Wednesday August 8 2018, Daily News Digest

OnDeck KPIs

News Comments Today’s main news: SoFi reports $200M loss in Q2. OnDeck jumps 18%. LendingClub sees record net revenues in Q2. Alipay fined for regulation violations. Dianrong raises $40M. Even Financial raises $18.8M. Today’s main analysis: OnDeck’s Q2 2018 earnings presentation. Today’s thought-provoking articles: GreenSky, OnDeck, LendingClub earnings. Where did it go wrong for Wonga? OnDeck’s Q2 earnings presentation. United States SoFi reports […]

OnDeck KPIs

News Comments

United States

United Kingdom

China

Other

News Summary

United States

SoFi Is Said to Report Second-Quarter Loss of $ 200 Million (Bloomberg), Rated: AAA

Writedowns of underperforming loans drove Social Finance Inc. to a second-quarter adjusted loss of about $200 million, according to people familiar with the matter.

OnDeck jumps 18% after Q2 beat and raise (Seeking Alpha), Rated: A

OnDeck (NYSE:ONDK) surges 18% in early trading after reporting Q2 adjusted EPS that beat consensus by 8 cents and boosting year adjusted net income guidance to $30M-$36M.

OnDeck Reports Second Quarter 2018 Financial Results (Markets Insider), Rated: AAA

OnDeck today announced second quarter 2018 Net income of $5.8 million, Adjusted Net income of $10.0 million and Gross revenue of $95.6 million.

Source: OnDeck Earnings Presentation

Review of Financial Results for the Second Quarter of 2018

Net income was $5.8 million, or $0.07 per diluted share, improved from the Net loss of $1.5 million, or $0.02 per diluted share, in the year-ago period.

Adjusted Net income was $10.0 million, or $0.13 per diluted share, compared to Adjusted Net income of $4.7 million, or $0.06 per diluted share, in the year-ago period.

Unpaid Principal Balance grew 3% sequentially and 8% from a year ago to $1,027 million. Originations of $587 million were consistent with the prior quarter reflecting an increase in the number of loans funded and decrease in the average loan size.  Originations increased 26% from a year ago with growth in both term loans and lines of credit.

Gross revenue increased to $95.6 million, up 6% from the prior quarter and 10% from the year-ago quarter, driven by higher Interest income. The Effective Interest Yield was 36.1%, up from 35.6% in the prior quarter and 33.5% in the year-ago quarter, primarily reflecting increases in average loan pricing.

Source: OnDeck Earnings Presentation

Guidance for Full Year 2018

OnDeck increased its guidance for the full year ending December 31, 2018:

  • Gross revenue between $380 million and $386 million, up from between $372 million and $382 million,
  • Net income between $10 million and $16 million, up from between $0and $10 million, and
  • Adjusted Net income between $30 million and $36 million, up from between $18 million and $28 million.
Source: OnDeck Earnings Presentation

See OnDeck’s full Q2 2018 earnings presentation here.

Why On Deck Capital Stock Is Soaring Today (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were soaring by nearly 25% as of 1 p.m. EDT on Tuesday as the company beat consensus earnings expectations in the second quarter and raised its outlook for the remainder of the year.

Lending Club: bob and weave (Financial Times), Rated: AAA

Now, the top-line numbers are improving. Second-quarter figures released after market close on Tuesday showed record net revenue, up 27 per cent from a year earlier at $177m, from record quarterly loan originations of $2.8bn.

On top of all that, there was a big writedown this quarter of an acquisition made four years ago, during an ill-fated push into supplying loans to medical patients. Over the first six months, total expenses came to $1.28 for every dollar of net revenue.

Roundup of Q2 2018 Earnings: GreenSky, OnDeck, LendingClub (Lend Academy), Rated: AAA

GreenSky went public just a few months ago on May 24, 2018. Their IPO was significant for a couple of reasons. One was the lack of US based fintech IPOs over the last few years and the second was that GreenSky is a wildly successful business. Last year they reported $139 million in net income on revenues of $326 million.

Source: Lend Academy

OnDeck reported net income of $5.8 million for the quarter with gross revenues of $95.6 million, up 10% year over and 6% from the previous quarter. Originations grew to $587 million, up 26% from the prior year period, but down slightly from the previous quarter. The company’s trend of increasing the number of loans funded and decreasing the average loan size continues.

Source: Lend Academy

CEO Scott Sanborn noted that LendingClub’s core business is firing on all cylinders with record revenue and originations. The company has seen a 50% increase in applications year over year. Originations were $2.8 billion, up 31% year over year and up from $2.3 billion in the previous quarter. For context, the company originated their last high water mark of $2.75 billion in the first quarter of 2016. Revenues came in at $177 million, up 27% year over year.

Source: Lend Academy

Even Financial raises $ 18.8 million from GreatPoint Ventures, Goldman Sachs and others (TechCrunch), Rated: AAA

Even Financial, a fintech startup that connects the disparate entities of the financial services industry, recently raised a $18.8 million Series A round led by GreatPoint Ventures with participation from Goldman Sachs, Canaan Partners, F-Prime Capital, Lerer Hippeau and others.

What’s missing from the OCC’s fintech charter (American Banker), Rated: A

Although the OCC emphasizes that it’s holding these special-purpose charters to standards equivalent to those demanded of national banks, this is only sort of true with regard to the named prudential requirements, and it looks to be completely incorrect on critical restrictions on competitive and financial risk. These omissions have significant consumer protection, safety and soundness and structural impacts. Absent egregious violations, a charter granted cannot be revoked. The OCC should be sure it isn’t a shadow-bank enabler before it hands out these high-powered charters.

Is the backing of the banks enough for Zelle to beat Venmo? (Marketplace.org), Rated: A

Rahul Chadha follows peer to peer mobile banking for the research organization eMarketer. His firm says Zelle will overtake Venmo this year.  Chadha spoke with Marketplace’s Lizzie O’Leary about the two payment systems.

US challenger banks: who’s who and what’s their tech (Banking Tech), Rated: A

BankMobile
A digital bank created by an established US-based financial services player Customers Bancorp. BankMobile opened for business in early 2015.

It caters mainly for students and offers a low-fee checking account with no monthly fees and no overdraft/non-sufficient funds (NSF) fees. It also provides personal loans.

Chime
Founded in 2014, Chime has raised over $100 million funding to date, values the business at around $500 million and has over one million accounts. It employs around 100 people.

Endeavor Bank
Endeavor Bank opened its doors for business in San Diego, California in January 2018, following an initial capital raise of $26.6 million and the backing of over 450 investors/owners. It is a brand new bank, with no merger legacy.

Finn
Finn is a digital bank account for smartphones created by JP Morgan Chase.

GoBank
GoBank was launched in 2013 by Green Dot Corporation, which claims it to be “the first bank account designed from scratch to be opened and used on a mobile device”.

Iam Money
Iam Money has its HQ in Chicago and an office in San Francisco. It also has two offices outside the US, in Dublin and London.

It has secured $3 million of funding, and plans to have $20 million when it launches.

Marathon International Bank
A start-up bank for the Ethiopian American community, based in the Washington DC area. Its founders are Tekalign Gedamu, a retired economist and former MD of the Development Bank of Ethiopia, and Tesfaye Biftu.

Marcus
An online platform launched by Goldman Sachs – named after Marcus Goldman, one of the firm’s founders – offering no-fee personal loans and high-yield savings to consumers.

Moven
Launched in 2011 by Brett King, Moven describes itself as “the world’s first real-time mobile money tool”. It is a digital bank account with a mobile app.

N26
A challenger bank from Germany, now working on its US presence, including obtaining a banking licence. It opened early access to users in the US in October 2017 and has an office in New York with eight staff.

PurePoint Financial
PurePoint Financial was launched in early 2017 by MUFG Union Bank. It is a “hybrid digital bank” offering savings accounts and certificates of deposit (CDs).

Revolut
European banking challenger Revolut opened early access to users in the US in September 2017. It says it aims “to clean up the American banking system”. It provides digital banking services to consumers and businesses.

Simple
Digital banking service Simple was founded in 2009 in Portland, Oregon. It describes itself “a tech company, not a bank”.

In early 2014, it was acquired by BBVA Compass for $117 million.

SoFi

In early 2017, it raised another $500 million, and spent $100 million (in stock) on Zenbanx, a mobile banking start-up. Zenbanx offered a mobile account in the US and Canada that lets people save, send and spend money in multiple currencies. This deal demonstrated SoFi’s interest in branching into other financial services, with a wealth management tool in beta at the time of the acquisition.

Stash

In early 2018, Stash raised $37.5 million in Series D funding for product expansion, and shortly afterwards teamed with Green Dot Corporation and its subsidiary bank, Green Dot Bank, to launch mobile-first banking services (underpinned by Green Dot’s Banking-as-a-Service platform).

Studio Bank
In 2017, Tennessee-based Studio Bank filed an application to become Nashville’s “first newly chartered de novo bank in nearly a decade”.

Varo Money
San Francisco-based mobile banking service Varo Money was founded in 2015. It applied for a national bank charter and federal deposit insurance in mid-2017, to form Varo Bank.

Treasury urges mortgage sector to embrace digital tech (National Mortgage News), Rated: A

The Treasury Department’s recent report on how to regulate nonbanks drew praise not just from tech startups but also from mortgage industry insiders.

In addition to recommendations for a new federal fintech charter and that regulators pull back from payday lending rules, the report contained a section that might be music to a mortgage banker’s ears, including support for the industry’s automation efforts and another call to soften the use of the False Claims Act against lenders.

Blend Launches Insurance Agency (Finovate), Rated: A

Mortgagetech company Blend is venturing into insurance. The San Francisco-based company launched Blend Insurance Agency, an extension of its digital mortgage platform that offers borrowers a range of options for homeowners insurance.

RealtyMogul Sells Four Real Estate Properties on Behalf of Digital Investors (Citizen Tribune), Rated: B

The first property is a 1,242-unit self-storage facility in Fayetteville, NC. It was acquired in December 2013 and sold in January 2018. It was acquired for $6,750,000 and sold for $9,645,000, representing a 43% increase in capital value from acquisition.

The second property is a 40,000-square foot office building in Tamarac, FL. It was acquired in May 2016 and sold in February 2018. It was acquired for $4,150,000 and sold for $4,900,000, representing an 18% increase in capital value from acquisition.

The third property is a 72-unit multifamily apartment building in Ogden, KS. It was acquired in July 2013 and sold in April 2018. It was acquired for $4,000,000 and sold for $4,450,000, representing an 11% increase in capital value from acquisition.

The fourth property is a 208-unit multifamily apartment building in Euless, TX. It was acquired in February 2015 and sold in May 2018. It was acquired for $12,375,000 and sold for $20,900,000 after a value-add renovation program, representing a 69% increase in capital value from acquisition.

Zillow gets into the mortgage business, acquires Mortgage Lenders of America (TechCrunch), Rated: B

Zillow, the publicly traded real estate portal and lead generation service, has acquired Mortgage Lenders of America. This is Zillow’s first move into originating mortgages.

DriveWealth and Bambu Launch Robo Platform for Registered Investment Advisors (BusinessWire), Rated: A

DriveWealth Holdings, Inc. (“DriveWealth”), a fintech company providing brokers, digital advisors and mobile online financial services companies seamless access to the U.S. securities market, and Bambu, a global provider of robo-advisory technology, today announced the launch of a white-label, end-to-end robo-advisory platform solution for the wealth management industry.

Arizona’s Regulatory Sandbox Is Open for Play (The National Law Review), Rated: B

To be considered for admission, applicants must complete the nine-page application and pay a $500 application fee.  Each application must be for an innovative financial product or service as defined by the enabling legislation.

United Kingdom

RateSetter: FCA marketing restrictions are “disproportionate” (P2P Finance News), Rated: AAA

RATESETTER has hit back at proposed marketing restrictions for peer-to-peer lenders, stating that they are “disproportionate” and “clunky”.

Where did it all go wrong for Wonga? (The Guardian), Rated: AAA

Just when things were meant to be getting better for Wonga, it emerged at the weekend that the payday lender’s investors had to rescue it with a £10m capital injection.

The emergency fundraising is the latest episode in Wonga’s rapid rise and fall. Just six years after the company was touted for a flotation that would have valued it at more than $1bn (£770m), it is reported to be worth just $30m.

Regulation didn’t wipe out Wonga – losing its reputation did (City A.M.), Rated: A

WHEN PAYDAY LENDER Wonga launched in 2007, it was tipped to become a £1bn success story. Today, the company is worth just £23m and has only managed to avoid insolvency thanks to a last-minute £10m boost from investors. So what went wrong?

Rothschild’s Augmentum receives £3.5m Zopa boost (Citywire), Rated: A

Augmentum Fintech (AUGM), the venture capital fund spun off from RIT Capital Partners (RCP) earlier this year, has received a £3.5 million boost from the revaluation of peer-to-peer lender Zopa.

LendInvest makes a series of changes to BTL product (Bridging and Commercial), Rated: A

The specialist lender has removed its requirement for a debenture or floating charge on limited company applications.

It has also reduced its ICR assessment rate to 5% across all products with the exception of the five-year fixed interest product, which remains at 4.19%.

Why brokers should be allowed to speak to decision makers (Bridging and Commercial), Rated: A

Roy Armitage, head of credit at LendInvest (pictured above), is clear that, for a specialist lender, a good working dialogue between the underwriters and the brokers placing the business is crucial.

Participate in the Cambridge Centre for Alternative Finance Research Study (Lend Academy), Rated: B

They are winding up their largest survey ever right now. In the past they have produced multiple reports targeting the various regions around the world including: the United Kingdom, Europe, the Americas, Asia and Africa. This year they are combining everything into one big study.

If you have not participated in the survey yet time is running out (while the survey says it closes on July 22nd, they have extended the deadline for another week or so). We need every platform in this country and around the region to participate. To learn more you can read more about this comprehensive piece  in 

China

China’s Central Bank Fines Alipay (PYMNTS), Rated: AAA

Alipay, a payment affiliate of Alibaba, has been hit with a $601,846 fine by the Shanghai head office for the People’s Bank of China.

