A Discussion About Internet 3.0 , Decentralized Everything

Internet 3.0

Internet 1.0 is HTML websites. Internet 2.0 is a social network and user-created content. How is Internet 3.0 coming along? What is Internet 3.0? Are you familiar with Napster, Kazaa, and BitTorrent? Today, Bittorent has met Bitcoin and given birth to the following startups, networks, or organizations: Decentralized computing power. Golem, among others, is a […]

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Internet 3.0

Internet 1.0 is HTML websites.
Internet 2.0 is a social network and user-created content.
How is Internet 3.0 coming along?

What is Internet 3.0?

Are you familiar with Napster, Kazaa, and BitTorrent? Today, Bittorent has met Bitcoin and given birth to the following startups, networks, or organizations:

  • Decentralized computing power. Golem, among others, is a peer-to-peer market for putting your computer’s excess CPU power to use for other people. It works because there is no easy way to pay anybody on the planet fractions of a dollar for having used their CPU for 1 minute. This is, however, possible via blockchain.
  • Decentralized exchanges. Ether Delta, among others, is a cryptocurrency exchange which operates in a decentralized way (i.e., without a central counterparty). Decentralized exchanges allow peer-to-peer trading, which means that when a trade is executed the items are exchanged directly between the traders without touching any third party, and without the traders being able to stop the exchange. This approach eliminates counter-party risk entirely. On the other side, it also allows people to trade completely anonymously.
  • Decentralized protocol approval. Tezos, among others, is an open-source platform for assets and applications and allows the participants to vote to change its rules and protocols. Participants can choose to change the fee structure, rules, the protocol APIs, nearly everything. This protocol change-mechanism is built within the network rules, and nobody has the right of veto or override. Imagine if eBay merchants could vote to reduce the eBay fees without the eBay management being able to stop it. Of course, this opens the doors to politics, and also to oligarchies as having more Tezos coins obviously gives you more power to influence the votes.

Other similar companies include but are not limited to:

  • Decentralized file storage (Filecoin)
  • Decentralized domain naming (Namecoin)
  • Decentralized cloud storage (Storj)
  • Decentralized databases (BigchainDB, IPFS)
  • Decentralized internet address allocation (JACS)
  • Decentralized Video Encoding and Streaming (Livepeer).
  • Decentralize financial services (Bitcoin, Litecoin, etc.) and more.
Fig. 1. A map of some of the decentralized space from here.

Business models

Centralized online marketplaces , like Amazon, Uber, E-Bay or Lending Club, typically earn roughly 10%-35% of the value exchanges through the platform.

Other online platforms like Facebook or Google don’t share any of the ad revenue earned from the personal-data exchanged through the platform. They keep 100%.

In addition, all centralized marketplaces and platforms exert full control over who can advertise, who and what can be sold, to whom, where, etc.

Their full control, when the company is young or fragile, is not being exercised much. They want to attract users and customers. However, as the company grows, and pressure from investors and the financial markets increases, the platform position of the de facto monopoly in their sector is usually leveraged to increase fees and to control who and what can be transacted on the platform. For example, Google has a history of banning certain ad categories on its platform. Most people agree that the bans, so far, have been legitimate and are targeting harmful or mostly fraudulent industries from selling their products and services. However, Google’s power of life-or-death over entire industries is troublesome.

In comparison, decentralized networks and organizations have so far mostly tried a few different business models.

Financing and crypto coins

Traditional , centralized, startups sell their equity to investors. Equity is scarce by definition, to 100%. And once sold, investors typically have a contractual right preventing startups from creating more shares and diluting them without their approval.

Equity is a problem in a decentralized project. Equity to what? What does an equity holder control?

Most decentralized organizations mentioned above have created their own crypto coins in order to finance their creation. Their usual business model is to make the coin, artificially or legitimately, a required part of each transaction on their network. As the number of transactions grows and the coin inventory is limited, the coins become more valuable. And the network itself uses its own inventory of coins to finance its expenses. In addition, some decentralized networks also take a percentage of the value exchanged on their platforms.

However, the token approach has, so far, failed to work for most networks.

The most successful tokens today have thousands of active daily addresses.

Fig. 2 : Number of active addresses per network per day, log scale, for MakerDAO ( purple) , Tezos (blue), Binance (orange).

This is not surprising. All these decentralized organizations are new startups. It takes time for startups to build traction. A handful of them will have millions of users after 3-5 years. Most startups may still be viable businesses even though they only have hundreds of daily active users, but their tokens will not have any real value due to over-inventory. Therefore, maybe relying on token activity and scarcity to finance all decentralized projects may not be a viable way to finance these projects.

I believe an alternative token model is needed for most of these projects. A model that will have significant return to investors even if the network only achieves modest success of 100s of transactions per day. However, this may require an increase in network fees.

The X Open questions of decentralized entities

As I think of decentralization, many questions are on my  mind:

  1. What are these entities? Are they businesses, networks, organizations, protocols, or something else? The concept of Decentralized Autonomous Organization, or DAO, has been used in the past. But to my knowledge, no actively operating entity using a real DAO model is live and generating revenue today. All entities have executives, employees, bank accounts, offices, etc. Or is it? The Bitcoin network itself, with all the developers in various organizations who are trying to contribute to it, is fairly decentralized.
  2. Governance: Leaders in centralized entities are required. Often, leaders aren’t any good at taking decisions, but making some decision is often better than not being able to make any decision. Many an organization has died because nothing at all was done. Are decentralized organizations able to make decisions fast and efficiently over 5 to 10 years while they grow?
  3. Are decentralized networks cheaper to run, and do they have a disruptor advantage over centralized networks? It is not clear. Lending Club, one of the first P2P lending startups, argued that their cost structure was cheaper than banks’. However, it turns out the cost of capital lending and cost of customer acquisition were under-estimated and banks have cheaper capital and cheaper customer acquisition. Lending Club’s profit margins are not impressive. Neither is Uber’s. Nor are Amazon’s. I believe there is no single answer to this question, but assuming that a decentralized entity is more cost effective than a centralized entity is not obvious. In human history, disciplined centralized organizations (armies, empires, …) have clearly been more successful than federations, communes, etc.
  4. Is there value built, and where is it? The startup/VC model has worked since the Dot Com boom because it was a profitable model for everybody involved. VCs made money, and successful entrepreneurs attracted more smart wannabe entrepreneurs. It is very important to see the founders and investors in these decentralized organizations be successful or there will be no second generation decentralized entities.

Conclusion

What is the innovation here?

I believe that an exchange that can work without counterparty risk is a real innovation.

I believe that a method to pay fractions of a dollars efficiently to anybody on the planet is a real innovation.

I believe one day we will see the Netflix of Internet 3.0 bankrupt the Blockbuster of Internet 0, 1.0, or 2.0.

However, questions remain. Is decentralization in business similar to communism in politics? Does this model really work? In 1990, in Moscow, everything was rationed, bread was extremely scarce. When a communist leader asked the London mayor who is in charge of the bread supply to London so they can learn their secrets, the mayor, confused, answered “Nobody!” Our modern food supply is a decentralized market, and fewer and fewer people are going hungry.

Author:

George Popescu

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Decentralized Internet: The P2P of Everything

Decentralized internet

Details Title: Internet 3.0: Decentralize everything Internet 1.0 is HTML websites. Internet 2.0 is a social network and user-created content. Internet 3.0 is the decentralization of everything: decentralization of marketplaces, of resources usage and allocation, etc. Is Internet 3.0 the P2P of everything? Examples of decentralization include: Decentralized exchanges (Ether Delta) Decentralize computing power (Golem) […]

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Decentralized internet

Details

Title: Internet 3.0: Decentralize everything

Internet 1.0 is HTML websites.
Internet 2.0 is a social network and user-created content.
Internet 3.0 is the decentralization of everything: decentralization of marketplaces, of resources usage and allocation, etc.

Is Internet 3.0 the P2P of everything?

 

Register Here

The post Decentralized Internet: The P2P of Everything appeared first on Lending Times.

Thursday September 26 2019, Weekly News Digest

LendingClub eligibility

News Comments Today’s main news: SoFi intros crypto trading. Investors locked out of LendingClub in 4 states. Funding Circle asks US regulators to folow UK’s model. Fundbox raises $176M. Klarna surpasses 12M transactions per year. Today’s main analysis: U.S. subprime auto loan ABS recession scenarios (A MUST-READ). Today’s thought-provoking articles: Recession talk cooling. Consumers with […]

The post Thursday September 26 2019, Weekly News Digest appeared first on Lending Times.

LendingClub eligibility

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

SoFi Introduces Crypto Trading With SoFi Invest (PR Newswire), Rated: AAA

SoFi announced today that it has added crypto trading to its fast-growing SoFi Invest platform, as a response to demand from its over 800,000 members. SoFi Invest is now the first platform to offer automated and active investing with stocks, ETFs, and crypto through a single app.

SoFi Adds Bitcoin, Litecoin, and Ethereum to Invest Platform (Cheddar), Rated: A

SoFi goes live with crypto trading service for its over 800K users (The Block), Rated: B

SoFi users can initially buy and sell three cryptocurrencies – bitcoin (BTC), ether (ETH) and litecoin (LTC). The Block first reported the story last week, saying that the firm is beta testing the service in partnership with Coinbase.

SoFi CEO on what’s next for the company (Yahoo! Finance), Rated: A

Sofi CEO Anthony Noto joins The First Trade to discuss what’s next for the company.

Watch the video here.

Charlie Lee {LTC} praises SoFi as crypto-investing with Litecoin kicks-off (Our Bitcoin News), Rated: A

Litecoin is ranked at #6 underneath Tether, as well as Bitcoin Cash, in the market. The price jumped up at a rate of 0.60% in the course of the past 24-hours. This led to LTC scaling all the way up to $57.03 where it presently rests. The trading volume recorded stands at roughly $2.957 billion, whereas the supply has 63,337,479 LTC coins included as part of circulation. The total market cap of Litecoin amounts to $3.612 billion which depicts a massive decline compared to the value attained a week back.

SoFi CEO: Start investing in your 20s (Yahoo! Finance), Rated: A

SoFi CEO Anthony Noto discusses how his company’s consumers can now buy and sell Bitcoin, Ethereum and Litecoin.

SoFi Refunds Investors Hit By Capital Gains from Proprietary ETFs (ETF Trends), Rated: A

Financial technology company SoFi is offering refunds to investors hit by capital gains taxes following the change of replacing Vanguard funds with their proprietary ETFs in certain portfolios managed by their robo-adviser.

Some Investors Locked Out of Investing in LendingClub Loans (Lend Academy), Rated: AAA

Over the last 24 hours we’ve received several messages from Lend Academy readers alerting us that they have received information that they are no longer able to invest in LendingClub notes. There is is also an active discussion on the Lend Academy forum.

LendingClub state eligibility as of 9/24/2019. Source: Lend Academy

Funding Circle urges US regulators to follow UK model (P2p Financ News), Rated: AAA

FUNDING Circle’s US division is urging the Securities and Exchange Commission (SEC) to amend its restrictions on peer-to-peer retail investment.

The US financial regulator limits annual investment to five per cent of an investor’s annual income if their yearly income or net worth is under $107,000 (£86,075), rising to 10 per cent if the investor earns more than that.

Two Franchise Trends Aspiring Franchisees Should Look Out For (Forbes), Rated: A

Over the past 14 years, I’ve coached more than 1,500 people who were searching for the best franchise for their situation. I recently read the 2019 Small Business Trends 

Fintech Fundbox raises $ 176M to lend to business using AI (Information Management), Rated: AAA

Fintech Fundbox Inc. has raised $176 million in a new funding round from investors including Allianz SE and General Catalyst. The company planned to announce the funding along with a new $150 million credit facility.

A Fundbox spokesman said the new round valued the company at between $500 million and $1 billion, but would not disclose the exact valuation.

U.S. Subprime Auto Loan ABS: Evaluating Recession Scenarios (DBRS), Rated: AAA

Summary Highlights

  • Under the hypothetical Recession Scenarios, DBRS found that credit enhancement (excluding excess spread) coverage of remaining expected losses, as determined by a multiple calculation, decreased at the inception of the hypothetical recession for all of the Sample Transactions. The senior debt tranches experienced a swift deleveraging whereas some of the subordinated debt tranches could be at risk for a potential downgrade during the hypothetical Recession Scenarios.
  • After the initial decline in the multiple calculations at inception of the hypothetical Recession Scenarios, the deleveraging nature of the sequential pay structures of the transactions resulted in the calculated multiples for the analyzed debt tranches to move into the multiple range corresponding to the original rating of the debt tranche over varying lengths of time. The multiples for some of the debt tranches originally rated BB were weaker and moved into the BB range at a slower pace. As a result, those tranches would be more likely to be considered for a potential downgrade as compared to the more senior debt tranches where the structures delevered more quickly and the multiples reached the range corresponding to the original rating over a generally shorter period.
  • Over the life of the Sample Transactions, the credit enhancement multiples for all of the debt tranches analyzed, some on a delayed basis, ultimately moved into the AAA rating multiple range.
  • In each of the Recession Scenarios, the structure of each of the transactions provided sufficient credit enhancement for timely payment of interest and ultimate payment of principal of all debt tranches.
Source: DBRS

Read the full report here.

A Cooling in Recession Talk, Heat Up in Housing (PeerIQ), Rated: AAA

Lower rates, improved credit scores, and tighter housing inventory are improving the outlook for housing. Housing market achieved an 18-month high in housing starts and a record high in FICO scores.

The Citigroup Economic Surprise Index – a measure of actuals vs economist’s expectations – has also registered readings above the neutral baseline suggesting slowdown fears may be exaggerated.

Source: PeerIQ, CitiGroup

Consumers with Significant Liquidity Needs Often Access Alternative and Traditional Credit Markets Concurrently (GlobeNewswire), Rated: AAA

Many lenders believe that consumers who turn to the alternative credit market for liquidity do so because they have no other options. However, a TransUnion study presented today at the Lend360 conference found that these borrowers are frequently applying for and receiving traditional credit at the same time. While traditional subprime installment lenders and alternative lenders are competing over the same consumers, the study finds that the liquidity need is often not fully met in either market.

Source: TransUnion

Risk Levels Higher for Traditional and Alternative Loan Borrowers

Controlling for risk score, 8.5% of the alternative credit-active consumers had a serious delinquency in the first 12 months, vs. just over 2% for the control group. Bankcard performance was also worse. While these borrowers exhibited a preference for unsecured personal loans under $1,500 within 12 months of the alternative credit origination, they also originated auto and bankcard credit during that time.

Read the full report here.

Lendio to Double Sales Force, Expand Loan Product Offerings (Benzinga), Rated: A

Lendio today announced plans to double the sales force at its Lehi, Utah, and Woodbury, New York, offices. The company has hired 80 employees in 2019, and intends to add another 40 sales representatives by the end of the year, with plans to bring on another 40 in the first quarter of 2020. In addition to the expanding workforce, Lendio plans to bolster its selection of loan products for small businesses, with a 10% increase in the number of product offerings in the coming year.

Fintech lenders taking more market share from banks, survey finds (American Banker), Rated: A

Fintechs are continuing to siphon away customers for unsecured personal loans from traditional lenders, according to a study released Wednesday by Experian.

The study found that digital lenders more than doubled their market share in the past four years, with consumers across the credit spectrum increasingly turning to fintechs like Lending Club and Social Finance.

Fintechs now provide 49.4% of unsecured personal loans as of March compared to 22.4% in 2015, according to Experian.

Fintech Lenders Could Hold the Keys to Recession Recovery (Salon), Rated: A

Born out of the last recession, young fintech lenders have not yet been tested by a significant economic storm, and many in the industry are wrapped up in a dialogue of speculation about the industry’s ability to ride out an impending recession. It’s time to turn the conversation instead to focus on how fintech lenders can position themselves to play a critical role in recovery from the next downturn, whenever it may happen.

WeWork should ask SoFi CEO for advice on how to save the company (Yahoo! Finance), Rated: A

The two new guys running the slowly sinking ship known as once hot tech startup WeWork should give SoFi CEO Anthony Noto a holla on his Apple iPhone. Trust me, Noto has some good, timely advice for Artie Minson and Sebastian Gunningham.

Because the former Goldman Sachs banker and Twitter chief financial officer, now SoFi chief clearly gets how to rebuild a promising tech startup after a high-profile challenge or two. And then possibly, take it down the path of a successful initial public offering.

Generation Z’ers want more financial education – and innovative tools to help them learn (PR Newswire), Rated: A

As high school students return to school, they may see the benefits of new state laws across the country that require curriculums to offer a class about personal finance. This is great news for young adults as 76% of recent high school graduates agree it should be required, according to a national survey by Experian.

Many Gen Z’ers surveyed say innovative tools are the way to go when it comes to learning about credit (45%) and almost half (48%) would prefer to use tech-driven tools versus textbooks to learn more.

Survey respondents also say they are currently learning about finances mostly through their friends (28%), YouTube (27%) and some form of social media (24%).

D.C. Court Dismisses Challenge to OCC’s Fintech Charter (Manatt), Rated: A

In the latest battle over the Office of the Comptroller of the Currency’s (OCC’s) plan to issue special purpose national bank (SPNB) charters, a D.C. federal judge has for a second time dismissed a lawsuit brought by the Conference of State Bank Supervisors (CSBS).

