You’ve likely heard that OnDeck recently expanded its relationship with JPMorgan Chase. Lending-Times decided to take the opportunity to discuss the deal with OnDeck CEO Noah Breslow. Here’s what he had to say. The relationship goes back almost four years, Breslow said. “Right before we went public,” which happened in 2014. At that time, JPMorgan […]
The relationship goes back almost four years, Breslow said. “Right before we went public,” which happened in 2014. At that time, JPMorgan Chase was involved in developing their internal business strategy and focused on small business products. “The small business loan experience was expensive, and it took a long time for customers to get approved.”
In fact, Breslow said there were several pain points, but the solution turned out to be a partnership with OnDeck, which specializes in small business loans.
“The contacted us and said they wanted to enter into a trial with us to build a digital loan experience,” Breslow said. The non-bank lender said yes, and the rest, as they say, is history. “For us, it meant getting into the highest level of banking. We helped Chase take the small business loan process from six weeks to six clicks.”
A Partnership Made in Nirvana
While the idea made sense for both OnDeck and JPMorgan Chase, it took a while to take the partnership from idea to market.
“There were a million different hurdles,” Breslow said. “That included compliance and regulatory risks, governance issues, and more.” Finally, after a long trek and many discussions, the first loan was made in April 2016. But what, exactly, does each party do for the other?
Chase has customers. Lots of them. According to its 2016 annual report, the company has relationships with approximately 50 percent of American households. In hard numbers, that’s 60 million. The bank also had 26.5 million active mobile customers, up 16% year over year from 2015. Average business deposits were $110 billion. That customer base was completely out of reach of OnDeck until they partnered with the bank.
The bank agreed to market the loan product to its customers in exchange for OnDeck’s technology. They take care of the approval process and provide the capital for the loans. In return, OnDeck provides lending as a service using its proprietary technology to give Chase customers an approved end-to-end digital experience. They takes care of sales, servicing, collections, and customer service.
“When it was time for JPMorgan Chase to decide whether to continue the relationship, they double downed,” Breslow said. And the next four years should demonstrate to the world that bank-fintech relationships really work.
What OnDeck Hopes to Get Out Of Its Partnership with JPMorgan Chase
“It’s not lending revenue for us,” Breslow said. “It’s technology revenue. It’s transactional. So there’s no credit risk.”
That can take a load off. But there is always a give and take where risk and reward meet. For OnDeck, those transactional revenues are small per capita. They get just a small payment for each loan in exchange for the use of their technology. But at scale, those small dollars can add up to millions in revenue each year when Chase customers use the service. And judging from last year’s annual report, Chase’s digital lending apparatus is working quite well.
“It’s a little impact,” Breslow said. “We hope to see it grow in 2018 and 2019 as we scale. Long term, we hope this relationship will become a bellweather for other banks to partner with us so we can integrate our technology into their systems to reach more customers.”
OnDeck has had discussions with other banks, but so far, Chase is the only one to turn a nibble into a bite. “Banks have gone from questioning fintech to realizing that they have to build a digital experience for their loan products,” Breslow said. “The question for them is, ‘Should we build, buy, or partner?’”
Breslow is hoping they’ll opt for the partnership and choose OnDeck.
“We have a great engine to make small business loans, to leverage our platform for the direct lending business. We haven’t been in business for 100 years,” Breslow said. “We don’t have the customer relationships, but banks have them.
Breslow’s Crystal Ball: More Partnerships On The Way
OnDeck has made some major structural changes to its business in the last year to bring itself back to the growth stage. It is liquid with a solid balance sheet and has funding in place from several key institutional investors. Now the focus is on building on that growth, adding new products, and building more partnerships.
“As we head in 2018, we’ll be incorporating new features into our technology, and we believe we’ll have one or more new products by the end of 2018,” Breslow said.
Regarding business lending in general, Breslow sees a couple of trends emerging. First among them is the ability for technology companies to profit. “Profits will come faster and easier,” he said. “We’ll see more data sources, new accounting systems, bank transactional technologies, credit bureaus, and more. Right now, data is flowing in one direction. But I think it’s going to be more frictionless and accurate.”
