, and Puhui Financial provides loans to consumers and micro-businesses.

Zhong An is China’s first Internet-based insurance company utilizing Big Data analytics.

Tencent has recently created Tencent FiT (Financial Technology Group), which includes TenPay (payments), WeChat Pay, Mobile QQ Wallet, Tencent Credit Services, and Tencent Licaitong, its money market fund and wealth management platform.

Tencent also launched WeBank, the first online-only bank in China, a joint venture that also includes Shenzhen Baiyeyuan Investment and Shenzhen Li Ye Group.

SinaPay is a social payments solution. Weiquanbao is a social wallet focused on mobile payments. Weicaifu is their Internet financial services company with a focus on personal financial management.

Phoenix Finance is an online platform, established by Phoenix Satellite Television Holdings, to provide intelligent financial services for Chinese investors worldwide.

Ezubao P2P Lending Fraud Update: 26 on Trial (Crowdfund Insider), Rated: A

Do you remember the Ezubao Ponzi scheme that ended in the single largest peer to peer lending fraud of all time? Investors, saw approximately 50 billion CNY or about USD $7.2 billion flushed down the tube. Reportedly 900,000 investors were impacted as an astounding 95% of the loans listed on the P2P lender’s site were said to be totally bogus.  Well process kicked off at the end of last year and according to a report from Xinhua, 26 Ezubao executives are now on trial. Proceedings are taking place in No. 1 Intermediate People’s Court in Beijing. Ezubao executives Anhui Yucheng and Yucheng Global and 10 company executives, including Yucheng chairman Ding Ning, have been charged with fraud.

European Union

Fintechs fight plan to bar screen scraping and protect European banks (CNBC), Rated: AAA

A coalition of 62 financial technology (fintech) firms including Klarna and Trustly and lobbying organizations such as the European Fintech Alliance (EFA) are fighting plans by the European Banking Authority (EBA) to ban screen scraping of customer data from online banking interfaces.

The screen scraping ban would come into force as part of the draft regulatory technical standards (RTS) rule under the European Union’s (EU) revised Payment Services Directive (PSD2) regulation.

Screen scraping is the process of collecting screen display data from one application and translating it so that another application can display it. This is normally done to capture data from a legacy application, such as an IBM mainframe computer for instance, in order to display it using a more modern user interface such as a PC or mobile. However, it can also be used to steal data or, depending on your point of view, legitimately gather business intelligence.

The EBA proposals are meeting fierce resistance from European fintechs that have signed a manifesto to fight the plan.

International

Introduction To P2P Lending Marketplace (Code Brahma), Rated: A

One of the biggest advantages of using an online P2P lending platform is that the loans are usually cheaper as the platforms operate with lower overheads and software powered automation. The P2P lenders charge money for the platform and doing credit checks for borrowers.

So, if a platform decides the unit note to be valued at $10 and an investor decides to invest $10,000 she’ll end up with 1000 notes to invest in borrowers.

One loan is typically funded by multiple investors. An investor willing to invest 1000 notes can choose to fund 10 different loans with 100 notes each or can mix and match the amount with loans.

According to a PwC report, the P2P lending platforms in the United States issued loans worth $ 5.5 Billion approximately. The global P2P market was estimated at $26.16 Billion in the year 2015. Transparency Market Research predicts the market to grow by CAGR of 48.2% year on year, reaching a whopping $897.85 Billion by the year 2024. Research and Markets expects the P2P market to grow at a CAGR of 53.06% between the years 2016 and 2020. Morgan Stanely predicts the market to be valued at $490 Billion by 2020.

Fintech vs Bank: Roles And Advantages Of Both Parties (ValueWalk), Rated: B

Globally, fintech funding was US$5.5 billion since 11 years ago and can be up to US$78.6 billion now.

According to TechinAsia, the reasons why consumers can adopt fintech are because of it is easy for them to set up an account, in fact, rates and fees that fintech offered are more attractive and cheap. On the other hand, fintech helps SMEs to acquire some funds.

Banks provide many services such as savings, loans, transfer of funds and much more. Some said that banks would disappear in the future. However, as long as bank dominates on lending, investing and deposits, they will sustain in the market. Banks basically will keep the customer’s information and will not easily give it to other parties. So the customer will feel more secure and safe doing the transaction with the bank.

India

Fintech Forging The Future For Cashless Economy (Techstory), Rated: AAA

When Prime Minister Narendra Modi announced on November 8 that over 80% of our paper currency would be obsolete thereon, most of the country was left spell bound. While this was a move to discourage and partially halt the flow of counterfeit currency in a supposedly invisible economy, also crippling most industries and investors, there was one industrial sector that sat by the side and smirked – FinTech.

While the ripples of the move are still being felt every now and then, the financial climate is much more stable now than it was 5 months ago.

The first challenge, aided in part by the recent Demonetisation announcement, is that of making the population aware of the ease and comfort associated with online banking and cashless transactions. Not only does this involve an ideological shift, it also requires the population to cross a mental barrier – security.

Looking at it through this lens, it comes as no surprise that a report by Finextra Research Ltd. states that 69% of existing FinTech firms plan on raising their expenditures on content marketing. The scope of development for an online app of such a sort can be exponential, as has been witnessed by the growing popularity of Paytm!

In fact, certain projections point to a 30% decrease in banking employment over the next decade, as the concentration of delivering banking services in person decline with time.

While we have always been used to being dependent on our banking corporations to provide the chunk of capital services that we have always required, over time, it will be these fintech apps that will do the job, with banks holding safe, liquid assets and deposits. The borrowers and savers will now all be available on your smartphone.

While the landscape of lending and borrowing might change when it comes to user experience, the degree and scope of investments will only increase. However, the way we read and process it may change over time. As cryptocurrencies becomes easier to process and handle worldwide, other technologies supporting the development of transactions in such currencies will develop.

As innovation takes the lead while the scope of integration broadens, startups can create a real impact in society through different mediums like the P2P marketplace.

Take Kiva, for example, a wonderful peer-to-peer micro finance website that aims to alleviate poverty by allowing everyday people in developed nations to finance budding entrepreneurs in developing nations. Kiva allows you to make a loan to an entrepreneur across the globe for as little as $25. It is one of the world’s first online lending platform connecting online lenders to entrepreneurs across the globe.

PayActiv is another app that encourages better ways and modes of saving regularly, thereby increasing the independence of many of its users over time.

10 tips to get personal loans despite having low credit score or CIBIL score (Plunge Daily), Rated: B

Banks do not give unsecured loans like personal loans as easily as they do secured loans like home loan or auto loan. They take various parameters into consideration and not everyone can pass the stringent eligibility criteria. Credit score is where most applicants lose out on, especially when half of them have no idea what credit score is in the first place. Lenders are totally dependent on CIBIL (country’s biggest credit bureau) among others to understand customers’ past credit behavior and hence, credit worthiness.

Meanwhile, here are ways to get personal loans despite having low credit score:

  1. Approaching non-traditional or alternate lenders – Qbera offers one such personal loan product that is specifically designed for salaried employees above age 23 with high earning potentials. They offer emergency loans if your CIBIL score is 625 and above.
  2. Having a good salary at present
  3. Getting the help of spouse or other close family member or friend
  4. Applying with the same lender
  5. Applying to lenders that caters to people with low CIBIL Scores – Many online lenders understand that a low credit score doesn’t necessarily translate to low credit worthiness. There could be plenty of reasons for a less-than-ideal score due to technicalities.
  6. P2P lending for personal loans – Quite a popular lending trend in developed countries is peer-to-peer lending, it is not that common in India. Customers haven’t taken to it because the loan amount offered is small while the rates are high.
  7. Work on improving your credit score
  8. Mixing it up wisely – If you have taken more loans, please ensure that you have a wise mix of secured and unsecured loans rather than having only one kind.
  9. Paying taxes
  10. Getting loan against collateral
Canada

Home Capital suspends dividend, taps credit line, bolsters board (Reuters), Rated: AAA

Home Capital Group Inc on Monday suspended its dividend, tapped its credit line and added new directors, the latest attempts from Canada’s biggest non-bank lender to restore investor confidence and stem the flow of customer withdrawals.

The company also estimated that the balance in its high-interest savings accounts (HISA) halved in the past week and said it has withdrawn from its C$2 billion ($1.5 billion) credit line for the second time. Home Capital said the balance in its HISAs is expected to slump to about C$192 million on Monday, down 50 percent from a week ago.

Authors:

George Popescu
Allen Taylor

Monday April 17 2017, Daily News Digest

Monday April 17 2017, Daily News Digest

News Comments Today’s main news: Republicans propose drastic overhaul of CFPB.  BOE chief sees no need for tougher FinTech regulation. CBRC assistant chair reported ‘out of contact’. Today’s main analysis: Transparency remains a sticking point for online lenders. The India FinTech Market Map. Today’s thought-provoking articles: How this FinTech CEO plans to prosper. Interview with Scott Sanborn. International regtechs […]

Monday April 17 2017, Daily News Digest

News Comments

United States

  • Republicans propose drastic overhaul of CFPB, Dodd-Frank. GP:” This is just a proposal and it will likely change a lot by the time, if and when, it gets adopted into law. In all cases, the theme here seems to be more control and less power for the agencies.”  AT: “We saw this one coming. I didn’t expect a name change, but I think that’s interesting, especially the use of the word ‘opportunity,’ which puzzles me. Why would a regulatory agency include that word in its name? Another thing I find interesting is the deputy director holding the job at the will of the president, which I expected. However, it makes the agency serve at the whim of the winds of the political climate, like all other executive agencies. What makes that interesting is it goes against the initial conception of the agency, which was intended to be independent of the chief executive. I’m not saying it’s right or wrong, good or bad either way, but we can expect the Democrats to fight this hard.”
  • How this FinTech CEO plans to prosper in 2017. GP:”The key is customer satisfaction, which itself relies on a good product, fair pricing, ease of use whom themselves depend on the cost of financing, employee satisfaction, technology quality and an infinite list of other items.”
  • Transparency remains a sticking point for online lenders. GP:”This is very interesting data. If the online lenders build a reputation of being expensive, regardless if it’s true or not, it will hurt their customer acquisition costs significantly. This has to be fought and this perception is very dangerous. In general consumers, especially opinion leaders, are not stupid. I think a good way to fight for transparency and to fight the high rate and unfavorable terms opinion is by actually releasing actual verifiable data that offers more transparency and demonstrates the rate and term points. ” AT: “It’s important that online lenders not simply claim to be transparent. Most consumers, millennials, in particular, are well aware that technology is not inherently transparent. It can be used to set up walls of opaqueness as easily as see-through curtains, or blinds. If you’re going to call yourself ‘transparent’, you’ve got to be transparent.”
  • Chatting P2P marketplaces with LendingClub’s CEO. GP:” Lending Club is really turning into a large company, run as a large company, on values and brand and letting every department alone to do what they can with controls in place. I am curious how it will defer from a large bank in two or three years.” AT: “Scott Sandborn shares some interesting insights into marketplace lending in general and LendingClub in particular.”

United Kingdom

  • BOE chief sees no need for tougher FinTech regulation. GP:”I am pleasantly surprised, and once again I understand how the UK, despite being a small market, continues to be the point of reference in finance in the entire world and has been for hundreds of years. I am yet to see a single US regulator who says even once: there is no need for more regulation.” AT: “This is a sign of maturity. In the U.S., when legacy institutions sense up-and-coming competitors, the first thing they want to do is use regulation as a protectionist scheme. Competition is good–for the goose and the gander.”
  • Researcher showcases unauthorized NFC payments with cloned Android device. AT: “This is interesting. We must all understand there’s no such thing as fail-safe security in the cyber world. Every device is a potential entry point for bad actors. In fact, every app on every device is a potential entryway for hackers and other bad actors. The key goal for security experts is to stay ahead of them. This hole needs to be plugged quickly.”

European Union

International

China

India

Asia

MENA

Africa

News Summary

United States

Republicans propose drastic overhaul of Dodd-Frank and CFPB (Housingwire), Rated: AAA

According to the summary of bill changes, the original CHOICE Act would restructure the FHFA and OCC as bipartisan commissions. The FDIC would be reorganized as a bipartisan commission with all five commissioners appointed by the president, and both the Comptroller of the Currency and the CFPB director would be removed from the FDIC board. Also, NCUA board of directors would be increased from three members to five.

The new CHOICE Act 2.0 cuts a lot of those proposed changes, and instead, the FHFA director would be removable at will by the president, with no changes to the current law regarding OCC and NCUA. The FDIC structure would stay the same as proposed in CHOICE 1.0.

The original CHOICE Act replaced the director of the CFPB with a Consumer Financial Opportunity Commission, a bipartisan independent Commission serving staggered terms.

Instead, in the newest version, the Consumer Financial Protection Bureau would be changed to the Consumer Financial Opportunity Agency, an executive agency with a sole director removable at will. The deputy director would also be appointed and removed by the president.

While the original CHOICE Act established a CFPB Credit Union Advisory Council, the updated one removed it because the bill eliminates mandatory CFPB advisory committees.

How This FinTech CEO Plans To Prosper In 2017 (Forbes), Rated: AAA

Along with FinTech industry guru Ron Suber, Prosper’s president, Kimball is intent on growing loan volumes, offering lower average rates compared to traditional lenders, delivering higher returns to investors and returning Prosper to profitability.

Prosper, which is the original online peer-to-peer marketplace, has originated over $9 billion in consumer loans over the past decade.

Since being appointed CEO of Prosper Marketplace late last year, Kimball has stepped outside his former financial role as Prosper’s CFO to take on a more operational-driven strategy.

David Kimball: Ultimately, the long-term success of platforms will be dependent on their ability to deliver a great product and a consistent experience. The success of the partnerships will depend on the ability for the two companies to communicate and understand each other (language, transparency, and culture), and it will depend on how well objectives remain compatible.

David Kimball: Last year, the industry did a lot to lay the foundation for a successful 2017, and we’re seeing that work pay off. The [recently announced loan purchase deal] gives us the funding stability we need to continue to grow, while at the same time giving us some great long-term partners that are invested in our business and its success.

David Kimball: A successful CFO is one who partners with the business instead of playing the finance sheriff. That requires a willingness to understand the business, to think holistically, to work with peers who jointly own the results. The CFO is the finance subject matter expert, but should be able to consider other disciplines, just as a CTO should be able to understand the financial implications of engineering decisions.

As CEO, I continue to think holistically and I now have an opportunity to flex into other areas of the business.

Transparency remains a sticking point for online lenders (Tearsheet), Rated: AAA

A small business credit survey by the Federal Reserve Bank of New York found 46 percent customer satisfaction at online lenders like Lending Club and OnDeck Capital with a 19 percent rate of dissatisfied customers – compared with large banks’ 61 percent of customers who indicated they were satisfied with their small business loan process and 15 percent of whom expressed dissatisfaction. Almost half of all customers specified that their dissatisfaction came from a “lack of transparency.”

Online lending customers are also dissatisfied with higher interest rates and unfavorable repayment terms, two common issues for the growing industry, which continues to have a higher cost of capital and for customer acquisitions.

Chatting P2P marketplaces with LendingClub CEO, Scott Sanborn (Simple Innovative Change), Rated: AAA

CL: The LendingClub story is a fascinating one and one that I’ve followed from the early days. So how does it feel to sit here and realize that so much of what is here today and the proliferation of all these different lending platforms is really because of this company and this team and what you have been able to build?

SB: I think it is exciting. It’s very gratifying to see how the initial idea has gained traction and how that has spawned new players who are bringing new energy and new ideas to different segments of the market. I think the clearest benefit is looking at how much value we’ve driven to consumers and investors.

For example, the personal loan market was actually shrinking when we first started. It shrank like 57% from 2007 to 2010, and yet we were still able to giveCL: There’s this great photo from the day of the IPO back in 2014 in which you can see just how elated you were. At the time you were the CMO and it was a very happy day, but when you stepped into the CEO role recently it wasn’t necessarily under the happiest of conditions. So, how have you handled the ups and downs of being a part of the Lending Club team, and how are do you lead the team through these challenging periods?

CL: That’s the answer you want to hear, by all means. Since becoming CEO at LendingClub, what have you learned about your own management style and how are you navigating the transition to this role?

