- Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. LendingPoint increases mezzanine financing. UK publishes Open Banking operational guidelines. Raisin raises $114M.
- Today’s main analysis: International P2P lending volumes for January 2019.
- Today’s thought-provoking articles: Where are we in the credit cycle? Marketplace lending associations respond to FDIC small dollar lending rule request. 8 U.S. challenger banks traditional banks should be scared of. Due diligence on P2P platforms. Global regulators struggle to define fintech credit.
- KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. The lowest rating is a BBB, highest AAA. No surprises, really.
- Where we are in the credit cycle. Traditional banks are happy with where things are. Also includes a roundup of some big news in the alternative lending sector, including Acorns’ huge raise of $105 million.
- How the industry responds to the FDIC small dollar lending rule request. Both the Marketplace Lending Association and the Online Lenders Alliance issue statements. Included: The statement from the Online Lenders Association. A must-read.
- LendingPoint increases mezzanine financing to more than $67.5 million.
- 8 challenger banks traditional institutions should be afraid of. There are way more challenger banks than this, but these are the bigger ones. SoFi Money is one of the late comers, but with its financial strength, it should be a contender. Down below, don’t miss the interview with Joust, which is not on this list.
- Joust interview: The bank for freelancers.
- Chime tries to disrupt American banking.
- Challenger bank Rising Bank sets up in Midwest.
- P2P Global sells U.S. loans.
- Molo offers 15-minute mortgages.
- 25% say money is biggest hurdle in running a business.
- Plaid, Quovo scratch the surface of data aggregation.
- PeerLoanAdvisor intros loan ratings for P2P lending investors.
- Dharma Labs offers blockchain lending.
- CashCall class action will need to be refiled.
- LendingHome named to Forbes Fintech 50.
- PeerStreet integrates with Liquid Logics.
- Fluent appoints new chief financial officer.
- CoreLogic launches enhanced title, closing solution for lenders.
- Custody firm backing Betterment, Stash to launch crypto custody service.
- Due diligence on P2P platforms. Are things going to get tougher for UK P2P lenders?
- Open Banking guidelines are offered.
- Starling Bank launches euro accounts.
- Aire raises $11 million.
- AccountScore offers real-time financial advice with Open Banking.
- Is SMEs declining external investments a barrier to scale?
- ANNA gets 8.5 million GBP in funding.
- Celsius has issued $630 million in crypto loans in six months.
- Aave launches Bitcoin lending on ETHLend.
- UK Bond Network closes doors.
- Raisin raises $114 million.
- ING offers Dutch SMBs funding options.
- NOVA disrupts P2P lending in Ireland.
- Banco BNI Europa, NDGIT accelerate Open Banking, PSD2.
- P2P lending volumes for January 2019. RateSetter crossed over 3,000 million GBP. Zopa crossed 4,000 million GBP.
- Regulators struggle to define fintech credit.
- Why venture capital is the answer to falling returns.
- Can technology stop the unbanked from falling through the cracks?
- Sancus to accept euros, dollars for loan funding.
- Revolut partners with WeWork.
- China: CreditEase offers social lending to farmers.
- Australia: Wisr launches ad campaign toward disillusioned big bank customers.
- Malaysia: Youth urged to diversify P2P lending investments.
- Canada: Vancouver-based crypto trading platform with lending features launches.
- Africa: DexAge offers versatile crypto trading and includes lending.
- United States
- KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA
- Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA
- The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA
- LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA
- Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA
- P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A
- 15 Minute Mortgages? Meet Molo – The New Fintech Aiming To Shake Up The Market (Forbes), Rated: A
- Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A
- 1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A
- Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A
- Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A
- US challenger Rising Bank rises up in Midwest (Fintech Futures), Rated: A
- PeerLoanAdvisor.com Introduces Exclusive Loan Ratings for Peer to Peer Lending Investors (PRWeb), Rated: A
- California-based blockchain lender proves attractive to investors (CoinGeek), Rated: A
- Long-running CashCall class action headed to state court (Reuters), Rated: A
- LendingHome Named to Forbes Fintech 50 List for Second Consecutive Year (Business Wire), Rated: B
- PeerStreet Announces New Software Integration with Liquid Logics (PeerStreet), Rated: B
- Fluent, Inc. Appoints Alex Mandel as Chief Financial Officer (Globe Newswire), Rated: B
- CoreLogic Launches Enhanced Title and Closing Solution for Lenders (CoreLogic Email), Rated: B
- A fintech firm backing hot robo advisors like Betterment and Stash is planning to launch crypto custody services within the next few months (Business Insider), Rated: B
- United Kingdom
- Due diligence on P2P platforms (FT Adviser), Rated: AAA
- UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA
- Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A
- Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A
- AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A
- Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A
- SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A
- What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A
- Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A
- Exclusive: P2P firm shuts platform (AltFi), Rated: B
- From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA
- European Union
- PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA
- ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A
- The Irish fintech startups disrupting their industries (Irish Times), Rated: A
- Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A
- International P2P Lending Volumes January 2019 (P2P-Banking), Rated: AAA
- Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA
- Why VC Is The Answer To Falling Returns (Forbes), Rated: A
- Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A
- Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A
- Revolut team ups with WeWork (AltFi), Rated: B
- Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A
- Diversify investments in P2P lending, youths urged (The Star), Rated: AAA
- DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA
- Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA
KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-1 (“SCLP 2019-1”). This is a $480.7 million consumer loan ABS transaction.
Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-1
|Class||Preliminary Rating||Class Principal|
Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA
This week’s big funding news was that digital savings and investing platform Acorns raised $105 million in its Series E round, bringing its total valuation to $860 million.
The US economy generated 304 k jobs in January, marking a record 100 months of job growth. Average hourly earnings rose by 3.2% and the unemployment rate rose slightly to 4%.
Marlette CEO Jeff Meiler discussed profitability and loan performance with Peter Renton (transcript and podcast here). Marlette announced another year of profitability in 2018.
Overall, lenders view the US consumer as healthy and the US economic growth as solid.
The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA
So, back in November the FDIC issued a Request for Information on Small Dollar Lending. They received more than 60 responses from banks, industry associations, non-profit groups, fintech companies and individuals. While the FDIC did not define exactly what they meant by a small dollar loan the respondents, for the most part, took it to mean loans of less than $5,000.
There are many mainstream online lenders offering personal loans down to $1,000 and there are also many fintech companies offering loans under $1,000. Companies like Oportun, Insikt, LendUp, Elevate, Opploans and many others offer these sub-$1,000 loans using the latest technology tools to make this process more efficient.
The Marketplace Lending Association (MLA) provided a detailed 10-page response where they urged the FDIC (and other regulators) to do more to support banks and foster closer working relationships with fintech providers:
The Online Lenders Alliance is a trade group that contains many small dollar lenders who operate online. Not surprisingly they are against the 36% rate cap but they also have a lot in common with their sub-36% brethren such as promoting partnerships between banks and fintech companies.
The Center for Responsible Lending gave one of the most detailed responses to the RFI, a full 38 pages.
Read the full Online Lenders Alliance response here.
LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA
LendingPoint, the consumer lending platform, announced it closed an increase of its mezzanine financing, bringing the total of the facility to $67.5 million. A Paragon co-investor joined the facility as a lender.
Today’s announcement is the latest in a string of financing transactions LendingPoint has closed in the past 15 months. The company secured an up to $500 million Senior Credit Facility in August 2017 and an up to $600 million Senior Credit Facilityin May 2018, both arranged by Guggenheim Securities.
Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA
1. BankMobile — Hooked Up With T-Mobile
Parent Company: Customers Bank
Category: Mobile bank
The creation of father-daughter team of Jay and Luvleen Sidhu (CEO and President respectively), BankMobile is an evolving banking-as-a-service platform.
2. Chime — Super Slick App
Category: Mobile banking and money management app (in partnership with the The Bancorp Bank)
Notable Milestone: 2 million account relationships
3. Finn — Chase Bank’s Millennial Play
Parent Company: JPMorgan Chase
Category: Mobile bank
Chase is offering a $100 for opening a new Finn account (as long as you make ten qualifying transactions in the first 60 days).
4. Marcus — Sucking Up Your Customers
Parent Company: Goldman Sachs
Category: Online bank
Notable Milestones: 2+ million customers and $35 billion in deposits.
Marcus’ loans range from $3,500 to $40,000 at rates of 6.99% to 25%. The average loan in 2018 was $15,000 over four years with a 12% interest rate, according to Bloomberg BusinessWeek. That leaves plenty of margin room even with its online savings rate up at 2.25% (as of January 2019).
5. N26 — Platform Maestro
Category: Mobile bank
Notable Milestones: 2.3 million users and $1 billion in deposits.
6. Revolut — The Amazon of Banking
Category: Mobile financial provider
Notable Milestones: 3 million customers — both consumers and businesses. Opening about 8,000 accounts per day. 1.2 million monthly active users. Monthly transaction volume $3 billion. Received European banking license in December 2018. More than 60,000 U.S. customers on Revolut’s waiting list.
7. SoFi Money — Join The ‘Waitlist’
Parent Company: Social Finance, Inc.
Founded: 2011 (Sofi Money Beta Launch, June 2018)
Category: No-fee Mobile banking account
8. Varo Money — Almost OCC Approved
Category: Mobile banking/money management app in partnership with the The Bancorp Bank.
Notable Milestones: First mobile-only bank to get preliminary approval for a national bank charter.
Walsh feels Varo Money is particularly suitable for the 70% of the people they initially surveyed who are “hands-off creditworthy Millennials.”
P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A
It said its net asset value (NAV) rose by 0.78 per cent in the final month of the year, amounting to a total 5.2 per cent return in 2018, as the fund sold off a number of poorly performing loans, according to its December newsletter published today.
Francesca Carlesi is the Co-Founder and CEO of Molo, a new, super exciting fintech start-up, aiming to reimagine how people get mortgages forever. She was originally a University professor, envisioning pursuing an academic career, before quickly joining McKinsey & Co., immediately after finishing her Ph.D. Molo is her first experience as a start-up entrepreneur after a long career in the finance and banking world. Here she discusses how she made the transition and found the journey so far.
Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A
57 million people in the US freelance and 30 million or so of those are micro and small businesses. Small businesses use approximately a dozen apps and pieces of software to manage their finances. From a bank account to payments to QuickBooks to factoring, microbusinesses spend 365 hours a year reconciling the data between all their financial tools.
1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A
- 1 in 4 Americans considers funding to be the biggest obstacle.
- More women say not knowing how to run a business is a challenge than men.
- Millennials ages 25 to 34 are the most afraid of failure.
- 1 in 3 Americans lacks a strong business idea to begin with.
Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A
The fintech consolidation is starting, at least in the financial data side of the business, with Plaid recently announcing an
With fintechs getting access to customers data residing at different banks and investment firms, the tie-up between Plaid and Quovo is seen as the early signs of the next wave of fintech disruption. These startups will not only help fintechs aggregate data but analyze it as well. That’s according to David Jegen, a partner at F-Prime Capital, an early stage venture fund based in Boston that co-led the Series B round of fundraising for Quovo. He said the industry has rapidly shifted from a time when no one beyond financial advisors gave much thought to aggregating all of a customer’s’ financial data to it now becoming expected. Just ask a millennial who wants to easily access their data from their bank account on a mobile trading app.
With fintechs getting access to customers data residing at different banks and investment firms, the tie-up between Plaid and Quovo is seen as the early signs of the next wave of fintech disruption. These startups will not only help fintechs aggregate data but analyze it as well. That’s according to David Jegen, a partner at F-Prime Capital, an early stage venture fund based in Boston that co-led the Series B round of fundraising for Quovo. He said the industry has rapidly shifted from a time when no one beyond financial advisors gave much thought to aggregating all of a customer’s’ financial data to it now becoming expected. Just ask a millennial who wants to easily access their data from their bank account on a mobile trading app.
Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A
Due diligence on P2P platforms (FT Adviser), Rated: AAA
In the immediate aftermath of the credit crunch, politicians enthused about the new crop of peer-to-peer providers and even created the Innovative Finance Isa.
UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA
The Open Banking Implementation Entity (OBIE) has published its Operational Guidelines and accompanying checklist to help financial institutions (FIs) better navigate Open Banking, per a press release.
With the guidelines, the OBIE aims to clarify the regulatory requirements for a dedicated interface, as set out in the revised Payment Services Directive (PSD2), RTS, EBA Guidelines, and Financial Conduct Authority (FCA) Approach documents.
Read the full report here.
Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A
The digital-only bank, which expects to top one million customers this year, said the new account is a simple was to ‘send and receive euros for free’.
Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A
Alternative credit assessment innovator Aire has picked up $11 million in new funding. The London-based company, which demonstrated its Aire Credit API at FinovateEurope 2015, said the new capital will support the continued development of its credit insight engine, as well as support expansion in the U.S.
AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A
A new service has been set up for people in debt, giving them the power to let advisors see their bank accounts in order to offer quick and accurate advice.
The service is a tie-up between fintech bank transactions firm AccountScore and The Insolvency Panel launched this month.
Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A
Small businesses accounted for 22 per cent of the UK’s economic growth in 2017 according to Octopus Investments High Growth Small Business Report. These SMEs, which comprise less than one per cent of UK companies, created one in five jobs in 2017 and hold a wealth of potential for our economy. When it comes to the future of the UK business landscape, it seems that the best things do come in smaller packages.
SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A
SME business account Anna has received an investment of £8.5 million from Kinetik as it prepares to launch new tools and products.
What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A
The cryptocurrency winter has been one of many contrasts. While some firms have gone out of business and shut down, some have thrived. Celsius Networks belongs to the latter.
Based in London, the firm launched just six months ago, but it has grown by leaps and bounds. It has lent over $630 million in loans, predominantly in cryptocurrencies.
Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A
AAVE, a UK-based FinTech Startup, today announced a new release for its crypto lending marketplace ETHLend. The release introduces the capability for the ETHLend users to use their Bitcoin holdings as a collateral to borrow funds for spending.
Exclusive: P2P firm shuts platform (AltFi), Rated: B
The UK Bond Network, a p2p platform for corporate bonds, is closing as of today Monday 4 February 2019, according to the firm.
From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA
Financial services group CreditEase runs an app through which its private banking clients can be connected to needy women farmers in China’s rural interior. It’s a remarkable initiative taken up by 200,000 farmers and shows what can be done with low-level credit. But how does the risk management work?
PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA
German financial technology group Raisin has raised $114m in new funding from high-profile backers including Index Ventures and PayPal, in one of the largest fundraisings to date in Europe’s emerging “wealth tech” space.
ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A
The partnership means Funding Options has launched services in the Netherlands, expanding beyond the U.K. for the first time, said reports in Crowdfund Insider. Approximately 1.8 million SMBs in the Netherlands will gain access to Funding Options via ING Bank.
The Irish fintech startups disrupting their industries (Irish Times), Rated: A
Also based at NOVA is Initiative Ireland which aims to give cautious investors lower-risk access to the Irish property market. With poor interest rates, investors face the perennial problem of what to do with their money. Risk takers will always have options, cautious investors less so, and this is Initiative Ireland’s sweet spot. It is offering returns in the order of six to eight per cent to those investing in its novel peer-to-peer lending platform for developers building social and affordable housing.
Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A
BNI Europa implements “PSD2 Ready”, NDGIT’s smart standardized software solution following the Berlin Group RTS standard, to fulfil all PSD2 requirements. This cooperation is a milestone for the future development of Open Banking in Europe and for BNI Europa the next step in their company’s development.
International P2P Lending Volumes January 2019 (P2P-Banking), Rated: AAA
Milestones achieved this month (total volume since launch):
- MyTripleA crossed 50M EUR
- Peerberry crossed 50M EUR
- Ratesetter crossed 3000M GBP
- Swaper crossed 50M EUR
- Zopa crossed 4000M GBP
Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA
While many jurisdictions have highlighted fintech credit as a key development in the nonbank financial space over the last year, they struggle to define exactly what fintech credit is, per findings of the Financial Stability Board’s (FSB’s) Global Monitoring Report on Non-Bank Financial Intermediation 2018.
Why VC Is The Answer To Falling Returns (Forbes), Rated: A
Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A
Those of us who work in finance can’t imagine life without a bank account. But for the world’s 1.7 billion unbanked adults, this is a reality. In the U.S., 33.5 million households are either unbanked or underbanked and lack the ability, criteria, or financial literacy to access banking services. Without access to savings and credit, these people often live — and remain — in a cycle of poverty.
In the U.S., nearly 95 percent of adults have a mobile phone and 80 percent of those are smartphones. And since they’re not tied to traditional banking norms such as branches, ATMs, and credit cards, the unbanked are more likely to adopt digital banking via their phones.
TymeBank in South Africa uses AI to help people learn about their money and how to save. It teaches people about credit scores and rewards them for good financial behavior — TymeBank offers an amazing 10 percent interest rate on savings accounts for customers who can define specific financial goals they want to hit, and then contribute to them.
Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A
SANCUS will start accepting euro-denominated loans within the next few months, to help it expand its investor base.
The alternative business finance provider is also planning to establish a new base in the Cayman Islands by the end of 2019, a move which would allow it to accept dollar-denominated investments as well.
Revolut team ups with WeWork (AltFi), Rated: B
The new partnership will provide Revolut for Business customers with 3 months free of hot-desk space at a WeWork co-working space.
Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A
Peer to peer lending service provider Wisr has targeted disillusioned big bank customers in its new ad campaign.
Diversify investments in P2P lending, youths urged (The Star), Rated: AAA
Technology-driven peer-to-peer (P2P) lending is becoming a popular investment choice among young investors, but the anticipated slowdown in the economy this year also raises the risk of losing money.
To protect their investment, a P2P financing platform operator said that investors should spread their investment into as many deals as possible.
DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA
The P2P Crypto loan services allow users to retain their assets in case they predict the concerned cryptocurrency value might appreciate in the future. DexAge enables users to stake their crypto assets as collateral and acquire a loan of the same value to expand their investment profile.
Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA
iBank Digital Asset L.P. (“iBank Digital”, “iBankEx” or the “Company”) has officially launched Vancouver’s first peer-to-peer (P2P) OTC digital currency trading platform on iBankEx. (www.ibankex.io) This launch is supported by Huobi Cloud (“Huobi Cloud”) technology, which has officially entered the Canadian market in 2019 with 120 exchanges around the world.
iBank Products & Services:
Fiat Lending – A decentralized global lending network connecting financial institutions worldwide by offering crypto backed loan business.
Crypto Lending – iBank provides crypto loans collateralized by your crypto assets in BTC/USDT with security and confidentiality.
News Comments Today’s main news: SoFi reports $200M loss in Q2. OnDeck jumps 18%. LendingClub sees record net revenues in Q2. Alipay fined for regulation violations. Dianrong raises $40M. Even Financial raises $18.8M. Today’s main analysis: OnDeck’s Q2 2018 earnings presentation. Today’s thought-provoking articles: GreenSky, OnDeck, LendingClub earnings. Where did it go wrong for Wonga? OnDeck’s Q2 earnings presentation. United States SoFi reports […]
- Today’s main news: SoFi reports $200M loss in Q2. OnDeck jumps 18%. LendingClub sees record net revenues in Q2. Alipay fined for regulation violations. Dianrong raises $40M. Even Financial raises $18.8M.
- Today’s main analysis: OnDeck’s Q2 2018 earnings presentation.
- Today’s thought-provoking articles: GreenSky, OnDeck, LendingClub earnings. Where did it go wrong for Wonga? OnDeck’s Q2 earnings presentation.
- SoFi reports $200 million loss in Q2. SoFi has had to write down underperforming loans.
- OnDeck jumps 18%. OnDeck has been on a slow and steady climb since it hit trouble a couple of years ago. It’s looking better all the time.
- OnDeck reports Q2 earnings. See the actual earnings presentation for yourself. Great charts, great Q2 results.
- OnDeck’s stock rose 25% on Tuesday.
- LendingClub hits record net revenues. After a bad year for marketplace lending, are we beginning to see a turn around for the industry? With OnDeck and LendingClub both on the rise, we can hope so.
- GreenSky, OnDeck, and LendingClub Q2 earnings. Lend Academy breaks it down as only they can.
- Even Financial raises $18.8 million from Goldman and others. Great capital raise. Congratulations.
- What’s missing from the OCC fintech charter?
- Can Zelle beat Venmo with bank backing?
- US challenger banks.
- U.S. Treasury urges mortgage sector to embrace digital technology.
- Blend launches insurance agency.
- RealtyMogul sells properties for digital investors.
- Zillow acquires Mortgage Lenders of America.
- DriveWealth, Bambu launch robo platform for registered investment advisors.
- Arizona’s regulatory sandbox opens.
- RateSetter says FCA marketing restrictions are disproportionate.
- Where did Wonga go wrong?
- Wonga’s reputation, not regulation, killed it.
- Augmentum receives 3.5 million GBP boost from Zopa.
- LendInvest makes changes to BTL product.
- Why brokers should be allowed to speak to decision makers.
- Cambridge Centre for Alternative Finance’s research study.
- Alipay fined for regulation violations.
- Dianrong raises $40 million. There’s still positive news coming out of China.
- China’s P2P lending meltdown.
- Australia: Financial advice institutions to refund over $800 million.
- Israel: Visa invests in Behalf.
- Australian challenger banks.
- International: Prime Trust to enable real estate syndicators, securities issuers to accept crypto.
- International: TransUnion partners with EXL on Current Expected Credit Loss solution.
- United States
- SoFi Is Said to Report Second-Quarter Loss of $ 200 Million (Bloomberg), Rated: AAA
- OnDeck jumps 18% after Q2 beat and raise (Seeking Alpha), Rated: A
- OnDeck Reports Second Quarter 2018 Financial Results (Markets Insider), Rated: AAA
- Why On Deck Capital Stock Is Soaring Today (The Motley Fool), Rated: A
- Lending Club: bob and weave (Financial Times), Rated: AAA
- Roundup of Q2 2018 Earnings: GreenSky, OnDeck, LendingClub (Lend Academy), Rated: AAA
- Even Financial raises $ 18.8 million from GreatPoint Ventures, Goldman Sachs and others (TechCrunch), Rated: AAA
- What’s missing from the OCC’s fintech charter (American Banker), Rated: A
- Is the backing of the banks enough for Zelle to beat Venmo? (Marketplace.org), Rated: A
- US challenger banks: who’s who and what’s their tech (Banking Tech), Rated: A
- Treasury urges mortgage sector to embrace digital tech (National Mortgage News), Rated: A
- Blend Launches Insurance Agency (Finovate), Rated: A
- RealtyMogul Sells Four Real Estate Properties on Behalf of Digital Investors (Citizen Tribune), Rated: B
- Zillow gets into the mortgage business, acquires Mortgage Lenders of America (TechCrunch), Rated: B
- DriveWealth and Bambu Launch Robo Platform for Registered Investment Advisors (BusinessWire), Rated: A
- Arizona’s Regulatory Sandbox Is Open for Play (The National Law Review), Rated: B
- United Kingdom
- RateSetter: FCA marketing restrictions are “disproportionate” (P2P Finance News), Rated: AAA
- Where did it all go wrong for Wonga? (The Guardian), Rated: AAA
- Regulation didn’t wipe out Wonga – losing its reputation did (City A.M.), Rated: A
- Rothschild’s Augmentum receives £3.5m Zopa boost (Citywire), Rated: A
- LendInvest makes a series of changes to BTL product (Bridging and Commercial), Rated: A
- Why brokers should be allowed to speak to decision makers (Bridging and Commercial), Rated: A
- Participate in the Cambridge Centre for Alternative Finance Research Study (Lend Academy), Rated: B
- China’s Central Bank Fines Alipay (PYMNTS), Rated: AAA
- Dianrong pockets $ 40 million funding amid mounting P2P defaults in China (Technode), Rated: AAA
- China’s P2P lending meltdown (CNBC), Rated: A
- Prime Trust to Enable Real Estate Syndicators & Securities Issuers to Accept Funds in Bitcoin & Ethereum (Crowdfund Insider), Rated: A
- TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution (MarketWatch), Rated: B
- Financial advice institutions to refund over $ 800 million (Business News Australia), Rated: AAA
- Australian challenger banks: who’s who (and what’s their tech) (Banking Tech), Rated: A
- Visa Invests In Israeli Start-up Behalf (RTT News), Rated: AAA
SoFi Is Said to Report Second-Quarter Loss of $ 200 Million (Bloomberg), Rated: AAA
Writedowns of underperforming loans drove Social Finance Inc. to a second-quarter adjusted loss of about $200 million, according to people familiar with the matter.
