- Today’s main news: Kabbage to launch payment services. Funding Circle SME Income Fund limited force signal moves past key line. Zopa boosts TruFin results. DEPO launches to help lenders accept digital assets as collateral. Qudian stock drops 16.5%.
- Today’s main analysis: Deep dive into MFT 2018-2 vs. AVNT 2018-A (A MUST-READ).
- Today’s thought-provoking articles: Credit score improvement on My LendingTree. GreenSky IPO offers litmust test for online lenders. Is decentralized lending too good to be true?
- Kabbage to launch payment services. AT: “Expansion is a good thing, and Kabbage has been making some great strides lately. Of course, there are a few ways to expand. Expanding services is just one of them, but a very important one.”
- MFT 2018-2 vs. AVNT 2018-A. AT: “A very good, deep look at Marlette’s MFT 2018-2 securitization and Avant’s AVNT 2018-A. A great comparison. A must-read.”
- Avant continues to benefit from tighter underwriting.
- My LendingTree users improve credit scores. AT: “LendingTree provides proof of the value of its services better than anyone in the industry.”
- GreenSky’s IPO is online lending litmus test. AT: “A very good look at GreenSky’s value versus LendingClub’s and Prosper’s. We can debate why the two latter have had struggles since their IPOs, but the industry is maturing now and GreenSky’s IPO could signal a new wave of online lending IPOs. If it does well, a floodgate could open. If not, the doors may shut for a long time.”
- How to responsibly invest in Bitcoin. AT: “If you want to invest responsibly, don’t take a loan.”
- Is Mulvaney targeting fintechs or nonbanks?
- Banking overhaul could be heading to Congress.
- Hedge funds, PE firms are main street banks’ new lending competitors.
- How small banks can make tech the solution.
- Vota turns credit card transactions into recommendations and spots fraud.
- Optimal Blue offers pipeline & lock management APIs.
- Mastercard unveils initiative aimed at digital banking.
- Funding Circle SME Income Fund limited force signal moves past key line.
- Zopa stake boosts TruFin results.
- UK watchdog says robo-advice falls short.
- Jamieson Blake joins Basset and Gold.
- DEPO helps lenders accept digital assets as collateral. AT: “This is a great idea. If agnostic toward type of lender, this service, if it catches on, could bring about new competition in online lending.”
- Interview with Matthias Setzer of PayU. AT: “Lend Academy podcast.”‘
- Instantor wants to change your views on data.
- Bricknode, Lendytech unite under Untie Group banner.
- Decentralized lending: Is it too good to be true? AT: “A sober look at a new buzzword. Lenders should be cautious about jumping on the decentralized bandwagon and throwing about a word that might be misleading or confusing. If your lending business is truly decentralized, fine, but is that really a distinction that can drive value?”
- Automation, ‘platformization’ could take hold in banking.
- New lending models in fintech.
- United States
- Online lender Kabbage to launch payment services by year-end (Reuters) Rated: AAA
- Deal Deep Dive MFT 2018-2 vs AVNT 2018-A (PeerIQ), Rated: AAA
- Avant continues to benefit from tighter underwriting criteria (Asset Securitization Report) Rated: A
- LendingTree Study Finds More than Half of My LendingTree Users Improved Credit Scores in Majority of 50 Metros Analyzed (PR Newswire) Rated: AAA
- New Fintech IPO Offers Litmus Test for Online Lenders (Wall Street Journal) Rated: AAA
- How to responsibly invest in bitcoin (Bankrate) Rated: A
- Is Mulvaney targeting fintech or nonbanks? (Respa News) Rated: A
- Banking overhaul heading for likely passage in Congress (Yahoo! Finance) Rated: A
- Main Street Banks’ New Lending Rivals: Hedge Funds and Private Equity (Wall Street Journal) Rated: A
- Making technology the solution, not the problem, at small banks (American Banker) Rated: A
- Vota turns your credit card transactions into recommendations, helps you spot fraud (Tech Crunch) Rated: A
- Optimal Blue First-to-Market with Pipeline & Lock Management APIs (Business Wire) Rated: B
- Mastercard Unveils Fintech Initiative Aimed at Digital Banking (Banker & Tadesman) Rated: B
- United Kingdom
- Funding Circle Sme Income Fund Limited Force Signal Moves Past Key Line (Concordia Review) Rated: AAA
- Zopa stake boosts TruFin annual results (AltFi News) Rated: AAA
- UK watchdog says automated financial advice falls short (Rueters) Rated: A
- Exclusive: Former ADS Securities exec Jamieson Blake joins specialty lender Basset and Gold (Leaprate) Rated: B
- Why Qudian Inc Stock Dropped 16.5% Today (Motley Fool) Rated: AAA
- European Union
- European Company Helps Turning Cryptocurrency into Collateral (the Merkle) Rated: AAA
- Matthias Setzer of PayU (Lend Academy) Rated: A
- New Insight will change the way you think about data (Instantor Email) Rated: A
- Bricknode and Lendytech unite under Untie Group banner (Finextra) Rated: B
- Decentralized Lending Promises Easy And Global Access To Credit, But Is It Too Good To Be True? (Forbes) Rated: AAA
- Automation, ‘platformisation’ tipped to take hold in banking (AltFi News) Rated: A
- Fin-tech changes the loan process: Meet new lending models (Bankless Times) Rated: A
- Kieran Arasaratnam to Join Credify Founding Team as CFO (Digital Journal) Rated: B
Online lender Kabbage to launch payment services by year-end (Reuters) Rated: AAA
Kabbage Inc, a U.S. online lender for small businesses, plans to launch payment processing services by year-end, President Kathryn Petralia said on Monday, helping it to diversify and compete more directly with industry leaders PayPal Holdings Inc and Square Inc.