SB: So much is swirling and changing in real-time, which means you need to keep everyone in the loop. In those early days after I stepped into the CEO role, I can’t tell you how many times we pulled all 1,500 employees together and marched them across the street to a hotel, to fit them into one room and explain, “Here’s what’s happening. Here’s what we know. Here’s what comes next.” That was certainly critical.

Lastly, we have focused tirelessly on assembling the right team. When a business is growing 80% to 100% a year for so many years it’s hard for the organization to keep up, and this was an opportunity to say, “Okay, new reality. Let’s look at what the right foundation is for the next decade of Lending Club.”

CL: One of the other reasons that I wanted to speak with you is because I often speak with seed and series A Fintech startups that’ll eventually face the challenges of being a larger organization if successful. So, what do you think are the challenges associated with trying to be an innovator while also being a larger organization?

SB: Literally, I left that conversation, and sat down with several team members in a room and said, “Okay, what are our values?” It was remarkably easy, actually, to identify what our values were. We put those down on paper and we revisit them, probably annually, maybe every 18 months or so and say, “Do they still resonate? Are they still right for this stage of the company?” Essentially all of our initial values have remained intact and we’ve added one or two as we’ve grown to reflect the new stage of the company.

Since then we have remained crisp on what our values are, and we have made sure we’re hiring to those values, and that our performance reviews reflect those values as well. That’s how you keep the essence of a company and that integrity of the company as you grow. The reality is, as you get bigger and layers get introduced and processes get introduced maintaining that value system will help the company stay, essentially, intact and stay functioning well.

CL: As we look to the vision of the future loan markets, do you think that startups will increasingly become the sourcing mechanisms of loans with financial institutions acting more as the wholesale banking providers?

SB: I think we’re not done seeing the different types of models that could emerge and how they could participate, and I think that’s part of what’s exciting. Not all of them will be great ideas, and not all of them will work, but some will.

If you look at our model, banks provide between a quarter and 30% of our funding and they have a very low cost of capital. When you combine their low cost of capital with our low operating cost it allows us to give, especially that super-prime customer, an incredible value that they couldn’t get at these institutions directly.

United Kingdom

Bank of England Chief Sees No Need for Tougher Fintech Regulation (Corporate Counsel), Rated: AAA

Fintech could pose a threat to traditional banks in the United Kingdom, according to Bank of England Governor Mark Carney. But that doesn’t mean he thinks they should be subject to tougher regulation.

The Bank of England created a New Bank Start-up Unit last year, which advises companies trying to become new banks. Carney said in his speech that four mobile banks have been authorized as a result of the new division.

Some of the questions that he said need to be answered, moving forward are: “Which fintech activities constitute traditional banking activities by another name and should be regulated as such? How could developments change the safety and soundness of existing regulated firms? How could developments change potential macroeconomic and macrofinancial dynamics including disruptions to systemically important markets? And what could be the implications for the level of cyber and operational risks faced by regulated firms and the financial system as a whole?”

Researcher Showcases Unauthorized NFC Payments With Cloned Android Device (The Merkle), Rated: A

While this concept sounds ridiculous to most people, they should not underestimate the power of root malware on Android devices. By using this type of malicious software, it is possible to abuse the host card emulation protocol. Google introduced this feature in Android 4,4, as it allows for NFC payments by keeping the Android device next to a payment terminal. Unfortunately, it appears this protocol can also be used to make fraudulent purchases.

Thankfully, this exploit has been discovered by a security researcher who notified both Google and all of the applications he successfully “abused” about this vulnerability.

European Union

Aegon Leaves Legacy Behind With Ohpen’s Cloud Finserv Platform (Forbes), Rated: A

Ohpen, a banking technology company based in Amsterdam,has announced that it will partner with Aegon to develop a new platform for Aegon’s Dutch services, from banking to investments. It will also support multiple labels including Aegon’s Knab (bank spelled backwards) an entirely digital bank.

Aegon, a global financial conglomerate whose American holdings include Pimco, will replace multiple individual systems for pensions, savings, current accounts and wealth management with a single Ohpen platform running in the cloud on Amazon Web Services (AWS). Aegon will plug into Ohpen’s platform through a flexible, 100% API-based interface.

Multiple companies under one corporate umbrella do many of the same things and have their own infrastructure and staff. Ohpen lets them merge all those activities onto a single cloud-based back end and then put an API on top so any application or Web site can get to it.

International

Keeping the banks honest: meet the regtech rule-obeyers (Wired UK), Rated: AAA

Under mounting pressure to become more transparent and accountable, banks and financial institutions are turning to regtech: technology that automates regulatory compliance.

London-based FundApps alerts financial institutions when regulations change, and gives them software to help compliance. Launched in 2010, it covers 88 jurisdictions.

Legislation in Europe requires companies to “know your customer” to make sure they’re not money laundering. That’s what Trulioo does.

Qumram records, retains and allows on-demand replays of digital activity across web, social and mobile.

US accounting rules require banks to store historical loan data to predict future repayment. “This is what we help them do,” says Vivek Subramanyam, CEO of Fintellix. Launched in 2006, it recently launched a website targeting US community banks and credit unions that are grappling with accounting regulations.

KYC3 (“Know Your Customer, Counterparty and Competition”) automates due diligence, so companies can screen potential clients.

How the World’s Richest Companies Can Help Its Poorest Citizens (Time), Rated: AAA

From Kenya and Tanzania, to Jordan and Peru, digital technology and simple mobile phones are opening up opportunities for millions of people by helping them to safely save and manage their money.

From Kenya and Tanzania, to Jordan and Peru, digital technology and simple mobile phones are opening up opportunities for millions of people by helping them to safely save and manage their money.

Four of the world’s largest telco system manufacturers — Sweden’s Ericsson, China’s Huawei, Canada’s Telepin and India’s Mahindra Comviva — have put aside their fierce competition and agreed to collaborate, not out of altruism but in order to better compete. Announced at the Innovate Finance Global Summit in partnership with the Bill & Melinda Gates Foundation, who works to bring competitors together to meaningfully address financial inclusion for the poor, these companies are developing a set of “application programming interfaces,” or in plain English, ways of making computers talk to each other. These APIs will create open-source standards for the development of digital financial services that are automatically compatible with each other, lowering costs for providers and increasing the utility of digital financial services for customers overall.

By governing how different digital accounts send and receive money, the APIs can be the basis for a new “internet of payments,” across which individuals, banks, merchants, employers, and governments seamlessly transact. The APIs are still under development, but when they’re complete they will be released as a global public good, available to anyone who wants to invent.

AI In Fintech: 100+ Companies Using AI Algorithms To Improve The Fin Services Industry (CB Insights), Rated: B

Funding to AI startups reached record highs in 2016 and applications for artificial intelligence technologies exist across nearly the entire spectrum of business. Highlighted here are the top 100 AI startups selected by CB Insights operating across numerous industry verticals.

China

Assistant chairman of China Banking Regulatory Commission, Yang Jiacai, reported to be ‘out of contact’ (SCMP), Rated: AAA

Fifty-six-year-old Yang Jiacai, assistant chairman of the China Banking Regulatory Commission (CBRC) was reported to be “out of contact” since Tuesday, April 11, by Chinese media Caixin and Caijing.

Caixin reported Yang had transferred all his responsibilities to his colleague, the commission’s vice-chairman Cao Yu.

Yang made his last public appearance a week ago during a press conference for the CBRC, during which he introduced some heavy-handed regulatory moves planned by the commission.

Podcast 97: Yihan Fang of Yirendai (Lend Academy), Rated: AAA

In this podcast you will learn:

  • The origins of Yirendai and how it was incubated inside CreditEase.
  • When and why Yirendai was spun-off from CreditEase.
  • Some background on all the divisions inside CreditEase.
  • The typical borrower who comes to Yirendai for a loan.
  • How Yirendai has broken new ground in China.
  • The different channels they use to obtain borrowers.
  • The typical size, rate and term of their consumer loans.
  • How these borrowers use their loan proceeds.
  • How Yirendai differentiates themselves from their competitors.
  • Who the typical investors are who participate on their platform.
  • The average amount each of their 200,000 investors deploy on their platform.
  • How their investor product works and details of their risk protection fund.
  • How their business model works as far as revenue.
  • A breakdown of their institutional investor interest.
  • Why they decided to do an IPO in New York rather than Shanghai or Hong Kong.
  • The impact of the new marketplace lending regulations in China.
  • Yihan’s perspective on the fraud that has happened in China.
  • Details of their new Yirendai Enabling Platform that they launched at LendIt.
  • What areas Yirendai will focus on in the coming years.

China is Cracking Down on Unscrupulous Financial Services (Crowdfund Insider), Rated: A

In a series of reports, ChinaNews is pointing to the increasing scrutiny of the Chinese government regarding financial fraud and over-all malpractice.

Now the China Banking Regulatory Commission has published measures to address risks in the financial and banking sectors. According to ChinaNews, CBRC highlighted 10 areas for improving risk control in both traditional and internet finance – which includes peer to peer lending.

All of this is taking place with the back-drop of Xian Junbo, Chairman of China Insurance Regulatory Commission (CIRC), being placed under investigation for “disciplinary violations.” He will be the most senior government financial regulator to be investigated in several years.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Big Data Company Wecash raised $ 80 million in series C funding led by China Merchants Capital, Fore Bright Capital and SIG. Two new investors – Dongfang Hongdao Asset Management and Lingfeng Capital joined the existing investors in this round.

On April 10, China Banking Regulatory Commission released “Guidelines on risk prevention and control in banking industry” to make the P2P online lending market standard by perfecting the in-out mechanisms, paying more attention to the supervision and perfecting the governance of online lending companies.

According to the PwC Global FinTech Survey China Summary 2017 released on April 6, the three main areas to be disrupted by FinTech in China over the next five years will be consumer banking, investment & wealth management, and fund transfers & payments. E-retailers, large technology companies and financial institutions will be the biggest sources of disruption.

Compared with developed countries, the market-penetration level of auto finance in China is much lower. However, it also indicates that China has a tremendous room to develop and grow.

US

Australia

China

Market-penetration

80% – 85%

70%

Less than 30%

On April 6, second-hand car online trading platform Souche closed on $180 million in Series D Funding led by Warburg Pincus. Other participants in the round included VMS Investment Group, ClearVue Partners, Haitong International, CreditEase and Morningside Capital. Notably, Souche just finished Series C Funding led by Ant Financial in the last November. In the past five months, Souche has raised a total of $280 million.

 

India

The India Fintech Market Map: 72 Startups Working Across Lending, Payments, Insurance & Banking (CB Insights), Rated: AAA

Looking at Indian fintech specifically, funding to private companies in the sector boomed from about $175M in 2014 to a high of $2B in 2015 (buoyed by mega-rounds to Paytm) and then slid to $530M in 2016. Still, 2016′s total funding was more than 200% higher than total funding in 2014. A host of global corporations and their venture arms have entered the fray, eager to reach India’s mostly unbanked population and profit from the country’s tech-friendly regulatory environment.

‘Free’ credit reports from fintech portals (livemint), Rated: A

Apart from bureaus, online financial marketplaces are also offering free credit scores and reports. These reports are not counted against the free reports you can get from credit bureaus directly.

On the four fintech platforms we went to, it took no more than a few minutes to log on, authorise the fintech to access our credit report, and get it on the screen or in email. And it was also simpler to get a report here than from a bureau’s website.

On Bankbazaar, we got the report on its website and in email. Paisabazaar displays the report on its website. Both sites provided reports from Experian Credit Information Co. of India Pvt. Ltd.

FinTech: To Regulate Or Not To Regulate? Former RBI Deputy Governor R Gandhi Explains (Bloomberg Quint), Rated: A

In lending, peer-to-peer lenders and online SME (small and medium enterprises) lenders are targeting clients considered too risky by banks. They claim to use technologies that can assess credit worthiness in smarter ways than the traditional income statements used by banks. In payments, wallet companies have taken the lead in retail payments forcing banks to up their game.

One gripe that banks have is that these fintech firms are getting away unregulated, which gives them a lot more flexibility in how they do business.

That’s true for now, said R Gandhi, former deputy governor of the Reserve Bank of India (RBI) who retired after a 37-year stint at the central bank earlier this month. The dilemma for the regulator is to decide when to regulate and how to regulate so as to ensure that innovative business models get a fair chance, Gandhi explained in an interview with BloombergQuint on Tuesday.

Is India ready for Peer-to-Peer lending industry? (Faircent), Rated: A

What we are trying to do is to create a P2P (Peer to peer) lending industry. Fundamentally we are providing an alternative to banking and other financial institutions.

Karun: Investors whom we call lenders can get returns up to 18% to 20% per annum which is much better than other options today. As a borrower you can avail unsecured loans at much cheaper interest rates. What we feel is that the banks make huge margins in terms of the rates that they offering customers on their savings and the rates they are lending it out to people at, in the form of loans. By reducing the margin, with Faircent as the match maker, we are able to pass value to both sides of the table, to borrowers as well as lenders.

Karun: We are purely a digital entity.   We are trying to use technology so that there is minimal offline intervention.

We’ve done a lot of marketing technology interventions, like we have a CRM which is built on top of our platform, which is a custom made CRM. We have integrated it with our lead gen channels. We have an email marketing platform using which we nurture our customers and also do promotional activities with potential customers. We have done a lot of work in trying to become Omni-channel. Three main channels which we use are email, SMS and Voice.

Karun: We are using a lot of the off- the- shelf products. But the challenge for us is really how do we integrate them with our platform. So hence we have to be much more careful about which option we choose. We are using Octane and Amazon for email. Octane is basically a mix of email and SMS which we are predominantly using for marketing.

Karun: Yes, we have a mobile app which is available on the Android and iOS platform. Right now, our focus has been more to enable our customers to access our platform on the mobile device. So for example if there is an investor who wants to invest in loans on the fly he can do it using our app. At present we’re not really focused on the app to acquire more borrowers or acquire more investors and lenders.

Razorpay plans overseas foray (The Hindu Business Line), Rated: B

Razorpay, a payment gateway solution provider focused on online merchants, plans to go international. It is looking to enter South East Asia and West Asia markets in 2018-19, Harshil Mathur, co-founder, has said.

The fintech startup, which started its journey in mid-2014, is in talks with local and global (banking) players in these markets, Mathur said.

Razorpay, which had raised Series A funding of $11.5 million, is not worried about funding for the next two years, according to Mathur.

Asia

ORIX Launches New Online Lending Business for Japanese Small Businesses (Orix), Rated: AAA

ORIX Corporation (“ORIX”) and Yayoi Co., Ltd. (“Yayoi”), an ORIX Group company, announced today that they are launching a new online lending business, a new FinTech service utilizing accounting big data and proprietary Artificial Intelligence (AI) based credit model.

The business will provide Internet-based lending to small businesses in Japan. A new credit model is under development, utilizing ORIX’s credit expertise, Yayoi’s accounting big data, and cutting edge AI technology by ORIX’s partner company, d.a.t. Inc. Most existing credit models in the market to date relied solely on static data such as financial reports; by utilizing dynamic data, such as day-to-day journal data and other transactional data, the new credit model is expected to offer much better predictive power than before.

ALT plans to start offering lending services on a trial basis to the approximately 600,000 companies, who are existing users of Yayoi’s online services1 in October 2017. Customers will be able to apply online, during which process they grant permission to access their accounting data.

According to a survey of 7,609 Yayoi customers, 85.0% of small corporations have a need for short-term financing, but 36.5% of those have been shying away from obtaining traditional loans, due in part to the excessive amount of time and efforts required for approval of short-term financing. With respect to sole proprietors, just 16.4% of them have obtained short-term traditional loans. Utilizing online lending can reduce complex administrative procedures, including the need to submit financial reports and other paperwork and to visit financial institutions in person, and can also shorten the time needed to obtain much needed cash, making simpler, more flexible financing possible.

AN INDONESIAN peer to peer (P2P) lending startup, KoinWorks is supporting small and medium enterprises (SME) and education by launching an art exhibition, ARTificial Intelligence which will run from April 13 to April 30 at Pacific Place, Jakarta.

Benedicto also says that KoinWorks mainly focuses on SMEs that conduct their sales and marketing activities online. He also believes that by connecting SMEs to lenders, it will bring benefits to both sides.