The decision creates the potential for circuit split, as a New York federal court reached the opposite conclusion in a nearly identical action filed by the state’s Department of Financial Services (DFS).

9 Ways To Build an Empire Without Lifting a Finger (Yahoo! Finance), Rated: A

Another way to build your real estate empire is through real estate crowdfunding. As with investing in a REIT, real estate crowdfunding allows you to pool your money with other investors to invest in real estate. This could include multifamily units, commercial properties and bundles of single-family homes.

According to U.S. News & World Report, the top real estate crowdfunding platforms are ArborCrowd, RealCrowd, Groundfloor, CrowdStreet, PeerStreet, Small Change and RealtyMogul.

If you can afford the minimum investment — which is usually $25,000 — you can make big returns. Groundfloor boasts 10% returns for individual investors and CrowdStreet’s is even higher with 25.5% total average annual returns across all fully realized deals.

RealCrowd offers a breakdown of average annual income on a $1 million investment based on the property type: $78,000 for a suburban office, $72,000 for a retail space, $59,000 for a downtown office and $58,000 for a multifamily unit.

The Best And Worst MA Towns For Young Families (Patch), Rated: A

The online mortgage broker Lending Tree has tried to take some of the guess work out of that decision by ranking every community in Massachusetts with 5,000 or more residents based on their appeal to families with school-age children.

Hingham, under Lending Tree’s methodology, received a score of 72.5. Last-place Webster’s score was 31.9. Other towns in the top 10 included Winchester, Needham, Milton, Longmeadow, Wellesley, Cochituate, Pinehurst, Lexington and Nantucket.

JPMorgan donates $ 25M to get fintech in hands of underbanked (American Banker), Rated: A

JPMorgan Chase announced Tuesday a $25 million commitment to the Financial Health Network’s Financial Solutions Lab, a program meant to focus on the creation of fintech tools to help consumers better manage their finances.

The Financial Health Network (formerly The Center for Financial Services Innovation) previously received a $30 million philanthropic donation from the bank that spanned the last five years.

Bitcoin and Ethereum dive deep, is Bakkt to blame? (Mashable), Rated: A

“The disappointing BAKKT opening signals to the crypto community that institutions are less ready to invest in BTC at scale than was supposed, which means the price was probably too high and due for a correction. What we’ve just seen is short sellers and momentum traders piling on to make things worse, and now here we are back at support,” Alex Mashinsky, CEO at crypto lending and depository company Celsius Network, told Mashable in an emailed statement.

STRATA Trust Company Reaches $ 2 Billion AUC Milestone (PR Newswire), Rated: A

STRATA Trust Company (“STRATA”), a custodian dedicated to the complexity of holding alternative investments in tax-advantaged, self-directed retirement accounts, announced today that the firm has surpassed $2 billion in assets under custody. STRATA offers access to a range of asset classes that include private equity, private debt, real estate, crowdfunding, structured settlements and more. Since 2008, STRATA has been committed to empowering investors and the investment community with wider diversification and alternative asset custody solutions in retirement portfolios by delivering industry-leading service, education and support.

Online Pawn Lending Goes Back Offline (Business Wire), Rated: A

Prominent online lender Borro Private Finance unexpectedly ceased its collateral-based lending program this summer after nearly ten years of business. The UK-US-based establishment specialized in online pawn loans against valuable assets, including fine art, jewelry, and watches. Borro’s discontinuation of its operations comes nearly two years after the company’s withdrawal from the bridge loan market in July 2017.

Eleventh Circuit Tosses Online Lender’s Forum Selection, Class Waiver Clauses (Lexology), Rated: A

Siding with six consumers who filed suit asserting violations of state usury laws against online lenders, the U.S. Court of Appeals for the Eleventh…

Marqeta Hires Vidya Peters As First Chief Marketing Officer, as Company Continues to Build Out Expansive Global Vision (Business Wire), Rated: B

Marqeta, the first global modern card issuing platform, today announced the addition of Chief Marketing Officer Vidya Peters to its executive team.

White Oak Commercial Finance Acquires Veritas Financial Partners’ Asset-Based Loan Portfolio (ABL Advisor), Rated: A

White Oak Commercial Finance (“White Oak”), an affiliate of White Oak Global Advisors, announced today it has purchased a portfolio of asset-based loans from Veritas Financial Partners, a Boca Raton, FL based specialty finance company.

Alchemy Technology And Equifax Partner To Drive FinTech Innovation (PR Newswire), Rated: B

Alchemy Technology Inc. and  Equifax Inc. (NYSE: EFX) today announced a new partnership to drive FinTech innovation. The relationship is designed to help banks, specialty financing firms and FinTech startups accelerate their time to market with easily deployable white labeled lending solutions. The two companies will make the “tech” in FinTech available to organizations of all sizes with a powerful combination of the Alchemy Lending Operating System and Equifax data analytics, credit, identity and income verification solutions.

Ex-Goldman Sachs Managing Director Joins Lendingblock as Strategic Advisor (Lendingblock), Rated: B

Lendingblock, the regulated, open exchange for institutional borrowing and lending of digital assets, today announces the appointment of John Macpherson as a strategic advisor.

CoreLogic Credco Integrates its Three-Bureau PreQual Solution with eLEND Solutions (CoreLogic), Rated: B

CoreLogic, a global provider of property information, insight, analytics and data-enabled solutions, today announced that CoreLogic Credco integrated its Three-Bureau PreQual credit report and score solution on eLEND Solutions, an automotive technology company specializing in online and in-store credit and finance solutions. The integration of the prequalification solution gives CoreLogic Credco customers who use eLEND instant, single-source access to a consumer’s credit report and FICO score from all three national credit bureaus – Experian, TransUnion or Equifax.

Tavant Named to 2019 IDC FinTech Rankings (Business Wire), Rated: B

Tavant, a Silicon Valley-based provider of AI-powered digital lending technologies, announced today it has been named to the 2019 IDC FinTech Rankings, the most comprehensive vendor ranking within the financial services industry.

United Kingdom

Klarna Surpasses 12M Transactions This Year (PYMNTS), Rated: AAA

FinTech payments disruptor Klarna has announced the start of its “No drama, just Klarna” retail campaign in partnership with 13 brands in the U.K., the company said in a press release on Wednesday (Sept. 25).

Klarna offers “pay later” payment options and attracts 50,000 new users each week. The startup said that in the past year, it has processed 12 million transactions. In August, more than 100,000 U.K. shoppers downloaded the Klarna app.

Klarna reports surge in payments, merchant growth during first half of 2019 (Mobile Payments Today), Rated: A

Klarna, a London based installment financing provider and challenger bank, said it surpassed 3 million active users in the U.K. and 170,000 retail merchants worldwide.

Brits hit financial maturity at 31 (P2P Finance News), Rated: A

THE age at which UK men and women finally feel secure in their finances is 31, according to Zopa.

The survey showed a clear split between age groups, with 21 to 25 year-olds believing 32 would be the age when they finally felt good about their finances, while those age 26 to 30 were less optimistic about the future, saying they would reach money maturity at 38.

OakNorth Bank completes £20m loan to specialist lending fund (London Loves Property), Rated: A

OakNorth Bank, the UK bank powered by OakNorth, has provided a £20m loan to the RAW Mortgage Fund, a specialist fund providing buy-to-let property loans against residential real estate in the UK.

Wonga borrowers have less than a week to submit payday loan reclaims (The Sun), Rated: A

Anyone who believes they have been mis-sold a Wonga loan is allowed to apply for compensation, but its administrators set a deadline of 11.59pm on September 30.

If you miss the deadline, you won’t be able to apply anymore and you won’t get any compensation for mis-selling.

Nexo Now Accepts Tokenized Gold for Instant Credit Lines and Will Offer Interest-Bearing Accounts on Gold (Covington Journal), Rated: A

Nexo is adding the NYDFS-regulated PAX Gold as a collateral option for its signature , bringing gold-backed lending to the blockchain.

With PAX Gold, now offers gold investors instant access to their gold wealth in over 45 fiat currencies via same/next day transfers and across 200+ jurisdictions.

European Union

Kreditech Eyes Expansion After Securing EUR 20 Million in Equity Financing (Yahoo! Finance), Rated: AAA

Kreditech is ready to scale globally in the near-prime customer segment – declares David Chan, Kreditech CEO. The Germany-based online direct lender and Point-of-Sale (POS) financing provider estimates its global target market at ca. EUR 300 bn in consumer credit issuance. It aims to reach EUR 1 bn in revenue by 2025, which will be driven by growth in existing markets where Kreditech is present, as well as expansion into new geographies. Kreditech currently operates in IndiaPolandRussia and Spain, and serves over one million customers. The company has raised EUR 20 million in its latest equity financing round.

You’ve heard of challenger banks, now meet the challenger lenders (sifted), Rated: AAA

For better or worse, it was Wonga that first put “challenger lenders” on the map. The UK payday lender’s meteoric rise saw it become a household name before its collapse last year after a string of irresponsible, inflated loans.

This month alone, large funding rounds were announced by Sweden’s Capcito and Lendify, as well as by UK’s Sonovate, an invoice lender for SMEs with over 750 active clients. Banks are also watching closely, with Goldman Sach’s equity arm being a notable funder in Lendable, recently ranked the UK’s sixth fastest-growing private tech company.

In the UK, the challenger-lender industry grew to £6.1 billion in 2017, according to a study by the Cambridge Centre for Alternative Finance (CCAF). The CCAF also estimated that 29% of all new loans issued to SMEs came from challenger lenders in 2017. PwC predicts that figure will rise to nearly 40% in the next decade.

Source: Financial Times
International

Marketplace Lenders Navigate The Choppy Waters Of Compliance (PYMNTS), Rated: AAA

Regulators the world over are beginning to take a closer look at the alternative and marketplace lending business model.

In June, the U.K.’s Financial Conduct Authority announced plans to impose stricter restrictions on marketplace and peer-to-peer (P2P) lenders beginning this December following the watchdog’s decision to place P2P lending platform Lendy into administration — a result, the FCA said, of the industry’s lenient requirements to disclose governance arrangements and controls.

Also, in China, analysts at Yingcan Group pointed to the government’s P2P and marketplace lending crackdown as being likely to shrink the industry by as much as 70 percent this year.

This Fintech Safari Could Be a Wild Ride (The Washington Post), Rated: AAA

From ATMs to credit cards and PayPal, the West’s dominance of innovation in consumer finance appears to have exhausted itself.

At the top of the emergent new order is the fintech duo from China — Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Next in line are Alphabet Inc. and Walmart Inc., whose highly localized smartphone payment rivalry is playing out between Google Pay and PhonePe in India. In Southeast Asia, two homegrown ride-hailing giants are aspiring to dominate commerce.

The rise of African mobile money is associated with M-Pesa, Kenya’s digital-wallet revolution. Now traditional lenders like Standard Chartered Plc, with a presence on the continent going back more than a century, are discovering that online banking can help them mobilize low-cost current and savings accounts more profitably than acquiring customers via physical branches.

Australia/New Zealand

Harmoney says the P2P lender has been ‘slowly moving to lending our own money’ since 2015 (interest), Rated: AAA

The founder of Harmoney, New Zealand’s biggest licensed peer-to-peer (P2P) lender, says he can’t see a viable P2P lending model in New Zealand which is why Harmoney has started lending its own money.

Neil Roberts and David Stevens of Harmoney (Lend Academy), Rated: A

Harmoney, the first peer to peer lender to be licensed in New Zealand, has originated more than NZ$1 billion in loans since launching five years ago.


Read the PDF transcript here.

India

Kreditech targets India after EUR20m funding boost (Finextra), Rated: AAA

Kreditech, a German-based online lender and POS financing provider focused on “near prime” borrowers, is looking to the Indian market after raising EUR20 million in funding.

The round was co-led by Runa Capital and unnamed German private investors, with participation from existing shareholders HPE Growth and Amadeus Capital Partners.
Southeast Asia

Accumulated P2P lending exceeds W6tr (The Investor), Rated: AAA

Accumulated peer-to-peer loans in South Korea have surpassed 6 trillion won ($5 billion), data showed on Sept. 26.

Outstanding P2P loans extended by 220 companies stood at 6.2 trillion won in June, compared with 4.7 trillion won at the end of last year, according to the data compiled by the Financial Supervisory Service.

Indonesia’s Investree in talks to raise series C funding for regional expansion (Tech in Asia), Rated: A

Indonesia’s fintech peer-to-peer lending startup PT Investree Radhika Jaya is in talks with several investors to raise a series C funding as the firm looks to boost its expansion in Southeast Asia.

The Securities Commission Malaysia Approves EdgeProp as First Property Crowdfunding Platform in Malaysia (Crowdfund Insider), Rated: A

The Securities Commission Malaysia (SC) has registered EdgeProp Sdn Bhd as the first “Recognised Market Operator” to establish and operate a property crowdfunding platform in Malaysia. EdgeProp was granted an approval in principle in September 2019.

FINTECH COMPANIES FACE TALENT SHORTAGE (StaffingIndustry.com), Rated: A

The majority, or 94%, of fintech companies in Singapore, say the country requires fintech talent, according to survey data from Michael Page Singapore.

The number of Singapore consumers adopting fintech products and services has drastically risen in the last two years, tripling from 23% in 2017 to 67% in 2019, according to Michael Page.

Bitcoin Daily (PYMNTS), Rated: B

And Singapore-based exchange Bitrue has announced the launch of a low-interest crypto lending platform, which goes live on September 30.

MENA

Qatar Boosts FinTech Focus (PYMNTS), Rated: A

As reported by Crowdfund Insider, the Qatar Financial Centre (QFC) has expanded the number FinTech-related activities that will be awarded licenses. The additional support will come from the QFC platform.

The seven firms include DecisionLogic, which focuses on advanced bank verification that lets lenders qualify borrowers.

Africa

Proven ways you can make money in real estate (Daily Monitor), Rated: A

You can utilise a variety of methods that includes any of the following:
•Seller financing through lease options
•Trading fixed assets such as cars, jewellery and more
•Taking over someone else’s mortgage payments who might be in a distressed situation
•Bringing in an investment partner with cash
•Borrowing from a bank or getting a hard money loan
•Taking out a home equity line of credit
•Utilising a peer-to-peer lending network

Caribbean

Victoria Mutual acquires shares in Barbados-based FinTech Carilend (Jamaica Observer), Rated: AAA

Victoria Mutual Investment Limited (VMIL) has acquired a 30 per cent stake in Carilend, a Barbados-based financial technologies (FinTech) company, that is said to have revolutionised borrowing and lending in the Caribbean.

Authors:

George Popescu
Allen Taylor

The post Thursday September 26 2019, Weekly News Digest appeared first on Lending Times.

What Happened at the Money 20/20 2018 Conference in Las Vegas?

Money 20/20

Its a good thing that everything that happens in Vegas doesn’t stay in Vegas, which is where the Seventh Annual Money20/20 Conference took place on October 19-21, 2018. With the goal to “fearlessly take on the mission of creating a simpler, fairer, faster and more inclusive financial system for individuals, businesses, and society as a whole,” the three-and-a-half […]

Money 20/20

Its a good thing that everything that happens in Vegas doesn’t stay in Vegas, which is where the Seventh Annual Money20/20 Conference took place on October 19-21, 2018. With the goal to “fearlessly take on the mission of creating a simpler, fairer, faster and more inclusive financial system for individuals, businesses, and society as a whole,” the three-and-a-half day event included more than 500 speakers and 15 agenda themes.

Themes included :

  • Payments and Platforms
  • Banking and Personal Finance
  • AI and Deep Learning
  • Cybersecurity and Fraud
  • Alt Lending and Credit
  • Blockchain and Crypto
  • Digital Identity and Biometrics
  • And much more

While this is going to serve as a brief overview of the Conference, some of the notables who spoke, and bigger announcements, there will be special interest on Alternative lending and credit. We’ll also look at the all-important payments race.

A lot of the coverage is available on YouTube where Money20/20 has its own channel, so, if you missed the conference, you still have free access to some of the information.

Day One

Apple Co-founder Steve Wozniak is always a good bet to help you get a financial conference rolling. The business legend’s assurances that the claims that artificial intelligence (AI) and robotics, along with other forms of technology, are going to cut into human productivity are unwarranted helped to establish an ongoing theme that tech is necessary for the broader inclusiveness of our collective financial future.

Jennifer Bailey, VP Internet Services for Apple Pay, detailed some of the expansions of the new iPhone X, which include face ID security.

Other notable speakers from the first day of the conference included John Collison of Stripe, Michael Mebach, CPO of Mastercard (who spoke on how to build a seven-trillion-dollar middle class), Anand Sanwal of CB Insights, and Bill Ready of PayPal.

Day Two

Day Two’s lineup of speakers was headed by none other than Virgin’s own Richard Branson, who told a remarkable story about how he created Virgin by renting a plane and selling seats to the other passengers scheduled to be on the American Airlines flight that was delayed. Sallie Krawcheck, Ellevest’s CEO and co-founder, had some valuable remarks on diversity, and Vanessa Colella, head of Citi Ventures and CIO of CitiGroup, shared some keen insights on partnerships.

Possibly the speaker from the conferences second day who made the biggest impression was Nikolay Storonsky, CEO of Revolut. The way money is moved is changing rapidly, but if Storonsky is correct in his predictions, it may change even faster. He predicts that in 10 years, two or three large fintech players will take 95 percent of banks’ business marking an industry overhaul akin to how Amazon bypassed the retail industry and Uber took on taxis.