The second trend he sees is more partnerships between traditional banks and fintech companies.
“It’s happening in consumer lending and small business lending,” he said. “These partnerships will happen all over the world.” Breslow said OnDeck may even be in a position to buy up a smaller company in the next year or two.
One thing is for certain: The future is looking up, both for OnDeck and for online lending. If more banks like Chase partner with technology companies like OnDeck, consumers won’t be able to know the difference. When they go online to apply for a loan, they’ll be applying through their bank (Bank of America, JPMorgan Chase, CitiBank, or a smaller regional or community bank), but the interface that will make it happen will be OnDeck’s or one of its competitors.
A wave of lending start-ups with innovative financial technology at their core and with a single minded motive to facilitate small businesses and consumers have taken the lending sector by storm all across the globe. Post-2008 financial meltdown, these startups have grown both in size as well as in numbers at a breakneck pace. The […]
A wave of lending start-ups with innovative financial technology at their core and with a single minded motive to facilitate small businesses and consumers have taken the lending sector by storm all across the globe. Post-2008 financial meltdown, these startups have grown both in size as well as in numbers at a breakneck pace. The rise of fintech can be gauged from the fact that in a survey by PWC, around 50 percent of the financial services firms shared that they plan to acquire fintech companies in the next three to five years and almost eight out of 10 institutions plan to strike strategic partnerships with P2P lenders.
Nigel Morris is a co-founder of Capital One and has led it to emerge as a multi-billion dollar behemoth. During his time at Capital One, he noticed there is a gap between banks and the fintech industry. To bridge this void, his team rolled out QED Investors in 2007 and was able to bring on board […]
Nigel Morris is a co-founder of Capital One and has led it to emerge as a multi-billion dollar behemoth. During his time at Capital One, he noticed there is a gap between banks and the fintech industry. To bridge this void, his team rolled out QED Investors in 2007 and was able to bring on board some ex-colleagues from Capital One to build QED; this helped him to ensure the team hit the ground running. QED has invested in multiple startups that have not only become unicorns, but have changed the entire landscape of the financial ecosystem in which they operate. Most notable are Credit Karma, SoFi, Prosper, GreenSky, BrainTree, and ApplePie.
Fintech Opportunities and Hindrances
Morris has seen the best and worst of big banking and fintech startups. He has seen that banks have some really important assets that fintech companies lack: low-cost deposits, regulatory access, top-notch compliance, huge customer base, and high profitability. But they are trying to be everything to everyone and this is where fintech companies are gaining ground. Fintech companies, rather than offering everything, offer a specific product or service that banks haven’t developed or cannot develop because that is just not part of their DNA.
On the other hand, Fintechs have been extremely nimble and have evolved into dominating spaces that have been vacated or neglected by banks, online consumer lending and small business lending being prime examples. However, banks have accepted the hard truth and have started striking partnerships with fintech lenders.
Morris is of the opinion that both sectors had been operating in silos. Though both have “complementary sets of skills,” they have only now really started communicating and exploring opportunities together. This lack of being able to meet on common ground was more of a cultural issue than anything. Startups do not understand or appreciate the hierarchy and sometimes bureaucratic structural setup of banks, and banks obviously are extremely wary of aligning themselves with unwieldy trigger-happy startups that can land them in a regulatory mess. So this communication gap is the biggest hindrance that both sides need to overcome to make this partnership work.
Bridging the Bank-Fintech Gap
In their endeavor to bridge the gap, QED has taken massive strides in the last six months by striking groundbreaking partnerships–one with Fifth Third in Cincinnati and another with Scotia Bank in Toronto. This partnership is beneficial for all three parties involved: Banks, Fintech companies, and QED.