According to a report in Reuters, citing the central bank, the fine was for payment services regulations violations. The regulator didn’t provide any other details.

Dianrong pockets $ 40 million funding amid mounting P2P defaults in China (Technode), Rated: AAA

Chinese P2P lending platform Dianrong announced that it has raised $40 million of funding from Dalian Financial Investment Group Co. Ltd. The current round will increase the company’s total funds raised to date to over $500 million. Its previous investors include big titles such as Standard Chartered, GIC Private Limited, Singapore’s sovereign wealth fund, CMIG Leasing, Simone Investment Managers, etc.

China’s P2P lending meltdown (CNBC), Rated: A

China’s P2P lending meltdown from CNBC.

International

Prime Trust to Enable Real Estate Syndicators & Securities Issuers to Accept Funds in Bitcoin & Ethereum (Crowdfund Insider), Rated: A

Prime Trust, a blockchain driven trust company, announced on Monday it has launched a new technology that enables real estate syndicators and securities issuers to accept funds from investors in the form of Bitcoin and Ethereum, frictionlessly and with zero crypto-market risks to the syndicator or issuer. According to Prime Trust, the technology enables holders of these virtual currencies to invest in real estate, crowdfunding and other private and public securities offerings without having to go through the cumbersome and often confusing process of liquidating tokens and then wiring funds in USD to an escrow account at Prime Trust.

TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution (MarketWatch), Rated: B

TransUnion TRU, +0.56% announced today it is partnering with global technology and analytics company EXL EXLS, +0.93% to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. Information about the new accounting rule will be highlighted during TransUnion’s webinar, “Major Hurdles to Overcome to be CECL-Ready,” scheduled for 1 p.m. CDT on August 15.

Australia

Financial advice institutions to refund over $ 800 million (Business News Australia), Rated: AAA

As the revelations from the Royal Commission continue to pour in, the Australian Securities and Investment Commission (ASIC) has revealed that, in total, Australian financial advice institutions will refund customers over $800 million in reparations over fees for no service (FFNS) programs.

Australian challenger banks: who’s who (and what’s their tech) (Banking Tech), Rated: A

86 400

Launched in June 2018, the bank is led by former ANZ Japan CEO, Robert Bell, and ex-Cuscal Payments CIO Brian Parker. Joining as incoming chairman is Anthony Thomson, co-founder and former chairman of Atom Bank and Metro Bank.

Judo Capital

For its tech, it uses a variety of different vendors. Unifii’s Business Transformation Platform is used for its technical infrastructure. For its small business lending platform, it will use one from Realtime Computing, based in Perth, Australia.

Pelikin

Digital banking start-up Pelikin aims to reshape the way people save, send and spend their money in Australia and while travelling abroad. The company’s slogan is “spend like a local”. The founder is Sam Brown.

UBank

Unveiled in 2008 and developed and supported by National Australia Bank (NAB). It operates under NAB’s banking licence, and offers home loans, online savings accounts, and term deposit accounts. UBank has more than 400,000 customers.

Volt Bank

Sydney-based Volt Bank was given Australia’s first new restricted banking licence and is now working towards becoming a fully licensed bank.

Xinja

The neobank emerged from the shadows to unveil its plans for a mobile-only digital bank in 2017. It will have no bricks and mortar branches.

MENA

Visa Invests In Israeli Start-up Behalf (RTT News), Rated: AAA

Visa, Inc. (V) on Tuesday announced an investment and partnership with Israeli start-up, Behalf, to support small business growth through easy-to-access capital and financing.

Authors:

George Popescu
Allen Taylor

Tuesday February 6 2018, Daily News Digest

paypal active customers

News Comments Today’s main news: Zopa reveals where the 3B GBP loanbook gets you. Revolut now operates in the Nordics. MatchMove, Rubique partner on loan payouts, disbursements. Behalf nabs $150M in debt capital. Today’s main analysis: PayPal has another solid quarter of growth. Today’s thought-provoking articles: Why SoFi wants to be a neobank. LendingClub wants to get customers off the […]

paypal active customers

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

What is a neobank, and why does SoFi want to be one? (Bankrate), Rated: AAA

The company, Social Finance (often shortened to SoFi), is set to launch its SoFi Money business in the next few months. With this new product line, the company adds its name to the growing list of so-called “neobanks,” alongside firms like Chime, Simple and Varo Money. If you’re interested, there’s a waiting list for SoFi Money.

However, up until now neobanks have tended to stick to narrowly focused product lines, offering only checking or savings accounts. They have also needed to partner with specialty banks to ensure deposits are covered by the Federal Deposit Insurance Corp. (FDIC).

Should you become a customer, your debit card would say SoFi Money and you’d use the SoFi app to check your balance and call customer service when you have a problem, but your money would be on deposit at WSFS Financial.

LendingClub: Getting Borrowers Off The Credit Hamster Wheel (PYMNTS), Rated: AAA

Allocca first observed the problem in the late 1990s, when he began to sense a disconnect between the bank’s stated vision and mission to help customers succeed financially — and the actual help and services that were being offered, from credit cards to overdraft fees.

An October 2017 study by PYMNTS and Unifund dubbed these consumers “financial invisibles,” having no (or little) access to further credit when they need it. These consumers live paycheck to paycheck, and the ends just aren’t meeting up. They feel like they could never set aside $300 a month to square away their credit card debt.

Allocca said they can — and they do — and if they get into the habit of setting aside those $300-a-month payments once the debt has been erased, the savings start to build up.

According to the Financial Invisibles Report, even 40 percent of the population that claims not to worry about money still lives paycheck to paycheck, and that’s true across demographics.

LendingClub (LC) Set to Announce Earnings on Monday (Week Herald), Rated: B

LendingClub (NYSE:LC) will be posting its quarterly earnings results after the market closes on Monday, February 12th.

PayPal sees another solid quarter of growth (Business Insider), Rated: AAA

PayPal, which Wednesday, had another quarter of strong growth across metrics.

  • Total payment volume: The firm’s total payment volume (TPV) increased to $131 billion in the quarter, up 29% from the $99 billion it posted in Q4 2016, and a 15% sequential increase. That volume 
    Source: Business Insider

    NYC-Based Behalf Secures $ 150 Million in Debt Capital (BusinessWire), Rated: AAA

    Behalf, a provider of working capital solutions for small and medium-sized businesses, announced today that it has secured $150 million in debt financing led by a private investment fund managed by Soros Fund Management LLC. Viola Credit also participated in the Debt Financing. An equity investment in Behalf was also made by Viola Credit and a private investment fund managed by Soros Fund Management LLC.

    Credit card issuers block bitcoin purchases (Bankrate), Rated: A

    Nearly all of the nation’s largest financial institutions have blocked consumers from being able to buy the volatile cryptocurrency with a credit cardJPMorgan Chase, Bank of America and Citigroup recently banned credit purchases of bitcoin and other cryptocurrencies, following Capital One and Discover.

    LendEDU, a student loan marketplace, surveyed nearly 700 bitcoin investors in December and asked how they paid for their investment.

    A third used a debit card, and another 19 percent set up an ACH transfer, which is what you’d expect—people tend to fund for their investment portfolio with cash.

    Another 18 percent, though, said they used a credit card. More than a fifth of those respondents said they carried credit card balance as a result of their purchase. Even more troubling, seven out of ten of those who went into debt believed the profit they’d earn from their bitcoin investment would compensate for interest payments.

    Hard Lessons From the Federal Student-Loan Program’s Coming $ 36 Billion Shortfall (WSJ), Rated: AAA

    U.S. officials have long maintained the federal government would make a profit on its $1.4 trillion student loan portfolio or at least break even, but two recent reports suggest just the opposite will be the case. Government lending to college and graduate students could soon become an immense drain on federal coffers, worsening an already deteriorating U.S. budget picture.

    The Education Department’s inspector general, an agency watchdog, in a reportreleased last week said the profitability of the U.S. federal student lending program is being squeezed because millions of Americans who borrowed heavily in recent years—including many graduate students—are flocking into a program to have substantial portions of their debts forgiven. Students who borrowed in the fiscal year ended Sep. 30, 2015, and enrolled in such “income-driven repayment” plans, for example, are expected to pay back $11.5 billion less than they took to pay tuition and other schooling costs.

    The prospect of taxpayer losses on student loans increases the chances that Congress will make major changes to the program, such as eliminating debt-forgiveness options or placing new dollar limits on how much individuals can borrow.

    REWIREMENT IS NOT AN ALTERNATIVE TO RETIREMENT, BUT A PHASE OF GLOBAL EXPLORATION THAT CAN HAPPEN AT ANY AGE (Ron Suber), Rated: AAA

    ON DAY 231-237,

    While hiking through a forest in Patagonia, wading over volcanic ash for miles, kayaking around fjords amongst glaciers and jumping off cliffs into roaring rapids I found the space to contemplate more on three of the most common topics of conversation.

    FEAR

    Few know that fear drove me to withdraw from the Prosper deal just days before we were going to invest with Sequoia in January of 2013.

    The fear of failure, fear of change, fear of losing, fear of the unknown; all drove me to say no to the Prosper opportunity that I wanted and had worked so hard on with my business partners.

    Overcoming that fear changed the trajectory of my life and helped shape my own investment philosophy (and the strategy of using an Investment Thesis).

    APPEARANCE

    Things aren’t always as they seem in nature, business, people and life. Keep staring, stay curious but remain open.

    ADAPTING

    Adapting is the ability to adjust and modify one’s self to new conditions and new circumstances, and it’s a proficiency we should nurture as our surroundings change ever more rapidly.

    Matt Hollender of NetCredit (Lend Academy), Rated: A

    In this podcast you will learn:

    • The history of Enova and how they have evolved over time.
    • What was appealing to Matt about taking the helm at NetCredit.
    • Where NetCredit fits in the overall picture at Enova.
    • Who the near prime consumer is they are targeting.
    • The range of loan terms that NetCredit offers.
    • While they don’t have a cutoff by FICO score for who they will serve.
    • How their underwriting process works.
    • The channels they use to find these customers.
    • How they are improving the financial lives of their customers.
    • How their unique bank partnership works and how it allows them to expand their reach.
    • The balance they strike between automation and human intervention in credit decisions.
    • How NetCredit differentiates themselves from their competitors.
    • How they are funding these loans.
    • The scale they are at today.
    • How their MyRightFit tool works during the loan application process.
    • The percentage of their customers that come to them on mobile.
    • What the future holds for NetCredit.

    How Millennial Shoppers Make Purchase Decisions Today (Free Biz Mag), Rated: A

    Millennials have become the most in-demand consumer group among online retailers. Experts estimate they already spend over $1 trillion annually. Savvy eCommerce executives are studying Millennials to understand how to better speak to (and sell to) this growing and highly influential audience. This article discusses:

    1. Actionable tips for improving relationships with Millennial customers
    2. Mistakes many companies make when speaking to Millennials
    3. Factors that make Millennials loyal to certain brands

    Pace of Small Business Investment Remains Strong (PayNet), Rated: A

    Small business investment continued to register gains at the end of 2017 as delinquencies and defaults remained at low levels according to the latest small business credit trends from PayNet, the leading provider of small business credit data and analysis. However, some warning signs in financial health are starting to emerge.

    The December 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) decreased 1% to 136.5 from 138.5 (revised) in November 2017. Compared to December 2016, the SBLI increased 2%.

    Construction increased +7%, Transportation +13%, and Administrative and Waste Services +5% on a three-month rolling basis compared to three months ago.

    Weaknesses are primarily in the services sector with declines in Information Services (-8%), Professional Services (-3%), and Health Care (-2%) on a three-month rolling basis compared to three months ago.

    New Product Alleviates Mortgage Lending Compliance Risk and Worry (PR Newswire), Rated: A

    Financial institution executives in charge of mortgage lending compliance training now have a solution to stay ahead of employee training, certification and licensing requirements with the launch of Compliance Keeper 2.0 by OnCourse Learning Financial Services.

    The new product alleviates mortgage lending compliance issues regularly plaguing compliance officers, such as tracking loan officers’ completed pre-licensing and continuing education courses, compliance report generation, and assessing company risk and liability.

    Mortgage lending compliance made easy
    Compliance Keeper 2.0 empowers financial services compliance departments to administer, schedule, communicate, report and customize employee training programs to ensure compliance and success.

    Additional benefits of the new product are:

    • Mitigation of risk, and time and money savings on audit preparation.
    • Ability to meet state and national regulatory compliance requirements on time.
    • Automatic notifications that alert managers and employees to training and compliance deadlines.
    • Review of all company license information in one dashboard.
    • Actionable insight into employee certification needs.
    • Continuity of training across departments and/or branches.

    Fluz Fluz Blockchain Cashback Platform Aims to Enter and Reshape US Consumer Market (Insider Monkey), Rated: A

    However, one of the most important areas that blockchain technology can and will disrupt in the near future is financial services. Put simply, the technology represents a shared database that contains entries that are incorruptible and immovable and have to be confirmed in order to be added and each entry is logically linked to the previous one. This makes it perfectly suitable for international money transfers, so it’s unsurprising that 90% of major North American and European banks are exploring the use of this technology, according to an Accenture survey.

    According to a PwC report, 77% of financial institutions expect to adopt blockchain technology as soon as 2020.

    Fluz Fluz currently has over 40,000 active users in Colombia, where it launched in January 2017 built by the serial Ecommerce entrepreneurs Maurice Harary and Stefan Krautwald. The company sells instantly usable gift cards from over 200 merchants. Whenever a purchase is made using this card, network participants earn cashable rewards called Fluz, which are stored in mobile wallets. Fluz points can be exchanged for other cryptocurrencies or fiat money.

    Verifundr Moved to Next Phase Reports APT Systems (GlobeNewswire), Rated: A

    APT SYSTEMS, INC. (OTC Pink: APTY), a fully reporting public company in the Fintech sector, is pleased to announce that it has formally engaged the services of Difitek, Inc. to build the Verifundr escrow and payment platform. We look to Difitek to provide us with a modern framework, architecture and bank grade security features.