Benefits for lenders are through net gained interest from their investment which can be up to 19.8% annually depending on the risk level. The service also fulfils social needs by helping businesses to grow.

Users may invest in KoinWorks with a minimum deposit of US$7.50 (100,000 rupiah). The funding will be deposited in real-time at a virtual bank account. Users only need to scan and upload information from their identity card, fill in the form, and deposit the money.

LendIt China Event, Lang Di Fintech, Updates on PitchIt Competition (Crowdfund Insider), Rated: A

LendIt, the global lending and Fintech conference, has announced the official launch of the Asian edition of their Fintech startup competition, PitchIt, in association with JadeValue, a Shanghai-based Fintech incubator. The competition is for all early stage Fintech startups in Asia-Pacific.

PitchIt will take place at the Lang Di Fintech conference, China’s largest global Fintech conference in Shanghai in July.

The 8 Finalists Will Receive:

  • Opportunity to secure investment and partners by meeting investors
  • Have your pitch heard by the international fintech community in front of an audience of international and local attendees across APAC.
  • Gain valuable exposure through global PR
  • Up to $1,000 for travel to Lang Di Fintech
  • Year-round exposure through press and brand visibility and the chance to gain mentorship from Global VCs on pitching and product positioning prior to the event.

The Winner Will Receive:

  • Mentorship, co-working space for 6 months and guaranteed investment of $150,000 from JadeValue
  • 2 free passes to LendIt USA 2018, roundtrip airfare and accommodations
  • Curated meetings for investment purposes in the US during LendIt USA 2018 (April, 2018, San Francisco)
  • Complimentary sponsorship at LendIt USA 2018
MENA

The future of digital money (Gulf News), Rated: A

At a time when the consumer relationship with cash is more virtualiser and abstract, and where use of physical cash continues to decline in many markets, the next phase of digital money offers undiscovered potential for a new period of expansive growth in transactions, beyond the limits of national borders.

The region’s e-commerce marketplace is thriving too, but it depends more on cash on delivery than on electronic payments. At the same time, a relatively low share of adults have bank accounts, while mobile money accounts have had limited success. That could be about to change. New Fintech entrants are playing their part in helping drive payment digitisation.

Furthermore, developments in payments technology are making it easier for us all to transact. Egypt’s Payfort recently has successfully helped smaller merchants accept electronic payments, and offers instalment payment options to help merchants improve sales. We’re also seeing global providers such as Apple Pay, Google Pay becoming more active in the region after a slow start and more global players are coming, for example Samsung, with Samsung Pay about to deploy payment services that are promising to be easier, faster and more secure using your Samsung smart phone.

Africa

VoguePay Wins Best Fintech Startup Award (This Day Live), Rated: B

VoguePay.com, a secure payment gateway has won the “Best Fintech Startup” at the 6th edition of the Cashless Africa Awards 2017, organised by Mobile Money Africa in Lagos recently.

Authors:

George Popescu
Allen Taylor

Friday April 14 2017, Daily News Digest

millennial asset allocation

News Comments Today’s main news: Marathon Partner calls for change at OnDeck. LC releases mobile app. Ranger slumps after the collapse of Argon Credit. College Ave secures $30M in a fourth equity round. Droom launches first used auto MPL in India. First Circle secures funding to expand into SE Asia. Today’s main analysis: High-Net-Worth Millennials want advice from humans. Ranking the […]

millennial asset allocation

News Comments

United States

  • Marathon Partners calls for change at OnDeck. GP:”There is an entire industry, especially in New York, of funds who buy a minor number of shares in public companies and then mount a public campaign to impose their views to the companies. Examples are Karl Icahn, Bill Ackman, Dan Loeb and Herbalife.  Their objective is a quick appreciation of the share value and not the long-term success of the company. They typically encourage the company to sell assets to quickly raise cash for the share prices to increase quickly. They then sell their shares at a large profit, having double or tripled their investment in months to a year. And over time, the company is left on its own, now without the assets, it sold. All companies have issues and I am sure plenty of people disagree with the choices made at OnDeck. But from there to saying that OnDeck is in big trouble I think the leap is too large. Many companies have the exact same board structure as OnDeck, common CEO and Chairman and more. I see this campaign as a pressure campaign, unfortunately, picked up by WSJ,  who probably saw some pieces of truth and some sensationalism in it but is likely exaggerated. The real issue at OnDeck: they need cash, and soon. Let’s see how they solve that issues while keeping control. Being a public company opens the doors to this kind of attacks. “AT: “More and more, it’s looking like OnDeck may be headed for a sale. It could at least see a changeover in leadership. That new leadership will be expected to turn the company around, and if they can’t, we could see a buyer emerge in the near- to mid-term future.”
  • Activist steps up pressure on OnDeck. GP:” See comment above.” AT: “One influential person is all it takes to impact a change.”
  • LendingClub releases mobile app for investors. GP:”As many of our readers we are surprised they didn’t have a mobile app yet. There is a difference between a mobile responsive website and a native app. When will people be able to apply for a loan using just the app? While the core of Lending Club’s applicants are baby boomers and Gen X, I still think that mobile apps open the door to new features like taking pictures of your IDs and documents in real time, using the mobile phone’s info for underwriting and applying even faster.” AT: “I wonder why they hadn’t already.”
  • SoFi intros new two-step verification process. GP:” A small important step, focused on security. We discussed recently the importance of security, especially of borrower’s data.”
  • HNW Millennials are hungry for advice from humans. AT: “This is interesting since we’ve been hearing a lot about how millennials prefer robo, or at least want a mix of human-robo advice. High-net-worth individuals are different, though, and I think that’s across generations. Significant is the fact that many HNW millennials are in charge of their families’ fortunes, or at least a part of it. I would imagine they would not want to be responsible for losing what their fathers and grandfathers built, therefore, it makes sense they’d want advice from a human mentor in some respects.”
  • Ranking all 50 states by average credit score of citizens. AT: “The interesting thing about this to me is there seems to be a cultural attitude at play here. The top states and bottom states in the ranking are clumped together in regions, which says to me that attitudes toward credit, and behavior driven by those attitudes, are at work within the cultures. Of course, you also can’t deny economic indicators such as unemployment, which tends to be higher in certain areas, probably due to certain industries losing out to automation and other paradigm-shifting forces.”
  • College Ave secures $30M in a fourth equity round. GP:” Student Lending continues to attract nice investments. Congratulations !”
  • CrediFi launches CredifX MPL for commercial real estate lending. AT: “We’re beginning to see the growing RECF market branch out into specialization. It’s an exciting time to be a marketplace lender in the real estate sector.”
  • Startup helps Chinese investors put money into U.S. funds.
  • Could fintech enable a resurgence in predatory lending. AT: “Yes, but this is a scare tactic aimed at borrowers. This thinking takes away from personal responsibility. It’s important for lenders to take note of this attitude and develop responsible-but-profitable lending practices. Anything else could land lenders in the same hot water as those caught up in the S&L crisis and mortgage default crises.”

United Kingdom

European Union

International

Australia

China

India

Asia

Africa

News Summary

United States

Marathon Partners Calls for Change at OnDeck (Yahoo! Finance), Rated: AAA

Marathon Partners Equity Management, LLC, together with its affiliates (“Marathon Partners”), announced today that it has released a letter that was sent to the board of directors of OnDeck Capital, Inc. (“OnDeck” or the “Company”) last month expressing concerns about the direction of the Company and making recommendations on steps to improve shareholder value.  Marathon Partners also announced today its intention to vote against the three incumbent directors up for election at OnDeck’s upcoming Annual Meeting scheduled to be held on May 10, 2017.

In its letter to the Board, Marathon Partners recommended two courses of action for OnDeck:

  • Fully rationalize the Company’s cost structure in order to rapidly achieve GAAP profitability and reduce the pressure on the organization to grow its loan portfolio
  • Seek the sale of the Company to a stable partner where OnDeck can thrive without the risks of destabilizing confidence in the business from shareholders and the capital markets.

In addition to the concerns expressed in the letter, Marathon Partners is also disappointed with OnDeck’s corporate governance and executive compensation practices, as exemplified by ISS’s Governance QuickScore of ’10’ – indicating the highest level of concern – at the 2016 Annual Meeting.  OnDeck’s current practices, including plurality voting for director elections, a classified board structure, no special meeting rights for shareholders, and combined CEO and Chairman roles, among others, serve to disenfranchise their shareholders’ rights. Marathon Partners also has concerns around the metrics believed to denote success for the Company, such as adjusted EBITDA that ignores stock-based compensation and is blind to increased balance sheet risk.

Given Marathon Partners’ lack of confidence in the Board’s ability to represent the shareholders’ best interests, it plans on voting against the entire class of directors up for election at the 2017 Annual Meeting.

Activist Steps Up Pressure on On Deck Capital (WSJ), Rated: AAA

Marathon Partners Equity Management LLC, which owned 1.75% of On Deck’s shares as of the end of 2016 according to FactSet data, also publicly released the text of a letter it sent to the company’s board and lead independent director in March urging them to slash expenses and explore a possible sale of the business.

The three directors up for re-election are Noah Breslow, who also serves as On Deck’s chief executive; Jane Thompson, a former financial-services executive at Wal-Mart Stores Inc. WMT -0.39% ; and Ron Verni, a former CEO of Sage Software Inc.

On Deck’s shares, which fell 3.3% Thursday afternoon, are down more than 35% over the past 12 months following the reporting of wider losses and cooler investor demand for its loans.

The LendingClub Investor Mobile App Has Arrived (LendingClub), Rated: AAA

Today, with more than $24 billion invested through the platform, LendingClub is thrilled to introduce its new iOS mobile application – LendingClub Invest.

Investors said that some of the most important functionality they use on a regular basis is checking their account summaries and investing in Notes. Armed with this insight, the team crafted a visually-attractive user interface that consolidates the investor’s total account value, available cash, returns and holdings on the first page.

SoFi Introduces New Two-Step Verification Feature to Offer Users Next Level of Account Protection (Crowdfund Insider), Rated: AAA

Online lender SoFi recently announced the launch of its new two-step verification feature that will offer users the next level of account protection. The company revealed that two-factor authentication (or 2FA) would provide an additional layer of security to help protect accounts from unauthorized access.

HNW Millennials Are Hungry For Advice… From Humans (Wealth Management), Rated: AAA

High-net-worth millennials enjoy growing influence in the management of their families’ portfolios, but few are fully satisfied with their investment objectives. They have strong opinions, but are hungry for advice and don’t seem particularly excited about getting it from a computer.

Only 32 percent of millennials rate their values-based investment knowledge highly, with roughly a quarter deeming their knowledge either poor or very poor. That being said, there is a continuing hunger for investment knowledge, with 42 percent claiming they would like to learn more about the area.

The other potential reason for this discontent is that millenials simply have differing philosophies on investment than previous generations.

Ranking All 50 States by Average Credit Score of its Citizens (Statistical Future), Rated: AAA

Scores range from 300 to 850, the data comes from Experian. The national average ends up being 673, this is kind of shocking to me since my banker seemed to stress the necessity of a 720 credit score to get a loan with the best rate. Obviously, not everyone owns their home, but even in the state with the highest average – Minnesota – the average is only 706.5. Even then, the state ranks a full 7 points ahead of the runner up – Wisconsin.

Someone has to bring up the rear and for this metric, that someone is the state of Georgia, with an average credit score of 642.

At first glance, the aspect that pops out the most is that the top four states are all bundled in the upper Midwest while 5 of the 6 lowest are basically neighbors in the south.

High unemployment + low wages = lower than average credit scores.

College Ave Student Loans Secures $ 30 Million During Fourth Equity Round (Crowdfund Insider), Rated: A

Student loan marketplace, College Ave Student Loans, announced on Thursday it secured $30 million during its fourth equity round. Investors of the funding round included new and existing participants, which included Comcast Ventures and Leading Edge Ventures.

First data-driven marketplace for commercial real estate loans speeds process to finance commercial properties (PR Newswire), Rated: A

CrediFi Corp., the leading source of data and analytics for commercial real estate (CRE) finance, has announced the launch of CredifX, its online marketplace for financing commercial properties.

CrediFi has already made the commercial real estate market more transparent, by providing data about more than two million properties and thirteen trillion dollars in loans across the U.S. Now CredifX is taking that transparency revolution one step further. In addition to accessing information about commercial real estate finance through the CrediFi platform, CRE borrowers, brokers and lenders will now have unprecedented access to financing opportunities allowing them to close real estate deals through CredifX, CrediFi’s latest fintech solution.

The launch of CredifX follows just weeks after CrediFi secured $13 million for its Series B funding, helping drive the launch of CredifX.

Chinese Fintech Startup Helps Mainlanders Invest Money in US Funds (Crowdfund Insider), Rated: A

The last method mentioned above, utilizing the $50,000 limit on transfers, is being utilized by Chinese fintech startup, Niu Jiao Suo, to help Chinese investors to move their money overseas. Niu Jiao Suo operates by connecting Chinese investors with foreign mutual funds. Its mobile app allows users to invest in foreign mutual funds like Blackrock, Vanguard, JP Morgan, and Goldman Sachs with a minimum investment amount of $400. Users are limited to $50,000 in total investments per year in accordance with China’s annual threshold. A $400 investment may not sound attractive to funds by itself, but Niu Jiao Suo is able to attract such prestigious funds by bundling their users’ smaller investments together into a larger investment package.

Could Fintech Enable a Resurgence in Predatory Lending? (Tech.co), Rated: B

The average household carries $134,643 in combined debt which includes mortgage, credit cards, auto loans, and student loans. A good chunk of household income go into servicing these loans as illustrated in how Americans spend their paychecks. The biggest chunks of people’s monthly spending correspond to housing, transportation, and education. For other expenses, Americans continue to rely on plastic. While not necessarily a bad thing, many fail to pay charges in full and carry a balance on their cards, further exposing them to compounded interest and other fees.

Credit card debt is at its highest since 2008. Americans added $60.4 billion to the outstanding credit card debt as 2016. Worse is that, 69 percent of Americans have less than $1,000 in savings. 34 percent of respondents revealed that they don’t have any savings at all. When emergency strikes, many are left with little choice but to get more loans. However, with bad credit scores, borrowers are resort to getting them from predatory lenders.

For cash-strapped consumers, the promise of fast and easy money is always enticing. The payday loan industry alone is a $38.5 billion industry.

Late last year, the Office of the Comptroller for Currency started to accept applications from fintech companies that would subject them to federal banking rules. Chartered companies will face controls to prevent money laundering and have to abide by consumer protection rules. However, some argue that a federal charter would also enable fintech companies to bypass state-specific provisions such as interest rate caps. Such flexibility may be abused by enterprising lenders.

You should always go with numbers. Know how much the loan will totally cost you. Calculate the annual percentage rate (APR). Many predatory loans would have APRs of three digits meaning you could pay triple, quadruple, or even more of the loan amount in a year’s time if you fail to pay. While many of these loans are designed to be short term, it’s really dependent on your capacity to pay.

United Kingdom

Ranger slumps as collapsed lender forces write-down (Citywire), Rated: AAA

Shares in Ranger Direct Lending (RDL) have slumped after the investment trust was forced to write down 4% of its portfolio following the collapse of US peer-to-peer lending platform Argon Credit.

Shares in the trust are trading at 996p, down 6.9% since the write-down was announced yesterday, languishing at a 17.3% discount to net asset value.

The £172 million trust holds a position in Princeton Alternative Income, which gives the trust indirect exposure to $28.3 million of a $37.5 million credit facility Princeton has supplied to Argon, which went bust in December.

Numis analyst Charles Cade said the entire position in Princeton represented 12.1% of net assets in December and as Ranger could not determine the exact impact ‘we would not be surprised to see further writedowns’.

RateSetter channels £120k to Essex foster care SMEs (P2P Finance News), Rated: AAA

A £120,000 loan arranged by RateSetter boosted child care placements in an Essex-based foster care company by almost a quarter.

The peer-to-peer lending platform helped Brighter Futures Foster Care increase the number of new foster households from 67 to 83, making its foray into a sector where it found “finance is desperately needed”.

The borrower works with local authorities in the South East to find foster families for young people amidst a national shortage of 10,000 foster places, and is looking to raise further finance to bring the number of placements to 110-120.