Fifth Third has invested heavily in QED portfolio companies like GreenSky, ApplePie Capital, and AvidXchange. The focus of the Scotia relationship is in Latin America as they have a tremendous presence in LatAm and Central American countries outside of Brazil. They are exploring multiple opportunities together in those markets and should be able to announce a groundbreaking deal soon.
The QED Matrix
Nigel Morris believes that differentiating between fintechs and banks on a single perimeter is not feasible or sufficient. That’s why he came up with the QED Matrix.
The matrix has been developed on the lines of the BCG matrix (which is used for analyzing business units). The QED Matrix is used to show the trade-offs in the business model structure of the financial service institutions. The gist of is that each quadrant has its strengths and weaknesses, so entities moving towards the center are in the best shape.
The Matrix is based on two spectrums:
Resilience is a function of factors like brand capitalization and product suite diversification;
Flexibility concerns both infrastructure and decision making, and also includes organizational design, technology, culture, talent, and much more.
Classifications of each quadrant:
Mountains – Firms listed as mountains are high in resilience and low in flexibility. They have resilience because businesses have product diversity, brand, capital reserves, distribution networks, and low cost of capital. But low in flexibility due to institutional inertia, low growth, technical debt, and focus on regulation and cost reduction.
Examples: Citibank, Fifth Third Bank, Suntrust etc.
Boulders – Firms under this quadrant represents low resilience and low flexibility. Low resilience due to lack of capital reserves or product diversification of larger banks. They also lack in flexibility due to legacy infrastructure, weak talent pipeline etc.
Examples: Regional banks, Credit unions, Community banks.
Trees – Trees represent high resilience and high flexibility. High resilience due to factors like product diversification and loyal customer base and high flexibility due to clutter-free organizational structure, less technical debt, and open access to talent.
Leaves – Firms under this quadrant represents low resilience and high flexibility. Low resilience due to product concentration and lack of stable low-cost capital. High in flexibility due to simple organizational structure, technology infrastructure, etc.
Examples: GreenSky, Avant
Obviously, Trees represent the best of both worlds. But the thought process behind the QED Matrix is for banks and fintechs to realize where they are in the matrix and what type of partnerships should they pursue to ensure they remain relevant in the twenty-first century. So a boulder should look to partner with leaves so that its customer base can be monetized properly. Leaves should look to partner with mountains so that they have access to cheaper capital and a diversified offering and customer base. Whatever the situation, QED is sitting in the middle of the matrix. It is not only a capital provider to fintechs, but also the creator of a platform for dialogue with banks; this should help it become the first choice for entrepreneurs looking to build a sustainable fintech business.
News Comments Today’s main news: Lending Club media sentiment of 0.27. P2P ISA data disappoints. 83North closes $250M fund for EU and Israeli startups. AnyTimeLoans fights its way into Singapore. Today’s main analysis: FinTech’s growing influence on financial services. Wealth Tech exit activity in one timeline. Today’s thought-provoking articles: Top 8 Renaud Laplanche/Upgrade news stories. MarketInvoice has ambitious expansion plans. Fintech […]
LendingClub receives media sentiment score of 0.27. GP:” We strive to be objective but we are still humans. Modestly, I do wish that more media was objective and looked at the numbers more though. I do think that being public did attract a lot of SEO and PR to Lending Club which shouldn’t be discounted. Also, the story based on ‘we are replacing the evil banks’ caught very well with a majority of the public. One shouldn’t underestimate a good story, or a pitch that is popular with the public. I am sure everybody remembers Google’s ‘don’t be evil’. “AT: “Lending Club’s press is getting better, signifying the company is making a comeback even as its ousted former leader is making his own comeback with a rival startup. This will be an exciting year for alt lending.”
FinTech’s growing influence on financial services. AT: “FinTech has been likened to Uber’s move in on taxi services and Napster’s disruption of the music industry, but I see one fundamental difference. Instead of fighting the trend, legacy financial institutions seem to be embracing it with partnerships and innovative initiatives of their own. We can debate the effectiveness of these attempts to embrace FinTech, but they are at least trying. We couldn’t say that about the music industry’s response to Napster or taxi services’ reception to Uber and Lyft. The takeaway: Financial services have changed, for better or worse, because of FinTech (I say better), and legacy financial institutions are embracing that change, even if they are doing so with much chagrin.”
