Monday September 18 2017, Daily News Digest

LendingClub

News Comments Today’s main news: 400K UK consumers may have been affected by Equifax breach. Independent Community Bankers of America letter opposing ILCs. RateSetter launches consumer hire-purchase product. Klarna partners with Wacom. Google enters digital payments in India. Payday type loans come to e-tailers in India. Today’s main analysis: Analysis of SoFi deal SCLP 2017-5 and Lending Club deal CLUB 2017-P1. […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

News Summary

United States

Independent Community Bankers of America Letter (ICBA), Rated: AAA

As you may be aware, ICBA recently filed a comment letter with the FDIC objecting to the deposit insurance application of SoFi Bank, an industrial loan corporation to be chartered by the state of Utah. In our letter, we urged FDIC, for safety and soundness reasons and to maintain the separation of banking and commerce, to not only deny SoFi Bank’s application but also impose a moratorium on ILC deposit insurance applications. Furthermore, we said that Congress should close the ILC loophole because it not only threatens the financial system but creates an uneven playing field for community banks.

The news that Square also intends to apply to the FDIC for deposit insurance as an industrial loan corporation has significantly increased our concerns and made it even more urgent that the FDIC immediately impose a moratorium on approving deposit insurance applications for ILCs. As we noted in our SoFi Bank letter, the ILC charter is nothing more than a loophole in the law to circumvent the legal prohibitions and restrictions under the Bank Holding Company Act.

SoFi Bank and Square are applying as ILCs and not as commercial banks because their parent companies and their affiliates do not want to be subject to the legal restrictions and supervision attendant to the BHCA. Square, for instance, already owns a point-of-sale hardware appliance business and a food delivery service and therefore could not own a commercial bank without divesting its commercial activities. For safety and soundness 2 reasons and to maintain the separation of banking and commerce, the FDIC should deny SoFi Bank’s application and impose a moratorium for at least two years on future ILC deposit insurance applications, including any application by Square. 

Read the entire letter here.

Did Lending Just Change for Good? (Crowdfund Insider), Rated: AAA

Bank lending regulations have rarely been thought of as dynamic or exciting but last night’s ruling by the Consumer Financial Protection Bureau (CFPB) to allow a lender to begin using alternative data in their underwriting could herald the beginning of a new era in lending and how banks work.

Why is this significant?

US banks have traditionally been guided by three key pieces of legislation, the Truth in Lending Act of 1968, the Equal Credit Opportunity Act of 1974 and the Community Reinvestment Act of 1977.  These three acts were created before the era of personal computers yet still guide bank lending today.  Since the rise of marketplace lending, which began in 2006, where borrowers go through a platform and investors fund those loans, it is becoming increasingly apparent that many of these regulations are in need of updating.

In an overly simplistic interpretation (and I am not an attorney), the regulator is giving an online consumer lender the right to underwrite loans using ‘alternative data’ which before was not in line with how the Equal Opportunity Act is interpreted by lenders.  It is not clear what data will be allowed but in a CNBC interview, Upstart co-founder Paul Gu suggested that SAT scores, college grades and even college majors are data points which are helpful in predicting loan defaults. 

So assuming the change stands, what is next?

As alternative lenders have more scope to use alternative data, machine learning complex data analysis is opening up an entirely new space for investors.  Gone are the days where banks only competed against each other with marketplace lenders now allowing investors to allocate capital in a similar way to banks, choosing loans to fund based on their own ideas and risk profile.   For now, this is mostly impacting consumer credit, but in the years to come, look for marketplace lending to impact all areas of lending as investors get more comfortable investing in this space regulations start to adapt.

Scandal costs Sofi chance to become a bank, says ex-SEC head (Financial Times), Rated: AAA

SoFi’s application to become a bank has almost no chance of approval in the wake of a sex scandal that forced out its chief executive, says a close adviser and former chairman of the Securities and Exchange Commission.

But last week’s departure of Mike Cagney, the co-founder, chairman and chief executive, has effectively killed the application, said Arthur Levitt, a former chairman of the SEC, who began advising the company two years ago.

“This departure of Mike makes that a very questionable attainment,” Mr Levitt said, referring to the charter.

He noted that the FDIC had turned down this type of application “many times” before.

Equity podcast: SoFi loses its CEO, big rounds for unicorns, and will this VC buy the iPhone X? (TechCrunch), Rated: A

We turned first to SoFi, a consumer-finance unicorn that has raised more than a billion in equity, and over $2 billion in total. The company is now down a CEO after allegations of misconduct brought censure upon its CEO, Michael Cagney, and the company’s culture.

Listen to the podcast here.

Fat cat frat boys ape the worst of banking and tech (Financial Times), Rated: A

The article also described employee concerns about lending practices and alleged that investors had been misled over a 2012 financing.

SoFi complained in a public blog about “inaccuracies” in the Times report, but focused on defending its lending practices.

If the allegations are true, SoFi and LendingClub have many of banking’s worst attributes with Silicon Valley’s warts layered on top.

Meanwhile, the allegations of doctored loans and conflicts of interest at LendingClub were reminiscent of some of the excesses of the bankers who fed the subprime mortgage market.

Goldman Sachs thinks fintech has as much potential as trading (Quartz), Rated: AAA

Goldman Sachs has been pilloried for lackluster results from its trading division (paywall), so this week the bank gave investors a peek into its plans (pdf) for making more money. Surprisingly, the Wall Street powerhouse thinks it can generate as much revenue from online consumer loans—a market targeted by many fintech startups—as from buying and selling securities.

Specifically, Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years, as much as it expects for its trading operations. Combined with new lending for the wealthy and companies, the bank expects to bring in $2 billion in additional sales from loans. Goldman co-chief operating officer Harvey Schwartz said it’s one of the fastest-growing lending platforms ever launched, even though he says the bank is taking its time with the nascent business. The bank’s digital consumer-lending arm called Marcus is expected to have lent out $2 billion by the end of the year.

Meanwhile, big banks have access to cheaper funds than peer-to-peer lenders like Lending Club or Zopa. With consumer deposits and the billions of dollars they routinely borrow in credit markets, banks can undercut the loan rates offered by smaller companies.

That said, Schwartz acknowledged that consumer lending isn’t immune to economic downturns, and analysts cited by Bloomberg were skeptical about Goldman jumping into a market outside its core expertise.

Source: Quartz

The Bank of Google or Amazon? Don’t count on it (American Banker), Rated: AAA

It might seem like it is only a matter of time before the tech giants knock on banking’s door. In fact, a recent World Economic Forum report posited that big tech companies present a greater challenge to banks than fintech startups. The report notes that regulators will accept a more “oligopolistic distribution of financial services products by tech firms.” Already, the fintech providers Social Finance and Square have applied for FDIC-insured banking charters, just as the Office of the Comptroller of the Currency continues work to develop its limited-purpose fintech charter. Are the largest tech firms next in line?

Incumbents still hold the upper hand. The risk of an Amazon or Google or Apple dominating the traditional banking sector is nowhere near a slam dunk.

In every scenario, the tech giants would need to persuade regulators to grant them some kind of charter access in order to effectively compete and level the playing field on funding costs. This would involve easing traditional limits on commercial firms owning banks, and potentially navigating opposition from members of Congress.

But more fundamentally, tech giants have had mixed experiences in rolling out financial services such as Google Wallet and Apple Pay. And despite the reported consumer skepticism of legacy institutions, banks still continue to maintain a high volume of customer relationships.

SoFi CEO Resigns; Goldman & Mosaic Ink Deal; SoFi & Lending Club Deal Analysis (PeerIQ), Rated: AAA

In the fallout of the Equifax breach, the leading credit bureaus are dealing with an overwhelming volume of credit freeze requests from consumers. While it is still too early to tell, it seems that the genie is out of the bottle. The breach is sparking additional focus on FinTech innovation to protect consumers (e.g., digital identity verification, disposable card numbers, etc.).

Beyond the headlines, SoFi’s growth engine continues. In Q2 2017 alone, SoFi funded $3.1 Bn in loans with $134 Mn in revenue and $61.6 Mn in adjusted EBITDA. Revenue and adjusted EBITDA were up 67% and 60% year over year respectively.  The news of Cagney’s resignation coincided with SoFi marketing its latest personal loan deal which priced this Friday. Interest in SCLP 2017-5 was initially strong, however the bond priced somewhat wider than guidance.