     

    The Worst Law Schools If You Ever Want To Pay Off Your Student Loans (Above the Law), Rated: B

    Worst Law School Salary-To-Debt Ratio
    School Avg Salary Avg Debt Salary-To-Debt Ratio
    Florida Coastal $84,664 $158,427 0.5x
    Charlotte School of Law $84,285 $154,802 0.5x
    Saint Thomas $96,356 $175,075 0.5x
    Barry University $86,908 $156,228 0.6x
    Appalachian School of Law $84,366  $143,724  0.6x
    Thomas Jefferson School of Law $101,173 $169,951  0.6x
    Roger Williams School of Law $94,557 $157,494  0.6x
    Elon University $87,680 $145,610  0.6x
    Texas A&M $90,665 $149,042  0.6x
    Arizona Summit f/k/a Phoenix School of Law $96,115  $155,697  0.6x
    United Kingdom

    Zopa reveals where a £3bn loanbook gets you (P2P Finance News), Rated: AAA

    ZOPA investors have funded enough car purchases to fill a traffic queue stretching from London to New Delhi, the platform claims.

    The peer-to-peer lender, which reached £3bn of loans last week, has been disclosing where the funds have ended up.

    Its loanbook has helped get 147,000 cars on the road, the platform revealed in a blog post on its website on Friday.

    Zorin Finance reaches £300m of lending (AltFi), Rated: A

    Zorin Finance, the alternative property lending specialist, has passed £300m of loans funded.

    Five UK FinTechs Leading The Charge In FinTech Fortnight (Forbes), Rated: A

    Today marks the start of FinTech Fortnight, a two-week celebration of the UK’s rapidly-growing FinTech sector.

    Revolut is a mobile-only digital banking app which launched its first UK current accounts in 2017.

    Founded in 2007, FreeAgent provides cloud-based accounting software, specifically for freelancers, micro businesses and accountancy practices.

    Bud is a London start-up that is trying to introduce “tailor-made banking”, by bundling a person’s various financial services, from a credit card with one bank, to a current account with another, into one platform.

    Funding Circle connects investors who wish to lend money directly to small and medium-sized enterprises via its peer-to-peer, alternative financing platform. Since its launch in 2010, investors on the platform have lent more than £3.2bn to UK firms, which has helped more than 33,000 companies access financing.

    Digital-only bank Monzo, began life as a start-up offering a pre-paid debit card.

    Current account customers slapped with an average of £152 in fees last year – here’s how to check what you paid (This is Money), Rated: A

    Plum has launched a Fee Fighter tool you can use to check how much you have handed over in fees yourself.

    Current account customers handed over an average of £152 each in banking fees last year, effectively putting an end to the myth of free banking.

    Given there are around 65 million active current accounts in the UK, this means the banks could have made nearly £10 billion in fees, according to the figures from savings app Plum.

    The research, which looked at 11,217 current accounts, showed that only 7 per cent (770 users) paid no bank fees at all.

    Over half (57 per cent) of the £152 average annual cost to current account customers came from using an overdraft and 56 per cent of account holders, or 6,276 people, used their overdraft, dipping in to the red at least once in the year.

    The next largest slice of the £152 average fee (at 27 per cent) was made up of monthly account charges or unspecified fees – which can include the cost of payments made or bounced by the bank that take you beyond your limit that are are commonly known as paid and unpaid item or transaction fees.

    These payments typically cost between £5 and £10 each.

    Source: This is Money

    R5-SHCH Connect goes live with eight Chinese banks (Finextra), Rated: A

    Theresa May today announced the launch of R5-SHCH Connect, a new service which links banks in China with London’s foreign exchange (FX) market.

    Using R5-SHCH Connect domestic banks in China now have access to the London FX market, recognised as the leading centre for global FX trading. The new service is a partnership between London’s R5 and the Shanghai Clearing House, announced by UK Chancellor Philip Hammond in December as part of the 9th UK China Economic Dialogue.

    European Union

    Red-hot fintech startup Revolut is taking on the Nordics (Business Insider), Rated: AAA

    Stockholm’s hot fintech scene is about to get hotter as Revolut – one of recent years’ biggest fintech sensations – arrives in the Swedish capital to launch its Nordic expansion.

    Since 2015, the startup has acquired some 1,3 million users around the world, making it one of the world’s fastest-growing fintech startups.

    The company, which recently added all the Scandinavian currencies among its basket of 130 global currencies, is now officially live in all the Nordic countries.

    Dutch fintech firm Ohpen raises €25 million to expand into new markets (Tech.eu), Rated: A

    SaaS-based core banking software Ohpen has raised €25 million in a Series C round led by private equity firm Amerborgh.

    Amsterdam’s Ohpen develops software tools used in the financial sector to digitalise services and for moving customers to the cloud. The new funds will be invested in growth and expanding into new markets.

    Finance chiefs warn on Big Tech’s shift to banking (Financial Times), Rated: A

    Europe’s introduction this year of “open banking” regulation, which forces lenders to provide access to accounts of customers who authorise it, has left senior bankers worrying that tech groups will cherry-pick the best parts of their business.

    Francisco González, executive chairman of Spanish bank BBVA, has warned that groups such as Facebook and Amazon in the US, and Alibaba and Tencent in China will “replace many banks”. He called on a global body such as the G20 to take action, saying “authorities [need] to bring order to this massive change” that could “pose risks to financial stability”.

    France regulator AMF clarifies its expectations for crowdfunding (LeapRate), Rated: B

    The crowdfunding regulatory framework, which was established in 2014 and updated in 2016, set up different statuses for intermediaries in relation to the marketed products:

    • crowdfunding investment advisors for investments in equity, bonds and “minibons” (interest-bearing notes). They are supervised by the AMF;
    • crowdlending intermediaries for donations or loans – with or without interest. These professionals fall under the jurisdiction of the ACPR.

     

    International

    16 Fintech Startups Deliver $ 12 Billion Financing to Consumers and SMEs in 32 countries (Crowdfund Insider), Rated: A

    The conference gathered more than 2,500 delegates from more than 50 countries from the five continents at the old French stock exchange in Paris, France. Alternative finance was one of the many topics addressed – the event spans Fintech and Insurtech and topics ranging from cryptocurrencies and blockchain to Artificial Intelligence and to Regtech.

    • They’re young: The 16 firms are on average 5.5 years old (with the oldest being 12 years old, the youngest not even 2),
    • Very international: They serve on average 4 different countries and together, with much overlap, cover 32 countries on the five continents.
    • Getting big: They have helped finance nearly €9.5 billion ($12 billion) worth of loans, bonds, and private equity for consumers and SMEs.
    • Well-funded: They raised on average $30 million in private equity for themselves

    Panelists Davis Barons, CEO of Creamfinance, Poland; Boris Batin, CEO of ID Finance, Spain; and Mark Ruddock, CEO of 4finance, Latvia, may be the best-kept secrets of global alternative finance. Founded respectively in 2012, 2012, and 2008, these companies have originated loan volumes measured in the €100s of million, and even, in the case of 4Finance, in billions of euros.

    Revolutionize Your Finance Industry Business With FinTech Mobile Apps (Finextra), Rated: A

    With the increased use of mobiles and digital revolution, every business has been disrupted, and financial services are no exception to this. There has been a drastic change in the way people are now accessing financial products and services. Customers are now looking out for FinServes that offer mobile apps and wearable technology to uninsured millennials. Insurance companies associating with FinTechs is on a rise and FinServes are increasingly leveraging new technologies to enhance customer experience. All insurance related process platforms ranging from claims, underwriting, distribution, and brokerage are being automated in innovative ways.

    According to a survey, FinTech is expected to be customer-focus by nearly 75% respondents out the 432 respondents surveyed. About 84% respondents expect that in the next five years, FinTech mobile applications will show the largest growth in usage.

    • Accept the changing market scenario 
    • Invest in technology: You need to implement innovative technology by investing in ventures to sideline your competitors in the FinServe industry.
    • Work in partnership: You need to collaborate with partners beyond the FinServe industry who have experience and can come up with new ways to generate value.
    • Analyse your success goals: So, plan your goals for the future by cautiously investing in digital technologies that are easy to implement and considering the opportunities available for improving business models.

    Challenges faced by InsurTech

    • IT security concerns: The security challenges of the IT industry make it a challenge for customers to enter the FinTech environment with complete reliability.
    • Frictions in customer journey: With the introduction of FinTech, customer expectations have reached a whole new level. However, they still experience a lot of friction throughout their journey as their very high expectations are still not met.
    • New and different business models: As the traditional insurance industry remained unchanged for over a century, the change in business models is not easily acceptable. Failure to meet user’s rapidly changing needs with time creates a challenge for FinTech adoption.
    Australia

    Why property buyers need to know about tax deductions (Domain), Rated: AAA

    According to a recent survey by online lender State Custodians, 61 per cent of respondents don’t know that mortgage interest payments on an investment property are tax deductible.

    A property is said to be negatively geared when expenses exceed rental income, and this net loss can be applied against other income, including salary or business income, to reduce your tax bill.

    Only 23 per cent of people under 35 know interest repayments are tax deductible compared with 44 percent of people aged 35 and over.

    The Australian Tax Office explains what expenses are deductible, but crunching the numbers based on a hypothetical property purchase can help put it into perspective.

    Source: Domain.com.au
    India

    Startup CXOs welcome boost to digital infra, ask for redressal of angel tax (money control), Rated: A

    Even as the government failed to address the issues of angel tax and crowdfunding of startups in Budget 2018, India’s young ventures have welcomed the move to encourage financial-tech sector and healthcare.

    Bhavin Patel, Founder & CEO, LenDenClub: 

    “The government’s step of introducing LTCG tax of 10 percent on capital gains over Rs. 1 lakh could push investors to go to other fixed income avenues like P2P Lending. The policy will encourage investors to consider P2P lending as an alternate platform to invest and earn profitable returns. The reduction in the Corporate tax to 25 percent also appears as some relief to MSMEs like us.

    The efforts towards creating the right environment for Fintech companies to grow in India will bring in promising growth prospects for P2P lending platforms.”

    Satyam Kumar- CEO and CO-Founder, Loantap: 

    “We are happy that Finance Minister has acknowledged voice from Fintech Industry seeking soft touch approach to regulation and making a strong case for Fintech participation in supporting SME/ MSME growth. Fintech as a segment has been signalled out in this budget with a very clear objective of credit push to the last mile. We see it as strong government backing for the way fintech industry is shaping in India.”

    Asia

    MatchMove and Rubique to Disrupt Loan Payouts and Disbursements (Payments Journal), Rated: AAA

    MatchMove India today announced its partnership with Rubique, India’s leading marketplace for financial services, to transform the current way of paying and disbursing funds to multiple recipients. Rubique’s platform provides a wide range of loan products and end-to-end loan fulfilments to individuals and Small and Medium Enterprises (or SMEs) through its wide network of retailers and distributors.

    The globally proven MatchMove Bank Wallet Operating System enables Rubique to pay commissions, incentives and cashbacks to its retailers and distributors securely with just one click.

    India’s lending market is expected to be valued at US$3 trillion by 2026 and this presents a huge opportunity for Rubique.

    To date, Rubique has processed approximately 100,000 applications, disbursed US$345 million worth of loans and signed up about 65,000 cards across 80 financial institutions. Rubique’s business has seen a fourfold increase year-on-year and it plans to increase its footprint from 27 to 100 cities next year.​

    Cayman

    FINTECH POISED TO TRANSFORM FINANCIAL SERVICES INDUSTRY (Cayman27), Rated: AAA

    Traditional financial services accounts for around 55% of Cayman’s economy, but emerging technologies – blockchain being one example – are poised to change the industry forever.

    Fintech, a mash-up of finance and technology, is a word we are likely to hear more often in years to come. In the not-so-distant past, Fintech referred to the back-end computer technology used by banks or trading firms. Over the last decade Fintech has evolved to describe a broad variety of technological interventions into personal and commercial finance, and it’s garnering a lot of investment.

    Authors:

    George Popescu
    Allen Taylor

Thursday October 6 2017, Daily News Digest

China mortgage loans

News Comments Today’s main news: SoFi surpasses $25B in originations. JPMorgan Chase rolls out mobile banking app. ID Analytics has 85% visibility into online consumer lending. Zopa prices new securitization. Fannie Mae expands digital mortgage platform. SEC investigated Bank of Internet. China’s cash loan market hits 1 trillion RMB. Lendified secures $60M credit facility. Facebook, Clearbanc partner on merchant cash advance. Today’s main […]

China mortgage loans

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

A new milestone: we’ve surpassed $ 25b in loan originations! (@SoFi on Twitter), Rated: AAA

Thank you to our community of over 390,000 people for growing with us.

Will JPM’s millennial-app experiment grant access to new markets? (American Banker), Rated: AAA

JPMorgan Chase spent more than a year researching what millennials (and clients wanting to bank like them) desire in a financial relationship. The result is a new mobile-only app that lets people sign up for a bank account within minutes and also helps manage their spending.

The megabank made a splash on Monday debuting Finn by Chase, an app that includes a checking and savings account and a physical debit card.

ID Analytics Now Has 85% Visibility Into Online Consumer Lending (deBanked), Rated: AAA

At Money2020, deBanked caught up with Kevin King, Director of Product Marketing and Ken Meiser, VP of Identity Solutions for ID Analytics. The last time I crossed paths with the company was six months ago at the LendIt Conference in New York City. Since then, the company has increased its visibility into the online consumer lending market to 85%.