Day Three

Patrick Gauthier, VP of Amazon Pay, spoke to Tracey Davies’s central theme when he talked about the use of technology to make things simpler and more natural between the merchant and the consumer. Harley Finkelstein, CEO of Shopify, pointed out that middlemen will not be totally going away in the financial realm of the future, but they will have to “provide a disproportionate amount of value for their profit margin in the future.”

Other notable speakers included Asiff Hijri, president and COO of Coinbase, who framed the crypto world well when he spoke of the two base use cases of the space, the store of value of bitcoin and the ability to build apps on top of Ethereum, while noting that we’re still looking for that breakthrough app. His quote “Fintech before crypto, and the promise of a stablecoin…is like mobile before the iPhone came along” might be one of those “remember when” moments.

NBA legend Shaquille O’Neal also spoke on the third day of the conference. Now an advisor and advocate of Steady, the platform which helps Americans find work, says his partnership with these efforts is driven by recollections of a past where the only investments that paid off were those he embarked on in order to help others.

Day Four

Much of what happened on Day Four is listed below, including the Uber/Barclays and the Grab/Mastercard partnerships, but the day also had some other mentionable happenings.

Marisol Menendez, head of open innovation for BBVA, introduced the overall winner of the 10th annual BBVA Open Talent competition, the reward going to Sedicii; founder Rob Leslie accepted the award. Sedicii provides a service that identifies data between two organizations without exposing the underlying data.

Also, adding some hope for the financial sector in general, Ripple’s Co-Founder and Executive Chairman Chris Larson stated that he thinks digital assets can help guard against another financial crisis by solving some of the key problems of global liquidity. He also predicts that a fluid digital asset (he thinks it will be XRP, of course) will make more fluid the trillions of dollars that are tied up due to the “clunkiness” of current systems.

Focus on Alternative Lending and Credit Cards

As instant payments and expanded remittance options gain more prominence in the world of payments and commerce, an app designed to speed up the remittance process, designed via Visa APIs, took top honors at the conference.

American Express and Amazon announced a partnership, which will produce a no-annual-fee business card. Cardholders (Amazon Prime members) will get to choose if they want to receive five percent rewards on any Amazon purchase (Whole Foods included) or 90-day payment terms, a reward that might benefit small businesses with cash flow issues.

Goldman Sachs’s Marcus Platform announced a new wealth management offering designed to make the financial market more inclusive for average Americans. The offering will focus on online savings accounts and personal lending, the end game being to educate customers on some of the ins and outs of the financial sector.

Grab Financial and M and A Mastercard announced a partnership that will make prepaid cards available to underbanked and underserved customers in Southeast Asia in order to bring them into the financial realm and allow them to conduct business globally.

Gregory Wright, CPO and SVP of Experian, touched on a common theme from the conference, that of businesses going forward by putting consumers first. He reinforced the platform’s focus on putting the consumer at the center of the lending decision by giving the consumer more control over his or her data to allow them to make a more informed lending decision. The goal is for lenders to make better decisions at lower risk while giving more consumers access to credit.

David Richter, global head of business and corporate development for Uber, joined with Curt Hess, CEO of BarclayCard US, to announce the unveiling of the Uber Visa card. A native app specifically designed for the Uber platform, the app will make it more engaging and enjoyable for Uber riders and Uber eaters to experience the platform. The card will also offer real-time notifications of rewards and balances, rather than customers having to wait a month for a statement as credit cards traditionally do.

Other Noteworthy Announcements

  • ViSync took the grand prize in the conference’s hackathon challenge. According to a Visa spokesperson, their entry, an app designed to help send remittance payments overseas, should make it easier for migrant workers to send money back to their home countries.
  • FICO announced an “Ultra” FICO rating. The new device will consider how people manage their checking accounts and will incorporate things like overdraft history to determine credit scores. The goal is to help younger people and others with little or no credit and people who are rebuilding their credit after a couple of setbacks.
  • Tracey Davies, president of Money20/20, also announced the Rise Up! program, the pilot of which took place at this event. Rise Up! seeks to increase inclusion into the financial sector on all levels. This pilot program, which will expand to other demographics in the future, focused on gender (women make up 50 percent of the population, but only 20 percent of leadership roles in the financial sector.). Of the 300 women who applied to the program, only 35 were selected. Those who were selected were privy to special seminars and one-on-one access to various leaders from the financial space.

The Payments Race

Knowing how we build points of sale, I wonder if the organizers of the original event knew just how apropos the payments race would be to the overall message of the Money20/20 events. Whether they did or not, the event serves to draw a good picture of how we use and interact with different forms of currency in our daily lives.

Closely resembling the scavenger hunt of the television series The Amazing Race, five participants were given six days to make it to Las Vegas for the opening day of the convention. They drew to see which host city will host most of their scavenging, and then they all have to make it to their city and then to Vegas. Along the way, they got points for things like the number of states they visited and the different modes of transportation they use.

The catch is this: Each participant was only allowed to use one form of payment; the options were

  • Team Checks
  • Team Cash
  • Team Credit Cards
  • Team Devices (Apple Pay and such)
  • Team Crypto

The episodes—all of which can be seen on YouTube—show the obstacles in trying to perform these tasks with only the given form of payment.

As you can imagine, Team Checks had a hard time of it, and they had to rely on the goodness of many others to navigate their journey. Team Cash didn’t face as many obstacles, but travel required some finagling as they got deeper into the trip. Team Crypto had some transportation issues early on, but also relied on the kindness of others to make the necessary accommodations.

Team Credit seemed to have the most ease traveling—they just rented an RV and drove—and the representative from Team Devices said after it was all over that using only devices proved to be easier than she thought it was going to be; she did have to go to some pretty significant lengths to rent a car.

In all, the little series of videos showed the importance of various forms of payment and that we still haven’t gotten to the point where we can survive conveniently on one single form of payment; still, everything from the conference seems to speak to the reality that we’ll get there.

And how did the race turn out? Well, I haven’t seen an actual crowning, but Team Crypto was the first to get to the Las Vegas sign, which was basically the finish line—I haven’t seen anything that mentioned how each fared at the number of states visited or modes of transportation used. If Team Crypto did prove the winner, it was their second straight title.

The event will return to Vegas next year, the dates being October 27-30, 2019.

Author:

Written by Paul Keenan.

The Rise of Crypto Lending, a Natural Progression of Peer-to-Peer Financing

Nexo

The rise of new technologies often give rise to new business models. The peer-to-peer lending space is just over a decade old and still have much to grow into. However, not long after the first P2P lender–Zopa in 2005–opened its doors, a new technology that promises to challenge traditional ways to deliver financial services emerged. […]

Nexo

The rise of new technologies often give rise to new business models. The peer-to-peer lending space is just over a decade old and still have much to grow into. However, not long after the first P2P lender–Zopa in 2005–opened its doors, a new technology that promises to challenge traditional ways to deliver financial services emerged. That technology was the blockchain, a distributed ledger that underlies the cryptocurrency Bitcoin. Since then, other blockchains have been created along with new business models to suit. As it stands in 2018, crypto lending has not made a big dent in P2P lending services, but the potential is there. This article will highlight some of the more significant blockchain-based P2P lenders, which we hope will inspire a new look at technological innovation in this space.

Think of crypto lending like you would the banking industry: Even if Capital One provided perfect products at every turn, there would still be plenty of room for JPMorgan Chase, Citigroup, and Bank of America. There would still be room for the hundreds of other banks that compete for customers.

The companies listed here are not ranked in any manner. Rather, they=se are just some of the choices available for consumers in the market for cryptocurrency loans.

1. SALT (Secured Automated Lending Technology) Lending

One of the best benefits crypto-based lending has to offer is that a lessened importance on traditional credit scores as a factor for risk assessment. SALT Lending touts blockchain-based assets as “the perfect form of collateral.” The company is using this fact to “dramatically reduce the complexity and cost of the loan process.” SALT operates under Regulation D and, in lieu of credit checks, the company does AML and KYC verifications.

Offering three tiers of product, SALT’s loans start at $5,000 and go as high as $250 million. Loan percentages run between 12 and 22 percent APR, but the borrower retains the value of the collateral currency claiming any gains and losses that happen over the life of the loan. SALT accepts Bitcoin, Ethereum, Litecoin, and Dogecoin as collateral, and funds loans in USD.

One fact that could be a significant factor when deciding to use the SALT Lending platform is that loans are not transferable on the blockchain, but through existing financial channels. Thus, they become securities.

It’s not foolish to base a good bit of faith in a company that has proven players on its team. Founder Erik Voorhees was also involved in founding several other crypto websites prior to starting SALT Lending. Among these include Satoshi Dice, which he later sold, Coinapult, and ShapeShift.

2. ETHlend

Unlike SALT Lending, Estonia-based ETHlend is a fully decentralized P2P platform built on the Ethereum blockchain for lending Ether as tokens for collateral. Some insiders fear that platforms that allow their loans to become securities might run the risk of being swallowed up by banks.

ETHlend lends Ethereum, Bitcoin, their own LEND tokens, and DAI tokens, as well as 180+ other Ethereum-based tokens. The company offers address-to-address loans that are sent within minutes, with no middle men, assuring that no one, not even Ethlend, can stop one’s lending or borrowing. The company plans to expand beyond Ethereum to other distributed ledger platforms in Q3 of 2019.

The company’s interest rates range from .25 to five percent MPR, and all transactions are carried out on digital wallets. Borrowers that transact in the LEND token can get a no-fee loan.

Announced earlier this week, Aave is a tech-based company designed to expand on the offerings of centralized fintech companies like PayPal and Coinbase. Aave Pocket, Aave Gaming, and Aave Lending (SaaS) are among the offerings this expansion adds to the platform.

Unfortunately, the service is not yet available everywhere including a block to U.S. citizens.

3. Nexo

A new kid on this block is Nexo, and being a new kid means that they are doing things in a new manner. Founded in Zug, Switzerland—even more of an “EF Hutton” mention than Estonia—in 2017, Nexo promises the world’s first instant crypto-backed loans. Available worldwide, Nexo loans start at $1,000 and top out at $2 million.

The process is an easy one.

  • Log on to the website.
  • Verify your account
  • Deposit crypto assets into Nexo wallet
  • Withdraw loan to your bank account

There will be brief pauses while the borrower is verified—the company complies with the highest AML and KYC (provided by Onfido) standards—and while your deposit is confirmed on the blockchain. Overall, the Nexo process reads like a rather quick and seamless process.

The platform loans Euros, USD, and Tether while accepting Ether, bitcoin, Bincance coin (BNB), and Nexo as collateral currency. The interest rate is eight percent if the collateral currency is Nexo and 16 percent for all others. Nexo assets are stored in multi-signature wallets, more than one multiple cryptographic keys are necessary to gain access, and cold storage (wallets not connected to the Internet) at BitGo and PrimeTrust.

4. LendingBlock

LendingBlock predicts that, as digital assets grow as an asset class, demand for hedging, swaps, repurchases, and short selling will increase. The currency crypto market has more than $500 billion in assets circulating with less than one percent used as collateral. That leaves lots of room for growth.

Touted as the first cross-chain lending platform for the crypto economy, the company promises a product that will help its customers access secure, transparent, and fair crypto-to-crypto loans. Not a lender itself, LendingBlock provides the platform upon which parties can enter P2P contracts. The company acts as agent for both lender and borrower, as well as security trustee of the collateral. This ensures that the borrower doesn’t face any uncovered credit risk to the lender.

All collateral deposits are held in cold storage. Those who think regulation will be necessary before the crypto market can fully mature can take comfort in the fact that the company is focused on becoming a regulated business. They have submitted the full regulatory application to the country of Gibraltar and await the regulator’s response. They have also begun regulatory processes with the Financial Conduct Authority in the UK, and the Securities and Exchange Commission and Commodities Futures Trading Commission in the United States.

Basing the platform on its own token (LND), which is used to make payments and receive interest on loans, allows the company to reduce the cost of exchange fees and makes it easier to manage interest payments. The use of smart contracts reduces expenses, risks, and complexity, which makes for lower costs for borrowers and higher returns for the lenders.

5. BlockFi

New York-based BlockFi might be the ideal platform for Americans who want to secure USD loans with Bitcoin and Ethereum, provided that said Americans live in any of the 44 states where the company is currently conducting business.

The attractive thing about the BlockFi platform is that it seems easy enough for a lay person to understand without any kind of financial advice. A borrower needs to meet only two requirements to qualify for a loan: They can have no liens or bankruptcies on their record, and they must have at least $15,000 of crypto assets between their Bitcoin and Ethereum portfolios.

If those criteria are met, the customer can borrow up to 35 percent of their crypto asset value, with loans ranging from $2,000 to $10 million. Interest rates go from 12 to 14 percent APR, and there is an added fee of one to four percent of the loan value. Borrowers can take a loan in Bitcoin, Ethereum, or Litecoin.

Unlike other crypto-based lenders on this list, BlockFi does not have its own coin or token.

6. Unchained Capital

Texas-based Unchained Capital could very well be the platform of choice for those who want to liquidate their Bitcoin while maintaining it and seeing it go to work in the world.

Not only is the team at Unchained Capital in the market to make money as a lender, they have an idealistic side as well. Noting that 60 percent of Bitcoin sits around and does nothing, they have a goal to circulate it and use it to strengthen the platform. The company was founded by people who believe cryptocurrencies can change the world only if they’re useful.

The Unchained Capital team has designed its personal loans to be ideal for people who are looking to make large purchases, who hope to avoid tax events, and who want to invest. Their commercial loans are geared to companies that want to free up capital, expand their businesses, buy expensive equipment, and balance their portfolios.

Unchained Capital does not have its own cryptocurrency.

7. Other Companies to Consider

The crypto lending space is expanding. New lenders seem to be popping up quite often, which means that some people in the cryptocurrency space, at least, see a market for crypto-backed lending. Despite the market having taken a downturn in 2018, rebounding from the bull run last year that catapulted Bitcoin to $20,000 in December, this space is expanding. Lately, Bitcoin has been holding around the $6,500 mark. Since the majority altcoins tend to follow Bitcoin’s price, that means the market as  whole is down, yet more crypto lenders are ambling to get in the door.

Some of the other companies in the crypto lending space that might be worth checking out include BitBond, Credible Friends, Bitfinex (a crypto exchange that facilitates crypto financing transactions between parties), Celsius, Poloniex (another cryptocurrency exchange that allows traders to lend to other users), CoinLoan, Nebeus, GetLine, and BTCpop.

Authors:

Written by Paul Keenan and Allen Taylor.

Allen Taylor

Thursday November 8 2018, Daily News Digest

LendingClub total loans

News Comments Today’s main news: LendingClub loan origination estimates better than expected, losses widen. Zopa closes 60M GBP in funding. Landbay hits 200M GBP lending landmark. N26 expands in Europe. BBVA, Red Electrica Corporation complete blockchain-based syndicated loan transaction. Today’s main analysis: Q3 earnings for GreenSky, LendingClub, OnDeck. Today’s thought-provoking articles: How GreenSky is changing financing. LendingTree’s mortgage offers report […]

LendingClub total loans

News Comments

United States

United Kingdom

International

Other

News Summary

United States

LendingClub profit beats estimates on record loan originations (Reuters), Rated: AAA

Online lender LendingClub Corp (LC.N) reported an adjusted third-quarter profit that edged past analysts’ estimates and raised its full-year earnings forecast on Tuesday, helped by record loan originations and higher transaction fees.

The company said it now expects 2018 adjusted earnings of between $89 million and $94 million, up from a previous range of $75 million to $90 million.

LendingClub loss widens on higher expenses (Reuters), Rated: A

Online lender LendingClub Corp’s quarterly net loss widened, due to higher expenses for outstanding legacy issues.

The San Francisco-based company’s net loss fell to $22.8 million, or 5 cents per share, in the third quarter ended Sept. 30, from a loss of $6.5 million, or 2 cents per share, a year earlier.

LendingClub to expand in Utah (Pulse.com), Rated: B

The Governor’s Office of Economic Development announced 

How GreenSky, In-House Financing, and Blockchain Are Transforming the World of Credit (Premier Gazette), Rated: AAA

Fifty years ago, if you needed a loan for yourself or your business, you would typically walk into a brick-and-mortar bank, fill out a bunch of paperwork, talk to a loan officer, and wait several days or weeks to find out if you were approved. Today, this story has changed, and it’s going to look even more different in the future.

Borrowers seem to like GreenSky’s new way of obtaining credit. So far, the fintech company has served more than 1.9 million customers, providing them over $13 billion. Perhaps GreenSky’s most promising distinction is that it has also been consistently profitable with its new way of providing loan services. Its transaction volume has grown steadily from $2.1 billion in 2015 to $3.8 billion in 2017. During the same time, it grew its merchant base from 5,000 to nearly 13,000. Clearly, consumers in the 21st century like the new way of borrowing.

GreenSky estimates the home improvement industry, one of its key targets, to be just south of $350 billion annually. At a transaction volume of $3.8 billion, the fintech company has roughly 1% of the market.

Source: Premier Gazette

The APR’s for GreenSky’s products tend to fall between 5% and 24%, depending on the borrower’s credit profile. Loan terms vary from 42 to 90 months, and customers can borrow up to $55,000. GreenSky does not cater to subprime borrowers.