SoFi’s Latest Consumer Lending Deal: SCLP 2017-5

After Mike Cagney’s resignation on Friday, the lead underwriter re-launched SCLP 2017-5. Since guidance was released before the critical NY Times article on Tuesday, we have a close (but imperfect) control to study the consequences of management upheaval on deal execution.

ABS investors reacted negatively to the news; the bonds priced 10 to 15 bps wider than guidance on Monday.

Source: PeerIQ, Company Filings, S&P, Kroll Bond Rating Agency

LendingClub’s Self-Sponsored Prime Consumer Deal: CLUB 2017-P1

This is the second self-sponsored deal from LendingClub, and it follows the success of CLUB 2017-NP1. LendingClub expects to alternate between prime and near-prime securitizations at least once a year going forward. Of the $363 Mn outstanding, approximately $100 Mn came from LendingClub’s balance sheet (a shift from prior management’s business practice); the remaining loans were contributed from investors.

The CLUB 2017-NP1 and CLUB 2017-P1 deals total to approximately $628 Mn in loans, yet LendingClub has facilitated almost $29 Bn in loans on its platform as of Q2 2017 making it a small part of LendingClub by dollars loaned but a meaningful portion of EBITDA.

Source: PeerIQ, Company Filings, Kroll Bond Ratings Agency

The FinTech Investor Podcast Series: Interview With Ron Suber (SoundCloud), Rated: A

DiversyFund Sells Pre-IPO Shares in Accredited Offer (Crowdfund Insider), Rated: A

DiversyFund, a real estate crowdfunding marketplace, is selling pre-IPO shares in a Series A crowdfunding round through a Reg D 506(c) offering.

The Form D filed with the Securities and Exchange Commission (SEC) indicated that Diversyfund had sold $200,000 of a $6 million funding round as of August 31st. Minimum investments of $100,000 are being accepted from accredited investors only.

Misha Esipov of Nova Credit (Lend Academy), Rated: A

In this podcast you will learn:

  • How talking with international students at Stanford led to the idea for Nova Credit.
  • The big problem that Nova Credit is trying to solve.
  • How they began their journey in trying to solve this problem.
  • Details of their Credit Passport product, the international credit report.
  • How they were able to convince international credit bureaus to share their data.
  • Why the big three U.S. credit bureaus have not developed an international credit report.
  • How Nova Credit is able to standardize data from very different countries.
  • Nova Credit’s business model and their similarity to a traditional credit bureau.
  • How they can report back credit data to international bureaus.
  • The other vertical they focus on beyond lending.
  • The kinds of lending platforms they are working with today.
  • The progress they have made since LendIt USA 2017.
  • When they first started making revenue.
  • Who has been backing Nova Credit.
  • What is on their road map for the next 6-12 months.
  • How they view expanding into new markets to help immigrants other countries.

The SoFi Sex Scandal Highlights How Hard It Is For Women In Fintech (Fast Company), Rated: A

Fintech has become a major force over the decade since the financial crisis, with $12.8 billion in venture capital flowing into the sector in 2016 alone. But of the nearly 500 deals that took place in the U.S. last year, less than a dozen went to companies founded by women.

“It’s lonely to be a woman in fintech, especially as a CEO,” says Rachel Mayer, cofounder and CEO of Trigger, an automated tool for investing alerts.

At Anthemis, based in London, 56% of employees are women, a remarkably equitable gender breakdown that is consistent at every level.

Former banking executive Sallie Krawcheck is following a similar playbook with her female-focused investing service, Ellevest. Since founding the company three years ago she has raised over $50 million in venture funding.

A survey of U.K.-based fintech firms published last week revealed that women represented just 3 in 10 employees. Of fintech board directors globally, just 8% are women.

Good news for fintech seen in CFPB’s ‘no-action’ move (American Banker), Rated: A

In an interview Friday, Upstart co-founder and CEO Dave Girouard explained why the fintech applied for the letter and how it works.

Is it fair to think of a no-action letter as a stay-out-of-jail-free card?

DAVE GIROUARD: We’re careful about not trying to interpret it in any way that is different than what the CFPB says it is. The letter makes it clear that they have reviewed what we do and how we do what we do and that they don’t find issue with it.

How do you feel about the agreement?

We’re pleased that the CFPB recognized the consumer advantage of alternative data and machine learning, the fact that it could make affordable credit more broadly available to more people.

So it’s not just about Upstart for sure — it’s the acceptance of these more modern techniques because they can and will benefit consumers broadly over time.

Sharestates Appoints New Chief Operating Officer, Adds SOC 2 Type 2 Certification (Crowdfund Insider), Rated: A

Sharestates, an online real estate crowdfunding marketplace, has announced that Nicole Joseph has joined the executive team as the new Chief Operating Officer.

The new hire is accompanied by the completion of the company’s SOC 2 Type 2 Certification, which affirms that Sharestates now meets the security requirements and parameters for storing information on the cloud as laid out by The American Institute of CPAs (AICPA).

ReliaMax Announces New Whole Loan Portfolio Placement Service (BusinessWire), Rated: A

ReliaMax®, the complete private student lending solutions provider for banks, credit unions and alternative lenders, today announced at the 23rd Annual ABS East 2017 Conference a new whole loan trading service, ReliaMax Portfolio Placement, as an extension of its existing capital markets and liquidity programs. The ReliaMax Portfolio Placement service will facilitate qualified existing private student whole loan portfolios for sellers and buyers.

The ReliaMax Portfolio Placement service provides unique value to the private student lending marketplace in multiple ways including insurance, default prevention, credit analysis, and servicing. Some benefits include:

  • State-of-the-art servicing through ReliaMax helps buyers maximize the value of their portfolio, providing compliance and regulatory support and staffing to manage student loan-specific servicing requirements.
  • Loan insurance through ReliaMax Surety Company covers 100% principal and interest and mitigates risks, reduces defaults, and provides better cash flow.
  • Portfolio review and credit analysis provides guidance around the price at which the portfolio might transact.

ReliaMax has been involved in many third-party portfolio transactions. For example, in December 2106, MetaBank acquired a $151 million student loan portfolio which ReliaMax Surety Company now insures. The transaction also included the conversion of the portfolio servicing onto the ReliaMax Platform. Over the last three years, ReliaMax has provided insurance and/or servicing on 12 portfolio placement transactions.

The Top Small Business Funders By Revenue (deBanked), Rated: A

Square $1,700,000,000 $1,267,000,000 Went public November 2015
OnDeck $291,300,000 $254,700,000 Went public December 2014
Kabbage $171,800,000 $97,500,000 Received $1.25B+ valuation in Aug 2017

Lendio Partners with Ocrolus to Automate Bank Statement Analysis (PR Newswire), Rated: A

Lendio, the nation’s leading marketplace for small business loans,today announced a partnership with Ocrolus, the emerging leader in bank statement review automation. The PerfectAudit API, powered by Ocrolus, analyzes uploaded bank statements with 99+% accuracy, replacing manual review with automation. Ocrolus technology allows lenders, for the first time, to review every potential borrower’s bank statement data automatically, regardless of whether or not the borrower provides sensitive bank login credentials.

In April, Lendio became the first lending marketplace to integrate with Ocrolus, whose clients include banks, alternative lenders, accounting firms, law firms, and government entities. The PerfectAudit API gives Lendio the ability to systematically combat bank statement fraud and conduct a hyper-accurate review for every potential borrower.

Outsiders and Insiders Are Behind the Fintech Revolution (JD Supra), Rated: A

From peer-to-peer lending to online banking, the fintech industry is a rapidly growing area for technology investment. In the first quarter of 2017 alone, U.S. venture capital-backed fintech start-ups raised $1.1 billion across 90 deals, according to CBInsights Global Fintech Report. The only region to outdo the U.S. during this same period was Asia, which reported for the same group investment of $2.7 billion across 226 deals.

There exists a wide range of technologies that fall under the definition of fintech, and each is seeing significant growth. One such technology is artificial intelligence, which, according to the PricewaterhouseCoopers 2017 Global Fintech Report, 30 percent of large financial institutions are investing in. For example, another factoid from a separate PricewaterhouseCoopers report, projects that, by 2020, AI will automate a considerable amount of underwriting.

