Thursday October 17 2019, Weekly News Digest

LendingClub

News Comments Today’s main news: Zopa launches tool to compete with credit bureaus. KBRA assigns preliminary ratings to Marlette Funding Trust 2019-4. OnDeck Capital financial results. ID Finance raises 1.7M euro on Crowdcube in minutes. Canada’s fintech adoption rate has doubled since 2017. Today’s main analysis: LendingClub account performance (A MUST-READ). LendingTree’s Personal Loan Offers Report […]

The post Thursday October 17 2019, Weekly News Digest appeared first on Lending Times.

LendingClub

News Comments

United States

United Kingdom

European Union

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2019-4 (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2019-4 (MFT 2019-4). This is a $326.27 million consumer loan ABS transaction.

Preliminary Ratings Assigned: Marlette Funding Trust 2019-4

Class

Preliminary Rating

Initial Class Principal

A

AA (sf)

$260,298,000

B

A (sf)

$30,117,000

C

BBB- (sf)

$35,854,000

On Deck Capital Inc. Financial Results Comparing With Consumer Portfolio Services Inc. (Mesa Weekly), Rated: AAA

On Deck Capital Inc.’s volatility measures that it’s 85.00% more volatile than S&P 500 due to its 1.85 beta. Consumer Portfolio Services Inc. on the other hand, has 1.53 beta which makes it 53.00% more volatile compared to S&P 500.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
On Deck Capital Inc. 3 0.12 45.93M 0.45 7.99
Consumer Portfolio Services Inc. 4 0.55 13.97M 0.50 7.37

Profitability

Net Margins Return on Equity Return on Assets
On Deck Capital Inc. 1,349,850,114.62% 12.2% 3.1%
Consumer Portfolio Services Inc. 396,042,410.84% 7.6% 0.6%

Global cooling; Upgrade Card (PeerIQ), Rated: AAA

In industry news, Upgrade led by CEO Renaud Laplanche released the “Upgrade Card”. The product is a cross between credit card and an installment loan. How does it work? Every month any new charges on the card transition into an installment loan of 12, 24, or 36 months. Customers can select the default payback period when applying for the card and they have the option to change the term for new charges at any time. Upgrade Card offers true risk-based pricing with a range of 6.49% to 29.99%. LendIt Co-Founder Peter Renton has a nice summary here.

In macro news, the Fed is expected to cut rates for a third time later this month to a range of 1.5% to 1.75%.

Source: OECD Interim Outlook Projections, Blackstone, PeerIQ
Source: WSJ, Cantor Fitzgerald, PeerIQ

New LendingClub Account Performance (Lend Academy), Rated: AAA

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

Source: Lend Academy
Source: Lend Academy

Personal Loan Offers Report – September 2019 (LendingTree), Rated: AAA

At 1,270 basis points, the spread between the highest and lowest offered APRs offered to the same consumers were especially stark for high-score borrowers.

  • The average spread for those with scores of 760 or higher was 1,270 basis points, amounting to a difference of 58.5% on the average loan amount offered for a three-year personal loan.
  • Consumers with scores between 720 and 759 saw an average offer spread of 1,145 basis points, representing a 49.9% difference in interest paid.
  • For those with scores between 680 and 719, the average spread was 971 basis points, representing a 37.3% difference in interest paid.
  • Borrowers with scores between 640 and 679 had an average spread of 860 basis points, representing a 28.2% difference in interest paid over the three years of the loan.
Source: LendingTree

Kiva Lending Team: Lendio Gives (Kiva), Rated: A

Lendio has provided over 10,000 Kiva microloans through its

Source: Kiva

There’s Never Been a Better Time to Consolidate Credit Card Debt (Credible), Rated: AAA

According to data collected by the Federal Reserve, borrowers who were assessed interest on their credit card accounts paid 16.97% on average during the three-month period ending Sept. 31. But the average rate on personal loans was only 10.07%.

That’s a spread of 6.9 percentage points — an all-time high in Federal Reserve records dating back to 1998.

Apple and Goldman Sachs aren’t reporting Apple Card information to credit bureaus (MarketWatch), Rated: A

Apple and Goldman Sachs have yet to start reporting consumers’ payment information for the Apple Card to the major credit bureaus, a source close to Goldman Sachs confirmed to MarketWatch on Monday. The source later said that the companies will begin reporting to the credit bureaus later this quarter.

Goldman Sachs CEO says Apple Card is the most successful credit card launch ever (CNBC), Rated: B

“In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” Solomon said, adding “which we believe is the most successful credit card launch ever.”

Rise of fintech weakens law to prevent lending discrimination (Roll Call), Rated: AAA

As online banking threatens to make in-person banking at brick-and-mortar branches as archaic as video rental stores, it may do the same to a 1977 law created to counteract decades of underinvestment in minority neighborhoods.

Fewer branches, more online

While that includes some wholesale banks or limited purpose institutions, like credit card banks, online banking is driving the sector’s growth.

At the same time, the number of bank branches with an obligation under the CRA to provide loans and other services is falling. Branches have declined every year since a peak in 2010, at 99,550, according to data from the Federal Deposit Insurance Corporation. Banks closed 1,700 branches in 2018, dropping the total number to 86,375.

After steadily rising to a peak of $505 billion in 2016, the number of CRA-compliant loans that banks issued dropped in 2017 to $482 billion, according to the Office of the Comptroller of the Currency.

CNB Bank Moves to Revolutionize its Retail Lending with nCino (PR Newswire), Rated: A

nCino, the worldwide leader in cloud banking, today announced that Pennsylvania-based CNB Bank will utilize nCino’s Bank Operating System to digitize its retail lending process from end-to-end to enrich the customer experience.

California has reformed consumer loan interest rates. But will lenders find loopholes? (Cal Matters), Rated: A

Gov. Gavin Newsom has signed into law Assembly Bill 539 by Assemblywoman Monique Limón, Santa Barbara Democrat. The measure sets an annual interest rate cap of roughly 36% on consumer loans from $2,500 to $10,000 made by non-bank lenders.

For the prior 34 years, under state law, the sky was the limit on rates charged for such loans. Last year, 333,416 non-bank consumer loans in the $2,500 to $10,000 range had annual percentage rates of 100% or higher. That represented 40.7% of such loans. In the $2,500-$4,999 range, the triple-digit APR ratio was 55.5%.

DrawBridge Lending CEO Discusses Risk and Compliance for Lending Capital to Bitcoin Holders (Crowdfund Insider), Rated: A

Earlier this month, DrawBridge Lending (DBL Digital), a digital asset lending, borrowing and investment management firm, partnered with Kingdom Trust, a qualified custodian providing a self-directed IRA incorporating several digital assets with property and traditional asset investments.

To be eligible to invest, investors must be eligible contract participants (ECPs), which means they should have a minimum net worth of $1 million. The minimum investment in Drawbridge Lending’s series fund is $1 million, which can be met with the contributions of multiple investors.

There are more than 600,000 millennial millionaires in the US, according to report (CNBC), Rated: A

There are 618,000 millennial millionaires in the U.S. and their wealth is only expected to grow.

Currently, 93% of millennial millionaires have a net wealth between approximately $1 million and $2.5 million, according to the report. Nearly 60% live in either California or New York and they are investing more in real estate than their elder-millionaire counterparts.

The Pros and Cons of Using Peer-to-Peer Lending When Investing in Real Estate (The Motley Fool), Rated: A

Today’s real estate investors have many financing options at their disposal. There are traditional options like government-backed loans, home equity lines of credit (HELOCs), and investment property mortgages. But on top of those, you also have new-age choices like crowdfunding and peer-to-peer (P2P) lending platforms.

Real Estate Earnings: What To Watch For This Quarter (Seeking Alpha), Rated: A

The “REIT Rejuvenation” of 2019 has restored the coveted NAV premium for most sectors, giving these REITs the currency to re-open the acquisition pipeline. This valuation premium has allowed REITs to kick-start external growth, which has historically been responsible for more than half of FFO per share growth across the REIT sector. REITs were net buyers again in 2Q19, buying $12.5 billion in assets while disposing of $6.6 billion. The $5.9 billion in net acquisitions was the largest quarterly “buy” since 4Q17, and we expect this trend to continue into 2020 given the favorable valuation environment. We break down the acquisition activity for each of the REIT sectors later in this report.

Source: Seeking Alpha

AMERICAN FINANCIAL RESOURCES AND FINICITY PARTNER TO SIMPLIFY THE MORTGAGE EXPERIENCE (Finicity), Rated: B

American Financial Resources, Inc. (AFR) announced today it is working together with Finicity—a provider of real-time financial data access and insights, to provide its business partners and their borrowers with a faster, simpler and more secure way to verify assets and income while originating loans.

Roofstock Accelerates Innovation with New Chief Product Officer at the Helm (Yahoo! Finance), Rated: B

Roofstock, the marketplace for investing in real estate, announced the addition of Ketan Babaria to the fintech’s leadership team as Chief Product Officer. Formerly the Head of Product for LifeLock and Capital One’s D3 incubation unit, Babaria will enhance Roofstock’s current offerings and introduce new, creative ideas to accelerate the fintech’s growth and make real estate investing radically accessible.

Director of Operations Joins Fintech Startup LenderClose (DS News), Rated: B

Des Moines fintech startup company LenderClose has welcomed Andrew Deignan as Director of Operations. Deignan will manage the Operations and Vendor Relationships group, ensuring LenderClose delivers the highest level of service to its credit union and community bank lender users.

United Kingdom

Zopa launches tool to dispel “mystery” of credit worthiness (AltFi), Rated: AAA

Zopa, the first ever peer-to-peer lending platform, is launching the tool, called Borrowing Power, as it says that lending decisions and credit worthiness have been “shrouded in mystery” for too long.

The tool, which is free of charge, works by giving Zopa customers a borrowing score between one and ten. Customers are shown why they are given the score and how they can help improve the score.

In the Spotlight with Mario Lupori, RateSetter (Financial Reporter), Rated: AAA

We spoke to Mario Lupori, chief investments officer at RateSetter, about whether there is more consolidation to come in the peer-to-peer market and whether forthcoming regulatory changes will hinder the sector.

Samsung.com partners with Klarna to offer pay later payment plans (IBS Intelligence), Rated: A

Samsung.com has partnered with payment provider Klarna in the UK to provide customers service to make purchases from its website and pay later. The customers will get a convenient and hassle-free way to pay later at Samsung.com.

Klarna: too good to be true for students? (Mancunion), Rated: A

Klarna is perfect in those situations, giving you a ‘try before you buy option’. You can get as many items as you wish, in as many sizes, returning all the items you don’t need before a penny leaves your bank account. There’s no waiting around for refunds to reach your depleted bank account – you only pay for what you actually keep.

Octopus Choice’s P2P loans now available within a SIPP (AltFi), Rated: A

The firm has announced that its P2P investment platform is now accessible within a SIPP wrapper.

Could banks become redundant in the future? (Finextra), Rated: A

P2P lending as it right now stands absolutely no chance in competing with traditional banking, as it requires a bit too much time from the lender’s side.

However, should technology such as Artificial Intelligence be successfully implemented on these platforms, it’s likely that P2P lending will occupy a large percentage of the financial market share.

Starling launches TV ad campaign after reaching 900,000 customers (AltFi), Rated: A

Today Starling Bank will premiere its first TV ad on ITV and Channel 4 during England’s UEFA Euro 2020 qualifier against Bulgaria, and Jamie’s Meat Free Meals.

Celsius Now Offers up to 10% Return on TrueUSD Lending Service (Finance Magnates), Rated: A

Celsius Network, a cryptocurrency lending and borrowing platform, has partnered with TrustToken, the team behind dollar-pegged TrueUSD (TUSD), to offer up to 10 percent interest on four new stablecoins.

Casa Italia to expand its restaurant in Liverpool following £650k loan from OakNorth Bank (Fintech Finance), Rated: B

China

PayPal wants to help Chinese online shoppers buy from overseas (Business Telegraph), Rated: AAA

By the end of this year, Chinese online shoppers will have a new way to buy things from abroad: PayPal.

Despite the tensions between Beijing and Washington, China’s central bank has allowed the US company to take a toehold in the country’s valuable payments market by buying a majority stake of Chinese payments group Gopay.

European Union

Barcelona-based fintech ID Finance secures €1.7 million within minutes on Crowdcube (EU-Startups), Rated: AAA

Barcelona–based ID Finance, a fintech that operates in Europe and Latin America, has raised over €1.7 million in crowdfunding within minutes of its campaign going live on Crowdcube, amidst strong demand from investors. The data science, credit scoring and digital finance company has a target of €2.3 million.

The company has a well established global team and over 3 million users, with over 40,000 new users joining each week. It is on track to double revenues this year to €90 million – up from €13 million in 2017 – and is targeting over €267 million in revenue by 2021, with the goal of becoming the number one digital lending platform in Hispanic and Latino markets.

Fintech exits have raked in €83bn since 2013 amid European funding boom (sifted), Rated: AAA

The sale of European fintechs via initial public offerings or acquisitions has pulled in €83bn over the past six years, according to a new report by Dealroom.co and Finch Capital. This is twice as much as the next biggest category, enterprise software, and highlights the scale of opportunity for investors as well as the growing maturity of the fintech market.

Some of the biggest exits were the €7.1bn flotation of Dutch payments company Adyen and the sale of Swedish start-up iZettle to Paypal for $2.2bn last year.

The same report also estimates that the continent’s remaining private fintechs have an “unrealised” value of €43bn combined, including companies such as N26 and Starling Bank.

Source: sifted
Source: sifted

Which P2P Lending Marketplaces in Europe Accept American Investors? (P2P-Banking), Rated: A

European p2p lending services are growing. And yields of 10+% are achievable on some of the platforms. This attracts international investors.

Here is an overview of 5 services (sorted aplphabetically) that do allow US investors.

Assetz Capital is a marketplace for UK SME and property development loans. The liquid ‘access’ products offer 4.1% to 5.75% interest.

Bondora is an Estonian p2p lending marketplace for consumer loans. The highly liquid Go&Grow product offer yields 6.75%. With other products higher yields of 10+% are achievable.

Estateguru is an Estonian marketplace for property loans. Typical interest rates are 10-12%.

Flender is an Irish marketplace for SME loans. Typical interest rates are around 10%.

Mintos is a Latvian p2p lending market place. A wide range of loan types is offered. The fairly liquid ‘Invest&Access’ product currently promotes around 8% rate. Yields of 10+% are possible with manual and autoinvest.

Europe’s top tech startups to know (sifted), Rated: A

Europe’s startup scene is often overshadowed by Silicon Valley, but the continent is gaining ground with more than 160 tech firms valued at over €1bn.

Klarna
Founded 2005 — Stockholm, Sweden — Unicorn

In 2019 it launched a new $460m fundraising round, giving the company a post-money valuation of $5.5bn and making it the highest-valued private fintech company in Europe. That was a 250% increase on its last valuation at the beginning of the year.

Starling Bank
Founded 2014 – London, UK – Rising Star & Female Led

Led by Anne Boden, Starling has made a dent in the UK’s thriving fintech ecosystem. As of August 2019 the bank has just shy of 800,000 customers, including around 60,000 business accounts. The company says it’s on track to pass a million this year and already has £1bn in deposits.

These numbers are not quite as impressive as Monzo, which boasts 3m customers, or Germany’s N26 with 3.5m.

Greensill
Founded 2011 — London, UK — Unicorn

Former British Prime Minister David Cameron is an advisor to the firm, which is backed by Softbank’s vision fund. The most recent funding round of $800m valued the company at $3.5bn — firm unicorn territory.

Its working finance solution is funded through issuing its own bonds, making it one of the largest bond issuers of the world, with an average of 47 bonds a day.

Nigerian SME Digital Lender Lidya Expands to Europe (Forbes), Rated: A

In an increasing trend where African technology companies are finding a global audience, Nigerian digital SME lending platform Lidya has expanded to Poland and the Czech Republic.

International

London-based finance platform Divido inks deal with US payment company Splitit offering point-of-sale finance (AltFi), Rated: A

Divido, the London-based consumer finance platform which lets consumers take out credit at the point of purchase to help spread the cost of purchases, has signed a deal with US payment company Splitit to offer a monthly instalment option to customers.

4+ INTERNET BANKING OPTIONS FOR GAMING (One Vale Fan), Rated: B

Klarna has become famous among the players in many countries since its creation in 2005. This virtual bank is seductive for its fast transactions and its privacy. The gamblers will remain anonymous when they deposit or withdraw funds utilizing Klarna as a method. In fact, this Swedish company does not ask any personal details or private information. What’s more, Klarna is also an excellent service to the mobile casino allowing the users to move funds at their convenience.

India

How Can Neobanks Potentially Transform SME Lending? (Inc42), Rated: AAA

Neobanking is a relatively newer concept in India as compared to the West, and is still on a take-off mode. However, market experts observe the gradual and steady adoption of Neobanks and credit their fast growth to its lender and SME-friendly characteristics.

IN CONVERSATION WITH CRIF’S ATRIDEB BASU & HOW HE SCALED DATA & ANALYTICS PRACTICE IN INDIA (Analytics India Mag), Rated: A

CRIF is an Italian company, based out of Bologna and caters to more than 6K banks and financial institutions across 30+ countries globally. In India, CRIF has two broad arms – one is the 100% subsidiary (called CRIF Solutions India) – which focuses on consulting, analytics and products and the other is the credit bureau where it has major ownership (CRIF Highmark) – which focuses on multiple services on retail and commercial side.

Asia

Investors Pour Record $ 735 Million Into Singapore Fintech Deals (Bloomberg), Rated: AAA

Investors poured a record $735 million into financial-technology ventures in Singapore in the first nine months of this year, according to research from Accenture Plc, which analyzed data from CB Insights, Pitchbook and Tracxn.

That’s up 69% from the same period a year earlier and exceeds the $642 million raised in all of 2018, the study found. Investments in payments startups and those in lending made up the bulk of fintech fundraising, accounting for 34% and 20% of the total, respectively. Insurance technology deals comprised 17%.

MENA

Region’s P2P lending platform Beehive funds first SME in Bahrain (Statup MGZN), Rated: A

Beehive, the region’s first regulated peer-to-peer lending platform announces that it has funded its first SME in Bahrain.

The funding was granted to Bahrain-based Mira Packaging Factory, which manufactures disposable cups in addition to other food packaging solutions for the GCC, and the African F&B industry.

Canada

FinTech adoption in Canada has increased from 18% to 50% since 2017, according to the EY Global FinTech Adoption Index 2019. Among the reasons driving consumers to FinTech services are better rates and fees (42%), ease of setting up an account (19%) and more innovative products and services (10%).

Authors:

George Popescu
Allen Taylor

The post Thursday October 17 2019, Weekly News Digest appeared first on Lending Times.

Thursday October 10 2019, Weekly News Digest

Lend Academy

News Comments Today’s main news: Affirm debuts shopping app. Zopa profits tick upward. RateSetter recovering from loan scandal. PPDAI stock rises 7% with lift in institutional-funded loans. Oportun ends Nasdaq debut with 8% gain. Australia: RBA cuts interest rates, online lenders follow. Today’s main analysis: The Future of Finance: Marcus, Neobank, and fintech. (A MUST-READ) […]

The post Thursday October 10 2019, Weekly News Digest appeared first on Lending Times.

Lend Academy

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA

OnDeck today announced the results of a national survey of U.S. small business owners that finds economic issues are the most important factors in determining their choice for president in 2020.

  • Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
  • Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
  • 57% of small businesses surveyed said they were either Very Optimistic or Somewhat Optimistic about the economic outlook for their businesses;
  • 93% of those surveyed said they plan to vote in the 2020 election.
  • 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.

Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA

The point-of-sale (POS) financing provider 

Source: Business Insider

Affirm ships new shopping and bill splitting app (Finextra), Rated: A

Affirm’s app also allows consumers to pay at any brick-and-mortar store that accepts Apple Pay or Google Pay, which is increasingly important as 24% of consumers want the flexibility to look online and shop in-store.

Those with Apple Pay or Google Pay enabled have also seen up to 14% of transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.

Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A

Since Affirm’s launch, the landscape in the POS space is radically different than it was when Affirm entered. It is, first and foremost, a much bigger and more populated space than it once was. Other startups have come to the field — AfterpayUplift and Sezzle for example — but also bigger and more established names in financial services. In the last 12 months alone SquareMastercardPayPal and Chase have all rolled out POS installment lending products or enhancements as the market continues to pick up popularity among consumers, particularly younger ones.

Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA

Q4 is off to a brisk start. The jobs report released this past Friday shows 114K in net new jobs (vs expectations of 120K), generally flat wages, and a drop in the unemployment rate to 3.5%.

On the one hand, the US economy is near ‘stall speed’ – around 1 to 1.5% growth rate.

Source: PeerIQ, The Daily Shot, Conference Board

House prices are expected to rise 5.8% over the next year due to low mortgage rates.

Two major financing announcements this week. FinTech lender, Oportun, led by CEO Raul Vazquez, ends its Nasdaq debut with an 8% gain. The debut is notable as it represents a positive shift in the sentiment to the reception of lenders to the IPO market.

My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA

The upward trend in my returns continued in Q2, making it the fifth quarter in a row with increasing returns. My preliminary return for the 12 months ending June 30, 2019 is 6.20% (one investment is still not final), the best I have achieved since Q3 2017.

Source: Lend Academy

The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA

Afterpay is one of a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop. In addition to it, there are Affirm, Sezzle, Klarna, and Quadpay. They are positioned as a more consumer-friendly option than credit cards, a whole host of services bent on—because this is 2019—disrupting the powers that be.

Globally, Afterpay, which launched in Australia, has over 4.6 million customers and 35,000 retail partners. In the U.S., where Afterpay only launched in May of last year, it has two million customers and is available at 6,500 retailers. Over three million people use Affirm, while another 500,000 have shopped with Sezzle.

Silicon Valley promises aside, Afterpay is, at best, a platform that allows you to take out what amounts to a small loan on an item. After an approval process—Afterpay does not check a credit score; others like Affirm do—the customer pays a fourth of the price upfront and the rest is paid off in three equal installments every two weeks.

Also new is the $1,500 limit, up from $500, that Afterpay raised after Hyde-McCormick proved himself a responsible shopper and the $87.50 payments currently due every two weeks.

What Happened to Borro? (deBanked), Rated: A

In 2013, Borro, an innovative online lending company that was poised to disrupt pawn shop lending forever, invited me to their stylish offices at 767 Third Avenue in Manhattan.

Borro made $50 million worth of such loans in 2013 and doubled that number in 2014.

Auto, home equity are soft spots in consumer lending (American Banker), Rated: A

In its quarterly report that tracks consumer delinquency trends, the American Bankers Association said that 30-day past-due rates ticked up in eight of 11 categories in the second quarter when compared with the first quarter, but stressed that delinquencies remain well below historic norms.

Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A

Maker DAO, the most active decentralized finance app on the Ethereum network, has announced a date for its long-awaited multi-collateral DAI generation. According to observers, November 18 may be the date MKR starts accepting other assets as collateral.

Multi-collateral DAI creation has the potential to be riskier in comparison to ETH-based models. Currently, Maker is deliberately over-collateralized at above 300%, with the minimum at 150%, due to the high volatility of crypto assets.

A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A

Loans tied to more than 50 companies have lost at least 10 percentage points of face value in just three months, according to data compiled by Bloomberg. Some have dropped a lot more, with lenders lucky to get back just two-thirds of their investment if they tried to sell.

It’s hardly a full-blown apocalypse for the junk-rated leveraged loan market, which totals $1.2 trillion.

Energy is the hardest-hit sector on the list, with more than $12 billion of loans falling more than 10 cents on the dollar. Consumer and health care follow, comprising around $8 billion and $5 billion of loans outstanding, respectively.

Source: Bloomberg

Ruling cuts short debt collectors’ victory lap over CFPB proposal (American Banker), Rated: B

Under the CFPB’s May proposal, debt collectors could have unlimited contact with debtors through email and text messages, though consumers could opt out of such communications. Additionally, collectors could satisfy disclosure requirements with a hyperlink embedded in an email that takes consumers to a description about how they can dispute a debt.

The SEC is hiring a chief data officer (Business Insider), Rated: B

The Securities and Exchange Commission is hiring its first chief data officer, according to a job posting for the role.

Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B

Voyager Digital, LLC, a subsidiary of publicly-traded Voyager Digital (Canada) Ltd (Ticker VYGR.CN), an industry-leading best execution crypto asset broker, today announced a partnership with Celsius Network, in which Celsius will manage a portion of Voyager’s digital assets.

United Kingdom

Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA

Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.

Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A

In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.

Ratesetter recovering from loan scandal (The Times), Rated: AAA

One of Britain’s largest peer-to-peer lenders appears to be recovering from a toxic loan scandal after its latest results showed it edging towards breaking even.