Wealth Tech exit activity in one timeline. GP:” Investors usually invest based on exits, the likelihood, and their size. This info is key for fundraising. Very few people build companies with a large EBITDA and cash flow for dividends in mind.” AT: “In the world of finance, the exit every bit as important (maybe more so) as entrances).”
Benefits of alt lending. GP:” A good summary is the phrase ‘ while equity markets were falling, the performance of these loans was unaffected’ “
JPMorgan’s fintech strategy. AT: “Jamie Dimon’s annual shareholder letter has received a lot of press lately, mainly for his regulatory requests. But he also disclosed some of JPMorgan’s fintech plans. Remember when he was deadset against fintech?”
P2P Isa data disappoints on year on. AT: “What’s interesting is what Stuart Law has to say about Isas. They may not have overwhelmed us in the last year, but when the Big 3 finally are approved, you could see a wave of acceptance and activity.”
MarketInvoice has ambitious expansion plans. GP:” What I would do if I was in charge Learning from Lending Club’s experience: opening its underwriting data for free to the internet will attract a lot of attention, PR , SEO and build its credibility. Also having a secondary market will probably enable people to invest more freely as they will not be worried being stuck with paper for 3, 4 or 5 years.”
Top 10 fintech lending companies and their worth. GP:” Where is Lending Club in this list? How can they not mention Lending Club? Or Yirendai ? Not a serious ranking at all. ” AT: “4 in China, 5 in the U.S., and 1 in the UK. The top 2 are in China.”
Renren dumps SoFi shares. GP:” SoFi shares are a hot commodity as I can’t imagine their valuation going down any time soon. Most likely this was driven by RenRen’s needs for cash. Note that they still kept 85.9% of their shares in SoFi. “
LendingClub Corp (NYSE:LC) traded up 1.91% during mid-day trading on Thursday, reaching $5.34. The company had a trading volume of 3,066,593 shares. The stock’s market capitalization is $2.14 billion. LendingClub Corp has a one year low of $3.44 and a one year high of $8.41. The company’s 50-day moving average is $5.63 and its 200-day moving average is $5.64.
The Financial Services industry continues to be fuelled by FinTech’s influence. The fact that consumers are increasingly doing business with these non-traditional players will do little to calm uncertainty. As incumbents react to this they are attempting to come together with FinTech; to leverage the ecosystem it creates, turn the innovation to their advantage and alleviate their concerns around their business being at risk.
Wealth tech startups are disrupting personal wealth management and institutional trading, with companies in the space seeing a record 74 deals in 2016.
Though a relatively nascent subindustry, there have been 29 wealth tech exits since 2012, including 28 mergers and acquisitions (M&A) and 1 IPO. Exit activity surged in 2015, with a record of 11 exits, all of which were from M&A. 2016 lagged 2015 with 8 exits, all of which were also M&As.
2017 is off to a strong start with 3 exits as of Q1’17.
One of the earliest exits in the wealth tech space was a merger between Zecco and TradeKing in Q2’12.
Since its inception in the late 2000s, marketplace lending has seen good and bad years. Today, an imminent interest rate hike has made its future uncertain.
Lending Club sorts its loans into almost 40 risk grades. Annual interest rates range from 6% for high-credit borrowers to 36% for risky borrowers. That makes them very competitive with traditional debt investments. It’s no wonder that marketplace loans soared 700% between 2010 and 2014.
Take a quick look at the stock performance of OnDeck and Lending Club. It becomes pretty clear that there are some problems under the hood. Both companies are down almost 50% in the last year.
Oversight said that 30-day delinquency rates were as high as 18% for some marketplace lenders.
An investor might be willing to gamble on a 6% return when Treasury bills are yielding 1%. But if U.S. government debt is yielding 3% or 4%, then marketplace lending is significantly less appealing.