Mobile payments are another rapidly growing area of fintech, with TechCrunch reporting that there will be an estimated $60 billion worth of payments made on mobile platforms in 2017. The site also predicts that, by 2020, 90 percent of smartphone users will have made a mobile payment, which serves to underscore just how commonplace this fintech will be within a very short time.

AON: ALTERNATIVE RISK PREMIA VIABLE FOR MANY (AllAboutAlpha), Rated: A

A new report from Aon discusses the contemporary market for alternative risk premia: where it is, how it got here; where it may be headed.

The authors, Matthew Towsey and Chris Walvoord, begin with some very basic considerations of what ‘risk premia’ are. They are, on the one hand, the payments one receives for taking on a risk that others do not wish to hold (providing insurance), or they are on the other the winnings one pockets on strategies that take advantage of market anomalies.

A Q&A With NerdWallet CEO Tim Chen: ‘We’re Making An Impact’ (Benzinga), Rated: B

How does NerdWallet create its content and recommendations? Do data and algorithms play a role in your platform? I’m curious about the company from a fintech perspective.

It’s actually a mixture of both — algorithms and incredibly smart, financially savvy humans power our recommendations, reviews and expert advice.

The company seems to simplify financial information for everyday consumers. Do you think NerdWallet has helped to democratize the space?

That’s the goal! I truly believe that a person that has spent no time at all thinking about personal finance and can’t afford a financial advisor, should be able to make the same quality of choice as the most financially savvy person in the country

SDIRA TV Offers New Strategies Amidst Massive Equifax Hack (PR Web), Rated: A

Experts deliver new alternative investment advice and resources for individuals being impacted by the giant 2017 Equifax data breach. This includes all new episodes of SDIRA TV with national finance experts and investment advisors, as well as a side by side comparison white paper on retirement investing options.

Deeper concerns have surfaced as it was discovered three Equifax executives sold off substantial amounts of personally held stock before making the breach known.

20 Places You Can Raise Funding for Your Business (TechBullion), Rated: B

  1. Crowdfunding

There are several platforms where you can create your crowdfunding campaign. Examples include KickstarterIndiegogoand Go Get Funding.

  1. Peer-to-Peer Lending

Peer-to-peer lending involves a group of people coming together to lend money to each other. You can look for an entrepreneur peer who is willing to fund ideas similar to yours.

  1. Online Lending

There are several online lending service providers. Good examples are Kabbageand OnDeck.These online lenders will process your application within hours as opposed to traditional lenders.

 

My Take On Real Estate Crowdfunding (ValueWalk), Rated: B

Many of these platforms seem to market to investors, showcasing high dividend yields in the 8% – 10%/year range.

I read the following two articles in my research:

In general, those are new untested platforms, which may or may not do well for you over time. These investments have not been time tested during a recession. In addition, I do not understand very well how investment assets are segregated in those platforms, and how things would work out if a project you invested in fails miserably.

As Financial Processes Go Digital, Detroit Looks To Siphon Talent From New York, Chicago (Benzinga), Rated: B

He’s talking about fintech, which has leveled the playing field for non-New Yorks to flourish in financial services. Inspired by emerging tech trends, Raznick and Benzinga are taking stakes in Michigan’s future by spearheading the new Detroit Fintech Association.

The nonprofit trade organization will enhance the community’s exposure, connect startups with national leaders and mentors, support talent recruitment and magnify the Detroit voice in U.S. regulatory discussions. The DFA also aims to improve financial literacy in the city through work with Detroit high schools and higher education institutions.

FHA Loan Originations Expected to Generate Servicing Portfolio Growth Leading to Servicers Taking on Greater Non-Performing Loans and REO (Marketwired), Rated: A

Altisource Portfolio Solutions S.A. (“Altisource”) (NASDAQ: ASPS), a provider of real estate, mortgage and technology services, today issued the results of its inaugural Default Servicing Survey, a survey of over 200 mortgage default servicing professionals. According to the study, nearly three-quarters (71 percent) of servicing professionals surveyed predicted FHA/VA loan volumes would increase within their organizations in the next 12 to 24 months; 41 percent believed FHA loans will offer their organizations the most portfolio growth over the same time period.

According to the U.S. Department for Housing and Urban Development, FHA loans accounted for over 17 percent of newly originated mortgages in 20161 and currently constitute 35 percent of all loans delinquent for 30 or more days2. As the issuance of FHA loans grows, so does the potential increase in volume of default assets. Thus, it is not surprising that 93 percent of servicing professionals surveyed stated that foreclosure/trustee and Claims Without Conveyance of Title (CWCOT) capabilities are important factors to consider when evaluating a vendor to manage growing default portfolios.

Servicing Professionals Cite Challenges Stemming from Costs of FHA Conveyance and Managing CWCOT Programs

Servicing professionals (29 percent) cited remitting fees, costs and financial obligations associated with FHA conveyance as the greatest challenge for effective CWCOT programs. For servicing professionals working with third-party vendors to manage CWCOT portfolios, 15 percent said overall vendor management is a challenge associated with managing CWCOT programs while another 15 percent pointed to timeline delays and increased costs due to attorney oversight; 11 percent cited not having enough in-house personnel on staff to effectively manage the program.

Third-Party Expertise and Central Coordination are Critical to Successful CWCOT Program Administration

In order to overcome the financial, regulatory and oversight challenges associated with their vendors’ CWCOT programs, servicers must carefully evaluate their third-party vendor strategy to ensure vendors possess the right expertise and resources to execute the program. Most servicing professionals surveyed (97 percent) said they are exploring options including a single-vendor approach to help achieve their objectives; 91 percent identified FHA asset management experience as an important criterion for vendors. When specifically evaluating single vendors, 72 percent of servicing professionals surveyed said consistency and efficiency in managing REO properties is a very important consideration; 69 percent also pointed to compliance management.

United Kingdom

Equifax says as many as 400,000 UK consumers may be affected by data breach (Financial Times), Rated: AAA

Equifax, the US credit-reporting company at the heart of a cyber-security scandal, has admitted that as many as 400,000 UK consumers may have had their personal information stolen.

The company said that while its UK systems were not affected by the massive cyber raid that targeted information for as many as 143m Americans, UK customer data “may potentially have been accessed”, because it was stored on US systems between 2011 and 2016.

If Equifax’s forecast is borne out, the data breach will be the biggest in UK cyber history, bypassing that of payday lender Wonga, which affected more than 250,000 customers.

RateSetter launches consumer hire-purchase product (P2P Finance News), Rated: AAA

RATESETTER has launched a hire-purchase (HP) product for individuals looking to buy vehicles.

Consumers will be able to borrow up to £25,000, but the peer-to-peer lender expects the agreements typically to be around £6,000. The terms range between 12 and 60 months, with APRs going from 19.9 per cent to 49.9 per cent depending on the customer’s creditworthiness.

Assetz Capital Reports “Development Funding Boom” with 175% Increase (Crowdfund Insider), Rated: A

Peer to peer lender Assetz Capital is reporting it has seen a year-on-year increase of 175% in the number of property development projects funded around the UK. The online lender says this rise comes following sustained growth in the funding pool for property developments, as investors hunt for a piece of the development market.

There are two new types of Isa – should you switch to them? (The Telegraph), Rated: A

But as new types of Isa have emerged and new rules have been introduced, the situation has become more complicated.

And some Isa features – notably “flexibility”, which allows account holders to make withdrawals and then pay the money back in during the same tax year while keeping the tax benefits – have not been introduced by all providers, which has further muddied the waters.

A Help to Buy Isa, a type of cash Isa, is also an option. First-time buyers can deposit £1,200 in the first month and £200 a month thereafter to put towards a home purchase. The Government then tops up savers’ money by 25pc.

However, you can’t pay into a normal cash Isa and Help to Buy Isa in the same year, unless you choose a provider that allows you to split the cash. Nationwide and Aldermore both offer this option; they pay 2pc and 1.75pc respectively.

Lifetime Isas 

The Lifetime Isa is the newest addition to the Isa family.

Consumers between the ages of 18 and 40 can use the accounts to save towards their first home or retirement. Up to £4,000 can be put away each year into either a cash Lisa or a stocks and shares version. Eligible savers can continue to contribute until the age of 50.