Accounts for Ratesetter, which links 56,000 ordinary investors with consumer and business borrowers, show that pre-tax losses narrowed by 69 per cent in the year to March.

Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A

Customers who were mis-sold loans by the collapsed payday lender Wonga are expected to receive less than 10% of what they are owed in compensation after administrators revealed that only £41m will be put aside for claimants.

Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A

Stockport and Wilmslow based fintech company Savvy.co.uk is to create 25 jobs after securing a £20 million investment.

The funding, from London-based Cairn Capital, will increase lending capacity for the company who provide an ethical alternative to pay-day loans.

MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A

WHY DID YOU START BLEND NETWORK?

I started working in the financial industry as an FX trader before moving to trading gold and copper, both much more inefficient markets than FX. I realised that the UK property market was a hugely inefficient market in the sense that lenders and borrowers are not meeting. On the one hand, you have very experienced property developers across the country who are trying to access funds to build homes but traditional lenders are no longer active in providing development finance.

Instead, we lend in places such as Coventry, East Anglia, Doncaster, Northern Ireland. Northern Ireland is a very good example of our strategic approach to lending. Last year, we did around 80-85% of our business in Northern Ireland.

Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A

Crowdfunding a start up brings to mind the statement ‘Nothing worth having comes easy’, never truer than in the case of launching a start-up. Getting a new business off the ground will often require capital. Something which a lot of people don’t know how to go about getting.

These are:

  • Reward based crowdfunding;
  • Equity based crowdfunding;
  • Debt based crowdfunding, and
  • Donation based crowdfunding.

Landlords wary of tax changes (Money International), Rated: A

Half of the 200 landlords approached agreed tax changes and tougher mortgage borrowing criteria have thwarted their plans to buy more properties, while 15% admitted they had been put off buying homes to rent.

A third who still wanted to invest are considering a switch from buy to let to peer-to-peer lending secured against property, while 8% have already done so.

China

PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA

The stock in PPDAI Group Inc (NYSE: PPDF) closed 7% higher on Wednesday, at $2.83 per American depositary share, after it announced a positive trend in funding of loans by its institutional partners and increased loan origination volume.

For the third quarter, the Shanghai-based company, which operates an online consumer finance marketplace, said in a statement on Wednesday that the volume of loans facilitated by its institutional funding partners jumped to $2.64 billion, up 91% from the second quarter. Total loan origination volume was above PPDAI’s guidance, it said, as it reached $3.51 billion, up 14% from the previous quarter.

European Union

What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA

At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks’ sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK’s P2P lenders.

  • CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG’s B customers.
  • Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays’ SMB clients access to MarkeInvoice’s solutions. 
  • French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market.
Source: Business Insider

Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A

The new 18-month loan period will allow borrowers to access working capital facilities of up to €300,000 (approximately £265,194) in just 24 hours.

ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A

ID Finance, the fintech operating in Europe and Latin America, saw revenue growth of over 100% in the first 9 months of 2019 and is on track to double its revenues to €90m revenue this year. The data science, credit scoring and digital finance company is now planning its first equity crowdfunding round via Crowdcube as it targets €300m+ of revenue within 2 years.

Binance Launches New Lending Program Phase (CoinCodex), Rated: A

The Binance cryptocurrency exchange has launched the latest phase of its relatively new lending program. For the program’s eighth installment, Binance is sticking with the model of short-term loans, as users only have to commit their crypto for 14 days.

International

A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA

These underbanked markets, led by countries in Asia and Africa, have inspired fintech innovation that’s leapfrogging the technology available in the developed world. Ant Financial Services Group’s Alipay and Tencent Holdings’ WeChat Pay in China, Paytm in India, and Safaricom’s M-Pesa in Kenya are some well-known examples.

Source: Bloomberg

Take Facebook Inc.’s plan to launch a digital currency called Libra in 2020. The social network’s gigantic reach—more than 2.4 billion active monthly users—could draw a much wider audience to Libra than has used previous cryptocurrencies. For instance, global remittances by migrants reached a record $689 billion last year, according to the World Bank.

Source: Bloomberg

San Francisco-based 500 Startups staked 43 such companies in the 12 months ended June 30.

Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA

Goldman is losing $1.3 billion on Marcus, trying to build a Fintech leader. Etrade is going to lose $75 million from cutting trading fees to $0 to keep up with Robinhood. Revolut is losing £35 million on £60 million in revenue, with another £140 million burned by Atom, Monzo, Tandem, and the rest.

Source FT Research and Future of Finance

Generally speaking, from a deposit point of view, these are still all small businesses at £1 billion in assets (e.g., Betterment manages $20 billion).

Source: ARK Invest and Future of Finance

The first is that the Robinhoods and Monzos of the world are 10x overpriced relative to the payments apps. I can sort of buy this — though money in motion is way easier to capture than money at rest. The second is that venture investors think a finance user is worth $1,500 in a digital bank.

Source: Future of Finance

Blockchain: the future of finance (Financier Worldwide), Rated: A

Recent examples of blockchain’s impact on financial markets go well beyond these initial applications or P2P lending or crowdfunding.

The first wave of applications in finance and banking is being driven by easily achievable gains in actively traded assets.

MasterCard incorporated a blockchain payment system providing vendors real time, lower cost settlements on cross-border transactions. Representing a consortium of more than 40 of the world’s largest banks, fintech firm R3 launched a payment system built on DLT platform Corda, to expedite intra-bank transfers.

St. Regis Aspen, a Colorado resort, is a partnership formed with a crowdfunding site, Indiegogo, that in lieu of a traditional IPO completed a private placement via DLT financing real estate. This sale of ‘tokens’ – fractional interests in the underlying property – raised $18m, compliant with securities laws.

Australia

Hot home loan rates starting with a 2 (mozo), Rated: AAA

The RBA has cut official interest rates for the third time this year, and already a handful of lenders have responded by slashing rates across their range of variable rate home loans. Right now, if your home loan doesn’t have a ‘2’ in front of it, you’re missing out.

loans.com.au jumps on October RBA home loan rate cut party (mozo), Rated: AAA

The online lender has announced its response to the 0.25% drop in the official cash rate though, with loans.com.au taking 0.15% off a number of variable rate home loan offers for both owner occupiers and investors.

The changes, which come into effect on October 17, will have an impact on a number of  loans.com.au home loan offers including:

• Essentials Variable loan – reduced by 0.15% with rates now as low as 3.04% (3.06% comparison rate*).

• Smart Home Loan – reduced by 0.15% with rates now as low as 2.88% (2.90% comparison rate*).

• ZIP Home Loan – reduced by 0.15% with rates now as low as 3.08% (3.10% comparison rate*).

• Offset Variable loan – reduced by 0.15% with rates now as low as 3.12% (3.14% comparison rate*).

OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B

Online SME lender OnDeck Australia has appointed experienced commercial lending operator Robbie Fidler as its national broker channel manager.

Asia

SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A

The growth and success of peer-to-peer (P2P) lending is a testament of the viability of risk-sharing contracts, where the investors take on some risks (for higher return) from the ventures they are financing. This way, finance will be grounded in the real economy, which is another core principle of Islamic finance.

MENA

Beehive funds first SME in Bahrain (Arabian Business), Rated: AAA

Dubai-based Beehive, the region’s first regulated peer-to-peer lending platform, has funded its first SME in Bahrain.

Canada

BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B

BFS Capital, a leader in small business lending, has officially launched a data science and engineering hub in Toronto as the company accelerates its plans to develop best-in-class digital financial products for small businesses across the globe.

Authors:

George Popescu
Allen Taylor

The post Thursday October 10 2019, Weekly News Digest appeared first on Lending Times.

Thursday March 7 2019, Weekly News Digest

chinese p2p lenders

News Comments Today’s main news: Funding Circle US small biz loan portfolio surpasses $2B. JPMorgan Chase to compete with Affirm, Klarna on POS financing. Funding Circle expands into Canada. Funding Circle financial highlights. Revolut fights new allegations. Dianrong lays off 2,000. Today’s main analysis: U.S. credit card debt hits record $870B IN 2018. International P2P lending volumes for February 2019. Today’s thought-provoking […]

The post Thursday March 7 2019, Weekly News Digest appeared first on Lending Times.

chinese p2p lenders

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Funding Circle US Small Business Loan Portfolio Surpasses Most Banks with $ 2 Billion Lent Through Platform (PR Newswire), Rated: AAA

Funding Circle, the global small business loans platform, today announced that investors have lent more than $2 billion through its platform to small businesses in the United States. With this milestone, Funding Circle now has more US small business loans outstanding than almost 98% of FDIC-insured banks1.

Funding Circle now has more than $1 billion of small business loans in its portfolio, which means that if it were a bank it would be among the 50 largest small business commercial & industrial loan portfolios in the United States, according to the latest FDIC data available1. However, unlike a bank, Funding Circle provides a single financial product. Its fully amortizing business loans, powered by sophisticated technology and proprietary credit models, enable business owners to access financing with speed and efficiency, allowing them to devote more time to delivering their product or service to the market and ultimately create more jobs and vitalize their communities.

JPMorgan Chase Enters A Hot Fintech Space: Point-Of-Sale (POS) Financing (Forbes), Rated: AAA

JPMorgan Chase announced that it is moving into the point-of-sale (POS) financing market.

POS financing certainly isn’t new. In 2016, merchants in nine different retail categories saw more than 160 million POS loan applications—only 53% of which were approved, however.

Source: Forbes

Filene Research Institute 

Source: CORNERSTONE ADVISORS

Shopping at Discount Stores Could Help Get You a Loan (WSJ), Rated: A

Discount-store shoppers may soon get an unexpected benefit: better odds when applying for personal loans from Discover Financial Services.

Discover, best known for its credit cards, plans to use artificial intelligence to assess hundreds of unusual characteristics about personal-loan applicants in an attempt to get its rising losses under control.

U.S. Credit Card Debt Closed 2018 at a Record $ 870 Billion (Bloomberg), Rated: AAA

U.S. credit card debt hit $870 billion — the largest amount ever — as of December 2018, according to the data from the Federal Reserve. Credit card balances rose by $26 billion from the prior quarter.

Source: New York Federal Reserve

Nearly 480 million credit cards are now in circulation — up by more than 100 million since hitting bottom after the recession a decade ago.

At the end of last year, credit cards were the fourth-largest portion of consumer debt in the U.S. after mortgage, student loan and auto debt. But the quarterly increase in credit card debt was faster than the other categories. Overall debt reached a record $13.5 trillion.

Source: New York Federal Reserve

LendingTree Compares Renting and Owning a Home in the 50 Largest Metropolitan Areas in the U.S. (LendingTree), Rated: AAA

Louisville, Milwaukee and Oklahoma City are the metros where median rents are cheapest when compared to median mortgages. In these areas, median rent costs are an average of $310 cheaper than median mortgage costs.

Source: LendingTree

Miami and Orlando, Fla.; and Virginia are the metros where rent payments are the most expensive when compared to mortgage payments. Median mortgage payments are an average of $215 cheaper than median rent payments in these metros.

Four of the top 10 metros where monthly rents are higher than monthly mortgage payments are in Florida. According to a recent housing study from Harvard University, low wages and too few rental units are key factors that have caused Florida’s rental affordability crisis to become the worst in the nation.

Source: LendingTree

‘Stop pitting misery against misery’: How TrueAccord is turning debt collections into a financial service (Tearsheet), Rated: AAA

Ohad Samet has spent his career working on lending analytics — first, at a firm called FraudSciences, which got bought by eBay. He ran analytics at Analyzd, which was acquired by Klarna. As the chief risk officer at the pay later lender, he became aware of how antiquated the debt collections industry was. Call centers, dialing for dollars, it just hadn’t kept pace with the front end of the business.

So, in 2013, he left and with two co-founders started TrueAccord, which is essentially a nearly-automated marketing and sales campaign for debt collection. Based on consumer data and data from the lender, it can determine who to call, what time to call, what communications channel — phone, text, email, chat — and what message to use. It purports to be a much better experience for consumers.

KBRA Assigns Preliminary Ratings to Kabbage Asset Securitization LLC, Series 2019-1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes (the “Notes”) issued by Kabbage Asset Securitization LLC, Series 2019-1 (“Kabbage 2019-1”).

This transaction is Kabbage, Inc.’s (“Kabbage” or the “Company”) third securitization and it is expected that the proceeds of the sale of the Notes will be used to refinance the Company’s existing $610 million outstanding Kabbage Asset Securitization LLC Series 2017-1 Notes and provide extra funding capacity for Kabbage.

Notes Preliminary Rating Initial Principal Balance
Class A AA (sf) $421,221,000
Class B A (sf) $59,715,000
Class C BBB (sf) $69,348,000
Class D BB (sf) $35,316,000
Class E B (sf) $24,400,000

Peer to Peer Lending Platform Beehive Raises $ 4 Million (Crowdfund Insider), Rated: A

Beehive, a peer to peer lending platform servicing SMEs in the MENA region, has closed on $4 million Series B funding round, according to a release from the platform. This most recent funding brings the Fintech’s total raised to $15.5 million since platform launch.

Loan officers cast serious doubt on latest loanDepot, Chase mortgage promises (HousingWire), Rated: A

In recent LendingLife news, loanDepot announced its new digital mortgage, which it says can identify significant time and cost-savings for borrowers in seven minutes.

AI Foundry Unveils Next-Generation Artificial Intelligence Platform and Mortgage Automation Solution (PR Newswire), Rated: A

AI Foundry, an artificial intelligence (AI) platform company, today announced the launch of its next-generation Cognitive Business Automation Platform along with a new Agile Mortgages solution. This patent-pending technology incorporates the latest in AI, machine learning and machine vision to deliver a higher level of problem solving and decision making for enterprises. The new Agile Mortgages solution, which is built on top of the platform, automates manual, labor-intensive mortgage processes, enabling lenders to dramatically accelerate the lending lifecycle.

Could A Selfie Put An End To False Identities? (Forbes), Rated: A

Earlier this year, 

Auto Loan Statistics (LendingTree), Rated: A

Key facts

  • Americans originated a record 2.5 million auto loans in July 2018, the most recent month for which data is available.
  • Americans owed more than $1.14 trillion in auto loans as of September 2018, 23% more than 2013.
  • Outstanding auto loan balances are rising about 3.1% a year in dollar amounts.
  • Auto loans accounted for about 8% of outstanding consumer debt in 2018, including mortgages, about 2 percentage points higher than a decade earlier.
  • Gen Xers carry the highest auto loan balances with a median of $18,741 and are the most likely of other age groups to have a car loan.
  • The average new car loan originated by a finance company is $29,921.27, an increase of more than $5,000 from 10 years earlier.
  • Average monthly payments are rising, too:
    • $530 for new vehicles, up 5% year over year
    • $381 for used vehicles, up 4%
    • $430 for a new vehicle lease, up 4%

For many Americans, car loans are their largest debt burden, a weight which threatens to become overwhelming as they stretch loan terms to buy increasingly expensive vehicles — new and used. To get the full picture of auto loan debt in the U.S., we looked at auto loan originations, prices and term lengths. Here are the numbers.

Online bank Chime now valued at $ 1.5 billion after new funding round (CNBC), Rated: A

Digital bank Chime has tripled its valuation, officially passing the $1 billion-mark this week.

The San Francisco-based company announced a $200 million Series D financing round that brings its new valuation to $1.5 billion. Investors were led by DST Global, which also participated in earlier fundraising rounds, and new investors Coatue, General Atlantic, Iconiq Capital and Dragoneer Investment Group, Chime said Tuesday.

Jason Gross of Petal (Lend Academy), Rated: A

In this podcast you will learn:

  • The personal experience that led to the founding of Petal.
  • Their core product and how it is different to what else is out there.
  • A profile of their typical customer.
  • How they are approaching underwriting.
  • The typical APRs and credit limits they offer on their card.
  • How they are protecting their company against fraud.
  • How Petal is getting the word out about their credit card.
  • The large waiting list they had when they launched last year.
  • The early signals they are seeing with credit performance.
  • How they are generating income.
  • The primary funding sources they use in providing the credit lines.
  • What they mean on their website when they say “a credit card with a conscience”.
  • Their biggest challenge as they grow their company today.
  • The goals the Petal team has for 2019.

FINRA Approves Circle’s Acquisition of SeedInvest, Continues Mission of Tokenization (Crowdfund Insider), Rated: A

FINRA has given their stamp of approval to the acquisition of SeedInvest by Circle. The crypto focused company announced the purchase of SeedInvest in October of 2018.  The acquisition of a regulated securities crowdfunding platform by the blockchain based Circle represented a seminal turning point in the crypto industry.

Virginians say online lender uses tribal immunity to get around state laws (Pilot Online), Rated: A

Virginians are taking a lead attacking what they say is a legal loophole that has left thousands of people stuck with debt they can’t escape.

The case involves loans at interest rates approaching 650 percent from an online lender, Big Picture Loans, associated with a small Indian tribe on Michigan’s Upper Peninsula.

Lula Williams of Richmond, the lead plaintiff in one case, still owes $1,100 on the $1,600 she borrowed from Big Picture Loans — debt that she’s already paid $1,930 to retire. One of her loan documents reports the annual percentage rate for her debt at 649.8 percent, calling for her to pay $6,200 on an $800 debt. Her first three installments on that loan, each for $400, would have yielded Big Picture a 50 percent profit on the loan after just three months, court records suggest.

How to Invest in Real Estate without Buying Property (Realty Biz News), Rated: B

Lastly if you love jumping on the latest trends, then jumping on one of these companies services that how recently cropped up will help you get involved in real estate investing. You are able to invest in commercial and residential real estate investments and receive cash flow distributions in return, and just like the other options on this list, someone else is doing the heavy lifting whilst you reap the rewards.

Whilst there is no one standout company that we can confidently recommend, since they all havent been around long enough for us to make a property judgement, Fundrise returned an average of 11.4% on the invested dollars in 2017 and a further 9.11% in 2019.

The best part is you don’t even need to be an accredited investor to open an account, meaning if you’re new to the market, then this is your chance to get in on something thats shiny and new and that could potentially give you a place to invest your cash and reap the rewards of owning physical property.

Elevate Appoints Kathleen Vanderkolk as Head of Enterprise Risk Management (BusinessWire), Rated: B

Elevate Credit, Inc. (NYSE: ELVT) (“Elevate” or the “Company”), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced that it has promoted Kathleen Vanderkolk to Chief Risk Officer.

Vemanti Group Engages With Securitize And DSLG To Launch Digital Security Offering For eLoan, JSC (GlobeNewswire), Rated: B

Vemanti Group, Inc. (OTC PINK:VMNT), a technology-driven holding company, today announced that it has engaged with Securitize, Inc. (“Securitize”) and Digital Securities Law Group (“DSLG”) to launch a Digital Security Offering (“DSO”) to fund and propel the business objectives for eLoan, JSC (“eLoan”), its portfolio company. The Company recently announced that it has completed its investment in eLoan, a fintech company based in Vietnam.

The offering will be conducted by the Company on behalf of Fvndit, Inc. (“Fvndit” – formerly Directus Holdings, Inc.), eLoan’s US-based parent company, as the issuer. The issuance will be managed by Securitize’s platform and DS Protocol. Details of the offering will be announced at a later date.

United Kingdom

Funding Circle Announces Expansion to Canada (PR Newswire), Rated: AAA

Funding Circle, the leading small business loans platform in the UK, US, Germany and the Netherlands, today announced its plans to enter the Canadian market and expand access to fast, affordable and transparent financing for Canadian small businesses.

Funding Circle will establish operations in Canada in the second half of 2019 with an office located in Toronto. The business will be led by Tom Eilon, who previously led the commercial strategy for Funding Circle in the United Kingdom.

Funding Circle Holdings plc (Funding Circle), Rated: AAA

Financial Highlights:

  • Strong Group performance delivering IPO guidance whilst continuing our strategy of investing for growth
  • Revenue of £141.9 million (2017: £94.5 million). Year-on-year growth of 55%1 (excluding property2) exceeding c.50% guidance stated at IPO
  • Segment adjusted EBITDA3 of £7.0 million (2017 loss: £3.9 million) with margin of 5% (2017: negative 4%)
  • Adjusted EBITDA4 loss of £28.5 million (2017 loss: £25.1 million) with margin improving to negative 20% (2017: negative 27%)
  • Basic loss per share of 18.2 pence (2017 loss: 14.0 pence)
  • Loss before tax £50.7 million (2017 loss: £36.3 million)
  • Free cash outflow5 of £42.0 million (2017 outflow: £35.3 million)
  • Cash of £333.0 million, £244.1 million higher than at the end of 2017 (£88.9 million), including IPO proceeds of £300.0 million, before expenses of £15.0 million

UK Peer to Peer Lending: Loans top £800 Million in Q4 as Industry Matures (Crowdfund Insider), Rated: AAA

The UK Peer-to-Peer Finance Association(P2PFA) has published fourth quarter numbers for member platforms. According to their data, cumulative lending now tops £9.5 billion with over £800 million originated during the period.

The P2PFA states that platforms facilitated loans worth nearly £3 billion during 2018.

In Q4, P2PFA platforms originnated £527 million to businesses and £282 million to almost a quarter-of-a-million consumers. Cumulative lending among P2PFA platforms has now exceeded £5.5 billion for business lending and £4 billion for consumer lending.

Revolut is fighting back after yet more allegations were made against the $ 1.7 billion fintech unicorn after a week from hell (Business Insider), Rated: AAA

The Financial Times on Tuesday alleged that the UK National Fraud Intelligence Bureau (NFIB) is examining a complaint from a customer, adding to Revolut’s issues after a difficult week for the fintech.

However, the allegations were denied by Revolut and the Financial Times article was subsequently taken down.

The FT, citing emails, reported on an incident in which £70,000 was incorrectly paid into a Revolut customer’s account.

Is the Innovative Finance Isa worth it? We look at the pros and cons (City A.M.), Rated: A

At barely three years old, the Innovative Finance Isa still has some proving to do. And for some savers, it’s a product that is deemed too risky. But how risky is it really?

Of course, the IFISA is merely a tax-free wrapper, so the risk actually depends on the underlying investments held within.

And while investments can vary wildly, most IFISAs are invested in the peer-to-peer (P2P) lending market, where lenders are grouped together to invest capital through an online platform which distributes funds to borrowers.

How savers can use an Innovative Finance Isa to reap the rewards from the property market (City A.M.), Rated: A

Investors can open one IFISA per tax year, and have an annual subscription allowance of £20,000, with substantial tax-free returns.

There are also several different opportunities available when it comes to property IFISAs, including buy-to-let and development.

Wealth management firm urges greater awareness in investments (Wealth Adviser), Rated: B

Last year, the National Trust was criticised for investing in a fund with holdings in fossil fuel companies, while the Church of England was shown to have ploughed funds into Wonga, despite having publicly criticised the payday lender.

Provident fights back in bitter £1.3bn bid battle as it accuses former boss of destroying shareholder value and failing to grasp modern technology (This is Money), Rated: B

A war of words has erupted between the doorstep lender Provident Financial and its former boss John van Kuffeler as he mounts a £1.3billion hostile takeover bid.

The Provvy has accused van Kuffeler of destroying shareholder value and failing to grasp modern technology.

China

Dianrong has laid off as many as 2,000 employees amid a regulatory crackdown (Business Insider), Rated: AAA

China-based peer-to-peer (P2P) lender Dianrong has laid off as many as 2,000 employees and will shut down 60 of its 90 brick-and-mortar outlets, which helped verify the identities and qualifications of users, according to Bloomberg, citing people familiar with the matter.

Additionally, the company has been accused of falling behind on wages and severance pay, per a Chinese media outlet cited by TechNode . The company reportedly started shrinking its business around 10 months ago, despite securinga $70 million funding round in January to expand its services, including SMB lending.

Source: Business Insider
European Union

How PSD2 Will Change Lending (PYMNTS), Rated: AAA

Merchants and customers are now transacting under PSD2 and GDPR in the European Union (EU) — regulations that allow a greater window into how customer data is being used. While these regulations are aimed at increasing consumer trust by allowing them more transparency, many consumers in the region are still adjusting.

French regulatory body, the Commission nationale de l’informatique et des libertés (CNIL), has fined Googlethe equivalent of $56 million for noncompliance with GDPR within the region, alleging that the information services company was using EU customer data for advertising purposes without obtaining clear consent from those customers.

For third-party providers, such as P2P lending and investment provider Zopa, PSD2’s data transparency rules provide an opportunity to “level the playing field” when it comes to gaining that consumer trust.

International

10 Fintechs Have Already Raised Monster Rounds in 2019 (Lend Academy), Rated: AAA

We came into 2019 after a strong year of fintech investments with about $40 billion invested globally according to CB Insights.