JPMorgan is developing an automated advice platform it says will be ready this year, Bloomberg writes.
The company is developing several “exciting new products,” and among them are “online vehicles for both individual retirement and non-retirement accounts, providing easy-to-use (and inexpensive) automated advice,” JPMorgan CEO Jamie Dimon wrote in his annual letter to the company’s shareholders, according to Bloomberg.
In addition to digital banking and electronic trading, JPMorgan will be rolling out the automated advice service later this year, Dimon says in the letter.
A direct online lender is a company that actually supplies the money it lends to borrowers. Many business-lending websites are mere matching services that send out your application to a network of lenders. That might sound good, but it’s not, because you end up paying much more for you capital.
Look for a lender with a streamlined, paperless online application process that can be completed in minutes.
A good lender looks beyond your credit score, makes a decision in minutes and gets you your money the next business day. A good lender will not do a hard pull on your credit. A bad lender may require extensive underwriting, which can waste days and still end up in a denial.
A business lender with a maximum loan limit of $25K or $50K won’t satisfy many small business borrowers who need more. Look for a direct lender who is willing to lend up to $150K.
While nonbank loan channels have always existed parallel to traditional banking, these channels were historically small niches in the overall economy. However, a new breed of lender has emerged to become a significant presence in the market.
Today institutions are the predominant source of funding for alternative loans. For example, Lending Club, the largest U.S. platform, shifted from 100% retail funding in 2008 to 84% institutional funding in 2015.
Investors saw the same thing following the Brexit vote in June 2016. In both cases, while equity markets were falling, the performance of these loans was unaffected. Thus, there are times (though not all times), when an investment in these loans will help dampen portfolio volatility.
In both alternative lending and reinsurance, one reason these products offer equitylike expected returns without the equitylike volatility is the illiquidity risk that investors accept.
Figures showed 42 companies now have full permissions from HM Revenue & Customs to offer the Innovative Finance Isa, which lets investors tap into alternative types of investment such as peer-to-peer lending.
But just 14 of the Isas are currently on the market, of which eight are offered by peer-to-peer providers, data compiled by P2P comparison service Orca revealed.
European VC firm 83North (formerly Greylock IL), which since 2008 has focused on backing startups in Europe and Israel, has closed its fourth fund — taking $250M in a raise that it says was both oversubscribed and its largest to date, and bringing its total capital under management to $800M.
In a statement she noted that the fund has already backed companies from France, Germany, Greece, Italy, Spain and Sweden, for example, and said it’s expecting European activity to accelerate in tech hubs outside London because of Brexit.
83North has invested in more than 40 startups to date.
The world’s banks have poured billions of dollars into new technologies but many say their innovation strategies are falling short as concerns about cyber security, intellectual property rights and procurement hinder partnerships with fintech firms.
The law firm found that just 7% called their institution “industry-leading” on digital innovation and only 16% considered their collaboration with financial technology firms to be “highly effective”.
The biggest barrier to successful collaboration with startups was cyber security, according to 71% of respondents.
Among the other hurdles were cultural clashes between fintechs and incumbents and issues around intellectual property rights; in both cases around 50% of respondents to the Simmons & Simmons survey flagged these as concerns, while only 19% said that their procurement processes were ‘highly effective’.
A separate survey of more than 1300 financial services and fintech executives published today by PwC, found that more than 80% believed parts of their business were at risk from standalone fintech companies (SEE CHART).
Renren Inc. (RENN) (“Renren” or the “Company”), which operates a social networking service and internet finance business in China, today announced that it sold preferred shares of Social Finance, Inc. (“SoFi”) to certain investors on April 4, 2017, in connection with SoFi’s most recent round of equity financing. The Company received net proceeds of $91.9 million for these shares. After this transaction, the Company still has 85.9% of its previous holdings in SoFi.