Late in 2018, GreenSky announced a new partnership with American Express.

Roundup of Q3 2018 Earnings: GreenSky, OnDeck, LendingClub (Lend Academy), Rated: AAA

OnDeck posted gross revenues of $103 million, up 8% from the previous quarter and 23% from the prior year period. OnDeck is benefiting from higher interest income due to rate increases as well as their origination growth while being able to decrease funding costs. Effective interest yield was 36.5%, up from 33.1% last year.

Source: Lend Academy

Net income came in at $9.8 million for the quarter, up from a loss of $4.1 million from the prior year period.

Source: Lend Academy
  • Gross revenue of $392 million to $396 million, up from $380 million to $386 million,
  • Net income of $20 million to $24 million, up from $10 to $16 million, and
  • Adjusted Net income of $40 million to $44 million, up from $30 million to $36 million.

GreenSky

GreenSky reported record transaction volume in the third quarter of $1.4 billion, up 33% year over year. Revenue increased 29% to $113.9 million year over year. GAAP net income was $45.7 million.

Source: Lend Academy

LendingClub

Net revenues were $184.6 million, up 20% from the prior year period and originations were $2.9 billion, up 18% from last year. Applications also reached their highest levels, up 30% year over year.

In Q3 2018 GAAP Consolidated Net Loss was $22.7 million, or $7.3 million if you exclude $15.5 million of expenses related to outstanding legacy issues.

Source: Lend Academy

Total loans issued by the company now stands at over $40 billion.

Source: Lend Academy
  • Net Revenue in the range of $688 million to $698 million.
  • GAAP Consolidated Net Loss in the range of $129 million to $124 million, reflecting expenses related to outstanding legacy issues through the third quarter partly offset by higher Adjusted EBITDA guidance.
  • Adjusted EBITDA in the range of $89 million to $94 million.

LendingTree Mortgage Offers Report – October 2018 (Lending Tree), Rated: AAA

October’s best mortgage offers for borrowers with the best profiles (the 95th percentile of borrowers) had an average APR of 4.61% for conforming 30-year fixed-rate purchase loans, up from 4.39% in September. The APR on refinance loan offers increased 22 basis points (bps), to 4.62%.

For the average borrower, the purchase APR for conforming 30-year fixed-rate loans offered on LendingTree’s platform was 5.27%, up 18 bps from September. The loan note rate of 5.14% is the highest rate of the year.

Consumers with the highest credit scores (760-plus, representing the 65th percentile of borrowers) received an average APR of 5.12%, versus 5.42% for consumers with scores of 680 to 719. The APR spread of 30 bps between these score ranges is the same as it was in September. For the average purchase loan amount of $233,938, the spread represents over $15,000 in additional costs for borrowers with lower credit scores over 30 years.

For the average borrower, the APR for conforming 30-year fixed-rate refinance loans increased 17 bps from September to 5.26%. The spread between credit score brackets (760-plus and 680 to 719) remained the same as last month, at 24 bps. That amounts to nearly $13,000 in extra costs over the life of the loan for borrowers with lower credit scores, given an average refinance loan of $238,447.

Average proposed purchase down payments fell to $60,361, a decline of about $3,600.

Source: Lending Tree

LendingTree Study Finds Millennials in the South Owe the Most on Their Cars (Benzinga), Rated: A

LendingTree today released its study on where millennials owe the most on their cars.

Key findings

  • Even car loans are bigger in TexasMetros in the Lone Star State dominate the top of the list: McAllenHoustonEl Paso and San Antonio have the highest median auto loan balances for millennials at $23,704$20,925$20,544 and $20,521 respectively.
  • Car capital of the world has the lowest auto debt. Ironically, Motor City has the lowest levels of millennial auto debt on our list with a median debt of $10,841 as well as the lowest average debt of $14,573.
  • Great Lakes area metros shine with the least auto debt. After Detroit, millennials in Rochester, N.Y.Grand RapidsToledo, Ohio, and Cleveland carry the lowest median auto debts, at $12,165$12,429$12,678 and $12,717 respectively.
  • New York and Ogden, UtahThese metros are on opposite ends of the spectrum when it comes to carrying any auto debt at all — New York has the lowest percentage of millennials with auto debt at 41.5 percent while Ogden, Utah has the highest percentage of millennials with auto debt (64.5 percent).

Outside Financial Brings Much-Needed Transparency to Auto Lending (Digital Journal), Rated: A

To prevent the average consumer from being charged more than $1700 in hidden markups on auto loan packages, Outside Financials opens an independent loan marketplace to facilitate transparency in auto lending and auto refinance.

We got a peek at Plaid’s financials, the fintech startup whose valuation has tripled in the past 6 months to as much as $ 3 billion (Business Insider), Rated: AAA

As of October, Plaid told investors it was on track to generate about $70 million over the next 12 months, two people who were briefed on the financials tell Business Insider.

That’s up from the $50 million in revenue the company told investors just one month earlier it was on track to generate, two other people who reviewed Plaid’s financials at the time said.

Fighting financial crime without excluding the underbanked (American Banker), Rated: A

Eugene Ludwig, founder and chief executive officer of IBM’s Promontory Financial Group, said artificial intelligence — already employed to help identify potential anti-money-laundering activity — is getting smarter, and can now be used to identify vulnerable groups of people who have been incorrectly labeled as high risk.

Nerdwallet Wants To Make Comparison Shopping For Financial Services Simple (Forbes), Rated: A

For example, Nerdwallet personal loan product page sorted loans by interest rates.

“All our consumers hated it. They wanted it sorted by monthly payments, which seems odd until you put yourself in their shoes and see what is going on month by month,” Chen said. “We have to meet them where they are. If you start by wagging your finger, that’s a good way to get them to hit the back button on their browser.”

Nerdwallet has three million members and more than 100 million visits each year, Chen said.

InfoSec Governance, Risk, and Compliance Manager (LinkedIn), Rated: B

SoFi is seeking an experienced InfoSec Manager to assist in all aspects of our governance, risk and compliance program.

NRL Mortgage Selects The Riivos Mortgage Lending Application (PR Newswire), Rated: B

Riivos Mortgage, a division of Riivos, Inc., the provider of cloud-based continuous value chain management technology, today announced that NRL Mortgage, an originator serving customers coast to coast, is using the Riivos Mortgage Lending forecasting, planning and reporting application to help them analyze and capitalize on growth opportunities. NRL Mortgage is majority owned by St. Christopher’s Holdings LLC, a privately-owned holding company based in Houston, Texas.

Judge suspends compliance deadline for CFPB payday rule (American Banker), Rated: B

U.S. District Judge Lee Yeakel on Tuesday reversed a previous order from June and granted, in part, the request by acting CFPB Director Mick Mulvaney and two industry trade groups to delay the payday rule’s August 2019 compliance date. They sought a delay to prevent lenders from having to comply with the old rule before the revisions are finalized.

United Kingdom

Zopa, the UK P2P lending company, closes £60M round on path to launching a bank (TechCrunch), Rated: AAA

Obtaining a banking license and then launching an actual new retail bank requires capital. A lot of capital. Enter Zopa, the U.K. peer-to-peer lending company that wants to become a bank, which today is announcing that it has closed £60 million in further funding. Only £16 million is actually new new money, having already disclosed £44 million in August, so this is effectively an extension of that earlier fund-raise.

Landbay reaches £200m lending landmark (P2P Finance News), Rated: AAA

LANDBAY has hailed its quality service and strong broker relationships as it reached the £200m lending milestone this week.

The peer-to-peer property platform, which purely focuses on buy-to-let mortgages (BTL), said it had reached the landmark with a track record of zero defaults.

Atom is intensifying its mortgage push (Business Insider), Rated: AAA

Atom has initially introduced 2- and 5-year buy-to-let remortgage products for landlords that have four to 25 properties. Users will have to pay a 1% loan fee, and the maximum loan term is 25 years.

Source: Business Insider

Older P2P property lenders boast “negligible or zero losses” (P2P Finance News), Rated: A

THE LONGEST running peer-to-peer property platforms are providing investors with high returns and “negligible or zero capital losses,” analysis claims.

Research from P2P analysis firm 4th Way has highlighted 11 lenders who now have a track record of four years or more.

LendInvest seeds newly launched real estate debt fund with £150m (Real Assets), Rated: A

LendInvest has launched a new real estate debt fund with £150m (€171.6m) seed capital from a previous fund.

JAJA SMASHES CROWDFUNDING CAMPAIGN AS IT READIES CREDIT CARD LAUNCH (Fintech Finance), Rated: A

Jaja Finance, the company on a mission to simplify the world of consumer finance, announces that it has already reached its fundraising target of £3m on equity crowdfunding platform Seedrs. The company will use the funds to expand its team and launch its digital credit card, Jaja.

China

Chinese tech CEO predicts ‘exponential’ growth in financial technology (CNBC), Rated: A

Financial technology has reached a tipping point for China’s Ping An Technology and future growth in that area is set to be exponential, according to CEO Ericson Chan.
European Union

N26 Expansion: German Challenger Bank Brings Services to Denmark, Norway, Poland, & Sweden (Crowdfund Insider), Rated: AAA

Germany-based challenger bank N26 is bringing its services to Denmark, Norway, Poland, and Sweden.

“N26 passes on these cost benefits to its customers. N26 partners with the most innovative fintech and traditional financial companies to offer its customers best-in-class products such as TransferWise (foreign exchange), Raisin (savings), Clark and Allianz (insurance), auxmoney (credit) and others.”

International

Banks complete first syndicated loan on blockchain (BBVA), Rated: AAA

BBVA and Red Electrica Corporation have become the first businesses in the world to deliver a syndicated loan using blockchain. The €150m deal, granted by BBVABNP Paribas and MUFG, was reached in record speed using BBVA’s proprietary platform- which is powered by distributed ledger technology.

Seven Businesses That Promise Digital Can Be Ethical (Forbes), Rated: A

In financial services, an industry where trust is a particular issue, Monzo was founded on the idea that there should be an alternative to traditional banking practices. Monzo argues that banks should get rid of punitive fees, do more to ensure customers know exactly what they can expect to pay for an overdraft, and provide greater control over how people spend their money.

Start-up Wagestream has just raised £4.5m for a business it promises will kill off the payday loan sector and the ‘payday poverty cycle’.

Banks should ally with fintechs in battle against payday lenders (PaymentsSource), Rated: A

Bankers who regard payment technology companies such as fintechs as a problem may be missing opportunities.

Alternatives to payday lending are an example. These fintechs provide credit for nonprime customers, such as a recently divorced woman faced with a slew of new expenses. It is pricey credit, but cheaper than payday lenders. Unlike payday lenders, these companies provide credit reporting and reduced rates as a client pays off the loan. Eventually, a successful client qualifies for bank lending and leaves to take advantage of bank interest rates.

Source: PaymentsSource

Report: AI in Fintech (Diplomatic Courier), Rated: A

FinTech has revolutionized the way that banks and insurance companies function. Rather than prioritizing themselves and their services as in the past, banks must emphasize client needs in today’s new technological era. This focus on personalized financial services manifests itself in FinTech—a financial infrastructure for consumer enablement. As FinTech applies data and technology to financial services in an effort to address industry challenges, artificial intelligence is essential to FinTech’s existence and usage.

To read the full report click here for the digital edition.

Crypto Power Player PwC is Assisting on Cred Crypto Lending Platform’s New Stablecoin Project (Bitcoin Exchange Guide), Rated: A

A division of the worldwide accounting and consulting firm PwCis currently working with a new stablecoin project that aims at developing a U.S. Dollar-based coin. The Hong Kong division will be exploring the best practices for issuing new stablecoinsworking with the Loopring Foundation.

Research reveals three tech strategies that will benefit small and midsized financial institutions (Finastra), Rated: B

A new piece of research, sponsored by Finastraand executed by Mercator Advisory Group, shows that small and midsized financial institutions can derive significant benefits to operational efficiency by pursuing three distinct cost-saving strategies: vendor consolidation, cloud delivery, and artificial intelligence. Based on in-depth interviews with C-level representatives of community banks and credit unions with asset size between $200 million and $5 billion, the research gauges attitudes toward and levels of adoption for each strategy.

  • Consolidation of vendors ultimately eliminates the need to maintain and manage multiple systems, and can improve operational efficiency by 20-30%.i
  • Cloud delivery brings numerous benefits including the ability to easily scale system capacity to meet demand.
  • Artificial intelligence (AI), which is the least adopted of the three strategies to date, promises to make processes smarter, faster and more personalized to the consumer. However, in order to reap these rewards, banks must prioritize their vendor consolidation and cloud delivery road maps.

The white paper, titled Landmark Decisioning: Using Vendor Consolidation, Cloud Computing, and Artificial Intelligence to Improve Operational Efficiency, is available here.

Persona and FintruX announce renewed control over personal data (Leaprate), Rated: B

Persona, the blockchain-based solution for identity management,has just announced its partnership with FintruX, the P2P lending ecosystem, to streamline the onboarding process for customers while ensuring they remain in full control over their personal details.

Persona is the first identity management solution developing its own blockchain, as opposed to other projects being developed as ERC20 tokens over Ethereum.

Asia

Funding Societies | Modalku Included in Global List of 100 Leading Fintech Innovators (Markets Insider), Rated: AAA

‘Look at where debt has gone’: MAS chief warns of 3 shifts in global financial risks (Channel NewsAsia), Rated: A

While the fault lines of the last global financial crisis have been mostly addressed, risks remain and have shifted in three ways over the past 10 years, said the Monetary Authority of Singapore’s (MAS) managing director Ravi Menon on Wednesday (Nov 7).

Meanwhile, the extension of credit has shifted from banks to non-banks – one of the areas that have not been given enough attention, said Mr Menon.

Canada

Loop Partners With Equifax to Launch Canada’s First Free Business and Consumer Credit Education Platform (Newswire), Rated: AAA

Equifax Canada and Loop today announced the launch of a credit health and monitoring platform for businesses. Launched at the intersection of Small Business Month and Financial Literacy Month, the new platform empowers Canadian small business owners and entrepreneurs alike, to improve their financial and credit health through easy-to-read credit scores, reports and resources.

Crypto Loans On The Rise – BTC Used As Collateral For Canadian Dollars (Crypto Disrupt), Rated: A

It is now possible to attain a loan for Canadian Dollars (CAD) using bitcoin as collateral. The ability to use crypto as a form of collateral for fiat is a sign of further legitimacy for the sector. More providers are expected to follow suit and offer crypto loans, with a wider range of fiat currencies for a larger range of acceptable cryptocurrencies used as collateral.

Authors:

George Popescu
Allen Taylor

Wednesday August 15 2018, Daily News Digest

financial assistance

News Comments Today’s main news: Square expands Bitcoin service to all 50 states. Funding Circle says higher rates will help them. Zopa says UK investors likely to hate Marmite. Preview of China Rapid Finance Q2 earnings. Funding Societies hits SGD200M in SME crowdfunding. Today’s main analysis: How non-prime families cover college tuition. Today’s thought-provoking articles: How Goldman Sachs created […]

financial assistance

News Comments

United States

United Kingdom

China

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News Summary

United States

Square Expands Cash App Bitcoin Service to All 50 US States (CoinDesk) Rated: AAA

The company – which was co-founded by Twitter chief executive Jack Dorsey – announced the service expansion through a Tweet on Monday, months after the firm initially rolled out the bitcoin service to investors in the country.

As reported by CoinDesk, Square officially launched the bitcoin purchasing option on its Cash App in January following a testing phase started last year. However, the service was not offered in the states of New York, Georgia, Hawaii and Wyoming due to their more restrictive regulations regarding bitcoin transactions.

How Non-prime families cover college tuition (Center for the New Middle Class) Rated: AAA

Students from non-prime households are more likely to attend public, community, or junior colleges compared to students from prime households.

  • Consequently, they are more likely to live at home.
  • The majority of these students come from single-parent or homes with a stepparent.
  • Compared to prime parents, non-prime parents are significantly more likely to say that financial aid affected their choice of schools.
  • Non-prime parents are slightly more sensitive to schools welcoming students from diverse economic backgrounds.
  • Students from non-prime families are extremely reliant on financial aid as nine out of ten will use some form of financial assistance to cover college expenses in the Fall 2018, compared to three-quarters of prime students.
  • Access to financial aid is critical for these students because most of them come from single-income households with fluctuating incomes where their parent’s financial situation is precarious and burdened with high levels of debt.

Almost twice as many nonprime students, 42%, attend public/community/jr colleges compared to prime students, 23%.

Source: The Center for the New Middle Class
Source: The Center for the New Middle Class
Source: The Center for the New Middle Class

Read the full report here.

How Goldman Sachs Created Marcus To Be a Dominant Force in Consumer Banking (Lend Academy) Rated: AAA

First, there was the launch of GS Bank in April 2016. Six months later Goldman Sachs introducedthe world to their Marcus brand. They began as an online lending platform offering unsecured consumer loans up to $30,000 with interest rates ranging from 5.99% to 22.99% (they now offer loans up to $40,000 and rates range from 6.99% to 24.99% as of August 2018). Their big differentiator was offering no fees. There was no origination fee for the borrower, no prepayment fees and no late fees.