Fannie Mae goes all-out on fintech collaborations (Business Insider), Rated: AAA

Fannie Mae, a US government agency that funds mortgages for lenders, rolled out 

92.3% of acceptance partners said Behalf increased their sales 10-20% (Behalf), Rated: AAA

Behalf’s merchant acceptance partners have found a way to apply Amazon’s small business strategies to their own business models. By adding the Behalf instant credit approval tool to their ecommerce experience, they also unlock the power of flexible terms on every sale. Customers of our partners can get instant access to up to $50,000 in buying power with their choice of flexible payment terms. With this boost in working capital, small businesses are able to invest in their growth, which increases their business purchasing velocity. Case in point: 92.3% of the Behalf acceptance partners surveyed reported that adding Behalf to their checkout experience drove a 10-20% sales lift.

Source: Behalf

Download and read the full whitepaper here.

Bank of Internet was under 16-month SEC investigation (New York Post), Rated: AAA

Online lender Bank of Internet was the subject of a formal 16-month Securities and Exchange Commission investigation, according to a report.

The company, led by Chief Executive Greg Garrabrants, was the subject of scrutiny until June — when it ceased without the SEC taking any action.

The probe was focused on alleged conflicts of interests, auditing practices, and loans made to two entities, according to subpoenas and government documents obtained by Probes Reporter, a publisher of investment research.

Wealthier Depositors Pressure Banks to Pay Up (WSJ), Rated: AAA

Large U.S. banks are starting to pay up to keep depositors from moving their money, saying customers are becoming increasingly demanding as the stronger economy nudges interest rates higher.

The average interest rate paid by the biggest U.S. banks on interest-bearing deposits jumped to 0.40% in the third quarter, the highest level since 2012 and the biggest quarterly increase this year, from 0.34% in the second quarter, according to Autonomous Research.

Bank executives said that the newest pressure for higher rates is coming primarily from wealth-management customers, typically well-to-do individuals and families who deposit cash as part of their investment accounts.

Fifth Third executives said they were raising deposit rates for some of those customers, particularly those who had other relationships with the bank.

Source: The Wall Street Journal

FT Partners Advises Credit Sesame on its ,000,000 Growth Financing (FT Partners), Rated: A

  • On October 25, 2017, Credit Sesame announced it has raised over $42 million in equity and venture debt
    • The funding comes from existing and new investors including Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital, SF Capital, among others, along with a strategic investor
  • The $42 million in funding is comprised of $26.6 million in equity and $15.5 million in venture debt, bringing the Company’s total funding to over $77 million
  • Headquartered in Mountain View, CA, Credit Sesame was founded in 2011 and has provided credit and loan management tools to over 12 million members
    • The mobile and web solution provides consumers with tools to build a path to achieve financial wellness, including free access to their credit profile complete with their credit score, credit report grades, credit monitoring, interactive step-by-step tools and recommendations for better lending options
Source: FT Partners

 

The 13 Chinese Companies That Listed On US Stock Exchanges In 2017 (Frontera), Rated: A

With about $2.4 billion raised in IPOs on US exchanges by Chinese companies so far this year, other China-based firms are increasingly vying for US investors and exchanges.

Qudian Inc (QD)

On October 18, Chinese online micro-credit provider Qudian Inc listed on the NYSE, raising $900 million in an IPO that was priced at $24, in the biggest ever US listing by a Chinese fintech firm. The financial sector firm’s stock, trading under the symbol QD, closed at $33 as of October 23. The stock commands a market capitalization of $8.8 billion in the US stock market.

Year-end Forward P/E for the depository receipt is estimated at 21.47. Estimated earnings-per-share stand at $8.21.

China Internet Nationwide Financial Services (CIFS)

This Beijing-based financial sector firm, trades under the ticker CIFS on the NASDAQ GM stock exchange, is engaged in providing financial advisory services in China. The company’s stock listed on the US stock market on August 8 at an initial offer price of $10 a share, raising $20.2 million for the company. The stock, trading at $31.5 (as of October 23rd), commands a market capitalization of $693 million in the US stock market.

China Rapid Finance Ltd (XRF)

Listed since April 28th on the NYSE stock market, China Rapid Finance Limited operates one of China’s largest online consumer lending marketplaces.  The company caters well to China’s 500 million EMMAs (Emerging Middle-class Mobile Active consumers), and has facilitated over 20 million loans to more than 2.7 million borrowers. Back in April, the company raised $69 million in an IPO, marking its listing on the US stock exchange under the ticker XRF. The shares initially offered at $6 a share, and now trade at $9.06 (as of October 23) with a market capitalization of $586.2 million.

Source: Frontera

Leading Banks are Embracing Digital Strategies More Than Ever (Lend Academy), Rated: A

JPMorgan was the first major US bank to partner with a fintech company when they launched their small business lending partnership with OnDeck in early 2016. That partnership was renewed earlier this year and has helped the bank to offer a seamless small business lending experience and reach customers it might not have otherwise. In recent months they have struck a new partnership with Mosaic Smart Data to help the slumping fixed income trading revenues and they have also completed an acquisition of WePay, a Silicon Valley company that offers payment capabilities to business platforms using APIs. Finally, just this week they launched Finn by Chase, an app aimed at millennials that allows people to use a phone to open a bank account, make deposits, issue checks, track spending and set up savings plans.

Bank of America saw more than 1 million users added to their digital channels and active digital banking users go from 32.8 million to 34.5 million in the last year. The main driver of this growth was through their mobile app. Customers are using the mobile deposit feature more than any other, mobile deposits now account for 21 percent of total bank deposits.

Wells Fargo’s digital growth, which includes web based and mobile users, saw a 2 percent increase from 2016. Branch and ATM interactions were down 6 percent while digital sessions through the web and mobile app increased 6 percent.

Citi is the first global bank to integrate banking, money movement and wealth management on mobile.

How Tech is Changing Multifamily Lending (Multi-Housing News), Rated: A

“Technology has helped us bring efficiency, speed and first-rate customer service to the small-loan space for all of our stakeholders, borrowers and brokers alike,” said Bonnie Habyan, executive vice president, marketing, at Arbor. Small-balance owners and operators need to work long hours to be successful, and the time and paperwork dedicated to obtaining financing is an inefficient use of time. Online multifamily financing platforms such as Arbor LoanExpress, or ALEX, address this by providing the ability to e-sign and upload documents.

“Crowdfunding was originally created to give average investors access to investments they normally wouldn’t have access to, and to give sponsors or borrowers easier access to capital,”said Bill Lanting, vice president, Commercial Debt at RealtyShares. “We were formed specifically with that idea in mind, to make borrowing easier and less cumbersome, and also to make investments in assets more available to everybody.”

AutoGravity Announces Partnership With Global Lending Services (PR Newswire), Rated: A

AutoGravity, a FinTech pioneer on a mission to transform car financing by harnessing the power of the smartphone, announced a partnership with Global Lending Services LLC, a South Carolina-based auto finance company, to provide access to finance offers through the innovative AutoGravity digital platform. Qualified car buyers gain access to an even broader set of car finance options through the AutoGravity iOS, Android and Web Apps.

Can employers help solve the student debt problem? (HRDive), Rated: A

The good news about student loans is that they allow millions of people to earn college degrees who otherwise wouldn’t be able to afford them. The bad news is that college graduates enter the workforce deeply mired in debt that deflates their net worth and keeps them cash-strapped for years, if not decades. The current wave of college graduates is facing debt in amounts far above previous generations.

Oliver Wyman, a global management consulting firm, sets the median figure for an undergraduate degree at more than $25,000. That figure rises with each advanced degree. Graduates with MBAs enter the workforce with a median debt of $45,000. Medical school graduates can expect to be $200,000 in debt.

Debt repayments for the typical college graduate will amount to $265 a month and for medical school graduates, $1,600 a month.

Target.com Introduces GiftNow (PYMNTS), Rated: B

Target announced that, starting this November, the retailer will integrate a wallet function in its Target mobile app. The purpose, says the retailer, is to allow customers to pay for purchases and redeem promotions through the use of a smartphone.

Legendary Investor Jim Rogers Believes FinTech Will Replace Banks and Cash (Cryptocoins News), Rated: B

Veteran investor Jim Rogers believes that banks must invest in the financial technology (fintech) space or they face being replaced.

According to the report, he has invested in Hong Kong-based ITF Corporation, the world’s first financial technology bank founded by Hui Jie Lim. Rogers has also invested in Tiger Broker, a Chinese online brokerage.

He also believes that digital currencies could change how we see money in the next 10 to 20 years. Even though he hasn’t invested in the crypto market Rogers is of the opinion that governments could issue their own cryptocurrencies in the future.

United Kingdom

New Zopa securitisation priced, highlights market confidence (AltFi), Rated: AAA

A securitisation of loans originated by peer-to-peer lending firm Zopa has received a warm reception in the market. The deal, which is the second securitisation of Zopa loans, has been priced significantly tighter than last year’s transaction.

The securitisation was led by P2P Global Investments PLC, the first UK listed investment trust to dedicate itself to investing in marketplace loans, and was arranged by Deutsche Bank. The most senior class of notes was priced at 70bps over one month Libor, compared to 145bps last year.

The senior tranche of the £209m securitisation, which represents 80 per cent of the portfolio, was rated AA by Moody’s.

Using the secondary market for above average returns on investment (P2P Banking), Rated: AAA

One central piece to understanding why trading (or flipping) strategies can be highly attractive is the effect of even small premiums pocketed on the portfolio yield. Take an investor that invests into a 100 (whatever currency) loan part and sells that part for 100.40 after holding it for 5 days. That is only a 0.4% premium, but the annualized yield is 33.8%.

Two main strategy approaches

Investors can
A) Invest on the primary market and then sell the loan later on the secondary market
or
B) Buy loan parts on the secondary market which they deem underpriced and then sell at a higher price. Be it buying at discount and selling at a lower discount, or already buying at premium and selling at an even higher premium.

One important point, is that market conditions change, usually good opportunities will stop working after a few months or weeks either because too many investors try to use them, or more general  the demand/supply ratio changes or the marketplace itself changes the rules how the market functions.

  1. First an investor will want to look how loan information is presented on the primary and secondary market.
  2. Understand the allocation mechanism on the primary market. How does the autoinvest feature work exactly?
  3. When is interest paid? Does it accrue for each of the day held, or does the investor holding the loan at the date of the interest payment gets full interest credited. This is important, because if in the example at the start of the article the investor not only makes a 0.40 capital gain but also collects interest for the 5 days he held the part, it will have a huge impact on yield
  4. Usually for this strategy longer duration loans are more attractive.
  5. Usually smaller loans are more attractive.
  6. Usually the time span a trading investor wants to hold on to a loan part, will be as short as possible (days). However there might be patterns observed where it could be desirable to hold for longer time spans.
  7. Strategies that allow to hold parts only at a time when the status of a loan cannot change can be attractive.

Monzo and Starling take bigger steps towards payment integration (AltFi), Rated: A

Monzo has announced today, after a week of dropping hints on various Twitter accounts, that it plans to integrate Android Pay into its user interface for current account users.

A few hours earlier, Starling Bank confirmed this morning that it will be the first bank in the UK to connect with Fitbit Pay.

Case study: the technology behind P2P (Banking Technology), Rated: A

The UK peer-to-peer (P2P) lending market has flourished in the last decade. Lending volumes among the major platforms are increasing rapidly, pushing the cumulative total above £7 billion for the first time, as the understanding of the investment model continues to grow.

New technology architectures, as well as the ability to quickly run up minimal viable products, mean that emerging P2P companies can turn ideas into reality much faster than their larger counterparts (“fail fast” or as I like to call it, “test quickly”).

This prioritisation of speed and efficiency, coupled with the ability to focus, means that P2P lenders can zero in on specific problems and provide what customers want and are increasingly expecting. At Landbay we can bring a new micro service up from scratch in 20 minutes, with the lag for code from committing to going live being about six to eight minutes whilst still maintaining the up time required.

Brokers should consider the P2P option (Mortgage Introducer), Rated: A

As the alternative finance market has become saturated with different funding options, it can be difficult for brokers to determine the best solution to suit their clients’ needs.

Loans can also be tailored to fit the specific needs of customers, with fixed rates available to allow customers to budget effectively for the full term of the loan. The flexibility of loans means borrowers can cover unexpected costs or finance planned purchases at more affordable rates, meaning P2P finance is a great option when situations happen to change at a company.

Whilst 25% of borrowers that apply to banks have their loan application rejected, according to British Business Bank, other forms of lending have paved the way for businesses to obtain cash, with P2P lending becoming one of the most prominent solutions in the current market.

Open letter to Andrew Bailey, chief executive of FCA (Specialist Banking), Rated: A

Dear Andrew, your comments on the BBC on Monday 16th October reflect the concerns that many share with the FCA about the effect of the high cost of credit impacting society widely and, in particular, the young.You cited concerns about certain aspects of credit card and payday lending practices, but you did not pass comment on the retail banks and their provision of overdraft credit at rates that may well exceed the rates of payday and credit card loans.It should be noted that at 1p per day for every £7 of overdraft, the fees for an overdraft of, for example, £2,000 pa, are in excess of 50% interest, uncompounded. This is certainly higher than many credit cards.Alex Letts
Founder and chief unbanking officer, U
China

Chinese Cash loan market grown to 1 trillion RMB in one year (Xing Ping She), Rated: AAA

Cash loan originated from the payday loan in America, and accelerated in China. In less than one year, the total volume increased from 600 billion RMB to 1 trillion RMB. As a branch of consumer finance, cash loan developed rapidly as much as P2P lending industry.

Early in this April, the regulator issued the first order to clean up the “cash loans”,while after six months the trend of compliance in the field is still unclear. Recently, with several relative businesses coming to the U.S. for IPO, the critical voice on the profiteering of cash loan becomes louder.

However, owing to the annual lending rate much more than the rate legal limited (36%), taking the consumer finance vents, cash loan still grow wildly under strict regulation.

Xi’s Neighborhood Watch (Bloomberg), Rated: AAA

Houses are for living in, not for speculation, Chinese President Xi Jinping said last week. The trouble is, fueling this speculation has been a surge in consumer lending, not only by banks but also by fintech firms such as recently listedQudian Inc.

Thanks to improved earnings and corporate debt that’s souring at a slower rate, Chinese bank shares have rallied this year.