P2P lending platform Assetz Capital to raise interest rates for limited time (Finextra), Rated: AAA

Assetz Capital, one of the UK’s largest and fastest growing peer-to-peer finance platforms, today announced it was raising the interest rate on its popular 30 Day Access Account (30DAA) by 0.5% to 4.75% for a limited time.

Investors will have until midday on 11 May to take advantage of the new rate and will benefit from a capped return of 4.75% for up to 90 days after an investment is made. After this, the account will return to its original rate of 4.25%.

Investors can automatically invest any amount from £1 in a diverse portfolio of secured business loans that have passed Assetz Capital’s strict credit checks.

A quiet crash in bank lending? March industry news (Funding Circle), Rated: A

Bank of England statistics reveal that since the EU referendum, net lending (that’s total lending minus repayments) to British small businesses by 22 of the largest banks dropped from £1 billion in the second quarter of 2016, down to just £220 million in the last three months of the year. Meanwhile, Funding Circle investors lent £167 million on a net basis in Q4 alone!

It was also great to see Samir Desai, Funding Circle CEO, featured in the The Sunday Times Maserati 100 list, which recognises influential entrepreneurs who are disrupting the business world.

And finally, our US business announced that Community Investment Management, an impact investment firm focused on direct lending, is now lending an additional $100 million to American small businesses.

FCA accused of hampering P2P market (FT Adviser), Rated: A

The Financial Conduct Authority’s decision to define peer-to-peer lending too narrowly has hampered the market, it has been claimed.

According to one compliance expert, the FCA’s decision has meant only 40 per cent of the P2P loans which HM Treasury had intended to be covered by the legislation were actually captured by the regulator’s definition.

Chinese firm Hywin Financial buys UK wealth manager (Fund Strategy), Rated: A

Hywin Financial Holding Group has acquired UK wealth manager Azure Wealth, which will now be known as Hywin Wealth.

Shangjia Monica Lin has been appointed chair of the board following the acquisition.

Banks favour lending to the owner-occupier market (Bridging and Commercial), Rated: A

Lendy believes that regulations such as Basel III have incentivised banks to take risks in the owner-occupier market and cut exposure to property developers.

This comes after the peer-to-peer secured lending platform found that the number of new residential mortgages worth over £1m increased by 24% in the 12 months to 30th September 2016.

Lendy discovered that the number of new £1m plus mortgages written by banks in 2015/16 increased to 4,844, up from 3,896 in 2014/15, while the total value of these mortgages grew by 18% from £7.59bn to £8.95bn in the same period.

When blockchain meets online lending: The business using one to improve the other (City A.M.), Rated: A

Sydney-based platform Othera goes a step further: the blockchain lending platform allows lenders and investors to access digital loans. It then chops up those loans – which are backed by businesses’ cashflows – in a process called tokenisation. These tokens can then be sold on an exchange, turning a traditionally fairly illiquid asset into a highly liquid digital asset.

Why did you launch Othera?

The overarching reason for launching Othera and building a blockchain lending platform is to unlock the alternative investment asset class and help it become mainstream.

You use blockchain to provide ongoing credit analysis of borrowing firms. How does that work and why is that so useful?

The blockchain provides what I call “total asset provenance” which means that every single interaction between the borrower and the lender is logged on it.

How does tokenisation work?

When we talk about tokenisation in the context of our platform, I am talking about the process of linking the rights to loan repayment cashflows (the principal and interest of the loan) to a digital cryptographic token similar to a bitcoin. So if you hold (own) the token, you will receive the pro rata portion of the loan repayment that your token represents. Tokens represent a digital form of fixed-income alternative investment. Tokens can be bought and sold just like an equity or bond or cryptocurrency.

Tell us about the importance of the secondary market.

Creating a vibrant secondary market for alternative investment assets is key to the growth of an industry or product sector for several reasons:

  • First, at a basic level, investors will only ever commit a relatively small portion of their investable funds into an asset class or a market with no liquidity.
  • Second, secondary markets are also a very good barometer of the performance of an asset class or specific investment, as the market quickly builds the strength or weakness of an investment into the current market price of that asset.
  • And third: liquidity.

Carney Says Crisis Lessons Are Why BOE Keeps Up With Fintech (Bloomberg), Rated: B

Bank of England Governor Mark Carney said the crisis shows why regulators and the banking industry must stay on top of the rapid developments in financial technology so that the system is solid enough to withstand shocks.

European Union

Online Lender 4finance Prices $ 325 Million Over-Subscribed Bond Issue (Crowdfund Insider), Rated: A

Riga-based 4finance Holding S.A., a large online and mobile consumer lending group, has placed and priced $325 million of senior unsecured 5 year fixed rate notes. These notes mature in 2022 and were issued with a 10.75% yield, at par.

The new 5 year issue was described as representing a liquid benchmark offering, with the scale to attract over 50 investors and secures 4finance’s long term funding.

These senior notes have a 5 year maturity with a 2 year non-call period and were offered on a Rule 144A / Reg S basis with ISINs XS1597295838 / XS1597294781 respectively. The bond was priced on April 12th, closing is expected on 28 April 2017.

International

FMS.next Alternative Finance platform enhanced with more FinTech functionality (Bob’s Guide), Rated: B

Profile Software, an international financial solutions provider, today announced the latest upgrade in the FMS.next Alternative Finance platform, to offer enhanced capabilities for “Auto-investing” that further boost the marketplace lending processes.

Australia

LendEx, Australia’s leading peer-to-peer marketplace lending platform for direct commercial property lending, appoints new board members (LendIt Blog), Rated: B

LendEx, Australia’s leading marketplace lender, today announced the appointment of Mr Brian Benger and Ms Kim Jenkins to its board as non-executive directors.

Mr Benger is on a number of the Australian subsidiary boards of Mercer Australia.

Ms Kim Jenkins is CEO of the Australian Retail Credit Association (ARCA), the peak body for organisations involved in the disclosure, exchange and application of credit reporting data in Australia.

China

CHINA: THE WORLD’S NEW FINTECH LEADER (International Banker), Rated: AAA

In November 2016, a report jointly produced by professional-services firm Ernst & Young (EY) and leading Singaporean bank DBS stated in no uncertain terms that China has now leapfrogged ahead of global technology hubs such as Silicon Valley and London to become “the undoubted centre of global fintech innovation and adoption”. Multiple fintech hubs have now emerged in China alone, most prominently in Shanghai, Hangzhou, Beijing and Shenzhen, which has led to EY and DBS concluding that the country now clearly leads the way in fintech and is “revolutionising many aspects of financial services”.

China also dominates the fintech “unicorn” space—those startups valued in excess of $1 billion. The country is home to eight of the world’s 27 unicorns.

Firstly, the sector has been well supported by the country’s regulatory framework.

Secondly, China’s population appears to be increasingly open to using online finance, with evidence mounting that they are eager to incorporate the support provided by various fintech services into many different aspects of their lives, including online banking, payments, transfers, crowdfunding, investing and shopping. Indeed, e-commerce in China is estimated to be a RMB 16 trillion market, and is now transforming the consumption habits of a rapidly growing number of Chinese people.

A significant chunk of China’s fintech success in recent years can be credited to Baidu, Alibaba and Tencent. Collectively referred to as BAT, the three tech giants control an intimidating share of China’s e-commerce landscape, as well as online messaging and Internet search platforms. They also control approximately half of the Chinese third-party payments market; whereas their US equivalents—Alphabet, Apple, Facebook and Amazon—control a mere 2 percent, as per recent analysis by Citigroup.

Payments/e-wallets is the dominant sector at present, with China having 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments.

The popularity of online banking is also exploding, with both China’s tech companies and its existing banks making a foray into this world, often in joint initiatives.

P2P (peer-to-peer) lending also deserves a mention, with China almost exclusively leading Asia’s growth in platforms designed to deliver credit to individuals and SMEs.

China P2P lender Dianrong sees market shakeout driving its growth (Reuters), Rated: AAA

Chinese online lender Dianrong.com expects to grow rapidly in the next few years, benefiting from tightening regulation driving a shake-out in the nation’s $100 billion-plus peer-to-peer (P2P) industry and pent-up demand for credit and investment.

Loan originations at the P2P lender, which is backed by investors including U.S. investment firm Tiger Global and Standard Chartered’s private equity unit, more than doubled to 16.2 billion yuan ($2.3 billion) in 2016 from the previous year.

Dianrong.com matches investors with individuals and small and medium-sized businesses in real-time, with loan sizes ranging from 500 yuan to 200,000 yuan for individuals and a maximum of one million yuan for small and medium enterprises.

Nearly half of the 4,000-odd online lending platforms in China were “problematic”, China’s banking regulator said in August when it unveiled the rules.

The P2P lender, founded in 2012 by Guo, a former lawyer, and Soul Htite, a co-founder of LendingClub Corp, is looking to grow loan origination by 50 percent annually over the next three to five years. It expects to broker about 30 billion yuan in loans this year.

India

Droom launches loan marketplace for used automobiles (VC Circle), Rated: AAA

Droom, an online platform for buying and selling used vehicles, has launched Droom Credit, a loan marketplace for pre-owned automobiles it claims is the country’s first.

For the initial rollout, it is going live with a dozen lenders, including HDFC Bank, Kotak Prime, Tata Capital, Faircent, i2i Lending and Capital First, a company statement said.

The platform, which guarantees loan approval within 30 seconds, uses the government-backed Aadhaar stack, apart from PAN verification, credit score validation and several other variables for credit evaluation.

There are three ways we are going to earn money, he said.

“First, the take rate, which will depend on who the lender is (different take rates and commission structures for different lenders). It will also depend on the category and profile of the borrower, and on the fulfilment and disbursal of the loan.”

Second, Droom will charge Rs 999 from borrowers.

Third, it will also charge the lender Rs 999 upon successful loan disbursal.

Droom Credit will initially restrict lending to borrowers purchasing vehicles from Droom. Going forward, however, it plans to open it to other platforms too.

Asia

Crowd Genie Receives Regulatory Approval from MAS (Crowdfund Insider), Rated: AAA

Crowd Genie, a small business lending platform, has received regulatory approval from the Monetary Authority of Singapore (MAS). Crowd Genie was granted a Capital Markets Services (CMS) license from MAS, an important development for the peer to peer lending platform. Crowd Genie has been in operation since mid-2016.

First Circle Secures Funding from Global Investors to Expand Access to Credit in Southeast Asia (Yahoo! Finance), Rated: AAA

First Circle today confirmed investments from Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, and Deep Blue VC. First Circle has now reported equity funding of $2.5m USD – from Accion Venture Lab, Deep Blue VC, 500 Startups, IMJ, and Key Capital – along with an undisclosed sum of debt funding.

The investment funds will be used to further develop First Circle’s technology and data analytics platform.

Africa

South Africa’s FSB to rule on crowdfunding by June 30 (Ventureburn), Rated: AAA

South Africa’s Financial Services Board (FSB) has set a date of 30 June by which it plans to rule on whether to craft specific rules or not for equity crowdfunding, an FSB spokesman said this week.

The African Crowdfunding Association has been calling for the FSB to craft a specific regulatory framework on crowdfunding.

“It’s not that it (equity crowdfunding) is illegal – it’s just that there’s no clarity,” he said.

Thundafund chief executive Patrick Schofield said he was not waiting for any regulatory certainty from the FSB and was going ahead with setting up a platform to facilitate equity crowdfunding in South Africa.

His idea is to use venture capital funds to vet deals and provide a certain percentage of the total equity injection, before placing these on the platform to attract investors.

Meanwhile a new lending threshold which came into effect in November under the National Credit Regulations is also likely to limit the ability of peer-to-peer lending platforms to fund startups.

Authors:

George Popescu
Allen Taylor

Thursday April 6 2017, Daily News Digest

loan originations

News Comments Today’s main news: Renaud Laplanche’s new firm Upgrade launches as a consumer platform. US MPL securitizations total $3B in Q1 2017. RateSetter targets growth in SME lending. NewOak Asset Management agreement to purchase $2bil in loans from LendingArch. Today’s main analysis: Fundrise files Reg A+ for new investment offer. Q4 Loan origination stats per market, a must […]

loan originations

News Comments

United States

  • Renaud Laplanche’s Upgrade launches as a consumer platform. GP:” With a $60mil A round from top investors and a 70-people team, Upgrade is Renaud Laplanche’s answer to being outsted from Lending Club. A very interesting nuance: Upgrade is using Blockchain to ‘enhance data integrity by creating time-stamped, immutable transaction records.’  Also they are already lining up Jefferies for securitization and the company will retain risk on balance sheet while providing whole loans for sale. I am not sure how you can sell whole loans if you retain risk. I assume the answer is that they will not retain risk on all loans. So put apart the confusion on their whole loan sale/balance sheet retained risk / what do they do with the rest of the loan-risk, it looks very promissing. I would also be curious if they plan to use direct mail for marketing or something more efficient. Their plan does include consumer tools for credit monitoring and understanding, but I wonder if that is enough to generate loan leads. Why not look into taking the lessons from Lending Club and launching a credit card business instead ?  ”   AT: “Lending Club’s Renaud Laplanche is back. And he may be bigger and better than before. A consumer credit platform for the MPL industry would be a huge boon.”
  • MPL securitizations reach $3B in Q1 2017. GP:” The full report can be found under our reports section with all charts and information. Very useful as usual.” AT: “PeerIQ’s report is a must-read.”
  • Fundrise files Reg A+. GP:” Reg A+ as our readers already know, is a mini IPO. A way to raise capital that shouldn’t be ignored.” AT: “Fundrise continues to innovate, which is probably why they’re still in front in the RECF niche. However, their shift into eREITs and eFUNDs is very telling. Where to next?”
  • Q4 slump caps off tough 2016 for US fintech lenders. GP:” Great data and summary. A must see table.” AT: “Despite major losses, Lending Club was still an industry leader in originations. I see them turning around.”
  • Lending Club is offering hardship plans for borrowers, protecting returns for lenders. GP:”Lending Club is trying to figure out a way to reduce defaults. Humans tend to game systems so I am curious how will such a program behave over time.”  AT: “Here’s the evidence, a tiny bit of it. Lending Club continues to focus on customer needs. I like this program. Hardship plans for borrowers has the potential to make a big impact on the economy and put a little confidence in everyday people.”
  • LendingHome’s investor platform hits $100M. AT: “Congratulations. Great milestone.”
  • Amazon launches Amazon Cash. AT: “As an avid Amazon shopper, I love this idea. It makes me wonder if Amazon will ever own a bank. I think they will, a digital one.”
  • OCC Fintech Charter is key first step. GP:” An article in support of the charter. In fact, most people are in support of the charter.”
  • Chase spent $600M on fintech deals in 2016. GP:” Chase has $26mil active customers on their mobile app.  Most of the spent was on mobile and digital… I wonder what else is there that is not mobile and digital.”
  • LC CEO sketches the future. GP:” A summary of the talk at Lendit. In 2016 LC lost $146mil, out of a $800 mil in cash approx. However, the 3 new initiatives look very vagues to me.”
  • Online lenders spooked by Colorado’s tough stance on interest rates. GP:” Even Upgrade, Renaud Laplanche’s new firm, doesnt’ originate in Colorado.”
  • The fintech accelerator in Little Rock.
  • Online RECF will flip industry on its head. AT: “I would say it already has. It just needs to go the next step and create more opportunities for non-accredited investors.”
  • Arizona gives legal status to blockchain-based smart contracts. AT: “I’d like to see more states draw attention to smart contracts. I see a lot of opportunity for mass acceptance.”
  • Online Lending Network to reduce fraud.
  • Goldman Sachs is bringing AI, blockchain to Columbia B-school.

United Kingdom

  • RateSetter targets growth in SME lending. GP:” An interesting move, not many personal lenders move into SME as the businesses are completely different and there isn’t much efficiency. In fact in the US Kabbage launched Karrot , moving from SME to personal lending, and last year they had announced they are shutting Karrot down.”
  • BofE still worried about personal lending. GP:” Personal lending is such a small piece of the credit markets I fail to see it as a major threat to anything at all.”
  • Bridging P2P lending’s data gap. GP: ”  ‘lack of independent research that allows investors and advisers to benchmark P2P platforms’ . There are a few options, perhaps not well know yet. Perhaps the research companies should advertise more and build real marketing arms. “
  • UK consumer slowdown underway.
  • When VCs get two bites of the apple. GP:” Participating preferred investments have been standard in the US since the VC industry existed. And yes, investors are in the investment to make money, and they will not only take participating preferred deals, but also coupons on their money, and control the budgets, key hires, force redemptions… Anybody thought investors were non profits giving money away for free?”
  • The complete guide to using Revolut for P2P lending investors.