They gained traction very quickly. They crossed $1 billion in total originations within eight month of launch. At the end of their first year they were at $1.7 billion. At that time they brought their deposit business under the Marcus brand, it was formerly branded under GS Bank. Now when you go to the Marcus website you are presented with two options: personal loans and savings accounts (which includes certificates of deposits).

We learned in Goldman Sachs Q2 earnings call in July that Marcus had originated more than $4 billon in total loans since launch and they had 1.5 million customers. Their deposit base is now $23 billion.

Lenmo, the Venmo for Lenders, Set to Launch for IOS (Bank Innovation) Rated: A

Whether it’s a consumer lender like Goldman Sachs’s Marcus or a point-of-sale lender like Affirm or even SMB lenders like BlueVine, there is a lot of perceived opportunity in the lending market.  Add a P2P dimension to that, and you have Lenmo.

The new app is launching in the next few weeks in Apple’s app store, Bank Innovation has learned. Lenmo, founded less than a year ago, is a peer-to-peer app in which the lender can select a borrower as well as set their own interest rate, “which will be higher than most alternative options,” Margaret Cipparone, a Lenmo spokesperson, told Bank Innovation. These individual lenders will facilitate small, unsecured loans ranging from as low as $50 to as high as $5,000, she said.

For borrowers, they can choose the various lenders available on the app and select the one they find most suitable. The goal behind this type of P2P lending service is to cater to the vast underserved market.

Transforming The Small-Business Lending Customer Experience: Kabbage CEO Rob Frohwein (Forbes) Rated: A

In the intervening years since Frohwein and his friends, Marc Gorlin and Kathryn Petralia, started Kabbage “with an idea and a misspelling of cabbage” (a slang term for money), it’s gone on to fund more than 150,000 small businesses, representing a wide variety of industries, with over $5 billion of working capital. And in that time, the goal has evolved, says Frohwein, to “never allowing you to go below zero.” What he means by this is “to keep entrepreneurs away from that pit-of-the-stomach feeling, which I know as a former small business owner myself: Deciding whether to pay vendors first, or make payroll, or invest in marketing, and knowing you need to do all three but it’s going to kill you because your cash flow just isn’t working out. It’s here that Kabbage can step up and help.”

Micah Solomon, Forbes:  I’m interested in how you went about pushing back against the traditional customer experience norms in lending.

Rob Frohwein, Co-Founder and CEO, Kabbage, Inc.: Everyone knows that banks have been underserving small business customers, but our transformational moment came from asking “why?”. It turns out that a large part of the reason is the costly, manual processes that make underwriting small business loans time-intensive and unprofitable. Kabbage’s technology quickly analyzes the live business data of a small business and fully automates the underwriting process, so businesses get an answer and access to capital in minutes, not weeks or months.

And for Kabbage? What’s next for you.  

Another internal saying here is “Let the bakers bake.” A baker didn’t start their business to deal with back-office financing all day long. They want to serve their customers and perfect their craft. We’re in the business of giving small businesses back more time in their day and to remove unneeded friction.

Startup’s mission: Help cash-strapped students finish college (American Banker) Rated: A

Harvard MBAs who want to refinance their student debt have numerous options, including the online lenders SoFi and CommonBond. Ivy Leaguers who need a loan to get through college also have choices, including Discover and Wells Fargo.

But low- or moderate-income students who do not have relatives with sound credit who can co-sign have few options for obtaining the financial help they need to complete college. Many of them are women, who hold nearly two-thirds of outstanding student debt in the U.S. — almost $900 billion as of mid-2018.

Fintech Crowd Dives Into Subprime Credit-Card Lending (The Wall Street Journal) Rated: A

Facing rising loan losses, especially among the riskiest borrowers, banks are reining in their growth in this sector. Subprime credit-card balances at seven large U.S. banks rose 3% in the first half of the year from a year prior, down from a 13% increase in the year-earlier period, according to Autonomous Research. Capital One Financial Corp.’ssubprime balances accounted for 32% of its domestic credit-card balances in the first half of 2018 compared with 36% in the same period a year earlier

Capital One has around $32 billion in subprime credit-card balances on its books.

The new entrants say their use of machine learning and artificial intelligence for underwriting helps them manage the risk. They also mostly extend small credit lines, often ranging between $500 and $2,000, limiting the scale of potential losses.

Around 60 million U.S. adults have credit scores lower than 650, according to Fair IsaacCorp. , roughly the threshold where banks focused on prime borrowers stop lending. Some 53 million U.S. adults don’t have credit scores at all because they have little or no borrowing history.

Q2 Holdings To Acquire Cloud Lending For Lending And Leasing Platform (Seeking Alpha) Rated: B

Q2 Holdings (QTWO) has announced it has agreed to acquire Cloud Lending for $105 million plus contingent earn-outs.

Cloud Lending has developed cloud-based software for the financial lending and leasing industry.

QTWO is acquiring Cloud Lending for its next generation web-based system and complementary capabilities and geographic customer base.

The San Mateo, California-based Cloud Lending was founded in 2012 to develop and operate a cloud-based peer to peer lending and leasing platform.

Roostify Announces Roostify Adapt Functionality to Extend Branding and Customization Options for Enterprise Lenders (Business Wire) Rated: B

Roostify today announced the release of Roostify Adapt. An easily configurable feature for lenders with complex workflows, Roostify Adapt allows for real-world process management while maintaining the power of primary and secondary (“parent/child”) accounts within the Roostify digital lending environment.

United Kingdom

Higher rates will help us, says Funding Circle after divi cut (Citywire) Rated: AAA

Peer-to-peer lending lending investment trust Funding Circle(FCIF) is expecting rising interest rates to help boost its yield after hedging costs forced a dividend cut.

After launching in 2015, the peer-to-peer fund had offered a 6.5p annual payout but in June it was forced to cut its target dividend range to between 5p and 6p for the next 12 months.

That equates to a forward yield of between 4.9% and 5.8% based on the current 102.8p share price.

ZOPA: UK investors more likely to hate Marmite (Peer2Peer Finance) Rated: AAA

INVESTORS in the UK are more likely to hate Marmite than average, according to new research.

A survey commissioned by peer-to-peer consumer lender Zopa showed that 50 per cent of UK investors dislike Marmite, compared to the national average of 33 per cent.

The research, which polled 2,000 people with an investment of at least £2,000, found a number of other quirky traits.

This included a preference for blue cars, which are owned by 20 per cent of investors, and a love of listening to Radio 2.

Here Are The U.K. Companies That Will Be Unicorns In 2019 (Forbes) Rated: AAA

There are 

Wonga investors raise £10 million to save company (Isreal National News) Rated: A

Payday loan giant Wonga.com has received a £10 million cash injection from its investors to avoid going into administration. The controversial company was once hailed as the fastest growing company in Europe and had plans for a £1 billion flotation. However, the firm has faced difficulties after a surge in compensation claims and a regulatory clamp-down on the high-cost loans industry.

The company had a variety of backers including Israeli investors – but emergency fundraising in the last few weeks caused their original investors of Accel Partners and Balderton Capital to offer a bailout solution.

P2P Lender Welendus Returns to Seedrs to Raise £850,000 (Crowdfund Insider) Rated: A

Short-term peer-to-peer lending platform Welendus has returned to equity crowdfunding platform Seedrs to raise £850,000 in funding. The lender’s latest initiative comes less than one year after it secured £208,898 through the funding portal.  

Welendus also reported that for investors its enables them to invest in short-term loans, offering higher returns with the short-term investment flexibility and the benefit of a Provision Fund.

Exploring the effect of the FCA crackdown on P2P and crowdfunding (AltFi News) Rated: A

The growth of P2P lending and its positive effect on the UK economy cannot be disputed. Initially starting out as a curiosity during the depths of the financial crisis in 2008, P2P lending has grown from £300 million in funds being lent in 2011 to a huge £4.6 billion in 2016.

China

Preview: China Rapid Finance Q2 Earnings (Benzinga) Rated: AAA

On Wednesday, China Rapid Finance XRF 4.86% will release its latest earnings report. Decipher the announcement with Benzinga’s help.

Earnings and Revenue

Wall Street analysts see China Rapid Finance reporting a loss of 13 cents per share on revenue of $30.88 million.

China Rapid Finance EPS in the same period a year ago came in at a loss of 29 cents. Revenue was $15.16 million. Revenue would be up 103.67 percent on a year-over-year basis.

Victims of P2P Lending Crisis in China Speak Out About Misfortunes (The Epoch Times) Rated: AAA

Yindou had a loan balance of 4.4 billion yuan (about $640 million) as of the end of June, according to Yicai, a major Chinese business newspaper. After Yindo suspended its operations in July, the company’s investors were left without the ability to withdraw their investments.

Since the platform closed, Yindou investors have turned to the bank in hopes of collecting their investments back.

Recently, victims of another financial product apparently gone wrong have taken to the streets. This year, a total of 170 private funds, 70 percent of which are private-equity or venture-capital funds, have failed or closed without explanation. This has led to many protests, most notably in Beijing on Aug. 7, where local police turned away protestors before they could make their case to China’s bank regulator, the Banking Regulatory Commission (CBRC).

Meanwhile, China’s M2 money supply, or the total savings of companies and residents, increased more than a hundredfold from 1990 to 2017, according to He, at a rate faster than the growth of GDP. While a steady money supply, or credit, can fuel an economy’s growth, such excessive credit, in relation to the GDP, can fuel bubbles and cause inflation.

Regulatory Reorganization Crucial to Health of Financial System (Caixin Global) Rated: A

The merging of the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission into the China Banking and Insurance Regulatory Commission (CBIRC) naturally has attracted a lot of attention outside of China as it involves major changes across two important areas of finance.

Yet perhaps the most important thing is how this will change the relationship between regulators and the central bank, the People’s Bank of China.

Fifteen years ago, responsibility for supervising and regulating banking institutions was taken from the central bank and given to the then-newly formed CBRC. This development had far-reaching consequences, and led to the rebuilding of the previously inefficient financial regulatory model into a comprehensive and professional banking system that is in line with international standards. State-owned banks were also commercialized around this time.

Protests Mark China’s Ruptured P2P Lending Landscape (PYMNTS) Rated: A

China’s peer-to-peer (P2P) lending crisis has caused widespread anger from citizens who are demanding that the government bail out hundreds of collapsed P2P companies. Last week, it was reported that China ordered a lockdown of Beijing’s financial district to prevent individuals from protesting a crisis in the P2P lending marketplace.

The size of China’s P2P industry is bigger than in the rest of the world combined, with outstanding loans of 1.49 trillion yuan ($217.96 billion USD). The industry was nearly unregulated and at its peak in 2015, when there were about 3,500 P2P businesses in the country. However, a combination of regulatory failures, fraud and the declining debt is being blamed for the shuttering of 243 online lending platforms since June.

China’s multi-front economic war dulls direction (Asia Times) Rated: A

Chinese stocks were at the bottom of the Emerging Asia pack into August, down 20% in local-index terms, as the so-called “trade war” with Washington added another 25% mutual tariff blow on tens of billions of dollars’ worth of goods.

The International Monetary Fund urged a negotiated settlement as it predicted only “limited direct impact” on the Chinese economy, shaving growth by half a percentage point under a medium-case scenario, while holding to this year’s 6.6% forecast. However, the IMF also warned that credit expansion was unsustainable and that tighter global financing conditions posed “downside risk,” as the renminbi continued its 10% slide since April.

However, the US-China exchange-rate and trade regimes now closely overlap as an overhang on “A” share consideration, despite China’s 30% slice on the benchmark MSCI Index, with a clean resolution of cross-cutting issues unlikely to offer recovery prospects in the coming months.

European Union

Lower Interest Rates on Mintos – How do Investors React? (P2P Banking) Rated: AAA

Compared to the beginning of July the interest rates for newly issued EUR loans on Mintos are much lower now. While investor enjoyed interest rates of up to 13-14% for loans issued in the first half of the year, typical rates are 8-11% now, with a 12-13% for more exotic loans mixed in.

To find out how investors reacted to the situation P2P-Kredite.com conducted a survey among German speaking Mintos investors. Here are the preliminary results (48 respondents):

  • 35% say they withdraw univested cash and invest it on other p2p lending platforms
  • 21% say they continue to invest on Mintos primary market
  • 17% say they just wait, the interest rates will rise again
  • 15% say they withdraw unimvested cash and invest it in other asset classes (e.g stock)
  • 12% say they buy on the Mintos secondary market now, instead of using the primary market
International

Banks and Retailers Are Tracking How You Type, Swipe and Tap (The New York Times) Rated: AAA

The way you press, scroll and type on a phone screen or keyboard can be as unique as your fingerprints or facial features. To fight fraud, a growing number of banks and merchants are tracking visitors’ physical movements as they use websites and apps.

Some use the technology only to weed out automated attacks and suspicious transactions, but others are going significantly further, amassing tens of millions of profiles that can identify customers by how they touch, hold and tap their devices.

The data collection is invisible to those being watched. Using sensors in your phone or code on websites, companies can gather thousands of data points, known as “behavioral biometrics,” to help prove whether a digital user is actually the person she claims to be.

When clients log in to their Royal Bank of Scotland accounts, software begins recording more than 2,000 different interactive gestures. On phones, it measures the angle at which people hold their devices, the fingers they use to swipe and tap, the pressure they apply and how quickly they scroll. On a computer, the software records the rhythm of their keystrokes and the way they wiggle their mouse.

Asia

Funding Societies Hits SGD200 Million in SME Crowdfunding (Funding Societies) Rated: AAA

Funding Societies surpassed the SGD 200 million mark in total crowdfunded SME loans. This achievement came just 6 months after crossing SGD 100 million in January this year. In the same period, its investor base has also increased from about 40,000 to 75,000, indicating strong demand from investors to support local SMEs while diversifying their investment portfolio.

Chinese P2P Lender Hexindai Announces Equity Stake Acquisition in Indonesian Online Lending Platform Musketeer (Crowdfund Insider) Rated: A

Chinese peer-to-peer lending platform Hexindai (NASDAQ:HX) announced on Tuesday it has entered into definitive agreements to acquire a 20% equity stake in Musketeer Group Inc., an Indonesian online lending platform that offers consumption installment loans, for approximately $1.6 million, and simultaneously completed the acquisition. 

MENA

The Impact Of The Middle East’s Fintech Boom On Economic Inequality In The Region (Entrepreneur) Rated: AAA

The past decade has shown that fintech can be a powerful force for equality. Blockchain, data analytics, and mobile phone technology are evolving at breakneck speed and have shown potential to bridge the gap between the rich and the poor. Safaricom’s mobile-money platform, M-Pesa, reaches an estimated 96% of households in Kenya, and is credited with lifting at least 200,000 Kenyan households out of poverty. The Indian mobile wallet, PayTM, has nearly 200 million users, including women and rural families that can now participate in the digital economy. Will the Middle East produce companies of the same caliber and social impact? There is certainly an opportunity, thanks to three factors.

The first factor is necessity. The Middle East is in dire need of ideas to bridge the massive gulf between the rich and the poor. The region leads the world in economic inequality, where the top 10% of the population enjoy about 60-66% of the region’s income. 86% of the adult population is underbanked, which means they don’t have access to services at formal financial institutions. This provides a tremendous market opportunity.

Square And MetLife Watch Out: Two Fintech Startups Target T Markets (Forbes) Rated: A

Lending Express, a Tel Aviv-based platform founded in 2016 that connects small businesses with lenders, is hoping to expand the market for small business loans. As CEO Eden Amirav explained in an August 13 interview, Lending Express — which has raised $2.7 million in seed capital — has grown from under 10 people in October 2016 to 25 — mostly in Tel Aviv with a business development office in San Francisco.

Lending Express did not disclose its revenues but it seems to be growing. As Amirav said, “We currently work with more than 30 leading lenders and FinTech partners, and have facilitated $65 million in SMB loans funded through our platform. Since we began operations in the US in the last quarter of 2017, and thereafter almost every quarter, we have doubled the number of loans we facilitated the previous quarter and 46% of all loans we’ve helped close happened in the second quarter of 2018.”

Lending Express sees tremendous potential for SMB lending outside of traditional banks. Amirav estimates that a mere 1% of the $1 trillion in total SMB loans — or $10 billion — is offered by alternative lenders like Lending Club and On Deck.

Authors:

George Popescu
Allen Taylor

Monday July 2 2018, Daily News Digest

Monday July 2 2018, Daily News Digest

News Comments Today’s main news: Zopa is profitable again. Capital One limits access to alt lenders. SimpleNexus raises $20M. Funding Circle changes projected returns. Metro Bank launches digital bank in Australia. Today’s main analysis: Deep dive into Amazon. Today’s thought-provoking articles: Deep dive into Amazon. More Chinese P2P lenders fall under regulatory scrutiny. How blockchain can assist banks with consumer lending. SMBs access […]

Monday July 2 2018, Daily News Digest

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United States

United Kingdom

China

European Union

International

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United States

Capital One restricts third-party data access, upsets customers (Payments Source) Rated: AAA

Capital One Financial Corp. is limiting how account data flows to outside apps for managing finances, prompting a backlash from the bank’s customers who say they have been locked out of their own information.

A technology upgrade led to the disruption, people familiar with the situation said. Plaid Technologies, whose software is used to connect banks with third parties, is unable to link with some Capital One accounts, according to the people, who requested anonymity because they weren’t authorized to speak publicly.