Hargreaves Lansdown, Britain’s biggest fund shop, and rivals including AJ Bell, The Share Centre and Nutmeg, an online wealth manager, offer investment Lisas.

Innovative Finance Isas 

These Isas shield peer-to-peer investments, which allow consumers to offer unsecured loans to individuals and businesses through online platforms such as Zopa and Ratesetter, and certain “crowdfunding” investments, from tax.

Lending Works was the first to offer the new Isa, paying the same return as the firm’s existing accounts.

Zopa allows existing customers to sell their loans and buy them back within the Isa. They can also transfer their Isas with other providers to Zopa.

Networks are the new corporations (Inside Bitcoins), Rated: A

There are a lot more people in the world that can collectively lend micro loans on a regular basis than there are corporations that can regularly distribute loans above the value of a thousand dollars.

“A network of independent lenders committed to distributing micro loans could potentially rival long established financial organisations in terms of the combined value of peer to peer loans serviced to borrowers on a world wide scale” says Richard Ochieze, Managing Director at Ledgermark, LTD.

The case for Digital Collateral

The internet makes non repayment of loans a marvellously simple task for borrowers and as such; organisations like the Funding Circle, a peer to peer lending firm, are left wide open to have the profits of their retail investors depleted due to this lingering risk.

Traditional financial institutions have been able to maintain a fortress of checks and balances such as strict collateral requirements for both business and personal loans in order to provide themselves with a means of recourse should a borrower fail to repay his debt.

In this digital age in which peer to peer transactions are becoming the norm, this same form of protection must be made available to the average individual who wishes to loan his money out to borrowers in return for profit.

However, the question must be asked: how can a borrower pledge his house or farm as collateral via an online loans application?

Prior to the invention of the Blockchain such an asset did not exist and now that it does, the door has been opened to allow individuals based anywhere in the world to distribute and/or become the recipient of a secured micro-loan.

Can a robot help you invest for retirement? (AOL), Rated: A

Robo-adviser Wealth Wizards, for example, typically charges £65 for advice on investments of up to £30,000, and 0.30%, or £300, for guidance on what to do with a £100,000 retirement savings pot.

A typical financial adviser, meanwhile, charges about £580 for telling you how to invest a £200-a-month pension contribution, or between £1,000 and £2,000 for at-retirement advice on your £100,000 pot, according to figures from UK adviser network Unbiased.

JustGiving targeted by criminals for money laundering (BBC), Rated: B

Fundraising website JustGiving has said criminals are attempting to use its site to launder money.

The website told the BBC it had shut down nearly 100 of its appeal pages in the past 18 months because it believed they were fraudulent.

When discovered, no payments were processed, he said.

China

China will step up supervision of overseas investment risks – insurance regulator (Reuters), Rated: A

China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems.

The China Insurance Regulatory Commission (CIRC) will step up supervision over the use of insurance funds, with focus on “chaos” such as irrational stock market fundraising and overseas acquisitions, said Guo Jing, vice head of the finance and accounting department of the CIRC.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: B

Shanghai-based BTCC is the largest and first domestic bitcoin exchange in China. On September 14th, BTCC announced that it would immediately stop new user registration and close operation in China on September 30th.

The 2nd China Fintech Conference (2017) will be held on September 17th, 2017 in Beijing.
IDC Financial Insights announced the 2017 Fintech Rankings and Real Results at Finovate Fall New York 2017. This year, 4 Chinese companies won the honor to be named in the 2017 IDC Fintech Rankings. They are Ping An Technology (38), Hundsun Technologies Inc. (54), Pactera Technology International, Ltd. (55) and ECCOM Network System, Ltd. (64).
Last week, China’s financial and educational regulators announced to ban online lenders from offering loans to college students, and encouraged commercial banks to offer micro-credit products for the campus market. As a response to the call, Industrial and Commercial Bank of China (ICBC) has launched its own student loan product Rong e Loan this week.
European Union

Order not going to “Pending” with Klarna (Drupal), Rated: A

Project:  SOFORT Banking for Ubercart
Version:  7.x-3.1

Sofort has been bought by Klarna. Although everything should function as normal according to Klarna, since the switch the order is not going into “pending” after checkout — order status is “in checkout”.

commented 

This is a good place trying to get this sorted. My questions are:

  • Is this a new shop or one that runs for a while and worked OK before?
  • From the screenshot it looks like Sofort sends notifications pretty often, is that true?
  • The expectation is that the first of those notifications should switch the status to pending and confirming that to Sofort so that they know you got it and then they wouldn’t notify you again, right?

commented 

That’s exactly why this is failing. The Ubercart payment module wants to write into its table the value Aus sofort-Überweisung wird Klarna into the field method.

You should notify Sofort AG about this problem and I will do the same.

International

Klarna partners with global technology company Wacom (Klarna), Rated: AAA

Today we are proud to announce a new partnership with global technology company Wacom® that further accelerates Klarna’s expansion in the U.S. Wacom is now bringing our simple retail financing solution to the world of creative interface technology and software.

Financing a purchase over time has historically been optimized for brick and mortar stores. But the online equivalent can often be an ordeal, with redirects, lengthy forms and unclear information. Our process only requires a few fields of information, and lets consumers know instantly if they qualify for the financing solution.

How Incumbents Can Take on FinTech Challengers (LendIt), Rated: A

Digital technology has changed financial services. It has facilitated innovation, increased competition and made the mobile customer experience the key differentiator.

This embodies a strategic threat with McKinsey estimating that legacy financial institutions will see profits decline by up to 60% by 2025 if they fail to evolve, a figure which should be motivating incumbents to look outside of traditional practices for growth and sustainability.

Millennials and digital natives have turned away from traditional banks in search of mobile alternatives. They are drawn to the best products and experience, and banks with the right level of service can win over this large market. Mobile-only banks like N26 are leading the way.

SME lending also offers a significant opportunity for growth. The European Commission’s SME Performance Review estimated just under 23 million small and medium enterprises generated €3.9 trillion in value add and employed 90 million people in 2016-2016, and McKinsey has identified a $350 billion untapped lending opportunity within this sector.

One path is acquisition, which banks like BBVA have followed by acquiring companies like Finland’s Holvi and neobank Simple. This is an expensive option complicated by having to find a company with the right fit for the business.

Given the technology available, a cleaner option would be to build a digital banking spinoff which can operate like a FinTech.

Meridian Proposes to Bring Peer to Peer Lending into the Age of the Blockchain (Crypto Insider), Rated: A

The far reaching nature of the internet has allowed the myriad of local economies that exist in the world to become merged into one, global, interwoven marketplace.

Despite this, it is still incredibly difficult for people to get a loan from an international organisation – without offering some form of collateral and/or proving credit worthiness.

The average size of deposit needed to get a mortgage is 62% of annual income, and in London, it’s 131%.

As a result, only 20% of 25-year-olds own their home today compared with 46% 20 years ago – less than half.

If you have a bad (or no) credit history, it is virtually impossible to borrow from a mainstream lender.

Banks and building societies advertise temptingly low rates, but they only need to apply to 51% of successful applicants, so almost half of all borrowers pay a different rate – probably higher.

Director of Ledgermark LTD, Richard Ochieze, explains:

An alternative should be offered to people who are being let down by the traditional banking system. We believe that the Meridian system can do a lot to alleviate some of the problems that exist in today’s online lending market.

The Meridian service offers users the opportunity to procure a loan of up to one Bitcoin at a time.

To qualify for a loan users must pledge a certain amount of Meridian tokens as collateral.

Meridian tokens can be purchased during the ICO on 12 October 2017 and will then become tradable on all alternative currency exchanges.

India

Google gets into digital payments fray in India (Banking Technology), Rated: AAA

Google is expected to launch a mobile payments app in India next week, according to several news reports. Google Tez, which means “fast” in Hindi is the anticipated name of the payments service, which Indian news outlet The Ken says is “largely fashioned on the company’s global product – Android Pay“.

As TechCrunch notes, “this is a big deal because Google hasn’t made a big push into payments outside of the US.”

ICICI plans payday-type loans in pact with e-tailers (India Times), Rated: AAA

In a first of its kind for India, ICICI Bank will partner with e-commercefirms to provide automated payday loan-type credit to customers at the bottom of the digital pyramid. Unlike other software-based loans, the digital credit planned by the bank will be available to non-customers and new-to-credit borrowers.