The Atlanta-based startup will offer tools to enable clients, mostly brick-and-mortar businesses, to accept card payments in-store and online, Petralia said in an interview.
Deal Deep Dive MFT 2018-2 vs AVNT 2018-A (PeerIQ), Rated: AAA
This week we compare 2 very different MPL personal loan securitizations – Marlette’s MFT 2018-2 Prime deal and Avant’s AVNT 2018-A Near Prime deal.
AVNT 2018-A has lower average loan size by $6,435, shorter weighted average loan terms by 9 months and higher WAC by 16.28%. This is a reflection of the quality of borrowers that Avant and Marlette target. Marlette’s prime borrowers have higher weighted average FICO scores by 59 points than Avant’s near prime borrowers. The geographic distribution is quite similar between the two deals.
Bond Characteristics and Pricing
The significantly higher WAC on AVNT 2018-A leads to a 14.8% pickup in excess spread. KBRA’s base case loss estimate is 7.4% higher on AVNT 2018-A, which leads to a 7.4% higher loss-adjusted excess spread on AVNT 2018-A.
AVNT 2018-A has 3.3% lower O/C which is compensated by 14.8% higher excess spread. The A tranches have similar CE in both deals but Marlette’s A is rated one notch higher.
Avant continues to benefit from tighter underwriting criteria (Asset Securitization Report) Rated: A
The introduction of tighter underwriting criteria continues to pay off for the online consumer lender Avant.
The company, which was founded in 2012 and is based in Chicago, was able to lower the credit enhancement, again, on its latest securitization, the $221.9 million Avant Loans Funding Trust 2018-A.
Kroll Bond Rating Agency assigned an A- to the $149 million senior tranche of notes to be issued, which benefit from 38.42% credit enhancement. That’s down from 41.8% on the comparable tranche of its prior transaction, completed last year.
LendingTree Study Finds More than Half of My LendingTree Users Improved Credit Scores in Majority of 50 Metros Analyzed (PR Newswire) Rated: AAA
LendingTree today released its study on the top places with rising credit scores. With credit scores being a crucial component of personal financial stability and opportunity, LendingTree analysts decided to look at anonymized My LendingTree users who logged into their accounts in both the first quarter of 2017 and the first quarter of 2018 to determine the top metros for rising credit scores among the 50 largest in the United States.
Below are some of the key takeaways from the study.
- Jacksonville, Indianapolis, Denver and Tampa saw the highest rate of rising credit scores among the 50 biggest metros from Q1 2017 to Q1 2018.
- Virginia Beach, Va., Los Angeles and Birmingham, Ala., had the lowest rate of rising credit scores, with 47 percent of Virginia Beach users raised their credit scores.
- San Jose (Silicon Valley) saw the most dramatic rises in credit scores, with the highest rates of people who raised their score by more than 75 points and 100 points.
- In the majority of the 50 metros analyzed, more than 50 percent of users improved their credit scores between Q1 2017 and Q1 2018.
- About one in three increased their scores by over 20 points, and 3.5 percent were able to improve their scores by 100 points or more.
New Fintech IPO Offers Litmus Test for Online Lenders (Wall Street Journal) Rated: AAA
It wasn’t long ago that online lenders were ascendant. More than $3 billion in capital from investors as diverse as Japanese conglomerate SoftBank Group Corp. and celebrity chef David Chang gushed into lending startups in 2015, according to Dow Jones VentureSource. Analysts at Morgan Stanley predicted that year that the nascent industry would account for 10% of all unsecured consumer and small-business loans by 2020.
How to responsibly invest in bitcoin (Bankrate) Rated: A
Recently, Bank of America, Chase, and Citigroup joined Capital One and Discover in banning cardholders from using them to buy cryptocurrencies. Credit cards were one of the most popular payment methods because of their relatively low fees and instant transaction rates, and investors are having to look at other options to make their investments.