Slightly weak US GDP growth, Amazon Deep-Dive (PeerIQ), Rated: AAA

US Q1 GDP growth was revised slightly lower from 2.2% to 2% driven by lower-than-expected growth in services. This slowdown in growth seems to be temporary as the Atlanta Fed is projecting a blistering 4.5% GDP growth rate for Q2.

Amazon Treading Carefully with Its Financial Services Ambitions

A new report by CB Insights details Amazon’s “barreling into” the financial services sector, notably in payments and lending. Our view on Amazon is more sober.

In the absence of a clear regulatory swim lane, Amazon will continue to partner with financial institutions to provide lending services. The major lending products Amazon offers today are executed with highly regulated banking partners. Amazon for instance has developed co-brand relationships with JPM, Synchrony and AmEx.

Also, Amazon is courting major financial services institutions as customers of its cloud business so the company has a delicate balance that it needs to maintain between disrupting the financial services industry and losing its clients and partners.

Amazon’s Lending Products

Amazon has made a foray into consumer lending mainly with the help of co-branded credit cards. The company has also made ~$3 Bn in small business loans, but that standalone effort has now fallen to the wayside with the new small business lending partnership with AmEx.

Amazon’s international investments in fintech products have been concentrated in India where Amazon will finance commercial loans to Amazon’s sellers. However, unlike the model in the US where Amazon lends on its own balance sheet, Amazon will utilize a marketplace model with six participating banks at the outset. The lending program has grown 150% in the first five months of this year (total volumes are unreported).

Source: CB Insights

Digital Mortgage Platform SimpleNexus Raises $ 20M In Growth Capital (FinSmes) Rate: AAA

SimpleNexus, a Lehi, Utah-based company that brings the home mortgage process to mobile devices through a dynamic digital mortgage platform, raised $20m in growth capital.

Insight Venture Partners made the investment.

The company intends to use the funds to accelerate its continued growth and expansion.

TD Bank Teams Up With Fintech BizEquity to Enhance Commercial Customer Experience (Crowdfund Insider) Rated: A

TD Bank announced on Tuesday it has formed a new partnership with BizEquity to provide its small and mid-size business customers and prospects from Maine to Florida a no-cost comprehensive business valuation through a cutting-edge digital application.

The bank revealed that through its relationship with the Philadelphia-based fintech it now offers a service that typically costs several thousand dollars free of charge to small and mid-size companies. BizEquity delivers a detailed report with valuation information and key industry performance indicators to TD Bank relationship managers, who then share it with the business owner.

Small Businesses Access More Than $ 1 Billion of Working Capital During Non-Banking Hours through Kabbage (PR Web) Rated: A

Kabbage, Inc., a global financial services, technology and data platform serving small businesses, reports its 145,000-plus small business customers accessed over 300,000 loans during non-banking hours, reaching a record total of more than $1 billion in funding. In total, Kabbage has now provided access to more than $5 billion in funding to its customers across America. The non-banking hour analysis illustrates how Kabbage’s fully automated lending solutions remove the age-old hurdle of normal business hours by offering companies 24/7 access to working capital online.

LendingPoint Upsizes its Mezzanine Financing, Bringing it to More Than $ 50 Million (Business Wire) Rated: A

LendingPoint announced it closed an increase of its mezzanine financing, bringing the total of the facility to $52.5 million.

Paragon Outcomes Management LLC provided the financing that closed earlier this month. Paragon and LendingPoint have been building upon a successful relationship started with their first mezzanine credit facility in January 2017 of just $20 million, which was upsized just seven months later, and now has been upsized again to $52.5 million.

Amit Aggarwal: Refining A Real Estate Platform (Think Realty) Rated: A

Amit Aggarwal joined Auction.com as its chief technology officer in late 2017, but the experienced senior information technology (IT) leader had his eye on the needs of the national housing market for more than a decade before the hire. As early as 2005, Aggarwal was watching the residential real estate industry, considering the early signs of what he refers to as “cracks” in the then-booming housing ecosystem and working on a solution. By the time the market melted down in 2007, Aggarwal had been instrumental in the design and implementation of the workflow processes and platforms that served as the underpinning for the foreclosure crisis, including working closely with Fannie Mae and several of the country’s biggest banks and mortgage lenders.

Aggarwal took his passion for purifying and refining technology, processes, and real estate transactions with him when he joined Auction.com. 

Marketplace Lending: 60-Second Market Review and Insights (Credit Chronometer) Rated: AAA

Seven securitizations totaling $4.3 billion closed in Q1 2018, up 34% versus a year ago and representing the second-highest issuance in any quarter (after Q4 2017). Q1 issuances comprised $2.1 billion in student loan ABS, more than double Q1 2017 and the highest ever quarterly issuance of student deals. Total ABS issuance is expected to climb to $18 billion in 2018, up 30% from 2017.

Delinquencies increased in Q1 2018 across the consumer credit space, and reports of an influx of defaults on marketplace loans have prompted online lenders, including Lending Club and Prosper, to tighten their underwriting guidelines. The bright spot has been the student loan sector. The sector, led by SoFi which issued its largest ever student deal in Q1 at $1 billion, has been performing well, driven by refinance loans made to borrowers with strong credit profiles.

Battle for small-business customers spurs arms race at banks (American Banker) Rated: A

Surveys of small-business owners show an increasing level of confidence and commercial-and-industrial lending is up. The Small Business Administration’s 7(a) loan guarantee program seems poised for a fourth consecutive record year.

To capitalize, banks are investing in technology to make faster loan decisions. They are also hiring more lenders to better serve this segment. Now, bankers and other industry observers are hoping it all leads to increased earnings.

A retirement perk for millennials who are buried under student debt (LA Times) Rated: A

A new benefit program at Abbott means she won’t have to choose between paying down student debt and saving for the future. For any U.S.-based employee who puts at least 2% of their salary toward student loan payments, the healthcare company will contribute the equivalent of 5% of their salary into their 401(k) plan.

Abbott’s twist works around the tax penalty, because 401(k) payments are tax-free. Steve Fussell, a human resources vice president at Abbott, says the benefit also helps employees kick off their retirement savings early, which can make a huge difference over several decades of work. Only about a third of millennials are currently contributing to the company’s retirement plan, compared with 90% of the workforce overall.

Lending to Digital Natives: A Map to the Millennial Market (Credit Union Times) Rated: A

Millennials are a major demographic, yet they are not being served by credit unions. Only 32% of millennials are currently using a credit union compared to 50% of baby boomers, according to the Financial Brand.

Time reported the average 2016 college graduate will enter the workforce with $37,172 in student loan debt. They will change jobs four times in their first decade after college and their salaries are 20% lower than those of baby boomers at the same age, according to CNN.

United Kingdom

Zopa back in black (The Times) Rated: AAA

Peer-to-peer lender Zopa scraped back into profit last year, but rising default levels have led it to crack down on who it allows to borrow, writes Rosamund Urwin. The company, which has lent out £3.3bn in total, matches borrowers with investors wanting to lend. It has applied for a banking licence and wants to launch its bank within a year. A float has been pencilled in for 2020.

Funding Circle changes projected returns (Peer2Peer Finance) Rated: A

FUNDING Circle has altered its projected returns, meaning that investors lending across the platform’s full risk spectrum are expected to earn less money and those opting for lower-risk loans could earn more.

The peer-to-peer business lender said on Friday that that its projected returns for its Balanced account – which invests in the full range of businesses across all risk bands – will now be six to seven per cent.

The target rate on the Balanced account had previously been 7.2 per cent.

Meanwhile, Funding Circle’s Conservative account – which only invests in businesses assessed as lower risk – is now offering a projected return ranging between five and 5.5 per cent.

Funding Circle fund warns on dividend as currency costs bite (Citywire) Rated: A

Shares in Funding Circle SME Income (FCIF) fell today after peer-to-peer lending fund said the rising currency costs would force it to cut its dividend.

Shares fell 2.1%, or 3p, to 102p after it reported a ‘material increase’ in the cost of hedging, or removing the impact of the investment company’s holdsin dollar-denominated loans.

As a result the company, which mainly lends to small and medium-sized businesses in the UK, would only be able to pay a fully covered annual dividend of 5p to 6p per share from the third quarter of 2018. This is down from the current annual dividend of 6.5p, a potential decline of 8%-23%.

SHARE PUNT OF THE WEEK: Recent AIM entrant Trufin is a financing business with four divisions (This is Money) Rated: A

Recent AIM entrant Trufin is a financing business with four divisions. DFC lends to firms selling motorbikes, caravans, yachts and industrial kit, areas that mainstream banks may not be willing to touch.

Oxygen Finance helps councils make savings by prompting them to pay suppliers early, and Satago helps smaller businesses manage their cash flow. Lastly, it holds a 15 per cent stake in peer-to-peer lender Zopa.

Trufin is applying for a UK banking licence, which could help lower the company’s funding costs and boost margins. Zopa has also proposed a new funding round, which could increase the value of Trufin’s stake.

Open Banking could be worth £7.2bn by 2022, report shows (London School of Business & Finance) Rated: A

A report from Big Four accountancy firm PwC has predicted that the Open Banking sector could be worth £2.8bn by the end of the year and £7.2bn by 2022.

SMEs were shown to be more aware of the effects of Open Banking than retail customers and are also willing to make use of the data-sharing scheme, with 40% saying that they would share their financial transaction information.

When it comes to what information individuals would be willing to share, just 10% cited transaction history, while 12% said that they would share information about their financial products.

Banks were also found to still be popular with businesses, with 72% favouring them over fintech companies and peer-to-peer lending firms. This was also found to be the case for 65% of individuals.

HEAVYWEIGHT INVESTOR SAYS ‘TOO MUCH MONEY’ THROWN AT TECH (Business Cloud) Rated: A

One of Britain’s most high-profile investors has expressed concerns about “too much money being chucked” at tech businesses in the UK.

Moulton has also been an active tech investor over the last three decades, having backed peer-to-peer lending marketplace Funding Circle “very early on”, and estimates that around 50 of his 120 current investments have a link to technology.

However speaking to BusinessCloud at an investment roundtable in London organised by the Lancashire Investment Readiness Programme, the 67-year-old said the return on investment in technology is is relatively “poor”, particularly in the UK, and fears that it could become worse.

China

More P2P lenders collapse amid tough regulations (Global Times) Rated: AAA

As China has been ramping up efforts to strengthen regulations on the online financial industry, an increasing number of Peer-to-Peer (P2P) lending platforms have found themselves collapsing. As such, experts have warned investors of the perils of illegal financial activities that offer lucrative rewards.

After several P2P firms such as lianbijr.com and txslicai.com.cn were investigated by police in June, another Shanghai-based online lender reportedly collapsed.

Yilongcaifu and its parent company Fuxing Group have been shut down and are under investigation by police, news site stcn.com reported on Thursday.

Another Online Lender Falls Under Investigation (Caixin Global) Rated: A

Another online peer-to-peer (P2P) lender has fallen under investigation on suspicion of illegal fundraising as the crackdown continues on China’s scandal-plagued internet finance industry.

Shanghai police have detained four senior executives of Tangxiaoseng, an online lending platform controlled by Zibang Financial Service Internet Technology Co. Ltd., since police began investigating the platform on June 16, Caixin has learned.

51 Credit Card hits road for $ 174m IPO (Global Capital) Rated: A

51 Credit Card opened books on Friday for its HK$1.4bn ($173.9m) listing in Hong Kong, with 10 firms in the syndicate.The Chinese online peer-to-peer lending platform is offering 118.7m primary shares for HK$8.5 to HK$11.5 each, which could raise between HK$1bn and HK$1.4bn.

Sponsors China Merchants Securities and Citi are leading the trade alongside CLSA, which is a global co-ordinator.

European Union

Belgian Lending Marketplace Look&Fin Partners with Insurer Atradius (Crowdfund Insider) Rated: AAA

Today June 28, Belgium-based SME lending platform Look&Fin announced that it has partnered with credit insurer Atradius to offer a 100% guarantee on the capital lent to SMEs by its retail investors. The move is dramatically closing the gap between marketplace lending and bank lending. SME borrowers will get marketplace loans at lower interest rates, closer to the banks’ and retail investors will enjoy bank-level security for their investment.

Headquartered in the Netherlands, Atradius is the second largest global credit insurance leader with operations in more than 50 countries around the globe and total revenue of more than €1.8 billion.

Azlo and Green Dot Offer New Lending Products for Gig Economy Workers (Bank Innovation) Rated: A

Azlo will begin offering lending services to small businesses and gig economy workers this fall, the company announced last week. The fintech, which is backed by BBVA Compass, will be partnering with an undisclosed “non-traditional lending platform” to originate loans. These loans will range between $10,000 and $100,000, and even less Azlo CEO Brian Hamilton told Bank Innovation.

To determine a borrower’s creditworthiness, Azlo will not be looking at FICO scores. Instead, it will look at data collected from payment tools using APIs connected to platforms like Stripe, Square, and PayPal, in an Azlo account.

Latvia Pushes Fintech Innovation (Inside Bitcoins) Rated: A

Riga-based online lending marketplace Mintos, which just turned an annual profit for the first time, is now looking for global expansion.

Alongside Mintos, some of Latvia’s most well-known fintech startups include peer-to-peer lending marketplace Twino, and micropayment app Monea.

INLOCK to Conduct Poll to Determine the Future of Its ILK Token Model (Tech Bullion) Rated: B

INLOCK(INCOME LOCKER), a blockchain and smart-contract based peer-to-peer lending platform that enables crypto assets to be used as collateral, today announced that it will be hosting a community poll to help inform the development of its ILK token model.

Amidst preparation for the initial token sale and throughout the business screening process, INLOCK found that its token model with fractals created an unnecessary inconvenience for its users, leading to an overwhelming number of requests for a token split.

Spotcap Expands C-Suite As Business Matures (Spotcap) Rated: B

Fintech business lender Spotcap recently expanded its C-Suite to include two newly created roles.

Linh Bergen-Peters joins the company as Chief Marketing Officer and Martin Gawlak as Chief People Officer. These new roles will be instrumental in ensuring Spotcap’s continued growth. The company increased its gross revenue by more than 100 percent between May 2017 and May 2018, and doubled the size of its loan book during the same time period.

Linh Bergen-Peters joins Spotcap from HID Global and will be responsible for Spotcap’s multinational marketing strategy. Linh is a highly experienced global marketer, having held senior roles in leading technology companies such as AMD and Hewlett Packard, building and marketing high-tech brands.

International

Harmonic Fund Services live with Finastra for loan servicing (Finastra) Rated: A

Harmonic Fund Services has gone live with Finastra’s Fusion Loan IQ solution. The independent fund administration and alternative asset fund servicing firm will leverage the platform — traditionally used by banks and increasingly by service providers, to service their bilateral, specialised and syndicated loan portfolios — to provide a new loan administration and agency service to its diverse alternative investment funds client base.

Blockchain can assist banks with consumer lending (Digital Journal) Rated: AAA

The finance sector has been in the lead in terms of implementing blockchain and tokenization. The next area where the technology is likely to be applied is with traditional loans.

The advantage of cryptocurrency assets as collateral lies in the efficiency the digital currency can bring into the entire lending process. For any cryptocurrency asset approved by the lender, blockchain allows for immediate validation of its authenticity, ownership and worth. This should enables anyone to get immediate backing for a loan, provided they have a verifiable means of making repayments.

The types of startups that are making in-roads in the finance space include Ripple, a real-time gross settlement system, currency exchange and remittance network. Ripple is by companies such as UniCredit, UBS and Santander. A second is the Depository Network [DEPO]. This is a multi-platform network enable lenders, including peer-to-peer lending marketplaces, banks, other credit institutions to accept digital assets as collateral.

Bitcoin Millionaires Turn to SALT for Liquidity (BTC Manager) Rated: A

SALT Lending offers a peer-to-peer lending platform that allows cryptocurrency holders to use their Bitcoin and Ethereum as collateral for loans.

A Peer-to-Peer Lending Platform

Dave Carlson, who runs a cryptocurrency mining operation in Washington, has used SALT for this very purpose. With electricity expenses running as high as $250,000 per month, Dave needed $1 million to cover operating expenses for Giga-Watt, his mining operation. However, the potential for a price surge made him reluctant to exchange his cryptocurrency for cash.  He found an alternative in SALT, which The Wall Street Journal has reported is helping Bitcoin millionaires “unleash their fortunes.”

Australia

Metro Bank founder joins digital challengers in Australia (Financial Times) Rated: AAA

Serial banking entrepreneur Anthony Thomson, co-founder of Metro Bank in the UK, is helping to set up a new digital bank in Australia that aims to shake up a market dominated by the Big Four institutions.

The bank, named 86 400 after the number of seconds in a day, is initially being funded by Cuscal, an Australia payment services company.

Asia

The magic of crowdfunding (The Manila Times) Rated: AAA

Here in the Philippines and in many countries around the world, not only is the family the basic unit of society, but it also serves as the primordial foundation for economic activity.

Crowdfunding, through its biggest platform, Kickstarter, proved to be a very effective mode of hosting linkages between entrepreneurs and investors. Since its inception in 2009, Kickstarter has successfully funded 130,000 projects having around $3.76 Billion worth of pledges on all its projects. The huge acceptance and positive reception of these crowdfunding platforms continue to grow. In fact, it is estimated that it will be a $300 Billion industry by the year 2025.