Acorns

  • $105 million round led by NBCUniversal and venture arm of its parent company Comcast. NBCUniversal is now their largest shareholder.

Better

  • $70 million Series C from American Express Ventures and the Healthcare of Ontario Pension Plan (HOOPP). The company originated $1.3B in mortgages in 2018.

Figure

  • The $65 million Series B round was led by RPM Ventures as CEO Mike Cagney continues to show his fundraising prowess. Their valuation is said to be $365 million today about double the valuation from last year. Read our coverage here.

International P2P Lending Volumes February 2019 (P2P-Banking), Rated: AAA

The total volume for the reported marketplaces in the table adds up to 531 million Euro.

This month I added Bondster (use Bondster Promotion Code 5506 to get 1% cashback).

Source: P2P-Banking

Omidyar Network spins out its fintech investment arm as Flourish, with up to $ 300 million (TechCrunch), Rated: A

After twelve years spent investing in impact-oriented financial services startups around the globe, the Omidyar Network,  which serves as the family investment office for eBay founder Pierre Omidyar, is spinning off its financial inclusion investment arm as Flourish Ventures.

Equipped with up to $300 million in capital for operations and investments, the new Flourish will continue to invest around the Network’s core mission of backing companies with a dual focus on making a social impact and achieving quality financial returns.

List of Multi-Crypto Wallets To Consider For Your Portfolio (Cryptomorrow), Rated: A

Everus

Everus is a multi crypto wallet that allows for payment of bills and for mobile top-ups in multiple crypto and management of multiple crypto. The wallet, which is part of an ecosystem featuring bill payment, marketplace, peer-to-peer lending and micro-finance; allows customers to send, receive, store and withdraw multiple cryptocurrencies (more than 50 currently).

Peer-to-peer lending will allow people to offer and accept microloans affordably, which will be more targeted to the un-banked.

Infinito Wallet

Other features to be added soon include crypto lending where users can lend crypto and earn profits, exchange integration to allow users to exchange crypto from the wallet, fiat gateway to let users purchase crypto with fiat, digital identity and KYC where users can register their digital identity and use it everywhere else without needing to create another one, news portal to furnish users with happenings in the crypto space, and App Square for browsing dApps.

Quppy Wallet

It links to other parts of the company’s product ecosystem including decentralized exchange to allow users to buy and sell crypto, a licensed crypto bank, Prepaid co-brand bank cards, a decentralized peer-to-peer lending for borrowers as well as merchants, individuals, corporate, financial and non-financial institutions as well as crypto-fiat payments for merchants and 100% legal fiat-crypto-fiat transactions regardless of region and legislation.

India

P2P lenders develop new ways to build trust (India Times), Rated: AAA

Monexo ensures less risk for lenders by keeping a lender’s contribution to a loan to only Rs 1,000. So if a Monexo customer lends Rs 1 lakh on the platform, it gets split across 100 loans.

Faircent also has a similar strategy. It does not allow lenders to lend more than 20% of a single borrower’s requirement. So for an average loan of Rs 1 lakh, there will be on average 43 lenders funding that. They also advice lenders not to lend beyond Rs 5,000-7,000 for one loan.

Scaling small businesses with alternative finance (India Times), Rated: A

Lack of access to finance is the most widely cited constraint by SMEs for growth and scaling up business. Generally commercial banks perceive SMEs fall in the category of high default risk due to limited collaterals, smaller in asset size and limited historical track record.

Asia

Tightened supervision needed for P2P lending services: Deputy PM (Nhan Dan), Rated: AAA

Deputy Prime Minister Vuong Dinh Hue has asked competent ministries and sector to enhance inspections, supervision and settlement of violations related to peer-to-peer (P2P) lending model which has been springing up in Vietnam in recent two years.

E-Money, P2P Lending The Hotspots (Fitch Solutions), Rated: A

  • The e-money and payments segment continues to show strong growth, and consolidation within the sector is positive to improve services and ease competitive pressures.
  • P2P lending is emerging as a bright spot, and regulation remains lax enough for lenders to thrive.
  • Cryptocurrencies show little potential for growth as the regulator remains apprehensive towards crypto-based assets.

FINTERRA Calls for All Thought Leaders and Regulators to Envision A Global Waqf Bank (Salaam Gateway), Rated: B

Malaysia has the potential to become the first nation in the world to set up a global “Waqf” bank using blockchain technology, expounded Hamid Rashid, the Founder of FINTERRA.

The platform is a blockchain-based solution to crowdfund Waqf charity, Islamic investments, and peer-to-peer lending.

Canada

Klarna And PayBright Partner To Give More Shoppers The Ability To Pay Over Time (PR Newswire), Rated: A

Today, Klarna, a global payment provider, announces a partnership with Canadian instant financing provider, PayBright. Klarna and PayBright are joining forces to give Klarna’s 100,000 global retailers the ability to turn on a consumer finance solution for their Canadian shoppers quickly and easily.

Authors:

George Popescu
Allen Taylor

The post Thursday March 7 2019, Weekly News Digest appeared first on Lending Times.

Tuesday May 29 2018, Daily News Digest

alternative loans

News Comments Today’s main news: How SoFi, Robinhood trick investors into saving money. The highest paying green IFISAs. Ant Financial’s $10B fundraising is oversubscribed. HashChing gets $700K loan. Today’s main analysis: Alternative loan borrowers may be traditional prospects. Today’s thought-provoking articles: The challenges online lenders would face in a recession. Crowdfunding in Switzerland is at a record high. Only 4% […]

alternative loans

News Comments

United States

United Kingdom

China

European Union

International

India

Other

News Summary

United States

Designers at SoFi, Robinhood explain how they trick users into saving (and making) money (Business Insider) Rated: AAA

  • Personal finance apps have gained traction with customers — especially millennials — thanks to the ease with which they let users sock money away, save towards big goals, and make big purchases more possible.
  • From the loan refinancing company SoFi to the stock trading platform Robinhood, many of these companies are now worth billions of dollars thanks to enthusiastic investors.
  • At the heart of their success: A good product which combines smart design with financial psychology to convince users to meet the goals they set for themselves.
  • Here’s how the best companies in fintech design their apps to convince users to save and make money.

Alternative loan borrowers may be traditional prospects (Banking Exchange) Rated: AAA

The latest example of this comes from a new study by TransUnion that indicates that some borrowers who use “alternative loans” may actually be good candidates for traditional consumer credit products.

Alternative loans typically don’t appear in traditional credit bureau files. These services include short-term debt, such as “payday loans”; point-of-sale finance offered by retailers or third-party lenders; virtual “rent-to-own” finance; and auto-title loans.

Release coincides with OCC announcement

Elizabeth Pagel, vice-president, market strategy, consumer lending at TransUnion, notes that while many consumers in the FactorTrust database of alternative loan users skew subprime, nearly 40% are not subprime credits, and 12% are actually prime or above.

One example given by TransUnion demonstrating the general pattern concerns near-prime borrowers (those with VantageScore 3.0 credit scores of 601-660):

• About 14% of those borrowers with only one short-term loan went 90 days or more past due on a traditional account 12 months later.

• The delinquency level fell to less than 12% when a consumer possessed two alternative loans.

• The delinquency level fell to about 9% when a consumer had eight or more alternative loans over the course of seven years.

Source: Banking Exchange
Source: Banking Exchange

The Unique Challenges Online Lenders Would Face In A Recession (Forbes) Rated: AAA

Technology has reshaped the lending industry over the last decade. Companies like Lending Club, Prosper and SoFi built billion dollar business (even if valuations have come down from their respective peaks) by better connecting lenders to borrowers and streamlining what was previously a slow and bloated consumer lending process. Dozens more companies have launched in their wake and are contributing to this wave of change. In fact, TransUnion data shows that fintech lenders now account for over a third of personal loan origination by volume. That Goldman Sachs launched their own online lending business, Marcus, shows that much of this change is here to stay.

But these businesses have all come of age during an unprecedented period of economic expansion and low default rates. Low defaults have helped performance, while low yields in other asset classes have driven up investor demand for higher yielding personal loans.

If the market needed a warning sign, look no further than auto loans. Delinquencies in the subprime auto market have 

PeerStreet Review 2018 – Real Estate Crowdfunding Platform (Dough Roller) Rated: A

Some real estate investors come to the platform looking for financing, while others come looking for above average returns on their money.

The difference is that while other P2P platforms provide personal loans to individuals, PeerStreet supplies financing for real estate transactions. The purpose of the platform is to make these sophisticated investments in commercial real estate available to ordinary investors.

The loans are generally short-term, between six months and 24 months. They also have conservative loan-to-value (LTV) ratios, of not more than 75% of the value of the underlying property.

Types of loan investments include:

  • Single-family residential buy-to-rent properties
  • Single-family refinances
  • Single-family Value Add (This is a property that is purchased then renovated for sale, sometimes referred to as a fix-and-flip loan.)
  • Bridge loans

Kabbage Sees More Mobile Lending, Women and Minority Owned Businesses Seeking Funds (Small Business Trends) Rated: A

Online lending platform Kabbage says it sees more mobile lending, more women and minority owned businesses seeking loans and more businesses from rural and lower to middle income communities too.

Today 140,000 small businesses use Kabbage. Today, Kabbage has delivered over $4.5 billion in funding, moving the loan process from long lines at a physical bank to a  shorter wait on mobile or the web.

Expect More Bank Mergers After Dodd-Frank Rollback (Barrons) Rated: A

But the legislation known as the Crapo bill (named after Idaho Sen. Mike Crapo), which President Donald Trump signed into law on Thursday, could provide another boost to bank investors by unleashing mergers, dividend increases, and buybacks among regional and local banks.

By raising the threshold for stricter supervision under Dodd-Frank from $50 million in assets to $250 million, the new law effectively removes a disincentive for mergers and acquisitions.

Banks had been wary of doing deals that would put them over the $50 billion level, which required more capital and more stringent supervision. CIT Group’s (CIT) deal for OneWest was a rare case where an acquisition broke that barrier since Dodd-Frank was enacted in 2010.

Vermont Passes First-of-Its-Kind Law to Regulate Data Brokers (Gizmodo) Rated: A

Earlier this week, Vermont became the first state in the nation to enact a law that will regulate data brokers that buy and sell personal information in an attempt to add a new layer of accountability to the massive, data-trading companies that often operate without much oversight.

As TechCrunch noted, under the guidelines of the bill—which passed into law Tuesday without the signature of Republican Governor Phil Scott—data brokers will have to pay a $100 annual fee to register with the state, and will have to comply with new rules meant to protect Vermonters from suffering at the hands of another data breach like the one that befell Equifax last year and exposed the data of 145 million (and counting) Americans.

United Kingdom

The highest paying green IFISAs of 2018/19 (Peer2Peer Finance) Rated: AAA

Earlier this year, Assetz Capital closed its Green Energy Account due to a lack of deal flow, while Trillion Fund closed in 2015 after the government scaled back its green energy subsidies.

So in alphabetical order, here are the highest-paying P2P green IFISAs available right now…

Abundance

  • Target returns for IFISA: 3-15 per cent

Downing Crowd

  • Target returns for IFISA: 3-7.6 per cent

Goji and Prestige-Prime Group

  • Target returns for ISA: 6.5-8.3 per cent

Triodos Crowdfunding

  • Target returns for IFISA: 5-7 per cent

Ethical bank Triodos launched its own P2P platform earlier this year, named Triodos Crowdfunding. Within the first few months of the year it had already funded seven projects, four of which were IFISA eligible.

Could savers be given access to multiple IFISAs each tax year? (Peer2Peer Finace) Rated: A

The Office of Tax Simplification (OTS) – an independent adviser to the government on simplifying the tax system – has said ISA rules should be made more simple for investors to administer.

It suggests changing the rule where only one type of ISA can be opened at a time and instead letting savers hold multiple products, such as more than one Innovative Finance ISA from different peer-to-peer lenders or a variety of cash ISAs, as long as they remain within the annual allowance.

Rage against robo-advice machines (FT Adviser) Rated: A

Despite the FCA offering this assistance now the regulator has found several causes for concern in the robo-advice that is being given to clients.

The watchdog revealed some robo-advice firms were failing to properly disclose prices and services, and crucially, the regulator flagged risks clients were not receiving suitable advice.

As a result, the FCA has required many of the robo-advisers which took part in the study to make “significant changes” to their businesses.

Christian Faes of LendInvest (Lend Academy) Rated: A

In this podcast you will learn:

  • How the financial crisis formed the backdrop for the founding of LendInvest.
  • How their first foray into raising capital online transformed their business.
  • The kinds of loans that LendInvest offers today.
  • The typical borrower who uses LendInvest today.
  • How they have applied technology to the borrowing process.
  • How they attract these kinds of borrowers.
  • The four different channels for investors.
  • Details of their London Stock Exchange listed bond.
  • What is being done in the UK to address the housing shortage there.
  • How Brexit has affected their business over the past two years.
  • Who has provided equity capital for LendInvest.
  • Christian’s thoughts on international expansion for LendInvest.
  • How he feels about a potential LendInvest IPO.

Crowdfunding faces withholding tax clampdown (The Times) Rated: A

Revenue has tightened the rules on peer-to-peer lending by requiring businesses that raise money through crowdfunding to deduct a 20% withholding tax on the interest they pay.

The move will make it harder for individuals to avoid tax when they use crowdfunding to lend spare cash to small businesses rather than earning paltry returns by leaving it on deposit.

Can this lending buy-to-let startup help agents sell more homes? (The Negotiator) Rated: A

A buy-to-let finance start-up founded by the entrepreneur behind crowd-funding mortgage firm Landbay says it wants to help agents sell properties faster and in greater volumes.

Officially launched this week after being set-up in November last year, Dot offers agents and developers a one-click buy-to-let purchase button for their ‘properties for sale’ listings (see mock-up above) which, the company’s claims suggest, could offer an antidote to the current sluggish sales market.

After clicking the button, investors will be offered the opportunity to buy the property on the spot if they put down a 30% cash deposit via Dot.

FCA urged to extend cap on payday loan fees to other forms of credit (The Guardian) Rated: B

The City watchdog is facing mounting pressure to extend its cap on payday lending fees and interest to a broader range of high-cost financial products before a major review of lending practices this week.

Likely to result in a series of new rules for banks and finance companies, the review comes as hard-pressed Britons increase their personal borrowing to levels unseen since the financial crisis.

China

China: WeiyangX Fintech Review (Crowdfund Insider) Rated: AAA

Ant Financial’s $10-billion fund-raising faced oversubscription

The ongoing $10-billion fund-raising of Ant Financial Services has attracted the attention of multiple investors.

According to informed sources, investors expected to participate in this round of financing include private equity group Carlyle, General Atlantic, Silver Lake, Sequoia Capital China, Warburg Pincus, sovereign wealth fund Temasek, institutional funds Canada Pension Plan Investment Committee (CPPIB) and BlackRock; while many other investors were rejected.

According to a person involved in the funding, this round of financing will value Ant Financial at more than US$150 billion. 

Traditional banks can be the ‘trusted face’ of fintech and online finance firms (South China Morning Post) Rated: A

While banks see fintech as their biggest threat, they can use their trusted position among customers and regulators to collaborate in the shift to digital banking, software firm Temenos says

In a recent survey of 400 banking executives, Temenos said more than 53 per cent of respondents cited e-financial services like PayPal, Alipay, WeChat Pay and Apple Pay as their biggest non-traditional competition in the next two years.

European Union

Crowdfunding in Switzerland at Record High: CHF 375 Million (PR Newswire) Rated: AAA

The Swiss crowdfunding market has reached a record high volume of CHF 374.5 million in 2017, almost three times more than in the previous year. This has been revealed by the latest Crowdfunding Monitoring report issued by the Lucerne University of Applied Sciences and Arts. The financing of SMEs and investments in real estate are key drivers of the strong growth. The authors of the report are expecting a further marked increase to about CHF 1 billion this year. Compared to the more advanced markets in the United Kingdom and the United StatesSwitzerland is two to three years behind, but catching up rapidly.

Hungary ready to join the global blockchain market (Budapest Business Journal) Rated: B

Europe is starting to take blockchain-based solutions seriously, and Hungarian players seem ready to be part of the game. The largest international blockchain summit in the CEE region, Blockchaineum 2.0, gathered major stakeholders in Budapest to discuss the hottest issues on the global agenda.

Peer-to-peer lending is considered another blockchain target area. Ray Youssef, CEO of Paxful gave the example of Nigeria, the biggest economy in Africa, where high inflation and foreign currency restrictions push many people towards finding shelter in cryptocurrencies.

International

Mobile ventures to take on payments (Daily Sabah) Rated: A

Square, one of the most popular payment solutions Visa invested on, allows street vendors the opportunity to accept credit cards. It brings the convenience of payment for consumers, who can shop safely anywhere in the world.

Klarna is another venture that has received Visa investments. It is one of Europe’s leading payment providers, aiming to make the payment process simple, smooth and secure for customers and trading partners. Klarna offers payment solutions for over 60 million users in Europe and North America.

Cryptocurrency Cap Waiting to be Unlocked by Lenders (The Merkle) Rated: A

Today, cryptocurrency has an estimated market cap of $300 to $800 billion USD. Asset-backed tokens have been expected to reach $5 trillion USD by 2025.

Now, Depository Network (DEPO) has made it even easier for digital asset owners to cash in on their holdings while offering peace of mind to lenders.

DEPO is developing the world’s first decentralized, multi-platform collateral network. The depository will be a secure place for borrowers to deposit their coins or tokens as a collateral for loans while offering lenders full control over the details of the loan agreement.

Australia

Mortgage marketplace receives $ 700k loan (Australian Broker) Rated: AAA

An online home loan marketplace has received a $700,000 loan from Jobs for NSW, which is set to help the business create 46 jobs over the next five years.

HashChing reports it now has over $900million settled through their platform from more than 1,950 loans. It also says it has 586 mortgage brokers on the platform and is growing at 700% year-on-year.

India

Only 4% Indians get easy personal loans from banks and NBFCs (Sify Finance) Rated: AAA

27 public sector banks, 93 commercial banks, over 10,000 non banking financial and Gold companies and several micro-finance institutions, but ask any entrepreneur the ease of getting a loan. A mixed response is most likely, with majority opting for diplomatic correctness over factual accuracy.

Getting a loan is certainly a monumental feat in this era of digitisation. And this is the exact demand that peer-to-peer companies such as LenDen, i2i Funding, Faircent, Lendbox are keen to fulfill.

i2i Funding is India’s second largest p2p lending platform, with a size of 50,000 customers. The company aspires to cross Rs 2 crores in monthly disbursal by October 2018.

How do Investors Invest in Startups – From a Venture Capitalist’s Point of View (Entrepreneur India) Rated: A

In this regard, to decode what goes on in the minds of leading venture capitalists, Entrepreneur India interacted with Bhaskar Majumdar who is Managing Partner at Mumbai-based Unicorn India Ventures. At this point in time, Unicorn India has dedicated equity funds worth INR 100 crores under deployment, while another INR 600 crores worth debt fund has been launched.

He also states that with aspects such as credit scoring, data collection, and even lending to MSMEs having now received the digital touch, Fintech is exciting considering the fact that startups in the sector could effectively collaborate with banks to bring more people into the formal banking system.

Xiaomi Launches Mi Credit, A Lending Marketplace Exclusively for MIUI Users (BW Disrupt) Rated: B

Chinese smartphone manufacturer Xiaomi has introduced Mi Credit which aims to deliver instant loans exclusively to MIUI users.

Mi Credit provides a hassle-free approach to avail loans instantly.

MIUI users can apply for a loan anytime and from anywhere. The company is offering loans starting from Rs 1,000 up to Rs 1 Lakh.

According to a report published by ET, the loan will be extended at 3% interest per month and focuses on salaried professionals.

Africa

Kenya moves to regulate fintech-fuelled lending craze (Reuters) Rated: AAA

Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones without a bank account.

Now, a proliferation of lenders are using the same technology to extend credit to the banked and unbanked alike, saddling borrowers with high interest rates and leaving regulators scrambling to keep up.

This week, the finance ministry published a draft bill on financial regulation which covers digital lenders for the first time. A key aim is to ensure that providers treat retail customers fairly, it said.

Eurasia

Russia Has Significant Opportunity to Advance Financial Tech Services – Analyst (Sputnik International) Rated: AAA

Bob Contri: I think that in financial services, which is where I work, digital is very important. I would say for our clients globally it’s probably the most important topic right now. I think it’s very important from a client perspective so how do they provide financial services to their clients in a very efficient way. And I think it’s also very important how they manage their business so how can they use their technologies to create more efficiency in the middle and back office. So it’s probably the biggest topic right now in our practice globally with working with our clients.

Sputnik: Do you think there’s big potential for new approaches in banking such as peer-to-peer lending, crowdfunding?

Bob Contri: Sure, I think that the face of financial services is changing pretty dramatically. I think that obviously automated money transfers and cross-border payments will change dramatically. I think peer-to-peer lending has a big opportunity to grow significantly. So I think the whole face of financial services is changing pretty dramatically. That’s not to say that the market leaders of today won’t be the market leaders of the future.

MENA

RentSher — a firm with a hire purpose (Gulf News) Rated: AAA

Founders Vaibhav and Purvashi Doshi and Harsh Dhand originally conceived of RentSher as a peer-to-peer lending platform, the Airbnb of stuff.

But after they launched the firm in Bengaluru in 2015 (Dubai followed in 2016), they noticed a problem.

“We figured out that peer-to-peer alone is not scalable enough,” said Vaibhav, the firm’s CEO, in an interview at his and Purvashi’s Dubai villa.
That forced a rethink, and a move towards a business-to-business (B2B) and business-to-consumer (B2C) model, a centralised one-stop rental platform for companies already offering rental services to connect with a pool of customers through an easy-to-use interface.

Reaping the fruits of hard work (Khaleej Times) Rated: B

It was while discussing a common problem that Marie-Christine Luijckx and three friends came up with a successful business model. Luijckx and her friends were doing long working hours in their corporate jobs with very few healthy food choices resulting in loss of productivity at the workplace. They thus decided to establish Fruitful Day, a business that delivers curated selections of fresh fruit to workplaces and homes across the UAE in 2015.

Luijckx says all partners believe passionately in the business and they funded it with their personal savings. “Our only external funding to date has been through Beehive, which is a debt crowdfunding platform,” she says.

Authors:

George Popescu
Allen Taylor

Tuesday April 10 2018, Daily News Digest

Tuesday April 10 2018, Daily News Digest

News Comments Today’s main news: Prime Meridian announces new opportunities fund. TransUnion launches startup credit kit. SoFi hires Goldman head of mortgage securitization as CFO. Upgrade intros new personal credit line. The Axiom Group ready to invest $50M into charge-off portfolios. S. Korean P2P loans increase 10.3% in March. Today’s main analysis: The highs and lows of Bank Negara’s 2017 […]

Tuesday April 10 2018, Daily News Digest

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Prime Meridian Capital Management Announces New Fund Launch: The Prime Meridian Special Opportunities Fund (Benzinga), Rated: AAA

Prime Meridian Capital Management (PMCM) a Registered Investment Advisor (RIA) specializing in marketplace lending strategies across three alternative credit verticals in four funds, today introduced the Special Opportunities Fund.

The new fund, due to launch in the second quarter 2018, will invest in multiple high yielding alternative credit verticals including litigation finance, life settlements, targeted high yielding, niche real estate, small business, and consumer loans.

TransUnion Boosts Entrepreneurial Innovation with New Startup Credit Kit (Investors Hub), Rated: AAA

To meet the needs of startups and their investors, TransUnion (NYSE:TRU) today launched the Startup Credit Kit at LendIt Fintech USA 2018, giving new companies faster access to cutting-edge alternative and trended credit and fraud prevention data.

With TransUnion’s Startup Credit Kit, new businesses can more quickly gain access to depersonalized consumer credit data to better explore the market for untapped opportunities. It also helps new businesses determine the viability of their products by analyzing real-world depersonalized consumer credit data. This allows startups to focus their resources on high-potential market segments and product opportunities while allowing them to prove their concept to raise funding in the early stages of the startup lifecycle.

SoFi hires former Goldman Sachs head of mortgage securitization as new CFO (Housing Wire), Rated: AAA

Now, it looks like SoFi may be making a bigger move into securitizations by hiring the former head of mortgage securitization at Goldman Sachs as its new chief financial officer.

SoFi announced Monday that it named Michelle Gill as the company’s new CFO.

Gill comes to SoFi from TPG Sixth Street Partners, a credit firm. Gill joined TPG last yearafter a lengthy term at Goldman Sachs.

Gill spent 14 years at Goldman Sachs, eventually serving as a partner and co-heading the firm’s structured finance business.