OnDeck jumps 18% after Q2 beat and raise (Seeking Alpha), Rated: A
OnDeck (NYSE:ONDK) surges 18% in early trading after reporting Q2 adjusted EPS that beat consensus by 8 cents and boosting year adjusted net income guidance to $30M-$36M.
OnDeck Reports Second Quarter 2018 Financial Results (Markets Insider), Rated: AAA
OnDeck today announced second quarter 2018 Net income of $5.8 million, Adjusted Net income of $10.0 million and Gross revenue of $95.6 million.
Review of Financial Results for the Second Quarter of 2018
Net income was $5.8 million, or $0.07 per diluted share, improved from the Net loss of $1.5 million, or $0.02 per diluted share, in the year-ago period.
Adjusted Net income was $10.0 million, or $0.13 per diluted share, compared to Adjusted Net income of $4.7 million, or $0.06 per diluted share, in the year-ago period.
Unpaid Principal Balance grew 3% sequentially and 8% from a year ago to $1,027 million. Originations of $587 million were consistent with the prior quarter reflecting an increase in the number of loans funded and decrease in the average loan size. Originations increased 26% from a year ago with growth in both term loans and lines of credit.
Gross revenue increased to $95.6 million, up 6% from the prior quarter and 10% from the year-ago quarter, driven by higher Interest income. The Effective Interest Yield was 36.1%, up from 35.6% in the prior quarter and 33.5% in the year-ago quarter, primarily reflecting increases in average loan pricing.
Guidance for Full Year 2018
OnDeck increased its guidance for the full year ending December 31, 2018:
- Gross revenue between $380 million and $386 million, up from between $372 million and $382 million,
- Net income between $10 million and $16 million, up from between $0and $10 million, and
- Adjusted Net income between $30 million and $36 million, up from between $18 million and $28 million.
See OnDeck’s full Q2 2018 earnings presentation here.
Why On Deck Capital Stock Is Soaring Today (The Motley Fool), Rated: A
Shares of On Deck Capital (NYSE:ONDK) were soaring by nearly 25% as of 1 p.m. EDT on Tuesday as the company beat consensus earnings expectations in the second quarter and raised its outlook for the remainder of the year.
Lending Club: bob and weave (Financial Times), Rated: AAA
Now, the top-line numbers are improving. Second-quarter figures released after market close on Tuesday showed record net revenue, up 27 per cent from a year earlier at $177m, from record quarterly loan originations of $2.8bn.
On top of all that, there was a big writedown this quarter of an acquisition made four years ago, during an ill-fated push into supplying loans to medical patients. Over the first six months, total expenses came to $1.28 for every dollar of net revenue.
Roundup of Q2 2018 Earnings: GreenSky, OnDeck, LendingClub (Lend Academy), Rated: AAA
GreenSky went public just a few months ago on May 24, 2018. Their IPO was significant for a couple of reasons. One was the lack of US based fintech IPOs over the last few years and the second was that GreenSky is a wildly successful business. Last year they reported $139 million in net income on revenues of $326 million.
OnDeck reported net income of $5.8 million for the quarter with gross revenues of $95.6 million, up 10% year over and 6% from the previous quarter. Originations grew to $587 million, up 26% from the prior year period, but down slightly from the previous quarter. The company’s trend of increasing the number of loans funded and decreasing the average loan size continues.
CEO Scott Sanborn noted that LendingClub’s core business is firing on all cylinders with record revenue and originations. The company has seen a 50% increase in applications year over year. Originations were $2.8 billion, up 31% year over year and up from $2.3 billion in the previous quarter. For context, the company originated their last high water mark of $2.75 billion in the first quarter of 2016. Revenues came in at $177 million, up 27% year over year.
Even Financial raises $ 18.8 million from GreatPoint Ventures, Goldman Sachs and others (TechCrunch), Rated: AAA
Even Financial, a fintech startup that connects the disparate entities of the financial services industry, recently raised a $18.8 million Series A round led by GreatPoint Ventures with participation from Goldman Sachs, Canaan Partners, F-Prime Capital, Lerer Hippeau and others.
What’s missing from the OCC’s fintech charter (American Banker), Rated: A
Although the OCC emphasizes that it’s holding these special-purpose charters to standards equivalent to those demanded of national banks, this is only sort of true with regard to the named prudential requirements, and it looks to be completely incorrect on critical restrictions on competitive and financial risk. These omissions have significant consumer protection, safety and soundness and structural impacts. Absent egregious violations, a charter granted cannot be revoked. The OCC should be sure it isn’t a shadow-bank enabler before it hands out these high-powered charters.
Is the backing of the banks enough for Zelle to beat Venmo? (Marketplace.org), Rated: A
Rahul Chadha follows peer to peer mobile banking for the research organization eMarketer. His firm says Zelle will overtake Venmo this year. Chadha spoke with Marketplace’s Lizzie O’Leary about the two payment systems.
US challenger banks: who’s who and what’s their tech (Banking Tech), Rated: A
A digital bank created by an established US-based financial services player Customers Bancorp. BankMobile opened for business in early 2015.
It caters mainly for students and offers a low-fee checking account with no monthly fees and no overdraft/non-sufficient funds (NSF) fees. It also provides personal loans.
Founded in 2014, Chime has raised over $100 million funding to date, values the business at around $500 million and has over one million accounts. It employs around 100 people.
Endeavor Bank opened its doors for business in San Diego, California in January 2018, following an initial capital raise of $26.6 million and the backing of over 450 investors/owners. It is a brand new bank, with no merger legacy.
Finn is a digital bank account for smartphones created by JP Morgan Chase.
GoBank was launched in 2013 by Green Dot Corporation, which claims it to be “the first bank account designed from scratch to be opened and used on a mobile device”.
Iam Money has its HQ in Chicago and an office in San Francisco. It also has two offices outside the US, in Dublin and London.
It has secured $3 million of funding, and plans to have $20 million when it launches.
Marathon International Bank
A start-up bank for the Ethiopian American community, based in the Washington DC area. Its founders are Tekalign Gedamu, a retired economist and former MD of the Development Bank of Ethiopia, and Tesfaye Biftu.
An online platform launched by Goldman Sachs – named after Marcus Goldman, one of the firm’s founders – offering no-fee personal loans and high-yield savings to consumers.
Launched in 2011 by Brett King, Moven describes itself as “the world’s first real-time mobile money tool”. It is a digital bank account with a mobile app.
A challenger bank from Germany, now working on its US presence, including obtaining a banking licence. It opened early access to users in the US in October 2017 and has an office in New York with eight staff.
PurePoint Financial was launched in early 2017 by MUFG Union Bank. It is a “hybrid digital bank” offering savings accounts and certificates of deposit (CDs).
European banking challenger Revolut opened early access to users in the US in September 2017. It says it aims “to clean up the American banking system”. It provides digital banking services to consumers and businesses.
Digital banking service Simple was founded in 2009 in Portland, Oregon. It describes itself “a tech company, not a bank”.
In early 2014, it was acquired by BBVA Compass for $117 million.
In early 2017, it raised another $500 million, and spent $100 million (in stock) on Zenbanx, a mobile banking start-up. Zenbanx offered a mobile account in the US and Canada that lets people save, send and spend money in multiple currencies. This deal demonstrated SoFi’s interest in branching into other financial services, with a wealth management tool in beta at the time of the acquisition.
In early 2018, Stash raised $37.5 million in Series D funding for product expansion, and shortly afterwards teamed with Green Dot Corporation and its subsidiary bank, Green Dot Bank, to launch mobile-first banking services (underpinned by Green Dot’s Banking-as-a-Service platform).
In 2017, Tennessee-based Studio Bank filed an application to become Nashville’s “first newly chartered de novo bank in nearly a decade”.
San Francisco-based mobile banking service Varo Money was founded in 2015. It applied for a national bank charter and federal deposit insurance in mid-2017, to form Varo Bank.
Treasury urges mortgage sector to embrace digital tech (National Mortgage News), Rated: A
The Treasury Department’s recent report on how to regulate nonbanks drew praise not just from tech startups but also from mortgage industry insiders.
In addition to recommendations for a new federal fintech charter and that regulators pull back from payday lending rules, the report contained a section that might be music to a mortgage banker’s ears, including support for the industry’s automation efforts and another call to soften the use of the False Claims Act against lenders.
Blend Launches Insurance Agency (Finovate), Rated: A
Mortgagetech company Blend is venturing into insurance. The San Francisco-based company launched Blend Insurance Agency, an extension of its digital mortgage platform that offers borrowers a range of options for homeowners insurance.
RealtyMogul Sells Four Real Estate Properties on Behalf of Digital Investors (Citizen Tribune), Rated: B
The first property is a 1,242-unit self-storage facility in Fayetteville, NC. It was acquired in December 2013 and sold in January 2018. It was acquired for $6,750,000 and sold for $9,645,000, representing a 43% increase in capital value from acquisition.
The second property is a 40,000-square foot office building in Tamarac, FL. It was acquired in May 2016 and sold in February 2018. It was acquired for $4,150,000 and sold for $4,900,000, representing an 18% increase in capital value from acquisition.
The third property is a 72-unit multifamily apartment building in Ogden, KS. It was acquired in July 2013 and sold in April 2018. It was acquired for $4,000,000 and sold for $4,450,000, representing an 11% increase in capital value from acquisition.
The fourth property is a 208-unit multifamily apartment building in Euless, TX. It was acquired in February 2015 and sold in May 2018. It was acquired for $12,375,000 and sold for $20,900,000 after a value-add renovation program, representing a 69% increase in capital value from acquisition.
Zillow gets into the mortgage business, acquires Mortgage Lenders of America (TechCrunch), Rated: B
DriveWealth and Bambu Launch Robo Platform for Registered Investment Advisors (BusinessWire), Rated: A
DriveWealth Holdings, Inc. (“DriveWealth”), a fintech company providing brokers, digital advisors and mobile online financial services companies seamless access to the U.S. securities market, and Bambu, a global provider of robo-advisory technology, today announced the launch of a white-label, end-to-end robo-advisory platform solution for the wealth management industry.
Arizona’s Regulatory Sandbox Is Open for Play (The National Law Review), Rated: B
To be considered for admission, applicants must complete the nine-page application and pay a $500 application fee. Each application must be for an innovative financial product or service as defined by the enabling legislation.
RateSetter: FCA marketing restrictions are “disproportionate” (P2P Finance News), Rated: AAA
RATESETTER has hit back at proposed marketing restrictions for peer-to-peer lenders, stating that they are “disproportionate” and “clunky”.
Where did it all go wrong for Wonga? (The Guardian), Rated: AAA
Just when things were meant to be getting better for Wonga, it emerged at the weekend that the payday lender’s investors had to rescue it with a £10m capital injection.
The emergency fundraising is the latest episode in Wonga’s rapid rise and fall. Just six years after the company was touted for a flotation that would have valued it at more than $1bn (£770m), it is reported to be worth just $30m.
Regulation didn’t wipe out Wonga – losing its reputation did (City A.M.), Rated: A
WHEN PAYDAY LENDER Wonga launched in 2007, it was tipped to become a £1bn success story. Today, the company is worth just £23m and has only managed to avoid insolvency thanks to a last-minute £10m boost from investors. So what went wrong?
Rothschild’s Augmentum receives £3.5m Zopa boost (Citywire), Rated: A
LendInvest makes a series of changes to BTL product (Bridging and Commercial), Rated: A
The specialist lender has removed its requirement for a debenture or floating charge on limited company applications.
It has also reduced its ICR assessment rate to 5% across all products with the exception of the five-year fixed interest product, which remains at 4.19%.
Why brokers should be allowed to speak to decision makers (Bridging and Commercial), Rated: A
Roy Armitage, head of credit at LendInvest (pictured above), is clear that, for a specialist lender, a good working dialogue between the underwriters and the brokers placing the business is crucial.
Participate in the Cambridge Centre for Alternative Finance Research Study (Lend Academy), Rated: B
They are winding up their largest survey ever right now. In the past they have produced multiple reports targeting the various regions around the world including: the United Kingdom, Europe, the Americas, Asia and Africa. This year they are combining everything into one big study.
If you have not participated in the survey yet time is running out (while the survey says it closes on July 22nd, they have extended the deadline for another week or so). We need every platform in this country and around the region to participate. To learn more you can read more about this comprehensive piece in
China’s Central Bank Fines Alipay (PYMNTS), Rated: AAA
Alipay, a payment affiliate of Alibaba, has been hit with a $601,846 fine by the Shanghai head office for the People’s Bank of China.
According to a report in Reuters, citing the central bank, the fine was for payment services regulations violations. The regulator didn’t provide any other details.
Dianrong pockets $ 40 million funding amid mounting P2P defaults in China (Technode), Rated: AAA
Chinese P2P lending platform Dianrong announced that it has raised $40 million of funding from Dalian Financial Investment Group Co. Ltd. The current round will increase the company’s total funds raised to date to over $500 million. Its previous investors include big titles such as Standard Chartered, GIC Private Limited, Singapore’s sovereign wealth fund, CMIG Leasing, Simone Investment Managers, etc.
China’s P2P lending meltdown (CNBC), Rated: A
Prime Trust to Enable Real Estate Syndicators & Securities Issuers to Accept Funds in Bitcoin & Ethereum (Crowdfund Insider), Rated: A
Prime Trust, a blockchain driven trust company, announced on Monday it has launched a new technology that enables real estate syndicators and securities issuers to accept funds from investors in the form of Bitcoin and Ethereum, frictionlessly and with zero crypto-market risks to the syndicator or issuer. According to Prime Trust, the technology enables holders of these virtual currencies to invest in real estate, crowdfunding and other private and public securities offerings without having to go through the cumbersome and often confusing process of liquidating tokens and then wiring funds in USD to an escrow account at Prime Trust.
TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution (MarketWatch), Rated: B
TransUnion TRU, +0.56% announced today it is partnering with global technology and analytics company EXL EXLS, +0.93% to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. Information about the new accounting rule will be highlighted during TransUnion’s webinar, “Major Hurdles to Overcome to be CECL-Ready,” scheduled for 1 p.m. CDT on August 15.
Financial advice institutions to refund over $ 800 million (Business News Australia), Rated: AAA
As the revelations from the Royal Commission continue to pour in, the Australian Securities and Investment Commission (ASIC) has revealed that, in total, Australian financial advice institutions will refund customers over $800 million in reparations over fees for no service (FFNS) programs.
Australian challenger banks: who’s who (and what’s their tech) (Banking Tech), Rated: A
Launched in June 2018, the bank is led by former ANZ Japan CEO, Robert Bell, and ex-Cuscal Payments CIO Brian Parker. Joining as incoming chairman is Anthony Thomson, co-founder and former chairman of Atom Bank and Metro Bank.
For its tech, it uses a variety of different vendors. Unifii’s Business Transformation Platform is used for its technical infrastructure. For its small business lending platform, it will use one from Realtime Computing, based in Perth, Australia.
Digital banking start-up Pelikin aims to reshape the way people save, send and spend their money in Australia and while travelling abroad. The company’s slogan is “spend like a local”. The founder is Sam Brown.
Unveiled in 2008 and developed and supported by National Australia Bank (NAB). It operates under NAB’s banking licence, and offers home loans, online savings accounts, and term deposit accounts. UBank has more than 400,000 customers.
Sydney-based Volt Bank was given Australia’s first new restricted banking licence and is now working towards becoming a fully licensed bank.
The neobank emerged from the shadows to unveil its plans for a mobile-only digital bank in 2017. It will have no bricks and mortar branches.
Visa Invests In Israeli Start-up Behalf (RTT News), Rated: AAA
Date: June 6-8, 2018 Location: The Neal Kocurek Memorial Austin Convention Center 500 E Cesar Chavez Street, Austin, TX 78701 Digital Banking is the leading and largest digital banking event in the industry, covering innovation in financial services for consumer and commercial customers around mobile, digital, AI, payments, RegTech, data, blockchain, API, channel and technology strategies. […]
Date: June 6-8, 2018
Location: The Neal Kocurek Memorial Austin Convention Center
500 E Cesar Chavez Street, Austin, TX 78701
Digital Banking is the leading and largest digital banking event in the industry, covering innovation in financial services for consumer and commercial customers around mobile, digital, AI, payments, RegTech, data, blockchain, API, channel and technology strategies.
Featured Speakers include:
- Lisa Adams, Product Marketing Manager, Avoka
Duangporn Aphiraksatyakul. VP of Enterprise Risk Analytics, Bank of America
Dan Armstrong, Chief Digital Officer, BankMobile
Amir Ben-Efraim, Co-Founder and CEO, Menlo Security
Lisa Cook, Product Manager for the Digital Banking channel, FirstBank
Keith Costello, CFA, President and CEO, First GREEN Bank
Parker Crockford, Commercial Director US, Onfido
Jennifer Daugherty, Senior Vice President and Director, Omnichannel Strategy, Fifth Third Bank
- And many more
According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost […]
According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost trust in traditional banks, and millennials don’t see the appeal in standing in line for banking services. To fill the void, Varo Money has launched a mobile banking business. The aim is to disrupt how banking is done in the United States. Its goal as to help customers cover their expenses, pay their bills, and build wealth over time.
Varo Money was founded in 2015 by Assaf Guery, Colin Walsh, Mykola (Kolya) Klymenko, and Roger Van Duinen. Its headquarters is located in San Francisco, California. The company has managed to raise over $78 million in various funding rounds with PE giant Warburg Pincus as the lead investor. CEO and Co-Founder Colin Walsh previously served for over 25 years in various reputed financial institutions like Amex in Europe, Lloyd Banking group, and Wells Fargo.
More Than a Bank
Throughout his professional career, Walsh realized a growing need to empower the next generation with tools that will help them improve their overall financial condition. He also realized incumbents were too entrenched in their existing business models to concentrate on developing products for the millennial generation. This became the driving force behind Varo Money. So he built a talented team with deep financial services expertise and a strong consumer technology knowledge. Varo Money is trying to be a one-stop shop for users’ banking needs and wants to inculcate better financial habits among customers by providing them with the right tools and financial guidance.
Last year, Varo Money launched their mobile app and banking products through a partnership with The Bancorp Bank. The partnership helped the platform come to the market with a FDIC-insured product. This helped them compete against incumbent banks and appeal to a larger cross section of the population. But Varo has big ambitions and wants a bigger share of the pie. That’s why the company applied for a national bank charter through the OCC. Even though obtaining this charter will be an uphill task, considering no new charter has been issued in the last decade or so, it’s a courageous move. It puts the spotlight on the young entrant and highlights its intention to be a serious regulated player in the industry.
Varo’s Business Model
The foundation of the Varo Money platform is relationship banking. It offers a basic consumer checking account just like any other bank, but the difference is a customer can perform all the basic functions like deposits and money transfers without having to go visit a bank branch. It even issues a debit card to customers and has started offering savings accounts. A customer can open a savings account on his or her mobile app and Varo offers interest rates up to 50 basis points as compared to 1 or 2 basis points offered by traditional banks.
Apart from the bank account, Varo also offers short- and long-term financing solutions. The short-term line of credit is a flexible line of credit (LOC) and is available to customers unexpected financial challenges. The LOC helps customers manage cash flows while avoiding the need to take a payday loan or cash advance. Also, 3- and 5-year fixed rate installment loans are aavailable for long-term financial needs.
Varo Money’s Technology and Competitive Posture
Varo Money is available as an iOS application with an Android version coming soon. The app is loaded with features like touch ID, a geolocation service to spot nearby ATMs, and the ability to link other accounts through APIs. The app is free and requires no minimum balance to open an account. Also, there are no foreign exchange charges or overdraft fees. Its customer base has access to over 55,000 ATMs worldwide as compared to 18,000 ATMs for Chase and 12,000 for Wells Fargo.
Varo charges a nominal fee for debit card usage. It also sells financial products of its partner bank earning income from that partnership. However, its lending products are a primary income generator. The pricing and structure of LOC products are developed to compete with other alternative lenders in the market.
Varo has a lot of competitors in different niches of banking. Players like Discover, Ally, and Goldman Sachs concentrate on only a few lending segments; these lenders do not follow a complete relationship model, but only offer a specific product. On the other hand, there are neobanks like Chime, Simple, and BankMobile that are single-purpose saving apps. Though they are doing a great job when it comes to user experience, the range of products offered by them is narrow compared to a full suite of products offered by a traditional bank.
This is where Varo Money is different. It is focused on customer relationships and wants the ability to offer the entire gamut of banking services to consumers. This gives it multiple cross-selling opportunities and reduces the cost of client acquisition. Its strategy seems to be paying off. In just 7-8 months, Varo has garnered tens of thousands of customers and over 100k downloads.
Varo Money is focused on replacing traditional banks with its comprehensive suite of online banking services and products. Coupled with its obsession for helping millennials make smarter financial decisions, Varo Money is looking to be an emerging player in the digital bankin sector.
Written by Heena Dhir.
News Comments Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland. Today’s main analysis: LendingClub’s Q4 2017 results. Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean […]
- Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland.
- Today’s main analysis: LendingClub’s Q4 2017 results.
- Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean faster fraud. Revolut CEO on work-life balance and overcoming challenges. The Temenos share buyback and Fidessa takeover.
- LendingClub’s Q4 2017 results. AT: “Read them for yourself.”
- Update from LendingClub’s CIO. AT: “An interesting look at the forces LendingClub faces, internally and externally.”
- LendingClub doesn’t have to share underwriting docs with investors.
- LendingTree ranks best places for a fresh start. AT: “As a Texan, I’m envious of Buffalo, New York. An interesting look at where to go if you want a fresh financial start.”
- Why faster payments mean faster fraud. AT: “Cybersecurity is one of the most important core business concerns for banks and alternative lenders alike.”
- Greenlight raises $16M.
- 7 companies reimagining real estate investing.
- Enodo provides quantifiable insights for property investors.
- Savings and deposits rates in a rising rate environment.
- Kabbage president talks about small business loans.
- The expanded Military Lending Act regs.
- How to invest in private loans.
- Challenges to the challenger bank business model. AT: “It’s a shame no real challenger banks have emerged in the U.S. The market could be taken over by foreign challenger banks moving in on the turf.”
- BankMobile launches online magazine. AT: “I’m a huge believer in branded journalism as a marketing strategy.”
- What family offices want from an alternative investment manager.
- 33% of Americans have more credit card debt than savings.
- U.S. mobile payment market to hit $3T by 2020.
- Marlette Funding a consumer lending finalist in LendIt Fintech awards.
- Klarna North America to sponsor, exhibit at eTail West 2018.
- Varo Money gets new chief marketing officer.
- Zopa warns investors of increased defaults.
- Raisin operating in the UK.
- Revolut CEO discusses challenges to building a competitive business.
- How startups can gain traction in financial services.
- Lloyds Bank puts $4.1B aside for digital strategy.
- P2P lending a part of SME finance inquiry.
- Guide to IFISAs, part 2.
- How Wonga went worldwide.
- RaboDirect bows out of Irish market.
- On the Temenos takeover of Fidessa.
- Anyfin raises 4.8M Euro.
- BNI Europa, Code for All partner to train IT developers.
- The Ripio Credit Network.
- Etherty launches blockchain-based real estate platform.
- 500 Startups, Huobi Labs to incubate blockchain projects.