Another type is “Peer-to-Peer Lending” that enable proponents to gain funding outside the traditional banking system through the risk-taking investors who are willing to shed a buck or two towards the growth of their loan portfolios.

Bermuda

Blockchain mortgages, touted for real estate investors, get thumbs-down on security concerns (Financial Post) Rated: AAA

Blockchain advocates have long touted the technology’s ability to disrupt entrenched business models. Now, several companies want to use it for real estate crowdfunding in a bid to circumvent the banks.

Bermuda-based Viva Network wants to exploit the blockchain’s ability to store records and transfer value quickly across international borders.

Targeting Bermuda as its first market, the company would use local mortgage professionals to run “mortgage hubs” that would evaluate and underwrite mortgages. It would divide each mortgage into 100,000 FMS units that could then be listed on the company’s blockchain-based exchange. Investors would purchase an FMS using Viva’s blockchain-based VIVA tokens and would harvest principal and interest payments from the property’s owner each month.

Inventions funded by

Authors:

George Popescu
Allen Taylor

Monday June 25 2018, Daily News Digest

FREED 2018-1 collateral characteristics

News Comments Today’s main news: SoFi launches SoFi Money. Robinhood in talks with regulators about bank products. Orca Money plans to double in size this year. Monzo, TransferWise partner. Banco BNI Europa drops 50M Euro into Linked Finance. Today’s main analysis: FREED 2018-1 Deep Dive. Today’s thought-provoking articles: What financial service firms can learn from direct-to-consumer companies. Graduate degrees with […]

FREED 2018-1 collateral characteristics

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

SoFi’s Latest Product Called “SoFi Money” is Here (Lend Academy) Rated: AAA

At time of writing, SoFi is paying 1.1% on their account which is a competitive rate when you consider that it is a hybrid account. Other banks who continuously offer the highest rates available on the market such as Goldman Sachs’ Marcus are currently paying around 1.7% on savings accounts. The largest banks in the US such as Bank of America, Citi and JP Morgan Chase pay between 0.01% and 0.1% on savings accounts which varies depending on deposit amounts and current promotions.

Source: Lend Academy

Continued Yield Curve Flattening, FREED 2018-1 Deep Dive (PeerIQ), Rated: AAA

The yield curve continued its unrelenting flattening after last week’s Fed meeting. The spread between 10-year and 2-year treasury yields now stands at 36 bps (about 1 to 2 rate hikes from inversion). An inverted yield curve and lower-long term yields have presaged economic slowdown or recessions in the past. You can read our analysis of the Fed’s interest rate decision here.

FREED 2018-1 Deep Dive

FREED 2018-1’s collateral pool consists of 2 types of loans – 61.6% Freedom Plus (F+) and 38.4% Consolidation Plus (C+).

F+ Loans: F+ loans are unsecured consumer loans to near prime and prime borrowers. F+ collateral has a WA age of 8 months and WA remaining term of 41 months. The WA current FICO score of the pool is 723 and the WA interest rate is 14.8%.

C+ Loans: C+ loans are offered to select qualified debt settlement clients as an option to shorten the duration of their debt settlement program by making funds immediately available to fund settlements reached by Freedom Debt Relief. C+ collateral has a WA age of 8 months and WA remaining term of 44 months. The WA current FICO score of the pool is 654 and the WA interest rate is 22.9%.

Source: Source: PeerIQ, KBRA, DBRS
Source: PeerIQ
Source: PeerIQ

There’s plenty more. See the rest of the charts here.

Robinhood is said to discuss bank products with regulators (American Banker) Rated: AAA

Robinhood Markets has more than 4 million U.S. consumers using its free stock-trading platform. Now, it’s in talks to offer them other banking services like savings accounts, according to people familiar with the matter.

KeyBank Acquires Digital Lending Platform For Small Businesses Bolstr (Crowdfund Insider) Rated: A

On Wednesday, KeyBank announced it has acquired digital lending platform for small businesses Bolstr. According to Key, the fintech software, which is expected to be implemented later this year, will enable the banking group to provide faster and easier access both to SBA loans and to traditional capital for business owners. The acquisition comes just after the OCC recently called on banks to issue more SME loans. 

Capital One Co-Founder Is Making a Bet on Risky Borrowers (Bloomberg) Rated: A

The co-founder of Capital One Financial Corp. is betting now’s a good time to lend to the riskiest borrowers.

Nigel Morris, Richard Fairbank’s partner in creating the company that became Capital One, is joining the board of LendUp Global Inc. and boosting his investment in the firm, which uses machine learning to look beyond traditional credit scores in the subprime market.

What Financial Services Can Learn from Direct-to-Consumer Companies (Crowdfund Insider) Rated: AAA

2016 Bain study found that nearly a third of customers globally would change their bank if they could do so easily. With dissatisfaction that high, traditional financial institutions should look to emulate the branding strategies of direct-to-consumer retailers, rather than leaning on their well-established names, to engage with millennial and Gen Z consumers.

Research from BCG found that brands that create personalized customer experiences with technology and data can increase revenue by six to ten percent, and direct-to-consumer brands have capitalized on the benefits of personalization.

Many fintech companies’ value proposition is to leverage technology to provide less expensive financial advice, lower interest rates on student loans, or more fair and reflective insurance rates. For example, robo-advisor Betterment charges only 25 basis points for wealth management services and no minimum to enroll, as opposed to traditional financial advisors that charge one to two percent on assets under management and often require high minimum investments to qualify for on-boarding.

A recent PricewaterhouseCoopers study found that 75 percent of bank customers base their purchasing decisions on whether or not they’ve had a positive customer experience at the bank.

Which Graduate Degrees Deliver More Debt than Income? (Credible) Rated: AAA

Credible’s analysis of student loan debt levels and salaries across 16 graduate school majors shows that the most important consideration isn’t how much debt you’ll take on to obtain an advanced degree — or how much you’ll earn after graduation — but achieving the right balance between the two.

Source: Credible
United Kingdom

Scottish fintech Orca Money hopes to double in size (Insider), Rated: AAA

Scottish fintech firm Orca Money hopes to double its staff to ten over the next year following its second funding round.

The Edinburgh-based company raised £280,000 seed capital last January and is now talking to investors about follow-on funding.

P2PFA accused of reducing transparency after loanbook changes (Peer2Peer Finance) Rated: A

THE PEER-TO-PEER Finance Association (P2PFA) has been accused of reducing transparency and hindering efforts to enhance investor protection after changing the rules governing how firms publish their loanbook.

Previously, members of the self-regulated trade body were obliged to publish their full loanbook, showing information about all the loans on their platform.

But at the start of June, the P2PFA announced that members now have the option to “either continue to publish their entire loan book, or provide a detailed breakdown of loans in their overall loan book to enable a consumer to be informed about the nature and number of loans of different descriptions presently originated through the platform according to standards to be approved by the P2PFA board.”

Asset management giant warns on ‘exotic’ peer-to-peer lending pension investing (AltFi News) Rated: A

Pension investors should avoid high yielding assets such as peer-to-peer loans, according to new research by UK-based Royal London Asset Management.

The firm, which manages £114bn of assets, says investors looking generate income in retirement should beware for high risk, higher yielding investments.

How I invest: Ayo Adesina, a software engineer with £32,000 in peer-to-peer (iNews), Rated: A

Ayo Adesina, 34, was lucky enough to come into a £50,000 windfall when he won series two of Channel 4’s TV programme Hunted in 2016.

Mr Adesina, who describes himself as a novice investor, put the majority of the money – £32,000 – into a peer-to-peer property lending platform. He says his investment has grown 7 per cent, or £3,000, since he opened an account a year ago.

Who’s switching jobs at BWB Compliance (City A.M.), Rated: B

BWB Compliance has recruited Dena Chadderton as a senior adviser. With wide-ranging experience both as a regulatory consultant and across the financial services industry, Dena will primarily be advising firms in the fintech and asset management space. In particular, Dena will continue to specialise in the regulation of P2P lending and crowdfunding platforms, a growing part of the current team’s client-base.

China

Online lender seeks small-scale borrowers (The Standard) Rated: AAA

China’s FinUp Finance Technology Group, which operates a technology-enabled finance platform with a focus on marketplace lending, aims to widen its market in the country by going public in Hong Kong.

The fintech firm also provides a variety of other personal credit services including point of sale instalment services to automobile financing services.

Chinese Fintech PINTEC Launches Installment Financing on E-Commerce Platforms (Crowdfund Insider) Rated: A

Chinese fintech Pintec Technology Holdings Limited (PINTEC) announced on Wednesday it has launched installment financing on its e-commerce platforms. This news comes just a couple of weeks after PINTEC secured $103 million through its latest financing round, which as led by Mandra Capital and SINA Corp.

European Union

Monzo partners with TransferWise for international payments (TechCrunch) Rated: AAA

The partnership, which TechCrunch outed nearly three weeks ago, will see TransferWise power international payments for the U.K. challenger bank’s 750,000 customers. It is the second new bank partnership that TransferWise has unveiled this month, after the fintech unicorn announced that it has begun working with France’s second largest bank BPCE Groupe.

Asked why Monzo  has chosen to work with TransferWise, Blomfield reiterates the challenger bank’s goal of becoming a “hub or control centre” for your money. This won’t necessarily all be done by Monzo, he says, “but with partner organisations who plug into this hub”. TransferWise is the first of these.

LINKED FINANCE SECURES €50M FUNDING FOR IRISH SMES FROM BANCO BNI EUROPA (Irish Tech News) Rated: AAA

Linked Finance, Ireland’s leading peer-to-peer (P2P) lending platform, has secured backing from Portugal’s fastest growing digital bank, Banco BNI Europa, who will deploy up to €50m over a 2-year period, to lend to Irish SMEs.

As part of a wider strategy to identify the best P2P lending platforms in key European markets, Banco BNI Europa will deploy its capital alongside Linked Finance’s existing lenders. Linked Finance, connects Irish SMEs who need loans with an online lending community of more than 19,000 users.

HAVE YOUR CAKE AND ‘HODL’ TOO: TAKING OUT A LOAN WITH BITCOIN (Bitcoinist), Rated: A

P2P lending platform InLock wants to change this by enabling cryptocurrency to be used as collateral for a loan in fiat — effectively solving the short-term spendability problem. At the same time, borrowers can remain ‘hodlers‘ with the option to get their cryptocurrency back in full after the loan is paid off, regardless of any changes in price.

Csaba: When we looked at the Bitcoin blockchain, we found that 40% of all bitcoins existing today had not been moved at all in the past year. Looking back at 2017, there were plenty of reasons to move them: hard forks, the mempool crisis, regulation problems, an amazing bull run, followed by a 70% correction.

The FinTech50 2018 (The FinTech 50) Rated: B

Listings include:

  • Monzo
  • N26
  • OakNorth
  • Raisin
  • Revolut
  • Seedrs
  • SolarisBank
  • Starling Bank
International

34 Fintech and Insurtech Unicorns (Inside Bitcoins), Rated: AAA

According to data compiled from CB Insights and Crunchbase, they are currently 34 fintech unicorns, or startups valued at over $1 billion.

32. Funding Circle — $1 billion

Value: $1 billion | Raised: $413 million

Founded: 2009 |  | HQ: London

What it does: Peer-to-peer marketplace for business loans.

Why it’s hot:Over £3 billion has been lent across the platform and the company is tipped for a blockbuster European float later this year.

31. Kabbage — $1 billion

Value: $1 billion | Raised: $500 million

Founded: 2009 |  | HQ: Atlanta

What it does: Fast online small business loans.

Why it’s hot: The company has written over $4 billion-worth of loans and has partnered with Spanish bank Santander.

24. ACORN OakNorth — $1.2 billion

Value: $1.2 billion | Raised: $486 million

Founded: 2015 |  | HQ: London

What it does: A fintech firm focused on unlocking the potential in bespoke SME lending globally using its data and technology platform, ACORN machine.

Why it’s hot: ACORN machine is a fintech platform that helps automate the way banks penetrate this underserved and underestimated market. It does this by leveraging process excellence, machine learning and technology to fuel data-driven decision making across the loan lifecycle.

22. Tuandaiwang — $1.46 billion

Value: $1.46 billion | Raised: $380 million

Founded: 2012 | HQ: Dongguan

What it does: Peer-to-peer lending platform.

Why it’s hot: The company has helped individuals and companies borrow $11.4 billion and helped lenders make $335 million in returns.

17. NuBank — $2 billion

Value: $2 billion | Raised: $527 million

Founded: 2013 |  | HQ: Sao Paulo

What it does: Brazilian app-only bank.

Why it’s hot: The bank has 3 million customers and has raised money from Sequoia Capital, Goldman Sachs, Tiger Global, and more.

16. Affirm — $2 billion

Value: $2 billion | Raised: $720 million

Founded: 2012 |  | HQ: San Francisco

What it does: A hire-purchase provider, letting people buy products and pay them off in installments.

Why it’s hot: The company works with over 1,200 retailers in the US and its technology helps retailers increase average order sizes by 51%. Morgan Stanley and Singapore’s GIC are both investors.

15. Avant — $2 billion

Value: $2 billion | Raised: $1.8 billion

Founded: 2012 |  | HQ: Chicago

What it does: Online personal loans.

Why it’s hot: The company has lent over $1 billion and is backed by the likes of Tiger Global, KKR, and Jefferies.

13. Klarna — $2.5 billion

Value: $2.5 billion | Raised: $636 million

Founded: 2005 |  | HQ: Stockholm

What it does: User-friendly payment systems for mobile and web that lets people buy now and pay later.

Why it’s hot: The company processes 800,000 transactions a day and has been used by 60 million people globally. Sequoia Capital, the Silicon Valley fund that backed PayPal, is an investor.

9. GreenSky — $3.6 billion

Value: $3.6 billion | Raised: $350 million

Founded: 2006 |  | HQ: Atlanta

What it does: Provides technology to banks that is used in processing loan applications.

Why it’s hot: Steven McLaughlin, a former Goldman Sachs banker whose firm advised GreenSky on a funding deal, told Bloomberg in 2016 that GreenSky “is the single best fintech company created in the last 10 years, by far.”

8. Credit Karma — $3.5 billion

Value: $3.5 billion | Raised: $868 million

Founded: 2007 |  | HQ: SanFrancisco

What it does: Provides free online credit reports, offsetting the cost of paying for them with targeted advertising of financial products.

Why it’s hot: Over 75 million people in the US and Canada have used the service. Google Capital is an investor.

7. SoFi — $4 billion

Value: $4 billion | Raised: $2.1 billion

Founded: 2011 |  | HQ: San Francisco

What it does: Peer-to-peer student loan refinancing, mortgages, and other types of personal loans.

Why it’s hot: Like Zenefits, SoFi struggled with a slew of setbacks in 2017. Allegations of sexual misconduct and loan misstatements forced out founder Mike Cagney. Former Twitter CFO and ex-Goldman banker Anthony Noto is now leading a turnaround of the business.

3. Lu.com — $18.5 billion

Value: $18.5 billion | Raised: $1.7 billion

Founded: 2011 | HQ: Shanghai

What it does: Chinese peer-to-peer loans and financing platform.

Why it’s hot: Lu.com, also known as Lufax, is one of China’s largest online lenders and is tipped for an IPO this year.

ETHLend Blockchain Lending Platform Adds MyBit Token (MYB) in Partnership (Bitcoin Exchange Guide) Rated: B

MyBit is an Ethereum-powered ecosystem that aims to connect the global Internet of Things (IoT) industry. ETHLend works with the Ethereum blockchain as well and is a marketplace for peer-to-peer lending services that use smart contracts. The company provides low interest rates and a transparent technology for processing transactions.

Currently, it allows users to lend with Ethereum, but it may be ready to introduce new altcoins at the end of this year, including MYB.

Australia

RateSetter to ‘accelerate’ broker strategy with new appointment (The Adviser) Rated: A

Last week, The Adviser broke the story that Mark Woolnough had left his role at ING after 18 years at the lender to join the fintech RateSetter.

It has now been confirmed by RateSetter that Mr Woolnough has joined its ranks as head of third-party distribution.

India

P2P lending marketplace ‘PaisaDukan’ to open branches in Noida and Bangalore (Knowledge & News Network) Rated: AAA

PaisaDukan, a P2P lending platform fully owned by Mumbai based fintech startup BigWin Infotech, has decided to launch 2 branches in Noida & Bangalore as a part of its PAN India expansion and growth plans by the end of next month.

This will enable the company to have better control over their operations and widen its reach.

Asia

Bills on P2P lending, cryptocurrency pending in National Assembly (The Korea Herald) Rated: AAA

Rep. Min Byung-doo of the ruling Democratic Party and Rep. Kim Su-min of the minor opposition Bareunmirae Party filed two separate bills to regulate P2P lending firms in July last year and in February, respectively.

With the bills still pending in the National Assembly, financial authorities have been struggling to tackle abusive and deceptive P2P lending practices.

Open Banking: no leisurely walk in the DX park (Enterprise Innovation) Rated: A

The 2018 Global Payments Insight Survey: Retail Banking report by ACI Worldwide and OVUM  claimed that 86% of banks in Asia are developing their open banking strategy.

Ovum’s 2017 Payments Insight Survey said 87% of surveyed banks report having a clear strategy for developing open APIs, up from 59% in 2017.