Lending Club Ex-CEO Is Staging A Comeback With New Fintech Startup (Forbes), Rated: AAA

Online lending startup Upgrade, led by cofounder and CEO Renaud Laplanche, announced that it’s now initiating $100 million in personal loans a month, with an average loan size of about $10,000. The one-year-old company has reached $60 million in annualized revenue, Laplanche says, and by the end of 2018, he expects to hit a $100 million revenue run-rate and become profitable.

Upgrade also announced a new product called Personal Credit Line, a hybrid of a personal loan and credit card. Consumers can get approved for up to $50,000 in credit, and they can draw down on the line as needed, paying interest only on what they’ve borrowed. The credit line has a fixed length of 12 to 60 months and a fixed interest rate, and it forces consumers to pay part of the loan principal every month.

Online lender touts new personal credit line as HELOC alternative (American Banker), Rated: A

The first online lending firm Renaud Laplanche founded, LendingClub, targeted consumers with hefty credit card balances, offering them the opportunity to refinance at a lower interest rate.

In his latest venture, Laplanche hopes to lure customers before they rack up big credit card bills. Upgrade, the San Francisco-based online lender that he founded in August 2016, is rolling out a new product that is designed for folks who are anticipating big expenses but are not sure exactly how much they will need to spend or when.

THE AXIOM GROUP ANNOUNCES $ 50M IN FUNDING AVAILABLE TO PURCHASE CHARGE OFF PORTFOLIOS (Lendit), Rated: AAA

The Axiom Group announced today at LendIt Fintech USA that it has obtained $50M in capital to finance the purchase of charge off portfolios with a focus on consumer loans and credit cards, specifically in the FinTech lending space.

This increase in capital will allow The Axiom Group to pursue large portfolios and monetize those portfolios immediately for the lender/seller partners. By selling bad debt portfolios, FinTech companies can utilize the income for further lending, as well as reduce their risk associated with the challenges of collecting on charged off accounts.

Fintech lenders will struggle to regain mojo alone (Nasdaq), Rated: A

Some 13 months later LendingClub, which Sanborn has run since a mis-selling scandal cost predecessor Renaud Laplanche his job in 2016, remains just a lender. Its stock has lost around a third of its value in the past year.

On Deck’s shares are effectively flat over the same period. But boss Noah Breslow had to slash costs last year after credit losses. He now plans to boost revenue by expanding into portfolio management and loss mitigation, and finding more bank partnerships.

Privately held Social Finance has done the most to diversify, adding consumer and mortgage loans as well wealth management to student-loan refinancing.

SoFi is now the biggest player. It extended $12 billion of new loans last year, 50 percent more than erstwhile leader LendingClub, and its adjusted EBITDA is two-thirds higher at $126 million, according to the Wall Street Journal. Yet each pales in comparison to JPMorgan’s retail unit, which lends around 10 times as much and enjoys lower funding costs thanks to customer deposits.

Consumer Lending Platform Best Egg Exceeds $ 5 billion & Celebrates Fourth Birthday (Crowdfund Insider), Rated: A

Marlette Funding, LLC, the owner of consumer lending platform Best Egg, announced on Monday the year-end results and key accomplishments for first quarter 2017. According to Marlette Funding, during the past year, Best Egg experienced origination growth of 66%, significantly reduced its customer acquisition costs, and ended 2017 with three straight quarters of net income positive on a GAAP basis. Best Egg has reportedly exceeded $5 billion of prime loans and celebrated its fourth birthday. 

Launched in 2014, Marlette Funding, through its consumer brand Best Egg, describes itself as a financial technology provider on a mission to find better ways to make money accessible to allow people to “enjoy life.”

Elevate to Release First Quarter 2018 Earnings on Monday, April 30, 2018 (Business Wire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced that it will release its first quarter 2018 financial results after the market closes on Monday, April 30, 2018. Ken Rees, Chief Executive Officer, and Chris Lutes, Chief Financial Officer, will also host a conference call on the day of the release (April 30, 2018) at 5:00 pm ET to discuss Elevate’s financial results.

 

How Blockchain is Changing the Mortgage Game (Investopedia), Rated: A

While blockchain doesn’t offer a perfect remedy to the problems afflicting the industry, it does provide a model that minimizes some of them. The first major improvement the technology brings is transparency. Blockchain’s distributed ledger technology (DLT) provides two major upgrades to the current model—it decentralizes the storage of information, and it makes all transactions immediately available across all nodes of the chain. The first upgrade means that companies and lenders can no longer manipulate information or engage in shadowy practices with data, as it is shared across an entire network and not under their exclusive supervision.

Nav Launches First-of-Its-Kind Cash Flow Analysis Tool for Small Business Owners (Lendit), Rated: A

Nav, a free platform that helps small business owners build, protect and leverage their financial data, announced the launch of Business Banking Health Check, a feature to help small business owners make more informed decisions on their cash flow. Nav is the only place entrepreneurs can access their personal and business credit scores, along with cash flow insights to provide greater transparency into how lenders view their
creditworthiness and enable greater access to capital.

According to Pepperdine’s Capital Markets Report, insufficient credit profiles and cash flow are two of the primary reasons banks reject business loan applications. Nav’s platform uses these data sets to help business owners manage their fundability, while also doing legwork for lenders by matching its small business customers to their most-qualified funding options.

LENDIO ANNOUNCES LENDER TURNDOWN PROGRAM (Lendit), Rated: A

Lendio announced today at LendIt Fintech USA that it has facilitated nearly $60 million in loans through its lender turndown program.

Lendio’s lender turndown program allows lending partners to offer a marketplace of loan options to customers that do not fit the lender’s credit box; this allows lenders to turn a decline response into a potential loan offer for the small business owner.

LENDR ANNOUNCES THE LAUNCH OF ITS BUSINESS DEBIT CARD (Lendit), Rated: A

Lendr Online, LLC. announced today at LendIt Fintech USA that it is has launched a new business debit card product to service its growing client base. The ability to fund business owners in real-time via an instant access virtual Mastercard followed up with a traditional plastic card utilizing the latest in EMV chip security, will further enhance its brand and solidify Lendr’s position as a premier financial services firm.

Ocrolus Secures $ 4M in Series A Funding (Finsmes), Rated: A

Ocrolus, a New York City-based provider of solutions to analyze financial documents, raised $4m in Series A funding.

The round was led by Bullpen Capital with participation from QED Investors, Laconia Capital Group, ValueStream Ventures, RiverPark Ventures, Sam Hodges (co-founder, Funding Circle), Vince Passione (CEO, LendKey), Ram Ahluwalia (CEO, PeerIQ), Bill King (former head of securitization, JP Morgan), Hugh Nguyen (CEO, ClearServe) and Tanya Barnes (managing director, Golden Seeds), among others. In conjunction with the funding, David Arcara of Laconia Capital Group and Nick Adams of Differential Ventures will be joining Ocrolus as board members. Paul Martino of Bullpen Capital, Amias Gerety of QED Investors and Karl Antle of ValueStream Ventures will be board observers.

 

THINK WALLET REVEALS SCALABLE SOLUTION TO REDUCE FUNDING COST OF PERSONAL LOANS (Lendit), Rated: A

ThinkWallet.com announced today at LendIt Fintech USA that it has solved the problem many lenders currently face: Overspending to attract leads that can’t qualify for their personal loan products.

Nelnet Expands Loan Servicing Offerings To Meet Demands Of Fintech Lenders (PR Newswire), Rated: A

Nelnet (NYSE: NNI) is bringing a new servicing option to Fintech lending platforms. Nelnet Loan Servicing will leverage the experience, scale, and personnel of its existing servicing business with technology enhancements to meet the unique needs of Fintech companies with primary and backup servicing.

 

General Atlantic in talks on a deal with Brazil’s online lender Geru (Reuters), Rated: B

U.S. investment firm General Atlantic is in talks to buy a minority stake in closely held Brazilian online lending startup Geru Tecnologia e Serviços SA, according to two sources with knowledge of the matter.

Other investors may join General Atlantic, the sources said, adding that Geru’s partners have spent the last few weeks visiting funds in San Francisco and New York to raise about $50 million.

 

 

 

 

IDVALIDATION SHOWCASES GOVERNMENTAL VERIFICATION SOLUTIONS FOR LENDERS AT LENDIT FINTECH USA – 2018 (Lendit), Rated: B

IDValidation will be showcasing their governmental verification solutions to the lending community and Stops 100% of Synthetic Identity Theft.

IDValidation’s Consent Based SSN Verification Allows Financial Institutions Direct Access to the Main Frame Database of the Social Security Administration to Accurately Verify the Validity of a Social Security Number and Stop Synthetic Identity Theft. Toyota Financial Services has conducted a successful pilot. IDValidation has become the forerunner in providing this vital tool to the Financial World helping mitigate
Fraud & ID Theft.

 

 

 

LendingPoint To Accept Loan Payments and Disburse Loans via Debit Cards (Business Wire), Rated: A

Bringing a new layer of convenience to financial transactions with its customers, LendingPoint, the company working to revolutionize access to consumer credit, announced today it has entered into an agreement with TabaPay that will integrate debit cards into LendingPoint’s financing platform.

Beginning immediately, LendingPoint will allow borrowers to use debit cards for loan payments they make online or over the phone. LendingPoint will be able to verify account ownership and balance of its applicants through the TabaPay platform. Then later this year, LendingPoint will also be able to instantly disburse loans to approved borrower accounts through their debit cards, 24/7/365, or credit card payoffs. Those inbound and outbound debit-card disbursements and collections will happen instantaneously and are free for the borrower.

HARVESTING INC LAUNCHES AI BACKED CREDIT RISK SYSTEM FOR AGRICULTURE LENDERS (Lendit), Rated: A

Silicon Valley-based FinTech Social Enterprise Harvesting Inc, launches its innovative credit scoring system for financial institutions to assess farmers creditworthiness and facilitate agriculture financing .

Harvesting’s Credit Risk System is an Artificial Intelligence (AI) powered platform which leverages on traditional & alternative data sets and allows financial institutions to build, deploy and monitor credit business in the cloud, within a fraction of time & resources it takes today. It’s easy to use interface with advanced feature engineering flexibility allows credit risk manager to create best of the breed custom credit risk model for the organization on a cloud infrastructure. It allows credit risk manager of any size of financial institutions to leverage the power of AI and increase acceptance rate and reduce defaults.

FUTUREBANK DIGITAL AND API BANKING PLATFORM INTEGRATES ENTERSEKT’S SECURE CONNEKT PAYMENT FUNCTIONALITY (Lendit), Rated: B

Global Kinetic announced today at LendIt Fintech USA, that it will be integrating Entersekt’s Connekt functionality into the FutureBank platform. FutureBank’s unique ability to abstract the complexities in legacy core banking systems and customize digital channels through its technology platform helps banks and disruptive FinTech companies work together more efficiently. The growing digital banking market in the US has become vulnerable as consumers are frustrated by poorly designed mobile apps that often have weak security implementations and limited payment functionality. The FutureBank platform can now offer converged payment acceptance through Connekt.

PENSCO Launches Custodian Connect (Lendit), Rated: B

PENSCO Trust Company (“PENSCO”) announced today at LendIt Fintech USA, the launch of Custodian Connect, an API-driven capability that seamlessly connects investment platforms to PENSCO enabling uninterrupted opening and funding of an IRA from within the platform.

 

Spring Labs Announces World Class Industry Advisory Board to Help Build Decentralized Credit and Identity Validation Network (Lendit), Rated: B

Spring Labs, which is building the Spring Network, a blockchain-based network being designed to allow lenders, banks, and data providers to securely and efficiently exchange data with one another, today announced its founding industry advisory board. The industry advisory board comprises a group of industry leaders in finance, credit, and compliance, with members including Sheila Bair, the former Chair of the U.S. Federal Deposit Insurance Corporation (FDIC); and Nigel Morris, Co-Founder and former long-time President of Capital One, and co-founder of QED Investors, a leading investor in global financial technology companies.

This news of the industry advisory board comes on the heels of Spring Labs announcing a $14.75 million seed fundraising round, one of the largest initial venture rounds to-date for a blockchain startup.

CoinVantage Announces Release of Flagship Portfolio Accounting & Reporting System for Digital Assets (Lendit), Rated: B

Alternative Investment fund administrator MG Stover & Co. (MG Stover) announced today a partnership with software technology firm CoinVantage as part of its strategy to grow its digital asset fund administration business and deliver world class solutions to its clients.

Cross River Bank Demonstrates Key Growth, Makes Significant Personnel Hires (Lendit), Rated: B

As Cross River Bank approaches its 10th anniversary, the leader in the emerging FinTech market is demonstrating a surge in growth and surpassing significant milestones as it grows its customer base, offerings and strategic partnerships designed to revolutionize the banking infrastructure.

 

United Kingdom

VPC’s revenue dips in February after record January performance (Peer2Peer Finance News), Rated: AAA

VICTORY Park Capital (VPC) Specialty Lending Investments saw its total net revenue return dip to 0.81 per cent in the month of February, after reporting a record return of 1.08 per cent in January.

In its monthly market commentary, VPC said that the fall in revenue was due to a combination of factors including a “one-time fee earned in January and a shorter day count”. Capital losses were attributed to VPC’s exposure to Elevate Credit – a US-based provider of short-term loans, and securitisation residuals.

 

International

The P2P Lending Alternative – Crowdvouching – Will Now Run in Test Mode (Coin Telegraph), Rated: AAA

In 2017, Suretly token-holders were inspired by the idea of a crowdvouching platform – an international exchange for micro-guarantees, where people can make money by helping others borrow. In the beginning of 2018, the project made something that many other ICOs were not able to deliver: the demo version of its product. To become a guarantor (or a ‘voucher’, in the crowdvouching terminology), an individual needs to download the Suretly mobile application, where he can find borrowers’ loan orders, vouch, and get receive a sum of money in return (a fee).

On April 9, Suretly releases the first version of the new app, available to all users registered for its testing period. The borrowers’ behavior is based on the real data of past periods, and, therefore, users can learn different vouching strategies and practice them in future.

Unlike p2p lending, Suretly does not lend money directly, but rather serves as an intermediary between financial institutions, borrowers, and co-signers. Suretly users vouch for a small part of a loan sum and guarantee that the loan will be repaid in the case of a borrower’s default. Liability for each loan is divided among all vouchers and each voucher’s approval serves as an insurance of the loan. In order for the loan to be approved, the entire amount must be guaranteed by the vouchers.

RCN AT LENDIT FINTECH USA 2018 (Lendit), Rated: B

RCN announced today at LendIt Fintech USA that it will showcase how global lending through peer-to-peer technology is possible using blockchain technology and cosigned smart contracts.

With billions of people all over the world excluded from traditional banking & financial services, Sebastian Serrano (CEO), will explain the company’s successful history in Latin America since it was funded and how RCN can contribute to the world’s economy by providing credit and financial inclusion through blockchain technology and cosigned smart contracts.

Scienaptic releases significant product enhancements to its credit underwriting product ‘Ether Underwrite’ (Lendit), Rated: B

Scienaptic Systems Inc. announced today at LendIt Fintech USA that it has released an advanced version of its Credit Underwriting product, Ether Underwrite.

European Union

Can Europe cash in on the fintech revolution? (Silicon Republic), Rated: AAA

Technologies such as blockchain underpin the fintech revolution, paving the way for a whole groundswell of new start-ups that have targeted markets underserved by banks through better user interfaces and user experience (UX) as well as through digital marketing and branding.

A case in point is Revolut, a London-headquartered start-up with offices in Dublin. It turns out that cash-savvy young workers have no time for bank fees and are less forgiving of banks than older generations, and are flocking to these challenger banks.

Examples include: Zurich’s Advanon, an online platform for invoice financing for SMEs; Dublin’s CurrencyFair, which allows individuals and businesses to send funds to bank accounts worldwide; Stockholm’s Klarna, which provides online payments for e-commerce sites; and London’s Monzo, a start-up bank that has amassed more than 20,000 current-account holders and more than 500,000 people using its distinctive ‘hot coral’ cards.

Latin America

Creditas publishes report on the Brazilian lending market (Lendit), Rated: B

Creditas, the leading digital lending platform for secured loans in Latin America, has published the updated report “The disruptors paradise: Understanding the Brazilian lending space” at the Lendit USA 2018 conference.

With roughly US$ 150 billion in net interest margin, Brazilian consumer debt represents a unique opportunity to significantly increase debt availability and reduce the 30%+ banking spread. The report summarizes the reasons behind the high spread of the Brazilian ecosystem and the evolution during the last decade.

Canada

Nova Credit Partners with Transunion Canada to Expand Immigrant Financial Access across North America (Lendit), Rated: AAA

Nova Credit announced today at LendIt Fintech USA that it partnered with Transunion to serve creditworthy newcomers to Canada who may otherwise miss out on credit opportunities due to a lack of Canadian credit history.

The new product—TransUnion Global Credit Connect powered by Nova Credit—provides newcomers to Canada with a platform to import their historical credit information and have their international credit reports delivered to end-users such as banks, in a streamlined, standardized format. The foreign credit score is mapped to a Canadian equivalent score so that it can be consistently applied.

MENA

Dubai SME Expands Agreement With Finance Solutions Provider ‘Beehive’ (Albawaba Business), Rated: A

The Mohammed bin Rashid Fund (MBRF) for SME – the financial arm of Dubai SME, itself an affiliate of Dubai’s Department of Economic Development (DED) – has expanded the partnership agreement with Beehive, the MENA region’s first regulated peer-to-peer lending platform, which will cross the $50 million mark of total funding for SMEs across the platform this month.

Following a successful initial launch, MBRF and Beehive have broadened the scope of the agreement to increase the credit guarantee to AED750k and also offer Sharia Compliant Invoice Finance, a short-term finance option for businesses wishing to improve cash flow.

Asia

South Korea’s P2P loans jump 10.3% on month in March (Pulse News), Rated: AAA

The combined loans of peer-to-peer (P2P) lenders in South Korea reached almost 2.3 trillion won ($2.1 billion) last month amid burgeoning demand for the debt financing service that allows individuals to borrow or lend money online without going through an official financial institution.

According to Korea P2P Finance Association on Monday, the accumulated loans of its 65 members reached 2.296 trillion won as of end of March, up 213.6 billion won or 10.26 percent from a month ago. By sector, total loans on real estate project financing reached 768.5 billion won, real estate mortgage 611.5 billion won, and other mortgages 472.4 billion won, and credit loans 443.2 billion won. The members’ average loan interest rate was 14.32 percent.

The State Of The Nation: The highs and lows in Bank Negara’s 2017 annual report (The Edge Markets), Rated: AAA

Source: The Edge Markets

THERE is a chance the economy will grow as much as 6% this year, according to Bank Negara Malaysia’s 2017 annual report, which was released on March 28. Not only is that ahead of 2017’s stronger-than-expected 5.9% gross domestic product growth, the central bank’s baseline projection of 5.5% growth for this year is at the higher end of the official 5% to 5.5% projected in the Economic Report 2017/2018, which was released just five months ago.

In fact, working numbers in the annual report indicate 5.67% growth for 2018 — exceeding the government’s projection last October, although just short of 2017’s spectacular 5.9% reading.
Source: the Edge Markets

While last year’s growth beat everyone’s expectations (including the central bank’s working number of 4.57%), it is worth noting that 2016’s actual GDP growth of 4.2% was very close to the central bank’s working number of 4.1% when official projections were between 4% and 5%.

 

Authors:

George Popescu
Allen Taylor

Friday February 16 2018, Daily News Digest

Amazon small business lending

News Comments Today’s main news: Amazon partners with Bank of America on lending. Roostify raises $25M for expansion. Lendy’s pretax profits hit 3.3M GBP. Lendix to enter Dutch, German markets. Revolut to launch banking app in APAC. Vested backs Dojo. Today’s main analysis: Important barriers to alternative investing digitization. Today’s thought-provoking articles: Americans can’t get enough consumer debt. Who are Britain’s […]

Amazon small business lending

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Amazon has partnered with Bank of America for its lending program (CNBC), Rated: AAA

CNBC has learned that Amazon Lending, which launched in 2011, ultimately found a partner in Bank of America Merrill Lynch, according to people familiar with the matter who asked not to be named because the alliance is confidential. Partnering with Bank of America allows Amazon to reduce its risk and access capital specifically to provide credit to more merchants so they can acquire inventory.

Amazon Lending is an invitation-only program that makes loans of $1,000 to $750,000, with terms of up to a year, for companies that may have difficulty landing traditional business loans. In June 2017, Amazon said it issued more than $1 billion in loans during the previous 12-month period, compared to $1.5 billion in combined loans for the four years prior to that.

Scaling back

But even with the Bank of America deal, Amazon Lending has been tapping the brakes on growth of late. After almost doubling to $661 million in 2016, outstanding loans just barely increased last year to $692 million, according to Amazon’s annual report earlier this month.

Source: CNBC

These 10 MBA Programs Will Earn You the Highest Salary, According to SoFi (Levo), Rated: A

According to SoFi, the student loan refinancing company, “No BS” Return on Education 2018 MBA rankings, these are the best schools for earning back your money.

With Americans owing more than $1.48 trillion in student loan debt,  (which is $620 billion more than the total U.S. credit card debt) knowing which schools are going to help you pay off your debt faster, is something you should consider if you are looking at business school programs.

Source: Levo

Roostify Closes $ 25 Million Series B To Fund Expansion (VentureBeat), Rated: AAA

Roostify, a digital lending platform provider, today announced the completion of a $25 million Series B round of financing. The round included new investments from Cota Capital, Point72 Ventures, and Santander Innoventures, the venture capital arm of Banco Santander, as well as additional funding from previous investors JPMorgan Chase, Colchis Capital, and a subsidiary of USAA. The new funds will power the company’s ambitious growth goals, including a deeper presence in the enterprise space, rich product enhancements, and expansion into new markets.

Abode Aims to Make Home Buying and Selling Easier (Chicago Inno), Rated: A

In 2016, Kyle Stoner and best friend Carson Junginger were both having a hard time navigating the home-buying process. Between finding a realtor, finding a property and securing a mortgage, the two tech entrepreneurs realized that buying a home was too cumbersome and fragmented. And when they couldn’t find a single platform where they could manage all these separate tasks, they teamed up to create one — Abode.

SoFi named Abode in its 2018 class of SoFi Entrepreneurs, the fourth cohort of startups which will receive mentorship and funding from the alternative lending startup, but Stoner declined to comment on whether SoFi is officially partnering with Abode in the future. Stoner said Abode is rolling out a new consumer product in March 2018, but declined to give further details.

Americans Can’t Get Enough Consumer Debt (WSJ), Rated: AAA

If anything, consumers are borrowing more on credit cards or through auto loans than they have in years, and lenders seeking growth are happy to oblige them.

In the fourth quarter, consumer debt, excluding mortgages and other home loans, rose 5.5% from a year earlier to $3.82 trillion. That is the highest amount since the Federal Reserve Bank of New York began tracking the data in 1999. Moreover, consumers’ non-housing debts accounted for just over 29% of their overall debt load, also the highest amount on record.

Overall, households are paying about 5.8% of their disposable personal income to stay current on their nonmortgage debts, according to third-quarter Federal Reserve data. This figure, which is at the highest level since the end of 2008, bottomed out at 4.9% in 2012.


URGENT VS. IMPORTANT: BARRIERS TO DIGITIZATION IN ALTERNATIVE INVESTING (All About Alpha), Rated: AAA

KPMG International and CREATE-Research have jointly prepared a report about the digitization imperative for alternative investment management.

Early on, its authors list eight key digital innovations that are reconstructing the industry:

Application programming interfaces; cognitive technology and machine learning; Big Data; blockchain; new digital platforms; robo-advisors; robotic process automation; and social media.

To that end they have talked to 125 alternative managers located in 19 countries, with combined assets under management of $2.6 trillion.

A Need to Future Proof

They found that the scale of the ongoing shake-up is well understood. Only 2% of respondents saw a “business as usual” scenario playing out over the next 10 years. Roughly one-third (35%) expect marginal changes. But 53% anticipate “partial” disruption and the remaining 10% anticipate “total” disruption.

Can small-dollar loans be both profitable and safe? (American Banker), Rated: A

Is now the time when U.S. banks, credit unions and their regulators finally see eye to eye on small-dollar loans to consumers who have checkered credit histories?

A long-running stalemate between the industry and its overseers has ceded much of the subprime consumer market to payday lenders, pawn shops and other high-cost lenders. But in recent months, banks started to get some insight from Washington about what type of product would be deemed acceptable.