Want to know your exact CIBIL score? Visit www.cibil.com and pay a fee to carry the process forward. Your score will range between 300 and 900. According to experts, 79% of loans get sanctioned if the minimum credit score is 750.
Peer to Peer Lending: Peer to peer (P2P) lending is also another option to consider if a low CIBIL score is standing in your way to secure that much-needed Home Loan. P2P lending matches lenders with borrowers and this is generally an online service. The service, because it is online, is more cost effective than traditional financial institutions. Lenders can hope to make higher returns and borrowers can borrow money at an interest that is best suited for them.
Peer-to-peer lending platform AnyTimeLoan (ATL) won the India chapter of Get in the Ring on Thursday. ATL will now compete with startups around the world in the Global Startup Competition, which will be held in Singapore in May.
Twenty four startups participated in the competition of which sixe startups had a faceoff in front of the Jury. Paymatrix, Authbase, Gayam Motor Works, SpotDraft, ATL, NicheAI were the startups that made it to the round.
ATL is a peer-to-peer on demand lending provider which provides mortgages, small loans, overdrafts and loans against property. There is an algorithm that analyses information of the individual seeking a loan from 187 data points.
News Comments Today’s main news: LendingHome exceeds $1B in mortgage originations. FCA plans tougher rules for P2P lenders. Today’s main analysis: China outpaces US, UK to become FinTech hub. Today’s thought-provoking articles: ABS, partnerships to lift MPL. eMoneyUnion responds to FCA report. Mambu expands into Singapore. United States LendingHome exceeds $1 billion in mortgage loan orginations. GP:” $1bil in […]
LendingHome exceeds $1 billion in mortgage loan orginations. GP:” $1bil in the same time is a lot of money as RealtyShares, Realty Mogul, Shareestate , PeerStreet and similar companies are no-where near $1bil. On the other side it’s not that much as the average loan in real estate is huge. I continue to believe in the online real estate crowdfunding space.”
FCA plans tougher rules on P2P lending. AT: “The FCA has released its initial review findings. The interesting thing here is not so much that the FCA plans to regulate P2P lending. We’ve seen that coming for a while. The really interesting thing is what they have to say about Ratesetter. This makes me wonder what will become of Ratesetter and its provision fund. Does the FCA’s prognosis mean tougher regulations of these instruments or a denial of authorization for Ratesetter? I think it’s a clear indication that provision funds are seen as a different category than P2P lending or marketplace loans.”
LendingHome, the largest and fastest-growing mortgage marketplace lender, has now funded over $1 billion in mortgage loans in the two and a half years since the company launched.
This year has marked a substantial period of growth for LendingHome. The company completed three securitizations, launched an investor platform for individuals, transitioned to servicing its mortgage loans in-house, expanded programs to include jumbo loans, and grew revenue over 2.5x in the process. Additionally, LendingHome hired two new executives to augment its risk and operational leadership, bringing deep experience in underwriting, risk modeling, credit analytics, mortgage operations, and technology from top financial institutions.
Marketplace lending and fintech will play an increasing role in the future of the securities market, according to US SEC chair Mary Jo White. Speaking at a recent SEC fintech seminar, White praised the benefits of innovative financial technologies, but outlined the need for relevant regulatory guidelines to protect investors and wider participants.
White stated that “fintech innovations have the potential to transform key parts of the securities industry” and added that marketplace lenders are providing individuals and SMEs with new paths to access capital. However, while such developments have brought many benefits, the SEC has a responsibility to “evaluate how our existing rules address both the challenges and opportunities presented by these new technologies”.
Specifically on the area of marketplace lending, White stated that the SEC is unique to other regulators as it focuses exclusively on investor protection.
Ram Ahluwalia, ceo and co-founder of PeerIQ, highlighted that securitisation is “the primary financial innovation that has enabled consumers and businesses to access capital markets” and that “it transforms illiquid credit of any kind into marketable securities, which can then be sold into a broader base of institutional investors”.
Conor French, general counsel at Funding Circle, added that marketplace lending has the ability to strengthen the financial system because of its potential to “provide better access to safe and affordable credit to consumers”.