Africa

FINT is changing the narratives in the Nigerian lending space (Nairametrics), Rated: AAA

In a recent report by the International Finance Corporation (IFC) and the Central Bank of Nigeria (CBN), less than a third of MSMEs have successfully obtained loans from financial institutions, and that is not for a lack of trying.

Nigeria currently has over 35 million MSMEs and if approximately only 10 million MSMEs have been able to get loans from financial institutions, hence, a credit gap of about 25 million in the country.

What exactly is FINT?

FINT is an online lending marketplace, basically we connect verifiable income borrowers looking for access to affordable credit with lenders who are looking to fund the loans for attractive returns. We have consumer loans i.e. loans between N60,000 and N2 million at rates as low as 8% for 3 – 12  months, with retail and institutional lenders (banks and asset managers).

For lenders, they can lend in the multiples of N20,000 grows at 26-39% for one-year loan tenures, for 6 months 15-22% for 3 months it is 8-14%.

Authors:

George Popescu
Allen Taylor

Tuesday May 22 2018 Daily News Digest

GreenSky vs. LendingClub

News Comments Today’s main news: Kabbage to launch payment services. Funding Circle SME Income Fund limited force signal moves past key line. Zopa boosts TruFin results. DEPO launches to help lenders accept digital assets as collateral. Qudian stock drops 16.5%. Today’s main analysis: Deep dive into MFT 2018-2 vs. AVNT 2018-A (A MUST-READ). Today’s thought-provoking articles: Credit score improvement […]

GreenSky vs. LendingClub

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

Online lender Kabbage to launch payment services by year-end (Reuters) Rated: AAA

Kabbage Inc, a U.S. online lender for small businesses, plans to launch payment processing services by year-end, President Kathryn Petralia said on Monday, helping it to diversify and compete more directly with industry leaders PayPal Holdings Inc and Square Inc.

The Atlanta-based startup will offer tools to enable clients, mostly brick-and-mortar businesses, to accept card payments in-store and online, Petralia said in an interview.

Deal Deep Dive MFT 2018-2 vs AVNT 2018-A (PeerIQ), Rated: AAA

This week we compare 2 very different MPL personal loan securitizations – Marlette’s MFT 2018-2 Prime deal and Avant’s AVNT 2018-A Near Prime deal.

Collateral Comparison 

AVNT 2018-A has lower average loan size by $6,435, shorter weighted average loan terms by 9 months and higher WAC by 16.28%. This is a reflection of the quality of borrowers that Avant and Marlette target. Marlette’s prime borrowers have higher weighted average FICO scores by 59 points than Avant’s near prime borrowers. The geographic distribution is quite similar between the two deals.

Source: PeerIQ, KBRA

Bond Characteristics and Pricing

The significantly higher WAC on AVNT 2018-A leads to a 14.8% pickup in excess spread. KBRA’s base case loss estimate is 7.4% higher on AVNT 2018-A, which leads to a 7.4% higher loss-adjusted excess spread on AVNT 2018-A.

Source: PeerIQ, KBRA

Capital Structure

AVNT 2018-A has 3.3% lower O/C which is compensated by 14.8% higher excess spread. The A tranches have similar CE in both deals but Marlette’s A is rated one notch higher.

Source: PeerIQ

Avant continues to benefit from tighter underwriting criteria (Asset Securitization Report) Rated: A

The introduction of tighter underwriting criteria continues to pay off for the online consumer lender Avant.

The company, which was founded in 2012 and is based in Chicago, was able to lower the credit enhancement, again, on its latest securitization, the $221.9 million Avant Loans Funding Trust 2018-A.

Kroll Bond Rating Agency assigned an A- to the $149 million senior tranche of notes to be issued, which benefit from 38.42% credit enhancement. That’s down from 41.8% on the comparable tranche of its prior transaction, completed last year.

LendingTree Study Finds More than Half of My LendingTree Users Improved Credit Scores in Majority of 50 Metros Analyzed (PR Newswire) Rated: AAA

LendingTree today released its study on the top places with rising credit scores. With credit scores being a crucial component of personal financial stability and opportunity, LendingTree analysts decided to look at anonymized My LendingTree users who logged into their accounts in both the first quarter of 2017 and the first quarter of 2018 to determine the top metros for rising credit scores among the 50 largest in the United States.

Below are some of the key takeaways from the study.

  • JacksonvilleIndianapolisDenver and Tampa saw the highest rate of rising credit scores among the 50 biggest metros from Q1 2017 to Q1 2018.
  • Virginia Beach, Va.Los Angeles and Birmingham, Ala., had the lowest rate of rising credit scores, with 47 percent of Virginia Beach users raised their credit scores.
  • San Jose (Silicon Valley) saw the most dramatic rises in credit scores, with the highest rates of people who raised their score by more than 75 points and 100 points.
  • In the majority of the 50 metros analyzed, more than 50 percent of users improved their credit scores between Q1 2017 and Q1 2018.
  • About one in three increased their scores by over 20 points, and 3.5 percent were able to improve their scores by 100 points or more.
Source: Lending Tree
Source: Lending Tree

New Fintech IPO Offers Litmus Test for Online Lenders (Wall Street Journal) Rated: AAA

It wasn’t long ago that online lenders were ascendant. More than $3 billion in capital from investors as diverse as Japanese conglomerate SoftBank Group Corp. and celebrity chef David Chang gushed into lending startups in 2015, according to Dow Jones VentureSource. Analysts at Morgan Stanley predicted that year that the nascent industry would account for 10% of all unsecured consumer and small-business loans by 2020.

Investors soured on the sector. Shares of LendingClub, which once had a market value of about $10 billion, are down 77% from their IPO price. Prosper’s valuation was slashed by more than two-thirds in a private fundraising round last year.

Source: The Wall Street Journal

GreenSky said in its IPO filings that it has facilitated more than $12 billion in loans to consumers for home-improvement projects and elective medical procedures.

Part of GreenSky’s advantage comes from its relatively low customer-acquisition costs. LendingClub’s biggest expense is sales and marketing, which last year rose to $229.9 million, equivalent to 40% of revenue.

Source: The Wall Street Journal

 

How to responsibly invest in bitcoin (Bankrate) Rated: A

Recently, Bank of America, Chase, and Citigroup joined Capital One and Discover in banning cardholders from using them to buy cryptocurrencies. Credit cards were one of the most popular payment methods because of their relatively low fees and instant transaction rates, and investors are having to look at other options to make their investments.

Source: Bankrate

You can borrow money from a family member or friend, or you can use a peer-to-peer lending platform like SoFi to leverage funds for Bitcoin investments. However, be cautious when borrowing money for an investment. Interest rates can eliminate any gains you get from the investment, and the risk of losing money in such a volatile market is high.

Is Mulvaney targeting fintech or nonbanks? (Respa News) Rated: A

The acting director also responded to a question about qualified mortgages which has left the industry scratching its head since. Was Mulvaney separating fintech marketplace lending from traditional mortgage lending, or was he drawing a line between depository mortgage and non-depository mortgages?

 

Banking overhaul heading for likely passage in Congress (Yahoo! Finance) Rated: A

Legislation that would ease banking regulations — and modify rules governing credit reports and some consumer loans — is headed for likely passage in Congress any day now.

The bill cleared the Senate in March with some bipartisan support and is expected to be voted on by House lawmakers this week, perhaps as early as Tuesday.

The measure rolls back some of the regulations imposed by the Dodd-Frank Act of 2010. That legislation came on the heels of the financial meltdown that rocked the U.S. economy a decade ago, when risky and unaffordable mortgages contributed to millions of homeowners losing their houses to foreclosure.

Main Street Banks’ New Lending Rivals: Hedge Funds and Private Equity (Wall Street Journal) Rated: A

Main Street banks are feeling squeezed by competition from new rivals: nonbanks like hedge funds and private-equity firms that are elbowing into business loans.

Growth in business lending has picked up recently—it was up 3.3% year over year as of May 9, according to Federal Reserve data released Friday, after falling below 1% earlier this year. But the growth rate is still far below where it’s been in recent years, when loans to businesses grew at a double-digit clip for much of 2014, 2015 and 2016.

Making technology the solution, not the problem, at small banks (American Banker) Rated: A

The board members of R Bank in Round Rock, Texas — who include the Hall of Fame fireballer Nolan Ryan, a co-founder of the bank — hold accounts there, and they, like most other patrons, knew its old technology made for clunky customer service.

So, says president and CEO Steve Stapp, he channeled those irksome experiences into board support for an investment in a systems overhaul at the $455 million-asset bank.

For community banks in highly competitive markets, service with a personal touch can be a differentiator to win and keep customers. But when legacy technology hampers the customer experience, all the cups of coffee in the world won’t help.

 

Vota turns your credit card transactions into recommendations, helps you spot fraud (Tech Crunch) Rated: A

Blippy, which was hyped up to a $46.2 million valuation back in 2010 before the world realized that almost nobody wanted a dedicated network for sharing and viewing each others’ purchases. Well, guess what? Someone’s trying a Blippy-like thing again — this time, in the form of a new app called Vota, which automatically records your credit card purchases and the places you visit so you can share them with friends or family, or view them privately for your own reference.

As a byproduct of this data collection, you may spot credit card fraud or other errant charges, too, or just get a handle on your spending.

Optimal Blue First-to-Market with Pipeline & Lock Management APIs (Business Wire) Rated: B

Optimal Blue is proud to recognize enterprise SaaS digital mortgage solution leader, Capsilon, as its first strategic partner to complete certification with the highly anticipated Pipeline & Lock Management APIs. By debuting these innovative system-to-system API interfaces in the mortgage industry, Optimal Blue has enabled Capsilon’s digital mortgage platform to fully support the creation, management, registration, and locking of first-lien mortgages instantaneously with Optimal Blue. As a result of this advanced integration, a completed application and pre-approval are done in half the time of the traditional back-and-forth processes, empowering loan officers to be more competitive in today’s purchase market and win more business from real estate agents.

Mastercard Unveils Fintech Initiative Aimed at Digital Banking (Banker & Tadesman) Rated: B

The company on Monday announced the creation of Accelerate, a new initiative to drive growth at scale for the fast-evolving fintech industry, reflecting the company’s ongoing commitment to this sector.

Designed to operate alongside its successful Start Path program, Accelerate will broaden Mastercard’s engagement with the payment fintech community including the next generation of digital banks.

United Kingdom

Funding Circle Sme Income Fund Limited Force Signal Moves Past Key Line  (Concordia Review) Rated: AAA

Checking on current RSI levels on shares of Funding Circle Sme Income Fund Limited (FCIF.L), the 14-day RSI is currently standing at 58.31, the 7-day is at 65.97, and the 3-day is resting at 83.22.

Funding Circle Sme Income Fund Limited (FCIF.L) currently has a 14-day Commodity Channel Index (CCI) of 148.41.

Shares of Funding Circle Sme Income Fund Limited (FCIF.L) have a 200-day moving average of 103.52. The 50-day is 104.93, and the 7-day is sitting at 104.82.

 

Zopa stake boosts TruFin annual results (AltFi News) Rated: AAA

TruFin, the AIM listed fintech lender and payments provider, has released its first set of annual results following on from its public listing back in February. The numbers show a 7.67 per cent uptick in its valuation of its stake in p2p lender Zopa in 2017.

TruFin, which says it used an external company to aid the valuation of Zopa, re-valued its holding upwards by £2.6m to £36.5m over the course of the year. The firm, which was spun out of hedge fund Arrowgrass’ fintech holdings, holds a c.15 per cent stake in Zopa bought by Arrowgrass in 2014 for £15m. TruFin was set up by Henry Kenner, one of the founders of Arrowgrass, who is also its CEO and chairman. The hedge fund itself was launched by a group of Deutsche Bank traders in the wake of the financial crisis, including Kenner.

UK watchdog says automated financial advice falls short (Rueters) Rated: A

Advice doled out online or via smartphone apps, referred to in the industry as “robo advice”, aims to cut costs for customers looking to save or invest. It also seeks to foster innovation and increase competition in financial services.

But the Financial Conduct Authority (FCA) said two reviews of the industry uncovered problems among early entrants.

Exclusive: Former ADS Securities exec Jamieson Blake joins specialty lender Basset and Gold (Leaprate) Rated: B

Following our exclusive report from earlier this month that Jamieson Blake, Head of Client Experience at the FCA regulated London based arm of ADS Securities, had resigned from the company, LeapRate has now learned that Mr. Blake has landed – at specialty lending and retail investment firm Basset and Gold, as Head of Relationship Management.

China

Why Qudian Inc Stock Dropped 16.5% Today (Motley Fool) Rated: AAA

Shares of Qudian (NYSE:QD) closed down 16.5% on Monday after the Chinese online lender announced earnings that fell short of expectations.

Qudian reported “diluted adjusted net income per share” of $0.16 but GAAP diluted net income per share of only $0.15 per share. Whichever yardstick you use, though, these numbers appear to be lower than the $0.17-per-share estimate quoted on Yahoo! Finance. Revenue, on the other hand, came in at $273.7 million, significantly above consensus expectations for $214.6 million.

European Union

European Company Helps Turning Cryptocurrency into Collateral (the Merkle) Rated: AAA

Following a similar model as traditional depository services, DEPO gives lenders the freedom to accept digital assets as loan collateral. The platform also allows borrowers to keep ownership of their digital asset during the entire loan period.  The platform also protects future financial gain of the asset for borrowers with its decentralized design.

By employing the DEPO platform, lenders will be able to accept cryptocurrency as collateral for loans. To be protected, lenders can request additional collateral, or a partial sale of the asset should the market become excessively volatile at any time during the loan period.

Matthias Setzer of PayU (Lend Academy) Rated: A

In this podcast you will learn:

  • The history of Naspers, the parent company of PayU.
  • What PayU does and the markets where it operates.
  • Why Matthias decided to leave PayPal after 12 years and move to PayU.
  • How PayU approaches going into a new international market.
  • The Naspers investment in Chinese giant Tencent and the PayU footprint in China.
  • Why the number one country PayU is focused on today is India.
  • Why they invested €110 million in Kreditech and how they are leveraging that partnership.
  • The point of sale lending product they have launched in India with Kreditech.
  • The biggest growth drivers for PayU over the next 12-18 months.

New Insight will change the way you think about data (Instantor Email) Rated: A

Today Instantor, the Swedish fintech company making financial decisions easy, announces Insight. A new product that will transform the way financial organisations assess risk for loan applicants. By using robust machine learning, Insight analyses more than 70 predictive features and insightful patterns in historical banking, and can be used to make better risk and opportunity decisions. Instead of having a risk team spending months testing risk models, Insight ́s intelligent features will build the most optimal risk model using the clients own data and can be up and running within a week.

Bricknode and Lendytech unite under Untie Group banner (Finextra) Rated: B

Untie Group used to be several companies, the largest of which were Bricknode and Lendytech. They had a common founder in Stefan Willebrand and used, at least to a degree, the same self developed software. Also a number of people have gone from one firm to the other over the years.

International

Decentralized Lending Promises Easy And Global Access To Credit, But Is It Too Good To Be True? (Forbes) Rated: AAA

Since the rise of cryptocurrencies, the term “decentralized” seems to be everywhere. Decentralization has been proposed in many industries as a way to heighten transparency and make transactions simpler. One field in particular which has shown great potential for the application of decentralization is money lending. As many might rightly ask, don’t we need banks who are willing to take the financial risk and approve loans? As it turns out, maybe we don’t.

For lenders, the use of smart contracts allows for much easier assessments of the counter-party’s trustworthiness. Something that would take traditional audits weeks, not to mention the costs of such a traditional audit. Validating transactions and follow-up can become fully automated. Collateral is automatically returned at the end of the loan period or liquidated if the loan is defaulted on, removing many of the time-consuming actions that come with it.

Automation, ‘platformisation’ tipped to take hold in banking (AltFi News) Rated: A

The report, entitled Whose customer are you? The reality of digital banking, shows that 73 per cent of bankers believe retail banking will be at least 80 per cent automated in the next two years. A further 78 per cent see ‘platformisation’ steering the market in the future.

71 per cent of respondents are focusing their digital investment budget on cyber security, up from 34 per cent last year. Yet a mere 17 per cent are thinking about the risks of third-party integrations under Open Banking.

Fin-tech changes the loan process: Meet new lending models (Bankless Times) Rated: A

The new FinTech lending model opens new opportunities to people who were not able to borrow from traditional banks and other financial institutions because of the poor credit history and other factors. Such loans are now available to the new groups of people who need an instant funding, for instance, small business owners, students etc. In particular, entrepreneurs got a chance to get a loan without collateral, which a while ago was a real obstacle for many business owners.

Millennials Choose FinTech

Millenials are the first generation to accept the real advantages of new technologies and ready to use them for their own convenience. When it comes to lending process, millennials no longer wish to visit bank branches personally, stand in lines, deal with unnecessary paperwork and wait for months to get the approval.

End of the Line…

Today we are already witnessing a drastic change in the lending model that existed for centuries. Consumers want to have a more flexible way to lend money but most importantly, they want this process to be quick. The FinTech industry already gave us this opportunity and hopefully, the following changes will be for the better.

 

Asia

Kieran Arasaratnam to Join Credify Founding Team as CFO (Digital Journal) Rated: B

Credify Inc., a pioneer in decentralised reputation systems, is pleased to announce that Kieran Arasaratnam is joining the founding team as Chief Financial Officer.

Authors:

George Popescu
Allen Taylor