- United States
- Fourth Quarter 2017 Results (LendingClub), Rated: AAA
- Q4 2017: An update from our CIO (Lending Club), Rated: AAA
- Judge Nixes LendingClub Investor Bid For Underwriter Docs (Law360), Rated: AAA
- LendingTree Ranks Best Places for a Fresh Start in 2018 (PR Newswire), Rated: AAA
- Why faster payments mean faster fraud (Tearsheet), Rated: AAA
- Greenlight raises $ 16m for kids’ debit card (Finextra), Rated: A
- 7 COMPANIES REIMAGINING REAL ESTATE INVESTMENT AND FINANCE (Builder Online), Rated: A
- Enodo delivers quantifiable insights for property investors (Realty Biz News), Rated: A
- Savings and Deposit Rates in a Rising Rate Environment (Lend Academy), Rated: A
- Kabbage’s Kathryn Petralia Talks Small Business Loans (LendEDU), Rated: A
- The Expanded Military Lending Act Regulations (The National Law Review), Rated: A
- How to Invest in Private Loans (The Student Loan Report), Rated: A
- As challenger banks seek to enter the US, the business model still faces hurdles (Tearsheet), Rated: A
- Why BankMobile has launched an online magazine (Tearsheet), Rated: B
- WHAT FAMILY OFFICES WANT FROM ALTERNATIVE INVESTMENT MANAGERS (All About Alpha), Rated: A
- 33% of Americans do not have more savings than credit card debt (KHOU), Rated: A
- US Mobile Payment Market to Reach $ 3 Trillion by 2020, Fintech Stocks Lead the Way (Investing News), Rated: A
- Marlette Funding Named a Finalist in Top Consumer Lending Platform in LendIt Fintech Industry Awards Competition (Business Wire), Rated: B
- Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B
- Carl Gish Joins Varo Money as Chief Marketing Officer (PRWeb), Rated: B
- United Kingdom
- Zopa warns over defaults as investor returns decline (Financial Times), Rated: AAA
- Fintech Raisin Crosses the Channel to Offer Services to UK Savers (Crowdfund Insider), Rated: AAA
- Revolut’s Nikolay Storonsky on long hours and high staff turnover (Financial Times), Rated: AAA
- How Startups Can Gain Traction In The Financial Services Market (Forbes), Rated: A
- Lloyds Bank Marks $ 4.1B for Digital Strategy (Bank Innovation), Rated: A
- P2P lending to form part of inquiry into SME finance (P2P Finance News), Rated: A
- Ultimate guide to Innovative Finance ISAs: Part two (P2P Finance News), Rated: A
- How Short Term Lender Wonga Went Worldwide (Silicon India), Rated: A
- China tries to bring order to sprawling online finance sector (Asian Review), Rated: A
- European Union
- RaboDirect to quit Irish market in May (The Irish Times), Rated: AAA
- Bizarre Buybacks and Expensive Takeovers (The Washington Post), Rated: AAA
- Anyfin raises €4.8 million to refinance loans with a statement selfie (Finextra), Rated: A
- BNI Europa and Code for All partner to train new generation of IT developers (Finextra), Rated: A
- What Is the Ripio Credit Network? (The Merkle), Rated: A
- Etherty launches blockchain-based, real estate trading platform (Construction Business News), Rated: A
- 500 Startups, Huobi Labs to Incubate Blockchain Projects (CoinDesk), Rated: B
- Australia/New Zealand
- FMA opens applications for personalised digital advice (Scoop), Rated: AAA
- P2P lending, payments platform JaldiCash to merge with parent firm Weizmann Forex (Financial Express), Rated: A
- ALAMI is on a journey to popularise sharia-based finance in Indonesia. (e27), Rated: A
- Wealthsimple raises $ 65 million in funding from Power Financial group of companies (Cision), Rated: AAA
Fourth Quarter 2017 Results (LendingClub), Rated: AAA
View the reported Q4 2017 earnings results from LendingClub right here.
Q4 2017: An update from our CIO (Lending Club), Rated: AAA
A core strength of LendingClub’s marketplace model is the ability to incorporate data insights quickly in order to responsibly adapt for the benefit of borrowers and investors.
From 2009 to 2014, credit supply was tight, so consumer loans experienced better-than-average loss rates. Since then, credit supply has increased, and the industry has seen a return to long-term average delinquency rates and higher losses in higher risk populations.
As a result of cumulative actions taken, our loss forecast for newly originated loans remains unchanged in aggregate compared to last quarter.
U.S. economic growth remains slow but steady, with annual GDP growth rate increasing to 2.6% in the fourth quarter of 2017. A primary driver of GDP growth since the financial crisis has been a historically low unemployment rate, which is down to 4.1% from its peak of 10% in 2009.
Updated pricing and return forecast
We continuously refine our methodology and recalibrate interest rates based on shifts in risk across the portfolio. This quarter, interest rates are increasing for certain subgrades in grades D and E.
Loss forecasts are remaining stable in aggregate for the platform relative to last quarter.
Platform Summary and Projections as of February 20, 2018
Judge Nixes LendingClub Investor Bid For Underwriter Docs (Law360), Rated: AAA
Morgan Stanley, Goldman Sachs and the other underwriters of LendingClub Corp.’s $1 billion initial public offering for now don’t have to produce roughly a thousand documents sought by a class of investors suing the peer-to-peer lending company for alleged stock fraud, a California federal judge ruled Tuesday.
LendingTree Ranks Best Places for a Fresh Start in 2018 (PR Newswire), Rated: AAA
LendingTree, the nation’s leading online loan marketplace, today released the findings of its study on the best cities for those seeking a fresh start.
First, the study looked at eight elements to consider when going through a financial recovery, such as the local median income and rents, and if the state has laws to protect debtors from aggressive collections and penalties, in case methods like debt consolidation or refinancing to lower rates aren’t enough to manage liabilities.
Next, to determine what opportunities there might be for people seeking a solid job and income, the study looked at the percentage of people in these metros who are between the ages of 35 and 64, single, employed, have health insurance coverage and are currently enrolled in school.
Lastly, to get an idea of how well people in an area are recovering from financial calamity, LendingTree calculated how quickly credit scores are rising after a bankruptcy by using proprietary data on the average credit score, on a geographic basis, of LendingTree customers who declared bankruptcy between three to four years earlier.
1. Buffalo, N.Y. – 67.6
At $738, Buffalo has the lowest median rent among the 50 cities reviewed, and 94 percent of adults over the age of 35 are insured (second highest). Residents who declare bankruptcy have an average credit score of 664 three years on, tied for the second highest score for the cities reviewed, suggesting that conditions are favorable for financial recovery. However, Buffalo ranks poorly in two metrics: at $52,303, median income is the seventh lowest, and only one other city has fewer students over the age the 35.
2. Minneapolis – 62.9
At just 3.7 percent, the exceedingly low unemployment rate for citizens in Minneapolis between the ages of 35 and 64 helps push the city to the No. 2 spot. Not only are most over-35s employed, but they also earn a median salary of $70,915, the eighth highest in the cities reviewed, 94 percent have health insurance and median rents are relatively low at $963.
3. Salt Lake City – 62.6
Only two other cities have more over-35s enrolled in school (Virginia Beach and Washington), and only five have more unmarried over-35s (New Orleans has the most). That could be due to the lowest unemployment rate for over-35s of any city reviewed (3.6%), and higher-than-average median income of $64,564 for that same group. That combines nicely with a moderate median rent of $967.
Why faster payments mean faster fraud (Tearsheet), Rated: AAA
Less than a month ago Early Warning Services, the network that powers peer-to-peer payments platform Zelle, touted $75 billion in funds moved through its bank-supported platform with plans to expand its member network. One member bank, however, also reported a fraud rate of 90 percent shortly after implementing Zelle last year, said someone familiar with the statistics who wished to remain anonymous.
Fraud detection in banks, however, is no longer just about building a wall to keep outsiders out; cybersecurity teams need to install a filter that can identify who can and should enter the system.
Bank of America will spend $600 million this year on cyber defense alone, its chief operations and technology officer Cathy Bessant recently told Tearsheet. In December Menlo Security, a company that provides malware isolation solutions, raised $40 million in Series C funding, bringing its total funding to $85 million. JPMorgan Chase, HSBC and American Express Ventures are among its investors.
Greenlight raises $ 16m for kids’ debit card (Finextra), Rated: A
7 COMPANIES REIMAGINING REAL ESTATE INVESTMENT AND FINANCE (Builder Online), Rated: A
Companies like Better Mortgage, Blend and LendingHome are reengineering the way mortgages are applied for and underwritten. While Cadre and Fundrise are moving real estate investments from Excel spreadsheets to the digital world.
GreenSky offers on-the-spot loans of up to $65,000 for home improvement projects with generous zero-interest promotional periods. Lemonade offers urban renters and homeowners insurance for as little as $5 and $25, respectively. LendingHome provides financing for house flippers, and more recently, homeowners.
Enodo delivers quantifiable insights for property investors (Realty Biz News), Rated: A
With the Enodo platform investors can cut to the chase with a platform that supports their decision-making through acquisition all the way to renovation, with features including rent price forecasting. In other words, Enodo is a real estate investing platform that provides quantifiable data, meaning investors no longer have to rely on hunches alone.
Enodo allows investors to carefully analyze any property in the country using basic physical and investment parameters. Users can also identify comparable properties, predict operating expenses and more. Parameters include things such as the year the home was built, number of units, amenities, market demographics and more.
Savings and Deposit Rates in a Rising Rate Environment (Lend Academy), Rated: A
This thread called Cash Parking on the Lend Academy Forum was created back in December 2016 and since then, forum members have discussed opportunities at banks and credit unions.
The discussion caught my eye when one user posted a 3% 5 year CD which happened to be offered by my local credit union.
Signing Up for a Savings Account at Marcus
Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS Bank. Rates are now 30 basis points higher at 1.5% on Marcus accounts.
Their investment has paid off and it was recently reported that they had $17 billion of deposits. Since Goldman Sachs acquired GE Capital’s retail deposits, deposits have grown a whopping 90%.
Kabbage’s Kathryn Petralia Talks Small Business Loans (LendEDU), Rated: A
She’s been hailed by Forbes as one of the most powerful women in the world, and TechCrunch recognized her for “crushing it” last year. Both sources refer to her success as a leader at Kabbage, Inc. which has financed over $4 billion to more than 130,000 businesses to date.
Q: What sets Kabbage apart from other online small business lenders?
A: Our focus on real-time access to third-party data and our ability to stay connected to our customer’s data all the time. This technology allows us to provide an automated experience.
Q: So, user experience seems to be a big advantage for non-traditional lending sources. While that’s an advantage, what disadvantages does a lender like Kabbage have against a traditional lender?
A: There are lots of things. First, traditional lenders like banks have well-known brands; they have access to really cheap capital. They have a lot of customers already. They already have access to a framework which they operate with the ability to move funds.
The only thing they don’t have is the ability to serve the market, because it’s too expensive for them to serve our customers with the type of product they need.
Q: Was there a typical small business customer that you would lend to? Do you lend to certain business more often than others today?
A: Well, we got our start making loans to eBay sellers which you may or may not know. The reason we started there was because that’s where the first API was available, so we could get information on a business’ performance. Then as more APIs became available, we were able to expand our business. So for a long time, all of our customers were eCommerce businesses.
But about three years ago, we began expanding to service brick & mortar businesses, and today, about 85% of our customers are brick & mortar businesses.
Q: Over the last 5 years, fintech lending has grown to take up more of the small business lending market. Where do you see the market share in 5 years? Where’s Kabbage in this equation?
A: If you’re talking about businesses seeking less than half or a quarter million dollars, I think it’ll stay the way it is with largely non-traditional players, like Kabbage, filling that space. And I think banks could serve that market through partnerships, but overall, I think it’s going to look much the same as it is now.
The Expanded Military Lending Act Regulations (The National Law Review), Rated: A
The Military Lending Act’s (“MLA”) lending restrictions are expanded to apply to consumer credit card issuers and unsecured consumer lenders. Compliance in most areas was mandatory as of October 3, 2016, but as to credit cards the mandatory compliance date is October 3, 2017.
The MLA applies to active-duty military personnel, active Reserve and National Guard personnel serving on Title 10 orders, and their dependents with a valid military identification card.
How to Invest in Private Loans (The Student Loan Report), Rated: A
The $1.45 trillion student loan market is made up of public and private student loans.
We now live in a world where crowdfunding and P2P investment opportunities are everywhere. The student loan market is no different. Companies like Sofi are shaking up what it looks like for both students and investors alike.
Sofi (short for Social Finance) has funded over $25 billion in student loans, with over 437,000 members around the country.
As challenger banks seek to enter the US, the business model still faces hurdles (Tearsheet), Rated: A
European digital banks N26 and Revolut will launch in the U.S. later this year, and there are reports that U.K. challenger bank Monzo is mulling a move into the U.S. market. Meanwhile, three U.S. banking startups — Varo Money, Square and Moven — recently announced plans to apply for or acquire U.S. banking licenses.
For N26, winning means customers loving N26 like in Europe. U.K.-based Revolut, which plans to launch in the U.S. later this year with a multi-currency bank account, said winning means acquiring millions of customers, particularly those who travel often; and to San Francisco-based Chime, a win is to bring large numbers of customers away from traditional institutions.
Why BankMobile has launched an online magazine (Tearsheet), Rated: B
BankMobile has launched a content marketing website called Paradigm Money to help customers navigate personal finance.
The site, which launched this month, includes news, opinion pieces, interviews and advice.
BankMobile, which was born as the mobile-only offshoot of Customers Bank which sold it last year, has 1.8 million customers to date and opens about 300,000 new accounts each year.
WHAT FAMILY OFFICES WANT FROM ALTERNATIVE INVESTMENT MANAGERS (All About Alpha), Rated: A
Competition within the alternatives sector for family office investments is at an all-time high, as these investors get more comfortable with the range of assets available to them and their general understanding of alternatives rises. Fund managers want to win these wealthy investors over, but often find they are unsure of how best to pursue them. The family office client is increasingly demanding a more tailored approach to wooing them over. Managers who can adapt their prospecting tactics stand a better chance of winning a partnership with these prized investors.
A Q4 2017 research study, “Single-Family Offices and Alternative Investments,” by Institutional Capital Network, provides a framework for the changing dynamics in family office activity within the alternatives space. Some of the research findings that stand out in particular include:
First-generation founders have a “stay-rich” mentality, while second-generation are more likely to have a “get-richer” perspective.
About 40% of second generation single-family offices are investing 15% or more of their total portfolios into alternatives, compared to 20% of first generation single-family offices that are investing at similar levels. In 2017, 71% increased their direct allocations relative to 2016, and 82% intend to do so in the future.
33% of Americans do not have more savings than credit card debt (KHOU), Rated: A
In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.
While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.
Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.
US Mobile Payment Market to Reach $ 3 Trillion by 2020, Fintech Stocks Lead the Way (Investing News), Rated: A
A new Market Research Reports Search Engine report states the US mobile payments will grow from $550 billion in 2015 to reach $2.8 trillion by 2020, representing a compound annual growth rate (CAGR) of 39.1 percent over the course of that period.
Marlette Funding Named a Finalist in Top Consumer Lending Platform in LendIt Fintech Industry Awards Competition (Business Wire), Rated: B
LendIt Fintech, the world’s leading event in financial services innovation, announced today that they have selected the Best Egg Personal Loan Platform provided by Marlette Funding, LLC, as a finalist in the Top Consumer Lending Platform category for the LendIt Fintech Industry Awards. The Top Consumer Lending Platform finalists were selected from companies that demonstrate a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.
Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B
Klarna, a global payments provider, is a sponsor of and will be exhibiting at next week’s eTail West 2018 in Palm Springs, Calif.
Carl Gish Joins Varo Money as Chief Marketing Officer (PRWeb), Rated: B
Mobile banking startup Varo Money, Inc. today announced the hire of Carl Gish as Chief Marketing Officer. Gish is a marketing and general management executive with more than 20 years of experience across well-known, high-growth consumer brands and e-commerce businesses, including Amazon, Unilever, Dyson, eBay and Affirm. He will lead all aspects of the company’s branding and marketing, and will work directly with CEO Colin Walsh to drive large growth in Varo’s customer base across multiple marketing channels and partnerships.
Zopa warns over defaults as investor returns decline (Financial Times), Rated: AAA
The UK’s oldest peer-to-peer service is warning investors that defaults on its recent loans will be running at a higher rate than during the financial crisis.
Fintech Raisin Crosses the Channel to Offer Services to UK Savers (Crowdfund Insider), Rated: AAA
Savings marketplace Raisin has launched in the UK.
Revolut’s Nikolay Storonsky on long hours and high staff turnover (Financial Times), Rated: AAA
Over the past three years, and with the backing of Balderton Capital and Index Ventures, two European venture capital firms, Mr Storonsky’s company has raised about £60m and had a valuation of £300m last year.
How Startups Can Gain Traction In The Financial Services Market (Forbes), Rated: A
The United Kingdom’s financial technology sector attracted a record £1.34bn in venture capital investment in 2017, with 90% of that money going to startup and early stage businesses based in London.
Those raising cash last year included peer2peer lending platform Funding Circle (£81.9m); payments company, Transferwise (£211m) and challenger bank, Monzo (£71m).
Last week I spoke to two fintech entrepreneurs – Ollie Purdue of online bank account provider, Loot and Jared Jesner, CEO of currency exchange, WeSwap – about their reasons for entering the fintech arena and how they hope to carve out a niche in a crowded market.
Lloyds Bank Marks $ 4.1B for Digital Strategy (Bank Innovation), Rated: A
British bank Lloyds has put aside £3 billion ($4.1 billion) for digital development and growth, the bank announced today.
The £3 billion is a 40% increase on the spend Lloyd marked for its previous three-year expansion plan.
P2P lending to form part of inquiry into SME finance (P2P Finance News), Rated: A
POLITICIANS are going to consider the availability and uptake of peer-to-peer lending as part of an inquiry into finance for small-and-medium-sized enterprises (SMEs).
Ultimate guide to Innovative Finance ISAs: Part two (P2P Finance News), Rated: A
Lending to small- and medium-sized enterprises (SMEs) has soared in recent years. Members of the Peer-to-Peer Finance Association have cumulatively lent a total of £5bn to businesses versus £3bn to individuals, as of the end of 2017.
Loans to SMEs tend to produce a higher rate of return than loans to consumers, but they can also be riskier in some cases. The average size of loan is also much higher.
How Short Term Lender Wonga Went Worldwide (Silicon India), Rated: A
Today the brand eclipses its competition, with many of its 400 failing to survive in 2016 as fresh price caps on loan and repayment charges came into action.
With UK-domination taken care of, the lender has been expanding rapidly overseas, starting its journey by launching in Canada, South Africa and Poland, before going on to purchase and assimilate a number of foreign short term lenders as part of its global growth.
To launch Wonga Spain, the lender purchased Spanish credit agency Credito Pocket in 2013, going on to purchase German “pay later” payment firm BillPay (with two million users to its name) and a stake in Indian firm Nahar Credits Private in October of the same year.
China tries to bring order to sprawling online finance sector (Asian Review), Rated: A
China’s 1.2 trillion yuan ($189 billion) internet finance industry has reached a turning point as regulators tighten regulations after one too many cases of bankruptcy and fraud.
RaboDirect to quit Irish market in May (The Irish Times), Rated: AAA
RaboDirect Ireland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.
The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.
Bizarre Buybacks and Expensive Takeovers (The Washington Post), Rated: AAA
In November, Swiss fintech company Temenos Group AG spent 150 million Swiss francs ($160 million) buying back its shares at an average price of 122 francs each. Weeks later, with the stock at 115 francs, it’s preparing to sell shares to fund a $1.9 billion takeover of British rival Fidessa Group Plc.
The return on invested capital looks set to be just over 6 percent in 2020, based on the stated cost synergies plus Fidessa’s forecast operating performance. That’s well below the target’s 9 percent cost of capital.
Anyfin raises €4.8 million to refinance loans with a statement selfie (Finextra), Rated: A
BNI Europa and Code for All partner to train new generation of IT developers (Finextra), Rated: A
BNI Europa, through Puzzle, its online credit brand, created a partnership with <Code for All_> to provide financial aid to anyone who wants to learn to become a IT developer.
This partnership provides an intensive code training program of 14 weeks supported by an online credit solution that offers special payment conditions to the program’s students.
What Is the Ripio Credit Network? (The Merkle), Rated: A
The Ripio Credit Network wants to offer a real global credit ecosystem which is more suitable than traditional solutions and even than similar peer-to-peer lending services. While that sounds like a tall order, the RCN protocol will connect lenders and borrowers all over the world via the native RCN token.
As is the case with any blockchain ecosystem, the Ripio Credit Network has its own native RCN token. It is the network’s payment channel first and foremost. Although credit transactions can be settled in any local currency, one does need RCN tokens to access the network and facilitate transactions.
Etherty launches blockchain-based, real estate trading platform (Construction Business News), Rated: A
A new investment portal, Etherty, has launched offering a real estate linked-crypto currency that enables investors to seize property investment opportunities all over the world, primarily in key markets such as Dubai, Mexico, and Australia.
500 Startups, Huobi Labs to Incubate Blockchain Projects (CoinDesk), Rated: B
500 Startups, the Silicon Valley startup accelerator, announced Tuesday it is partnering with cryptocurrency exchange Huobi’s incubator wing, Huobi Labs.
The two companies will support startups in various areas, including developing business plans, focusing on elements such as white papers, marketing strategies, community engagement and fundraising efforts, the accelerator said in a press release.
FMA opens applications for personalised digital advice (Scoop), Rated: AAA
The FMA is now open for applications from providers seeking to offer personalised financial advice to consumers through digital tools and platforms (so-called robo-advice).
P2P lending, payments platform JaldiCash to merge with parent firm Weizmann Forex (Financial Express), Rated: A
Weizmann Forex Limited (WFL), a foreign exchange and inward remittances platform, has approved the acquisition of its unit Weizmann Impex Enterprises Ltd (WISE). The proposed deal is supposed to take place on April 1st and will be done through a Scheme of Amalgamation, the company said in a press release. WISE is authorized by the Reserve bank of India to issue and operate semi-closed prepaid payment systems in India. The company owns ‘JaldiCash’, a payments platform that claims to have a network of more than 18,000 channel partners across 29 Indian states and more than 520 districts through their B2B model. JaldiCash works on a P2P model lending model, enabling loans for retailers, hotels and other services
Islamic banking assets is only 5.03 per cent of the total banking sector’s assets in the country, with a market share of IDR356.5 trillion (US$26.7 billion).
According to ALAMI CEO Bembi Juniar, this is due to the lack of infrastructure, support from key opinion leaders, and education on the benefits of sharia-based financial services.
So ALAMI offers a platform that serves as an aggregator for sharia-based financing for SMEs.
Wealthsimple raises $ 65 million in funding from Power Financial group of companies (Cision), Rated: AAA
Canada’s digital investor has raised a $65 million investment from the Power Financial group of companies, bringing their total investment in Wealthsimple to $165 million. Wealthsimple manages approximately $1.9 billion for over 65,000 clients in Canada, the United States, and the United Kingdom. More than 80 per cent of people who use digital investing in Canada use Wealthsimple.
News Comments Today’s main news: Wealthfront gets backing from Tiger Global. Funding Circle partners with Kansas bank. Elevate customers see rise in credit scores. NextCapital raises $30M for digital advice platform. London tops tech funding. HMT Treasury says P2P lending not deposit-taking. Yields lower in Euro zone as MiFID II begins. Today’s main analysis: FT Partners’ CEO monthly alt lending market […]
- Today’s main news: Wealthfront gets backing from Tiger Global. Funding Circle partners with Kansas bank. Elevate customers see rise in credit scores. NextCapital raises $30M for digital advice platform. London tops tech funding. HMT Treasury says P2P lending not deposit-taking. Yields lower in Euro zone as MiFID II begins.
- Today’s main analysis: FT Partners’ CEO monthly alt lending market analysis. Why did biz loan growth fall of the cliff?
- Today’s thought-provoking articles: Business loan growth fell off the cliff. Ron Suber talks about 2018. Country comparisons and deals in tech funding 2017.
- Wealthfront snags backing of Tiger Global. AT: “A huge win for both companies. Congatulations.”
- FT Partners’ CEO monthly alternative lending market analysis. AT: “FT Partners advised the recent GreenSky deal that led to that company overtaking SoFi as the most valued online lender.”
- Why did business loan growth fall in 2017? AT: “Maybe businesses are profitable without loans. If cash reserves are growing, they may be managing their businesses on those. On the other hand, business owners could be worried about an economic downturn that could crush their businesses, especially if they are in debt. A third option may be the uncertainty caused by a Trump Administration that is unpredictable.”
- Ron Suber discusses alternative lending in 2018. AT: “Excellent insight. Prosper, for instance, is making money despite lower profits. They’re likely not the only ones, and Suber says it is because the industry has grown up.”