Citi, PNC invest in B-to-B payments fintech (American Banker), Rated: A

In the latest example, Citi Ventures and PNC on Wednesday announced a strategic investment in the fintech firm HighRadius, which makes business-to-business payments and receivables software. Terms of the investment were not disclosed. HighRadius has an existing partnership with Bank of America on an accounts receivables platform, and also counts as clients Fortune 500 companies such as Walmart, Johnson & Johnson, Procter & Gamble and Starbucks.

U.S. Bancorp hit with $ 613M in penalties linked to payday lender Scott Tucker (USA Today), Rated: A

U.S. Bancorp, the parent of U.S. Bank, agreed to the criminal and civil penalties in settlements announced by the Manhattan U.S. Attorneys Office in New York, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Crimes Enforcement Network.

From 2009 until 2014, U.S.Bank set an artificial cap on the number of alerts generated by its customer transaction monitoring systems, authorities said. The Minneapolis-based bank based the number of alerts on low staffing levels, rather than on the level of risk in the transactions.

The lax oversight aided Tucker, a longtime U.S. Bank customer who was sentenced to more than 16 years in prison last month for running an illegal $3.5 billion Internet-based payday lending scheme that victimized thousands of consumers with loan interest rates as high as 1,000%.

 

Fluid Market Launches Truck Sharing Marketplace (Business Insider), Rated: A

Fluid Market, a neighborhood truck sharing application that allows people to rent trucks seamlessly from one another, today announced the nationwide launch of its truck-sharing marketplace, providing a seamless and on-demand utility vehicle rental experience to its peer-to-peer network of users and lenders across the country.

Finalists for the LendIt Fintech Industry Awards 2018 Announced (Crowdfund Insider), Rated: A

Fintech Innovator of the Year

  • Affirm
  • Varo Money
  • Better Mortgage
  • Upstart
  • Plaid
  • Circle
  • loanDepot

Top Consumer Lending Platform

  • LendingClub
  • Zopa
  • Marlette Funding
  • Marcus by Goldman Sachs
  • LightStream
  • Yirendai

Top Small Business Lending Platform

  • Kabbage
  • Funding Circle
  • BlueVine
  • Mirador
  • Credibly
  • StreetShares

Top Real Estate Lending Platform

  • Sharestates
  • LendInvest
  • LendingHome
  • PeerStreet
  • LendingOne
  • Fundrise

Emerging Lending Platform

  • Upgrade Inc.
  • Better Mortgage
  • ETHLend
  • Neat Capital
  • Nexoos
  • LendingUSA

Excellence in Financial Inclusion

  • Kreditech
  • LendUp
  • LenddoEFL
  • Oportun
  • China Rapid Finance
  • Elevate Credit

Most Promising Partnership

  • Katipult + Polymath Inc
  • Macquarie + PeerIQ
  • Lending Club + Opportunity Fund
  • Intrinio + QUODD
  • Financeit + Goldman Sachs
  • Minna Technologies + Swedbank

Most Successful Cross-Border Partnership

  • Kabbage + ING
  • Kreditech + PayU
  • PayJoy + Macrocel
  • nCino + OakNorth
  • Kasisto + DBS Bank
  • Phoenix Finance + Saxo Bank

Most Innovative Bank

  • BankMobile
  • Cross River Bank
  • Laurel Road
  • CBW Bank
  • Marcus by Goldman Sachs
  • HSBC

International Innovator of the Year

  • UP Financial
  • LexinFintech
  • Afluenta
  • Phoenix Finance
  • IrisGuard
  • Borrowell

Top Enterprise Technology Company

  • Salesforce
  • Roostify
  • Blend
  • ThreatMetrix
  • Mambu
  • CUneXus

Top Emerging Technology Company

  • Nav
  • Ingo Money
  • Nova Credit Inc.
  • MoneyLion
  • dv01
  • Emailage

Most Innovative Mobile Technology

  • PayJoy
  • Clarity Money
  • AutoGravity
  • Dave.com
  • Blinker
  • Juvo

Top Investment Bank in Fintech

  • Macquarie
  • Marlin & Associates
  • FT Partners

See the full list here.

Macquarie looks to broaden US ABS footprint (Global Capital), Rate: B

Macquarie Group is seeking to hire a US ABS director for its credit markets team as it looks to grow its presence in US esoteric ABS sectors, including whole business, marketplace lending and renewable energy finance.

Small nonbanks call for clearer exemption from CFPB audits (American Banker), Rated: A

Nonbank mortgage firms are seeking formal assurance from the Consumer Financial Protection Bureau that they will not become subject to surprise audits or enforcement without involvement of a state regulator.

In a joint letter to acting CFPB Director Mick Mulvaney, the Community Home Lenders Association and the Community Mortgage Lenders of America said the agency should practice “streamlined supervision” of smaller nonbanks, which is consistent with the Dodd-Frank Act.

 

Business Innovation Could Accelerate Under a Friendlier CFPB, LeClairRyan Attorney Says (Business Insider), Rated: B

Recent moves by the federal Consumer Financial Protection Bureau (CFPB) could signal a friendlier approach to businesses, according to Jay Spruill, a partner in LeClairRyan’s Richmond office and leader of the national law firm’s Marketplace Funding Team.

“The Payday Loan Rule has been heavily criticized by the small loan industry which says the rule will restrict consumers’ access to credit,” Spruill notes in the blog, CFPB Signals Retreat from Aggressive Regulation. The post appears in Marketplace Shift, which focuses on the impact of legal and regulatory developments on financial innovation.

United Kingdom

P2P Lender Lendy Releases Financial Results: Pretax Profits Rise to £3.3 Million (Crowdfund Insider), Rated: AAA

Peer to peer lending platform Lendy has released its audited accounts for 2016, showing profits before tax rising to £3.3 million compared to £53,000 in 2015. The company reports that since launch in 2012, Lendy has originated over £376 million in secured loans generating £36 million in interest for investors. Approximately £141.5 million in principle has been repayed with current outstanding loans at £186.5 million.

 

The digital upstarts taking on Britain’s dominant few banks (The Economist), Rated: AAA

For some British millennials, Monzo is as close to a cult as a bank can be. Its coral-pink cards are hard to miss. “People in bars will get very excited if they see you are a fellow Monzo user,” says Mr Matthews, who is 29.

Counting the British arm of Santander, Spain’s largest bank takes the share to over 80%. In 2015 Britons had 70m-odd active current accounts. They paid £500 ($750) or more into 70% of them every month.

Supervisors have licensed more than 30 entrants since 2013. But by no means are all the challengers young. One of them, CYBG, owns Clydesdale, a Scottish bank that turns 180 this year, and Yorkshire Bank, aged 159. It has about 1.8m personal current-account customers and assets of £43bn. Nor are all the infants purely digital. Metro Bank has since 2010 established 55 “stores” (ie, branches) and is spreading beyond south-east England.

Among digital purists, Monzo’s chief rival is Starling Bank—where Mr Blomfield used to work. It started current accounts last spring; around 100,000 have been opened. Tandem, which recently acquired Harrods Bank, the banking arm of a posh department store, is also open for business. Atom Bank, part-owned by Spain’s BBVA, focuses on mortgages funded by fixed-rate savings. N26, a German smartphone bank, is due to arrive this year. Another near-cult, Revolut, is seeking a European licence (valid, for now, in Britain).

To ginger up small-business banking, RBS, the market leader, must cede ground and money to competitors as part of the price, agreed on with the European Commission, of its rescue by the government in 2008. RBS will put up £425m, divided into sums from £5m to £120m, to build up rivals’ capabilities, plus £350m for incentives to customers to switch banks. Banks with assets of up to £350bn may bid. That excludes the big four but just lets in Santander (£315bn), to some challengers’ chagrin.

 

Industry reacts to SME finance inquiry (Bridging&Commercial), Rated: A

Earlier this month, the Treasury committee launched an inquiry into SME finance to look at the state of the market and the lessons to be learned from RBS’s Global Restructuring Group (GRG).

The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.

For example, unsecured lending to an SME borrower for the purposes of their business will only be regulated if the SME is unincorporated and the amount being borrowed is £25,000 or less.

The UK’s Financial Conduct Authority doubles down on algorithmic trading (Crowdfund Insider), Rated: A

The UK’s Financial Conduct Authority (FCA) on Monday published its report on the supervision of algorithmic trading, which is intended to illustrate best practices and give guidance to firms considering implementing AI to automate trading operations.

The focus areas of the report hint at concerns the FCA harbors about AI use in capital markets. The regulator placed particular emphasis on humans being able to intervene in an algorithm if something goes wrong, and ensuring the technology doesn’t start behaving in a way unintended by its creators.

Innovate Finance Announces Finalists for 2018 FinTech Pitch360 (Crowdfund Insider), Rated: B

The 2018 Pitch360 finalists are the following:

  • Artificial Intelligence: Axyon AI SRL, Coriolis Technologies Ltd, Eye Capital S.A.
  • Banking/ Enterprise Solutions: Akoni, Hedgewiz Pure Risk Management Solutions, Salt Edge Inc
  • Distributed Ledger Technology: hiveonline, SPIRAL
  • Financial Inclusion: CommuScore, CreditSpring, Trezeo
  • Payments & FX: Duality Banx, Divido Financial Services, Envision&Company LTD
  • Peer-to-Peer / Alternative Funding / SME Lending: Alterest, Credit Data Research Ltd, StrideUp
  • Personal Finance Management & Robo Advice: CASHOFF Ltd, Bedaan
  • RegTech: Calcabis, Exate Technology
China

 

Hexindai: Positive Quarter Strengthens Bull Case (Seeking Alpha), Rated: AAA

Sales increased 575% to $43.31 million, driven by loan facilitation growth, which was $388 million – an increase of 187.1% over the prior year. The high sales growth rate contributed to a whopping 1,589% net income growth, which was $26.9 million for the quarter. Gross billing ratio contributed to overall growth with an increase from 7.4% in the previous year to 12.1% in the reported one as the company continues its shift to credit loans.

The company increased its guidance, bumping EPS estimates for the year from $0.74 (see linked article for full estimate calculations) to $1.30 per share, as sales are now expected at $108 million – up from previously expected $90 million. The company believes this will be driven by a bump in loan facilitation, which it expects to be $1.23 billion, up from previously expected $1 billion.

In my previous article I initiated the company with a price target range of $14.80 to $22.20 per share given a 20x to 30x forward earnings multiple, and given recent positive catalysts I believe fair value lies in the same multiple. As the company has hiked its sales and net income guidance, pushing EPS to $1.30 for fiscal 2018, I believe the company’s fair value now lies in the range of $26.00 to $39.00 per share. That represents almost 200% upside from the current share price.

Money20/20 launches in China, the world’s biggest FinTech market (CUInsight), Rated: A

Ascential announced in Hangzhou recently the launch of its trailblazing FinTech event Money20/20 at Hangzhou International Expo Center on 14-16 November 2018.

Guest speakers includedArthur Zhu, President of LianLian Pay; Raymond Qu, CEO of Geoswift; Jeff Parker, Managing Director of WorldFirst Asia-Pacific; Eric Gu, founder & CEO of Metaverse; and experts such as Dr. Ben Shenglin, Dean of Zhejiang University’s Academy of Internet Finance.

Chinese ADSs on the Rise (Capital Watch), Rated: B

Coming in second and third place, China Rapid Finance Ltd. (NYSE: XRF) and JP Holdings Ltd. (NYSE: JP) both soared 8 percent to close at $5.17 and $19.85 per share, respectively, while Jianpu Technology Inc. (NYSE:JT) rose nearly 6 percent to $7.28 per share.

European Union

Online Lender Lendix Plans Entrance into German and Dutch Markets (ICO News Desk), Rated: AAA

Continuing its plan to lead the European SME lending market, fintech company Lendixcontinues its geographical expansion with plans to branch into Germany and the Netherlands.

bitJob teams up with the Dutch government blockchain program to enrich students résumés with a crypto flair (Chipin), Rated: A

bitJob, the P2P marketplace that connects students and businesses, is announcing today its partnership with the Blockchain projects division inside the Dutch government, to deploy its pilot project in Holland. The marketplace, developed by bitJob, bridges the gap between businesses and students by enabling both sides to offer/look for employment with a technology that promotes honesty, immediacy, and robustness.

Opiria & PDATA token: peer reviewed token sale from Germany (Opiria email), Rated: B

Opiria allows consumers to sell their personal data and companies to buy personal data directly from consumers without a veiled middleman in a fully transparent and secure way.

We are presently running an ICO. About our ICO:

  • peer reviewed with due diligence report – showing PDATA is a top 5% ICO

  • Already >1 million USD raised in the Pre-ICO (hard cap $5 million in Pre-ICO)

  • 4k+ active users providing personal data and opinions

Management Team:

  • Dr. Christian Lange (CEO): proven track record in entrepreneurship and successful exit in 2015

  • Marlene Gagesch (CTO): head of B2B software departments for > 10 years

For more information:

  • 2 min pitch video: 

    1 page business model canvas: 

    ICO website/whitepaper: 

    International

    Can’t Miss Quick-Start Guide to Launching a New Business Venture (Influencive), Rated: A

    The following quick-start guide will explain the 7 steps that you need to follow to launch your business venture.

    Make Sure There Is a Market for Your Idea

    The very first step you should take is to validate your idea or concept. You need to make sure that there is a market for your idea.

    Create a Basic Business and Marketing Plan

    If you are trying to launch your product or service as soon as possible, you will still need a solid business and marketing plan. You do not need to be completely detailed, but you should have a good plan in place.

    Obtain Funding for Your Idea

    Another way to get financing is to use P2P (peer to peer) lending. This is similar to crowdfunding, which is another option. With both P2P lending and crowdfunding, you will need to properly explain the value of your product or service. Also, it may take a while to obtain all the funding that you require.

    Research Your Target Demographic

    Once you get funding, you will need to start researching your target demographic. You need to know who you are marketing to before you start a marketing campaign.

    Create a Website

    You do not need to spend a lot to build a website. There are several affordable options with easy to use website builders. These website builders include drag and drop layouts, so anyone can build their own website. A few options include WordPress, Wix, and SquareSpace.

    Decide on a Business Structure

    The next step is to choose a business structure. This is essential and should be decided before you release your product or service.

    Start Marketing Your Product or Service

    The final step is to begin marketing your product or service.

    India

    In consultation with MCA, Sebi makes headway in framing crowd-funding norms (Business Standard), Rated: AAA

    The Securities and Exchange Board of India (Sebi) is finalising the regulatory framework for crowd-funding in consultation with the corporate affairs ministry.

    APAC

    Revolut uses GPS for FX app launch in APAC (Fintech Futures), Rated: AAA

    Revolut will be using Global Processing Services (GPS) for the launch of its multi-currency FX app in the APAC region.

    Revolut will unleash its app, starting with New Zealand, Singapore and Japan. GPS announced the deal during the Lord Mayor of the City of London’s UK Business delegation, which is currently in Australia this week.

    Middle East

    Fintech Startup Beehive Is Closing The Gap For SME Finance In The GCC (Dubai Forum), Rated: AAA

    She found Beehive, a Dubai-based peer-to-peer lending platform. Through Beehive, Lowmass borrowed $54,000 in late 2016 at an interest rate of 9.89%. Although it took about the same amount of time to get a loan from Beehive as it did through the bank, Lowmass says, “the funds were raised cleanly and extremely quickly and we were delighted with the resultinginterest rate we ended up paying.”

    It has 6,000 registered investors—mostly from the U.A.E.—and has channeled a total of $40 million to borrowers.

    Africa

    Ecobank: African Fintech Predicted to Grow Exponentially by 2020 (Crowdfund Insider), Rated: A

    Africa is now at the forefront of fintech with 57.6% of the world’s 174 million active registered mobile money accounts (100.1 million) in Sub-Saharan Africa. Fintech in Africa is predicted to grow from US$ 200 million to US$ 3 billion by 2020. As Ecobank works seamlessly across 36 countries in total, Ecobank is also the only bank that allows customers to transact more easily across borders.

    Ecobank’s mobile app allows customers in any of the 33 African countries in which it operates to check balances, pay bills and merchants, and many other services. Rwanda, where the summit is taking place, has the second highest use of mobiles in Africa, with more than 50% of the population unique subscribers. Kenya has the highest penetration rate of almost 60% of the population.

    Canada

    Vested Ventures completes seed round in gamified savings app Dojo (Finextra), Rated: AAA

    Vested Ventures, the investment arm of the fastest growing public relations agency globally, Vested, announced it has successfully completed a seed round investment in Vancouver financial software company Dojo Technology Corp (“Dojo”).

    Dojo’s iOS and Android-friendly mobile platform reimagines how families and young people interact with their banks and credit unions by providing reward-based gamification and nudging users towards positive financial habits.

    Authors:

    George Popescu
    Allen Taylor

Tuesday October 3 2017, Daily News Digest

blooom

News Comments Today’s main news: blooom passes $1B in assets under management. SoFi rolls out new deal. DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-E LLC. The P2P Power 50. PeerStreet funds over $500M in loans with zero losses to investors. Today’s main analysis: LendingClub, Prosper after 10 years. FT Partners’ CEO monthly alternative lending market analysis (a […]

blooom

News Comments

United Kingdom

China

International

Asia

Middle East

News Summary

United States

blooom Becomes Fastest Independent Robo-advisor to Pass $ 1 Billion in Assets Under Management (BusinessWire), Rated: AAA

According to monthly Securities and Exchange Commission (SEC) ADV filings, blooom, inc. reached $1 billion in assets under management (AUM) faster than any other independent robo-advisor. blooom achieved this milestone faster than Betterment and Wealthfront – and with less capital raised.

blooom, a first-of-its-kind robo-advisor, helps anyone with a 401(k) or comparable employer-sponsored retirement plan. blooom’s mission is to make “do-it-for-you” financial advice available, simple and affordable, regardless of the client’s account size.

The $1 billion AUM milestone is one of many key achievements for blooom over the past year.

  • In mid-2016, Sheila Bair, FDIC Chair under two U.S. Presidents and “the second most powerful woman in the world in 2008 and 2009” by Forbes, joined the company as an Advisory Board Member.
  • In February 2017, blooom raised $9.15 million in Series B funding and surpassed the $500 million mark in AUM.
  • Since 2014, as part of its free product evaluation, blooom has analyzed the health of more than $2 billion of individual 401(k) plan balances.
Source: BusinessWire

SoFi rolls out new deal amid exec reshuffle (GlobalCapital), Rated: AAA

SoFi filed documents with the Securities and Exchange Commission on Friday for the upcoming deal, under its SOFI shelf. Deutsche Bank, Goldman SachsJP Morgan, Bank of America Merrill Lynch and Morgan Stanley have been named in the documents as banks on the deal.

DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-E LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-E LLC (SoFi 2017-E):

— $72,850,000 Class A-1 Notes at AAA (sf)
— $303,000,000 Class A-2A Notes at AAA (sf)
— $161,000,000 Class A-2B Notes at AAA (sf)
— $55,000,000 Class B Notes at AA (sf)
— $34,500,000 Class C Notes at A (sf)

SoFi Unlikely To Damage Digital Lending Sector (Market Intelligence), Rated: AAA

The recent exit of Social Finance Inc. CEO Mike Cagney represents the third departure of a big-name digital lending CEO since the start of 2016. Social Finance, more commonly known as SoFi, was long considered a bright spot in the digital lending industry after making it through a rough 2016 unscathed.

Everything unravels

Heading into 2016, investors started to notice higher-than-expected defaults on loans from large marketplace platforms, especially in lower-graded loans. In order to compensate for these higher losses, some lenders increased interest rates to keep investors on their platforms. For institutions that had been purchasing loans and packaging them into asset-backed securities, the underperformance of loans in previous securitizations became a concern. By April, Citigroup Inc. was having trouble marketing a new securitization of loans from personal-focused lender Prosper Marketplace Inc., leading the two firms to end their partnership. Without this important source of capital, Prosper saw originations fall 55.5% during the second quarter of 2016.

Source: Market Intelligence

Past problems lead to a brighter future

Digital lenders entered 2017 with a renewed focus on operational efficiency and loan quality. For some, these measures are starting to pay off. LendingClub and On Deck both reached targeted profitability measures in the second quarter of the year. Prosper has reignited loan growth thanks to a $5 billion commitment to fund new loans, and the company reported positive adjusted EBITDA for the second quarter. Ex-LendingClub CEO Renaud Laplanche has launched a new personal-focused lender called Upgrade. Student-focused lender Earnest has taken a different approach and according to Bloomberg is seeking a buyer for its business. Originations have started to rebound as large lenders in the industry regain confidence in their models and continue to ramp up volumes.

Source: Market Intelligence

Lending Club and Prosper Data: 10 Years In (Lend Academy), Rated: AAA

Lending Club and Prosper have both been around over 10 years now. A lot has changed since both companies were founded, including the performance of the loans. In this blog post we’ll share the performance of each platform over the last 10 years. The fact that we have access to this data set is one of the things that makes marketplace lending unique. The screenshots from this post are taken from NSR Invest, a marketplace lending robo advisor that is also a sister company to Lend Academy.

Lending Club Data

For Lending Club investors, most loan grade returns peaked in 2013. As you look at this chart it is worth noting that the 2017 numbers are somewhat meaningless because the loans there have not seasoned yet.

Source: Lend Academy

Prosper Data

Prosper launched in 2006 as the first p2p lending platform in the U.S. Initially, they operated with a very different model allowing deep subprime borrowers on to their platform.

When they relaunched Prosper grew very slowly, they needed to prove out their platform to the many retail investors who had lost money in Prosper 1.0. Even in 2009 and 2010 originations were just $8 million and $27 million respectively. Prosper began to scale significantly in 2011 and onwards.

Prosper’s C grade loans are the closest to Lending Club’s D grade loans so this is the best side by side comparison.

Source: Lend Academy

FT Partners’ CEO Monthly Alternative Lending Market Analysis (October ’17) (FT Partners), Rated: AAA

Source: FT Partners

September was another active month for the FT Partners team as we announced three significant FinTech transactions and the appointment of two additions to our senior team.

We are pleased to announce our role advising:

  • Source: FT Partners

    Download the full report here.

    PeerStreet funds over half a billion in loans, maintains zero losses to investors (PeerStreet Email), Rated: AAA

    PeerStreet, the real estate investing platform for real estate debt, has just hit the milestone of having funded half a billion in loans and with zero losses to investors since the company launched in 2015.

    Platforms in the P2P and crowdfunding space are seeing increasing competition and scrutiny, but PeerStreet has continued to offer investors access to quality loans and high yields, earning the public testimonial of some high-profile users, such as 

    College Ave Student Loans Completes $ 161MM in Inaugural Securitization (BusinessWire), Rated: A

    College Ave Student Loans, the leading next-generation student loan marketplace lender, announced it has completed a $161 million securitization of private student loans, its first securitization. The CASL 2017-A transaction, completed over the summer, received an ‘A’ rating from DBRS and a ‘BBB’ rating from S&P for its highest-rated senior notes. The transaction was four-times oversubscribed. Barclays was the underwriter on the transaction.

    The securitization also marks a year of growth for College Ave Student Loans. To date, the company has secured more than $2 billion of committed loan purchasing power from multiple sources.

    Why are Amazon, PayPal meeting with bank regulators? (American Banker), Rated: A

    Technology giants like Google, Amazon, Facebook and Apple are showing an increasing interest in engaging with federal banking regulators, a move that underscores Silicon Valley’s growing involvement in the financial services arena.

    Amazon lobbyists met with the Office of the Comptroller of the Currency starting in the second quarter of 2016, and again this year to discuss “issues related to mobile payments and payment processing, financial innovation, and technology,” according to publicly available lobbying disclosures.

    PayPal, meanwhile, met with OCC officials in the second, third and fourth quarters of last year to discuss “mobile payment innovation” issues related to underserved customers and remittances and money transfers, according to its disclosures.

    Vestwell Raises $ 8 Million in Series A Funding led by F-Prime Capital Partners (Business Insider), Rated: A

    Vestwell, the industry’s first and only fiduciary-backed retirement platform for the financial advisor community, today announced $8 million in Series A Funding led by F-Prime Capital Partners, the venture capital group associated with the parent company of Fidelity Investments, with participation from Primary Venture Partners, FinTech Collective, and Commerce Ventures. Launched in late 2016, Vestwell received $4.5 million in its initial Series Seed of financing in September 2016.

    So far this year, the company has signed over 50 registered investment advisor (RIAs) firms, as well as independent broker-dealers, asset managers, and bank/trust custodians, with plans to onboard several thousand advisors this year.  The funding will be used to grow the team while further enhancing the technology.

    YieldStreet Adds Three Tech Disruptors to Its Advisory Board (YieldStreet Email), Rated: A

    YieldStreet, the fintech company seeking to change the way we invest and accumulate wealth, announced the addition of three new members to its advisory board: Ron Suber of Prosper Marketplace, Alexandra Wilkis Wilson of Gilt, and Mitch Jacobs of OnDeck.