Speaking to TOI, Anup Bagchi, executive director, ICICI Bank, said that the bank would price these loans similar to credit card advances. In the West, payday loans are advances that fund the low-income individuals to make up for cash shortfalls until their salary. The difference in the ICICI Bank loan is that for the first month, the buyer will get free credit for up to 45 days. It is only if they do not pay on the due date that borrowers will be charged interest at close to credit card rates.

The bank will lend to new-to-credit customers based on their track record with the e-commerce provider.

Here’s why RBI wants to regulate online P2P lending (VC Circle), Rated: A

“The RBI is concerned that this can go big and get out of control,” says Harish.

Faircent—which is backed by financial institutions like JM Financial, venture fund Aarin Capital and Mohandas Pai-promoted 3one4 Capital—is seen as the largest online P2P lender in India. Other names include Lendbox, Rupaiya Exchange and LenDen Club.

There are typically three models through which such lenders operate, says Aditya Kumar, founder and chief executive officer at Qbera.com, an online lender that began operations in February this year and claims to have a Rs 10 crore loan book. “While there are at least 30-40 P2P players, who connect lenders to borrowers, 15-20 do marketplace lending (where money is raised from banks and other financial institutions) and then there are loan aggregators who have been around for longer,” says Kumar.

While Kumar says the total P2P lending market size would be around Rs 25 crore, Rajat Gandhi, founder and CEO at Faircent, puts the figure at Rs 50-70 crore on an annualised basis.

Figures available with Peer2Peer Finance Association (P2PFA) suggest that the global P2P lending market saw cumulative lending of £8.5 billion during the first quarter of 2017, against £5.8 billion three quarters before. In the same period, the number of lenders grew by a fifth from 1.5 lakh to just over 1.8 lakh.

How to boost your retirement income with P2P Lending (India Times), Rated: A

The discourse around P2P lending has always been centered around what it means for borrowers and the advantages they can derive. However, what gets missed is that P2P lending has the potential to be a great source of investment for the lenders contributing to their retirement fund.

P2P lending is an investment delivering multiple benefits when building a retirement plan:

1. Add Lending to your Portfolio Mix: The adage that talks of not putting all your eggs in one basket still holds true. An investor should not limit his portfolio to only a few asset class, but focus on investing across investment opportunities so that market fluctuations do not have a huge negative impact on their retirement funds.

2. Steady and high returns not Linked to Stock Markets: P2P lending adds to building such a diversified investment portfolio while delivering returns that are not merely comparable, but often preferable to returns from other investment instruments such as mutual funds, stocks, and SIPs.

Lenders on Faircent.com are earning gross returns to the tune of 18% to 24% per annum on an average by building a diversified loans portfolio.

3. Income Generation & Power of Compounding: Another reason that P2P investment does well is because investors can compound their earnings. Lenders are earning back part of their investment, both principal and return, every month.

Asia

Get Me My Wedding Present: How We Run a Micro-Lending Business in Cambodia (Cointelegraph), Rated: AAA

MicroMoney co-founder and CEO Anton Dzyatkovsky on attracting new customers, recruitment issues and risks in greenfield countries.

Now that we’ve opened new offices in Myanmar, Thailand and Sri-Lanka, our decision to start with Cambodia can be seen as a definitive step which enabled us to embrace the largest community of unbanked people in the region, bringing the advantages of Blockchain as the key technology for global financial inclusion.

Cambodia is all about banks

For us as Europeans, the first surprise was the population’s absolute trust in local banks.

The US dollar is as used in Cambodia as the local currency is, and the exchange rate has remained stable for over 20 years. State regulators do not exercise particular pressure on the financial industry, and by the time we stepped into the game, 50 organizations had been involved in the consumer loan industry, each with an average capital of $1.5 mln and an ARPU of $5,000.

30-day overdue loans in Cambodia account for only 0.9 percent of the total, so the PAR ratio (portfolio at risk) is quite profitable (according to the local Central Bank).

Our Cambodian lessons

  • A growing share of the middle class due to the growth of GDP. For instance, Cambodian GDP grew six percent in 2016.
  • A market capable of generating cheap leads. We discovered all Cambodians belonging to the target audience have at least one active Facebook account, and for them Facebook often equals Internet in general: every national mobile operator provides free access to Facebook.
  • Dormant or non-existent competition. in Cambodia there were no paperless lending services without an escrow of land or real estate property.
  • Eager audience in need of a product. when we were checking out the market, we found only five percent of the population had a credit record. According to McKinsey, the number of ‘unbanked’ people in Asian region overall ranges from 65 to 80 percent of the adult population.
  • Collaboration at the local level. It helped us understand local customers and comply with local regulations (in this case you must be ready to assign 51 percent of your newly established company to a local partner).

Peer lending for small businesses (The Star), Rated: A

Funding Societies, which started in Singapore in 2015, is one of the first peer-to-peer (P2P) financing companies to open its doors here in Malaysia in February this year. It is also present in Indonesia.

Wong, who learned about alternative financing while studying at Harvard Business School, says P2P is well-suited for the Malaysian and South-East Asian markets where there is a big gap in SME financing. He estimates financing needs for small businesses in Malaysia to be at RM80bil.

According to Research and Markets, the global P2P lending market was valued at US$26bil in 2015 and is projected to reach US$460bil by 2022, growing at a compound annual growth rate of 51.5% from 2016 to 2022.

Funding Societies has made it to the Fintech 250 list, which is recognised and regulated by Securities Commission Malaysia, to provide financing to SMEs. The company also provides flexible investment opportunities with rigorous risk assessment and returns of up to 14% per year for investors, says Wong.

So far, the company has done more than 800 deals and disbursed more than RM180mil in financing to SMEs in Malaysia, Singapore and Indonesia.

Default rate in the region is low at about 2%.

Bank approves online accounts in foreign currencies (Taipei Times), Rated: A

Taiwanese could soon be able to open bank accounts denominated in foreign currencies on the Internet after the central bank on Thursday gave its go-ahead to the plan.

Local banks could seek approval for the new accounts by the end of this year, or 60 days after the introduction of the new regulations, the central bank said in a statement.

Taishin, the banking arm of Taishin Financial Holding Co (台新金控) and the nation’s largest online lender by the number of accounts, told reporters that it aims to be the first applicant when the notification period begins.

Africa

Outsurance buys CoreShares stake as it launches robo-adviser (BusinessDay), Rated: AAA

Outsurance is to acquire a 25% stake in passive investment manager CoreShares, as the insurance company’s robo-adviser, Outvest, goes live.

The acquisition complemented Outvest, an online, automated advice business, the companies said in a statement on Monday.

In SA, financial advisers, to more effectively service their clients, are predominantly using these platforms, although there are platforms available to retail investors.

 

Authors:

George Popescu
Allen Taylor

Thursday February 2 2017, Daily News Digest

Thursday February 2 2017, Daily News Digest

News Comments Today’s main news: SoFi acquires mobile banking startup Zenbanx.  LC class action suit to be arbitrated. Goldman CIO touts Marcus as FinTech startup. Prosper appoints Usama Ashraf as CFO. Today’s main analysis: P2P lending was a product of the financial crisis. Own SoFi through Renren. Today’s thought-provoking articles: Smaller P2P players likely to struggle.  How to […]

Thursday February 2 2017, Daily News Digest

News Comments

United States

United Kingdom

European Union

Israel

News Summary

United States

SoFi moves beyond lending with acquisition of mobile banking startup Zenbanx (Finextra), Rated: AAA

Online lender SoFi is stepping up its efforts to take on America’s banks by buying fellow fintech player Zenbanx, enabling it to offer checking accounts, credit cards and international money transfers. Financial terms were not disclosed.

Although terms have not been revealed, the deal is expected to be worth around $100 million when it closes later this month.

Founded in 2012 by former ING Direct CEO Arkadi Kuhlmann, Zenbanx offers a mobile banking account that lets people save, send and spend money in multiple currencies both domestically and internationally. The firm is not a bank, teaming up with FDIC member Wilmington Savings Fund Society, which issues accounts.

OUR ACQUISITION OF ZENBANX (SoFi), Rated: AAA

We have never been shy about SoFi’s ambitions to become the center of our member’s financial lives. Offering deposits, credit cards, and payment solutions is key to that ambition, and we think we can offer something better than incumbent players with the same kind of innovation we’ve brought to other areas of finance, like student loan refinancing, personal loans, and mortgages.