- Elevate says customers have seen a rise in credit scores.
- NextCapital raises $30M for digital financial advice platform. AT: “Congratulations. As a result, we may see a surge in legacy advice firms offering a robo or hybrid service. Increased competition can only improve services and help the industry.”
- FSOC report highlights marketplace lending.
- Can blockchain tech revive P2P lending?
- How the unbanked and underbanked differ.
- BankMobile’s plan to expand. AT: “But when will they expand to businesses?”
- Banks offer student loan pay downs to attract millennials for employment.
- How Citizens Bank is redesigning its branches. AT: “Bank branches of the future will likely be more like the barber shops of the past.”
- Banks use behavioral economics to woo customers.
- The battle over credit scoring for mortgages. AT: “There is more than enough room for traditional credit scoring and alternative credit scoring models like VantageScore.”
- Envestnet finalizes FolioDynamix acquisition.
- PropertyMetrics offers online proformas for real estate investors.
- One stock newsletter writer recommends LendingClub.
- New York to get an online lending task force.
- Chippewa Cree Tribe, BEH Gaming settle lawsuit.
- LendingTree chooses Portland ad agency.
- 3 financing mistakes to avoid in growing a business.
- Infographic: How to keep a good credit score.
- London topped list of tech funding hubs in 2017.
- Comparison of European countries on tech funding.
- P2P lending not deposit-taking, says treasury.
- How angel investors support startups.
- Over half low-income families use expensive credit to buy household appliances.
- Babb hires Paul Johnson as CIO.
- Funding Circle partners with Kansas bank. AT: “This is the online lender’s first partnership with a U.S. bank. I sense more to come.”
- Former Ripple CEO now one of the world’s richest billionaires.
- Publisher of Times of India invests in fintech lender FinREQ.
- EarlySalary raises $15.7M.
- Try these asset class investments.
- United States
- An investing startup that grew by $ 100 million in a single day just got some big name backing (Business Insider), Rated: AAA
- FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA
- Business-Loan Growth Fell Off a Cliff in 2017 and No One Can Figure Out Why (WSJ), Rated: AAA
- Looking at 2018: A Discussion with Ron Suber (Crowdfund Insider), Rated: AAA
- ELEVATE ANNOUNCES BOOST IN CUSTOMER FINANCIAL HEALTH (BusinessWire), Rated: AAA
- NextCapital Raises $ 30M for its Digital Financial Advice Platform (ChicagoINNO), Rated: AAA
- FSOC Annual Report on Financial Stability Highlights Marketplace Lending (Lend Academy), Rated: A
- Can blockchain technology revive peer-to-peer lending? (American Banker), Rated: A
- Unbanked vs. Underbanked: Who they are and how they differ (MicroBilt), Rated: A
- ‘We don’t need to stay in the student market’: How BankMobile wants to grow its offering and replicate its model (Tearsheet), Rated: A
- Banks compete for tech talent by helping on student loans (American Banker), Rated: A
- Inside Citizens Bank’s branch redesign strategy (Tearsheet), Rated: A
- How banks use behavioral economics to win over customers (American Banker), Rated: A
- A Fight Over the Credit Score Lenders Use for Your Mortgage (WWJ), Rated: A
- Envestnet Finalizes Acquisition of FolioDynamix for $ 195 Million (Finovate), Rated: A
- PropertyMetrics helps real estate investors create more accurate proformas (Realty Biz), Rated: A
- 10 favorite stocks for 2018 from top-ranked stock newsletter writers (MarketWatch), Rated: A
- An Online Lending Task Force is Coming to New York (deBanked), Rated: A
- Chippewa Cree Tribe Settles BEH Gaming Ltd Lawsuit (PRWeb), Rated: B
- Portland ad agency lands $ 126M LendingTree account (Biz Journals), Rated: B
- Growing your business? These 3 financing mistakes can cost you big (News-Journal), Rated: B
- 3 Behaviors To Keep Credit in Good Standing (MicroBilt), Rated: B
- United Kingdom
- London was top destination for tech funding in 2017 (Reuters), Rated: AAA
- London’s tech scene pulls in record £2.5bn in 2017 venture capital bonanza (City A.M.), Rated: AAA
- Treasury clarifies whether P2P lending constitutes deposit-taking (AltFi), Rated: AAA
- How angel investors support UK start-ups (Growth Business), Rated: A
- High numbers using expensive credit to buy basic household appliances (Ekklesia), Rated: A
- Blockchain-based banking startup Babb names Paul Johnson as CIO (Finextra), Rated: B
- European Union
- Euro zone yields edge lower as MiFID II kicks in (Reuters), Rated: AAA
- P2P platform bosses offer cautious support for pan-EU licences (AltFi), Rated: A
- Online lender Funding Circle inks partnership with Kansas bank (American Banker), Rated: AAA
- This Cryptocurrency Inventor Has Suddenly Become One of the World’s Richest Men (Money), Rated: A
- BCCL invests in fintech company FinREQ in an ads-for-equity deal (Medianama), Rated: AAA
- Online lending platform EarlySalary raises $ 15.7 mn in Series B round (VC Circle), Rated: A
- Invest smart with these asset class investment options (ANI), Rated: B
- Commencement of Online Lending Service for Small Businesses That Leverages Accounting Big Data and AI Technology (Orix), Rated: A
An investing startup that grew by $ 100 million in a single day just got some big name backing (Business Insider), Rated: AAA
Wealthfront, a robo-adviser with more than $9 billion under its management, announced Thursday that Tiger Global, the New York investment firm, would lead a $75 million fundraising round.
Wealthfront plans to use the new capital to enhance its Path platform, which allows users to view all of their financial accounts.
“Path’s appeal to young people propelled our growth such that people under 45 now represent 85% of our clients,” Wealthfront cofounder Andy Rachleff said in a statement.
FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA
As FT Partners wraps up 2017 and looks forward to 2018, we are extremely proud of our accomplishments. Celebrating over 16 years in business, we executed a record number of deals, significantly expanded our team, continued our global expansion and won a number of industry awards during the past twelve months. We are confident that 2018 will be another successful year for the Firm and we are incredibly thankful to our clients and friends across the industry.
Business-loan growth fell to its lowest levels since the aftermath of the financial crisis in the final weeks of 2017, a puzzling development that could weigh on bank earnings later this month.
Bank loans to companies grew 1.1% from a year earlier as of Dec. 20, up slightly from a 0.8% rate the prior week, according to Federal Reserve data. That Dec. 13 level was the lowest since spring 2011, when banks were just starting to lend to companies again after the financial crisis.
The readings likely cement 2017 as the worst year for this type of lending in recent history. The average weekly rate of business-loan growth was 2.7% for 2017 through Dec. 20, compared with 9.3% in 2016 and double-digit growth in the two years before that.
Looking at 2018: A Discussion with Ron Suber (Crowdfund Insider), Rated: AAA
“[People] from the banking industry from the tech industry. We have grown up,” said Suber. “We had some people that were great from the early days but were not good for long term growth. There has bee a major turnover in the leadership at many of these companies. My call is that companies are focusing on cash flow, profitability and EBITDA for the first time. Earnings on GAAP basis … I think that is great for the industry. You are seeing companies generate cash. [In the past] Prosper did $400 million in month and it lost money. Now it is doing, say $200 million a month and it is making money. They are being run to be profitable businesses. That is the takeaway from 2017.”
Suber says that today, Prosper makes money every quarter. They have $100 million on the balance sheet and it gets higher every month.
“We are seeing lots of money coming in from Asia to buy loans now. More than ever,” added Suber.
LendingClub, a reporting company, has had a tough two years as its stock has tanked while Wall Street looked elsewhere for growth.
ELEVATE ANNOUNCES BOOST IN CUSTOMER FINANCIAL HEALTH (BusinessWire), Rated: AAA
More than 140,000 customers of Elevate’s RISE product have seen an improvement in their credit scores. Additionally, more than 35,000 RISE customers are now eligible to receive at least a 50 percent reduction in their APR and more than 13,000 customers are eligible to receive RISE’s lowest rate.
More than 160 million Americans are either non-prime or “credit invisibles,” without any credit score. These customers account for almost two-thirds of the U.S. population, yet are significantly underserved by the traditional financial industry.
RISE loans are originally priced to risk. Customers are eligible to receive 50 percent off of their rate on subsequent loans after 24 months of payments, eventually achieving a further reduction to 36 percent. Today, more than 35,000 customers have received or are eligible to receive a 50 percent rate reduction and more than 13,000 customers are eligible for an APR of 36 percent.
About the Data
Elevate worked with a major credit bureau to which it reports, gathering anonymized data on RISE customers. Elevate reviewed credit scores of customers from the customer acquisition point up to two quarters after loan completion.
The number of customers who have reached the necessary number of payments to receive a rate reduction was calculated by tabulating the number of accounts at the number of payments necessary.
- 24 months of payments are required to receive 50 percent off of the customer’s original APR
- 36 months of payments are required to reach 36 percent
NextCapital Raises $ 30M for its Digital Financial Advice Platform (ChicagoINNO), Rated: AAA
NextCapital officially announced Thursday that it has raised $30 million in new funding to grow its enterprise digital advice platform.
The Series C round brings the company’s total funding to more than $52 million. The round was led by Oak HC/FT, and included additional investments by Manulife Financial, Transamerica Ventures, Vermont Seed Capital Fund and Route 66 Ventures.
FSOC Annual Report on Financial Stability Highlights Marketplace Lending (Lend Academy), Rated: A
Last month the Financial Stability Oversight Council (FSOC) released their annual report. This 165-page report highlights potential risks to our financial system by looking at new developments and providing recommendations to improve financial stability.
Section 4.14 of this year’s report deals with new financial products and there is an entire section on marketplace lending. Here is their conclusion about our space:
Although marketplace lending has the potential to reduce costs and expand access to credit, the extent to which these benefits have been realized thus far is unclear. Furthermore, the marketplace lending model has not been tested through a full credit cycle. There are risks that misalignment of incentives could exist on these platforms.
Can blockchain technology revive peer-to-peer lending? (American Banker), Rated: A
The original premise of online peer-to-peer lending platforms was simple and democratic: A single mom from Kalamazoo, Mich., could post her story explaining why she needed $5,000 to pay off her credit card, and a retired electrician in Illinois could read it, decide to fund her loan and receive interest far exceeding what he could get on his savings account.
LendingClub and others that proffered this people-helping-people model quickly found they needed to make changes.
Unbanked vs. Underbanked: Who they are and how they differ (MicroBilt), Rated: A
Slightly more than two-thirds of households in America frequently make use of traditional banking services, according to the Federal Deposit Insurance Corporation. But that leaves 33 percent of people in the U.S. who don’t, a significant percentage by any measure.
As the title implies, unbanked Americans are those who don’t make use of any banking services whatsoever. This includes debit cards and checking accounts, as well as savings accounts. In 2015 – the most recent year for which data is available – the unbanked represented 7 percent of U.S. households, translating to approximately 23 million individuals, including children, the FDIC reported. The percentage of unbanked households in the U.S. is down slightly from 2013, when it was 7.7 percent.
Families have a plethora of rationales for why they opt to go without banking services, but it’s usually due to what they do not have in terms of savings. Nearly 57 percent of unbanked households cite this as their prime reason, according to the FDIC report.
Around 20 percent of Americans are underbanked, according to the FDIC, which means they have either a checking or savings account, though rarely both. Households are also usually given the underbanked distinction if they’ve used alternative financing options during the previous year, such as money orders or rent-to-own services. Around 67 million Americans are underbanked, or the equivalent of 24.5 million households, based on 2015 figures from the most up to date FDIC survey.
As far as demographics are concerned, millennials are among the most likely to be underbanked, with 31 percent of them under the age of 24, according to federal figures.
‘We don’t need to stay in the student market’: How BankMobile wants to grow its offering and replicate its model (Tearsheet), Rated: A
BankMobile, the digital-only bank that offers checking accounts to students, wants to start offering them credit.
The three-year-old Customers Bank subsidiary launched a personal loan product for its customers at the end of December, but that was just the first of a suite of credit products the bank plans to roll out this year as part of its “customer-for-life” strategy, according to Luvleen Sidhu, president and chief strategy officer.
BankMobile has 1.8 million customers to date and has opened about 300,000 new accounts each year in the student demographic through its university partnerships.
Why are you expanding into credit now?
We’re just looking at our demographic. Many in our current customer base are living paycheck to paycheck — that’s why personal loans make sense.
How do you plan to expand your products after the personal loan?
We have a lot of products to introduce on the credit side: credit cards in the second quarter, student refinancing in the second quarter, auto loans and home equity by the second half of next year.
You’re partnering with Upstart on credit products. What are the advantages of that approach?
In the longterm you could say it’s more expensive to partner but those costs outweigh the fact that we get to market much faster.
How has competition changed since BankMobile launched?
It’s accelerated. Challenger banks and Neobanks like Moven, GoBank, Simple and Varo continue to flourish and grow. Digital banks like Ally, USAA and Captial One 360 have really done a push in 2017 attracting millennials, tweaking their product, tone, messaging, branding to make sure they start penetrating that segment. Traditional banks are finally realizing the branch based customer acquisition model is not sufficient.
Banks compete for tech talent by helping on student loans (American Banker), Rated: A
Though banks might be hard-pressed to offer similar wages — average starting salaries at Uber, Pinterest, and Airbnb are all over $220,000, according to Paysa — they can offer something most tech companies don’t: a student loan repayment benefit plan.
Inside Citizens Bank’s branch redesign strategy (Tearsheet), Rated: A
Banking giants like Citi and Capital One with much more money and resources at hand have been making branches look more like lounges, coffee shops or museums as they figure out what to do with them with less foot traffic, but in 2018, smaller institutions could start to make a move on their plans.
The Providence, Rhode Island bank is transforming its branches into digitally-connected community centers, Johnson said.
Citizens currently has 1,200 branches, and the bank is in the second year of a 10-year plan to reduce its branch footprint as lease expiries take effect. It’s replacing paper pamphlets with digital tools, like a digital retirement checkup platform customers can use while meeting with bankers. The bank can also project digital content onto the walls of a meeting room — a nod to the digital-first habits of some younger customers. Citizens is on an ambitious track to reduce its retail footprint by as much as 50 percent — a “do more with less” approach that over the long term that will save occupancy costs, CEO Bruce Van Saun said in an earnings call last year.
How banks use behavioral economics to win over customers (American Banker), Rated: A
When a major international bank was looking to improve the response rates for its credit card mailers in 2017, rather than changing the graphics or upgrading the paper stock, it turned to a firm that could offer guidance on how consumers make decisions.
It was trying to tap into the insights of behavioral economics, a discipline that uses psychological observations about human behavior to analyze and predict how people will act.
A Fight Over the Credit Score Lenders Use for Your Mortgage (WWJ), Rated: A
Banks and rival lenders are butting heads over the credit scores used to decide millions of mortgage requests by U.S. home buyers.
Now, a federal agency is weighing whether to step into the fight, which revolves around a longtime requirement for lenders who sell mortgages to Fannie Mae FNMA -3.17% and Freddie Mac FMCC -3.31%to gauge most borrowers using FICO scores. The Federal Housing Finance Agency’s ultimate decision could have wide-reaching ramifications for the mortgage market and home buyers across the U.S.
Many nonbank lenders, which in some recent quarters have accounted for more than half of the mortgage dollars issued in the U.S., want the ability to use a credit score provided by a company owned by credit-reporting firms Equifax Inc., EFX +0.00% Experian EXPGY 0.23% PLC and TransUnion . TRU 0.80% These lenders argue the alternative score would open the mortgage market to a greater number of people and lead to more mortgage approvals, helping to boost home sales and the economy.
That is where VantageScore Solutions LLC, the scoring firm that Experian, Equifax and TransUnion launched in 2006, says it can step in.
The company says it can assign a credit score to about 30 million more consumers than FICO. Roughly 7.6 million of those consumers would potentially be eligible for a Fannie or Freddie mortgage, VantageScore says.
Envestnet Finalizes Acquisition of FolioDynamix for $ 195 Million (Finovate), Rated: A
PropertyMetrics helps real estate investors create more accurate proformas (Realty Biz), Rated: A
With that in mind, a company called PropertyMetrics has built a web based platform that’s designed to help investors come up with a proforma that includes evaluation and analysis. With PropertyMetric’s software it’s possible to analyze any property in minutes, from any device. This means investors can quickly generate a quick cash flow proforma, perform a cash flow analysis and generate PDF reports from anywhere, in a matter of minutes.
10 favorite stocks for 2018 from top-ranked stock newsletter writers (MarketWatch), Rated: A
Michael Brush, Brush Up on Stocks
I also recently suggested Lending Club Corp. LC, +0.98% in part because of the huge buying by Chinese technology and internet expert Tianqiao Chen, who founded the online gaming company Shanda Interactive Entertainment years ago while he was in his 20s.
He owns around 20% of Lending Club, an online peer-to-peer lending platform. LendingClub recently tightened its lending standards, which hurt loan growth, so the company missed earnings estimates and guided down. But it still expects 15%-20% annual revenue growth over the next few years. This seems plausible given how many people with OK credit would like to refinance their credit card debt with loans. Lending Club estimates $300 billion to $350 billion in credit card debt could potentially be refinanced in this way.
An Online Lending Task Force is Coming to New York (deBanked), Rated: A
An online lending
task force DFS study will be coming soon to New York, according to legislative records.
Chippewa Cree Tribe Settles BEH Gaming Ltd Lawsuit (PRWeb), Rated: B
Plain Green, LLC, the online resource for the short-term financial needs of underbanked and subprime consumers, today announces a successful settlement with BEH Gaming Ltd related to loans to the Chippewa Cree Tribe and Chippewa Cree Tribe Development Corporation. Plain Green’s settlement and payment of the debt to BEH releases the Chippewa Cree Tribe and Chippewa Cree Tribe Development Corporation from all liability. The settlement amount is under seal of court order.
The agreement settles a lawsuit filed by Florida-based BEH Gaming Ltd in 2014 (Case # DV-14-142 in the 12th Judicial District Court in Hill County, Montana) to repay loans to expand Northern Winz Hotel and Casino.
Portland ad agency lands $ 126M LendingTree account (Biz Journals), Rated: B
Advertising agency R2C inked a deal late last month to become the new media partner for LendingTree Inc.
LendingTree is an online loan marketplace for financial needs like auto loans, small business loans and credit cards headquartered in Charlotte, N.C. AdWeek reports that the company had a media budget of $126.5 million in 2016, and spent nearly $61 million during the first half of 2017, though R2C won’t manage LendingTree’s entire media budget.
Growing your business? These 3 financing mistakes can cost you big (News-Journal), Rated: B
1. Not understanding the true cost of your loan
When shopping for a business loan, it’s easy to become overwhelmed by fast-talking salespeople, endless strings of acronyms and confusing terms. If it’s unclear how much you’ll really pay for financing, that’s a good sign you should walk away, Hodges cautions.
2. Getting trapped in daily or weekly repayment cycles
Term loans are often the better option, Hodges says. They allow businesses to borrow a set amount of money for a specific purpose, like hiring new staff or stocking up on inventory. The funds are then paid back over a set amount of time, with consistent monthly payments and no surprise fees.
3. Not knowing what you deserve
After seeing countless small businesses get stuck with credit products they couldn’t afford or understand, a coalition of small business advocates, lenders and online credit marketplaces came together to launch the Small Business Borrowers’ Bill of Rights. As the first-ever gold standard for responsible business lending, the Bill of Rights outlines the rights and safeguards that small businesses should expect from finance providers.
3 Behaviors To Keep Credit in Good Standing (MicroBilt), Rated: B
London was top destination for tech funding in 2017 (Reuters), Rated: AAA
London was the top city in Europe for technology investment last year, with more funding going into companies in the British capital than into firms based in Paris, Berlin and the next seven cities combined, data showed on Friday.
Tech firms in London attracted 2.45 billion pounds ($3.3 billion) in venture capital funding in 2017, about 80 percent of the 2.99 billion pounds invested in Britain as a whole, according to data compiled by funding database PitchBook for London & Partners.
Fintech, or financial technology, was the most popular segment for investors, attracting a record 1.34 billion pounds in venture capital, the data showed, led by major rounds for TransferWise, Funding Circle and Monzo.
London’s tech scene pulls in record £2.5bn in 2017 venture capital bonanza (City A.M.), Rated: AAA
London’s tech venture capital investment reached another all-time high in 2017 as firms raked in four times more cash than Paris, the nearest European rival.
Softbank’s $502m (£392m) investment in game development platform Improbable was the biggest single investment during the year, but it was London’s burgeoning fintech firms which led the way with a record haul of investments.
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Treasury clarifies whether P2P lending constitutes deposit-taking (AltFi), Rated: AAA
HMT Treasury has passed an order confirming that straight-forward peer-to-peer lending does not constitute deposit-taking.
The order relates to the now-infamous “Dear CEO” letter, sent in March 2017, in which the FCA effectively ordered P2P platforms to cease and desist with all wholesale lending activities. The rationale was that a business borrowing money in order to lend that money on constitutes a form of deposit-taking. This was deemed illegal, per article 5, paragraph 1 of the regulated activities order.
How angel investors support UK start-ups (Growth Business), Rated: A
Investing in start-ups is becoming increasingly popular and accessible in the UK. The attractiveness of that market has come from two main factors: the success of a number UK start-ups built over the past two decades (ASOS, Just Eat, Zoopla, Funding Circle) which are showing the way for many more to come and the supportive policies implemented by the various governments over the same period to encourage investment in ventures.
These schemes have proven to be extremely popular with private investors who every year invest over £1.5 billion into high growth ventures under SEIS and EIS.
So how do you get started with investing in start-ups if you are new to this market?
Your first option is to invest through online equity crowdfunding platforms (ECF) such as Seedrs, Crowdcube and Syndicate Room, which showcase dozens of investment opportunities from start-ups looking to raise equity funding from the public. The advantage of ECF websites is that they are convenient and accessible to anyone with investment tickets starting at £10.
If you consider yourself to be a more sophisticated type of investor looking to build a portfolio of investments with tickets of more than £5,000 per company, then you should probably think about joining an angel syndicate.
A third option to get started is to invest through a start-up fund.
High numbers using expensive credit to buy basic household appliances (Ekklesia), Rated: A
Research found almost 60 per cent of people on a low income turn to more expensive forms of credit to purchase home appliances because they do not have the means to pay up front or access to affordable credit. Seventeen per cent say they used a credit card to make the purchase, 10 per cent used an overdraft and 10 per cent used a store card. More worryingly, significant numbers said that they used high cost credit to buy home appliances, with 13 per cent relying on hire-purchase and eight per cent saying that they used a payday loan.
Blockchain-based banking startup Babb names Paul Johnson as CIO (Finextra), Rated: B
Blockchain-based banking startup BABB (Bank Account Based Blockchain) has appointed banking technology veteran, Paul Johnson who previously lead one of the UK’s leading challenger banks, Aldermore, as CIO to spearhead the development of the world’s first decentralised bank.
Euro zone yields edge lower as MiFID II kicks in (Reuters), Rated: AAA
Germany’s 10-year government bond yield fell 2 basis points to 0.44 percent DE10YT=TWEB, off two-month highs hit on Tuesday after weekend comments from the European Central Bank’s Benoit Coeure that there was a “reasonable chance” ECB stimulus will not be extended this year.
Most core euro zone bond yields were down 1-4 bps on the day, with the gap between Italian and German 10-year bonds yields tightened to 160 basis points as Italian yields dropped as much as 6 bps to 2.03 percent. IT10YT=TWEB
Ireland meanwhile kicked off its annual funding drive by raising 4 billion euros with a syndicated 10-year bond, covering around a quarter of its issuance target just three days into the year.
P2P platform bosses offer cautious support for pan-EU licences (AltFi), Rated: A
“Opt-in passports” are the way forward, says Lendix co-founder Patrick de Nonneville.
The EU Commission is laying the groundwork for a licence that will allow European crowdfunding and peer-to-peer lending platforms to operate across the bloc.
“We think it’s a great development that will be useful for us,” said Patrick de Nonneville, chief operating officer at French marketplace lender Lendix.