However, he added that the ability of the sector to do this is perhaps limited by a relative amount of uncertainty regarding future regulation. French nevertheless said that he is “excited” to see the SEC refocusing on marketplace lending and that it is important for the sector that it establishes clear “customer guardrails”.
She added, however, that while banks have “low cost deposits and customers”, they don’t have the customer-facing technology that SMEs want today. Mills added that should online lenders wish to partner with banks, they will have to be prepared for “regulatory oversight” that banks have to comply with, which will then apply to marketplace lenders in a bank partnership.
Student loan marketplace Credible.comannounced that the New Hampshire Higher Education Loan Corporation (NHHELCO) will offer student loan refinancing through the site, expanding the range of options available to borrowers.
Available in all 50 states, NHHELCO’s EDvestinU Consolidation Loan lets borrowers combine multiple student loans, federal and private, into a new loan with a potentially lower interest rate and monthly payment. Borrowers refinancing with EDvestinU can choose a fixed- or variable-rate loan with a repayment term of 5, 10, 15 or 20 years. Variable-rate loans currently range from 2.47% to 6.07% APR, with fixed-rate loans available from 3.94% to 7.54% APR.
The Crowd Invest Summit West, held at the Los Angeles Convention center on Wednesday and Thursday, was geared towards helping equity crowdfunding break into the mainstream.
The day’s first speaker was legendary author and investor James Altucher, who delved into his personal history, and what he learned from a roller coaster of success and failure that led him to make millions selling two companies early in his life, only to blow through all that cash twice in a row. One valuable takeaway was to make a point of really engaging with his creative mind.
Following Altucher was a fireside chat between Darren Marble and Ron Suber, President of Prosper Marketplace, a P2P loan platform. Suber delved into the success that Prosper has found, including a hair-raising tale of a long Labor Day weekend when they were perilously close to seeing their success come crashing to a halt. He also emphasized that the key to success for an industry relying on the crowd required balance between users and companies. If any piece of the equation seriously outweighs the others, it disrupts the industry. During his concluding remarks, Suber emphasized that building a strong community was an essential part of finding long-term success for the industry.
Moderator Devin D. Thorpe, author and contributor for Forbes, and panelist Rodney Sampson, veteran author and tech entrepreneur, reminded the audience that the vast majority of venture capital goes to white men living in three states. While crowdfunding offers an opportunity to potentially break the stranglehold that New York, California, and Massachusetts has on startup capital, the industry will still need to address the fundamental issue that there remains a huge disparity in wealth in this country between white families and African-American and Latino families.
Real estate crowdfunding platform Bricksave have launched their brand new website, as well as their first property in the city of New York. The new site includes enhanced security features, a more intuitive investment dashboard and an increased focus on catering to different investor types.
As the platform closes in on successfully funding over $2 million worth of properties, Bricksave are accompanying their new site with the launch of a new investment opportunity in New York, located in the prestigious neighbourhood of Hell’s Kitchen.
The World’s Biggest Show in Lending and Fintech LendIt returns to the financial capital of the world for its largest conference and expo ever. Join established and emerging fintech innovators and investors for two-action packed days of networking, learning and dealmaking at the iconic New York Javits Center.
Kabbage(R), the leading financial services data and technology platform, today announced the small business pitch contest finalists and grand prize winner. Kabbage is excited to reveal that Junior Lubin, owner of Supafly Skate Company, Inc., is the $10,000 grand prize winner and recipient of a private, one-hour business consultation with entrepreneur and investor, Lori Greiner.
The following “Elevator Pitch” finalists received a $1,000 consolation prize to help grow their business:
It’s difficult to compare platforms to each other;
Risks are hard to assess;
Financial promotions do not always meet requirements to be “clear, fair and not misleading;”
Increasingly complex structures are introducing new risks and conflicts of interest;
Provision funds, which platforms like RateSetter offer to cover a certain amount of investor losses, “introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors;”
Wind-down plans, put in place to take care of loans in case firms go bust, are not adequate;
Some platforms client money handling standards are not up to scratch.
eMoneyUnion responds to FCA report (eMoneyUnion Email), Rated: AAA
A number of concerns have been raised by the FCA following our feedback and their own research, such as unnamed platforms provision fund promotion, client-money account management and wind-down arrangements.