You can borrow money from a family member or friend, or you can use a peer-to-peer lending platform like SoFi to leverage funds for Bitcoin investments. However, be cautious when borrowing money for an investment. Interest rates can eliminate any gains you get from the investment, and the risk of losing money in such a volatile market is high.
Is Mulvaney targeting fintech or nonbanks? (Respa News) Rated: A
The acting director also responded to a question about qualified mortgages which has left the industry scratching its head since. Was Mulvaney separating fintech marketplace lending from traditional mortgage lending, or was he drawing a line between depository mortgage and non-depository mortgages?
Banking overhaul heading for likely passage in Congress (Yahoo! Finance) Rated: A
Legislation that would ease banking regulations — and modify rules governing credit reports and some consumer loans — is headed for likely passage in Congress any day now.
The bill cleared the Senate in March with some bipartisan support and is expected to be voted on by House lawmakers this week, perhaps as early as Tuesday.
The measure rolls back some of the regulations imposed by the Dodd-Frank Act of 2010. That legislation came on the heels of the financial meltdown that rocked the U.S. economy a decade ago, when risky and unaffordable mortgages contributed to millions of homeowners losing their houses to foreclosure.
Main Street Banks’ New Lending Rivals: Hedge Funds and Private Equity (Wall Street Journal) Rated: A
Main Street banks are feeling squeezed by competition from new rivals: nonbanks like hedge funds and private-equity firms that are elbowing into business loans.
Growth in business lending has picked up recently—it was up 3.3% year over year as of May 9, according to Federal Reserve data released Friday, after falling below 1% earlier this year. But the growth rate is still far below where it’s been in recent years, when loans to businesses grew at a double-digit clip for much of 2014, 2015 and 2016.
Making technology the solution, not the problem, at small banks (American Banker) Rated: A
The board members of R Bank in Round Rock, Texas — who include the Hall of Fame fireballer Nolan Ryan, a co-founder of the bank — hold accounts there, and they, like most other patrons, knew its old technology made for clunky customer service.
So, says president and CEO Steve Stapp, he channeled those irksome experiences into board support for an investment in a systems overhaul at the $455 million-asset bank.
For community banks in highly competitive markets, service with a personal touch can be a differentiator to win and keep customers. But when legacy technology hampers the customer experience, all the cups of coffee in the world won’t help.
Vota turns your credit card transactions into recommendations, helps you spot fraud (Tech Crunch) Rated: A
Blippy, which was hyped up to a $46.2 million valuation back in 2010 before the world realized that almost nobody wanted a dedicated network for sharing and viewing each others’ purchases. Well, guess what? Someone’s trying a Blippy-like thing again — this time, in the form of a new app called Vota, which automatically records your credit card purchases and the places you visit so you can share them with friends or family, or view them privately for your own reference.
As a byproduct of this data collection, you may spot credit card fraud or other errant charges, too, or just get a handle on your spending.
Optimal Blue First-to-Market with Pipeline & Lock Management APIs (Business Wire) Rated: B
Optimal Blue is proud to recognize enterprise SaaS digital mortgage solution leader, Capsilon, as its first strategic partner to complete certification with the highly anticipated Pipeline & Lock Management APIs. By debuting these innovative system-to-system API interfaces in the mortgage industry, Optimal Blue has enabled Capsilon’s digital mortgage platform to fully support the creation, management, registration, and locking of first-lien mortgages instantaneously with Optimal Blue. As a result of this advanced integration, a completed application and pre-approval are done in half the time of the traditional back-and-forth processes, empowering loan officers to be more competitive in today’s purchase market and win more business from real estate agents.
Mastercard Unveils Fintech Initiative Aimed at Digital Banking (Banker & Tadesman) Rated: B
The company on Monday announced the creation of Accelerate, a new initiative to drive growth at scale for the fast-evolving fintech industry, reflecting the company’s ongoing commitment to this sector.
Designed to operate alongside its successful Start Path program, Accelerate will broaden Mastercard’s engagement with the payment fintech community including the next generation of digital banks.
Funding Circle Sme Income Fund Limited Force Signal Moves Past Key Line (Concordia Review) Rated: AAA
Checking on current RSI levels on shares of Funding Circle Sme Income Fund Limited (FCIF.L), the 14-day RSI is currently standing at 58.31, the 7-day is at 65.97, and the 3-day is resting at 83.22.
Funding Circle Sme Income Fund Limited (FCIF.L) currently has a 14-day Commodity Channel Index (CCI) of 148.41.
Shares of Funding Circle Sme Income Fund Limited (FCIF.L) have a 200-day moving average of 103.52. The 50-day is 104.93, and the 7-day is sitting at 104.82.