Raffael Johnen, CEO and co-founder of leading German marketplace lender auxmoney, offered his thoughts.
“Getting closer to a single digital market will further boost the creation of true European fintech champions.”
Online lender Funding Circle inks partnership with Kansas bank (American Banker), Rated: AAA
Funding Circle, an online lender that operates in four countries, is partnering for the first time with a U.S. bank.
On Thursday, the 7-year-old company announced a deal with Intrust Bank in Wichita, Kan., under which it will sell $20 million worth of its small-business loans to the $5 billion-asset institution.
Cryptocurrency has a new king. His name is Chris Larsen, and he’s the co-founder and former CEO of Ripple, which created the digital token known as XRP. He’s now one of the world’s richest billionaires, thanks to XRP’s incredible hot streak.
XRP, a cryptocurrency intended for international transactions, has had a meteoric rise this winter. Its value went from $0.25 a coin in mid-December to $3.16 as of Wednesday, according to Coinmarketcap. It’s currently the second biggest cryptocurrency behind Bitcoin.
Forbes reports that, as a result, Larsen almost instantly became worth $37.3 billion (based on XRP’s Monday exchange rate).
BCCL invests in fintech company FinREQ in an ads-for-equity deal (Medianama), Rated: AAA
Bennett, Coleman & Co Limited (BCCL), the publisher of the Times Of India and the parent of Times Internet, has acquired an undisclosed stake in online loan company FinREQ.
As such, it looks like the investment in FinREQ is an ads-for-equity deal.
FinREQ was founded in 2011 and has tie-ups tie-ups with nationalized, co-operative, foreign, private banks, NBFCs and Housing Finance Companies. The company provides a variety of loans ranging from overdrafts, import & export finance, supply chain financing, loans against property (LAP), loans against share, lease rental discounts and others.
Online lending platform EarlySalary raises $ 15.7 mn in Series B round (VC Circle), Rated: A
Pune-based Social Worth Technologies Pvt. Ltd, which runs online lending platform EarlySalary, has raised Rs 100 crore ($15.7 million) in a Series B funding round led by Eight Roads Ventures India, a company statement said.
Invest smart with these asset class investment options (ANI), Rated: B
A research from the Transamerica Center for Retirement Studies indicated that nearly three-quarters of millennials are saving for retirement and that we started doing so at an earlier age than previous generations.
Peer-to-peer (P2P) lending in India currently gives a net return of 18-22 percent to lenders.
Commencement of Online Lending Service for Small Businesses That Leverages Accounting Big Data and AI Technology (Orix), Rated: A
ORIX Corporation (“ORIX”) and Yayoi Co., Ltd. (“Yayoi”) announced today that the ALTOA Online Lending Service, which leverages accounting big data and AI technology, will commence its operation through the jointly established entity, ALTOA, Inc. (“ALTOA”).
The ALTOA Online Lending Service is an online lending service that provides small amount, short-term loans for small businesses through a new credit model that leverages the credit know-how of ORIX, the accounting big data of Yayoi, and the AI technology of d.a.t. Inc., who is a partner in this venture.
News Comments Today’s main news: SoftBank leads $120M funding round for Lemonade. Shareholders file class action against Qudian. RateSetter looks to cautious growth in car financing. LoanBook rakes in 650K GBP on Crowdcube. Prospa planning a 2018 IPO. Today’s main analysis: Muddy Waters goes cold on China Internet Nationwide Financial Services Inc. (CIFS). Today’s thought-provoking articles: Two big banks […]
- Today’s main news: SoftBank leads $120M funding round for Lemonade. Shareholders file class action against Qudian. RateSetter looks to cautious growth in car financing. LoanBook rakes in 650K GBP on Crowdcube. Prospa planning a 2018 IPO.
- Today’s main analysis: Muddy Waters goes cold on China Internet Nationwide Financial Services Inc. (CIFS).
- Today’s thought-provoking articles: Two big banks to launch online lending platforms. China is ripe for auto finance boom. Startups: How to improve API security. Alternative investment strategies to consider for 2018.
- SoftBank leads funding round for Lemonade. AT: “Whatever SoftBank touches turns to gold.”
- Shareholders file class action against Qudian. AT: “It was bound to happen.”
- Two big banks to launch online lending platforms. AT: “I suspect more to come. This Lend Academy analysis is worth the read and highlights how online lending has grown to the point of being ‘legitimized’. Marcus has proven that traditional banks can compete with up-and-coming tech companies. But will they be the only success story? Maybe not, but we will have to wait and see.”
- Marketplace lending enters 2018 taking flak. AT: “It must mean the industry is doing something right.”
- Interview with EquityMultiple CEO.
- Ellevest expands into human advice.
- Why employers should help workers with income volatility.
- BankMobile uses AI, alternative data to FICO-poor student lending.
- Merrill Lynch fined $1.4M.
- Banks can’t attract the right talent. AT: “So says an insider.”
- 10 people, organizations that had a rough year. AT: “You know some of them.”
- Runway Growth Credit Fund closes $275M equity round.
- T0 ICO brings in $100M.
- Otting sees a future for a fintech charter.
- Blackstone examines secondary private equity market.
- How the digital community supports small business.
- Atlanta mayor rolls out plan to help underbanked.
- 9 holiday gift cards that give something for nothing.
- RealtyMogul hires new chief people officer.
- Credit Karma hires new GM, credit cards.
- Small business benefits to being charitable.
- RateSetter plans cautious growth in car financing.
- Chip raises over 1M GBP, plans to apply for banking license.
- Muddy Waters goes short on CIFS.
- China is ripe for auto finance boom.
- Debtors blacklisted from flying, buying train tickets, or staying in luxury hotels.
- LoanBook nabs 650K GBP on Crowdcube.
- How to improve API security. AT: “Cybersecurity is perhaps the most important issue in European lending, but it’s important everywhere.”
- Klarna, iZettle entrepreneurs share advice.
- Net Element surges 250% by launching blockchain unit.
- Prospa plans 2018 IPO. AT: “And would probably outperform Credible.”
- Alternative investment strategies to consider for 2018.
- P2P lending emerges as a viable option.
- Regulations help fintech mature.
- The top finalists of Wharton India Startup Challenge.
- United States
- SoftBank leads a $ 120 million round for insurance startup Lemonade (TechCrunch), Rated: AAA
- Shareholder Class Action Filed Against Qudian Inc. – QD (GuruFocus), Rated: AAA
- Two Big Banks Set to Launch Their Own Online Lending Platforms (Lend Academy), Rated: AAA
- From On Fire To Under Fire: Marketplace Lending Enters 2018 Taking On Flak (ValueWalk), Rated: A
- EquityMultiple CEO Charles Clinton Highlights Real Estate Opportunities & Disruption, Predictions for 2018 (Crowdfund Insider), Rated: A
- Krawcheck expands Ellevest robo to three service levels with more human advice (InvestmentNews), Rated: A
- Why Employers Need To Help Workers Deal With Income Volatility (Forbes), Rated: A
- BankMobile deploys AI, alternative data to lend to FICO-poor students (American Banker), Rated: A
- Merrill Lynch Fined $ 1.4M Over Supervisory Failures (Financial Advisor IQ), Rated: A
- ‘Banks can’t attract the talent they want or need’ (Tearsheet), Rated: A
- 10 who had a rough year in 2017 (American Banker), Rated: A
- Runway Growth Credit Fund Successfully Closes $ 275 Million Equity Offering with Increased Investment from Oaktree Funds (BusinessWire), Rated: A
- Investors Commit $100 Million to tZERO ICO (Coindesk), Rated: A
- OCC’s Otting sees future for fintech charter, CRA reform (American Banker), Rated: A
- BLACKSTONE LOOKS AT THE SECONDARY PRIVATE EQUITY MARKET (All About Alpha), Rated: A
- How the digital community is supporting small business (Rapid Growth Media), Rated: A
- Mayor Kasim Reed Announces Bank on Atlanta Initiative (AJC.com), Rated: B
- 9 Holiday Gift Cards That Give You Something for Nothing (TheStreet), Rated: A
- RealtyMogul Hires New Chief People Officer (BusinessWire), Rated: B
- Credit Karma adds Gannesh Bharadhwaj as General Manager, Credit Cards (Credit Karma), Rated: B
- The Small Business Benefits of Being Charitable (Business2Community), Rated: B
- United Kingdom
- RateSetter plans ‘cautious growth’ in car finance market (P2P Finance News), Rated: AAA
- Chip, the chatbot savings app, raises over £1M in crowdfunding with plans to apply for a banking license (TechCrunch), Rated: A
- Muddy Waters Is Short China Internet Nationwide Fncl Srvcs Inc (CIFS) (ValueWalk), Rated: AAA
- China Ripe for Auto Finance Boom as Consumer Penetration Rate Rises (Auto Finance News), Rated: AAA
- Debtors in China are placed on a blacklist that prohibits them from flying, buying train tickets, and staying at luxury hotels (Business Insider), Rated: A
- European Union
- Spanish Marketplace Lending Platform LoanBook Secures £650,000 Funding Target on Crowdcube (Crowdfund Insider), Rated: AAA
- Two Additional Ways to Improve API Security for Fintech startups (Finextra), Rate: AAA
- 5 hugely successful Nordic entrepreneurs share their advice to young people (Business Insider), Rated: A
- A small fintech company surges 250% after launching a blockchain-focused business unit (Business Insider), Rated: A
- Online lender Prospa joins the 2018 IPO pipeline (Financial Review), Rated: AAA
- “Five best alternative investment strategies to consider in 2018” (Business Today), Rated: AAA
- Alternative asset classes: P2P lending emerges as viable option in India (Financial Express), Rated: A
- Regulations helped fintech mature in 2017; yet 2018 may prove challenging for cos to navigate (Economic Times), Rated: A
- Meet The Top 20 Finalists Of The 5th Edition Of Wharton India Startup Challenge (Inc42), Rated: B
- Cyberattack brings a cryptocurrency exchange to its knees (Business Insider), Rated: A
- How to get a personal loan without a credit score? (Asianet Newsable), Rated: B
- RATEHUB REPORTS GENERATIONAL DIVIDE WHEN IT COMES TO TRUST IN FINTECH (Betakit), Rated: A
SoftBank leads a $ 120 million round for insurance startup Lemonade (TechCrunch), Rated: AAA
The SoftBank Group has finally made a good tech investment around real estate.
After investing $4.4 billion in what is essentially a bespoke office space rental business (WeWork) and another $450 million in Zillow for rich people (Compass), the gargantuan Japanese tech investor is leading a $120 million round of funding for Lemonade, a startup providing renters and homeowners insurance.
Additional investors in the round include previous backers Alphabet’s investment firm, GV, General Catalyst and Sequoia Capital.
Shareholder Class Action Filed Against Qudian Inc. – QD (GuruFocus), Rated: AAA
The law firm of Kessler Topaz Meltzer & Check, LLP announces that a shareholder class action lawsuit has been filed against Qudian Inc. (NYSE: QD) (“Qudian” or the “Company) on behalf of investors who purchased the Company’s securities between October 18, 2017 and November 20, 2017, inclusive (the “Class Period”).
Qudian shareholders may, no later than February 12, 2018, petition the Court to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, or other counsel, or may choose to do nothing and remain an absent class member.
Two Big Banks Set to Launch Their Own Online Lending Platforms (Lend Academy), Rated: AAA
A little over a year ago Goldman Sachs launched their consumer lending platform Marcus as part of a digital strategy to move into the retail banking segment. They have since grown faster than any online lending platform with originations approaching $2 billion. Goldman Sachs now believes revenues from online loans will equal that of trading in the near future.
U.K. based Barclays has been increasing their footprint in the U.S. the last few years through the Barclaycard brand. They are now one of the top 10 credit card issuers in the US. News broke last month that Barclays would be launching a digital bank in 2018 and rebranding from Barclaycard to Barclays in the US.
Pittsburgh based PNC Financial Services Group is one of the top 10 largest banks in the US with $371 billion in assets. They are looking to launch their online consumer lending product in new branches and through their mobile wallet product.
From On Fire To Under Fire: Marketplace Lending Enters 2018 Taking On Flak (ValueWalk), Rated: A
After a meteoric rise, marketplace lending has had its share of challenges and scrutiny, but the future should still be bright for such an industry on the forward edge of technology and consumer needs. Yet marketplace lending seems to be ending 2017 under an unwarranted attack from regulators and commentators determined to find similarities in marketplace lending to the subprime mortgage market in the years leading up to the financial crisis.
EquityMultiple CEO Charles Clinton Highlights Real Estate Opportunities & Disruption, Predictions for 2018 (Crowdfund Insider), Rated: A
CEO Charles Clinton and CIO Marious Sjulsen co-founded EquityMultiple with a shared vision of transforming real estate investing through tech and by providing new access to private transactions while streamlining the investment process.
Erin: Please share EquityMultiple’s latest stats.
Charles: We’ve funded 32 investments to date and are expecting to hit around 100% year-over-year growth in dollars invested. For investments that have fully repaid or are currently cash-flowing to investors, we’re averaging around a net 9% annualized dividend.
Erin: What sets EquityMultiple apart from its industry peers? How will EquityMultiple continue to differentiate itself?
Charles: We’ve taken a different path from most of our direct competitors and I suspect that will continue. This started at the very beginning – rather than look for venture capital financing, we sought out a real estate firm to partner with and found that in Mission Capital, a national capital markets firm that has done over $70 billion of business in its 15-year history.
Erin: Earlier this year you stated that individuals made up 100% of EquityMultiple’s investments. Has institutional money entered into this investment flow? Why or why not? What are your methods of tapping into new investors?
Charles: We are still 100% focused on individual investors by design. We feel that individual investors are the customers that we provide the most value to. For institutional investors, there often is no real accessibility issue for getting into commercial real estate. Individual investors, on the other hand, are significantly under-allocated into real estate by comparison.
Krawcheck expands Ellevest robo to three service levels with more human advice (InvestmentNews), Rated: A
Investors can access the robo-adviser by itself for 25 basis points (formerly 50 basis points), which includes algorithmic portfolio construction, tax minimization strategies, and now support from human advisers via email and text.
For 50 basis points and an account minimum of $50,000, investors can access Ellevest Premium, which includes the technology platform as well as personalized goals-based planning from an adviser with certified financial planner credentials.
Why Employers Need To Help Workers Deal With Income Volatility (Forbes), Rated: A
Roughly a quarter of American families suffer a major disruption to their income each year, according to the Urban Institute. Nearly one in five of those families suffer an income drop of 50% or more: a potentially catastrophic shock for low-income families.
But it’s not just these one-time shocks that affect families’ ability to plan and save — it’s the month-to-month fluctuations, as well. The JP Morgan Chase Institute foundthat, between 2012 and 2015, 55% of the bank’s customers regularly experienced more than a 30% change in income — up or down — from one month to the next.
BankMobile deploys AI, alternative data to lend to FICO-poor students (American Banker), Rated: A
BankMobile has become the first bank to start using online lending software developed by Upstart, which is designed to use artificial intelligence and alternative data to determine the creditworthiness of consumers with thin or no credit files.
BankMobile, the digital-only subsidiary of Customers Bank in Wyomissing, Pa., which is due to be spun off and merged with Flagship Community Bank in mid-2018, is planning to use the software to offer its first credit product to the students it reaches through relationships with 800 universities.
Merrill Lynch Fined $ 1.4M Over Supervisory Failures (Financial Advisor IQ), Rated: A
From April 2013 through June 2015, the wirehouse allegedly didn’t collect enough margin to offset credit, market and exposure risk presented by the longer time period between trades and settlements inherent in such trades, Finra says.
‘Banks can’t attract the talent they want or need’ (Tearsheet), Rated: A
Banks have always proclaimed themselves as technology companies with banking licenses. But culturally, banks are still banks: conservative. Innovation teams can only innovate so much before someone in legal or compliance tells them no; they can only move so fast before someone tells them to slow down.
In this installment of Confessions, in which we trade anonymity in exchange for honesty, we spoke with an analyst at a startup attached to a large bank about internal innovation, attracting strong talent and why alternative bank service companies should get serious about becoming or partnering with a bank.
10 who had a rough year in 2017 (American Banker), Rated: A
Move over Wells Fargo, another prominent financial firm has taken your place as the poster child for bad behavior.
Equifax, the credit reporting agency whose primary responsibility is to protect consumers’ personal information, became public enemy No. 1 this year when it revealed that thieves hacked into its database and stole the personal information — birth dates, credit card data, Social Security numbers — of some 145 million consumers.
Runway Growth Credit Fund Successfully Closes $ 275 Million Equity Offering with Increased Investment from Oaktree Funds (BusinessWire), Rated: A
Runway Growth Credit Fund Inc. (“Runway Growth Credit”), a provider of term debt to fast-growing companies seeking an alternative to raising equity, today announced the successful closing of its $275 million initial equity capital raise with an increased commitment to $139 million from OCM Growth Holdings, LLC, an entity owned by certain investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”), along with commitments from other investors.
Investors Commit 0 Million to tZERO ICO (Coindesk), Rated: A
As reported by CoinDesk, the first leg of the sale – in which the firm is selling Simple Agreements for Future Equity (SAFEs) that will later be redeemed for tokens by accredited investors – began yesterday, albeit a bit laterthan planned. Hiccups aside, Byrne told CoinDesk the sale ultimately attracted a big crowd – some 2,000 accredited investors.
As such, he indicated the company may move to shorten the initial two-month timeframe for the token sale.
Some of the offers, he said, were as high as $5 million or more for single token allocations.
OCC’s Otting sees future for fintech charter, CRA reform (American Banker), Rated: A
Comptroller of the Currency Joseph Otting said in a press conference Wednesday morning that there is a place in the banking world for some kind of fintech charter, though the exact parameters of such a charter are still unclear and have to be worked out.
“I’m not sure what it looks like, and how it’s funded, but I do think there’s a space there that a technology solution can solve,” Otting said when asked whether he sees a future for the Office of the Comptroller of the Currency’s nascent fintech charter.
BLACKSTONE LOOKS AT THE SECONDARY PRIVATE EQUITY MARKET (All About Alpha), Rated: A
An October paper put out by Strategic Partners Fund Solutions, of Blackstone, argues that (despite risks and drawbacks) investing in the secondary private equity market can still be a smart play, offering “accelerated returns with lower volatility, lower loss rates, and greater downside protection” than the primary market.
How the digital community is supporting small business (Rapid Growth Media), Rated: A
The 2016 Small Business Credit Survey, published by the Federal Reserve Bank of New York, reports that startups are more likely than their mature counterparts to be undergoing growth and planning to add jobs. The report shows 70 percent of startup applicants are in need of funding to support this growth, versus 60 percent of mature applicants. Additionally, in 2016, 52 percent of startups applied for financing.
The Credit Survey highlights that only “31 percent of startup applicants were approved for the full amount of financing sought”.
Debt crowdfunding: Peer-to-Peer lending
Lending Tree was a revolutionary option for individuals to secure financing when they simply wanted to compare options or if they may not have been bankable. Kiva, for example, allows lenders to contribute small amounts, sometimes as little as $25, to help fund requests.
As of October 2017, Kiva reports funding over 1M loans resulting in $1 billion being lent.
Now, instead of searching for affluent individuals looking to invest in a business, entrepreneurs can turn to sites like MicroVentures. MicroVentures is a public, online venture capital investment bank. Investors have the opportunity to invest as little as $100, which opens up the market to a much larger pool of potential investors. This option is best suited for established companies with strong historical performance and larger financial needs. Since their launch in 2011, MicroVentures reports facilitating over 160 investments, resulting in over $100M in capital investment to date.
Mayor Kasim Reed Announces Bank on Atlanta Initiative (AJC.com), Rated: B
Bank on Atlanta, a financial access program that will focus on providing free or low-cost banking products, along with financial education and financial counseling, to unbanked and underbanked residents in the city of Atlanta has been created.
Research shows that relying on alternative financial service providers such as check-cashing or payday lending establishments makes it hard for residents to rise out of poverty in our city.
9 Holiday Gift Cards That Give You Something for Nothing (TheStreet), Rated: A
Online student loan marketplace LendEDU.com studied the most sought-after gift cards and listed them in descending order: Amazon (AMZN – Get Report) , Walmart (WMT – Get Report) , Target (TGT – Get Report) , Best Buy (BBY – Get Report) , and Subway. But these cards sold for only 2% to 5% less than face value, compared with 1-800-Flowers (FLWS – Get Report) , H&M or Dress Barn gift cards which offered, on average, 30% off face value on their sites. Even Dunkin’ Donuts (DNKN – Get Report) and Godiva mark down their gift cards by 25%.
RealtyMogul Hires New Chief People Officer (BusinessWire), Rated: B
RealtyMogul, a unique commercial real estate private markets investing platform, today announced the addition of Soley Van Lokeren as Chief People Officer.
Credit Karma adds Gannesh Bharadhwaj as General Manager, Credit Cards (Credit Karma), Rated: B
Credit Karma, the leading personal finance technology company in North America, today announced it has appointed Gannesh Bharadhwaj as general manager of credit cards. Previously president of Renew Financial, Bharadhwaj brings a strong background in financial institutions as Credit Karma remains focused on using innovative technology to bridge the gap between banks and consumers.
The Small Business Benefits of Being Charitable (Business2Community), Rated: B
Entrepreneurs can make charity a part of their approach to business, and in a variety of ways. A survey by Funding Circle revealed some interesting figures, as reported by Joshua Sophy last December for smallbiztrends.com.
- Of 1,400 small business owners polled, 52 percent said they were donating or had already donated to charity.
- 46 percent planned to donate “up to $1,000.”
- 44 percent preferred to donate cash.
RateSetter plans ‘cautious growth’ in car finance market (P2P Finance News), Rated: AAA
RATESETTER is planning to grow its motor finance division to take advantage of the huge opportunities it sees in the market.
The peer-to-peer lender entered the consumer hire purchase industry in May when it acquired Vehicle Credit Limited out of its parent company’s administration as part of its wholesale lending “interventions”. Vehicle Credit Limited has now been integrated into the group as part of RateSetter Motor Finance.
Chip, the chatbot savings app, raises over £1M in crowdfunding with plans to apply for a banking license (TechCrunch), Rated: A
Chip, the chatbot app that plugs into your bank account and lets you automatically save for a rainy day, has raised nearly £1.1 million on equity crowdfunding platform Crowdcube.
The fund raise, which is part of a larger £2.4 million funding round, forms part of plans for the London-based startup to apply for a banking license so that it has more flexibility regarding the kinds of products it can offer in the future. The app currently claims 30,000 active users “who are collectively saving millions a month”.
Muddy Waters Is Short China Internet Nationwide Fncl Srvcs Inc (CIFS) (ValueWalk), Rated: AAA
We conclude that China Internet Financial Services Inc. (NASDAQ:CIFS) is a King Zero – just another worthless China fraud, says Muddy Waters Research.
- Every one of the purported borrowers to which CIFS disclosed having made loans (accounting for 84.2% of loan balances) appears to be a sham counterparty. (The purported borrowers of the remaining 15.8% of reported loan balances were not disclosed; however, we strongly suspect that most – if not all – of these loans and associated income are also fabrications.)
- CIFS’s recently announced “big data” company purchase also appears to be a lie.
- 47.3% of CIFS’s reported 2016 net income purportedly was generated by its Kashgar subsidiary; however, that subsidiary existed for only two days in 2016.
- CIFS is too good to be true – claiming to turn a seeming commoditized business model into an overnight juggernaut with purported gross margins over 97% and net margins over 70%.
Read “The Farce Awakens: CIFS” in full here.
China Ripe for Auto Finance Boom as Consumer Penetration Rate Rises (Auto Finance News), Rated: AAA
Since 2009, China has surpassed the United States as the largest market for new-vehicle sales, according to Deloitte Consulting LLC. And now, auto finance is starting to catch up.
For many years, the Chinese automotive market has been propped up by government incentives like tax breaks, which encouraged customers to purchase cars. So far, this incentive has led to more than 2 million cars being sold a month, with growth running up 15% last year, the Wall Street Journal reported in March. But as the tax breaks are expected to wind down, auto lenders have a greater opportunity to step in and capture marketshare in China, where penetration rates remain lower than other developed nations.