Source: Bloomberg

What investors may be ignoring at their peril, however, is the spike in household advances. Consisting of mortgages, credit-card debt and auto loans, consumer lending as a share of the total is relatively low. Only 400 million Chinese had personal loans in 2016, or about 29 percent of the population. The ratio in the U.S. is about 82 percent, according to Bloomberg Intelligence. But it’s been growing fast and even People’s Bank of China Governor Zhou Xiaochuan is worried. China’s household debt-to-GDP ratio reached 47 percent in the first half, according to a recent Citigroup Inc. report.

Source: Bloomberg

Ali Microcredit Ltd. made 2.6 billion RMB in first half, exceeding 14 public banks (Xing Ping She), Rated: A

In the first half year of 2017, Chongqing Ali Microcredit Ltd. has made the revenue of 3.97 billion RMB, which increased 100 million RMB compared to the 3.86 billion RMB of 2016. The company’s net profit was 2.644 billion RMB, in a growth of about 700 million RMB from the end of 2016.

As one of the Ant Financial eco-system, Ali Microcredit takes the business of credit loan (Ant Jiebei). Therefore, Ali Microcredit is already the industry leader in the consumer finance field. Even compared to the listed banks, Ali Microcredit’s profit data can defeat many of them. Take the first half year for example, the company profit exceeded 14 of all the 38 listed banks in stock exchange of Shanghai, Hong Kong and Shenzhen, including Guangzhou Rural Commercial Bank (01551.HK, profit of 2.639 billion RMB), Bank of Tianjin(01578.HK,profit of 2.62 billion RMB), Bank of Hangzhou(600926.SH, profit of 2.53 billion RMB),etc.

Cash loan controversy (Global Times), Rated: A

Chinese people are becoming more and more willing to spend. But if they don’t have money, they borrow. This ever-growing phenomenon has recently thrown cash loans, also known as fast loans, right under the public spotlight.

Han, a 26-year-old white-collar worker in Shanghai, who preferred only to give her surname, borrowed a 6-month loan of 10,000 yuan ($1505.53) from Mayi Jiebei, the online cash loan service provided by e-commerce giant Alibaba’s subsidiary Ant Financial, at the end of September.

When borrowing the money, Han was informed by Mayi Jiebei that she will need to pay a monthly interest rate of slightly more than 100 yuan. In total, Han will need to pay an interest rate of 637 yuan to the provider.

Currently, the entire cash loan market is worth between 600 billion yuan and 1 trillion yuan, the wdzj.com report showed.

LendingClub of China: World’s no.2 economy is a fintech haven (MSN), Rated: A

China provides the infrastructure for financial technology to succeed, such as clearly-defined laws and good internet penetration, says Soul Htite, Dianrong CEO.
Watch the video interview here.

China Rapid Finance names Zhou Ji’an a non-executive independent director (Bankless Times), Rated: B

China Rapid Finance has named Zhou Ji’an a non-executive independent director. He becomes the seventh member of a board that includes former executives of Hewlett Packard, McKinsey & Company, Morgan Stanley, and UBS.

Mr. Zhou is the executive director and general manager of China United SME Guarantee Corporation aka Sino Guarantee. He previously served in senior roles with China Export & Credit Insurance Corporation, and China Life Insurance Co . and is a senior scholar of the Eisenhower Fellowships, an international nonprofit leadership corporation.

European Union

ECN Convention Debates Technology & Cross-border Future in EU Alternative Finance & Crowdfunding (Crowdfund Insider), Rated: AAA

Two main topics of the 6th Annual Convention of the European Crowdfunding Network (ECN) on October 19th and 20th were technology innovation and cross-border finance.

To retain their lead in innovation over banks and traditional finance’s Fintech, startups must keep delivering greater customer orientation and execution efficiency. The success of Initial Coin Offerings (ICOs) is a clear signal, and a red flag, that there exist gaps in technology and cross-border funding that finance has not filled.

Cross-border alternative finance is still hampered by the fragmentation of the European Union (EU) regulation at many levels: Not only do crowdfunding and crowdlending regulation differ from one country to the next, but so do investor taxation and corporate law.

Ingi Sigurdsson, CEO, Karolina Engine, claimed that artificial intelligence enables the platform to predict the success of crowdfunding campaigns with 80% accuracy. Mads Dalsgaar CMO, Funderbeam, explained how Funderbeam uses Bitcoin’s blockchain to register, clear and settle the trading of private companies’ shares. For Rein Ojavere, CFO of Bondora, technology enables his lending platform to “cut through the layers of fat” of multiple investment intermediaries. In the same vein, Lasse Mäkelä, CEO of Invesdor, called his company a “digital investment bank.”

Umberto Piattelli of law firm Osborne Clarke summarized the conclusion of ECN’s updated complete review of national crowdfunding and crowdlending regulations in 29 countries. He stressed the strong correlation between the growth of alternative finance and effective crowdfunding regulation. Only 11 out of the 28 EU markets researched have published specific regulations for crowdfunding and crowdlending. These markets have taken off rapidly after the issuing of such regulations.

Tink secures investment and bank partners as it plans European expansion (Banking Technology), Rated: A

Swedish fintech company Tink has signed with Nordic banks NordeaKlarna and Nordnet. Integrating in 2018, the banks will use Tink’s payment technology and personal finance management (PFM) platform within their existing customer channels.

In addition to the partnership agreements, SEB, Nordea, Nordnet, ABN Amro, Creades and Sunstone has invested €14 million in Tink.

International

DTCC: HOW TO THINK ABOUT FINTECH (All About Alpha), Rated: A

The Depository Trust and Clearing Corporation (DTCC), a provider of clearance, settlement, and a wide range of other services to the financial markets, has issued a new white paper on technological innovations and the disruptions fintech may generate.

By “core banking functions,” (1) the authors of the white paper have in mind credit, liquidity, and maturity transformation. The banks have more institutional experience handling these functions than upstart fintech firms and, to the extent the latter take over the core functions of the former, there may be reason to worry. Likewise, the fragmentation (2) of “the creation and delivery of financial services across additional providers and platforms” could cause errors and inefficiencies. And (3) if certain players could become too good at delivering these services in this way, they could pose systemic risks.

Source: DTCC

Read the full report here.

The Importance of Fintech Spreads Across the Financial Industry (PR Newswire), Rated: A

A research report by Transparency Market Research, predicts that the global peer-to-peer (P2P) market lending valuation will reach US$897.85 billion by 2024, as it expands at a significant CAGR of 48.2% from 2016 to 2024.

Dragon Victory International Limited (NASDAQ:  LYL) announced today that, the Company has entered into a Strategic Cooperation Agreement (the “Agreement”) with Shenzhen 708090 Investment and Development Co., Ltd (“708090”), a leading provider of shared workspace, community, and services for entrepreneurs, freelancers, startups and small businesses, to promote incubation services.

On October 24th, Fiserv announced that Regions Bank will expand their digital money movement capabilities with the addition of person-to-person payment and account-to-account transfer solutions from Fiserv.

On June 15th, Yirendai announced that it was awarded the Best P2P Lending Platform in ChinaAward at The Future of Finance Summit (the “Summit”) held in Singapore. Yirendai is the first FinTech company in China to receive this prestigious reward.

Qudian Inc. (NYSE: QD) is a leading provider of online small consumer credit in China. The Company uses big data-enabled technologies, such as artificial intelligence and machine learning, to transform the consumer finance experience in China. The company recently emphasizes Its collection efforts and pricing policy. The Company’s collection efforts extend to every delinquent borrower. The Company’s collection process is divided into distinct stages based on the severity of delinquency, which dictates the level of collection steps taken. As part of the major upgrade of the Company’s risk management system in January 2017, the Company has developed a machine learning algorithm to better allocate collection resources based on more detailed grouping of larger delinquency risk. Higher risk groups are allocated with more collection resources as the likelihood of their outstanding balance becoming longer-term delinquent or even uncollectable is generally higher.

Australia

ANZ BBSW penalty too low: P2P lender (InvestorDaily), Rated: A

On Tuesday, ASIC announced that it had reached a confidential in-principle settlement with ANZ resolving the dispute over alleged BBSW misconduct. Commenting on the matter, RateSetter chief executive Daniel Foggo said the corporate regulator’s activity in this area of the market bodes well for a more transparent financial system.

India

Gratification Unleashed (OutlookMoney), Rated: A

There was a time when a loan mostly meant you were going to buy a house or a car. This is not the case any longer. With changing times, now there are loans against salary advance to fund even your honeymoon. Today, there are loans available practically for every need and dream.

Take the case of the ubiquitous car loan, the advent of luxury cars has turned several car companies to offer loans that are tailored to suit customer offerings. For instance, Volkswagen Finance (India), offers financing solutions to customers for both new and pre-owned Volkswagen group vehicles (namely Volkswagen, Skoda, Audi, Porsche, Lamborghini, MAN and Scania) through registered and authorised Volkswagen group dealer channels.

Yet, borrowing is not as smooth as one would expect it to be. Take for instance Mumbai-based Amit Shukla, he had to take a personal loan of Rs 5 lakh to fund his first commercial car, because a car loan did not work out the way he wanted it to work for him.

Asia

Finance: Ensuring a safe investment crowdfunding landscape (The Edge Markets), Rated: AAA

When equity and debt-based crowdfunding platforms were launched in the market, there were concerns that these vehicles could be used for money laundering. After all, investors could unknowingly fund a fraudulent company and the money could end up being misused by the issuers for their personal gain or, even worse, to fund criminal activities.

The Securities Commission Malaysia (SC) introduced a legal and regulatory framework for equity crowdfunding (ECF) in 2015 and peer-to-peer (P2P) financing last year to address these concerns. According to the SC’s deputy general manager Tengku Ahmad Ruzhuar Tengku Ali, the regulator views money-laundering activities to be of minimal risk on ECF and P2P platforms due to the safeguards built into their frameworks and the platform operators’ vetting process.

There have been several cases of fraud linked to investment crowdfunding. The first widely known case, involving US-based Ascenergy, came to light in 2015. The company had raised US$5 million from about 90 local and foreign investors by leveraging some of the better known crowdfunding platforms such as Fundable and EquityNet.

The SC’s approach

All six ECF operators registered in Malaysia are operational. According to Tengku Ahmad Ruzhuar, 31 issuers had successfully raised RM18.3 million on ECF platforms as at end-September, reaching 80% of their target amount.

Retail investors are allowed to invest up to RM5,000 per issuer and a total investment of RM50,000 within a 12-month period. Angel investors registered with the Malaysian Business Angel Network can invest up to RM500,000 while there are no restrictions for sophisticated investors.

Issuers are able to keep the funds raised if they reach a minimum of 80% of the target amount, but they are not allowed to raise multiple funds for the same purpose.

Canada

Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: AAA

Lendified, a Canada-based lender who provides small business loans online has entered into an agreement with ClearFlow Commercial Finance to increase its lending capacity. According to the lending platform, through the agreement, ClearFlow is providing it with a $60 million credit facility to fund loans delivered through its website.

Facebook teams up with Clearbanc to offer cash advances to business (Financial Times), Rated: AAA

Small businesses advertising on Facebook can now get their hands on up to half a million dollars in growth capital, in the latest example of an online platform moving into territory historically dominated by bricks-and-mortar banks.

The social network has been trialling a scheme in partnership with Clearbanc, a Toronto-based firm, since February. Under the scheme, known as “Chrged,” customers connect their Facebook Ads account and their payment processor with Clearbanc, which then makes an offer.

Funds are not loans but merchant cash advances, giving Clearbanc the right to a certain portion of revenues flowing through the customer’s account until it gets its money back, plus a fee, typically of 5-10 per cent. The fee is set by analysing daily cash flows to determine the customer’s ability to repay.

About 1,000 small-business owners have so far taken up an offer.

MONEYTREE Q3 REPORT: STRONG AI AND FINTECH FUNDING PUSHING 2017 BACK ON TRACK (Betakit), Rated: A

According to CB Insights and PwC’s Canada’s latest MoneyTree report, 2017’s sluggish start may transform into a podium finish by year’s end.

The report, which tracks VC activity in Canada for Q3 2017, indicates that Canada could exceed $2.5 billion ($2 billion USD) across more than 300 deals for the year. The result would match or surpass activity from last year, when a total of $2.2 billion USD was invested, and 2016, which fell just below the $2 billion USD threshold.

Source: Betakit

Seed-stage deals accounted for 32 percent of deals in Q3 2017, a 19 percent drop from 51 percent of all deals in Q2 2017. However, early-stage and expansion-stage deals increased to 27 percent and 21 percent of deal share, respectively. Expansion-stage deals climbed to an eight-quarter high in Q3 — a strong contrast from past quarters where seed-stage deals were the most prominent, and perhaps a sign of a more robust investment ecosystem.

FinTech was another notably strong sector, as Canadian FinTech companies have received $252 million ($200 million USD) across 27 deals. This year is on pace to see $341 million ($270 million USD) invested across over 30 deals, on par with last year’s figure of $351 million ($278 million USD).

Source: Betakit

Authors:

George Popescu
Allen Taylor

Tuesday August 15 2017, Daily News Digest

corporate bond credit spreads

News Comments Today’s main news: Prosper reports strong Q2, closes $500M securitization. Zopa to refund investors affected by IT glitch. RateSetter in final stages of FCA authorization. Funding Societies joins international association of credit portfolio managers. Goldmoney reports Q1 profits, plans to open physical branch. Today’s main analysis: Third largest corporate note offering easily digested by bond market. Today’s thought-provoking […]

corporate bond credit spreads

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Africa

News Summary

United States

Prosper Progress: Online Lender Reports Strong Q2 Growth, Closes $ 500 Million Securitization (Crowdfund Insider), Rated: AAA

Summary of Key Financial Highlights for Prosper during the quarter:

  • Prosper facilitated $775 million in loan originations through its platform, up 32% quarter-over-quarter and 74% year-over-year driven by strong demand for its personal loan product.
  • Transaction fee revenue rose to $35.4 million, up 32% quarter-over-quarter and 84% year-over-year.
  • The company reported a Net Loss of $41.4 million in the second quarter of 2017, which included $39.3 million in non-cash charges related to warrants to purchase preferred stock that were issued to a consortium of investors, and a third party in connection with a settlement agreement.
  • Prosper generated $8.6 million of Net Cash from Operating Activities and Adjusted EBITDA of $6.7 million in the second quarter of 2017, driven by an increase in origination volume, improved marketing efficiencies and lower general and administrative expenses.