A review of our own policies and procedures has taken place throughout the year in consultation with the FCA. This has led to a number of minor amendments to our T&C’s and some day to day client-money management tweaks. These are covered in more detail below.
Provision Funds: The use of a provision fund is NOT to be deemed a guarantee or insurance policy, and as you are all aware, when the funds in the rainy day pot are gone; they’re gone. The Provision figure we promote is a financial buffer to smooth out late payments by unsecured borrowers and is displayed to approved lenders only and not on the public website. Property loans are not covered by the provision fund, as the properties themselves carry equity as the financial cushion to any potential losses.
Client Money: As reported earlier in the year, we are pleased to confirm that our client account policies and procedures meet the required regulatory standards. When the FCA client money team visited our offices, it was confirmed to them that that provision fund is a discretionary tool of the platform. And is not deemed “client money” it’s actually discretionary “platform money” and will not co-mingle with “client money”
Wind-down arrangements: As reported in September, our related party business Moneybrain Ltd, which is our contracted wind-down provider, received full FCA Authorisation.
I was very pleased to see from the FCA report, proposals for new rules to be considered in Q1 2017, in particular “extending mortgage-lending standards to loan-based platforms.”
As property lending (mortgages) is very much part of our JustUs.co plans for 2017, when coupled with our team’s mortgage experience over the last 25 years; the future is looking very positive indeed!
The chief risk officer of Ratesetter, one of the UK’s top three “peer-to-peer” lenders, has left the company just six months after joining.
Sallé de Chou said in a text he had moved to HSBC to be chief risk officer of their European retail business. “[It is] a great opportunity I could not refuse. Not a sign of concerns re RateSetter. I thoroughly enjoyed my time at RateSetter,” he said.
We were always confident that Scotland was a good destination for our first ‘office’ out of London. The market is undersupplied for short-term mortgages and small-scale development finance. The housing situation is no less desperate than in England and Wales. There are too few houses in Scotland, so supporting SME developers to get more houses built is a good thing.
We’ve also just launched in northern England and have appointed Damien Druce to lead our efforts there.
I want 2017 to be the year when we really accelerate our lending throughout the country.
I also want our Property Development Academy to launch outside London, helping aspiring developers to gain skills anywhere in the UK.
China has leapfrogged the US and UK as the undisputed global fintech hub, according to a collaborative report produced by DBS and EY entitled “The Rise of FinTech in China.”
Currently, 40% of Chinese consumers use new payment methods compared with 4% in Singapore, while, 35% use fintech to access insurance products compared with 1%–2% in many Southeast Asian markets. There are also significantly higher rates of fintech participation in wealth management and lending.
As of the end of 2015, mobile online payment users reached 358 million, 64.5% up year-on-year. At that point, China’s utilisation ratio of mobile online payments stood at 57.7%, with more than 1-in-2 persons using their smartphone to conduct financial transactions primarily through Alibaba’s Alipay or WeChat’s payment service.
Ant Financial, Alibaba Group’s financial affiliate which operates Alipay, have expanded into investment products, lending, credit scoring, insurance and so on.
Mywish Marketplaces (MMPL), the company that owns Deal4loans.com, today announced strategic additions to their Board of Directors. Financial industry veterans Alok Sethi, Chairman, Franklin Templeton Services, and Vivek Kudva, Managing Director, EMEA & India, Franklin Templeton Investments have joined the company’s Board of Directors effective July 2016.
MMPL pioneered the neutral loan marketplace in India and has successfully established trust with over 7 million customers, leveraging technology to enhance customer acquisition for participating banks’ loan products, and smarter matching of customers with products.