In the U.S., for instance, 84% of new cars in the U.S. were financed in 2014 compared with 20% in China, according to Experian. The Chinese auto finance rate rose to 38% in 2016, and is expected to rise steadily in the next few years; reaching an estimated 55% in 2021, according to ReportLinker.
Debtors in China are placed on a blacklist that prohibits them from flying, buying train tickets, and staying at luxury hotels (Business Insider), Rated: A
China maintains a public blacklist of debtors that effectively restricts their movements and their spending habits.
The country’s highest court publishes the names and ID numbers of “dishonest people” on its website and restricts those people from flying domestically, using high-speed trains, or enrolling their children at expensive private schools.
Defaulters are also prevented from staying at hotels with three-stars or more. They also face tougher exams if they want to join the civil service, and are charged higher fees for booking cars. The bans work by linking to a person’s ID number. Some people used their passport when travelling to circumvent the ban, but that loophole now appears to be closed.
Spanish Marketplace Lending Platform LoanBook Secures £650,000 Funding Target on Crowdcube (Crowdfund Insider), Rated: AAA
LoanBook, a Spanish marketplace lending platform, has successfully secured its initial £650,000 funding target from more than 200 investors through equity crowdfunding platform Crowdcube. Founded in 2013, LoanBook claims to be Spain’s largest marketplace lending platform, with a 4-year track record of working capital lending to Spanish SMEs and 40% market share.
Two Additional Ways to Improve API Security for Fintech startups (Finextra), Rate: AAA
It’s simple: the probability of being under cyber attack is 100%.
With high probability and high impact, the risk is very high that API’s in the PSD2 era will enable a New Normal in Bank Robberies. Not IF, rather WHEN and WHO.
1. Consider new AI-based approaches in vulnerability scanning.
2. Know what’s under the hood
Think of the Infineon-developed RSA Library version v1.02.013, which lead to Estonia having to reissue over 750,000 certificates, part of their National ID scheme. Or the 2014 GnuTLC bugwhich allowed a Man-in-the-Middle attack due wrong behavior during a TLS handshake.
My advice is to keep track of all dependencies and track vulnerabilities in all underlying components. OWASP has a project calledDependency-Check aimed to do just that.
5 hugely successful Nordic entrepreneurs share their advice to young people (Business Insider), Rated: A
iZettle CEO Jacob de Geer says you should team up with peers – and experiment.
“Apart from getting the business started, is to experiment with whatever idea you have. Most of your trials will fail, but one in 100 will work. If you view problem solving as a way of increasing the value of the company that you are building, then you are off to a good start.”
Klarna co-founder Sebastian Siemiatkowski thinks it’s important to have a holistic approach to problem solving.
When I advise young entrepreneurs, I tell them, “It’s not about figuring out the best business ideas, and it’s not about solving problems theoretically, but it’s about testing your ideas. It’s about coming up with an idea, and then trying it and learning from it.”
A small fintech company surges 250% after launching a blockchain-focused business unit (Business Insider), Rated: A
Online lender Prospa joins the 2018 IPO pipeline (Financial Review), Rated: AAA
Investment bankers lining up for a stronger 2018 pipeline of initial public offerings have online business lender Prospa in their sights.
Street Talk understands a handful of banks have pitched their wares to Prospa’s chief executives Greg Moshal and Beau Bertoli in recent weeks ahead of a planned run at the local bourse some time next year.
“Five best alternative investment strategies to consider in 2018” (Business Today), Rated: AAA
Alternative investing is as much a mindset, as it is about specific investments. Here are some alternative investments approaches culled from our members around the world that are applicable to any investment decisions.
Invest in markets or assets that your analysis leads you to believe will do well; don’t invest in a product just because it’s likely to (or, worse, has in the past) “outperform the market”.
Understand that returns are one-dimensional, risk is multi-dimensional
You should constantly revisit your assumptions of the return drivers of the investment (much more so than its price performance), in case they change and you need to rethink your investment.
When we’re asked to define alternatives, we often end up saying “well, anything that’s not traditional”. Actually that’s not quite such a lame definition; alternative investment practitioners know that the best opportunities are usually those that are yet well known or exploited, and hence the field of “alternative investment” is one populated by investment ideas that may not be immediately obvious.
Diversification is the only free lunch – make sure you are diversified
Alternative asset classes: P2P lending emerges as viable option in India (Financial Express), Rated: A
India has a unique problem of too much money chasing too few customers. So at one end, we have traditional salaried class getting loan offers and at the other end, people are left at the mercy of hawkish money lenders ever-more resembling Shakespeare’s Shylock. Clearly, P2P lending and borrowing is the disruption that was waiting to happen as banks and NBFCs have successfully struggled at twin accounts of making credit affordable and accessible in a credit-hungry nation.
Regulations helped fintech mature in 2017; yet 2018 may prove challenging for cos to navigate (Economic Times), Rated: A
If 2016 saw demonetisation change India’s fintech ecosystem forever, this year will be remembered for the Reserve Bank of India’s (RBI) multiple regulations aimed at organising the sector. Recognition of peer-to-peer lending startups, revised guidelines for digital wallets, finalising charges for digital payments—the second half of the year saw it all, setting the template for a more mature yet challenging 2018.
The 22nd Wharton India Economic Forum (WIEF) has announced the finalists of the Yes Bank – Wharton India Startup challenge.
Perpule: Perpule’s 1Pay is a self -checkout app for express checkouts and easy payments in Perpule’s partnered stores like Hypercity, Spar etc.
Capzest: Capzest is a digital lending platform focused on providing unsecured credit to individuals for income generation purposes. It secures partnerships with income generation service platforms and provides short term capital to their various stakeholders. It was founded in October 2015 in Mumbai by Rohan Adlakha andSayantan Sarkar.
Luharia Technologies Pvt. Ltd: Based in Hyderabad, Luharia Technologies owns and operates peer-to-peer platforms for businesses and individuals. Founded by ISB alumni Keerthi Kumar Jain, Luharia’s flagship solution is Vote4Edu, which is an online peer-to-peer lending platform for K-12 education loans. The company also runs Vote4Cash, a P2P marketplace where borrowers can avail cash loans. Machine Bank, an infrastructure ecommerce platform, and P2P lending platform SMEBank are also owned by Luharia Group.
Cyberattack brings a cryptocurrency exchange to its knees (Business Insider), Rated: A
A South Korea-based cryptocurrency exchange was brought to its knees by a cybersecurity attack.
Yapian, the operator of crypto-exchange Youbit, halted trading of cryptocurrencies on its venue Tuesday and filed for bankruptcy after a hack, according to reporting by The Wall Street Journal.
The Journal reported the exchange had 17% of its digital currency holdings stolen.
How to get a personal loan without a credit score? (Asianet Newsable), Rated: B
Your credit score reflects how well you have treated your credit in the past. It is one of the most important factors that lenders consider while evaluating a loan or credit card application. But what if you don’t have a credit score?
If your bank has rejected your personal loan application, approach NBFCs. Since they usually target customers with low or no credit score, they are more flexible with credit scores than banks.
- Peer to Peer Lending
Since P2P platforms connect borrowers and investors online, they run with lower overheads and resultantly offer services cheaper than what traditional financial institutions have to offer. There are over 40 peer-to-peer lending platforms in India that are helping a large section of people who have been failed to qualify for loans from banks.
RATEHUB REPORTS GENERATIONAL DIVIDE WHEN IT COMES TO TRUST IN FINTECH (Betakit), Rated: A
A RateHub report examining FinTech trends in 2017 found that there is a generational divide when it comes to trust in the emerging technology.
Nearly twice as many millennials (44 percent) and Generation Xers (42 percent) said they trust robo-advisors, compared to baby boomers (23 percent).
Forty-seven percent of millennials and forty-eight percent of Gen Xers trust marketplace lenders, compared to 23 percent of boomers.
Online banking and contactless payments were the two most trusted FinTech offerings this year, capturing the trust of 85 percent and 62 percent of Canadians on average.
Access the full report here.
News Comments Today’s main news: Lending Club closes 5 investment funds, rebrands LC Advisors. CommonBond closes $248M securitization, receives AA S&P rating. LendingTree Q3 results. LandlordInvest expects to double IFISA intake. Ant Financial puts off IPO. Renredai volume surpasses 37.8B RMB. New Zealand prepares for open banking. SMART Box to debut in Canada. Today’s main analysis: Don’t forget about loan recoveries. Today’s […]
- Today’s main news: Lending Club closes 5 investment funds, rebrands LC Advisors. CommonBond closes $248M securitization, receives AA S&P rating. LendingTree Q3 results. LandlordInvest expects to double IFISA intake. Ant Financial puts off IPO. Renredai volume surpasses 37.8B RMB. New Zealand prepares for open banking. SMART Box to debut in Canada.
- Today’s main analysis: Don’t forget about loan recoveries.
- Today’s thought-provoking articles: Big Tech vs. Big Banks. Social credit scores in China. Global AUM expected to rise to $145.4M by 2025. Why banks should fear Amazon. Indian regulations are a win-win for borrower and platform.
- Lending Club closes 5 investment funds, rebrands LC Advisors.
- CommonBond closes $248M securitization, secures S&P rating of AA. AT: “Congratulations.”
- Don’t forget about loan recoveries. AT: “A must-read analysis from Orchard Platform.”
- LendingTree Q3 results. AT: “LendingTree is looking good and setting new records in several areas.”
- Big Tech vs. Big Banks. AT: “So far, all this talk of Amazon and Google threatening banks has been speculation. They certainly have the financial clout and technological prowess to be the threat that everyone is anticipating. But we still haven’t seen it happen–yet.”
- Anticipation for Amazon SMB lending disruption grows. AT: “The danger for Amazon, if it branches out into too many verticals, is a threat of running up against antitrust concerns. They may very well be checking into those possibilities.”
- Amazon and tech companies are challenging big banks.
- Why student loan companies like SoFi are becoming useless. AT: “Overstated, but interesting.”
- Credit Sesame raises $42M.
- Something is broken in small business lending.
- McDonald’s franchise owners settle in payroll card lawsuit.
- BankMobile’s road to profitability.
- Overview of U.S. real estate platforms. AT: “Very interesting rundown on top RECF platforms and what they’ve raised in funding.”
- PayNet testifies in Congress.
- Mobile app reinvents personal credit.
- Braviant Holdings secures $40M credit facility.
- SBA approves record in New Jersey small business loans.
- Genesis Financial Solutions services Signet Jewelers’ non-prime consumer accounts.
- Online lenders can get credit to small businesses.
- 2017 spotlight on women business lending.
- Robo-advice vs. DIY.
- SelfScore rebrands as Deserve.
- Mortgage lending primer on blockchain.
- Jiko raises $7.7M.
- Templum raises $2.7M.
- Current raises $5M.
- The recent boom in real estate crowdfunding.
- Appetite grows for riskier MPL collateral.
- Local vets launch business with crowdlending.
- 3 places women-owned businesses can get financing.
- Zeus Crowdfunding hard money offer.
- OnDeck set to announce quarterly earnings this Wednesday.
- MakuSafe raises $1.25M.
- Wells Fargo adds smart beta to financial advice platform.
- Newable Business Finance partners with Open Risk Exchange.
- Pravati launches third fund.
- LandlordInvest expects to double IFISA intake.
- Will Lendingcrowd satiate investor appetite?
- Cryptocurrencies pose low terrorist financing risk.
- Regtech and financial inclusion.
- Silicon Valley doubles funding to UK tech after Brexit.
- London fintech firms set record investment.
- What P2P lending learned from Lego.
- HomeLyfe raises 2.4M GBP.
- Uber appoints Atom Bank exec.
- Quantuma joins P2PFA.
- Ant Financial postpones IPO.
- 51CreditCard to raise 500M on Hong Kong exchange.
- Chinese fintechs set flurry of IPOs.
- Renrendai surpasses 37.8B RMB.
- Qudian falls below offer price.
- Rong360 targets $200M IPO for Jianpu.
- China to tighten regulation on consumer loans.
- China learns fast on AI.
- Social credit scoring with Sesame Credit.
- Social credit system and P2P lending.
- BorsadelCredito.it launches fund.
- Europe’s fintechs don’t want to be banks.
- Crypto Lending Project announces ICO.
- Global AUM to reach $145.5T by 2025.
- Banks need to fear Amazon.
- How mobile phones, Internet changing banking.
- P2p lending will change how credit is dispensed.
- How fintech impacts international education.
- What is Ethercash?
- New Zealand looks to recognize open banking.
- Robo-advice raises alarm.
- Small banks need to work together on technology.
- 3 apps to help Aussies buy real estate.
- Regulation a win-win for platforms, borrowers.
- P2P regulations a missed opportunity.
- Online lending platforms rewrite SME lending habits.
- I2I Funding founder on post-demonetization.
- Five platforms a boon during demonetization.
- P2P gold lending, bullion.
- Emerging bright spots in fintech innovation.
- VCs call on startups to look at southeast Asia.
- United States
- Lending Club Closes Five Investment Funds, Rebrands LC Advisors (Lend Academy), Rated: AAA
- CommonBond Closes $ 248 Million Securitization, Secures Inaugural S&P Rating of AA (CommonBond), Rated: AAA
- Don’t Forget about Loan Recoveries (Orchard Platform), Rated: AAA
- LendingTree Reports Record 3Q 2017 Results; Increasing Full-Year 2017 Guidance (Business Insider), Rated: AAA
- McKinsey Report on Financial Services Big Tech vs. The Big Banks (PeerIQ), Rated: AAA
- Anticipation For Amazon’s SMB Lending Disruption Grows (PYMNTS), Rated: A
- Amazon, Tech Companies, Are Challenging Big Banks (Bloomberg), Rated: A
- Why Student Loan Companies Like SoFi Are Becoming Useless (Fortune), Rated: A
- Credit Sesame Raises $ 42 Million in Growth Funding (PR Newswire), Rated: A
- There’s something broken in small-business lending (American Banker), Rated: A
- McDonald’s Owners Settle PA Payroll Card Class Action (PYMNTS), Rated: A
- BankMobile’s long road to profitability (American Banker), Rated: A
- Overview of US real estate platforms (online lenders) (MonJa), Rated: A
- PayNet Provides Expert Testimony to U.S. Congress on The State of Fintech (BusinessWire), Rated: A
- New mobile application designed to reinvent personal credit (Muskogee Phoenix), Rated: A
- Braviant Holdings Announces $ 40 Million Credit Facility with Redpoint Capital Group (PR Web), Rated: A
- SBA Approves a Record $ 869 Million in Loans to NJ Small Business (Cap May County Herald), Rated: A
- Genesis Financial Solutions, Inc. agrees to service Signet Jewelers’ non-prime consumer accounts (Genesis Email), Rated: A
- Online lenders can get needed credit to small businesses (The Hill), Rated: A
- State of Small Business Lending: 2017 Spotlight on Women Entrepreneurs (Fudera), Rated: A
- In The Battle For Low-Fee Financial Advice, DIY Beats The Robos (FA-Mag), Rated: A
- SelfScore rebrands as Deserve, raises $ 12m funding (Banking Technology), Rated: A
- Mortgage lenders: Here’s your blockchain primer (Housingwire), Rated: A
- Jiko Raises $ 7.7m in Series A Funding (FINSMEs), Rated: A
- Templum Raises $ 2.7M in Seed Funding (FINSMEs), Rated: A
- Digital bank for teenagers raises $ 5m in Series A investment round (AltFi), Rated: A
- 10 Takeaways from the ULI Fall Conference 2017 (National Real Estate Investor), Rated: A
- Appetite grows for riskier MPL collateral and deeper sub notes (Global Capital), Rated: A
- Local veterans get help launching businesses through crowd lending (WFLA), Rated: A
- 3 Places Women-Owned Businesses Turn for Financing (NAV.com), Rated: A
- Zeus CrowdFunding Year-End Hard Money Offer Helps Real Estate Investors Finish 2017 Strong (PR.com), Rated: B
- On Deck Capital, Inc. (ONDK) Set to Announce Quarterly Earnings on Wednesday (Ledger Gazette), Rated: B
- MākuSafe Raises $ 1.25m Convertible Funding Round (FINSMEs), Rated: B
- Wells Fargo Adds Smart Beta to FA Platform (Financial Advisor IQ), Rated: B
- Newable Business Finance partners with Open Risk Exchange (Fintech Finance), Rated: B
- Litigation Finance Specialist Pravati Launches Third Fund (FINAlternatives), Rated: B
- United Kingdom
- LandlordInvest expects to double IFISA intake this tax year (P2P Finance News), Rated: AAA
- Could this platform satiate investor appetite for manual lending? (P2P Finance News), Rated: A
- UK Treasury: Cryptocurrencies Pose Low Terrorist Financing Risk (Coindesk), Rated: A
- Regtech and financial inclusion: “For Millennials opening a bank account online is a no-brainer” (Bob’s Guide), Rated: A
- Silicon Valley investors double funding for UK tech after Brexit (The Telegraph), Rated: A
- London fintech firms set for record investment despite Brexit (Descrier), Rated: A
- What the peer-to-peer lending industry learnt from Lego (City A.M.), Rated: A
- Homelyfe Raises £2.4M in Seed Funding (FINSMEs), Rated: B
- Uber appoints former Bank of England senior adviser as non-executive UK chair (Independent), Rated: B
- Quantuma Joins UK Peer to Peer Finance Association (Crowdfund Insider), Rated: B
- Alibaba-Affiliate Ant Financial Isn’t Itching to Go Public (WSJ), Rated: AAA
- WeiyangX Fintech Review (Crowdfund Insider), Rated: A
- Chinese fintech firms set for flurry of IPOs in US, HK (China Daily), Rated: A
- Total Volume of Renrendai Surpass 37.8 Billion RMB (Xing Ping She), Rated: AAA
- Qudian Stock Fell Below its Offer Price (Xing Ping She), Rated: A
- Chinese fintech Rong360 targets $200m US IPO for subsidiary Jianpu (Deal Street Asia), Rated: A
- China to tighten regulation of fintech consumer loans (Financial Times), Rated: A
- China a fast learner when it comes to artificial intelligence-powered fintech, experts say (SCMP), Rated: A
- Sesame Credit, fintech and social credit scores in China (Technode), Rated: AAA
- China’s Social Credit System And P2P Lending: An Opportunity For Yirendai (Seeking Alpha), Rated: A
- European Union
- Italian peer-to-peer lender launches its own fund, targets €100m raise (AltFi), Rated: A
- Europe’s fintech lenders don’t want to become banks (yet) (AltFi), Rated: A
- CLP Initial Coin Offering Announcement (Cointelegraph), Rated: B
- Global Assets under Management set to rise to $ 145.4 trillion by 2025 (Finchannel), Rated: AAA
- Banks need to fear Amazon’s finance ambitions: McKinsey report (American Banker), Rated: AAA
- How Mobile Phones and the Internet are Changing Banking (The Merkle), Rated: A
- P2P Lending Will Change the Way Credit Is Dispensed Globally (Crytocoins News), Rated: A
- Click, pay, study – how fintech is impacting international education (The PIE News), Rated: AAA
- Ethercash Aims to Revolutionise Three Core Functions of Finance (Coinidol), Rated: B
- Australia/New Zealand
- NZ prepares to join the ‘open banking’ revolution (Stuff), Rate: AAA
- Robo-advice raises alarm (Financial Standard), Rated: A
- COBA conference 2017: small banks need to work together on tech (The Courier Mail), Rated: A
- 3 apps helping Australians buy real estate in ways that traditional banks can’t (Business Insider), Rated: A
- RBI Regulations For P2P Lending Industry: A Win Win Situation For Both Platforms And Consumers (Inc42), Rated: AAA
- P2P regulations: A missed opportunity (Livemint), Rated: A
- Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India (BW Disrupt), Rated: A
- I2I Funding cofounder Neha Agarwal: Saw significant business growth post-demonetisation (Financial Express), Rated: A
- Five platforms which were a boon during demonetization (Business-Standard), Rated: A
- P2P Gold Lending, Bullion, and Physical Crypto Storage (Palisade-Research), Rated: A
- Here are some emerging bright spots in fintech innovation in Asia (e27), Rated: A
- VCs call on startups to set sights on SE Asia (The Investor), Rated: A
- The Credit Crisis in Malawi (Maravipost), Rated: A
- CANADIAN LENDERS ASSOCIATION & INNOVATIVE LENDING PLATFORM ASSOCIATION LAUNCH SMART BOX IN CANADA (Canadian Lenders Association), Rated: AAA
- Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: A
- Finn.ai Raises $ 3 Million in Institutional Financing Round (Finn.ai), Rated: A
Lending Club Closes Five Investment Funds, Rebrands LC Advisors (Lend Academy), Rated: AAA
Yesterday, Lending Club announced the closure of several funds. The funds were part of what was previously known as LC Advisors, an investment management company dedicated to investing in notes originated by the platform.
Since each fund is a separate legal entity there were many different buyers that participated. While we don’t know the terms of the deals or who purchased these loans, Suri did share with us that there were over 40 bids for the assets and 5 of the 6 funds have been sold at fair value or a slight premium.
What happens next?
Lending Club is rebranding its asset management business. Now called LendingClub Asset Management or LCAM for short.
When we asked Suri about positioning the new offerings to investors he stated that their biggest flagship fund under LC Advisors had delivered slightly over 6% annualized since 2011.
CommonBond Closes $ 248 Million Securitization, Secures Inaugural S&P Rating of AA (CommonBond), Rated: AAA
CommonBond, a leading financial technology company that helps students and graduates pay for higher education, today announces the close of a $248 million securitization of refinanced student loans. The offering’s most senior notes achieved AA ratings from Moody’s, S&P, and DBRS – Aa2, AA, and AA (high), respectively – the company’s highest ratings to date.
The transaction was CommonBond’s fifth and largest to date. Investors submitted $1 billion in orders, making the deal more than four times oversubscribed. Goldman Sachs served as structuring agent, co-lead manager, book-runner, and co-sponsor. Barclays and Citi also served as co-lead managers and book-runners on the transaction, while Guggenheim Securities served as co-manager.
The transaction was the first of CommonBond’s to be rated by S&P, who assigned AA ratings to the transaction, alongside similar ratings from Moody’s and DBRS. Moody’s and DBRS also recently upgraded CommonBond’s ratings on previous deals in recognition of the company’s strong credit performance.
Don’t Forget about Loan Recoveries (Orchard Platform), Rated: AAA
To showcase the significance of the third-party debt collection industry in America, the New York Fed publishes in their Quarterly Report on Household Debt and Credit a ‘Third-Party Collections’ chart (below). As of 2017-Q1, between 12-13% of consumers with debt have debt being collected by third-party agencies (blue line). Of those, the average amount of debt in collections is ~$1,400 (red line).
The 2015-2016 roll rate matrix is experiencing a higher percentage of loans going from non-performing (60-89 DPD & 90-119 DPD) to current when compared to the 2013-2014 roll rate matrix. This 100 bps difference for 60-89 DPD and 200 bps for 90-119 DPD can be attributed to the improvement of servicers’ collection and outreach programs for delinquent loans.
Consumer loans have experienced a monthly recovery rate between 5% to 15% within different portfolios on our platform. Based on this table, a $100M pool of loans would have a $1M valuation difference between a 5% and 15% recovery rate input.
LendingTree Reports Record 3Q 2017 Results; Increasing Full-Year 2017 Guidance (Business Insider), Rated: AAA
LendingTree, Inc. (NASDAQ: TREE), operator of September 30, 2017., the nation’s leading online loan marketplace, today announced results for the quarter ended
Third Quarter 2017 Business Highlights
- Record revenue from mortgage products of $73.8 million represents an increase of 38% over third quarter 2016 driven by strong growth in both purchase and refinance revenues at 87% and 24%, respectively. According to Mortgage Bankers Association, originations industry-wide were down 16% in the comparable period.
- Record revenue from non-mortgage products of $97.7 million in the third quarter represents an increase of 138% over the third quarter 2016 and increased to 57% of total revenue compared to 43% one year ago.
- Home equity revenue growth accelerated, increasing $9.0 million, or 176% over third quarter 2016, and marked the eighth consecutive quarter of year-over-year growth exceeding 100%.
- Personal loans revenue of $25.4 million grew 44% over third quarter 2016 and grew 24% sequentially.