Zopa stake boosts TruFin annual results (AltFi News) Rated: AAA
TruFin, the AIM listed fintech lender and payments provider, has released its first set of annual results following on from its public listing back in February. The numbers show a 7.67 per cent uptick in its valuation of its stake in p2p lender Zopa in 2017.
TruFin, which says it used an external company to aid the valuation of Zopa, re-valued its holding upwards by £2.6m to £36.5m over the course of the year. The firm, which was spun out of hedge fund Arrowgrass’ fintech holdings, holds a c.15 per cent stake in Zopa bought by Arrowgrass in 2014 for £15m. TruFin was set up by Henry Kenner, one of the founders of Arrowgrass, who is also its CEO and chairman. The hedge fund itself was launched by a group of Deutsche Bank traders in the wake of the financial crisis, including Kenner.
UK watchdog says automated financial advice falls short (Rueters) Rated: A
Advice doled out online or via smartphone apps, referred to in the industry as “robo advice”, aims to cut costs for customers looking to save or invest. It also seeks to foster innovation and increase competition in financial services.
But the Financial Conduct Authority (FCA) said two reviews of the industry uncovered problems among early entrants.
Exclusive: Former ADS Securities exec Jamieson Blake joins specialty lender Basset and Gold (Leaprate) Rated: B
Following our exclusive report from earlier this month that Jamieson Blake, Head of Client Experience at the FCA regulated London based arm of ADS Securities, had resigned from the company, LeapRate has now learned that Mr. Blake has landed – at specialty lending and retail investment firm Basset and Gold, as Head of Relationship Management.
Why Qudian Inc Stock Dropped 16.5% Today (Motley Fool) Rated: AAA
Shares of Qudian (NYSE:QD) closed down 16.5% on Monday after the Chinese online lender announced earnings that fell short of expectations.
Qudian reported “diluted adjusted net income per share” of $0.16 but GAAP diluted net income per share of only $0.15 per share. Whichever yardstick you use, though, these numbers appear to be lower than the $0.17-per-share estimate quoted on Yahoo! Finance. Revenue, on the other hand, came in at $273.7 million, significantly above consensus expectations for $214.6 million.
European Company Helps Turning Cryptocurrency into Collateral (the Merkle) Rated: AAA
Following a similar model as traditional depository services, DEPO gives lenders the freedom to accept digital assets as loan collateral. The platform also allows borrowers to keep ownership of their digital asset during the entire loan period. The platform also protects future financial gain of the asset for borrowers with its decentralized design.
By employing the DEPO platform, lenders will be able to accept cryptocurrency as collateral for loans. To be protected, lenders can request additional collateral, or a partial sale of the asset should the market become excessively volatile at any time during the loan period.
Matthias Setzer of PayU (Lend Academy) Rated: A
In this podcast you will learn:
- The history of Naspers, the parent company of PayU.
- What PayU does and the markets where it operates.
- Why Matthias decided to leave PayPal after 12 years and move to PayU.
- How PayU approaches going into a new international market.
- The Naspers investment in Chinese giant Tencent and the PayU footprint in China.
- Why the number one country PayU is focused on today is India.
- Why they invested €110 million in Kreditech and how they are leveraging that partnership.
- The point of sale lending product they have launched in India with Kreditech.
- The biggest growth drivers for PayU over the next 12-18 months.
New Insight will change the way you think about data (Instantor Email) Rated: A
Today Instantor, the Swedish fintech company making financial decisions easy, announces Insight. A new product that will transform the way financial organisations assess risk for loan applicants. By using robust machine learning, Insight analyses more than 70 predictive features and insightful patterns in historical banking, and can be used to make better risk and opportunity decisions. Instead of having a risk team spending months testing risk models, Insight ́s intelligent features will build the most optimal risk model using the clients own data and can be up and running within a week.
Bricknode and Lendytech unite under Untie Group banner (Finextra) Rated: B
Untie Group used to be several companies, the largest of which were Bricknode and Lendytech. They had a common founder in Stefan Willebrand and used, at least to a degree, the same self developed software. Also a number of people have gone from one firm to the other over the years.
Decentralized Lending Promises Easy And Global Access To Credit, But Is It Too Good To Be True? (Forbes) Rated: AAA
Since the rise of cryptocurrencies, the term “decentralized” seems to be everywhere. Decentralization has been proposed in many industries as a way to heighten transparency and make transactions simpler. One field in particular which has shown great potential for the application of decentralization is money lending. As many might rightly ask, don’t we need banks who are willing to take the financial risk and approve loans? As it turns out, maybe we don’t.
For lenders, the use of smart contracts allows for much easier assessments of the counter-party’s trustworthiness. Something that would take traditional audits weeks, not to mention the costs of such a traditional audit. Validating transactions and follow-up can become fully automated. Collateral is automatically returned at the end of the loan period or liquidated if the loan is defaulted on, removing many of the time-consuming actions that come with it.