Third-largest corporate note offering easily digested by bond market (Morningstar), Rated: AAA

From a microeconomic perspective, second-quarter earnings reports have generally been in line, with the usual amount of hits and misses. Thus far, our corporate credit analysts have not discerned any significant change to their sector outlooks. From a macroeconomic perspective, second-quarter real GDP was reported to have expanded an annualized 2.6%, and as widely expected by the market, the Federal Reserve did not make any change to monetary policy.

In the corporate bond market, the average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) continued its tightening trend but declined only 1 basis point to end the week at +106. In the high-yield market, the BofA Merrill Lynch High Yield Master Index tightened 5 bps to +359. In equities, the S&P 500 was unchanged and volatility sank to new lows.

Fund flows in the high-yield market came to a near standstill last week, as the amount of redemptions from high-yield exchange-traded funds more than offset inflows into open-end funds, resulting in a net outflow of $0.1 billion.

Chatter Increases that Earnest is Up for Sale. Again. (Crowdfund Insider), Rated: A

Back in May, Crowdfund Insider reported that Earnest, an online lender providing personal loans, was up for sale. Referencing a report in Bloomberg, the rumor was quickly squashed by Earnest representatives who told this publication they were absolutely not for sale.

But now the chatter is increasing that Earnest is, in fact, on the auction block.  Apparently management is attempting to sell itself for $200 million. Alternatively, Earnest needs a quick equity injection of $50 million. Otherwise, things don’t look so good.

Millennials are financing everything from bed sheets to concert tickets (MarketWatch), Rated: A

In recent years, payment companies including PayPal PYPL, +1.76% Affirm and Bread have created installment plans for retailers that give consumers the option to finance the weirdest purchases over time.

These payment methods have taken hold at a time when millennials have been more reluctant than their parents to use credit cards. Millennials had about two credit cards each on average last year, according to the credit reporting company Experian. That’s compared with about three for boomers and an average of 2.5 for members of Generation X.

Brooklinen partnered with the payment company Affirm in June to offer a payment plan spread over three, six or 12 months. Financing doesn’t come cheap: Rates range from 0% to 30% APR, after Affirm checks the buyers’ credit and approves them. That compares to an average APR of almost 17% for credit cards — or zero if you’re paying with cash.

If the consumer does not pay within 120 days, Affirm no longer lends to that person, and writes off the debt. Affirm then sends the remaining balance to a third-party debt collector, which Affirm supervises, but Affirm does not package and sell the balances, Metcalf said. Affirm makes its money from simple interest consumers pay, Metcalf said.

PayPal offers two types of credit, both as part of a program called PayPal Credit. One option is to wait six months without paying anything, and no interest on purchases over $99 from select retailers. The other option is an installment payment plan called Easy Payments: Consumers pay interest at an APR of 19.99% if they don’t first pay off their balance within the term they select.

DiversyFund Announces First Ever ‘No Fee’ Real Estate Income Fund (Digital Journal), Rated: A

DiversyFund, Inc., a fast growing, online real estate investment platform, announced the first ever “no fee” real estate debt fund to investors today. With the Fund, investors gain the ability to invest in a diversified portfolio of real estate debt investments that target risk-adjusted returns and generate passive income.

The Fund already has an impressive four-year track record since its launch in March 2013, posting an average annualized net return of 11.4% since inception through Q1 2017, a track record that few Wall Street funds have been able to match. The Fund targets passive income by making real estate-backed debt investments in assets featured on DiversyFund’s platform. The Fund makes quarterly distributions of interest income to its investors and has never lost any investor principal.  The minimum investment amount is $10,000.

How Some Savvy FAs are Overtaking ‘Basic’ Robos (Financial Advisor IQ), Rated: A

Robo advice for mass-affluent investors keeps evolving. But brick-and-mortar advisors aren’t standing still. In fact, some traditional FAs are taking into their own hands ways to automate more sophisticated types of holistic planning – from philanthropy to tax strategies and healthcare issues.

For instance, Heron Financial uses a mobile app, Mobile Assistant, that helps Edwards turn client meetings into easy-to-disseminate notes in Redtail, the firm’s CRM system.

Savant Capital says it’s licensing new off-the-shelf software suites to create their own robo-like experience for clients.

By year’s end, Savant expects to start beta testing its own robo-style package that automatically plucks key data from a family’s tax returns.

Savant is also working on a similar tool to automate estate planning. It’s designed to automatically sort through internal client reporting software, CRM data and core financial planning databases to identify an appropriate estate planning strategy from 120 different scenarios, according to Brodeski.

Advisor Jonathan Swanburg in Houston isn’t writing special algorithms. But his employer, Tri-Star Advisors, finds it can achieve similar results automating more areas of clients’ comprehensive plans by taking advantage of new algorithms being embedded in core prepackaged financial planning suites.

Behalf Inc. Partners with FinWise Bank to Offer Small Business Loans (LendIt), Rated: A

Behalf, a rapidly growing on-demand commercial credit platform, today announced its partnership with FinWise Bank.

Operating since 2013, Behalf is an alternative financing provider that facilitates commerce between business buyers and sellers. Driven by data and technology, Behalf allows merchant partners to offer business customers instant credit and flexible payment terms at the point of sale. Once approved, Behalf customers can use their credit line to fund purchases with virtually any vendor, including MasterCard accepting businesses.

LendingTree Announces Finalists for $ 25,000 Startup Innovation Spotlight (Markets Insider), Rated: A

LendingTree®, the nation’s leading online loan marketplace, today announced the five finalists for its new initiative to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon this summer.

  • Traaqr
    Brian Handrigan, Co-Founder & Co-CEO

This SaaS disruptor is bringing click level analytics to companies of all sizes while providing automated data capture at a precision never believed possible before.

ForeverCar works with consumers to find and compare quotes for the right vehicle protection plan, and offers concierge support when a vehicle needs service or repairs, keeping you up-to-speed throughout the repair process.

  • Outleads
    Dorin Rosenshine, Founder and CEO

Outleads integrates with leading contact center software, including Genesys, Five9, and more, and onboards CRM data directly into Adobe Analytics, Google Analytics™ & AdWords™ for conversion attribution and real-time retargeting.

LeadCrunch solves the problem of finding optimal B2B targets by analyzing a company’s best customers to identify “Smart Personas”, and then engages look-alike personas with relevant content to generate permission-based leads.

Starbutter AI is a voice and chat app development company focusing on chatbots and AI agents, giving consumers high quality information so that they can pick the best financial products and helps financial companies match the right products to their customers.

The age of e-mortgages finally arrives (Scotsman Guide), Rated: A

The Michigan-based lender United Wholesale Mortgage recently received much media attention for rolling out what it claimed to be the first-ever truly digital mortgage after a Chicago couple in late July completed the entire process of refinancing their mortgage from a computer.

What was supposedly newsworthy about this event — worthy to be featured in an Aug. 9 article in the Wall Street Journal — was that a notary was remotely patched in for the e-signing, and didn’t have to be present in the couple’s home.

A male employee claims he was fired after reporting sexual harassment at a $ 4 billion startup (Business Insider), Rated: A

But a lawsuit filed on Friday against hot fintech startup Social Finance, better known as SoFi, is strikingly different.

This suit has been filed by a male employee who claims that he saw sexual harassment of his female coworkers and was fired after he reported it, according to a report by The New York Times’ Nathaniel Popper.

SoFi Harassment Suit (Fortune), Rated: A

Charles’ lawyer says he will file another lawsuit this week claiming broader employee mistreatment and seeking class-action status.

Fintech Startup SoFi Faces Wage, Retaliation Suits (Law360), Rated: A

Social Finance Inc. was hit with a wage-and-hour putative class action in California court Monday, just days after a former worker sued the financial startup, alleging it fired him for reporting the harassment of a female coworker and for reporting managers who fraudulently canceled loan applications to reap bonuses.

Five employees — Sean Pullen, Christina Cane, Michael Carrera, Matthew Taylor and Yulia Zamaora — allege that San Francisco-based SoFi failed to provide them with meal and rest breaks, failed to pay them for overtime and all….

Income& Selected for Highly Competitive Plug and Play Fintech Accelerator (LendIt), Rated: A

Income&, a real estate investment platform based in San Francisco, announced today that it was one of 24 startups selected for the sixth class of the Plug and Play Fintech Accelerator. The company will participate in a 12-week accelerator program geared toward financial technology startups, during which time it will gain access to Plug and Play’s extensive network of leading banks and financial institutions. Income& was among 3% of startup company applicants selected from a highly competitive pool for the fall 2017 Plug and Play Fintech Accelerator class.

How One Lawyer is Making Real Estate Investing Safer (Markets Insider), Rated: A

Last year, attorney Amy Wan, received a call from a real estate developer client who was trying to raise $300,000 from investors to acquire an investment property. When he asked how much the legal services would be, she gave him a flat fee of $10,000.

While working as a Partner in Crowdfunding Lawyers, a boutique real estate securities law firm, Wan says she began to come face-to-face with the reality that clients doing small raises could not afford her services.

She was named one of “Ten Women to Watch in LegalTech” by the American Bar Association Journal, and pivoted to a career in securities law when she became General Counsel of Patch of Land, a real estate crowdfunding startup. At Patch of Land, Wan works to help democratize investment opportunity. Now, she hopes to democratize access to counsel for small businesses.

Bootstrap Legal is a legaltech/fintech startup based in Los Angeles.

E-Signatures & Digital Lending: How to Move 99% of Customers off Paper (Bright Talk), Rated: A

In the sub-prime lending market, speed-to-close determines market share. Join us to learn how an end-to-end digital process with e-signatures transformed OneMain’s lending business – positioning the lender as the largest personal loan company in the U.S. Today,99% of OneMain’s loans are e-signed, enabling them to be closed and funded significantly faster than on paper.

In this 60-minute presentation, you’ll learn how the company took a phased approach and implemented e-signatures in the call center and online channels, then expanded to the branch network. This year, OneMain will complete its e-signature roll-out to 1,700 branches, where the majority of its loans are transacted.

Presenters

David Smith, Vice President, Application Systems, OneMain
Philip Hannah, Director of IT, OneMain
Mary Ellen Power, VP Marketing, eSignLive by VASCO

Live online Aug 31 11:00 am United States – Los Angeles  or after on demand

SEC Suspends OTC-Traded Emerging Markets Investor Over ICO Concerns (Coindesk), Rated: A

Issued August 9, the order was made against a firm called CIAO Group (now rebranded as NuMelo Technology), which trades on markets operated by OTC Markets Group. NuMelo first announced plans for an ICO on July 6, at the time indicating a desire to bring a “digital financial products marketplace” based on blockchain tech to the African market.

ETHLend announces date of LEND token presale and ICO (CryptoNinjas), Rated: B

ETHLend token pre-sale details:

Starting: 25.09.2017 at 12.00 GMT

Ending: 25.10.2017 at 23.59 GMT or when the cap is reached

AMOUNT TO RAISE: 2,000 ETH

TOKENS FOR SALE: 60,000,000,LEND (6% of total sold tokens)

LEND TOKEN PRICE: 30,000 LEND = 1 ETH

(price includes 20% bonus tokens for all pre-sale participants)

Minimum amount to participate: 1 ETH

ETHLend token pre-sale details:

Starting: 25.09.2017 at 12.00 GMT

Ending: 25.10.2017 at 23.59 GMT or when the cap is reached

AMOUNT TO RAISE: 2,000 ETH

TOKENS FOR SALE: 60,000,000,LEND (6% of total sold tokens)

LEND TOKEN PRICE: 30,000 LEND = 1 ETH

(price includes 20% bonus tokens for all pre-sale participants)

Minimum amount to participate: 1 ETH

3 Stocks That Doubled So Far in 2017 (Madison), Rated: B

LendingTree’s efforts have proven immensely successful. In its most recent quarter, the online loan marketplace reported record results both from mortgages and other types of loans, and the number of loan requests jumped by nearly half to 5.4 million. In particular, efforts to expand beyond the mortgage realm have been extremely lucrative, as non-mortgage product revenue more than doubled in just the past 12 months.

United Kingdom

Zopa to refund investors affected by technical glitch (Bridging&Commercial), Rated: AAA

The technical issue has now been fixed and Zopa will be refunding impacted investors the difference between the amount paid and the true value of the loans purchased.

RateSetter in “final stages” of FCA authorisation process (P2P Finance News), Rated: AAA

RATESETTER believes it is in the “final stages” of reaching full authorisation after becoming the last of the main peer-to-peer lenders to be trading on interim permissions.

The platform is the last of the Peer2Peer Finance Association (P2PFA) members still awaiting full permission after ThinCats announced it had received Financial Conduct Authority (FCA) authorisation last week.

Invesco sells £9.6m Ranger Direct Lending fund stake (AltFi), Rated: A

Invesco Perpetual, the asset management giant, has been trimming its exposure to the £243m Ranger Direct Lending fund amid a testing period for the alternative credit investment trust.

The firm is one of Ranger’s largest investors with, until this week, just under a third of total shares in the fund.  This, however, has been trimmed in the past seven days, according to regulatory documents, with Invesco Perpetual’s current holding now down at 27.9 per cent.

Invesco Perpetual, who owns the fund as an income play within their fleet of top equity income portfolios, sold £9.6m worth of Ranger’s stock last week.

London fintech Tail is a cashback platform built on the promise of Open Banking (TechCrunch), Rated: A

London-based Tail is a new fintech startup that offers a glimpse into the promise of Open Banking. This is seeing upcoming legislation in the EU and U.K. force banks to offer third-party developer access to your bank account data — with your permission, of course.