- Revenue from our credit card offerings grew to $39.4 million in 3Q compared to just $6.6 million in 3Q 2016. On a proforma basis, giving effect to the CompareCards and MagnifyMoney acquisitions as if they had occurred on January 1, 2016, credit cards revenue grew 43%.
- More than 6.5 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and the volume of new enrollments accelerated. Revenue contribution from MyLendingTree grew 96% in the third quarter compared to the prior year period as new features and smarter savings alerts are driving increased engagement.
Third Quarter 2017 Financial Highlights
- Record consolidated revenue of $171.5 million represents an increase of $76.9 million, or 81%, over revenue in the third quarter 2016.
- GAAP net income from continuing operations of $10.1 million, or $0.74per diluted share.
- Record Variable Marketing Margin of $59.1 million represents an increase of $22.8 million, or 63%, over third quarter 2016.
- Record Adjusted EBITDA of $34.7 million increased $16.2 million, or 88%, over third quarter 2016.
- Adjusted Net Income per share of $1.17 represents growth of 65% over third quarter 2016.
- During the quarter, the company repurchased 42 thousand shares of its stock at a weighted-average price per share of $237 for aggregate consideration of $10.0 million. As of September 30, 2017, the company has $38.7 million in repurchase authorization remaining.
Business Outlook – 2017
LendingTree is revising Revenue, Variable Marketing Margin and Adjusted EBITDA guidance for full-year 2017, as follows:
- Revenue is anticipated to be in the range of $603 – $608 million, representing growth of 57% – 58% over full-year 2016 and an increase from prior guidance of $580 – $590 million.
- Variable Marketing Margin is anticipated to be $202 – $205 millioncompared to prior guidance of $190 – $195 million.
- Adjusted EBITDA is anticipated to be in the range of $111 – $113 million, up 59% – 62% over full-year 2016 and an increase from prior guidance of $103 – $106 million.
McKinsey Report on Financial Services Big Tech vs. The Big Banks (PeerIQ), Rated: AAA
A recent report from McKinsey on the global banking industry addressed the threat banks face from technology firms. Amazon stock jumped 13% on earnings and reporting that Amazon is increasing its lending footprint. Tune into Bloomberg Radio archive to hear more about this topic as PeerIQ’s CEO discusses the threats and opportunities of big technology with Bloomberg’s Lisa Abramowicz and Pimm Fox.
Summary of Amazon’s Lending Business
Amazon finances small businesses that sell products through the Amazon marketplace on an invitation-only basis. Interest rates range from 6 to 15%, tenor ranges from 4 to 6 months, and loan size is up to $750K.
Although there is no segment-level P&L reporting for the lending unit, loss-rates according to Amazon’s Peeyush Nahar have been “very, very small.” Amazon’s lending makes up a small part of their business (e.g., $3 Bn in loans to date vs. Amazon’s $136 Bn annual revenue). Amazon is also not directly financing the consumers indicating substantial opportunity to grow.
Owning the Customer
The most compelling advantage big tech has outside of data and customer acquisition are the creation of entirely new channels that banks cannot easily replicate.
A few examples:
- In-Home: Large consumer tech firms occupy the most intimate space of consumer through services such as Amazon’s Echo, Google’s Home, or Apple’s Siri. These platforms represent a trojan horse for delivering new products and services in a highly personal and exclusive manner.
- Personal assistants that are increasingly anticipatory and have access to the calendars, preferences, and daily lives of consumers.
- Mobile and virtual wallets which shift the battleground from legacy “share of wallet” and “primary card” concepts to mobile platforms and virtual wallets
- Virtual spaces created via social media including Facebook or services such as Lyft or Uber which enable unobstructed access to the consumer.
Anticipation For Amazon’s SMB Lending Disruption Grows (PYMNTS), Rated: A
Technology giants like Google and Amazon, which gained their market muscle from non-finance-related ventures, are slowly stepping into the space. Their next target could be small business lending, and according to some experts, it’s fast approaching the market.
Amazon in particular is positioned to dominate. The company has already lent more than $1 billion to merchants selling on its platform, and, just as alternative lenders put the pressure on traditional FIs with their quick surge into the market, the Amazons of the world will do the same, Mills predicted.
Chatter Picks Up Steam
Karen Mills’ statements have found new backing in the latest banking report released by McKinsey & Co. this week. New reports in Bloomberg on Wednesday (Oct. 25) said the report identifies Amazon as the newest, biggest threat to the small business lending status quo.
The report points to sagging return on equities for the banks, which have not been able to surpass 10 percent since the 2007/2008 global financial crisis. The FIs that collaborate with those FinTechs could boost their return on equities to 14 percent and even higher if they develop their own solutions in-house.
Amazon, Tech Companies, Are Challenging Big Banks (Bloomberg), Rated: A
GUEST: Ram Ahluwalia, CEO and co-founder of Peer IQ, on how Amazon and other big tech companies are challenging big banks.
In The Battle For Low-Fee Financial Advice, DIY Beats The Robos (FA-Mag), Rated: A
When customers open an account at one of these automated investing firms, they’re put into funds from companies like Charles Schwab Corp. and Vanguard Group and charged a fee of anywhere from 25 to 50 basis points. In return, they get some extra benefits, like tax loss harvesting, which can result in a lower tax bill, and automatic re-balancing at no extra cost.
But there’s a catch, the funds that customers buy through these advisors are all available on free trading platforms such as Robinhood Financial, where there’s no added cost.
SelfScore rebrands as Deserve, raises $ 12m funding (Banking Technology), Rated: A
Consumer analytics company SelfScore has rebranded as Deserve, writes Julie Muhn at Finovate (Banking Technology‘s sister company).
The California-based company continues to be committed to providing underbanked Americans with access to credit, and to fuel that mission, Deserve has received $12 million in funding. The round was led by Accel, with participation from Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group, and GDP Venture, and brings Deserve’s total funding to $27 million.
Mortgage lenders: Here’s your blockchain primer (Housingwire), Rated: A
Blockchain is particularly relevant to the lending market. Lending is a contract-intensive process with an extensive lifecycle; it carries significant risk and limited trust across its value chain – from origination to funding through to the fulfillment and servicing of the loan.
Moreover, the integration of blockchain with digital lending ensures transactions are tracked in an open and transparent way. Banks and lenders get direct visibility into exactly what happened during the lending process – who was involved, who had control over the authoritative copy of the digital assets and ultimately, who owns the value of those assets, as required by law.
Jiko Raises $ 7.7m in Series A Funding (FINSMEs), Rated: A
Jiko, an Oakland, Calif.-based personal bank startup, raised $7.7m in Series A funding.
The round was led by Upfront Ventures and Radicle Impact with participation from Social Capital, 500 Fintech, Digital Currency Group, Core Innovation, Embark Ventures and Story Ventures.
Templum Raises $ 2.7M in Seed Funding (FINSMEs), Rated: A
Templum, LLC, a NYC-based fintech startup facilitating regulatory compliant ICOs as securities and secondary trading of digital assets, closed a $2.7m seed funding round.
The round was led by Raptor Group, Galaxy Investment Partners, Blockchain Capital and firstminute.capital.
Digital bank for teenagers raises $ 5m in Series A investment round (AltFi), Rated: A
Current, a new mobile-only banking platform for parents and teenagers, has raised $5m in a Series A funding round led by QED Investors.
10 Takeaways from the ULI Fall Conference 2017 (National Real Estate Investor), Rated: A
Touching on the recent boom in real estate crowdfunding firms, John McNellis, co-founder of Palo Alto, Calif.-based development firm McNellis Partners, divided the crowdfunding sector into two groups: firms that simply connect investors with developers and firms that invest in projects themselves. The first concept should work in the long term, he noted. But when it comes to crowdfunding firms underwriting real estate deals, McNellis pointed out that it takes at least a decade in the business to become a reliable underwriter. “To expect these 20-year-olds who are good at tech to be good at underwriting” is unrealistic, he said. McNellis added that established developers normally already have financial partners that they prefer to work with. The developers most in need of crowdfunding dollars would be either those just starting out in the business or developers with a spotty track record.
Appetite grows for riskier MPL collateral and deeper sub notes (Global Capital), Rated: A
The decline in underlying collateral quality — a theme across wider consumer ABS sectors — has been playing out in marketplace loan ABS, with recent deals from Prosper, Marlette Funding and Avant featuring a growing proportion of loans taken by borrowers with credit scores of less than 680.
Local veterans get help launching businesses through crowd lending (WFLA), Rated: A
There is now a way anyone can help veterans launch their new life through a concept called StreetShares.
You can invest just a few dollars or thousands to the fund. Investors can earn 5 percent on their money.
For Shane and Melissa Underwood, a $20,000 loan allowed them to purchase a piece of equipment that launched their small business Driveshaft Specialists.
3 Places Women-Owned Businesses Turn for Financing (NAV.com), Rated: A
A 2017 crowdfunding reportby the National Women’s Business Council, for example, found that 47% of successful campaigns on the popular crowdfunding platform Indiegogo were run by women.
Keep in mind that online business loan shopping sites may operate in a variety of ways:
- Lead generation sites will simply gather your information then sell it to various lenders, which may then call or email you with information or offers.
- Online lenders may offer a specific set of loan products aimed at specific types of borrowers (for example, those with significant credit card sales). Remember: just because you can’t qualify with one lender doesn’t mean you can’t quality with others.
- Online brokers may try to help get you funding with various lenders with whom they have a relationship. They may charge a significant fee for this service, so be sure to ask.
- Online marketplaces will present you with options and allow you to choose which ones seem right for your needs. Ideally, you’ll also see which loans are best matched to your qualifications. (Disclosure: Nav’s small business loan marketplace operates this way.)
Zeus CrowdFunding Year-End Hard Money Offer Helps Real Estate Investors Finish 2017 Strong (PR.com), Rated: B
Zeus CrowdFunding once again offers borrowers what other lenders won’t – low rates designed specifically for the real estate investor and their year-end needs. For a limited time, qualified applicants will pay only six percent interest for the first six months of the loan term.
The company loans up to 100 percent of a project’s cost to qualified applicants in as little as four days.
On Deck Capital, Inc. (ONDK) Set to Announce Quarterly Earnings on Wednesday (Ledger Gazette), Rated: B
On Deck Capital, Inc. (NYSE:ONDK) is scheduled to be issuing its quarterly earnings data before the market opens on Wednesday, November 1st. Analysts expect the company to announce earnings of $0.03 per share for the quarter.
MākuSafe Raises $ 1.25m Convertible Funding Round (FINSMEs), Rated: B
MākuSafe, a West Des Moines, Iowa-based Insurtech startup, raised $1.25m convertible note round of funding.
Wells Fargo Adds Smart Beta to FA Platform (Financial Advisor IQ), Rated: B
As banks rush to catch a wave of robo technologies, Wells Fargo Advisors is rolling out a factor-based approach designed for advisors and their clients.
The wirehouse has launched an expansion to its electronic model portfolio services platform, according to Patty Loepker, WFA’s head of research directed advisory programs. The new managed accounts program features allocations built around smart beta ETFs.
Newable Business Finance partners with Open Risk Exchange (Fintech Finance), Rated: B
Litigation Finance Specialist Pravati Launches Third Fund (FINAlternatives), Rated: B
Litigation finance specialist Pravati Capital has launched its third fund vehicle to capitalize on opportunities in the burgeoning litigation finance sector.
The new fund, named Pravati Credit Fund III, will invest in mature stage, high-probability, high-value cases or case portfolios where there is established liability and precedent for settlement, according to a statement.
LandlordInvest expects to double IFISA intake this tax year (P2P Finance News), Rated: AAA
LANDLORDINVEST is expecting its Innovative Finance ISA (IFISA) intake to double this tax year.
The property peer-to-peer platform, which launched its IFISA in January, said it attracted £419,385 in the previous tax year and was hoping to see that double to nearer £1m.
Could this platform satiate investor appetite for manual lending? (P2P Finance News), Rated: A
LENDINGCROWD has been ranked as an alternative to Funding Circle for investors looking to continue with manual lending, as they both offer similar interest rates and borrower profiles.
Peer-to-peer analyst Orca said that before Funding Circle shifted to manual lending last month, 27 per cent of investors used the manual option, suggesting there is demand for this functionality.
UK Treasury: Cryptocurrencies Pose Low Terrorist Financing Risk (Coindesk), Rated: A
The U.K. government’s economic and finance ministry has released a new policy document stating that cryptocurrencies like bitcoin pose a “low risk” for terrorist financing.
The paper further cited the peer-to-peer lending industry, which it said has the potential to be used as a “terrorist financing tool,” though no incidences have been observed in the U.K. to date.
Regtech and financial inclusion: “For Millennials opening a bank account online is a no-brainer” (Bob’s Guide), Rated: A
How did you find your way to founding Onfido?
Initially, my co-founders and I had experience verifying identity documents meant for an offline world. The current way of verifying documentation for a standard current account requires hours and hours of face-to-face in-branch and still not getting approved; it’s no wonder there’s a 40% drop-off.
Of the 7 billion people in the world, Facebook has brought their social identity online, LinkedIn has brought their professional identity online and now we’re looking to bring their legal identity online.
How exactly are Onfido providing something that mainstream banks should take notice of?
Very simply, we help business verify the identity of the people they are onboarding digitally. That can be with a photo of their government issued ID that the user can send with a smartphone. We cover 600 IDs globally and use machine learning to verify whether the ID is genuine or not. There are three steps to our core technology. The first, we extract the details, see if the patterns are consistent and compare them to the millions of historically computed IDs. The second step is asking the user to take a photo or short video of their face, which we compare to the photo on their identity document for similarity. The third step is to check that their details – name, date of birth and address – are consistent with records on multiple databases. Altogether this verifies the person is who they claim to be and, end-to-end, takes two minutes.
We use a hybrid machine/human approach – the technology is able to automatically process the vast majority of documents, and the small number of outliers are passed to our expert human team for review. It means that human resource can be put to more effective use, and would heavily cut down on the 30,000 people employed by Citibank, for example, who just work on onboarding and compliance checks.
As a Millennial yourself, how much of a role do you think generations play on attitudes to banking?
Millennials are just so used to doing absolutely everything on their phone.
Fintechs have really monopolised the millennial market and they’re building the models to ensure they keep that market for the next 15-20 years. That’s where PSD2 becomes very relevant as a leveller of the playing field for the market – it’ll increase healthy competition.
Silicon Valley investors double funding for UK tech after Brexit (The Telegraph), Rated: A
Silicon Valley investors have more than doubled funding for UK technology companies this year, in a sign of strengthening links with the world’s biggest tech hub after the Brexit vote.
British start-ups received £884.8m from venture capital backers based in San Francisco and the Bay Area in the first nine months of this year, compared to £342m in the whole of 2016, according to London & Partners, the London mayor’s promotional agency.
London fintech firms set for record investment despite Brexit (Descrier), Rated: A
According to the latest figures from London & Partners (L&P), the Mayor of London’s official promotional firm, investors from around the world have backed London-based fintech firms to the tune of £825m so far this year. This is a positive sign for the industry after UK fintech investment plummeted by more than a third in 2016 as investors put off decisions in the wake of the Brexit vote.
One of the biggest London fintech success stories, currency exchange platform Transferwise, is reported to be in discussions with investors to raise a further £77m, which would value the company at more than £1.2bn.
What the peer-to-peer lending industry learnt from Lego (City A.M.), Rated: A
Strange as it may seem, using the analogy of Lego may be the best way to demonstrate why we believe the peer-to-peer (P2P) industry also isn’t – and can’t be – a one trick pony. While some see the industry as a fad that is set to become redundant, there are many reasons why this isn’t the case.
P2P platforms are exploring a range of new and old ways, and their aim is to create something which is more equitable, satisfactory and useful for everyone.
Homelyfe Raises £2.4M in Seed Funding (FINSMEs), Rated: B
Homelyfe, a London, UK-based insurtech startup, raised £2.4m in seed funding.
Uber appoints former Bank of England senior adviser as non-executive UK chair (Independent), Rated: B
Uber has appointed a former senior adviser to the Bank of England as non-executive chair in the UK, as it endeavours to clean up its image and “make things right” after Transport for London last month revoked the ride hailing company’s licence to operate in the city.
Laurel Powers-Freeling, who will take up the newly created position, is currently senior independent director at online lender Atom Bank.
Quantuma Joins UK Peer to Peer Finance Association (Crowdfund Insider), Rated: B
Quantuma, a corporate recovery and business advisory firm that works with several peer-to-peer lending platforms, has joined the UK Peer to Peer Finance Association(P2PFA). Earlier this year, the P2PFA announced the creation of Associate Membersto broaden its membership beyond strict lending platforms.
Alibaba-Affiliate Ant Financial Isn’t Itching to Go Public (WSJ), Rated: AAA
Flush with cash, Chinese financial-technology giant Ant Financial Services Group is putting on hold plans for an initial public offering while it steps up investments in everything from startups to artificial intelligence, according to a senior company executive.
Investors and analysts have been expecting Ant to go public sometime in 2018. The Hangzhou-based company last raised $4.5 billion from private investors in April 2016 in a deal that gave it a $60 billion valuation—and its business has since expanded significantly.
WeiyangX Fintech Review (Crowdfund Insider), Rated: A
51 CreditCard (u51.com), an online platform for credit card bill management, is reported to be listed on Hong Kong Exchanges and Clearing Limited (HKEX) in 2018, aiming to raise at least 500 million dollars.
According to a report of China Daily, the credit database of PBOC has collected credit information of more than 840 million individuals as well as more than 19 million companies and organizations by the end of April. Among these agencies, only 255 licensed micro loan companies have been connected to the company credit information system and 156 to the individual credit information system.
From November 1st, customers will be able to pay their train tickets by using WeChat Pay through the official booking website 12306.com or in the train station (booking office/self-service ticket machine).
On October 18th, Trustdata released the long-awaited “Trustdata: China Consumer Finance Analysis Report (2017)”. The document presents a comprehensive review of consumer finance development in China, makes a deep analysis of payday loan, installment credit and consumer behaviors, and proposes a new concept called “Consumer Finance Development Index”. Statistics from the research notes that, by the end of last month, the credit scale of consumer finance in China has reached more than 110 billion yuan with 3.7 million registered users.
Chinese fintech firms set for flurry of IPOs in US, HK (China Daily), Rated: A
The phenomenon of “Chinese companies lining up for an IPO in the United States or Hong Kong” has re-surfaced recently, Tiger Brokers, an online brokerage helping Chinese investors trade US- or HK-listed stocks, told chinadaily.com.cn Thursday.
Beijing-based Jianpu Technology Inc, which is 100 percent controlled by RONG360 Inc filed its preliminary prospectus with the US Securities and Exchange Commission, without the estimated IPO price range, on Oct 20.
Prior to Jianpu, Chinese online small consumer credit provider Qudian Inc made its debut on the New York Stock Exchange on Oct 18. Qudian priced its IPO of 37,500,000 American depositary shares (ADSs) at $24.00 per ADS for a total offering size of about $900 million, according to Xinhua News Agency. Qudian closed at $26.39 Wednesday after diving 7.24 percent, still above its IPO price.
Total Volume of Renrendai Surpass 37.8 Billion RMB (Xing Ping She), Rated: AAA
Recently, Renrendai issued its performance report for the third quarter of 2017.According to the report, the cumulative turnover of the platform surpass 37.88 billion RMB, with 524 thousand transactions in total.
More details, Renrendai remained steady growth in the third quarter. The volume on the platform reached 6.51 billion RMB this quarter, a 109% increase over the same period last year, and the amount of money that investors earn is up 55% from the same period last year. In addition, the per capita borrowing amount on the platform is 80.8 thousand RMB, which represents the capital requirements of small business owners and self-employed people in the class, and always below the national regulations of loan balance ceiling of $200000.
Qudian Stock Fell Below its Offer Price (Xing Ping She), Rated: A
On 27th October, the shares of Qudian tumbled again, closing down $3.59 to $22.8, down 13.6% below the offering price of $24 a share.
The company has fall into constant questioning just after it landed in the SEC. Luo Min, the CEO of Qudian, responded several questions through an interview Qudian’s Luo Min Respond To All, but this move has raised more query. Many media and media outlets gathered to lambast Luo Min for “lying” in her response.
On 23th October, Luo Min avoided all the media interviews again. Since then, the shares of Qudian began to slump, which closed at $26.39 on 26th Oct, down nearly 20 percent from the opening price of $31.89 on Wednesday.
Chinese fintech Rong360 targets 0m US IPO for subsidiary Jianpu (Deal Street Asia), Rated: A
Jianpu Technology Inc, a wholly-owned subsidiary of Chinese fintech firm Rong360, has filed for a $200 million IPO in the US. Goldman Sachs, Morgan Stanley and JP Morgan are bookrunners for the deal, according to a stock exchange filing.
China to tighten regulation of fintech consumer loans (Financial Times), Rated: A
China is preparing to tighten regulation of online consumer lending as part of a campaign against financial risks, dealing a possible setback to Chinese fintech groups that hope to sell shares in the US.
Household debt in China remains low as a share of GDP, and authorities have encouraged growth of consumer credit as a way to rebalance the economy towards consumer spending, but now concerns are rising about irresponsible lending practices online.
Online consumer lending has replaced peer-to-peer lending as the trendy new area in Chinese fintech, as a regulatory crackdown on P2P reduced that sector’s profitability. Short-term consumer loans outstanding in China grew by Rmb1.49tn ($225bn) through the first nine months of this year, compared to an increase of Rmb830bn for all of 2016, according to PBoC data.
China a fast learner when it comes to artificial intelligence-powered fintech, experts say (SCMP), Rated: A
Chan also said the rapid growth of new fintech services, such as peer-to-peer lending marketplaces and online money market funds, was made possible by a lack of innovation by the country’s traditional banks in addressing the needs of not only the average consumer, but also many small and medium-sized enterprises.
High-flying start-up Ant Financial Services Group, which runs online payments service Alipay and money market fund Yu’ebao, has made AI a key driver for expanding its businesses and improving customer service.
China was the world’s second-biggest investor in AI enterprises last year, injecting US$2.6 billion into the sector, according to the state-run think tank, Wuzhen Institute. The United States topped the list with US$17.9 billion in investments.
Sesame Credit, fintech and social credit scores in China (Technode), Rated: AAA
What would your reaction be if you wanted to get a loan and your bank asks to go through your Facebook profile? In China, this is already happening on a large scale, but it’s not banks that are doing the rating—it’s the country’s burgeoning fintech companies. And it’s not Facebook they are looking at—its social platform WeChat and shopping website Taobao.
Social credit scoring analyses data from non-traditional sources: social media, online shopping, payment apps, cell phone accounts, and more. This type of scoring is meant to fill a gap for people who want a loan but don’t have any way of proving they can repay one. In order to gauge whether you are creditworthy or not, the score can take into account a number of variables: who your friends are, what you buy, whether pay your bills on time or even how much time you spend reading the user agreement. It’s like FICO but decidedly more creepy.
Alibaba was once a kind of shadow lender too. The company first started building its own credit scoring model to provide loans to Taobao vendors. For this, it relied solely on the platform’s ability to gather big data—transactions, user ratings, market positioning, and others.
Sesame Score (screenshot above) tracks five areas: identity information, such as information on users’ education and work, ability to keep financial obligations, credit history, behavioral preferences like shopping, money transfers, and connections with other people. In return, it offers deposit-free bike and power bank rentals as well as other benefits.
China’s Social Credit System And P2P Lending: An Opportunity For Yirendai (Seeking Alpha), Rated: A
Yirendai (YRD) is a Chinese fintec company focused on facilitating unsecured loans. Leveraging the experience of its parent company, CreditEase, Yirendai has facilitated more than RMB 47 billion (US$7 billion) of loans since commencing operations in March 2012.
Financials and performance
Yirendai’s core business has seen rapid growth, facilitating over RMB 20 billion(US$3 billion) in loans in 2016, up 112% from 2015. The most recent forecastfrom the company expects loan volume to continue to grow through 2017, with RMB 35-37 billion (US$5.3-5.6 billion) this year. Earnings have been strong and growing as well, with net income for the six months ending June 30, 2017, rising from RMB 392 million to 620 million (US$58.9 million to 93.2 million) over the same prior-year period, translating to diluted earnings per ADS of RMB 6.71 to 10.26 (US$1.01 to 1.54) for the same periods.