    The three new members join an elite team of advisors whose deep expertise spans technology, investing, policy and financial services. The current members include economic policy expert Donald Marron Jr. of the Urban Institute, Rahul Gupta former Group President of Fiserv (NASDAQ: FISV), Mark Gerson founder of GLG, former House  Majority Whip Tony Coelho, and Todd Deutsch formerly of Goldman Sachs.

    The Risk Of Playing Alt Lending’s Rate Limbo (PYMNTS), Rated: A

    And while there are myriad explanations, one clear issue – according to Quick.me CEO Ola Okeshola – is the simple fact that access to capital for small businesses has dried up significantly since the Great Recession, as banks have either gone out of business or lost interest in lending to that sub-segment of the market.

    FinTech, Okeshola said, can offer SMBs streamlined access to funds in ways that are unprecedented. That’s the good news: There is a large, hungry and addressable market out there.

    The more challenging news is that finding ways to address that market isn’t necessarily as easy as flipping a switch – it’s addressing the right problem in the right way.

    For small business loans, he explained, giving an SMB a low interest rate or a very fast approval time nearly guarantees they will sign on, regardless of how much it cost the alt lender to acquire that customer.

    In Quick.me’s case, that means working with POS providers as their referral source, to basically cut their customer acquisition costs as much as possible. Because they can’t make money back spending hundreds of millions to acquire customers, they instead decided to explore how to work with someone who’s already spent that money.

    The Source Code: Max Levchin (Marketplace), Rated: A

    Max Levchin knows a thing or two about money. He helped found PayPal almost 20 years ago, and his new startup, Affirm, is in the business of lending.


    Source available: Finance Industry Files Lawsuit to Overturn CFPB Arbitration Rule (Ballard Spahr Email), Rated: A

    A coalition of chambers of commerce and consumer financial services associations, including the U.S. Chamber of Commerce and the American Bankers Association, filed a lawsuit in federal court on Friday seeking to block the implementation of the Consumer Financial Protection Bureau’s final arbitration rule. The rule would prohibit the use of class action waivers in consumer financial services arbitration agreements. Class action waivers preclude consumers from participating in class action lawsuits and instead require them to individually arbitrate their disputes with companies.

    Fintech startup Curve partners with accounting software Xero to make filing expenses ‘frictionless’ (TechCrunch), Rated: A

    Curve, the London fintech startup that lets you consolidate all your bank cards into a single card and track your spending, has partnered with accounting software Xero to remove much of the friction involved in filing expenses. The move is part of the newly-launched ‘Curve Connect’ feature that will see Curve connect to a growing list of third-party apps and services to make managing your money easier.

    Specifically, the Xero feature gives you the option to connect the Curve app to Xero so that spending on your Curve card (and therefore any of the underlying cards you’ve linked Curve to) can be automatically added to the accounting software without the need to enter each expense manually.

    Here’s How Blockchain Will Change the Financial Services Industry (Business.com), Rated: A

    The blockchain is, essentially, a vast, distributed ledger capable of recording anything of value. It can record deeds, rental agreements, equities, contracts, money, titles and, realistically, any kind of asset. These records can be stored and moved privately between two parties independent of any financial intermediary. It is essentially a peer-to-peer transaction tool that does not rely on an intermediary for verification or identification of the involved parties.

    If financial intermediaries are not required for transactions, banks are the supposedly biggest losers in this equation.

    Lawyers, investment bankers, and venture capitalists come with high attached costs, but the emergence of peer-to-peer lending schemes and equity crowdfunding schemes have derailed this market for over a decade.

    First Data, Live Oak team up on fintech startup to take on big banks (Biz Journals), Rated: A

    A New York technology firm and a North Carolina banking company have joined forces on a startup that could help community banks compete with mammoth firms such as Bank of America and Wells Fargo.

    Checking account fees surge. Here’s how to dodge them (Bankrate), Rated: A

    There is a paradox in banking right now: Fees have never been higher, but it’s also easier than ever to sidestep them.

    The average cost of an out-of-network ATM withdrawal is $4.69, up 2.6 percent from a year earlier, according to the 2017 Bankrate checking account survey. Meanwhile, overdraft fees rose 1 percent to $33.38.

    But if you tweak your habits, assess priorities and lean on technology, you can dodge these charges altogether.

    Overdraft fees

    Source: Bankrate

    Link a savings account. This will serve as a backstop to your checking account. Your bank may charge you to move money when you overspend, but that fee might be $5 to $10, McBride says — significantly less than the cost of an overdraft. If you have an alert on, you can move money from your buffer account into your checkingwithout a charge.

    Instead, look for no-fee or low-fee accounts, like those offered by online banks and fintech companies, like Dave.com, Chime and Qapital.

    ATM fees

    The average ATM surcharge — the fee levied by the other bank — was $2.97, up 2.4 percent from a year earlier, according to our survey. The average fee banks charge to use another bank’s ATM was $1.72, up nearly 3 percent from a year earlier.

    Source: Bankrate

    If it is unwilling or if you want better options, shop around for other accounts. Some online banks not only have no out-of-network fee, but cover a set amount — say $15 — of ATM surcharges each month.

    Tamarack Launches 5 Clients with Lease/Loan Origination Accelerator (Monitor Daily), Rated: A

    Tamarack Consulting, a provider of independent software solutions in the equipment finance and commercial lending industry, has taken five new clients live on Salesforce utilizing Tamarack’s proprietary Lease/Loan Origination Accelerator.

    With more than 40 Salesforce clients utilizing the Lease/Loan Origination service, Tamarack added VFI Corporate Finance, TEAM Funding Solutions, Centra/4 Hour Funding, BSB Leasing and Dimension Funding to its list of clients that launched through the Lease/Loan Accelerator and are now processing leases and loans via Salesforce.com.

    Tamarack’s Lease/Loan Origination Accelerator on Salesforce is a scalable solution offering users the ability to automate work queues, increase throughput of loans without additional head count and customize notifications from lead generation through to funding.

    Average CEO Pay at Big RIAs Nears $ 800K (Financial Advisor IQ), Rated: B

    If you’re trying to break away or simply want to see what the big boys are doing on The Street in terms of compensating key employees, then Fidelity has some salary benchmarking figures that might be of interest.

    In a new research report, the asset manager and custodian surveyed large RIAs and multi-family offices to see what they’re paying in 20 different job categories.

    Participants were handpicked by Fidelity and required to have at least $1 billion in assets under management. Compensation ranges from CEOs getting on average $458,900 in base pay — $797,300 with cash and other bonuses included — to $285,200 for a typical big company chief investment officer ($469,600 total).

    By contrast, chief financial officers have “a significantly lower portion of their compensation based on incentives,” the survey adds. Base pay for a typical CFO is listed at $243,100 with total compensation topping $328,000.

    Angelo State University Students Graduate With Very Little Debt (San Angelo Live), Rated: B

    Angelo State University has been ranked among the nation’s top 150 “Public Colleges That Give Students the Least Private Student Loan Debt” by The Student Loan Report (SLR), a news and information guide dedicated exclusively to college student loans and financial aid.

    ASU is ranked No. 57 in the nation, which puts ASU in the top 12 percent of the 480 public colleges in the U.S. that left students with private student loan debt. According to the SLR rankings, only 3 percent of ASU graduates leave school with outstanding private student loan debt, and their average debt load is $14,431.

    The fintech name generator (Vested Ventures), Rated: B

    Vested has launched a fintech name generator with categories for banking, investment management, lending, payments, personal finance, tax & accounting, wealth management, blockchain, private equity, insurtech, and more. Check it out here.

    United Kingdom

    What’s £38m of “other expenses” between friends? (Financial Times Alphaville), Rated: AAA

    Take Funding Circle, for example.

    The accounts showed sales up 59 per cent to £50.1m, while its operating loss worsened at a slower rate of 30 per cent to £51.8m.

    Despite the progress, operating expenses at £103m still stand at double the company’s sales.

    Rent on land and buildings, as well as depreciation and amortisation, make up another £9m or so of operating expenses.

    Source: Financial Times

    The P2P Power 50 (P2P Finance News), Rated: AAA

    So, who are the key players influencing the UK’s P2P sector? The inaugural Peer2Peer Finance News Power 50 list aims to identify the big names in the industry who have helped it grow into a force to contend with over the past decade and who will play a key role in its future.

    Our top 10 list gives particular acknowledgement to the most influential individuals that we believe have helped establish the P2P brand or will be the biggest drivers in its future.

    Source: P2P Finance News
    Source: P2P Finance News

    Read the full list of P2p powerbrokers.

    £200m UK SME funding programme launched by ThinCats (RealBusiness), Rated: A

    Lending platform ThinCats and parent company ESF Capital have introduced a £200m SME funding programme for British growth businesses.

    The launch of the SME funding scheme by ESF and ThinCats will support loans from £100,000 right up to £5m for leaders looking for an injection to take their companies to the next level.

    The company is joined by New York-headquartered Waterfall Asset Management, which has added £70m to the pot, a firm that currently manages $6bn of assets.

    Why financial services should be terrified of dispensing wealth management robo-advice (Banking Technology), Rated: A

    Robo-advice costs less than “bricks & mortar & human” services, hopefully harvesting a bigger market. Today it primarily invests clients’ money in mainstream investments aimed at generating attractive risk-adjusted returns over time.

    With mutual distributed ledgers (aka blockchains), there are going to be immutable versions of what was advised, what happened, and what the robo-code at the time decided. Robo-advice with blockchain leaves a permanent trail.

    London-Based Fin-Tech Platform Nebeus Championing Banks as Public Utilities (Business Insider), Rated: A

    London-based Nebeus.com – a crypto-currency platform enabling customers to buy, sell, store, remit, lend and borrow crypto-currency funds – is launching a pre-ICO campaign to fund its ambitious plans.

    Developed over the last three years, the company currently operates as a crypto-currency wallet, allowing consumers to buy, remit, loan, borrow and exchange. They are also proud to have recently joined LEVEL39 – the world’s most connected community for finance, cybersecurity, retail and smart-city technology businesses.

    Having raised over £1.5M GBP in private funding in previous years, the company wants to open up its platform to third-party developers; creating a ‘supermarket’ of financial products and services based on blockchain and smart contracts, while providing full transparency and security as it serves individual, corporate and developer communities.

    Download the Nebeus whitepaper.

    Landbay makes five new hires following record lending month (Financial Reporter), Rated: A

    Landbay has reported a record month of buy-to-let lending in September, with a total of £6.31 million lent across 31 mortgages.

    In response to the growth, as well as to the new PRA regulation surrounding portfolio landlords, Landbay has made five new hires.

    Among them, James Cooper-Smith and Joela Jenvey both join the lending team as Senior Lending Officer and Key Account Manager respectively, while Wing Chan joins the wider team as Operating Manager.

    How To Raise Finance For Your Business (The Voice), Rated: B

    1. THE SOURCE

    Equity has massive implications for dilution – so don’t ignore the debt option.

    2. THE FINANCIAL MODEL

    Put your figures into a spreadsheet and test them. Try out different scenarios – see what happens to the numbers.

    3. THE VALUATION

    To get a sensible, realistic idea of the value of your company, compare the most recent valuations for transactions in the space.

    4. THE MONEY

    For example, Sola Bank and Baldetton Capital work in the £100million arena. Whereas EIS/SEIS and VCT funds generally work in the £1-5million sphere. For smaller amounts contact angel investors.

    5. THE CONTACTS

    6. THE DOCUMENTS

    It is essential to prepare a one-page summary of the opportunity. Too much information is not helpful.

    China

    CBRC cautions on surging consumer loans (China.org), Rated: A

    China’s top banking regulator on Friday warned surging consumer loans may pose potential risks to the country’s lending system.

    It also cautioned against a fast rise in consumer leverage ratio.

    Recent inspections on banks by CBRC branches and the People’s Bank of China, the central bank, have found that some consumer loans were used to make a down payment for home purchases or as an investment, rather than using them for travel, education, home renovation or to buy consumer durables.

    International

    Souqalmal.com raises $ 10m in Series B funding with investment from UK’s GoCompare (The National), Rated: A

    Price comparison website Souqalmal.com has raised US$10 million in Series B funding to expand its regional presence and increase its offline service offering, with leading UK firm GoCompare joining the funding round.

    GoCompare Group, which operates the popular UK comparison site GoCompare, is a minority investor in the funding, which is led by Saudi-based Riyad Taqnia Fund (RTF), with UAE Exchange Group also participating.

    Asia

    TrueMoney finds a niche in Myanmar’s mobile fintech space (Myanmar Times), Rated: AAA

    TrueMoney, one of the newest additions to the string of fintech firms vying for a slice of the mobile money market in Myanmar, is upping its game in the face of rising competition.

    TrueMoney, a Thai company, provides mobile financial services allowing users to deposit cash in mobile accounts online or at physical point-of-sale outlets and transfer cash equivalents to a network of agents domestically or overseas.

    In ASEAN, TrueMoney is the only fintech company to have established a mobile money network in Thailand, Cambodia, Vietnam, the Philippines, Indonesia and Malaysia, allowing users to transfer money between these countries.

    TrueMoney is also the only mobile payments firm that allows Myanmar workers in Thailand to send money home, all within the hour.

    Around 80 per cent of the population do not have bank accounts in Myanmar, where most prefer to carry large wads of cash. With mobile money technology, many operators see the country leapfrogging bank accounts altogether.

    Middle East

    This UAE Startup Secured an Investment of US$ 5M, and is Planning on Expanding to Saudi Arabia (Startup Magazine), Rated: A

    The leading MENA’s peer to peer lending platform, Beehive, has managed to secure US$5 million investment as part of a Series A round Riyad TAQNIA Fund.

    Up to now, Beehive has successfully arranged the lending of over US$ 35 million (AED 130 million) to more than 200 business finance requests. In addition to that, it also registered more than 5,000 international investors.

    Authors:

    George Popescu
    Allen Taylor

Monday October 2 2017, Daily News Digest

marketplace lending uk

News Comments Today’s main news: CEO-less SoFi will have to wait to get a bank. Zopa partners with Saffron Building Society. Zopa updates credit risk model. Assetz Capital lowers commercial mortgage interest rate to 6.9%. RateSetter reports 56% of investors switch from cash. Beehive raises $5M. African billionaire invests in digital bank. Today’s main analysis: UK marketplace lenders struggle to find […]

marketplace lending uk

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

MENA

South Africa

News Summary

United States

SoFi’s CEO Hiatus Stalls Its Big-Time Banking Ambitions (The New York Times), Rated: AAA

One of the most valuable private financial technology startups in the United States, SoFi’s $4.3 billion valuation was based on expectations it could develop into a major lender but Cagney’s departure this month and the circumstances around his exit complicate efforts to create a new-generation bank that could compete against JPMorgan or Bank of America.

The company has hired headhunters over the past few days to help find his replacement, but an appointment is not expected to take place until the end of the year, a source familiar with the matter told Reuters.

The gap at the top is likely to stall SoFi’s application for a banking license, according to the source, because regulators assess whether a company has a capable CEO before allowing it to accept deposits.

A banking license was a key part of Cagney’s push to grow SoFi beyond its core business of student loans and unsecured personal loans.

But without Cagney at the helm, the emphasis is expected to shift.

The company will be more disciplined about testing new products before selling them widely, a source close to the company said.

Square Wants To Be A Bank, And Real Banks Are Pissed (BuzzFeed), Rated: AAA

Small businesses love Square because it charges them less than the bigger, bank-owned payment processors, and the little white card-swipes that plug into a smartphone are easier and more convenient than handheld credit card terminals. Square also — through a partnership with a tiny bank in Utah — makes loans to small companies and entrepreneurs banks would turn away.

As much as small merchants love Square, smaller banks distrust it, particularly now that the company, which is based in San Francisco, has applied to become an industrial loan company (ILC), a controversial type of banking license offered in Utah and a few other states.

And while Square insists it only wants to make small loans to the merchants it serves, banks see this as a backdoor way into their bread-and-butter business of taking deposits and making loans, both to businesses and consumers.

And Square, with its at least 2 million merchant customers, may look to today’s bankers a lot like Walmart did a decade ago. The company has been aggressively soliciting the merchants who use it as a payment processor, offering them small-dollar loans by email.

Take Courtney Foster, who runs a one-chair salon in the Murray Hill neighborhood of Manhattan and has used Square to accept payments for years. One day she got an email from Square Capital with an offer of a loan of $1,000 to $1,500, which would be paid back directly out of her payments processed through Square.

She has since borrowed about $3,000 in total from Square using the money (supplied by Celtic Bank) to start her own line of hair products.

The average loan approved by Square is about $6,000, and the company has either advanced or loaned almost $2 billion since 2014. The amount due back is typically 10% to 16% more than the amount loaned out — which is on the low end for similar types of small business finance  with payments coming out of a fixed percentage of the merchant’s receipts received through Square. The whole balance is due after 18 months, though Square customers can repay early.

Utah has 16 industrial banks, and most fall into the latter category, while some are retailers that issue their own loans, like BMW. Other companies that operate Utah industrial banks include American Express, USAA, UBS, and Sallie Mae.

Acting OCC Head Noreika Comments on FinTech Charter and Online Lending (PeerIQ), Rated: A

Also, in a major shift from prior OCC Head Tom Curry, Noreika affirmed that the proposed FinTech charter could be granted to commercial firms. Former Chair of the FDIC, William Isaac, was also constructive on the concept of enabling commercial firms to engage in banking to drive greater competition, customer choice, and expand access to credit to the 60% of Americans that cannot access a loan from a US bank. Historically, the separation of banking and commerce under the Bank Holding Company Act has prevented commercial firms (outside the ILC charter) from offering banking services. Our interpretation of the above is that, under the FinTech charter, commercial firms such as Walmart, Amazon, Google, and Facebook would have a path to offering banking services.

Cross River Bank CRO Adam Goller moderated a panel including PeerIQ (Ram Ahluwalia), Affirm (Alex Karram), Marlette Funding (Jeff Meiler), and former Massachusetts Commissioner of Banks, David Cotney. PeerIQ cited data and research from Columbia and Harvard Law concluding that the lack of regulatory clarity stemming from Madden-Midland has reduced the availability of credit in District 2.

On Timing for Issuing Charters:
“Interest also remains in the possibility of the OCC offering special purpose national bank charters to nondepository fintech companies engaged in the business of banking. … We have not, however, decided whether we will exercise that specific authority to issue special purpose national bank charters to nondepository fintech companies. We will keep you posted.”

PeerIQ Context: The Conference of State Bank Supervisors and NYS Dept of Financial Services have challenged the OCC’s authority to issue charters. Also, the OCC may be waiting for the nominee of Head of OCC Joseph Otting to be confirmed by the US Senate before introducing the FinTech Charter. Otting was approved by the Senate Banking Committee in early September.

Will They or Won’t They: The OCC’s Fintech Charter (Payments Journal), Rated: A

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 non- depository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.”

“Acting U.S. Attorney Joon Kim, representing the defendants, argued that DFS lacks standing in the complaint because the OCC’s regulations addressing the special-purpose national bank charter have resulted in no injury-in-fact, because the office has not reached a final decision on whether it will offer the specific type of national bank charter that does not take deposits and conducts activities other than fiduciary activities. The U.S. Attorney’s Office also argues that the complaint should be dismissed for failure to state a claim.”

Scott Robinson of Plug and Play Fintech (Lend Academy), Rated: A

One of the leading accelerator programs today is Plug and Play, they claim to be the world’s largest startup accelerator. Lending Club and many other big names have gone through their program. In 2014 they started a dedicated fintech accelerator program, founded by Scott Robinson, who is our latest guest on the Lend Academy Podcast.

The Massive Hedge Fund Betting on AI (Bloomberg), Rated: A

Man Group, which has about $96 billion under management, typically takes its most promising ideas from testing to trading real money within weeks.

What spooked him was an experiment at his firm, Man Group Plc.Engineers at the company’s technology-centric AHL unit had been dabbling with artificial intelligence—a buzzy, albeit not widely used, technology at the time. The system they built evolved autonomously, finding moneymaking strategies humans had missed. The results were startlingly good, and now Ellis and fellow executives needed to figure out their next move.

The program stayed in quarantine until 2014, when a senior portfolio manager with a Ph.D. in mathematical logic named Nick Granger decided it was time to take it out of testing. He gave the AI system a small amount of money from a portfolio he was managing—then more, then more again. At each step, the program was profitable.

Source: Bloomberg

Matic Insurance Services and LendingQB Team Up to Eliminate Stress, Mortgage Delays Related to Homeowner’s Insurance (PR Newswire), Rated: B

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, today announced a new partnership with LendingQB, a provider of “lean lending” loan origination technology. Matic announced the news as part of a live demonstration at San Francisco’s Digital Mortgage conference.

Matic’s integration with LendingQB’s flagship loan origination software (LOS) makes it easy for borrowers to upload or secure a homeowner’s insurance policy during the mortgage application process. The result is a less stressful experience for borrowers and the elimination of costly insurance-related delays for LendingQB’s lender clients.

Is Yahoo a fintech company now? (Quartz), Rated: B

Fintech generally refers to companies like SoFi, TransferWise, and Revolut, whose ambition is to use technology to challenge traditional banks. What Yahoo Finance is doing is a little different—its app will add online brokers like Fidelity and E-Trade to its platform, but it won’t make any money from the brokerage charges. Instead, Yahoo Finance (now part of Oath, a Verizon-owned company), which has about 41 million mobile users, is trying to boost usage of its app.

The platform is targeted at devoted investors and provides more financial data for free than you can get outside of a Bloomberg terminal, according to Michael La Guardia, Yahoo Finance’s head of product.

Alipay almost accidentally started the world’s biggest money market fund (paywall) when it gave users a way to park their money from mobile payments. Amazon, meanwhile, offers credit to its merchants and has made more than $3 billion of loans, according to the World Economic Forum (WEF). Facebook has ambitions for its app to do just about everything, including financial activities. Tencent’s WeChat in many ways already does.

United Kingdom

Zopa searches for new borrowers through Saffron Building Society loan partnership (City A.M.), Rated: AAA

Zopa is partnering with a building society to offer its loans as it seeks to add more borrowers to the platform.

The online peer-to-peer lender will provide loans at 11 bricks-and-mortar branches of Saffron Building Society across Hertfordshire, Essex and Suffolk, as well as online.

Zopa Announces Credit Risk Model Update (Crowdfund Insider), Rated: AAA

On Friday, online lending platform Zopa announced the latest update of its credit risk model. This news comes just a few weeks after the lender announced updated on improving loan sale time progress, rebate period, and ISA transfer-in. Chief Product Officer at Zopa, Andrew Lawson, revealed he and his team are continuing to monitor leading macroeconomic indicators carefully alongside how Zopa’s loans are performing compared to expectation:

Marketplace lenders struggle to find borrowers (Financial Times), Rated: AAA

Zopa, the world’s first peer-to-peer lending company, hoped the partnership whereby drivers for the ride-hailing app were directed to its website for loans would mark its entry into a multibillion-pound market for secured loans in the UK.

But barely six months after the deal was struck it collapsed, with the partnership failing to attract as many drivers as expected.

Zopa’s experiment with Uber underlines the enormous difficulty faced by marketplace lenders attempting to find new borrowers. These borrowers are crucial for the platforms to grow at a time when there is strong interest from institutional investors to provide crowdfunded loans.

Source: Financial Times

According to Mr Zhang, institutional investors such as hedge funds, asset managers, pension funds and family offices now account for between 30 and 40 per cent of peer-to-peer consumer and business lending, compared with less than 5 per cent before 2014. BlackRock, the world’s largest asset manager, made its first significant retail investment in peer-to-peer loans last year when it bought a stake in Funding Circle’s investment trust.

So far, however, they have struggled to attract borrowers to match this demand. Competition is increasing from traditional banks — Goldman Sachs has its own online lending platform — especially for prime and super-prime debt that is less likely to default.

Source: Financial Times

Assetz Capital Lowers Commercial Mortgage Interest Rate From 7.9% to 6.9% (Crowdfund Insider), Rated: AAA

Assetz Capital, one of the UK’s fastest growing peer-to-peer finance platforms and the largest property backed peer-to-peer lender, announced on Friday it has lowered its entry interest rate for commercial mortgages from 7.9% to 6.9% in an unprecedented move to give access to even lower rates for lower-risk borrowers looking for commercial mortgages. This is one of the lowest rates available from any alternative finance providers.

Three million small businesses still don’t accept cards, despite move away from cash (The Telegraph), Rated: AAA

Around three million of Britain’s small businesses do not accept card payments, despite the UK rapidly becoming a nation of card-only shoppers.