European Union

Australia

Canada

International

News Summary

United States

Upgrade, Inc. Launches New Consumer Credit Platform (Upgrade), Rated: AAA

Upgrade, Inc. () today announced the launch of a new consumer credit platform that combines a marketplace lending approach with tools that help consumers understand and monitor their credit.

Upgrade started operations in August 2016 and closed its Series A round of financing in March, raising $60 million in equity and convertible notes from investors including Apoletto, Credit Ease, FirstMark Capital, Noah Holdings, Ribbit Capital, Sands Capital Ventures, Silicon Valley Bank, Union Square Ventures, Uprising and Vy Capital.

All loans originated through the Upgrade platform are issued by WebBank, Member FDIC. Upgrade will acquire loans from WebBank, retain a representative portion of those loans on its balance sheets and offer whole loans for sale to institutional investors.

Jefferies is advising the company on its capital markets strategy and is expected to participate in loan purchases to help establish the company’s securitization program.

Personal loans are available through the Upgrade website starting today. Credit monitoring, alerts and education features will launch in coming weeks.

US MPL securitisations total $ 3bn in first quarter (P2P Finance News), Rated: AAA

SEVEN marketplace lending (MPL) securitisations took place in the US in the first quarter of 2017, with a total value of $3bn (£2.4bn), according to new research.

This is up from $2.4bn in the fourth quarter of 2016. Alternative lending research firm PeerIQ found that total issuance to date now stands at $18bn, equating to 80 US MPL deals since September 2013.

Read the full report: MPL securitization tracker for Q1 2017 from PeerIQ.

Fundrise Files Reg A+: “For Sale Housing eFUND”, New Real Estate Investment Offer (Crowdfund Insider), Rated: AAA

Fundrise is adding a new investment vehicle to its growing list of opportunities for smaller investors. This time the real estate marketplace has filed a Form 1-A with the SEC for a “Fundrise For-Sale Housing eFUND”.

Now Fundrise is looking to develop single family attached and detached homes, including condos in southern California.

For investors, the objective is to pay distributions from cash flow from operations as a partnership which means different taxation for investors (IE you receive a K-1)

As with their other Reg A+ filings, Fundrise is seeking a maximum amount of $50 million (the legal limit).

Q4 slump caps off tough 2016 for US fintech lenders (AltFi), Rated: AAA

S&P Global Market Intelligence, a research arm of major ratings agency S&P, has released 2016 origination numbers for 13 major online lenders. The data is headlined by a 14.5 per cent year over year fall in originations for the entire group in the fourth quarter.

Despite the difficult Q4, S&P estimates that the 13 lenders in question grew full-year originations in 2016 by 15 per cent. The student and SME focused lenders exhibited especially strong full-year origination growth, with 62.3 per cent and 43.0 per cent respectively.

Analysis from AltFi Data shows that originations in the UK’s marketplace lending sector grew 49 per cent in Q4 2016 on a year on year basis.

SoFi was the largest online lender by volume in the US during Q4 2016, with roughly $2.5bn lent. But Lending Club just about remained the largest player by yearly origination volume with a little over $8.5bn lent, besting SoFi by around $600m.

Offering Hardship Plans for Borrowers and Protecting Returns for Investors (Lending Club Email), Rated: AAA

We’re excited to announce that after a beta test, we will begin offering hardship plans to borrowers effective May 4, 2017. Hardship plans allow borrowers to temporarily make interest-only payments to accommodate an unexpected life event. As part of this change we are also making additional data fields related to these plans available for investors.

Our hardship plan program specifically targets borrowers who are more likely to return to repaying their loan. Under the plan, borrowers are allowed to temporarily make interest-only payments for a period of 3 months to accommodate an unexpected life event. After 3 months, regular payment terms and obligations resume. Only borrowers who fulfill specific characteristics (such as a demonstrated history of repayment) and who claim a hardship will be offered plans. Importantly, borrowers’ loans must be either current or between 1 and 30 days past due to qualify for a hardship plan.

Finally, we are adding 15 new data attributes of borrowers who utilize hardship plans to investor reports and the API. The fields will only apply for hardship plans offered as of May 4, 2017 and going forward. You can find more information on these new data fields here.

LendingHome, the leading mortgage marketplace lender, today announced that $100 million has now been invested on its platform for individual investors since the platform’s launch in January 2016.

Individual investors can access LendingHome’s marketplace with a minimum opening balance of $50,000 and a minimum investment of $2,500. Investors benefit from fractional notes backed by mortgages that yield 8.75 percent on average. They also receive immediate monthly cash flows and the ability to diversify across hundreds of investments.

In its first year of operation, more than 500 loans were fully funded through the investor platform. Currently all loans offered on the platform are short-term bridge loans for professional real estate investors who buy, renovate, and resell properties. The average loan duration is under one year.

Amazon launches Amazon Cash, a way to shop its site without a bank card (TechCrunch), Rated: A

Amazon this morning announced the launch of Amazon Cash, a new service that allows consumers to add cash to their Amazon.com balance by showing a barcode at a participating retailer, then having the cash applied immediately to their online Amazon account. The service will support adding any amount between $15 and $500 in a single transaction, Amazon says.

Amazon Cash will be available at brick-and-mortar retailers across the U.S., including CVS Pharmacy, Speedway, Sheetz, Kum & Go, D&W Fresh Market, Family Fare Supermarkets, and VG’s Grocery. Other stores will be added in the future.

The service is not all that different from a similar effort by PayPal, whose PayPal My Cash Card lets you add funds to your online PayPal account, using cash from your wallet. It also has a barcode-only service, powered by Green Dot.

The advantage to Amazon Cash is that, as soon as you checkout at the register, the funds are available in the customer’s Amazon account. There are also no fees – something that can’t be said of all the prepaid cards on the market.

The OCC Fintech Charter is a Key First Step, Not the Last Word (Crowdfund Insider), Rated: A

While Americans prize the innovations that can improve their lives, our regulatory framework today is structured in such a way that makes experimentation and greater competition in financial services expensive and difficult.  For instance, obtaining and maintaining licenses in 50 states is a major hurdle, and can impose outdated and arbitrary restrictions that are hardly even applicable to platforms that born on the internet.

This has important implications, because while the incumbent national institutions bypass all these state rules, those same traditional bricks and mortar players currently may not always deliver credit products that best meet the current needs of under-served urban and rural communities.

The recent charter proposal from the Office of the Comptroller of the Currency (OCC) strives to strike the balance of promoting greater innovation but doing so within the constructs of existing national bank laws and regulations.  As it has done with previous generations of innovative products, like credit cards, the OCC recognizes that the business of banking is not static, and the agency is working within its existing authority to create a single national regulatory option for financial technology firms.

Finally, promoting competition from the formation of innovative “de novo” banks is clearly a bipartisan priority. The OCC special purpose bank charter is a critical response to help advance this goal nationally and its associated benefits.

Chase Spent $ 600 Million on Fintech Deals in 2016 (Bank Innovation), Rated: A

$600 million of JP Morgan Chase’s $9.5 billion technology spend in 2016 went to fintech solutions, and given the company’s 2016 results, it seems like money well spent.

According to the company’s Annual Report 2016, released today, the bank’s spend on fintech included improving its mobile and digital services.

Chase ended the year with 26 million active customers on its mobile app.

It also reported 94 million transactions took place in 2016 on its P2P service, Chase QuickPay, representing a 30% increase year over year—and as Chase is one of the banks supporting Zelle, it expects further development in P2P during the course of 2017.

Lending Club CEO sketches the future (Banking Exchange), Rated: A

When Lending Club CEO Scott Sanborn spoke at the LendIt USA Conference in March the majority of the audience represented a key part of Lending Club’s funding base—institutional investors, including banks—as well as potential partners and competitors in the marketplace lending community.

“Roughly 60% of our loans are to people who are paying off existing credit card debt with a lower interest fixed-payment loan from us,” Sanborn said. “On average borrowers are telling us they’re saving about 25% versus their credit cards so it’s a pretty material spread there that we’re comfortable with.”

Lending Club lost $146 million in 2016.

Sanborn likened the situation to the online retail business, where he had worked earlier. The launch of eBay and Amazon in 1995 spawned a host of dotcom competitors, many of which went away. Amazon itself was expected to close doors, first in 1999 and then in 2001, he noted. Today the behemoth has $100 billion in e-commerce sales, with Walmart a distant second. Likewise, the development of the online lending business is not a linear process, said Sanborn, but more of a cycle.

Sanborn said the good news for 2016 that didn’t get a lot of press: “Lending Club remained the number one provider of personal loans in the country. We issued $8 billion in loans last year, bringing our total [outstandings] to $25 billion.”

Sanborn spent the bulk of his speech describing three initiatives he sees shaping the online lending industry—and Lending Club—going forward.

  1. Evolving the customer experience
  2. Unleashing the platform’s potential
  3. Amplifying core innovations

Online lenders spooked by Colorado’s tough stance on interest rates (American Banker), Rated: A

The ongoing battle over the interest rates that online lenders can charge has moved to Colorado, which is taking aggressive steps to enforce its 12% rate cap for consumer loans.

Inside the fintech accelerator program in Little Rock (Tearsheet), Rated: A

A recent addition to the pool of development programs for financial technology startups is the Venture Center Fintech Accelerator based in Little Rock, Arkansas, which just graduated its first class. It is backed industry giant FIS, a banking technology company that operates in over 130 countries.

The program selects 10 entrepreneurs a year, and it covers a broad range of focus areas, including core banking services, wealth management, wearables, wallets, back office, compliance and payments. For the startups, it’s an opportunity to get honest feedback from counterparts in the banking sector. This year, organizers received 295 applications.

Grant Easterbrook, co-founder of Dream Forward, a 401(k) startup and 2016 class graduate, said the program was mix of meetings and independent work organized around a series of themes relevant to growing the business.

Each week, every company had deliverables, and the work culminated in a demonstration day for investors, bankers and other stakeholders. Bauer said that while many accelerators focus on fundraising, the FIS program zeroes in on getting the products to market, which he said can be the biggest challenge for early-stage entrepreneurs.

Online real estate crowdfunding will flip industry on its head (Daily News), Rated: A

An acronym for Jumpstart Our Business Startups, this lesser-known, but very impactful law has substantially relaxed some of the most stringent securities laws dating back to the Depression era and single-handedly created a whole new investment category known as equity crowdfunding.

And while the title of the category is equity crowdfunding, in reality both equity and debt opportunities are allowed. It is now possible to take relatively small amounts of money and purchase a small stake in a Silicon Valley startup, loan money to an established small business, and — yes — participate in real estate deals.

As an early adopter I have been participating in this space since late 2013, patriating in over 30 deals. They have almost exclusively been debt and I have had several successful exits with no loss of capital this far. My net return over this time has been a very satisfactory 11%.

While we are still in the early phases, I think that real estate crowdfunding is here to stay. From a few million dollars in 2012 to over $3 billion in 2016, we have clear evidence of growing momentum in this space.

Arizona Gives Legal Status to Blockchain Based Smart Contracts (Trustnodes), Rated: A

Ethereum’s technology has just been given the seal of approval by the State of Arizona which passed a bill giving legal status to smart contracts and blockchain based signatures, considering them as any ordinary contract or signature.

In effect, the new legislation applies current contract law to blockchain based contracts, erasing any uncertainty and making it clear that any blockchain based agreement is fully enforceable in a court of law.

The law goes further to state that blockchain based data amounts to ownership, importing current property rights to the nascent field and removing any legal ambiguity as to what may amount to theft.

Things like futures, as in you pay a farmer now for his crop at a set price with delivery at a later date, things like escrow, things like blockchain based insurance, and so on, can now be set in code with the code itself applying enforceable contractual terms where it operates as intended.

Online Lending Network to reduce fraud (Bankless Times), Rated: B

ID Analytics hopes its new Online Lending Network will reduce fraud committed against participating members.

Within a year of its inception, ID Analytics believes the Online Lending Network has gained visibility into 75 per cent of the U.S. domestic marketplace lending activity.

Goldman Sachs Is Bringing Artificial Intelligence And Blockchain To Columbia B-School (Business Because), Rated: B

New York’s Columbia Business School will host a fintech conference sponsored by Goldman Sachs, Microsoft and Deloitte — the latest example of the fintech frenzy at elite business schools.

Students at the business school run Columbia FinTech Club, an organization that aims to develop education and innovation in the field of financial technology. Columbia alumni include Jon Stein, the founder of digital wealth manager Betterment, which uses software to create a portfolio and automatically rebalance it, which is valued at $700 million.

United Kingdom

RateSetter targets growth in SME lending (P2P Finance News), Rated: AAA

RATESETTER is planning to ramp up its business lending, after working behind the scenes last year to boost its small- and medium-sized enterprise (SME) technology and grow its dedicated team.

But it sees opportunities for growth within the sector, as SMEs across the country grow increasingly hungry for working capital.

Small businesses have shrugged off Brexit, with the weak pound creating a very strong case for boosting exports, Marston said. The firm found that in the South East region alone, at least 40 per cent of small companies are looking to grow in the next six months.

Bank still worried about personal lending (BBC), Rated: AAA

The recent rapid rise in consumer borrowing is still a potential threat to the stability of the UK’s financial system, says the Bank of England.

These elements of household borrowing – known as consumer credit – are dwarfed by the amount of money that has been lent to home buyers in the form of mortgages.

But the Bank fears that lenders may have become too slack in deciding to whom they should lend.

Data from the price comparison service Moneyfacts shows that some card issuers will now offer interest-free periods of as long as 43 months.

Another area of concern, the Bank said, was that some lenders had been offering larger, unsecured, personal loans than before.

Consumer credit lending is still less than 10% of all lending by UK banks to household borrowers, and is far smaller than mortgage lending which amounts to 70% of loans to households.

Bridging P2P lending’s data gap (Professional Adviser), Rated: A

A strange thing happened in April last year, when the regulator allowed financial advisers to recommend peer-to-peer (P2P) lending to their clients. What happened was – nothing. At least not to begin with.

To an extent, this reflects a certain wariness for the P2P lending sector among some advisers, which is based on a lack of familiarity with the asset class. But there is a much bigger problem – the lack of meaningful data about the sector and a dearth of tools with which to interrogate what little information is available.

In short, there has been a lack of independent research that allows investors and advisers to benchmark P2P platforms. Independently assessed default and return rates have been hard to find – as have been industry-wide figures on subjects such as the total size of the market.

This matters increasingly as the P2P scene grows ever larger. There are now more than 50 P2P platforms and, in the three years from 2014 to 2016 alone, lending grew from £1.25bn to £3.13bn, providing credit to both consumers and businesses. Currently, just over 177,000 retail investors are active in this space. By 2020, it is estimated 2.7 million people will be investing in P2P lending.

They will need independent data, analysis and insight to guide their decisions.

UK consumer slowdown underway, caution needed on rates-Bank of England’s Vlieghe (Arab News), Rated: A

Bank of England rate-setter Gertjan Vlieghe said on Wednesday a consumer slowdown was already underway in Britain and was likely to worsen, underscoring the need for caution on interest rates.

Vlieghe, who is considered one of the central bank’s most dovish policymakers, repeated his view that a premature rate hike was more dangerous than one that came too late.

The BoE is widely expected to keep interest rates at their record low throughout this year and possibly until 2019 as it steers the British economy through the uncertainty linked to the exit from the EU.

However, one rate-setter — Kristin Forbes — voted last month for a rate hike and others said they might follow suit soon if there were signs of inflation picking up by more than expected or that economy was maintaining its momentum of 2016.

When VCs get two bites of the apple (Financial Times), Rated: A

But this is finance and that means things inevitably get even more complicated. This time we’re going to look at the way venture capitalists have structured their investments in two of the UK’s rising fintech stars: Funding Circle and Transferwise.

Transferwise, a payments business, has raised just over $100m from investors including Index Ventures, Peter Thiel’s Valar Ventures, Andreessen Horowitz, and Baillie Gifford, according to Crunchbase.