Today, we got a lot closer to being able to provide those products with the acquisition of Zenbanx, a Delaware-based company that offers a mobile banking account that lets people save, send and spend in multiple currencies.

With the addition of Zenbanx, SoFi is poised to make banking much more frictionless. We can’t wait to show you what’s in store.

Class Action Against Lending Club and WebBank Headed to Defeat (JDSupra), Rated: AAA

On Monday, a federal district court in the Southern District of New York granted a motion to compel arbitration in Bethune v. Lending Club Corporation, et al., a closely watched putative class action raising important issues for the fintech industry.

Under the Federal Arbitration Act, the court’s decision is potentially subject to immediate appeal to the Second Circuit under § 1292(b). The decision, especially if it is affirmed, may provide increased certainty and comfort for the marketplace lending industry and investors.

Own SoFi, Other Fintechs Through Renren (Lend Academy), Rated: AAA

There is one company called Renren that has allocated to numerous fintech firms and is currently publicly traded on the NYSE under symbol RENN.

Renren has participated in SoFi’s series B, D, E and F rounds for a total investment of over $242 million. According to the 2015 year end report, “The Company held 28.85% and 21.20% equity interest of SoFi as of December 31, 2014 and 2015, respectively.”

Renren also hold significant positions in Motif (10%, their CEO was the most recent guest on the Lend Academy Podcast, Lending Home (14.7%, which just crossed $1 bn in originations) and Fundrise (25.3%, which is in the process of raising money from the crowd, has originated over $210 mn in originations and touts 123k members).

Goldman CIO touts new consumer lending business as ‘fintech startup’ (SearchCIO), Rated: AAA

Goldman Sachs Group Inc., financial adviser to corporations, governments and the world’s one-percenters, is stepping out of its comfort zone. The global investment bank recently unveiled Marcus.com, an online lending platform for consumers. The platform not only represents a new customer focus — ordinary people who get into debt — but a new technology strategy at Goldman.

Fintech startups rely on technology to provide faster, more agile customer service than the traditional Wall Street behemoths. Marcus, which is built on APIs, was born out of the same thinking.

Indeed, Chavez said Goldman is not only exploiting APIs, but open source and cloud services as well — a trio he referred to as the most “profound drivers” of innovation in financial services he’s ever experienced.

Goldman is not alone. The use of APIs has skyrocketed in the last couple of years. In 2015, there was a 12-fold increase in API calls. A majority of the revenue at Salesforce, Expedia and eBay — between 50% and 90% — comes from APIs; for some companies such as Twilio, a cloud communications platform, 100% of its revenue comes from APIs, Chavez said.

The Marcus online lending offering is an example of a plug-and-play API strategy; Chavez and his team built and launched the platform in 12 months.

How to earn Bitcoin through p2p lending (CryptoCompare), Rated: AAA

That is why we want to introduce you to BTCjam, a peer-to-peer lending website that connects lenders and borrowers directly. BTCjam was founded in 2012 and has already facilitated over $10 million dollars worth of Bitcoin in loans.

  1. Step 1: On the top right corner, click the “Invest” button
  2. Step 2: You will be taken to the loan listings. We want you to check out the filter below. These are: Term (time period of the loan), BTCjam score (the rating given to the borrower according to his profile information and to the loan requested. Basically a credit score), type (this dictate the currency value in which the investment will be returned) and advanced
  3. Step 3: Now once you find a listing that you like, click on its name
  4. Step 4: This next step is probably the most important one. We want you to take a good look at all of these fields below. Number 1 shows how many BTC is missing for the loan to be fully funded. Number 2 shows the Listing rating and the verified profiles of the user. The more profiles linked, the most likely it is the person to be the owner of these profiles. Number 3 is the description of the business plan or motive for the loan. Make sure the plan proposed is sound and that the borrower has a backup plan to repay the funds Lastly, number is the borrower reputation, which he can acquire from previous loan
  5. Step 5: Once you have analysed all of these fields and are ready to invest in this loan, click “Invest
  6. Step 6: Enter the amount of BTC you want to invest and click “Invest” once more

Prosper Marketplace Appoints Usama Ashraf Chief Financial Officer (Yahoo! Finance), Rated: A

Prosper Marketplace announced today it has appointed Usama Ashraf as Chief Financial Officer. As CFO, Ashraf will oversee the company’s capital markets function, as well as all of the company’s finance activities. As head of the Capital Markets team, he will be responsible for expanding the company’s funding sources by bringing new investors onto the Prosper lending platform.

What to Expect From Real Estate Crowdfunding in 2017 (Equities.com), Rated: A

While growth slowed somewhat in 2016 (likely in response to top-of-market trepidation) the 40% figure is still robust, and the US accounted for a large share of the $1bn of overall industry growth this year. In 2015, the $1.5bn in volume for US real estate crowdfunding represented only 0.3% of total real estate finance transactions in the US, indicating that the sub-industry still has enormous room to grow, even while remaining modest as a share of overall commercial real estate activity in the economy.

The trend of division and specialization among real estate crowdfunding platforms is likely to continue, with the potential for consolidation in the advent of a dip in the market.

The transition of the executive branch will likely have a major impact on commercial real estate capital markets, and therefore on the prospects for the young real estate crowdfunding industry. The trouble is, no one can credibly claim to know what that impact will be.

The Colleges That Offer The Most Bang For Your Student Loan Buck (Lifehacker), Rated: A

Online student loan marketplace LendEDU did an analysis of 752 public and private 4-year colleges. The site looked at two main factors: average student loan debt per graduate and the average early career pay for graduates. They used these two criteria as the risk and reward for attending college to determine which schools give you the biggest upside for the amount of money you have to spend.

Unsurprisingly, schools like Princeton, Yale, and Harvard trend towards the top of the list, but those are also among the hardest to get into.

The Battle to Control Trillion in Investment Direction (Dara Albright Media), Rated: A

In the Fall of 2016, I penned an article entitled, “Modernizing the Self-direct IRA – The Trillion Dollar FinTech Opportunity” – the first in a new series of articles that focuses on next-generation retirement planning. The piece underscored how FinTech will mend America’s flawed retirement system and foster the growth of “digital” investing.

Perhaps the majority of America’s retail investors are too busy reluctantly allocating their retirement dollars to sanctioned bond funds – many of which yield more clout than performance – to even notice the race to create a next-generation retail retirement product that will economically custody coveted micro-sized alternative investment products and, in doing so, ensure that a greater number of Americans maintain more properly diversified retirement portfolios.

Unlike previous corporate clashes, the winning IRA model is easy to predict. The frontrunner will be the one possessing the most optimum technological and regulatory framework to accommodate the needs of the modern retail investor. Today’s retail investor is not looking for another mutual fund. He is not begging for ETFs. Nor is he interested in day-trading stocks. Instead, he is craving yield, and he is demanding access to the same level of returns that institutions have been enjoying for years through alternative asset diversification.

Yes, you read that correctly. Retail brokerages would prefer to limit access to investment products or exit the retail retirement business altogether than to deal with the regulatory headaches of helping small investors prepare for retirement.

3 Years Later, the Jobs Act Continues to Drive Growth in CRE (Commercial Property Executive), Rated: A

The combined effects of the Jobs Act, digital advertising, and online investing platforms are currently driving rapid growth in CRE investments.

Investors enjoy greater autonomy on digital platforms because they’re able to build their own high-performing portfolios. Rather than putting money into pooled investments, they can pick and choose specific opportunities that appeal to them. Some sites even list institutional quality offerings to private investors and allow them to participate alongside institutional capital.

Global crowdfunding investments in real estate are expected to hit $250 billion by 2020.

Here are three key reasons the industry will show continued growth:

  1. Evolved functionality and flexibility.
  2. Enhanced community building.
  3. Maturing Millennials. In fact, 23 percent of the world’s millionaires are Millennials.

DealIndex study indicated that young investors are 10 times more likely than Baby Boomers to use online investing platforms, even though investing is growing among the 50-years-and-older crowd. Naturally, as Millennials’ influence increases, online investing platforms will mature as well.