One in six British shoppers now uses cards only to pay. A further 38pc would typically try to pay with a card first before they have to pay with cash, according to a study by Square, the payment company belonging to Twitter founder Jack Dorsey.

Small companies could be missing out on millions of pounds’ worth of business by not offering card payment facilities, Square warned.

Card payments overtook cash payments as the main method of purchases in the UK for the first time in July this year, according to the British Retail Consortium. The average Brit has just £32.54 in cash in their purse or wallet right now – not enough to cover more than one of the average transaction size of £18.42.

Wonga on course for profit this year after major changes (Express), Rated: A

The company, which has been overhauled under new management after being accused of targeting the vulnerable and being forced to compensate nearly 200,000 borrowers who overpaid owing to “system errors”, cut its annual pre-tax loss from £80.2million to £64.9million.

Revenue grew by 18 per cent to £76.7million as more products boosted customer numbers by 6 per cent.

Wonga confirms £64.9m loss in year it ended Newcastle United sponsorship (ChronicleLive), Rated: A

Britain’s biggest payday lender Wonga has revealed it remained deep in the red last year with losses of £64.9m, but confirmed plans to return to profit in 2017.

Nutmeg loss widens to £9.3m as it develops advice offer (Citywire), Rated: A

Nutmeg’s 2016 losses have widened £9.3 million as it continued to invest heavily, as it presses ahead with developing the ‘most approporate’ advice proposition for its customers.

The loss, revealed in its accounts published on Companies House, follows the £8.9 million loss it posted in 2015. Its operating expenses rose from £10.8 million to £11.9 million over the year.

At the end of the year Nutmeg managed around £600 million in assets under management on behalf of 25,000 clients.

Turnover rose by almost 50% from £1.72 million to £2.56 million.

Wealthtech is coming to the High Street (Banking Technology), Rated: A

One area of fintech that is of interest is wealthtech. This sub-sector is likely to become more visible over the next few months. Wealthtech has become defined as utilising technology to enhance wealth management and the retail investment process.

The most visible players in the UK are the robo-advisors with Nutmeg the best known (and RiskSave following behind!) but other concepts are also deserving of attention, such as Munnypot.

These developments will soon be more visible at branch level.

An offering of automated financial advice from the retail banks could go a long way towards alleviating this. Santander and HSBC have already launched product offerings in this space, RBS is trialling a service through its Coutts’ sub-brand and Lloyds (with a quarter of the UK market) are sitting on the sidelines awaiting the results of the regulator’s Financial Advice Market Review (FAMR).

Fintech start-up Curve adds cloud-based accounting software to its app to simplify expenses (CNBC), Rated: A

Fintech start-up Curve will now let users claim business expenses across multiple bank cards through its app.

The London-based firm’s app allows its users to link all of their bank cards to one contactless MasterCard. Curve said it hopes to automate the tedious process and remove any friction associated with business expenses. It is predominantly targeted at small business owners and the self-employed.

Curve said Monday it would add online accounting software developer Xero to the app, meaning users will now be able to claim business spending across all their accounts.

The hottest startups in London (Wired), Rated: A

As London’s startup community awaits the result of Brexit negotiations – and its impact on single-market access – one might think tech would have ground to a halt. But growth continues: the last 18 months have seen billion-dollar valuations for TransferWise, Funding Circle and Improbable, and a near-unicorn valuation for Deliveroo.

Monzo

Monzo wants to make banking smarter. Founded in 2015 by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman, it offers pre-paid cards connected to an app that tracks spending and lets its customers analyse their financial activity.

Nested

One of a growing number of UK property – or proptech – startups, Nested guarantees that it will sell your house within 90 days, or buy it themselves.

Habito

Habito scours more than 15,000 mortgage products to suggest the best option, and takes a commission from the eventual lender. In January 2017, the startup raised £5.5 million in a Series A round led by Ribbit Capital.

Ravelin

Founded in 2014, Ravelin analyses online behaviour in real time to reduce payment-related fraud. According to its clients – including Deliveroo, Karhoo, and Easy Taxi, its technology reduces fraud incidence by more than 50 per cent. The company has raised £4.3 million to date from backers including Passion Capital and Errol Damelin.

P2P needs the FSCS stamp of approval (Citywire), Rated: B

Some commentators estimated nearly half a million new investors would try their hand at P2P lending when the Innovative Finance ISA brought eligible platforms into the ISA fold.

This is unsurprising given that, according to government statistics, British consumers have around £500 billion either saved or invested in ISAs.

However, the stampede has not arrived yet.

Plenty of people think the FSCS offers an insurance policy against poor investment performance. It does not. If a share portfolio tanks, for example, the scheme will not be there to save you. That is the risk you run by choosing to invest in the equity markets.

The FSCS is, however, on hand to compensate investors if a provider has been shown to mismanage its product, and has subsequently gone bust. Only then does it offer up to £50,000 (2017/18 tax year), not the larger amount doled out to savers.

Hull has fast become a profitable city for buy-to-let landlords (Mortgage Introducer), Rated: B

LendInvest’s buy-to-let index ranked the city as the fifth best buy-to-let postcode for landlords in the third quarter of 2017, up from 33rd in the second quarter.

“Cities such as Hull and Nottingham making significant gains in the Index (up #33 to #5 and #35 to #12 respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.

The top 10 areas for investors in order of ranking are Luton (#1), Colchester (#2), Manchester (#3), Rochester (#4), Hull (#5), Stevenage (#6), Romford (#7), Southend-on-Sea (#8), Ipswich (#9) and Ilford (#10).

China

Wealth-Management Industry at Turning Point (Caixin), Rated: AAA

China’s wealth-management industry is undergoing profound changes, shifting away from short-term, fixed-income products to longer-term, equity-based investment, said Tang Ning, chief executive of Beijing-based fintech conglomerate CreditEase.

Last year, the Forbes listed a record 400 billionaires from the Chinese mainland, compared to 335 a year ago. The listed members held a total of $947 billion assets, a 14% rise from the previous year. Meanwhile, China’s per-capita GDP exceeded $8,123 in 2016, up from $8,069 a year earlier, according to the World Bank.

Unlike investors in the U.S. and other developed market, Chinese investors have long favored most the fix-income products like bonds and bank bills, betting on governments’ implicit payment guarantee. But as China’s economy slows and its financial market liberalizes, the government has become increasingly hesitant to offer such sweeping guarantees.

A number of wealth management companies including CreditEase have launched private equity FOF over the past few years. In early September, the China Securities Regulatory Commission (CSRC) approved the first batch of six firms including China Asset Management, China Southern Fund Management and Manulife Teda Fund Management to set up publicly offered FOF products.

Tang estimated that there are 200 million active investors in China who do not have access to human advisers and asset managers because of their hefty fees.

Alibaba’s Jack Ma places bet on China’s online insurance market (Asian Review), Rated: A

When the heads of three of China’s most prominent companies join hands to launch a start-up, investors notice.

Jack Ma Yun of Alibaba Group HoldingTencent Holdings‘ Pony Ma Huateng, and Peter Ma Mingzhe of Ping An Insurance Group — collectively known as the “three Ma’s” — did just that. Looking to turn Ping An into a full-blown financial technology company within ten years, Peter also enabled the growth of Lufax, which started as a peer-to-peer lending platform in 2011 and became one of the most valuable e-finance company worldwide as of September.

Four years ago they founded China’s first online-only insurer. It was a company with an untested business model and making no money, but it sparked an investor frenzy.

Source: Asian Review

HSBC: Mobile banking in China begins with your face (Enterprise Innovation), Rated: A

Mobile banking continues to soar in China. According to China Internet Watch, total transactions of China mobile banking clients totaled 55.63 trillion yuan (US$44 trillion), up 5.1% quarter on quarter. China Construction Bank (26.1%) and Industrial and Commercial Bank of China (21%) have a combined market share of close to half of mobile banking in Q2 2017.

European Union

French Real Estate Crowdfunding Grows Steadily and Delivers (Crowdfund Insider), Rated: AAA

The French real estate crowdfunding market grew by 50% in 2016 and keeps growing at the same linear growth pace in 2017. While new platforms continue to join, first entrants strongly dominate the nascent market. With €160 million worth of real estate projects funded, the French platforms have a positive record of delivering expected returns.

It has since grown at a fast, but more linear pace of +53% to reach €68 million in 2016, and is expected to grow by 50% again in 2017.

French real estate crowdfunding attracts new platforms. In 2016, their number grew from 26 to 42, with 19 new entrants and 3 withdrawals. Indeed, more than 90% of real estate crowdfunds are raised by the top 10 platforms and 75% by the top 5. Between them, the two leaders, WiSeed and Anaxago, account for more than 50% of the market.

Top 10 French real estate crowdfunding platforms
Platform

Regulatory Status

Regulated Real estate since

Projects

Value

Repaid

Wiseed

PSI

2014

123

€53,197,600

33 %

Anaxago

CIP

2014

83

€38,908,333

18 %

Lendix

IFP

2014

14

€15,875,000

7 %

Clubfunding

CIP

2015

30

€10,075,500

27 %

Lymo.fr

CIP

2015

29

€8,196,500

45 %

Fundimmo

CIP

2015

23

€7,734,900

26 %

Homunity

CIP

2016

22

€6,732,200

18 %

Koregraf

CIP

2015

17

€4,935,500

47 %

Proximea

CIP

2015

5

€3,490,000

20 %

Immovesting

CIP

2016

7

€2,932,000

Source : , September 2017

 

Source: Crowdfund Insider

WINNERS ANNOUNCED FOR INVESTOR ALLSTARS EVENT (BusinessCloud), Rated: A

The winners of the 15th annual Investor Allstars awards were announced this week, with Funding Circle co-founder and CEO Samir Desai being crowned Entrepreneur of the Year and CoderDojo winning the Tech4Good award.

The Entrepreneur of the Year award went to Samir Desai of Funding Circle and online property lending and investment platform LendInvest was announced as Europe’s Allstar Company.

The full list of award winners is:

  • Exit of the Year: Skyscanner (Scottish Equity Partners)
  • Growth and Buyout Fund of the Year: Livingbridge
  • Entrepreneur of the Year: Samir Desai (Funding Circle)
  • VC Fund of the Year: Idinvest Partners
  • Europe’s Allstar Company: LendInvest
  • Corporate Development Team of the Year: Sage Group
  • Investor of the Year: Benoist Grossmann (Idinvest Partners)
  • VCT of the Year: Octopus Ventures Specialist
  • Debt Provider of the Year: Kreos Capital
  • Seed Fund of the Year: LocalGlobe
  • Service Provider of the Year: Orrick
  • Tech4Good Award: CoderDojo Foundation (part of Raspberry Pi Foundation)
  • Digital Innovation in Art: Articheck

That viral ‘mermaid dog’ video was too good to be true (The Daily Dot), Rated: B

It seemed too good to be real. A hairy creature, which some people guessed was an afghan hound, effortlessly floats underwater and moves its arms with the grace of a ballet dancer. It’s pure euphoria, captured in a video that lasts only a few seconds.

When Klarna, a tech bank with a focus on online shopping, posted the video to its Instagram account on Sept. 17 with the caption, “When you’re swimming into the weekend like… #noworries,” many people assumed it was a video of a real animal swimming in a pool. Or maybe they just wanted to believe.

It’s an animation that is part of an ad campaign for Klarna, which is trying sell people on the company’s “smooth” payment system.

International

Regtech Startups On Pace For Record Deals, Against Backdrop Of Shifting Regulatory Landscape (CCB Insights), Rated: AAA

Deals to regtech startups have increased steadily (if at times slowly) over the past few years, from 83 deals in 2013 to 147 last year. At the current run rate, deals in 2017 are on track to hit a new high, while funding is on pace to grow 14% to nearly match record funding levels set in 2015.

In 2017 YTD, regtech startups have seen 103 deals worth $894M in disclosed equity funding. At the current run rate, deals in 2017 are on track to reach a new high of 148 (up slightly from 147 in 2016). Funding is also on pace to grow, potentially bringing total disclosed equity investment over the last 5 years to more than $5B.

Source: CB Insights

Last quarter saw 34 deals, dipping 13% from Q1’17 to hit a 6-quarter low. Though deals were down, funding was up 14% from the previous quarter — and grew 64% year-over-year — to reach $326M.

H1’17 has seen 73 investments, up 3 deals from H1’16, while funding is up approximately 54% over the same period.

Source: CB Insights
Australia/New Zealand

Yield-hungry investors switch their cash to peer-to-peer lenders (The Sydney Morning Herald), Rated: AAA

Peer-to-peer lender, RateSetter, says 56 per cent of money invested with it is from savers withdrawing their money from their bank savings accounts.

Yield-hungry investors are understandably frustrated with earning next-to-nothing on their cash held at their banks, with interest rates at historic lows and likely to stay that way for the foreseeable future.

With the the advent of peer-to-peer (P2P) lenders, online platforms that match investors and borrowers, investors can get up to  three times the interest paid by term deposits.

NZ named Asia Pacific’s fintech champ (NZ Adviser), Rated: A

New Zealand has the highest per capita fintech lending volumes of any country in the Asia Pacific, and has embraced fintech faster than any other neighbouring Asia Pacific countries.

According to the research, peer-to-peer consumer lending forms the bulk of market activity in here. The second largest was donation-based crowdfunding, for which US$16.8 million was raised in 2016 – an increase of around 100% over the previous year. Equity-based crowdfunding was the third largest model in New Zealand with US$13.85 million across 2016 – up from US$11.86 million in 2015.

Appetise’s ASX listing; Study Loans & RateSetter close funding (Deal Street Asia), Rated: A

UK startup Appetise looks to list on the ASX, Study Loans has secured seed funding and P2P lender RateSetter Australia has closed additional funding from a private equity (PE) fund.

Melbourne-based fintech Study Loans, which offers a credit engine targeted at the student loans sector, has raised A$2 million ($1.56 million) in seed funding from investors that include the Simonds family and RMY Corp, as well as A$5 million ($3.9 million) in debt equity.

RateSetter Australia, a peer-to-peer (P2P) lending platform, has secured A$8.5 million ($6.65 million) from private equity fund Five V Capital. The deal values the company in excess of A$100 million. Existing equity investors in RateSetter are RateSetter UK, Carsales and Strattons.

India

Chqbook – Gurgaon Based Fintech Startup Raised Funds (Bizztor), Rated: B

Chqbook – a fintech startup that allows customers to explore, compare, book and get personal finance products like home loans, personal loans and credit cards, raises undisclosed funds from Youwecan backed Startup Buddy, Apurva Chamaria, global head of corporate marketing, HCL, Sachin Arora, ex-CTO Myntra, Bharat Gupta, Founder of Net Asset Consulting LLP, Amit Manocha, Private equity professional based out of Singapore, and others.

APAC

Indonesian P2P lending platforms recorded 496.5 per cent year-to-date growth of funding allocation (e27), Rated: AAA

Indonesian Financial Services Authority (OJK) revealed that peer-to-peer (P2P) lending platforms in Indonesia in total has channeled up to IDR1.4 trillion (US$106 million) in funding for small and medium enterprises (SMEs) in the country. The number is a 496.5 per cent year-to-date (YTD) growth from December 2016’s number of IDR242.48 billion (US$17.9 million).

Funding Societies Dubbed First Southeast Asian Company to Win Global SME Excellence Award from United Nations’ ITU Telecom (Crowdfund Insider), Rated: A

Singapore’s and Southeast Asia’s SME crowdfunding platform Funding Societies announced on Friday it was named the first southeast Asia company to win the Global SME Excellence Award from United Nations’ ITU Telecom, which was held this year in Busan, South Korea. 

PLDT unit disrupts businesses (Manila Standard), Rated: A

Vea, 67, now heads Voyager Innovations Inc., the digital arm of PLDT and the one behind digital platforms such as Smart Padala (mobile remittances), PayMaya Philippines Inc. (formerly Smart e-Money), Freenet (free sponsored data platform), VYGR (digital performance-based marketing), Tackthis! (electronic commerce platform), Hatch, (marketing technology and innovations platform), Lendr (digital consumer loan platform), FINTQ (financial technology unit) and Voyager DX (digital transformation).  Voyager, which has 600 employees, introduces solutions that allow customers to participate in the digital economy such as by using digital money.

Marzan presented data showing that 60 million or 58 percent of the Philippines’ 103 million people are Internet users.  Active social medial users are 60 million as well.

“In the Asia-Pacific region with 4.2 billion population, 46 percent are already Internet users and active social media users are 1.5 billion or 36 percent.  Mobile connection is 3.99 billion and active mobile social users are 1.44 billion. This is exponentially growing and we have to prepare for it,” Marzan said.

How FinTech uses technology to help the ‘unserved’ (Manila Bulletin), Rated: B

TrueMoney, a new financial technology player, seeks to have one TrueMoney center in each of the country’s more than 42,000 barangays to serve those who need a remittance network but have no bank accounts.

To meet that goal, TrueMoney teams up with cooperatives and groups in different regions. Its latest partnership is with Cebu People’s Multi-Purpose Cooperative (CPMPC), a community-based savings and credit cooperative with over 55,000 members to-date.

At this point, TrueMoney has over 5,000 centers in the Philippines.

MENA

Fintech Peer to Peer Lending Platform, Beehive, Raises $ 5m Investment (PR Newswire), Rated: AAA

Beehive, MENA’s leading peer to peer lending (P2P) platform, has secured $5m investment as part of a Series A round led by Riyad TAQNIA Fund and supported by the Mohammed Bin Rashid Fund (MBRF), the financial arm of Dubai SME, as well as several other regional investors. This latest fundraise brings the total raised by Beehive to $10.5m since its launch.

To date, Beehive has successfully facilitated finance over $35 million (AED 130 million) to more than 200 business funding requests and registered more than 5000 international investors.

South Africa

African Billionaire Patrice Motsepe Invests In Digital Bank (Forbes), Rated: AAA

South Africa’s first black billionaire Patrice Motsepe has reportedly invested in TymeDigital, an online lender that has recently been awarded an operating license by the South African Reserve Bank.

African Rainbow Capital (ARC), an investment firm founded by Patrice Motsepe, recently acquired a 10% stake in TymeDigital, which is a subsidiary of the Commonwealth Bank of Australia, one of the world’s largest banks.

Authors:

George Popescu
Allen Taylor

Wednesday June 14 2017, Daily News Digest

nonprime mortgages

News Comments Today’s main news: Misys, D+H team up to launch Finastra. Fundrise intros first real estate robo-advisor. UK businesses find it harder to get a loan. Singapore Life gets insurance license. Faircent offers online lenders ‘What-If’ scenario simulations. Today’s main analysis: Does anyone remember how to make a subprime mortgage? The most up-to-date numbers for Prosper, RateSetter. Today’s thought-provoking […]

nonprime mortgages

News Comments

United States

United Kingdom

Asia

European Union

International

Australia

India

MENA

Canada

News Summary

United States

Launch of Finastra (D+H), Rated: AAA

Today Misys and D+H have joined forces to create a diversified global financial software provider, unmatched in terms of depth and breadth of solutions. Operating under the new company name Finastra (www.finastra.com), the combination will create the third largest financial services technology company in the world. The company has approximately 10,000 employees and over 9,000 customers across 130 countries, including 48 of the top 50 banks globally. This follows the acquisition of D+H by Vista Equity Partners, which already owns Misys, creating a merger of two highly complementary financial technology providers.

Finastra will be led by Nadeem Syed in the role of Chief Executive Officer. Mr. Syed was previously CEO of Misys and has over 27 years of experience leading global technology companies through transformation and growth. The company has U.S. $2.1 billion* in revenues and has offices in 42 countries around the world. It will be headquartered in London, UK, maintaining North American headquarters in Toronto, Canada.

Finastra offers the broadest set of retail banking, transaction banking, lending, and treasury and capital markets software capabilities available in the world. The company’s open architecture and approach enable financial institutions to harness the power of software ecosystems and will be delivered on premises, hosted or via the cloud. With the increased scale and geographic reach, Finastra will be able to serve customers better, regardless of their size or geographic location – from global banks, to community banks, credit unions, and corporations. Using the company’s secure and reliable solutions, customers will be empowered to accelerate growth, optimize cost, mitigate risk and continually evolve to deliver a superior customer experience, both now and in the future.

Having long pursued a progressive vision of innovation within both businesses, Finastra will strive to further unlock the potential of people and businesses by executing the product strategy of ‘Protect, Extend and Innovate’. This includes protecting our customers’ investments in all of our solutions; extending the value of our solutions by integrating new products and services; and innovating to create the best-in-class solutions. Finastra will work in partnership to help customers transform their business, and become more agile, innovative, and resilient to better meet their evolving needs.

Finastra will be privately held.

Retailpocalypse: Bank branches are closing in droves (Tearsheet), Rated: AAA

There may be no physical institution as historically revered as a bank.

Nice try. Banks these days are hardly elegant or imposing. Most have shrunk in size thanks to rising costs of real estate, and many have disappeared entirely, according to data from the Federal Deposit Insurance Corporation. Chase reduced its branch presence by 190 locations, a 3.4 percent decline, from 2012 to 2016. Wells Fargo closed 98 branches, a 1.6 percent decline in the same period. Its peers are even more aggressive. Bank of America closed 243 branches (16 percent) in that period and Citi closed 302 (28.5 percent).

Branches are consolidating locations with lower servicing volume, opening in higher growth areas and renovating existing branches and ATMs. More importantly, they’re evolving into more compact, digitally oriented spaces that incorporate new technology and help branch employees focus on improving the customer experience.

While those in the banking industry feel there will always be brick-and-mortar branches, in large part because the business of banking is grounded in trust, and in knowing the person with whom you’re working, the move to digital technologies is expected to grow exponentially.

Fundrise Revamps Service with First Ever Robo-Advisor for Real Estate (Crowdfund Insider), Rated: AAA

Fundrise, one of the leading online investment platforms for real estate, has launched the “2.0” version of their platform. Fundrise has created a Robo-Advisor focused on real estate thus providing an investing tool to match individual investor needs.

The Fundrise Robo-advisor enables individual investors to create a highly diversified real estate portfolio accessing Fundrise’s growing number of eREIT’s. The service provides an estimate based on submitted variables to extrapolate potential returns. Fundrise estimates users will save up to 40% on fees versus traditional services.

Does Anyone Remember How to Make a Subprime Mortgage? (WSJ), Rated: AAA

Brokers willing to learn the lost art of making risky mortgages are in demand again.

Mr. Boyd, a 25-year-old account executive at FundLoans in a beach town outside of San Diego, is at the cusp of efforts to bring back an army of salespeople who once powered the mortgage industry and, some say, contributed to the housing crisis.

Brokers are a key part of a mortgage chain that starts with a borrower going to a broker for a loan. The broker surveys lenders for the best loan to fit the customer. The lender then funds the borrower’s loan.

While brokers before the crisis served banks and independent lenders, today they are working largely for nonbank lenders who make up a critical part of the mortgage market.

In the first quarter, nonbank lenders accounted for about half the mortgages originated in the U.S., according to industry publication Inside Mortgage Finance.

In the first quarter, nearly a decade after the start of the housing crisis, lenders originated just $6 billion in loans to borrowers with less than stellar credit scores or who are using alternative documentation to prove income, a category now known as “nonprime,” according to Inside Mortgage Finance.

In all of 2016, they originated $22 billion in loans, according to Inside Mortgage Finance. Back in 2005, at the peak for such loans, lenders made about $1 trillion of these mortgages.

Meanwhile, the volume of loans produced by mortgage brokers dropped to $37 billion in this year’s first quarter, down about 34% from the last three months of 2016. Loans from brokers peaked at around $1.1 trillion in 2003.

‘Fintech’ startup SoFi moving into traditional banking (Seattle Times), Rated: A

NEW YORK (AP) — Online lender and financial startup SoFi has taken the first step toward competing with the nation’s biggest banks on their home turf: the checking account.

The company, however, will have back-office operations in both Delaware and Salt Lake City, Utah.

In its application to the Federal Deposit Insurance Corporation, SoFi plans to fund its new bank subsidiary with $166 million in capital.

Student Loans Are Holding Back Entrepreneurs. SoFi Is Changing That (Inc.), Rated: A

All your life, you’re told that an education will set you up to fulfill the American dream. But once you graduate, you’re faced with onerous payments that seem to hardly dent the principal. You need a steady job, stat. It’s terrifying to forgo a salary to start something new, let alone invest your assets, when you’re obligated to make monthly payments that can reach thousands of dollars.

One startup is helping its users get ahead of their debt and start the new ventures that our economy needs to thrive. SoFi (short for Social Finance) is largely known as the startup that will refinance your student loans, though it aspires to encompass its members’ entire financial lives.