Funding Circle, a lender to small businesses, has raised $370m from the likes of Index Ventures, Accel Partners, BlackRock, Baillie Gifford, and others, also according to Crunchbase.

Funding Circle, on the other hand, seems to have a more complicated setup called a “participating preferred” structure. This means the investors get their money back in a sale, ahead of anyone else, and they get a share of the cash that’s left over.

The Complete Guide to Using Revolut for P2P Lending Investors (P2P-Banking), Rated: B

The important fact is that with the own account number it is possible to use that for withdrawals from UK marketplaces as no reference is needed for the transfer. I have done this a couple of times now and it takes only a few hours for the money to arrive and get credited.

Entering the recipients bank details on a smartphone is a bit cumbersome, but it needs to be done only once, as the details are stored and can be reused for future transfers.

Note to UK investors: You cannot use the Revolut app likewise for transfering funds from on p2p lending platform in the Eurozone to another p2p lending platform in the Eurozone.

And when I did a comparison of exchange rates at the time of writing this article, I found that actually Revolut offers a much better exchange rate. This is what I got when I compared:

  • Revolut: 238 Euro gets 206.12 GBP
  • Transferwise: 238 Euro gets 204.92 GBP
  • Currencyfair: 238 Euro gets 202.91 GBP

Important tip: Never exchange money on Revolut on a weekend, as Revolut will charge a 1% fee then.

European Union

Deutsche Bank acquires stake in FinTech TrustBills (Deutsche Bank), Rated: A

Deutsche Bank AG today announced the acquisition of a 12.5 percent share interest in the receivables auction platform TrustBills. Founded in 2015, the Germany based FinTech TrustBills is an electronic True Sale marketplace for national and international trade receivables. TrustBill’s goal is to become an international receivables market place for companies of all sizes. Terms of the agreement are not being disclosed.

GRANT SUPPORTS DELIVERY OF NEXT GEN FINTECH FOR SPEAKERBUS (Speakerbus), Rated: B

Speakerbus today announced a milestone in its TRADECOM European Union funded project with the successful submission of its scheduled phase 1 reports. The European Commission’s innovation in SME’s programme (Horizon2020), awarded Speakerbus an innovation grant to advance the commercialisation of its vTurret; itself a prototype developed from a UK Government Innovation Grant, a grant specifically awarded to showcase and fast-track technological innovation in technology.

The partly funded project demonstrates Speakerbus commitment to Software as a Service (SaaS), cost pressures, scalability, redundancy, VoIP, compliance, access to an advance API and multi-vendor collaboration, as the project matures.

Australia

Fintech all talk no action in bank competition race (Fiancial Review), Rated: A

One theme often overlooked in the debate around the role of the major banks and home lending is competition, or lack of it. Australia’s banking sector is one of the most highly concentrated in the world and the much-hyped arrival of digital disruption has hardly shifted the dial.

Sims makes no bones about the fact that he thinks the market share of the big banks, along with their profits, are too high. He notes that their earnings have increased over the past 15 years as their share of the lending market continues to rise.

The hype around the changes digital technology was going to have on the industry has also failed to materially affect the competitive landscape, although it has forced the existing players to compete with each other with better payments systems and smartphone apps. The biggest competitive shift has been the rise of mortgage brokers, although they will be impacted the most from the banking regulator’s latest crackdown on interest-only loans.

Canada

NewOak Asset Management Partners with LendingArch to Purchase up to Billion in Consumer Loans (LendingArch Email), Rated: AAA

Today LendingArch, the Calgary-based online and point-of-sale lending platform, announced a partnership with NewOak Asset Management LLC, a New York-based asset management and institutional advisory firm who have advised on over $5.5 trillion in assets on behalf of the world’s top banks, institutions, law firms and regulators. This partnership gives NewOak the ability to purchase up to $2 billion worth of loans originated through LendingArch’s platform over the next three years, the largest deal of its kind for a Canadian consumer lending platform.

NewOak will also be taking on an advisory role with LendingArch, providing insight on capital markets, credit, growth, and additional business opportunities as the company further expands its point-of-sale lending platform.

The NewOak partnership is LendingArch’s first of many institutional-based deals that they are looking to strike in North America and internationally, and means that the company can continue to provide high-quality, low-cost loans across a range of verticals, giving Canadians a viable alternative to banks for consumer lending.

International

CFA challenges investment industry: transform or be disintermediated (The Asset), Rated: A

CFA Institute, the investment management industry’s global think-tank and lobby group, has come out with a very strong challenge to the industry to “transform” itself or risk being “disintermediated” in the face of industry difficulties.

Among the significant trends that the study cited are:
• Uncertainties brought about by geopolitical developments such as Brexit, Trump’s election, regulatory reform, etc;
• Disruptions brought about by fast-paced developments in the financial technology (fintech) sector;
• The persistent low-yield environment and the resulting shift from passive to active management.

 

Authors:

George Popescu
Allen Taylor

Monday January 30 2017, Daily News Digest

price & yield table for SCLP 2017-1

News Comments Today’s main news: ABA Banks seeks MPL partnership. Zopa passes 2bil GBP milestone. Today’s main analysis: SoFi Unsecured Consumer 2017-1. Today’s thought-provoking articles: Orchard Online Lending Snapshot. Five mistakes to avoid when starting a FinTech company. Spanish banks lead FinTech VC in Europe. Tyro, RateSetter, Stockspot and Westpac on past and future. United States ABA seeks MPL partnership. […]

price & yield table for SCLP 2017-1

News Comments

United States

United Kingdom

European Union

Australia

India

Asia

News Summary

United States

U.S. bank trade group seeks marketplace lending partnership (Reuters), Rated: AAA

The American Bankers Association, a trade group for U.S. banks, has been hunting for a marketplace lending platform to help its members ramp up their digital offerings.

The ABA has run a formal bidding process to secure a marketplace lending partner, spokesman John Hall confirmed on Friday. He could not say which companies were under consideration because the information was confidential.

Weekly Industry Update: January 29, 2017 (PeerIQ), Rated: AAA

The ABS market finished January on a high note with strong buyer interest. SoFi and Mosaic priced their first and inaugural transactions respectively in 2017, which were both heavily oversubscribed.
FinTech financings continue apace. Nyca announced the successful closing of a

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

It was reported this week that LendingRobot launched a robo-advisor hedge fund for accredited investors that will invest in loans from LendingClub, Prosper, Funding Circle, and Lending Home. loanDepot announced that they have funded $100 billion in home, personal, and home equity loans since their inception in 2010. In yet another sign that positive sentiment seems to be returning to the industry, BorrowersFirst, an online consumer lending platform, announced last week that it has secured an additional $100 million in debt financing to accelerate loan originations and fund continued growth of its balance sheet. The Office of the Comptroller of the Currency issued OCC Bulletin 2017-7 as a supplement to OCC Bulletin 2013-29, which “governs the risk management frameworks maintained by OCC- regulated banks in establishing, monitoring and concluding third party relationships (including relationships with bank affiliates).” On Monday, we announced that LendIt has partnered with us for our 2017 Meetups–as a way to enrich the events–strengthening the depth and breadth of ourrelationships in the industry.

DiversyFund Takes Crowdfunding Real Estate Investment Giants Head On (Military Technologies), Rated: A

DiversyFund, Inc., announces the launching of its new full-service online crowdfunding real estate investment platform. DiversyFund principals, Craig Cecilio and Alan Lewis, have been delivering exclusive investment opportunities that generate high returns for their investors for over a decade. The company has planned to offer some unique features to its investors in the upcoming months. These are aimed to disrupt the current status quo of the industry.

With their new online crowdsourcing platform, DiversyFund is planning to become the key sponsor and lead developer to the majority of their projects, if not all of them. This is a key difference in their crowdfunding real estate investment platform. It makes them stand out since many of their competitors work with third-party sponsored projects and act only as mediators by providing technology to implement funding for outsourced deals.

AirBnb’s Fintech Future (The Financial Revolutionist), Rated: A

This week, word “leaked” that Airbnb is in advanced talks to acquire Tilt, a group payments/social network hybrid start-up that helps people split the cost of rent, dinners and events. Whether or not this deal happens (it probably will), the rumors support our view that of all the next-wave tech giants known as WASSUPPs (WeWork, AirBnb, Slack, Snap, Uber, Pinterest and Palantir), AirBnb is the most aggressive in embracing fintech as core to its business.

Crowdfunding takes aim at commercial real estate (Westfair Online), Rated: A

Despite a lack of data on the exact size of the real estate crowdfunding market in the U.S. – no federal agency or national trade association tracks those deals – the investment vehicle apparently is attracting a particular class of investor.

“This investor is typically younger,” said Ben Sayles, director in the Boston office of real estate brokerage HFF. “From what I am seeing, this person is high-earning, usually in the tech world – though maybe in the financial world – and doesn’t have a lot of expenses. They probably rent their apartment, do not have a car and have an extra income that they want to put to work.”

Among real estate professionals, the use of crowdfunding to raise capital also appears to be concentrated within a particular demographic.

“For a smaller commercial real estate developer or investor, the non-Donald Trump type, this can be a cheaper source of financing for a $10 million to $30 million project,” said professor Anthony Macari, executive director of graduate programs at Sacred Heart University in Fairfield.

Three Crowdfunding Sectors to Watch in in the US in 2017 (Crowdfunding), Rated: A

With investors becoming increasingly more comfortable with new Fintech platforms, the amount of money invested in crowdfunding in the Americas jumped from $11.4 billion in 2014 to $36.49 billion in 2015 — and Technavio market research analysts predict the overall industry will grow at a compounded average annual rate of 27% through 2020.

Since the first provisions of the JOBS Act went into effect, real estate has remained one of the most popular crowdfunding investment classes. The physical nature of buildings and land lends real estate more security than higher risk startups. And with a self-proclaimed real estate mogul now in the White House, many leading experts are predicting a record year for real estate. We are also seeing increasing issuer adoption — more real estate firms are launching their own crowdfunding platforms, and a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack.

In addition to standard real estate crowdfunding platforms, we think we will see an influx of hybrid platforms that allow users to not only invest but to solve other problems as well.

Last year’s announcement from OPEC to cut production in combination with President-elect Trump’s oil friendly appointments has oil and gas prices on the rise. Oil prices have already climbed 17.5 percent as of December 27 and show no signs of slowing. And investors are taking notice. EnergyFunders, a crowdfunding marketplace that allows investors to directly invest in U.S. oil and gas wells, reported a 45 percent increase in signups after OPEC’s announcement.

Impact investing, or investing in companies that bring about positive change in the world, is growing in popularity as more millennials enter the market. A recent survey from U.S. Trust states 93% of millennials believe that social impact is key to their investing decisions. Ryan Ràfols, CEO of Newchip.co an aggregation platform that uses Robo-advising to showcase impact investing crowdfunding offering, explains;

“Millennials want to invest in companies that can make a return while making a difference in the world.”

Elon Law dean addresses poor SoFi ranking (Biz Journals), Rated: A

Social Finance Inc. (commonly known as SoFi) ranks Elon among the bottom 10 law schools in the nation in its Return on Education Law School Rankings. It ranked Elon eighth out of the 10 worse schools. Elon’s graduates, SoFi said, average $87,680 in salary and $145,610 in debt.

Luke Bierman, dean of Elon Law, which is based in Greensboro, said he doesn’t argue that a law school degree requires a sizeable investment from a student in terms of both time and money. But he said Elon adopted a new curriculum two years ago intended to make it quicker and less expensive for a student to earn a law degree. He said the school’s current tuition is 20 percent below the national average for private law schools and said the new curriculum allows a student to graduate in 2.5 years as opposed to the three years required through a traditional curriculum.

He said the study released by SoFi doesn’t reflect students who have enrolled at Elon since the adoption of the new curriculum. The first group enrolled solely under the new curriculum, he said, will be graduating in December. He said it’s Elon’s hope that those students will be graduating with less debt.

Bitcoin P2P Lending Remains A Risky Business (Live Bitcoin News), Rated: A

On paper, the service provided by companies such as BTCJam is an excellent way to use Bitcoin. Extending loans to people from all over the world is a great solution to promote Bitcoin usage. Unfortunately, this concept still needs a lot of work, as there are a lot of caveats to using services such as BTCJam right now. In most cases, a lot of the loans are never repaid in full.

It is evident a lot of BTCJam users are losing money unless they are the borrowers for a specific amount of Bitcoin. In fact, some Reddit users argue the only people who benefit from using BTCJam are the ones who borrow money, and everyone else is losing money left, right, and center. BTCJam has been dealing with these issues for quite some time, yet it seems very little has changed over the past year or so.

Global Debt Registry Successfully Completes SOC 1 and 2 Attestation (Global Debt Registry Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced receipt of its Service Organization Control [SOC] 1 and SOC 2 Type 1 attestation engagement report, providing independent validation that the Company’s internal security controls are in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) applicable Trust Services Principles and Criteria. Just days after International Data Privacy Day on January 28, this attestation showcases GDR’s continued dedication to meeting the highest industry standards for protecting confidential consumer information.

GDR’s SOC 1 and 2 Report demonstrates that the Company has the necessary internal controls and processes in place to protect consumer data, maintain operational integrity, and comply with industry standards and regulations.  The SOC 2 engagement included evaluating GDR in accordance with the trust principles of security, availability, processing integrity, and confidentiality. The AICPA created the SOC guidelines to provide an authoritative benchmark for service organizations to demonstrate implementation of proper policies, operational practices and controls.

As a partner to online lenders, investors, warehouse lenders and other industry stakeholders, GDR delivers real validation and helps ensure asset certainty including protection against double pledging and double selling of assets with its suite of digital due diligence solutions. The Company contracted with KirkpatrickPrice for its SOC 1 and 2 engagement to meet the ongoing public and private reporting requirements of its financial institution clients.

GDR is also compliant with a number of additional industry standards, including PCI DSS (Payment Card Industry Data Security Standard), the GLBA (Gramm Leach Bliley Act) Safeguards Rule, and ISO 27002 (International Organization for Standardization 27002). As evidenced by the SOC 1 and 2 Report, the Company is continuing its focus on meeting the highest standards of data and information protection and operational integrity for its clients.

The 4 Best P2P Lending Platforms For Investors In 2017 — Detailed Analysis (Forbes), Rated: A

With interest rates at all-time lows since 2008 and many historically “safe” investments like government bonds carrying negative yields, investing in P2P loans in 2017 is a no-brainer.

Founded in 2007, Lending Club is the world’s largest P2P lending platform with over $20 billion in loan issuance. Lending Club has grown exponentially and currently has a 45% market share. It raised over $900 million from its IPO in 2014, but its share price has since fallen 72%.

Launched in 2006, Prosper was the first P2P platform in the US. It has since funded over $6 billion in loans and serviced over 2 million customers. Prosper grades borrowers through its Prosper Score. This proprietary system focuses on criteria such as debt-to-income ratio and other “soft checks” conducted by credit bureaus.

Launched in 2014 by a bunch of ex-Googlers, Upstart has originated more than $300 million worth of loans. Upstart uses unique grading criteria. It looks at FICO scores but also considers educational background. The firm has the lowest default rates across the industry thus far. Over 94% of loans are on track to be repaid in full. The company makes its money solely on origination fees from the borrower.

Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands. Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands.

Why More Consumers Are Seeking Alternative Investments (Newswire.net), Rated: A

However, modern consumers are starting to look at alternative investments, which stray from “conventional” standards either because they’re riskier, newer, less tested, or involve unknown variables. What you need to know about alternative investing is this: it’s on the rise, and there may be a benefit in jumping in early.

Types of Alternative Investments

  • Private lending. Private lending has grown in popularity in recent years, thanks to peer-to-peer apps that make it possible, such as Lending Club. Here, you may lend some of your own money to one or more private borrowers, who pay you back with interest.
  • Currencies. Currencies are constantly shifting in value against each other as various countries grow or shrink economically. Investing in a country’s currency when they’re poised for growth with an app like XE could result in a major gain.
  • Other tech-based solutions. There is also a rising number of new apps and technological solutions opening the doors to new investment possibilities. The rise of machine learning and automated investing solutions, like Wealthfront, is an example of this.