China’s upcoming Social Credit System
Presently, eight companies have been licensed to develop algorithmic SCS scoring systems, including China Rapid Finance, a partner of social network TenCent (OTCPK:TCEHY) and Sesame Credit, which is run by Ant Financial, an Alibaba (BABA) affiliate.
Italian peer-to-peer lender launches its own fund, targets €100m raise (AltFi), Rated: A
Italian P2P firm BorsadelCredito.it has followed in the footsteps of its UK antecedent Funding Circle by launching a closed-end fund. The unlisted fund, which is called Colombo, hopes to raise €100m to invest across a 5 year timespan, and is managed by BorsadelCredito.it (through a vehicle named ART SGR SpA). The fund’s custodian bank is Caceis Bank.
By investing in Italian SME loans, originated exclusively by BorsadelCredito.it, the fund will target a yield of 5 per cent (5.5 per cent pre-tax).
Europe’s fintech lenders don’t want to become banks (yet) (AltFi), Rated: A
José Rego, who runs Portuguese P2P firm Raize, sees the issue as black-and-white.
“By definition, if you become a bank, you stop being an alternative lender,” he said. “Becoming a bank is an extremely complex and very expensive strategic decision which typically takes into consideration other elements besides the equity value generated by the alternative lending. Only a select number of platforms are likely to have the opportunity to become banks (if they wish so). So, in reality, I don’t think it should be something we’re thinking about within the industry.”
CLP Initial Coin Offering Announcement (Cointelegraph), Rated: B
Crypto Lending Project (CLP) announces its crowdsale campaign.
Name: CLP coin
Start Date: 1st November, 2017
End Date: 30th November, 2017
Global Assets under Management set to rise to $ 145.4 trillion by 2025 (Finchannel), Rated: AAA
In a new report ‘Asset & Wealth Management Revolution: Embracing Exponential Change’, PwC anticipates that global Assets under Management (AuM) will almost double in size by 2025, from US$84.9 trillion in 2016 to US$111.2 trillion by 2020, and then again to US$145.4 trillion by 2025.
By 2025, AuM will have almost doubled – rising by 6.2% a year, from US$84.9 trillion in 2016 to US$145.4 trillion in 2025, with the fastest growth seen in the developing markets of Latin America and Asia Pacific.
While active management will continue to grow and play an important role, reaching $87.6 trillion by 2025 (60% of global AuM), PwC predicts growth in passive management to reach $36.6 trillion by 2025 (25% of global AuM).
If current growth is sustained, the industry’s penetration rate (managed assets, as a proportion of total assets) will expand from 39.6% in 2016 to 42.1% by 2025.
PwC anticipates assets growing at 5.7% a year in North America from 2016 to 2020, slowing to 4.0% per annum from 2020 to 2025, lifting assets from US$46.9 trillion to US$71.2 trillion over the nine years. Similarly, Europe is projected to grow at 8.4% and 3.4% per annum respectively over the two periods, with assets rising from US$21.9 trillion to US$35.7 trillion.
Banks need to fear Amazon’s finance ambitions: McKinsey report (American Banker), Rated: AAA
McKinsey said that the industry needs to continue its digital makeover to protect the up to 40 percent of revenues at risk by 2025 and prepare for competition from so-called platform companies like Bezos’s Amazon.com Inc.
As he extends Amazon’s reach, the Seattle-based company has had discussions with banking regulators about financial innovation, according to lobbying disclosures reviewed by American Banker. And it already has a small-business lending arm that has doled out more than $3 billion to more than 20,000 of the merchants on its e-commerce platform.
The global banking industry, which had an 8.6 percent return on equity last year, could offset the loss of profits from price competition by partnering with platform companies and generating more revenue from their data. Banks that go further by creating their own platforms could elevate their ROE to 14 percent, according to the report. ROE is a measure of profitability.
How Mobile Phones and the Internet are Changing Banking (The Merkle), Rated: A
Furthermore with smartphone prices of $30 to $50, Asian markets maintain a robust mobile market. 76% of Taiwan is connected to mobile, and 70% of Myanmar is connected.
Experts estimate Asia as the region to become the fastest growing Internet region by 2020. And while their internet industry is flourishing, only 27% of Southeast Asians have a bank account. In 2017, China has 731 million internet users. That is only 53.1% of the population. China represents internet development at a fast pace, but it still has 21% unbanked. Internet traffic growth in Myanmar is at 58%, yet Myanmar is one of the lowest banking rates in Asia with over 70% of adults (aged 15+ years) unbanked.
P2P Lending Will Change the Way Credit Is Dispensed Globally (Crytocoins News), Rated: A
As an example OECD research points out that financial sector works constitute 19% of the top 1% earners but the share of finance in the overall employment is only 4%.
In developed world, there are huge reserves of money lying in banks at sub zero, zero or miniscule interest rates. On the other hand in the developing world where there is a dearth of credit, loans can only be had at rates as high as 20-30%.
Karma plans to use the blockchain in such a way that individuals as well as legal entities can make the most of profitable relationships with each other. This will entail creating a community of participants, who will be able to lend money, borrow money, insure against default, Score loans and carry out assessments and even collections. All of this will be fuelled by the Karma token that will be at the centre of this new ecosystem.
The sale of Karma tokens is legal in all jurisdictions including the United States and China. Qualified US investors can participate. The basic price of Karma Token is US$ 0.01. Early investors can get discounts of 50% till US$ 1 mln is collected, thereafter 30% discount is available till US$3 mln is collected and 15% till US$ 8 mln is collected. There is a hard cap of US$ 10 mln on the token sale.
Click, pay, study – how fintech is impacting international education (The PIE News), Rated: AAA
Though fintech can take many forms, “I think the disruption is really in the payer experience,” says Sharon Butler, EVP, education at Flywire, a global payment solutions company. “Essentially we are leveraging banking infrastructure. I think really what fintech is, is sort of the blend of the old and the new.”
Preceding the growth in cross-border tuition fee payment services, which track the money and file it instantly with minimum costs involved, were more staff resources sifting through multiple transactions and matching them to the student, coupled with uncertainty from the student’s side about when or whether the money would actually have arrived.
Improvements in payment services is one of the biggest ways fintech has benefitted students, agrees Devie Mohan, founder of fintech research company, Burnmark.
Fertile ground in China
Financial technology as an industry has grown globally at an unprecedented scale. Last year, fintech reaped $17.4 billion of venture capital investment – a colossal increase on the $2.5 billion it received just four years ago.
And $7.7 billion of this investment went to China, seeing it overtake the US as the top investment market for fintech companies for the first time.
The mobile payment industry is one which has grown particularly quickly in China in comparison with other countries around the world, predominantly led by Alipay and WeChat Pay. These two platforms combined saw $2.9 trillion in transactions overall last year.
Modernising student loans
But it was Prodigy Finance that entered the loan market specifically to serve international students. Since its inception in 2007, the platform has lent over $310 million to international students all around the world to study overseas, and is expanding its services.
Ethercash Aims to Revolutionise Three Core Functions of Finance (Coinidol), Rated: B
Financial services startup Ethercash has proudly announced its Pre-ICO Campaign, which will raise funds to develop its blockchain-backed financial platform. The Ethercash platform aims to revolutionise three core functions of finance to bring greater transparency and security in the way we lend, send and spend. The Etherecash platform will allow its users to leverage their cryptocurrency holdings to acquire fiat currency loans without the need for credit history, through the application of lawyer-backed smart contracts. The Etherecash Pre-ICO campaign will run from October 25th, 2017 until November 7th, 2017 and ICO campaign will begin November 15th, 2017 and finish on December 19th, 2017.
NZ prepares to join the ‘open banking’ revolution (Stuff), Rate: AAA
Andrew Sieprath is among the first people in the Europe to embrace “open banking” as a customer.
His chosen banking provider is Revolut, which isn’t even a bank.
Revolut is just one of three “open banking” services due to launch here in the next few months. They will lead New Zealand into something of a banking revolution which threatens to do to banks what Uber is doing to taxi firms, and ultimately put more pressure on them to cut staff or close branches.
There are many emerging open banking models, but as a starting point, think internet banking that’s slicker, more intuitive, and allows users to see and manage accounts from multiple banks in a single place.
Robo-advice raises alarm (Financial Standard), Rated: A
While the technology behind robo-advice is making it cheaper to invest, it doesn’t mean it is actually providing advice let alone the right advice, says the Association of Real Return Investment Advisers general manager Rebecca Jacques.
She told a recent Calastone forum that she put a few global and domestic robo-advisers to the test by giving each the same simplistic target: to pay her young children’s private school fees.
Every robo asked for a country of origin; only one asked for a tax bracket – but what was “scary” was that not one asked if the funds would be used for private school tuition, she notes.
COBA conference 2017: small banks need to work together on tech (The Courier Mail), Rated: A
IN the competitive fight against the big banks, smaller lenders such as credit unions find themselves hopelessly outgunned in terms of technology budgets.
But the chairwoman of the Customer Owned Banking Association said smaller lenders were taking opportunities to collaborate on budgets and spruce up their technological offering.
3 apps helping Australians buy real estate in ways that traditional banks can’t (Business Insider), Rated: A
But the report found property transactions made up a very small part of that alternative financing industry, making up just $49 million, or 8%, of the $609 million dealt out in 2016.
Australia lags behind the Asia-Pacific average (excluding China) of 17% of alternative financing going towards real estate. The popularity of peer-to-peer property financing in South Korea is a big contributor to the high average.
The $49 million alternative lending spent on real estate in Australia is made up of $36 million in peer-to-peer lending and $13 million in crowdfunding. In the US, peer-to-peer is worth $1 billion and crowdfunding $800 million.
- CrowdfundUP – The startup has so far allowed 2,000 people invest in 17 projects, with individual investments typically ranging from $5,000 to $2 million.
- BrickX – BrickX, as previously reported by Business Insider, allows everyday folk to invest in fractions of a residential property through units called “bricks”, which can cost as little as $66.
- CoVESTA – The real estate on offer includes residential, commercial and even agricultural properties, with investors requiring to contribute at least 5% of the purchase price if they wish to be a tenant in the property. For passive ownership, just 1% ownership is required.
RBI Regulations For P2P Lending Industry: A Win Win Situation For Both Platforms And Consumers (Inc42), Rated: AAA
It has been observed that, when the P2P lending industry or any other industry is prudently regulated, it attracts more participation. In terms of P2P, the regulation will increase entry of investors as well as borrowers. This is a reason why RBI regulating the NBFC-P2Ps is a long-term positive for the Indian P2P lendingindustry.
RBI regulating the sector means dead-end for players that are looking only to generate money without adding any value.
P2P regulations: A missed opportunity (Livemint), Rated: A
However, the potential social benefits of P2P lending are contingent on a facilitative and proportionate regulatory ecosystem. A review of the P2P regulations issued by the RBI leaves much to be desired in that sense. Saliently, the P2P regulations delegate potentially arbitrary discretion to RBI in gatekeeping, impose high market-access barriers that would inhibit innovation in a technology-intensive sector, and lack clarity around critical issues like leverage ratio.
A. Excessive regulatory discretion: One of the principal governance issues of a modern state is injecting accountability into regulatory discretion.
B. Disproportionate minimum capital requirements: The RBI has prescribed a mandate that would require a minimum net-owned fund (NOF) of Rs2 crore.
C. Lack of clarity around critical issues like leverage ratio: Leverage ratio is defined as “total outside liabilities divided by owned funds, of the non-banking financial corporation in P2P (NBFC-P2P)”. This leverage ratio has been capped at 2.
Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India (BW Disrupt), Rated: A
The current marketplace for financial products in India is still highly inefficient, time-consuming & uncertain for customers – especially the SMEs and the MSMEs. When they require loans as working capital or for expenditures like purchase of raw materials, payment towards wages etc. to achieve scale and growth, approaching a bank directly or even visiting loan aggregator websites becomes challenging in terms of time & information. Also, due to varied risk appetite of traditional financial institutions, many SME and MSME entrepreneurs are often puzzled in terms of documentation requirements; different banks and lenders have their own set of risk parameters which they assess while sanctioning a lending facility. This results in high rejection rates within the loan ecosystem.
Why online lending is emerging as an enabler for India’s MSME industry
New-age fintech lending marketplaces endeavor to revolutionize the country’s financial lending patterns by changing the way it works. They are enabling easy access to loans by connecting these small businesses to financial institutions on a consolidated platform for quicker sanctions. Such neutral platforms, with customer-centric features offering a wide range of loan products and end-to-end loan fulfillment, enable MSMEs to concentrate on building their businesses rather than worrying about finances to fulfill the gap in their cash flows or fund their expansion and growth.
I2I Funding cofounder Neha Agarwal: Saw significant business growth post-demonetisation (Financial Express), Rated: A
While the Reserve Bank of India’s (RBI) guidelines for lenders and borrowers on peer to peer (P2P) lending platforms are important cautionary moves, caps on lending should ideally be linked to lenders’ incomes, Neha Agarwal, co-founder of i2ifunding, told Shritama Bose. The company has disbursed more than Rs 3 crore so far in FY18 and has a full-year target of Rs 10 crore, she added.
We have had more than 30,000 registrations on our platform so far, of which around 25,000 people are registered as borrowers and around 5,000 as lenders. Since launch, around 500 loans have been disbursed and we have around 2,000 active lenders.
The average loan size is about Rs 1.5 lakh.
Almost 90% of the lenders have invested more than once. Around 40% of lenders are lending regularly on our platform.
Five platforms which were a boon during demonetization (Business-Standard), Rated: A
P2P Gold Lending, Bullion, and Physical Crypto Storage (Palisade-Research), Rated: A
Gregor has a company in Singapore where individuals can securely store their gold and silver.
Using peer to peer lending you can withdraw up to half of your holdings in loans at low-interest rates. For example, if you have $100k worth of gold you can deposit and take out a loan for 50k at around 3.5% interest per year.
The fast growing Fintech industry is another feather in the cap of rising Asia. According to EY FinTech Adoption Index 2017, there is a palpable global shift of fintech activities from the UK and the US to Asia.
Another report provided by KPMG and CB Insights says in 2016, investments in Fintech companies in Asia hit $8.6 billion across 181 deals.
In light of this, fintech innovation labs and fintech accelerator/incubator spaces are rapidly growing throughout Asia, especially in Hong Kong. The FinTech Innovation Lab Asia-Pacific is collaboration between Accenture and leading financial institutions including Bank of America, Merrill Lynch, Goldman Sachs, HSBC, J.P. Morgan, and Standard Chartered, etc.
A bout of high-profile mega-rounds in the Chinese market has also played a vital role in uplifting Fintech investment. One such activity was a whopping US$4.5 billion funding round by Ant Financial, an affiliate of Alibaba group. The other smaller but successful funding rounds in China during 2016 were: US$73 million to Quant Group, and US$30.4 million to China Rapid Finance.
According to a recent research conducted by Startupbootcamp FinTech Mumbai and PwC, it was found that more than 95% of financial service companies are seeking partnership with Fintech startups through collaboration rather than competing with them.
Another report regarding Indian Fintech ecosystem is more interesting. It says Indian Fintech market is expected to double from current US$1.2 billion to US$2.4 billion in 2020.
VCs call on startups to set sights on SE Asia (The Investor), Rated: A
Tan, who formerly partnered with Sequoia Capital Asia, said his Singapore-based fund is looking for ambitious, strong Korean tech startups to invest in what could become the next unicorn.
He believes Asian-based VCs have a competitive advantage over established VCs from Europe or the US in the region as they can effectively tackle the needs of startups.
Fintech and software as a service, especially targeting small and midsized businesses, are the buzzword in Southeast Asia, according to Yoo Jung-ho, investment manager at Korea Investment Partners.
“In many of these countries, payment, banking abd finance, are still in a nascent stage with only 10 percent of the population utilizing credit and banking services,” said Yoo. “There is a great demand for firms that provides peer-to-peer lending and payment services. “So companies that target small and medium enterprises that make up the majority in Southeast Asia, will have a fighting chance.
The Credit Crisis in Malawi (Maravipost), Rated: A
According to recent reports, only 12 percent of households in Malawi have access to credit. With 65 percent of the population living under the poverty line, the rural population is especially vulnerable to the limitations of credit.
In today’s modern age, a physical bank is no longer needed to conduct financial services. Virtual and automated banking is expected to replace 30 percent of bank roles in the next ten years. These virtual banks even the playing field for Malawians by allowing consolidated rates, 24/7 access to services, and a location for information about other services. Some of these alternative, virtual services include:
- Personal Loans: To find a personal loan, Malawians can use search sites such as this example from Finland.
- Peer to Peer Loans:Rather than receiving a loan from a financial institution, peer to peer loans allow people to receive a loan directly from an individual financer. In order to apply for a loan, you must visit a peer to peer lending platform such as Prosper or Perform, and the online marketplace will match borrowers and lenders. Although the site still uses credit scores, individuals may have more sympathy towards you and your situation as opposed to a national bank.
- Crowdfunding:Another way to finance an opportunity is through crowdfunding. Crowdfunding is a fairly recent innovation that utilizes crowdsourcing as a way to raise funds for a project or business.
The change in financial technologies in the coming years will have a great impact in Malawi, and create more access to services for the entire population.
CANADIAN LENDERS ASSOCIATION & INNOVATIVE LENDING PLATFORM ASSOCIATION LAUNCH SMART BOX IN CANADA (Canadian Lenders Association), Rated: AAA
The Canadian Lenders Association (CLA) and the Innovative Lending Platform Association (ILPA) today announced the introduction of the SMART Box™ into Canada – a model pricing disclosure and comparison tool that will enable Canadian small businesses to better assess and compare their finance options. Top small business lenders in the country, including Company Capital, Evolocity Financial Group, IOU Financial, Lendified, Merchant Advance Capital, OnDeck and Thinking Capital, have committed to adopt the tool for use by their customers.
Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: A
Lendified, a Canada-based lender who provides small business loans online has entered into an agreement with ClearFlow Commercial Finance to increase its lending capacity. According to the lending platform, through the agreement, ClearFlow is providing it with a $60 million credit facility to fund loans delivered through its website.
Finn.ai Raises $ 3 Million in Institutional Financing Round (Finn.ai), Rated: A
Finn.ai, the award-winning, AI-powered virtual assistant built for banking and personal finance, today announced it has raised $3 million in its recent institutional financing round.
A panel of bankers met at LendIt to discuss the future of digital banking. The following discussion offers an interesting snapshot of what it might look like. I say, count me in. Jeremy Balkin, head of innovation at HSBC USA, started the conversation with this observation: “We live during the ‘millennialization’ of everything. We value […]
A panel of bankers met at LendIt to discuss the future of digital banking. The following discussion offers an interesting snapshot of what it might look like. I say, count me in.
Jeremy Balkin, head of innovation at HSBC USA, started the conversation with this observation: “We live during the ‘millennialization’ of everything. We value freedom and mobility. In banking, it’s no different.” Balkin went on to say that banks must cater to all types of customers, from Millennials to Builders, who aren’t likely to adopt emerging technologies. “The challenge is the adaptation of customer data.”
Millennial Banking, From the U.S. to China
Millennials have an average of 14 different financial services apps on their phones, Balkin said. In that regard, they are primed for mobile banking. Mitch Siegel, KPMG’s national FS strategy and transformation leader, agreed with that.
“I would say mobile first, not only,” he said.
While the average millennial is engaging with financial services companies on their phones, they are mostly performing simpler tasks, he said. Meanwhile, they’re putting off mortgages, kids, car loans, marriage, etc.
“Yet, as their lives become more complex, they’ll interact more on more devices,” he said.
Shanghai Huarui Bank is one of only five privately owned banks in China. Andrew Fang is head of innovation at the bank, which caters to technology startups in the retail sector.
“Facebook is blocked in China,” Fang said, “but we leverage the social networks to distribute banking services. We’re one branch. We have no offline presence.”
Because Shanghai Huarui is a digital-only bank, they don’t compete directly with the big banks in China. Fang said their fiercest competition comes from fintech companies, and WeChat. He sees something similar happening in the states.
In terms of digital banking, it’s Asian companies leading the way. In China, Singapore, India, and other Asian countries, more people have mobile phones than laptops, and there are huge populations of the unbanked and the underbanked. This makes it a rich environment for digital-only banking innovations.
“In China,” Fang said. “Everyone is on WeChat. Consumers can pay for things through the social network, and it has become a distribution channel for us to acquire customers. You can access your account through a single click banner, login, and see our banking services while chatting with a friend.”
Who’s Adopting Mobile Banking?
BankMobile is the U.S.’s equivalent to Shanghai Huarui. Ash Exantus is a best-selling author and the director of financial education at BankMobile.
“Larger banks are the ones who started to drive the habit in consumers to go mobile,” Exantus said. “Because we are mobile-only, we can provide services to customers faster and not charge as much as traditional banks. We have no ATM or overdraft fees. Millennials don’t like those. Because we can keep costs low, we can provide our services cheaper.”
Exantus went on to say that one key business strategy for BankMobile is building strategic partnerships. The bank doesn’t try to provide all the services they offer. Instead, they partner with other financial companies such as auto lenders, investing firms, and other financial services companies. BankMobile sees itself as a distribution channel for those providers.
“Yes, we want to provide services through mobile,” Exantus said, “but the consumer wants human interaction. Mobile keeps us affordable. Our strategic partnerships allow us to provide other services.”
Fang said the financial services sector in the U.S. is more mature than in many other parts of the world, including China. That’s one of the major reasons the U.S. regulates the sector, he said. Then he tossed out the rhetorical question, “Can Google, Facebook, and Amazon get into financial services? They have all the data to make it happen.”
In China, he said, it’s easier to start a financial services company. Companies like WeChat and Alibaba can get the data they need and transition into financial services at a much lower cost.
Siegel jumped in and asked, “How do you enable an ecosystem similar to that of China in the U.S.? It boils down to whether you spend money or save money. Financial services are embedded in e-commerce.”
Regulating Digital Banks Vs. Traditional Banks
After discussing the nature of mobile banking and technology, the panel moved on to regulation.
“Technology companies don’t want to be regulated like the banks,” Balkin said.
Siegel added, “A relaxed regulatory environment is not going to be relaxed from a bank’s perspective. We’re going to do what is necessary to keep customer data safe.”
Exantus said it was the regulatory environment in the U.S. that allows BankMobile to thrive. “We are able to provide services to consumers at a low cost or no cost because of some of the laws in place,” he said. “Whatever changes happen, I believe it will be in the best interest of helping consumers.” By leveraging distribution models through strategic partnerships, BankMobile was able to grow to two million customers since 2014. “It costs us $10 to acquire a customer. It may cost a bank $300 to $500.”
That’s very strong evidence of the benefit to current regulation for mobile banking.
How Digital Banking Will Grow
With mobile banking on the radar, it’s likely going to be millennials that popularize it. After the early adopters get on, they’ll get their parents involved. Later generations will come on board during the growth and expansion stages.
The interesting thing about millennials in the U.S. is that 63% don’t have credit cards.
“It’s annoying,” said Balkin. “I don’t like waiting when the chip doesn’t work and waiting around for authorization. My kids may not know what a credit card is.”
By contrast, in China, there are about 600 million credit card users. With 1.357 billion Chinese citizens, that’s less than half the population. Many people access credit is through a credit line at the Jingdong platform, Fang said.
“These users don’t have a credit card,” he said. “The credit line allows them to make purchases offline.”
Exantus said it’s all about building trust.
“Millennials want mobile, but they aren’t willing to switch because they want to feel secure,” he said. “Once you build trust, you can gain their business.” Exantus also said millennials love to use p2p payment services. “They like the ability to borrow money and pay someone back easily.”
In terms of the future, Balkin sees biometrics gaining traction. He also thinks mobile banking will become more secure, and it will become easier and faster to use.
“Technology is fantastic,” he said. “It levels the playing field for customer experience. It allows the customer to win back their time.”
Siegel agreed. He added that transactions will become more dynamic and micro-services will increase.
“You’ll be able to get life insurance for the time you’re on the plane,” he said. “Designing dynamic transactions for the mobile phone is a huge opportunity for fintechs.”
The panel was moderated by Aaron Lucchetti of The Wall Street Journal.