Nevertheless, student loans are SoFi’s bread and butter, a reflection of the generation of Millennials saddled with insurmountable-feeling debt. That’s why, in addition to its unemployment support and career coaching, SoFi has an entrepreneurship program. The benefits include six months of loan deferment, mentorship resources such as connections to investors, and networking with other entrepreneur members.

Of course, SoFi can’t single-handedly revive American entrepreneurship, not least because the cohorts of accepted entrepreneurs are limited, and the types of businesses that SoFi favors skew toward scalable tech startups rather than conventional small businesses. But student loan relief has a definite impact on the participating SoFi members’ ability to launch companies.

Fundrise Offering Circular (Disclosure Quest), Rated: A

We are offering up to 5,000,000 shares of our Class B Common Stock to the public at $5.00 per share. This offering commenced on February 1, 2017 and as of May 30, 2017, we had settled approximately 2,884,129 shares of our Class B Common Stock of the 3,000,000 shares that we had previously qualified for sale. We are including in the offering an additional 2,000,000 shares of our Class B Common Stock to be sold pursuant to this offering circular.

Disruptor Alert: These 2 Companies Are Changing Banking (The Motley Fool), Rated: A

Square (NYSE:SQ) has disrupted the mobile payment market, and could still be in its early innings of growth. Over the past year, Square’s stock has more than doubled, thanks to its impressive and better-than-expected growth and optimistic forecast.

Over the past year alone, Square’s payment volume increased by 33% to over $13.6 billion, and the company is on the verge of becoming profitable. Plus, Square’s services and subscription revenue more than doubled year-over-year, and has tremendous long-term growth potential.

P2P lenders aren’t the only players in the unsecured lending space anymore — some of the biggest names in the industry are getting involved, which could certainly shake things up in the years to come.

One in particular I have my eye on is Goldman Sachs (NYSE:GS).

Goldman first announced its intention to get into the consumer lending business in 2015, and after a couple of years of development, the company recently launched Marcus (named for Marcus Goldman, one of the bank’s founders), its new lending platform that offers personal loans of up to $30,000.

According to a report by TransUnion, nearly 16 million people took out an unsecured loan in 2016, the highest on record. With an average balance of $7,640 and average interest rate of 12%, this translates into a billion-dollar revenue stream if Goldman can build its market share to just 7%.

IMAGE SOURCE: LENDING CLUB INVESTOR PRESENTATION.

Cadre Raises $ 65 Million in Series C Financing, Led by Andreessen Horowitz (BusinessWire), Rated: A

Cadre, an online investment marketplace providing access and insight into institutional quality alternative assets, today announced a $65mm Series C financing round led by Andreessen Horowitz, with additional participation from Jim Breyer of Breyer Capital, Ford Foundation, General Catalyst, Goldman Sachs, Khosla Ventures, and Thrive Capital. Cadre’s existing investors include DST, Founders Fund, SL Green, and others.

Envestnet | Yodlee Unveils Personal Financial Wellness Solution Powered by Data Intelligence (PR Newswire), Rated: A

Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced the launch of its Personal Financial Wellness Solution at the Digital Banking Summit. The Envestnet | Yodlee Personal Financial Wellness Solution is a suite of applications and APIs that leverages enriched data and artificial intelligence to move beyond organizing historical financial data, helping financial institutions and fintech developers provide actionable, financial guidance to their customers across a spectrum of devices, user interfaces and platforms.

The Envestnet | Yodlee Personal Financial Wellness Solution enables financial institutions and fintech developers to provide actionable tools to help consumers identify their projected OK to Spend balance and easily Save for a Goal. By applying Envestnet | Yodlee’s advanced data intelligence to its enriched transaction data of over 15,000 data sources, financial service providers can derive actionable information from consumers’ financial data in order to measure, guide and improve consumers’ financial health.

OK to Spend

Core to the Personal Financial Wellness Solution is OK to Spend, which synergizes predictive analytics and user feedback to deliver smart financial forecasting. OK to Spend can be consumed as a financial application or a fully RESTful API framework that enables financial service providers to create forward-looking forecasts that organize and predict recurring income and financial obligations along with personalized notifications for financial events and projected balances. OK to Spend analytics is run across the consumers’ primary spending accounts (cash and credit card) regardless of which financial institution they primarily bank with, in order to provide a holistic view of their finances.

Patent-protected machine learning and data analytics enable the OK to Spend algorithms to identify sources of recurring income and accurately predicts future income, accounting for anomalies. Similarly, OK to Spend identifies recurring and forecasted financial obligations, while accounting for fluctuations determined from historic data.

Save for a Goal

The Save for a Goal application allows consumers to easily set and track savings goals. The application facilitates money movement across different accounts at a specific time frequency and allows customers to better track their goals by allowing consumers to allocate multiple goals to a single account, or spread a single goal across multiple cash and investment accounts. Save for a Goal provides visual data and notifications such as progress bars, charts, graphs and alerts, engaging customers with the option to flex and prioritize between goals.

The First In-Depth Report of the Single Family Real Estate Investor – the Iceberg Report (Newswire), Rated: A

The role of the individual and institutional single-family residential investor is highly undervalued and tremendously under-appreciated. About 10 million individuals, businesses and institutions provide secure housing and jobs for millions of average Americans. 67 million souls live in single-family rentals, a million more properties are added each year employing millions of individuals, to buy, renovate, lease and maintain as safe housing for tenants in affordable to luxury markets.  Single-family rentals have been discovered as a low-risk passive income revenue source and a growth asset in a balanced portfolio or personal retirement plan.

Using Harris Poll, single-family real estate investors were surveyed nationwide to understand why, where, what and how they invest and manage these properties to provide stable housing and realistic returns on their personal and company investments.

The report touches several other critical components that shape this market. Key among these are how the single-family real estate investor effects the economy, how investors view their properties (as added rental income or as an intentional business goal), investor decision points, and the investor as a customer,” says Steve Murray, Founder & CEO Real Trends.

To download your free copy of the Iceberg Report Executive summary, please go to

Want to Bring More Services to Your Clients? There’s A FinTech for That (CPA Practice Advisor), Rated: A

These days, there are few “typical” CPA firms left. As they seek to diversify, differentiate and grow by offering their clients value added services, firms are engaging in a much wider range of activities.

With the rise of a new generation of B2B financial technology companies, or Fintechs, the opportunities for CPA firms to offer new services have never been better.

Fintechs are infiltrating every aspect of B2B financial services, and venture investment continues to pour in. Where people used to look to QuickBooks, Oracle and SAP, now there are cloud-based accounting and ERP options like Xero and Freshbooks and NetSuite and Workday. But you probably know about those.

What you might not know is that Fintechs are moving into e-invoicing, expense reporting, data sharing and protection, compliance, tax management and fraud control. They’re executing specific parts of the banking value chain better, cheaper and faster, including lending, trade finance, and payments. Some are even considering becoming banks themselves.

Fintech solutions solve the whole thing– all types of payments and all the work that goes along with the payments. Companies can make 80 percent or more of their payments electronically, and that saves a lot of resources, especially if you’re a BPO writing hundreds of thousands of checks on behalf of your clients. You could be helping them get a lot more card rebates instead.

But what visibility really does is open up more opportunities for CPA or audit or BPO firms down the road. If you’re a BPO, visibility into payments could potentially help you work better with vendors.

The more you can help clients automate, the more nimble they are and the more nimble you are.

Goldman Sachs Bank Aggressively Going After Deposits (Lend Academy), Rated: A

So, I did a bit of research on what Goldman Sachs Bank is offering compared to others in the market. I looked at Bankrate and Nerdwallet to see who were the top offerings for savings accounts and CDs of various duration. What was interesting to me is that Goldman Sachs was at or near the top in every category.

For savings accounts there were a couple of small regional or local banks that had slightly higher rates but no major national banks were higher. If you look at 3-year CDs with a minimum investment of $500 (the Goldman Sachs minimum) I could not find an offering anywhere in the country that came close to matching Goldman’s 1.90% rate. In fact, the second highest rate available anywhere for a $500 3-year CD was 1.65% from Barclays.

Allstate, Marketplace Lending Association and others fly in (Politico), Rated: A

All sorts of interest groups are flying in this week to nab some time with lawmakers before the July 4 recess.

The Marketplace Lending Association, a trade group that represents digital financial and lending startups, is in town this week for its first-ever fly-in, meeting with lawmakers and regulators. “The goal is to bring Washington up to speed on the growth of the sector, as well as the emerging partnerships between the fintech member firms and banks,” according to the group. Its member companies include Lending Club, Prosper, Funding Circle, Avant, Marlette Funding and Affirm.

FINRA Establishes Innovation Outreach Initiative For FinTech (ETH News), Rated: A

On June 13, 2017, The Financial Industry Regulatory Authority (FINRA) declared the establishment of the Innovation Outreach Initiative, in order to properly assess FinTech‘s industry impact.

FINRA’s Innovation Outreach Initiative comes after the launch of its FinTech site that’s dedicated to emergent topics in the field, and literature on blockchain technology and digital investing.

The initiative will consist of program elements, such as enhancing FINRA’s processes, timely publication of regulatory technology applications, regional outreach roundtable discussions (comprised of FINRA members and nonmembers), and the creation of a FinTech Industry Committee. The committee will help to assist with ongoing discussions about how FINRA’s programs and rules will intersect with FinTech innovations.

Online Lending Policy Institute Names Board of Governors (OLPI Email), Rated: B

The Online Lending Policy Institute (OLPI), a voice for policy analysis, in-depth research, and education for the online lending industry, today announced its Board of Governors, a group of industry experts ranging from academics to lawyers to executives from twelve leading organizations. This newly elected group joins founding members of OLPI: Cross River Bank, Boston University’s Center for Finance, Law & Policy, and RocketLoans.

The Board of Governors are:

  • Frank Borchert, General Counsel, Marlette Funding/ Best Egg
  • Colin Darke, General Counsel/Chief Compliance Officer, RocketLoans
  • Dr. Michael Dooley, Chief Economist, SoFi; professor of economics UC Santa Cruz
  • Marc Franson, Managing Partner, Chapman and Cutler LLP
  • Michael Freedman, General Counsel, BorrowersFirst, Inc.
  • Gilles Gade, CEO, Cross River Bank
  • Adam Goller, Chief Credit Officer, Cross River Bank
  • Cornelius Hurley, Director, OLPI; professor Boston University
  • John Kromer, Partner, Buckley Sandler LLP
  • Robert Linderman, General Counsel, Freedom Financial Network, LLC
  • Tim Li, CEO, Kuber Inc.; professor Fintech School
  • Marshall Lux, Senior Fellow, Harvard Kennedy School
  • Marty Mitchell, Managing Director, ProBank Austin (formerly Professional Bank Services)

DiversyFund Announces New Luxury Investment With Roman James Design Build (Digital Journal), Rated: B

DiversyFund, Inc., a fast-growing full-service online real estate investment platform, announced the next ground-breaking real estate investment project that their partnership with Roman James Design Build will undertake. DiversyFund and Roman James will be building a new ultra-luxury in Hollywood Hills, one of the most exclusive neighborhoods in Los Angeles.

This investment opportunity is located at the end of Granito Drive in the prestigious Hollywood Hills community of Los Angeles, California, home to Hollywood celebrities, professional athletes and Fortune 500 CEOs.

Congressional Testimony on Fintech Innovation: “Today We Are Following Not Leading” (Crowdfund Insider), Rated: B

This past week the House Subcommittee on Digital Commerce and Consumer Protection, part of the Energy and Commerce Committee, held a hearing on Fintech innovation as part of their disruptors series.

Van Valkenburg called on Congress to “rationalize the chaos of financial regulation,” pointing to the horrifying reality there exists a byzantine environment of state and federal regulators that, well simply put, doesn’t make sense.

United Kingdom

London leads European fintech investment despite Brexit (Financial News), Rated: AAA

London-based fintech companies attracted more than three times as much capital in the first quarter as Berlin – Europe’s second largest fintech investment hub – and maintained its market share despite moves by other cities in the region to gain from the UK’s departure from the EU.

New research from data provider FinTech Global found six cities that stand out in Europe’s fintech arms race, with companies based in London, Berlin, Stockholm, Paris, Barcelona and Amsterdam raising $823m in the first three months of 2017.

Overall European investment stood at $1.2bn, with London claiming a 36% share at $421m — more than treble the $140m investment in Berlin-based companies, according to the research.

Over the previous three years, London accounted for 39% of European investment, suggesting that the impact of last year’s Brexit vote has been slight.

UK businesses looking for finance are finding it harder to get a loan (Business Matters), Rated: AAA

With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance reveals how credit conditions look to be tightening again, with over 400,000 small businesses now interested in finding an alternative to the banks for a loan.

When asked, 32 per cent of SMEs that had considered raising finance said that it was now harder than six months ago.

As banks are progressively closing their branches and cutting back on front-line staff, businesses now need to go elsewhere to benefit from face-to-face contact before borrowing money. With over a third of small businesses preferring to seek advice in person, the move to online-only offerings and the closure of physical branches is a concern.

Hive ICO – the first crypto currency invoice financing platform for SMEs (Daily Fintech), Rated: A

Hive claims it will be the first crypto currency invoice financing platform for SMEs, with its ICO opening in 4 days and closing at the end of July.

From what I can gather – and I’d say you’re best to verify this yourself – Hive tokens give holders the right to participate in the network and generate a return by funding invoices. The carrot for small business owners is the speed of execution of the financing element.

And while I was lucky enough to get a master class in person, if you haven’t yet got your head around tokens and ICO, these articles are worth a read:

Asia

OBTAINING DIRECT LIFE INSURANCE LICENSE BY SINGAPORE LIFE (Credit China Fintech Holdings Limited), Rated: AAA

This announcement is made by Credit China FinTech Holdings Limited (“Company”) on a voluntary basis.

Reference is made to the announcement of the Company dated 26 April 2017 in relation to the Investment in Singapore Life (the “Announcement”). Unless otherwise defined, the capitalised terms used herein shall have the same meaning as those defined in the Announcement.

The board of directors of the Company is pleased to announce that Singapore Life has been approved as a fully licensed direct life insurer by the Monetary Authority of Singapore.

Singapore Life will also soon offer life insurance solutions to customers through its online platform www.singlife.com and financial advisers.

European Union

French Fintech Under Macron’s Presidency One Month On (Forbes), Rated: A

On the other hand, as Grossman points out, ‘since Macron has publicly stated that innovation and disruption is key for France’s growth potential, his intention for closer integration with Europe has been broadly welcomed by the fintech industry.’ Macron seems to be pro-PSD and has invited those affected by Brexit to work in the technology sector in France, all are welcome under En Marche. The French president is also very supportive of SME growth and is interested in helping French Tech.

Macron’s initiatives so far are clearly in favour of the development of fintech in France and with billions promised for innovation, the president is returning to supporting this space, as he did with The Family in Paris, as Grossman points out.

International

What do the most up-to-date numbers in marketplace lending tell us? (AltFi), Rated: AAA

Prosper is currently lending significantly more than it is being repaid for the first time in roughly a year.

In March, the platform posted its first positive monthly net lending figure ($200k) since May of last year. April saw net lending growth to c. $15m.

 

RateSetter has posted back-to-back months of negative net lending in April and May (roughly £-700k and £-4m respectively). There are no other negative net lending months in the platform’s 6-7 year history.

Sovereign wealth funds ramp up private debt investment (AltFi), Rated: A

Gargantuan sovereign wealth portfolios are increasingly turning to private debt exposure with almost two-fifths of portfolios now actively investing in the asset class due to its potential for stable risk-adjusted returns and portfolio diversification benefit.

The report found that 39 per cent of sovereign wealth funds now invest in the asset class, an increase of five percentage points over the past 12 months. The majority of sovereign wealth funds with over $10bn in assets now allocate to the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.

Libyan Investment Authority is one such investor in private debt that allocates to the asset class as part of its private equity portfolio. The fund targets distressed debt and mezzanine funds in Europe, North America and MENA.

Mezzanine investments are the private debt fund type most appealing to sovereign wealth funds, with 70 per cent targeting the strategy over the next 12 month and direct lending is sought by 53 per cent.

Australia

Australia and Hong Kong seal fintech cooperation agreement (ZDNet), Rated: A

The Australian Securities and Investment Commission (ASIC) has signed an agreement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other’s markets.

Under the agreement, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC’s Innovation Hub — aimed at helping fintech businesses navigate Australia’s regulatory framework without compromising investor and financial consumer trust — and its Hong Kong-based equivalent, SFC’s Fintech Contact Point.

India

Now online money lenders can simulate ‘What-if’ scenarios on Faircent (Techseen), Rated: AAA

India based Peer-to-Peer lending website, Faircent, has announced the launch of what it claims to be a first-of-its-kind Portfolio What-if Analysis (PWA) tool on its platform. According to the company the tool will allow lenders to simulate different loan scenarios and understand how multi-loan portfolios in peer-to-peer lending operate through a ‘What-if’ analysis.

Using the tool lenders can create a test portfolio and specify the amount they would like to invest, along with the duration, interest rates, and tenure. The Portfolio Simulator will then perform advanced algorithm-based calculations based on the input, generating projected portfolio returns by following a standardized method using the concept of Net Annualized Return (NAR).

Rupaiya Exchange Receives Award for Best Peer-to-Peer Lending Platform in India (PR Newswire), Rated: A

Rupaiya Exchange received the award for Best Peer-to-Peer Lending Platform in India in The Asian Banker Financial Peer-to-Peer Audit Awards Programme 2017. The awards ceremony was held in conjunction with the prestigious Asian Banker Future of Finance Summit 2017, the foremost annual meeting for decision makers in the financial services industry in the Asia Pacific region, held at the Asian Civilisations Museum, Singapore.

The awards evaluation criteria were based on multiple dimensions including financial performance, risk management processes, technology, innovation and strategy.

Online Peer-To-Peer Lending (BusinessWorld), Rated: A

Facilitating simple, fast, and tech-enabled banking services, the emergence of fintech is forcing banks to rethink old business models and delivery mechanisms to adopt a more technology-driven and consumer-centric approach to retail banking.

Leading this ‘uberisation’ of financial services is the online P2P (peer-to-peer) lending sector, which is driving disruption in the institutional lending space through its simplified, tech-enabled approach. What this also means is that online P2P lending will play a significant role in driving the Indian economy.

The adoption of technology means that loan approvals and disbursals can be facilitated in as little as 24 hours from the request origination, whilst digitised operations and processes allow for minimisation of overhead costs. This translates to greater benefits for all stakeholders; while borrowers pay lower interest rates and processing fees, lenders earn higher margins and returns on their investments.

MENA

MBRF, Beehive to offer start-up finance solutions (Gulf News), Rated: AAA

Dubai SME’s financial arm and peer-to-peer lending platform Beehive had signed a memorandum of understanding (MoU) to aid financing for small and medium enterprises (SMEs).

The MoU between Beehive and the Mohammad Bin Rashid Fund (MBRF) will make it easier for SME owners in Dubai to obtain loans for development and expansion at competitive rates through the Beehive Group Finance Platform.

Under the deal, MBRF would act as a guarantor for credit of up to Dh500,000 on SME financing for a period up to 36 months.

Canada

Calgary-Based POS Lender LendingArch Expands into Quebec (Crowdfund Insider), Rated: A

LendingArch, a Calgary-based online and point-of-sale lending platform, announced its expansion to Quebec. LendingArch has partnered with medical clinics and home improvement contractors in Quebec to offer POS financing options, enabling LendingArch to become a fourth in-store payment method by applying online to finance products or services for up to 36 months.

Authors:

George Popescu
Allen Taylor

Profiles of the Leading FinTech Startups in UAE

UAE FinTech

According to International Finance Corporation (IFC), P2P lending in the Middle East and North Africa (MENA) cropped up when the credit gap for SMEs reached to USD $260 billion. While P2P lending is prevalent in the UK and U.S., it is a relatively new concept in United Arab Emirates (UAE). Even though UAE has a […]

UAE FinTech

According to International Finance Corporation (IFC), P2P lending in the Middle East and North Africa (MENA) cropped up when the credit gap for SMEs reached to USD $260 billion. While P2P lending is prevalent in the UK and U.S., it is a relatively new concept in United Arab Emirates (UAE). Even though UAE has a healthy SME sector (about 3 million SMEs account for 60 percent of GDP), they still suffer from lack of funding options as banks reject 50 percent to 70 percent of SME loan applications.

Global FinTech Investments grew from $15.3 billion to $78.6 billion between 2010 and 2015. Though the U.S. and UK have been at the forefront of the revolution, the UAE government has been supportive of the industry with an eye on the untapped MENA market. UAE has set up a regulatory laboratory (RegLab) to help firms deploy new technologies in the financial services industry and to accelerate the entry of FinTech players in the region.

With more than 80 percent of the population unbanked and more than 5 million small and medium enterprises (SMEs) that do not accept online payment, the Middle East has the potential to become a major FinTech hub. UAE is building its FinTech ecosystem while working toward enhancing its FinTech base by encouraging stakeholders to support innovation. By analyzing and replicating proven ideas in FinTech innovation in the U.S. and Europe, UAE is set to make far-reaching changes in the way financial services are provided in the region.

Profiling Leading FinTech Startups in UAE
Beehive is UAE’s first peer-to-peer lending platform that seeks to fill the critical funding gap between SMEs and traditional institutions. Beehive was founded by Craig Moore, who previously worked at Dell, EMC and HSBC, He also co-founded Butterfly Software, a data analytics company acquired in 2012 by IBM. Beehive connects investors with creditworthy businesses to build mutually beneficial partnerships for the growth in the SME sector. Since its inception in 2014, it has funded about 50 UAE-based firms by raising AED $25 million from more than 500 investors through its crowdfunding platform. Beehive has enjoyed considerable success in the short time since its launch, but its biggest achievement was getting Sharia-compliant accreditation from the Shariyah Review Bureau. The platform has managed to connect 32 businesses with USD $4 million Sharia- compliant loans from investors. It has also launched a new invoice finance service for SMEs to manage cash flow by closing the gap between the moment a business issues an invoice and when it receives the actual payment. With this service, businesses will be able to list invoices that are due within 60 to 120 days and receive financing within 24 to 48 hours at rates starting from 0.75 percent per month.

Eureeca has been the pioneer in equity crowdfunding in the region. It was founded by finance execs Chris Thomas and Sam Quawasmi in 2013 and was the first equity crowdfunding platform to get an official license by Dubai Financial Services Authority (DFSA). Eureeca works with the government in the region by using its digital platform to connect SMEs looking for capital expansion with angel investors across borders. It helps investors buy shares in growth-oriented business while providing SMEs access to capital. Eureeca is backed by multiple regulatory authorities that allow it to fund businesses globally. Since its inception, Eureeca platform has raised $735,000 for six companies and has more than 4,000 registered investors on board.

Almost 90 percent of registered businesses in UAE are small and micro enterprises. Despite a strong UAE banking sector, lending to small enterprises accounts for just 3.85 percent. To support the growth of budding micro-entrepreneurs in the region, PiSlice launched its online crowdfunded micro-finance platform. Started by London Business School alumnus Genny Ghanimeh in 2012, it connects high net-worth individuals and companies who want to invest in MENA-based MFIs (Micro Finance Institutes). MFIs use these funds to empower micro-entrepreneurs who do not have access to credit from banking institutions by providing small online loans. PiSlice is a new channel of funding and will not only help MFIs to grow, but will also help to shape the region’s future economy.

Non-Lending, Non-Funding UAE FinTechs

Besides the areas of lending and funding, other FinTech innovators in the UAE include:

Bridg, an innovative smartphone payment platform that processes transactions between two devices even if both devices are not connected to the Internet. Bridg could be a game changer for the FinTech industry as it eliminates the need for Internet/data connections and enables users to pay with Bluetooth-enabled device.

Born in 2015, Democrance makes insurance accessible to the underserved via a mobile application. Considering the market penetration is less than 10 percent, the young startup has a huge runway for capturing market share.

UAE is ranked top in global smartphone penetration. While the majority of its financial transactions are cash-based, 73.8 percent of the population having smartphones. Payfort provides a trusted payment gateway built with the most sophisticated and latest anti-money laundering technology to completely eliminate the risk on both the buyer and seller side of online payments.

BitOasis is all set to find its way into the virtual pockets of consumers by building the foundation for digital payment products using blockchain technology. BitOasis uses advanced Multi-Signature Technology to protect customers from hacking, which adds an additional layer of security to the traditional Bitcoin wallet.

More than 35 percent of UAEs population is younger than 25–the median age is only 30. The country is tech savvy and an oasis of peace and hub for business in a region filled with war and turmoil. This provides the country a unique opportunity to be a leader in the technology segment in general and the FinTech sector in particular. The investment government is making via easing the regulations and creating multiple funding institutions could bear fruit for the economy for a long time to come.

Authors:

Lauren Twardy
Allen Taylor