Manhattan Beach’s PeerStreet opens real estate investing to individuals (TBR News), Rated: B

Headquartered in Manhattan Beach just across the street from the town’s iconic 24-hour diner, The Kettle, PeerStreet may be located in a small beach town, but the reach of this real estate investment firm is national.

Crosby describes PeerStreet as an eTrade for real estate investing.

The business began right in the heart of Manhattan Beach, and currently has 50 employees. According to Johnson, they’ve recently received funding from venture capitalist Andreesen Horowitz and investor Michael Burry.

United Kingdom

Peer-to-peer lender Zopa passes £2 billion loans milestone (Business Insider), Rated: AAA

Zopa, the fintech businesses credited with inventing peer-to-peer lending, has passed £2 billion ($2.5 billion) in loans over its online platform.

The milestone means Zopa is still just about Britain’s biggest peer-to-peer lender by historical loan book. Funding Circle, which lends to small businesses, has lent £1.92 billion since its launch in 2010.

Zopa says in a release on Monday that the £2 billion in lending represents 300,000 loans made to 246,000 borrowers since its founding in 2005. 75,000 investors funded the lending over the platform.

Five mistakes to avoid when starting a fintech company (Banking Technology), Rated: AAA

However, what I feel very comfortable doing is pointing out some things that failed companies do, based on my experience in Startupbootcamp as well as building a number of successful companies. Here it goes:

  1. They forget to validate

Intuition, experience and opinions are important and helpful. However, building a fintech start-up based only on these three is very risky. A business can’t be built on limited data. Without really understanding if there is a real pain you are solving, a need you are fulfilling or knowing how many people would pay for your product or service you are multiplying the possibility of going after the wrong market, building the wrong solution or having the wrong commercial model or doing the wrong thing.

  1. They lose focus

 

Successful entrepreneurs focus on one thing at a time and they are very good at saying “No” to anything that would distract their real focus. This does not mean that they are not aware of what is going on around them or blindsided to changes or competition but they just know how to use their time efficiently.

  1. They focus too much on being “investable” and forget to build a sustainable business

It is easy to fall trapped to the chants of investors. It can be easy to believe that you have a sustainable business when an investor says that the company you started working on 12 months ago is worth £2 million. That does not mean that you have a business. It means that you can build a viable business. The criterion that investors use is not normally sustainability but potential for a large payout. Sometimes, those two factors are contradictory. Investors have to go for big money and some of these attempts fail.

  1. They don’t invest enough in team and culture

Building a fintech company is hard. The pressure is incredibly strong and never stops. Under continuous pressure, it is very easy for teams to crack and fall apart which in many occasions kill the company. A start-up’s biggest challenge is getting the team right and having the different skill sets covered to succeed. Complementing each other’s strengths and weaknesses is extremely important in small teams, especially with co-founders.

  1. They underestimate what it takes

The journey of an entrepreneur is incredibly hard and requires grit, execution and a lot of patience. In many cases, entrepreneurs get caught in the “fintech celebrity” hype and think that being on panels, and ranking high in different top lists and Twitter means success. Building a real business takes a lot of hours “in the basement”. Once the reality hits, many founders get bored and quit or fade.

Welendus – One Week on Seedrs (Welendus Email), Rated: A

One week has passed since the release of our Seedrs fundraise campaign with significant results.

Over the past week, Welendus attracted over 50 investors and raised over 25% of our target which only proves the level of interest people have in Welendus. The level of engagement and the discussion is another indication of how much people love Welendus.

We are raising £300k for equity in our company and would like to invite you to be one of our first investors and shareholders. You can access our Seedrs campaign at

Assetz Capital CEO Stuart Law Shares His 2017 P2P Lending Predictions (Crowdfund Insider), Rated: A

Nearly one month after ringing in the new year, Stuart Law, CEO and co-founder of peer-to-peer lending platform Assetz Capitalprovided his alternative finance predictions for 2017. 

Law stated:

“Brexit has already had a very positive effect on the peer-to-peer (P2P) market, and all indications signal that it will grow further in 2017 whilst bank lending remains subdued. With the larger platforms announcing record second half results in the six-month period after the Brexit vote, they are also attracting increasing amounts of capital in the form of equity.  Smaller P2P players however will likely struggle to lure the necessary lending or growth capital to survive independently, so we expect a degree of consolidation and some to drop out of the market altogether.

Alternative finance has certainly started to make its mark with savvy investors, but the biggest attraction to date will be the Innovative Finance (IF) ISA.  We predict that this will attract a huge amount of capital onto the main platforms and represent as much as 30% of all capital inflows to P2P platforms this year, assuming all large P2P lenders such as Assetz Capital get approved before the end of March 2016, and perhaps as much as 50% in 2018.

“The desire to invest in secured loans will increase amongst lenders and professionals.”

P2P Lender Flender Closes Successful Seedrs Campaign (Crowdfund Insider), Rated: A

P2P lending platform Flender has officially closed its successful equity crowdfunding campaign on Seedrs. Originally seeking £500,000, the initiative secured a total of £501,700 from more than 230 investors.

Flender stated it does not consider itself a traditional P2P platform with an anonymous marketplace. Instead, its team believes that it will help businesses create lasting bonds with customers, and for consumers to reach through their existing networks and be part of each other’s success. And at the same time, underpinned with legal contracts created by the platform between borrowers and lenders.

ArchOver Announces P2P Business Lending Services Expansion (Crowdfund Insider), Rated: A

On Friday, peer-to-peer business lending platform ArchOver announced it is expanding its current “Secure & Insured” lending model by launching “Secure & Assigned” business loans.

According to the lender, the first Secured & Assigned loan will be for Ergowealth, a firm of chartered financial planners based in Marlow, Buckinghamshire.

The loan announcement comes just a couple of months after ArchOver revealed it was extending its exclusive partnership with international credit insurer and collections company Coface by a further three years.

Banks and lenders face clampdown from the Bank of England on household borrowing (This is Money), Rated: A

The Bank is due to release figures this week showing that the growth in personal loans and credit cards is running at more than 10 per cent a year.

Lenders have been slashing rates in the past six weeks and banks including TSB are offering unsecured personal loans at less than 3 per cent.

The rock bottom rates come alongside cheap loans by peer-to-peer lenders which bypass the banks by allowing loans between private individuals. Ratesetter and Zopa are offering loans at just 3.1 per cent and 3.2 per cent respectively.

Funding Circle welcomes new BDM (Bridging & Commercial), Rated: B

Funding Circle has announced the appointment of Sarah Beard as its new business development manager.

Prior to joining Funding Circle, Sarah spent three years at Lease Plan as an account manager and three-and-a-half years at Hitachi Capital Business Finance, where she managed a portfolio of 30 introducers.

Sarah, who will be based in Bristol, said she was very excited about joining the company.

European Union

Spanish Banks Lead FinTech VC Investments Against Their European Peers (The Corner), Rated: AAA

Citi’s analysts also take a look at how different the FinTech evolution has been in the West: (1) the U.S. pivoted to InsurTech in 2016; and (2) two of the largest U.S. FinTech VC funding rounds in 2016 were in the health insurance space. Big data, the Internet of Things (IoT), and wearable devices, among other trends, will help insurance companies use FinTech to be more creative and customized.

Europe remains a laggard for start-ups/VC investing at about 10% of global FinTech VC investment in 2015-16. This is not a big surprise as Europe has a smaller VC market versus the U.S., it has none of the large technology/Internet companies that exist in the U.S. or China and its banking system (despite the sector’s weak stock prices, earnings and capital challenges of the past decade) offers more of a full-service provision versus U.S. or Chinese peers.

As reported by Citi:

European banks are increasingly interested in FinTech and with more bank investors and affiliates, we will see more of a shift to business-to-business (B2B). In 2017 we expect more focus on B2B FinTech topics, such as Artificial Intelligence, especially in London which is a hotspot with DeepMind and its concentration of universities; regulatory tech both in the U.K. and the U.S.; and cybersecurity primarily in the U.S. and Israel.

European Crowdfunding Networks Calls for Members to Assist with EU Crowdfunding Regulatory Review (Crowdfund Insider), Rated: AAA

The European Crowdfunding Network (ECN), a pan-European alternative finance advocacy group, is asking members to participate regarding input on the Capital Markets Union.  Specifically, the ECN will be working with the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) regarding input on obstacles to cross-border

The ECN will also launch an open survey to all EU securities and lending crowdfunding platforms with will deliver input for the European Commission’s review of the Capital Market Union and which will be followed up by individual interviews with interested parties.crowdfunding for both online lending (peer to peer lending) and equity crowdfunding.

Australia

Tyro, RateSetter, Stockspot and Westpac on 2016 and the year ahead (The Mitchel Lake Group), Rated: AAA

CK: The transferability of information is huge with a growing number of middleware, SaaS applications and APIs. Sharing data and improving collaboration in the market is continually on the improve, benefiting the customer.

DF: Investors are much more discerning in the businesses they back. This will be better in the medium term, but it’s been difficult for some businesses locally.

CB: This year Stockspot became the first robo-adviser in the world to give clients the flexibility to personalise their portfolio with the launch of Stockspot Themes. We’ve already managed to generate some fantastic net returns for early adopters (6.2% and 9.2% per year) while charging clients less.

DF: For RateSetter, expanding our offering from consumer lending to business lending was a significant development. In Australia there’s been a real lack of business financing options outside residential property-secured bank finance and expensive short-term working capital finance, so we’re excited that RateSetter now offers Australian businesses a low-rate funding alternative to help them grow and prosper.

JS: My biggest highlight has been Tyro receiving a bank license. We are the only tech company to have achieved this so far. This was such a massive win for us and the sector. Following this, we were then able to deliver next-gen banking, a cloud-based, totally mobile & totally integrated banking solution for SMEs and growth companies.

JS: The FinTech community has limited potential if banking is not opened up. In a way, Australia is cursed by the entrenched bank oligopoly. If we don’t get our act together and open up banking, the next-gen banking providers will not be Australian.

CB: There are two things the Government could do to improve fairness for consumers when it comes to investing and superannuation. One is to require all superannuation and managed funds to provide fee and performance data to comparison websites so consumers can easily compare fund options. The second is to implement a public tender for the right to manage default super funds as outlined by the [Grattan Institute]( Chile established public tenders for the right to manage default super funds and it has reduced average annual super fees by 50%.

John Cummins Appointed New CIO for Australian Marketplace Lender SocietyOne (Crowdfund Insider), Rated: A

The Australian largest marketplace lending platform SocietyOne announced John Cummins has joined the group as CIO, according to The Advisor. Reporting to SocietyOne CEO and MD Jason Yetton, Cummins will be responsible for SocietyOne’s funding requirements to support demand from an expanding number of borrower customers, including building on SocietyOne’s existing network of investor funders which features large financial institutions, mutual banks, credit unions, high net worth individuals and SMSFs.

India

India Money Mart Serves as a P2P Lending Platform (Military Technologies), Rated: A

With India Money Mart serving as a P2P lending platform, borrowers and lenders find transactions easy. This online market place provides a reliable platform for both lenders and borrowers in India with a minimal operational cost.Lenders and borrowers can avail loan facilities at their own will. Borrowers can choose single or multiple lenders at the same time. IMM ensures that these transactions are carried forward without any hassles or meeting one another personally.

Through an easy lending process, Kissht helps consumers avail quick loans (YourStory), Rated: A

There is an entire population that has the money to repay loans, yet mainstream banks reject their loan applications. This does not favour consumer spending, although consumption has grown in this country. According to data available with the RBI there are only around 27 million credit cards in the country, and 300 million bank accounts. In 2016, although personal loans were 22 percent of all bank credit disbursed, several Indians remained without personal credit.

With this as the backdrop, Krishnan Vishwanathan, a consultant from McKinsey, wanted to find a fix to help people consume. Giving up his lucrative career, he set up Kissht, which means EMI  in Hindi, to provide collateral-free loans for products that consumers want to purchase. The total loans disbursed so far are to the tune of Rs 17 crore, with over 9,000 customers.

Asia

Peer-to-peer lending platform awaits BOT nod (The Nation), Rated: A

VORAPOL PHORNVANICH, chief executive of PeerPower, a financial-technology start-up, aims to create a new online peer-to-peer lending platform for investors and borrowers.

“At present, investors and savers in Thailand earn a relatively low return on their funds, averaging 0.5 per cent for savings accounts, 2-2.5 per cent for fixed deposits and 4-4.5 per cent for corporate bonds.

“On the other hand, if you are a borrower, you have to pay a relatively high interest rate on consumer loans, which have no collateral. Interest rates are currently as high as 15-36 per cent per annum. The interest-rate spread is huge, so we think this new online platform can help narrow the gap between deposit and lending rates as happens in other countries.”

Authors:

George Popescu
Allen Taylor

Monday November 14 2016, Daily News Digest

lc marketplace loan originations

News Comments Today’s main news: Orchard weekly online lending snapshot. U.S. Small business borrowing falls while delinquencies rise Today’s main analysis : LC loan volume stabilizes. AltFi Data sees equity crowdfunding market shrinking. Today’s thought-provoking articles: OCC considers FinTech charters. Singapore hosts world’s largest FinTech event. Future of FinTech. United States Orchard Weekly Online Lending Snapshot. AT: “Note the […]

lc marketplace loan originations

News Comments

United States

United Kingdom

European Union

Australia

China

India

Singapore

Africa

Israel

International

News Summary

United States

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

This year saw the launch of the first online lending-focused, registered closed-end funds (or ’40 Act funds) in the U.S. It is a significant step that further legitimizes the industry to U.S. investors by providing a way to gain exposure to the loans of multiple originators via professionally managed, SEC-registered investment vehicles. RiverNorth Capital Management, LLC, the investment manager that launched the

LendingClub Loan Volume Stabilizes (The Wall Street Journal), Ratd: A

LendingClub Corp. said its loan volume stabilized after the surprise ouster of its chief executive six months ago, sending shares climbing 15% to their biggest one-day percentage gain ever.

The San Francisco-based loan-marketplace operator reported Monday third-quarter revenue and adjusted per-share earnings that exceeded analysts’ expectations, in addition to a large, new loan-sale arrangement with a unit of one of Canada’s largest banks.

Third Quarter 2016 Results (Lending Club)





Fundrise Launches RSE Capital as Stand-Alone Company (Multi-Housing News), Rated: AAA
Crowdfunding real estate platform Fundrise is spinning off its real estate investment branch, RSE Capital Partners, into a stand-alone company. The new firm will focus on origination, underwriting, investment and management for the company’s eREIT platform. RSE will collaborate with top brokers and real estate firms nationwide, focusing on institutional-level assets, primarily multifamily acquisitions,multifamily development and infill bridge lending.

RSE has already closed several deals, including three with one its first partners, Arlington-basedInsight Property Group. The two companies aim to invest $200 million in D.C. real estate annually.

Five Issues to Watch as OCC Mulls Fintech Charters (Bloomberg BNA), Rated: AAA

The Office of the Comptroller of the Currency could soon decide whether to offer national charters to financial technology companies, and as a Magic 8 Ball might say, “Signs point to yes.”

More concrete signals come from a couple of arcane regulatory moves by the agency in September: A Sept. 13 proposed rule that deals with receiverships for insured national banks, and a Sept. 28 revision of its charters booklet for the Comptroller’s Licensing Manual that addresses possible trust and special-purpose charters for charter-holders lacking deposit insurance.

If and when the OCC unveils its proposal for a fintech charter, here are five things to look for:

One: Who Will Be Covered?
The OCC exercises charter-granting authority for ventures that engage in at least one of the typical banking functions of taking deposits, lending money or paying checks. The lending criterion would take in online platform lenders, for example, but how wide is the “paying checks” qualification?

Two: Capital Requirements
It remains to be seen how the OCC will set capital and liquidity requirements for companies to receive a fintech charter.

Three: Leveling the Playing Field
Banks are worried that fintech companies may gain an advantage if they’re not held to the same standards as the banks.

Four: Application Process
How long will it take to apply for and receive a charter?

Five: Partnerships With Banks
The OCC will be looking to strike a balance between its primary duty to preserve the safety and soundness of the national banks it supervises and its stated intention to promote what it calls responsible innovation.

Will They Use It?
Some fintech companies look to national charters as a way to simplify their operations by, for example, pre-empting the patchwork of state laws that govern lending. But others are skeptical, viewing the concept as just another layer of government regulation.