Video: Accessing Peer-To-Peer Loans For Alternative Income (RIA Channel), Rated: A

Allen Webb, Senior Portfolio Specialist at RiverNorth Capital Management talks with Julie Cooling, Founder and CEO at RIA Channel about their new marketplace lending strategy, specifically, RMPLX.

Watch the interview here.

How You Can Leverage A Business Competition Win (Forbes), Rated: A

Women may think it’s not ladylike to brag. The truth is, if you want to get ahead in the world, even if you’re a nice girl, you’ve got to brag a little. When done right, it can be an effective way to get attention for your product or service and grow your business.

So how do female founders brag without sounding boastful? By winning a competition, such as OnDeck’s Seal of Approval Contest.

Applying for money from an online lender is less intimidating, commented Corcoran. It’s fast — unlike the 33 hours it may take with a bank — and easy, she said. It’s leveling the playing field for women entrepreneurs who are seeking capital.

Employing crowdfunding to start or expand your business (SlideShare), Rated: A

United Kingdom

P2P Lending Platform Flender Selects Equifax to Support Underwriting for UK SME Loans (Crowdfund Insider), Rated: AAA

Following the closing of its Seedrs equity crowdfunding campaign, peer-to-peer lender Flender has selected Equifax Limited to support the underwriting for UK small and medium enterprises (SME) loans.

According to Finextra, Equifax will be supplying real-time consumer and commercial to help make the underwriting process automated and optimized. This data, which will be provided by Equifax Business Insight’s solution, will give a comprehensive view of SME loan applicants.

Smaller P2P players likely to struggle, says alternative lender (Bridging&Commercial), Rated: AAA

With the many political, regulatory and economic twists and turns of 2016, 2017 is set up to be a strange year in the world of alternative finance.

With the larger platforms announcing record second-half results in the six-month period after the Brexit vote, they are also attracting increasing amounts of capital in the form of equity.

Smaller P2P players, however, will likely struggle to lure the necessary lending or growth capital to survive independently, so we expect a degree of consolidation and some to drop out of the market altogether.

We predict that this will attract a huge amount of capital on to the main platforms and represent as much as 30% of all capital inflows to P2P platforms this year, assuming all large P2P lenders such as Assetz Capital get approved before the end of March 2017, and perhaps as much as 50% in 2018.

RateSetter’s former chief risk officer joins The Money Platform (P2P Finance News), Rated: AAA

THE MONEY Platform has hired RateSetter’s first-ever chief risk officer Kevin Allen (pictured) to head up its credit decision processes and grow its borrower base.

Allen joined the recently-launched peer-to-peer payday lender on Monday 23 January, after three-and-a-half years at RateSetter.

Allen joined RateSetter – which is one of the ‘big three’ P2P lenders – as CRO in July 2013 and went on to become head of retail lending. He helped to increase lending from £3m to £60m per month and was instrumental in growing the provision fund from under £1m to £23m, according to his LinkedIn profile.

The firm is looking to shake up what it calls the “morally bankrupt” payday loan market, by offering a more ethical alternative. With a representative APR of 165 per cent, it is much less expensive than some of the big-name payday lenders in the market.

The Association of Alternative Business Finance Launched Today (Fintech Finance), Rated: A

The Association of Alternative Business Finance (AABF) launched today (1 February) with the major ambition of championing and promoting the best standards of industry practice.

The seven founding members, Capify UK, Catalyst Finance, Credit4, Fleximize, Liberis, The Just Loans Group and YesGrowth have clearly defined four operating principles that members will be required to adhere to:

  • Transparency
  • Responsibility
  • Fairness
  • Security

A key early initiative for the AABF is for members to create and subscribe to a centralised database for Personal Guarantees that will prevent borrowers over committing themselves and help identify potential fraudulent activity.

Behind the scenes: How the Funding Circle process works (Funding Circle), Rated: A

To recap, once you’ve submitted an application online:

  • Your Account Manager will need 3 months business bank statements, the last set of full, filed accounts at Companies House and if these are over 16 months old we’ll need P&L and balance sheet information for the last financial year end.
  • Then, an Underwriting Assistant will carry out some initial credit checks and searches on the financial documents you’ve submitted.
  • Our Credit Assessment team will then look at whether the loan is affordable, if it makes sense and whether it fits our credit criteria.
  • Once the loan is approved, you’ll receive an email with the offer conditions and loan contract. Once the contract has been signed by a company director, scan it back to us along with:
    • A direct debit mandate
    • I.D. and proof of address documents for all guarantors
    • If it’s a Limited company, a personal guarantee
  • The team will then carry out a few final fraud checks, and once complete the loan will be listed at random either as a whole loan, where an institutional investor buys the entire loan, or as a partial loan where thousands of investors lend to your client. The funding process typically takes one to five working days.
  • Once the process is complete, your client will receive the funds within 24 hours.

ThinCats founder: Peer-to-peer lending was a product of the financial crisis (BusinessZone), Rated: B

It was a remarkable change in the way things were done. The key thing now is; can we get a sufficient foothold, so that if the economy improves and the banks come back into the market in a big way we’ll be able to withstand that? I think it will be five years before the banks even consider that. Things may have changed forever.

We made £2m loans in our first year, most of which came from founders and shareholders. I think we did about £5m in the second year, then it doubled each year after that.

We basically hung on their shirt tails – let them do the marketing.

European Union

French Finance Regulators Embrace Fintech (Crowdfund Insider), Rated: AAA

The old Paris Stock Exchange, the Palais Brongniart was buzzing again as international Fintech startups, bankers, insurers, and investors gathered there for two days of panel discussions, Fintech startup pitches and networking at the second edition of the Paris Fintech Forum last week.

While “stable” and “agile” may sound like a contradiction in terms, Francois Villeroy de Calhau insisted that they are not. Regulation is a positive asset for Fintechs as it strives to limit potential risks for customer protection and financial stability.

The French authorities see the Brexit as an opportunity for France to regain a stature as a financial center.

The danger for the Continent is now that the post-Brexit UK, freed from the yoke of EU directives, could decide to compete with the Continent through large scale financial and fiscal deregulation. The UK, which already enjoys an 80% share of the European alternative finance sector, could then maintain or even widen the gap.

Strengthening the communication with fintech firms, implementing their own digital transformation and developing Regtech are key elements of the regulators’ strategy.

Israel

Not Just Hi-Tech: Israel Competes in Global Asset Management (PR Newswire), Rated: AAA

Clarity has launched its own multi-manager fund which allows its clients to invest in a globally-diversified portfolio of high-yielding private debt strategies, such as real-estate-backed debt, senior corporate lending and peer-to-peer lending. Clarity clients benefit from the firm’s access to top-tier debt investment managers globally and from its due diligence and investment selection capabilities. Since the fund’s launch in late September, it has accumulated tens of millions of dollars in assets under management. The fund targets Eligible/Accredited Investors.

Authors:

George Popescu
Allen Taylor

Monday January 30 2017, Daily News Digest

price & yield table for SCLP 2017-1

News Comments Today’s main news: ABA Banks seeks MPL partnership. Zopa passes 2bil GBP milestone. Today’s main analysis: SoFi Unsecured Consumer 2017-1. Today’s thought-provoking articles: Orchard Online Lending Snapshot. Five mistakes to avoid when starting a FinTech company. Spanish banks lead FinTech VC in Europe. Tyro, RateSetter, Stockspot and Westpac on past and future. United States ABA seeks MPL partnership. […]

price & yield table for SCLP 2017-1

News Comments

United States

United Kingdom

European Union

Australia

India

Asia

News Summary

United States

U.S. bank trade group seeks marketplace lending partnership (Reuters), Rated: AAA

The American Bankers Association, a trade group for U.S. banks, has been hunting for a marketplace lending platform to help its members ramp up their digital offerings.

The ABA has run a formal bidding process to secure a marketplace lending partner, spokesman John Hall confirmed on Friday. He could not say which companies were under consideration because the information was confidential.