The app, initially available for iOS and serving London only, offers heavy discounts at local places to eat and drink, all linked to the card you pay with and delivered each week in the form of cashback. However, the draw is how seamlessly it all takes place, by being built on top of digital-only challenger bank Starling‘s API, with Monzo integration also in the works.

Hargreaves Lansdown cashes in on (not too much) excitement (FT Alphaville), Rated: A

Back on August 4, the Financial Conduct Authority said it needed to “reassess” the broker’s capital requirements, because of its plans to do things a little more interesting than selling investment funds – such as offering an online cash deposit service, and lifetime individual savings accounts.

That meant Hargreaves had to retain another £50m, scrap its planned special dividend, and reassure the market of its profitability ahead of schedule.

Hence, this morning’s results contain no real surprises. Its 21 per cent rise in pre-tax profit, to to £265m, for the year ending June 30 had been rushed out with the capital announcement 11 days ago, “to allow investors to assess its strong financial and trading performance”.

P2P lenders offering rates up to five times better than mainstream best buys (P2P Finance News), Rated: A

THE MAIN peer-to-peer lenders are currently offering rates five times higher than the best offerings on the mainstream savings market.

It comes as a new challenger bank launched last week called PCF, offering a fixed savings rate of 2.6 per cent.

This may come with Financial Services Compensation Scheme (FSCS) protection, but seven years is a long time to lock up your money for and savers could do better by taking a bit more risk with a P2P platform.

P2P investors can earn up to 6.1 per cent a year for backing consumer loans, even while using an Innovative Finance ISA (IFISA).

End of Line for iFunding? Real Estate Crowdfunding Site May Be Done (Crowdfund Insider), Rated: A

The chatter on Bigger Pockets regarding iFunding has taken a new twist. In a series of public posts investors are referencing a possible bankruptcy for the real estate crowdfunding platform.

According to the posts, a company named Jazco has offered to take over the remaining deals that have funded on the iFunding site.

Fewer Advisors View Robos as a Threat (Financial Advisor IQ), Rated: A

Sixty-six percent of advisors are undecided about whether robos are a positive or negative force for their practice, according to a survey of 102 advisors by U.K.-based Panacea Adviser cited by FT Adviser. Just last year, when Panacea Adviser last conducted the survey, a whopping 89% of respondents said robo-advisors were a threat, according to the paper. The rate of incorporating robos into traditional advice practices is also picking up. While only 2% of advice firms surveyed this year currently offer a robo platform, 8% are in the process of integrating one and 12% are considering doing so, FT Adviser reports.

Buy to Let mortgages and peer to peer lending explored (AXA), Rated: A

Zoopla research from May 2017 discovered that it’s now cheaper to rent than to buy in 54% of UK cities.

Those with good credit ratings could be offered interest rates as low as 3%. If your credit rating is not so great, however, rates can rise to as high as 30%.

Is this the end of fintech as we know it? (Banking Technology), Rated: A

In the age of the internet, fintech dominates finance. In the UK, the sector is currently worth £7 billion, employing around 60,000 people with figures set to increase.

With unseen levels of growth in fintech, it’s important for companies to make sure that they don’t fall prey to the same mistakes their predecessors did. The easiest way to do so is by sticking to regulation standards.

As online banking slowly becomes the norm for managing money, it’s only natural that online banks emerge. Usage of online banking has more than doubled since 2007, kindling a banking revolution through which the UK has lost 40% of its banks and building societies since 1989. Online banks offer two key services: better banking deals and superior user experience.

Challenger banks like MonzoAtom and Starling have been making a lot of noise in this new banking arena. In 2016, Monzo raised £1 million in just 96 seconds in the fastest crowdfunding campaign ever. Atom Bank established its base outside of London, and Starling is now expanding outside the UK.

LendInvest signs up former Interbay BDM (Mortgage Strategy), Rated: B

Specialist lender LendInvest has appointed Andy Virgo (pictured) as its first BDM for the South of England.

Virgo will be responsible for sourcing deals across the South of England and joins LendInvest from Interbay Commercial, the commercial mortgage lending arm of OneSavings Bank, where he was a senior BDM.

ONLINE LENDER QUIDIE UNVEILS NEW MARKETING PUSH (ResponseSource), Rated: B

Croydon based online lending company, Quidie has launched a new digital marketing campaign to support sales of its new low rate short term loan products (of up to £1,000 with a fixed interest rate of 180%*) which are available to qualifying UK consumers exclusively online via the website.

The new campaign includes a 40 second video ad starring up and coming rapper and actor Craige Middleburgh.

London-based Integrated Marketing Agency Brandnation was responsible for all campaign creative and production. Brandnation is also handling all supporting PR and Social Media activity for the campaign.

China

The Score On Tencent’s Credit Scoring (PYMNTS), Rated: AAA

Hong Kong Stock Exchange to Launch Blockchain-Powered Market in 2018 (Coindesk), Rated: A

The Hong Kong Stock Exchange (HKEX) is planning to launch a blockchain-powered private market aimed at helping smaller firms obtain financing.

HKEX chief executive Charles Li detailed the plan, which would play out through a separate venture dubbed HKEX Private Market, in an August 1 note.

China’s biggest unicorns are a different breed (NASDAQ), Rated: A

China boasts 695 million mobile web users and shops more online than anywhere else in the world, with e-commerce sales likely to top $1.1 trillion this year, according to eMarketer, or more than twice the outlay in the United States.

China’s startups confront a particular set of regulatory risks. A crackdown on peer-to-peer lending and online “wealth management products” has probably delayed flotations by both Ant and Lufax, for example.

And Didi, which now has no serious local rivals, recently took in more than $5 billion from Japan’s SoftBank and others.

Overall, VC and private equity funds ploughed 384 billion yuan ($57.5 billion) into startups in the first half, according to Zero2IPO, not much changed from the previous year’s frantic pace. Local giants Baidu, Alibaba, and Tencent have deep pockets and want to keep emerging threats under control. They boast stakes in or ties to more than half of the top ten. SoftBank is also eyeing China as it invests a $93 billion mega-fund.

European Union

Fintech CEO says tech giants like IBM may go on M&A ‘shopping spree’ for start-ups in 2018 (CNBC), Rated: A

Tech giants like IBM and Capgemini could go on a mergers and acquisitions “shopping spree” for financial technology (fintech) start-ups next year, the chief of one such start-up has told CNBC.

new European directive, which becomes effective in January 2018, would enable third party businesses to monopolize on banks’ software and customer data to build new products – something referred to in the fintech world as “open banking”.

Döderlein, whose company helps develop mobile payments products for 17 banks, said that this would result in big, mainstream tech companies snapping up smaller fintechs to harness the newer technologies they have on offer.

International

Visa’s Latest Big Bets in Fintech (The Motley Fool), Rated: AAA

When extolling the virtues of long term, buy-and-hold investing, it’s hard to think of a better example than Visa Inc. (NYSE:V). Since going public in March 2008, Visa’s shares have returned well over 600%, crushing the market in the process.

Broadening its partnership with a Pal

Was it really just a little over a year ago when, after a frosty and testy co-existence as business frenemies, that Visa and PayPal Holdings Inc (NASDAQ:PYPL) first struck a deal covering their North American business?

For starters, in Europe, Visa Checkout will automatically be enabled at any merchant utilizing PayPal’s Braintree payment processing. More impressively, however, is that, since PayPal holds a banking license in Europe, Visa will be issuing PayPal debit cards in Europe.

Kleaning up with Klarna

Visa also recently announced a strategic investment in and a new partnership with Klarna, a European online payments company that offers credit and flexible payments during the checkout process at online merchants.

Going to the market with Marqeta

Finally, in its most recent fintech deal, Visa announced a multiyear partnership and strategic investment in Marqeta, an open API (application programming interface) card issuer platform. Marqeta offers a number of payment solutions for issuers for on-demand delivery, alternative lending, the disbursement of earnings and rewards to card holders, advance cost controls, and on-demand virtual and tokenized cards.

Foolish takeaway

The payments industry is changing rapidly, with fintech start-ups and larger financial institutions all wanting a bigger piece of the pie. That is why Visa shareholders should take heart that the company is making constant investments to ensure it gives its clients and card holders the best payment experience possible.

The 10 largest P2P and marketplace lending deals of Q2 2017 (AltFi), Rated: AAA

The three months of this year, from April to the end of June, was a particularly active period for fundraising in the space. The top ten deals to marketplace lending companies received a combined investment total of $658m in the second quarter of the year, which represents 84 per cent of the total capital committed to deals in the sector, according to data provider Fintech Global.

The largest deal in Q2 went to Chinese P2P lender Tuandaiwang which raised a whopping $262.6m of private equity funding in May. This was the only marketplace lending company in Asia to feature in the top ten deals.

Fintech: Why It Matters So Much to Your Investment (FX Daily Report), Rated: A

In their latest report, Accenture established that international investment in fintech blast through the roof in just a couple of years. From $ 800 million in 2008, the figure has moved up to $ 12 billion by the onset of 2015. In Europe, the growth rate rose by 215% to $1.48 billion between 2008 and 2014. This figure is expected to continue going up and having a huge impact on individual businesses and institutions.

Transferring cash within and outside the country had made the traditional methods complicated, expensive, and unrealistic. However, latest technologies have made international cash transfer easy, transparent, reliable, and highly secure. Using online wallets such as Skrill, GOOG, and others, money is transferred within seconds and accounts maintained in top conditions.

India

Fin-tech startup DigiLend raises funds from InCred, Fullerton (VC Circle), Rated: AAA

Mumbai-based fin-tech firm DigiLend Analytics & Technology Pvt Ltd has raised nearly Rs 2 crore ($311,939) from two non-banking financial services companies, filings with the Registrar of Companies show.

Mumbai-based InCred Finance and Temasek-owned Fullerton India Credit Company Ltd have made the investment, the filings indicate.

DigiLend will use the funds to pilot its product in the personal loan segment, Dattani said.

Asia

Funding Societies Joins Prestigious IACPM and Welcomes Risk Expert Terry Tse to Board of Directors (Markets Insider), Rated: AAA

Funding Societies has become the first and the only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a prestigious forum for credit risk management. In addition, risk expert Terry Tse joins Funding Societies’ Board of Directors. Mr. Tse is the former Chief Risk Officer of Dianrong — one of China’s leading P2P lending platforms.

Together with sister platform Modalku, Funding Societies is currently the biggest SME loan crowdfunding platform in Southeast Asia, with operations in SingaporeIndonesia, and Malaysia. Recently, Funding Societies has also become the only Southeast Asian digital lender to be selected by CB Insights to the Fintech 250, a list of 250 top private companies changing the face of financial services around the world.

Canada

GOLDMONEY REPORTS FIRST QUARTERLY PROFIT OF $ 3.3 MILLION, PLANS TO OPEN PHYSICAL BRANCH IN TORONTO (Betakit), Rated: AAA

Toronto-based Goldmoney, a gold-based payments and savings platform that allows users to acquire, store, and spend gold that is stored in a secure vault, has released the financial results for its first quarter of 2018, which ended on June 30, 2017.

Goldmoney reported an adjusted profit of $3.3 million and an IFRS profit of $2 million. The company said this is the first time it’s reported a quarterly profit in Goldmoney history.

Goldmoney also reported a quarterly revenue of $125 million, suggesting improvement from $112 million year-over-year (YoY).

Canadian Small Business Growth Continues (Lessors), Rated: A

PayNet, the premier provider of credit assessments on private companies reports that the PayNet Canadian Small Business Lending Index (CSBLI) increased 1% to 123.8 in June 2017 from 122 in May, the third month in a row of year-over-year increases. Compared to May 2016 the CSBLI is up 5%.

The Construction sector investment increased 4% which continues to reflect improvements in housing starts and prices throughout much of the country. Accommodation and Food fell 5% while all other segments were within 3% of May 2017. Growth geographically remains broad based as well with British Columbia and Quebec showed the largest increases from May, both up 3%, while Atlantic Canada exhibited the largest decrease (3%).

The financial health of Canadian companies continues to maintain stability with relatively few signs of deterioration of financial health. The PayNet Canadian Small Business Delinquency Index (CSBDI) 31-180 days past due held steady at 1.09% in June from May 2017. Compared to June 2016, delinquency decreased (10 bps).

Agriculture delinquency decreased by (11 bps), the largest monthly decrease amongst all industries in June.

Africa

Nigeria’s Fintech industry has grown by over 90 % in 4 years (Business Day Online), Rated: AAA

In 2009, we began to look at how digital  is affecting the economies and consumers. The economy has changed, the world has changed. We now live in global, digital economy and because of that, one of the key things that makes money gets to businesses is through payment.

Fintech in Nigeria has come to stay, but what is your assessment of the industry in Nigeria today?

We are coming a bit late but the nation is doing so well compared to other nations. In the last 3-4 years the industry has grown by over 90 percent. It is said that there is over 400 Fintech organisations working with Africa Fintech organisation. These are all entrepreneurs and different groups providing solutions.

Are you saying that  Fintech has impacted  hugely on the economy, assist to solve clients’ challenges and provide job opportunities?

Imagine the 400 Fintech firms working with Africa Fintech Organisation and many of them are at infancy.  And each of them has its own niche of providing  solution to a particular sector. This is the new economy. Before now we had an economy that is based on crude oil, manufacturing and others, but the new economy is digital.

Are there examples of countries that employed Fintech to drive their economy?

Fintech  manifests in different forms and that is why speakers at the forum said that they do not see Nigeria being a follower in Fintech market. They see Nigerian being a leader because it is leading its own form of Fintech which is different from countries like S/Africa.  Though South Africa is doing so well in Fintech with its peculiar needs and penetration of banks to customers.

Nigeria is now growing from a combination of these models. But there are some models, where Nigeria is yet to get to which have been done so well in other markets. For instance, Econet which has worked very well in Zimbabwe where the number of people who are insured through the mobile platform are higher than the number of people insured in Nigeria. Under Fintech, people can borrow money like in Kenya without going to the bank because the whole system can read all your transactions as the system knows how money comes in and how it goes out. So when you ask for loan, they know that you are trustworthy and then they can lend you money easily.