Marketplace Lending as a Service Startup Blackmoon Secures $ 2.5 Million in Equity Funding (Fintech Finance), Rated: A

Blackmoon Financial Group has secured $2.5 million in an equity funding round that includes Target Global, A&NN Group, Flint Capital, and several private investors. The valuation of the company and the structure of the investment are not disclosed.

Blackmoon will use the funds for the further development of its technological platform and front-end solutions, and for further expanding its presence in the U.S. market, which will be a key growth area in the next year and a half.

Blackmoon makes money by charging investors for getting access to the unique supply of loans that can not be found on other platforms. According to its own data, monthly transaction volume has grown by a multiple of 2.5 since June 2016 and exceeded $5 million in September 2016.

Four Lessons as Rating Firms Look at Marketplace Lenders (American Banker), Rated: A

Whether we like it or not, independent oversight and regulations exist in financial services for a reason: to protect borrowers, lenders and society’s greater economic health. In other words, they help make industries viable. Therefore, as the marketplace lending industry continues to mature, it needs the oversight equivalent of Standard & Poor’s, Moody’s Investor Services and Fitch Ratings.

In 2008, the credit ratings agencies had clear profit incentives. The agencies were paid by the companies issuing debt — a revenue model that often resulted in ratings agencies bending standards in order to gain business. As we contemplate rating agencies for marketplace lenders, we must avoid repeating this past mistake. Marketplace lenders should not pay the agencies in any way.

Rating agencies for marketplace lender-originated loans need IT solutions that calculate and recalculate, automatically and continuously, consumer and small-business loan ratings. At any moment in time, these ratings should take into account all available information on particular loans and bundles of loans in order to deliver the most accurate risk assessments based on real-time market conditions.

While ratings agencies are very valuable, investors should not over-rely on them, as they often did in 2008.

U.S. small business borrowing falls, delinquencies rise (Reuters), Rated: AAA

Nov 1 Borrowing by small U.S. firms slipped in September, and the percentage of firms late on repaying existing loans rose to its highest in nearly four years, data released on Tuesday showed.

The Thomson Reuters/PayNet Small Business Lending Index fell to 128.9 from a downwardly revised 132.8 in August. Measured from a year earlier, it was the fourth straight monthly decline, with the index at its lowest point since January.

Credible Expands Student Loan Marketplace & Announces Partnership With Massachusetts Educational Financing Authority (Crowdfund Insider), Rated: A

Student loan marketplace Credible announced on Wednesday it has formed a partnership with the Massachusetts Educational Financing Authority (MEFA).  The organization will now be offering student loan refinancing to borrowers nationwide through Credible’s multi-lender platform.

Credible users may now be able to access student loan refinancing options provided by six lenders, which are Citizens Bank, College Ave, CommonBond, iHELP, MEFA, and the Rhode Island Student Loan Authority (RISLA).

Fintech’s Most Powerful Dealmakers of 2016 (Institutional Investor), Rated: A

General Atlantic also stressed partnership in leading a $325 million Series E funding late last year for marketplace lending platform Avant, with Korngold joining the company’s board.

Although there is, by definition, a collaborative element in any investment or advisory relationship, the sector that has come to be known as fintech has special needs. The culture of a start-up is very different from that of an established financial institution; even if the latter wishes to be more nimble and embrace new ideas and technologies, its procurement and compliance bureaucracy can get in the way. Hence the emergence of ecosystems designed to lower such barriers. Eighteen-year-old FTV Capital (<a href=” Bernstein and Richard Garman</a>, No. 7) pioneered in this regard with its Global Partner Network, which includes major financial companies that invest in FTV funds and thereby gain insight into new developments.

Citi Opens APIs to Third-Party Fintech Developers (American Banker), Rated: A

The API Developer Hub was launched Thursday to foster collaboration and partnerships between fintech companies and consumer brands. Such portals allow developers to build their own financial services applications and client solutions that easily connect to Citi. Mastercard, Virgin Money and others are already leveraging Citi APIs to create customer solutions.

There are four APIs currently available to developers: one that allows Citi customers to access their account summaries; an authorization API that gives customers secure access to their account data for more streamlined transactions; one that approves access to shared Citi customer profile information for deeper engagement; and the Pay with Points API, which allows an app to accept a customer’s Citi rewards points to pay for their purchases.

10 reasons fintech startups fail (Banking Exchange), Rated: A

My employer, William Mills Agency, has represented hundreds of fintech companies. We’ve seen startups with (in our opinion) marginally acceptable products or services thrive. And we’ve also witnessed companies with (again, in our opinion) incredible ideas fail—miserably.

Here are 10 deadly mistakes fintech startups make, as well as some simple solutions to avoid them.

  1. Mistake 1. Underfunding the startup. Solution: Before I start any do-it-myself project I’ve learned (the hard way) that it’s going to cost me twice as much and take three times as long.
  2. Mistake 2. Underestimating the length of the sales cycle. Solution: If you’re selling fintech to any financial institution— be it small community or money center bank—expect a long, arduous sales cycle with multiple setbacks and delays.
  3. Mistake 3. Not understanding the market. Solution: Too many startups are blinded by their own arrogance. They’ve sold themselves into believing their solution will completely change the way the financial world operates, and that they don’t need to work within existing parameters.
  4. Mistake 4. Failing to devise a sound sales strategy.
  5. Mistake 5. Don’t put all your sales chips on “Bob.”
  6. Mistake 6. Don’t blow your shot with a poor start. Solution: If your organization is still trying to figure out what it is and to whom you’re selling, don’t make it up on the fly.

Read the rest at Banking Exchange.

Nead.co to Release Open Fintech Platform for Investment Banking (Eries News Now), Rated: A

Nead.co, provider of middle market finance and technology consulting solutions will soon be launching a dedicated fintech platform for mergers, acquisitions and investment banking. In preparation for the launch, the company is inviting independent software developers with a keen interest in financial technology engineering to join the company’s ever-growing ecosystem.

Fintech developers are encouraged to join by submitting detailed information regarding the types of applications they intend on building into the platform. If accepted, Nead & Co. management will open up the firm’s API tools for access by engineers who wish to develop into a growing ecosystem of expert financial and technology experts.

The War Between Fintech And Traditional Finance Reaches A Crossroads (News BTC), Rated: A

To put this into perspective, the financial sector has an annual revenue of roughly US$5tn. As is always the case, they want that number to keep growing. To do so, they partner with fintech startups to realise new ideas and improve existing infrastructure. Combining the US$5tn market with a US$20bn fintech industry can lead to exciting developments.

Change is inevitable at this stage. The sooner banks and financial institutions realise this inconvenient truth, the better for everybody. Fintech should not be ignored, and various subsectors of this industry are making waves. Blockchain, Bitcoin, robo advising, and AI are just a few examples of what the future holds. Exciting times are ahead of us, even though we are all cogs in the global financial war machine.

Kabbage Hires Chief Technology Officer and Chief Data Officer (PRWeb), Rated: B

Kabbage®, a pioneering financial services technology and data platform, today announced Amala Duggirala has been appointed Chief Technology Officer, and Rama Rao has joined Kabbage as Chief Data Officer.

Amala Duggirala is highly accomplished in building large-scale, high-performing systems with a keen eye toward exponential business growth. Bringing nearly two decades of experience to Kabbage, she is responsible for advancing the automation and growth of the Kabbage Platform and for implementing strategic information technology and product initiatives to power financial services for organizations worldwide.

NYU Stern Hosts Inaugural FinTech Conference Featuring President and CEO of PayPal (BusinessWire), Rated: B

New York University’s Stern School of Business, the first business school to establish aFinTech specialization for MBA students, held its inaugural FinTech Conference on November 9, 2016. Featuring keynote speaker Dan Schulman (MBA ‘86), president and CEO of PayPal, the conference addressed many critical issues in the industry, ranging from regulation to public policy, equity crowdfunding, marketplace investing and blockchain technologies

81% OF NONPRIME AMERICANS DO NOT OVERSPEND: STUDY FROM ELEVATE’S CENTER FOR THE NEW MIDDLE CLASS (Elevate Email), Rated: A

In the wake of last week’s seismic election, Elevate’s Center for the New Middle Class today issued new research on how underserved Americans maintain their financial health, showing that 81% of nonprime Americans – those with credit scores lower than 700 – spend only what they earn, or less on everyday expenses.

Elevate’s Center for the New Middle Class is a research-focused body that engages and educates the public about the growing needs of individuals who do not have access to traditional credit options. In this study, the Center outlines how nonprime Americans are financially savvy in a number of ways, especially in comparison to their prime counterparts. Additional key findings from the study include:

  • Nonprime Americans check their bank account balances 50% more often than prime
  • Nonprime consumers check their credit scores 40% more often than prime
  • Two-thirds of this group plan for major expenses
  • 67% consider themselves “careful spenders”
  • 72% say they know how to create a budget

“Our research shows the narrative about the New Middle Class being less engaged in their finances is just not the case. In fact, it’s the opposite in many situations,” said Jonathan Walker, executive director of the Center. “Because they have fewer financial options, the New Middle Class clearly recognizes and appreciates the need to be fully aware of their financial position at any given moment.”

“Although most nonprimes spend what they earn or less, little room is left for unexpected expenses. When you are one car repair away from a significant financial problem, you have every incentive to know exactly where you stand financially,” concluded Walker.

United Kingdom

AltFi Data sees UK equity crowdfunding market shrinking in 2016 for first time (SMN Weekly), Rated: AAA

The UK equity crowdfunding market is set to close 2016 with more than £130 million new equity issuance, posting a slowdown in momentum for the first time, according to a report of financial markets analytics provider AltFi Data. The segment is expected to facilitate young companies in the UK raise more than £130 million growth capital in 2016.

The report includes data for all equity crowdfunding in the UK from 2011 (when when the industry was started), covering a total of 955 equity crowdfunding rounds and 751 companies. The data refers to six platforms that offer equity crowdfunding services – Crowdcube, Seedrs, SyndicateRoom, Venture Founders, Code Investing(previously CrowdBnk), and Angels Den, the last one of which was new addition for 2016.

Following are details about the funded volume for first nine months of 2016 (and 2015) of the six UK equity crowdfuning platforms included in the report:

Financial Stability Board: Fintech Firms Not Posing a Risk to Financial System (Crowdfund Insider), Rated: AAA

Secretary General of the Financial Stability Board (FSB) Svein Andresen announced at a Chatham House conference in London earlier this month that Fintech firms looking to disrupt traditional banking and financial systems are not yet posing an immediate threat, according to Reuters.

The FSB’s mission is to promote global financial stability, conduct outreach to non-member countries, and monitor implementation of agreed policies.  Members include the G20 countries and key financial centers — Hong Kong, Singapore, Spain, and Switzerland.

UK FinTech Bridge to China (Finextra), Rated: AAA

Today it is another significant milestone for the UK FinTech ecosystem as the Financial Conduct Authority (FCA) signed the Co-operation Agreement with the People’s Bank of China.

The purpose of this agreement is to provide a framework for co-operation between the parties with respect to promoting innovation in financial services. The Agreement sets out how the parties plan to share and use information to promote innovation in their respective markets.

Bank of England: We Set Up the Fintech Accelerator to Develop Our Practical Experience of Fintech (Crowdfund Insider), Rated: A

In a speech this past week by Charlotte Hogg, Chief Operating Office of the Bank of England, she welcomed the launch of the Bank’s Fintech Accelerator while explaining their mission.

The Bank of England is currently working with the following Fintech firms:

  • BMLL: This machine learning platform provides access to historic full depth limit order book data. The BMLL platform aims to facilitate analysis and anomaly detection. We have agreed to test their alpha version for this Proof of Concept.
  • Threat intelligence: As part of the Bank’s wider information security and threat intelligence work we have partnered with two firms – Anomali and ThreatConnect– that provide innovative technologies to collect, correlate, categorise and integrate security threat data. For this project, we have asked them to offer a solution to consolidate threat intelligence into a searchable repository that can optimise information collation, enrichment and sharing in support of a proactive intelligence-led defence strategy.
  • Enforcd: In this proof of concept, we are using an analytic platform designed specifically to assess and draw out trends on regulatory enforcement action using publicly available information.

UK’s FCA fully licenses crowdfunding platform UK Bond Network (SMN Weekly), Rated: A

Bond crowdfunding platform UK Bond Network said on Wednesday it has obtained a license from the UK Financial Conduct Authority (FCA). Prior to getting fully licensed, the platform operated under an Appointed Representative temporary authorization.

The platform seeks to grow its business and expand its investment solutions. It considers launching new offering investments which would qualify for the Innovative Finance ISA (IFISA), a program for tax-free peer-to-peer (P2P) lending.

Investor Views: “Peer-to-Peer Lending Boosts my Income” (Morningstar), Rated: A

Harman, who lives in West Sussex with his wife, has built up a portfolio of using pension and ISA wrappers over a number of years. More recently he has also invested in peer-to-peer lending.

Harman says: “It certainly isn’t for everyone but I am comfortable with the risks. I get a steady income stream from the money I’ve lent out, currently around 5 to 6% a year.”

Crowdfunding might make you money but it’s not an alternative to savings (Herald Scotland), Rated: A

For one thing, investors have so far not received any return on their capital and, with BrewDog’s exit route not yet articulated, it is unclear when they will.

For Adam Tavener, chair of both Clifton Asset Management and funding platform Alternative Business Finance, it is for this reason that equity crowdfunding should never be seen as an alternative savings vehicle.

European Union

Fintech Golem’s ‘Airbnb’ For Computing Crowdsale Scores $ 8.6M In Minutes (Forbes), Rated: AAA

Golem Network, the first decentralized global market for computing power, raised more than $8.6 million (m) in just 29 minutes on Friday for its Golem Network Token (GNT) and in so doing became the third largest platform ICO (Initial Coin Offering) ever.

Acting and dubbed as an ‘Airbnb for computers’, Polish-based Golem Network is a peer-to-peer (P2P) network with no central server that allows both application owners and individual users (‘requestors’) to rent the resources of other users’ (‘providers’) machines, and be paid in cryptocurrency.

As the third largest ICO for a platform behind Ethereum, a public blockchain-based distributed computing platform ($18m in 42 days) and Waves, a blockchain-powered tokens platform ($16m in 30 days), Golem claims it “substantially lowers” the price of computations to make applications more accessible to everyone.

Denmark establishes FinTech hub (FS Tech), Rated: A

The Financial Services Union Denmark, the City of Copenhagen and the Danish Bankers Association have collaborated to form Copenhagen FinTech – a new association that will develop an ecosystem for FinTech entrepreneurs in the city.

Copenhagen is currently home to a range of FinTech companies, but many believe it needs investment if the city is to establish itself as a hub for innovation. The City of Copenhagen hopes to see growth and jobs as a result of the new efforts – following a study which showed that FinTech has the potential to create 10,000 new jobs in Denmark.

The association is launching, amongst other things, a co-working space under the name Copenhagen FinTech Lab, where entrepreneurs take lodgings and become part of a FinTech environment with sparring from established companies and other entrepreneurs.

Australia

Australian Treasurer Promotes the Benefits of Fintech & Regtech (Crowdfund Insider), Rated: A

At the inaugural Fintech Australia Summit this month, Scott Morrison MP, the Treasurer of Australia, delivered a speech that addressed this “collision” between Regtech and financial innovation.

Regtech, in Morrison’s opinion, can seamlessly integrate into financial firms creating a “compliance by design” environment where risks can be mitigated as everything is monitored in real-time.

Applying Regtech to Fintech  may ease the burden of the highly regulated industry;

“…we cannot allow our financial regulatory framework to act as a handbrake to this innovation. Excessively stringent rules and obligations result in less business, less competition and ultimately worse outcomes for consumers. RegTech can equip us to avoid these outcomes.”

China

Two banks trialling biometric technology under Hong Kong fintech ‘sandbox’ (Reuters), Rated: A

Hong Kong’s banking regulator received applications from two banks to test emerging biometric technologies under a new regulatory regime, Hong Kong Monetary Authority Chief Executive Norman Chan said on Friday.

The banks have applied to test the use of biometric authentication of securities trading, Chan said at the regulator’s first ever financial technology or “fintech” day on Friday.

India

Authors:

George Popescu
Allen Taylor