Shivani Siroya of Tala (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Shivani Siroya, the CEO and founder of Tala. While Tala is headquartered in southern California its lending operations are focused on the developing world. They launched in Kenya back in 2014 and in three short years they have become the #5 most downloaded app in that country. How they have done this is a fascinating story.

Authors:

George Popescu
Allen Taylor

Wednesday August 30st 2016, Daily News Digest

Wednesday August 30st 2016, Daily News Digest

Correspondance From our readers regarding yesterday’s comment of why verified-income borrowers perform less well than verified one. Rich said “Hi George – on the question about why non-verified incomes perform better: could be because the rules they apply to determine whether to verify are more powerful than the lift from verification. Example: only verify if Fico […]

Wednesday August 30st 2016, Daily News Digest

Correspondance

  • From our readers regarding yesterday’s comment of why verified-income borrowers perform less well than verified one.
  • Rich said “Hi George – on the question about why non-verified incomes perform better: could be because the rules they apply to determine whether to verify are more powerful than the lift from verification. Example: only verify if Fico < 650.  This could cause the effect. I have no info on how LC underwrites – all speculation”
  • I assumed that a random sample was picked to verify income for. If the sample was not random, the source of our mystery is certainly most likely there, indeed.

News Comments

United States

United Kingdom

European Union

Indonesia

Australia

New Zealand

 

United States

Behalf Raises $ 27 Million, (Finovate), Rated: AAA

In a round led by new investor Viola Growth, small business financing innovator Behalf has raised $27 million in Series C funding.

Behalf pays vendors directly on their small client’s behalf – hence the name.

Behalf was founded in 2011 and is headquartered in New York City. he company has doubled revenues every six months since inception, and recently added Jorgen Bocklage, founder of 118 118 Money and former VP of Finance at fellow Finovate alum Dashlane as its new CFO.

Consumer Unsecured Q2 2016, (Orchard Platform), Rated: AAA

2014 vintage charge-offs have increased more steeply than in recent years, aligning closely with rates we saw in 2011 and 2012. While some of this trend can be attributed to deteriorating loan performance, most of it is due to the continued growth of subprime loan origination platforms. These platforms charge off at higher rates but offer investors increased interest rates as compensation for this additional risk. There’s not enough 2015 vintage performance data to draw any conclusions yet but we will be closely monitoring how that vintage performs in the coming quarters.

Across the industry, Q2 origination volume was down approximately 34% from Q1 origination volume, and down approximately 16% from Q2 2015 origination volume. Following years of consistent quarter-over-quarter increases in originations, we continue to see declines so far in 2016. Recent news and volatility at several of the largest originators have led to softening origination volumes, but we’re not ruling out an uptick in growth later this year as confidence and capital returns to these platforms.

Borrower rates rose 96bps in Q2 as a result of increases made by several originators to borrower interest rates in an effort to reignite investor demand in loan purchases.

Source : Orchard Platform

Source : Orchard Platform

Source : Orchard Platform

Three Takeaways From Square’s Latest Earnings, (Fortune), Rated: AAA

Online lending is still massive and growing: Square’s lending arm, Square Capital continues to be one of the bright stars in the company’s suite of services outside of payments. In the second quarter, Square extended nearly 34,000 business loans totaling $189 million, an increase of 123% year over year and 23% from the previous quarter in 2016.

Square originally launched the lending arm in 2014 to provide cash advances to merchants using Square’s point of sale service. Square recently announced that it would be expanding into traditional online loans, with fees between 10% to 16% of the amount borrowed.

Last quarter, Square said it was experiencing “challenging credit market conditions” and also reported delays in signing new investors to back its fledgling lending business.

Square sells the majority of its loans to third parties for an upfront fee and a small ongoing servicing fee. This quarter, Square said that it added five new investors to invest lending capital.

Is The Future Of Alt-Lending Playing Well With Others?, ( Pymnts), Rated: A

The biggest and most surprising change of direction on the “beating” vs “joining” question doubtlessly comes from the rapidly evolving world of online lending.

The banks, for a variety of reasons, aren’t going anywhere, which means a lot of lenders like Fundation are looking more into joining — and to connecting their lending platform to those banks customers.

Online lending, particularly its marketplace variant, solved a lot of problems at once and quickly attracted interest from all corners. By 2015 it seemed certain to many sober judges that lending was a business that technologists were going to slowly devour out from under the banks.

But a year can make a big difference, and the summer of 2016 is a very different place than the summer of 2015.

Today, investors have more options — less risky ones (more on that in a second) — and that has resulted in fewer marketplace loans getting bought.

Borrowers also have more options as credit has thawed for even sub-prime buyers.

“It’s saturated. Hundreds of platforms are going after the same pool of customers.”

Graziano describes Fundation as a “credit solutions provider” more than a lender — noting that the power of its offering is in the tools it offers around online applications and data-intensive credit algorithms to partners.

The Composite Model: A Viable Future for Online Lending, (Crowdfund Insider), Rated: A

Composite lending combines two models – balance sheet lending and marketplace lending – to deliver best of both worlds: all the benefits of marketplace lending, combined with the reliability and resiliency of balance sheet lenders.

Marketplace lenders shot into the spotlight just a few years ago, promising faster, easier access to credit than ever before, for those wanting or needing it.

If a recession or downturn causes loan requests to dry up or investors to pull back, marketplace lenders have no other reliable source of capital generation – making going out of business a probable fate.

As the saying goes, “you need to have money to make money” – and a comparison of marketplace lenders to balance sheet lenders proves this.

In many instances, marketplace lenders’ biggest problem is their borrowers, many of which are subprime. In addition, analyses have shown that these borrowers often borrow money to pay off debt, but then just end up accruing more debt.

In an effort to grow capital, marketplace lenders may assume even more perilous risk positions, which just leads to more delinquencies and defaults and can quickly accelerate the downward spiral.

As we have noted, the advantages of the marketplace lending model are very real.

CredibleFriends launches P2P bitcoin credit line mobile app, plans credit card, (SMN Weekly), Rated: A

Only recently CredibleFriends raised $100 006 of its $250 000 fundraising goal on the cryptocurrency crowdfunding site BnkToTheFuture from 87 backers, surpassing the $100 000 needed by July 15  to ensure the funds pledged will be deposited.

“The mission at Credible Friends is to get digital currency into everyone’s pocket by making it insanely easy to extend credit to the people you know and trust already,” Zach Doty, CEO Credible Friends told Bravenewcoin.com.

The platform locks in a 15% return, depending on defaults. A loan of $575, or 1 Bitcoin today, will be worth $661.2 in a year, regardless of the price of Bitcoin at that time. While this may work for or against the lender, it removes volatility.

Borrowers are charged 25% APR interest using the average daily balance method and the interest is charged monthly.

United Kingdom

Have online lenders changed their spots, (Alt Fi), Rated: A

Is it all just buttressing lending capital and trimming down costs? Has nothing else changed?

Transparency has long been pitched as the panacea to the industry’s so-called incentivisation problem.

However, as we at AltFi have repeatedly pointed out, standards of disclosure vary immensely across the industry. There are limits to the alignment that static loanbook disclosure can effect. There are also limits to what sense can be made of static loanbook disclosure, and to what extent investment decisions can be based upon this granularity of information.

In the UK market, AltFi Data Analytics provides investors with a real-time view of the performance of four of the “big five” marketplace lenders – Zopa, Funding Circle, RateSetter and MarketInvoice.

It’s “real-time” because the product is powered by loan-by-loan, cash-flow level data. But more important, perhaps, is the fact that the data has been packaged up into a series of tools which allow for seamless segmentation and intuitive analysis.

Finally, in questioning whether or not the online lending sector is changing shape, it would be remiss of me not to mention the imminent arrival of a brand new cadre of formidable-looking sector entrants.

Goldman Sachs is set to launch Marcus, an online lending outfit that will target both consumers and business, in October. Rumour has itthat Marcus loans will be funded by Goldman’s New York State-chartered banking subsidiary.

American Express, the $55.13bn market cap credit card giant, has also launched a platform – a short-term lender for small business owners in the US named Working Capital Terms.

And, of course, there’s the JPMorgan Chase initiative, made possible through a collaboration with OnDeck.

European Union

Two Years of Investing in Property Development Loans at Estateguru, (P2P-Banking), Rated: B

Estateguru is a p2p lending marketplace in Estonia focussed on bridge loans to property developers in Estonia. Since the launch in 2014 Estateguru has facilitated a loan volume of more than 10 million Euro in a total of 65 loans.  Typical interest rates range from about 9% to about 12%.

Many investors keep some cash in the Estateguru account in order not to miss out, when new loans appear. Tiny loans (< 40,000 EUR) are sometimes 100% funded by the time the email arrives.

Indonesia

Check out the new fintech industry partnerships announced during the IFFC 2016, (e27), Rated: A

Several companies even had the opportunity to sign their MOU on stage during the opening ceremony, with President Joko Widodo witnessing the process.

Investree – Bank Danamon

P2P lending platform Investree announced their partnership with Bank Danamon on the first day of IFFC 2016. Bank Danamon will be handling cash management for lending activities facilitated by the Investree platform, which connects lenders to SMEs. The startup has been working with Bank Danamon since its launch in October 2015.

Dimo – Sinarmas Bank

Mobile payment startup Dimo and Sinarmas Bank were one of the businesses who had the opportunity to sign their MOU in the presence of President Joko Widodo.

AMVESINDO – SVCA

On the venture capital firms side, Venture Capital Association for Indonesian Startups (AMVESINDO) and the Singapore Venture Capital and Private Equity Association (SVCA) announced the formation of the ASEAN Venture Council.

Australia

XBRL to flatten information asymmetries in the small business lending market, (DailyFintech), Rated: AAA

Like English is to business, so too in many ways is XBRL to data.

It is the common language many governments and startups now hope will become the standard by which organizations share and translate information between each other. Today, without broad take-up of XBRL, many governments, investors and businesses are currently in the dark when it comes to analyzing the mountains of unstructured data thrown at them by financial entities.

For small business finance and banking, XBRL has the potential to not only reduce the need for multiple data entry, but to also allow for greater comparability and portability of financial information. This opens the door to significant productivity savings and reduced financing costs to boot.

In 2010 Australia made inroads into encouraging adoption of XBRL through the launch of its Standard Business Reporting (SBR) initiative. Using SBR enabled software, businesses across Australia can now lodge key government forms (tax returns etc) straight from their accounting software to relevant government agencies. According to a report from the Australian Business Register, at the end of June 2014, over 568,000 reports had been lodged using SBR since its implementation in mid-2010.

Unsurprisingly, there is evidence that suggests XBRL can play a role in lowering the cost of lending. After being spearheaded by the National Bank of Belgium back in 2005, today more than 95% of Belgian private firms’ annual accounts are voluntarily filed in XBRL.

Research published in the Journal of Accounting and Public Policy in April 2016 has also indicated a correlation between XBRL adopters and lower interest rate spreads.

There is nothing more satisfying than being understood. Yet for many small business owners seeking credit, this is still far more difficult than it should be. XBRL has the potential to help both sides of the lending equation communicate with each other better, faster and more fluently.

ASIC Talks Regulating Fintech Insurgents, (Which 50), Rated: AAA

The corporate watchdog has its eye on new business models in financial services such as marketplace lending.  ASIC established its Innovation Hub in April 2015 in order to proactively engage with the fintech sector and help start-ups navigate ASIC’s regulatory system.

“We are making senior ASIC staff available at places like Stone and Chalk from time to time to answer questions,” said Tanzer.

In the first twelve months of operation, ASIC’s Innovation Hub worked with 93 entities, with 66 receiving informal assistance. As a result, 15 previously unlicensed innovative businesses have received a new financial services or credit licence since March 2015. The Innovation Hub has established relationships with international regulators in Europe, North America and Asia to discuss innovation developments and policy proposals.

An Innovation Hub Taskforce has also been formed, which includes senior executive leaders from many teams in ASIC and commissioner John Price.

The regulator has also have established the Digital Finance Advisory Committee, or DFAC for short, which is made up of industry, consumer and academic representatives.

New Zealand

LendMe sympathizes with Harmoney but says not in the same boat, (Stuff), Rated: B

Peer-to-peer lending service LendMe says it sympathises with Harmoney over a lawsuit filed by the Commerce Commission though it doesn’t believe the whole industry is under threat.

Harmoney, which is part-owned by Trade Me and Heartland Bank, has syndicated $300m of unsecured loans through its website which acts as matchmaker between borrowers and lenders.

Harmoney chief executive Neil Roberts said on Monday that an unfavourable ruling could “spell the end of the industry in its current form”.

A commission spokesman noted Harmoney would continue to be able to earn a margin from lenders who advanced money through its website, which those lenders could recuperate through interest payments.

LendMe chief executive Marcus Morrison said it was in a different position to Harmoney as all but one of the $3m of loans it had facilitated were to trusts and small businesses, to which the CCCFA did not apply.

Morrison said he sympathised with Harmoney, however. “They are providing a service and they feel they should be able to earn something for that. Harmoney has obviously fulfilled a strong need otherwise they wouldn’t have been able to do this level of lending.

Another disagreement between Harmoney and competition watchdog opened up after the commission denied a claim by Harmoney that the company had circulated copies of its proposed fee structure to the commission prior to it being granted a P2P lending licence by the Financial Markets Authority (FMA) in 2014.

Though Harmoney would have disclosed that information to the FMA, that authority “didn’t have any involvement with the CCCFA”, he said.

Some people who have lent money through Harmoney complained on Stuff that it had had virtually no loans awaiting fulfillment in recent days, meaning they had funds sitting idle on call that they were unable to invest. Harmoney responded through a spokesman that investors’ appetite to lend money through Harmoney had grown at a faster pace than borrowers’ willingness to take out loans, even though the latter had doubled.

Author:

George Popescu