Weekly Industry Update: January 29, 2017 (PeerIQ), Rated: AAA

The ABS market finished January on a high note with strong buyer interest. SoFi and Mosaic priced their first and inaugural transactions respectively in 2017, which were both heavily oversubscribed.
FinTech financings continue apace. Nyca announced the successful closing of a

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

It was reported this week that LendingRobot launched a robo-advisor hedge fund for accredited investors that will invest in loans from LendingClub, Prosper, Funding Circle, and Lending Home. loanDepot announced that they have funded $100 billion in home, personal, and home equity loans since their inception in 2010. In yet another sign that positive sentiment seems to be returning to the industry, BorrowersFirst, an online consumer lending platform, announced last week that it has secured an additional $100 million in debt financing to accelerate loan originations and fund continued growth of its balance sheet. The Office of the Comptroller of the Currency issued OCC Bulletin 2017-7 as a supplement to OCC Bulletin 2013-29, which “governs the risk management frameworks maintained by OCC- regulated banks in establishing, monitoring and concluding third party relationships (including relationships with bank affiliates).” On Monday, we announced that LendIt has partnered with us for our 2017 Meetups–as a way to enrich the events–strengthening the depth and breadth of ourrelationships in the industry.

DiversyFund Takes Crowdfunding Real Estate Investment Giants Head On (Military Technologies), Rated: A

DiversyFund, Inc., announces the launching of its new full-service online crowdfunding real estate investment platform. DiversyFund principals, Craig Cecilio and Alan Lewis, have been delivering exclusive investment opportunities that generate high returns for their investors for over a decade. The company has planned to offer some unique features to its investors in the upcoming months. These are aimed to disrupt the current status quo of the industry.

With their new online crowdsourcing platform, DiversyFund is planning to become the key sponsor and lead developer to the majority of their projects, if not all of them. This is a key difference in their crowdfunding real estate investment platform. It makes them stand out since many of their competitors work with third-party sponsored projects and act only as mediators by providing technology to implement funding for outsourced deals.

AirBnb’s Fintech Future (The Financial Revolutionist), Rated: A

This week, word “leaked” that Airbnb is in advanced talks to acquire Tilt, a group payments/social network hybrid start-up that helps people split the cost of rent, dinners and events. Whether or not this deal happens (it probably will), the rumors support our view that of all the next-wave tech giants known as WASSUPPs (WeWork, AirBnb, Slack, Snap, Uber, Pinterest and Palantir), AirBnb is the most aggressive in embracing fintech as core to its business.

Crowdfunding takes aim at commercial real estate (Westfair Online), Rated: A

Despite a lack of data on the exact size of the real estate crowdfunding market in the U.S. – no federal agency or national trade association tracks those deals – the investment vehicle apparently is attracting a particular class of investor.

“This investor is typically younger,” said Ben Sayles, director in the Boston office of real estate brokerage HFF. “From what I am seeing, this person is high-earning, usually in the tech world – though maybe in the financial world – and doesn’t have a lot of expenses. They probably rent their apartment, do not have a car and have an extra income that they want to put to work.”

Among real estate professionals, the use of crowdfunding to raise capital also appears to be concentrated within a particular demographic.

“For a smaller commercial real estate developer or investor, the non-Donald Trump type, this can be a cheaper source of financing for a $10 million to $30 million project,” said professor Anthony Macari, executive director of graduate programs at Sacred Heart University in Fairfield.

Three Crowdfunding Sectors to Watch in in the US in 2017 (Crowdfunding), Rated: A

With investors becoming increasingly more comfortable with new Fintech platforms, the amount of money invested in crowdfunding in the Americas jumped from $11.4 billion in 2014 to $36.49 billion in 2015 — and Technavio market research analysts predict the overall industry will grow at a compounded average annual rate of 27% through 2020.

Since the first provisions of the JOBS Act went into effect, real estate has remained one of the most popular crowdfunding investment classes. The physical nature of buildings and land lends real estate more security than higher risk startups. And with a self-proclaimed real estate mogul now in the White House, many leading experts are predicting a record year for real estate. We are also seeing increasing issuer adoption — more real estate firms are launching their own crowdfunding platforms, and a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack.

In addition to standard real estate crowdfunding platforms, we think we will see an influx of hybrid platforms that allow users to not only invest but to solve other problems as well.

Last year’s announcement from OPEC to cut production in combination with President-elect Trump’s oil friendly appointments has oil and gas prices on the rise. Oil prices have already climbed 17.5 percent as of December 27 and show no signs of slowing. And investors are taking notice. EnergyFunders, a crowdfunding marketplace that allows investors to directly invest in U.S. oil and gas wells, reported a 45 percent increase in signups after OPEC’s announcement.

Impact investing, or investing in companies that bring about positive change in the world, is growing in popularity as more millennials enter the market. A recent survey from U.S. Trust states 93% of millennials believe that social impact is key to their investing decisions. Ryan Ràfols, CEO of Newchip.co an aggregation platform that uses Robo-advising to showcase impact investing crowdfunding offering, explains;

“Millennials want to invest in companies that can make a return while making a difference in the world.”

Elon Law dean addresses poor SoFi ranking (Biz Journals), Rated: A

Social Finance Inc. (commonly known as SoFi) ranks Elon among the bottom 10 law schools in the nation in its Return on Education Law School Rankings. It ranked Elon eighth out of the 10 worse schools. Elon’s graduates, SoFi said, average $87,680 in salary and $145,610 in debt.

Luke Bierman, dean of Elon Law, which is based in Greensboro, said he doesn’t argue that a law school degree requires a sizeable investment from a student in terms of both time and money. But he said Elon adopted a new curriculum two years ago intended to make it quicker and less expensive for a student to earn a law degree. He said the school’s current tuition is 20 percent below the national average for private law schools and said the new curriculum allows a student to graduate in 2.5 years as opposed to the three years required through a traditional curriculum.

He said the study released by SoFi doesn’t reflect students who have enrolled at Elon since the adoption of the new curriculum. The first group enrolled solely under the new curriculum, he said, will be graduating in December. He said it’s Elon’s hope that those students will be graduating with less debt.

Bitcoin P2P Lending Remains A Risky Business (Live Bitcoin News), Rated: A

On paper, the service provided by companies such as BTCJam is an excellent way to use Bitcoin. Extending loans to people from all over the world is a great solution to promote Bitcoin usage. Unfortunately, this concept still needs a lot of work, as there are a lot of caveats to using services such as BTCJam right now. In most cases, a lot of the loans are never repaid in full.

It is evident a lot of BTCJam users are losing money unless they are the borrowers for a specific amount of Bitcoin. In fact, some Reddit users argue the only people who benefit from using BTCJam are the ones who borrow money, and everyone else is losing money left, right, and center. BTCJam has been dealing with these issues for quite some time, yet it seems very little has changed over the past year or so.

Global Debt Registry Successfully Completes SOC 1 and 2 Attestation (Global Debt Registry Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced receipt of its Service Organization Control [SOC] 1 and SOC 2 Type 1 attestation engagement report, providing independent validation that the Company’s internal security controls are in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) applicable Trust Services Principles and Criteria. Just days after International Data Privacy Day on January 28, this attestation showcases GDR’s continued dedication to meeting the highest industry standards for protecting confidential consumer information.

GDR’s SOC 1 and 2 Report demonstrates that the Company has the necessary internal controls and processes in place to protect consumer data, maintain operational integrity, and comply with industry standards and regulations.  The SOC 2 engagement included evaluating GDR in accordance with the trust principles of security, availability, processing integrity, and confidentiality. The AICPA created the SOC guidelines to provide an authoritative benchmark for service organizations to demonstrate implementation of proper policies, operational practices and controls.

As a partner to online lenders, investors, warehouse lenders and other industry stakeholders, GDR delivers real validation and helps ensure asset certainty including protection against double pledging and double selling of assets with its suite of digital due diligence solutions. The Company contracted with KirkpatrickPrice for its SOC 1 and 2 engagement to meet the ongoing public and private reporting requirements of its financial institution clients.

GDR is also compliant with a number of additional industry standards, including PCI DSS (Payment Card Industry Data Security Standard), the GLBA (Gramm Leach Bliley Act) Safeguards Rule, and ISO 27002 (International Organization for Standardization 27002). As evidenced by the SOC 1 and 2 Report, the Company is continuing its focus on meeting the highest standards of data and information protection and operational integrity for its clients.

The 4 Best P2P Lending Platforms For Investors In 2017 — Detailed Analysis (Forbes), Rated: A

With interest rates at all-time lows since 2008 and many historically “safe” investments like government bonds carrying negative yields, investing in P2P loans in 2017 is a no-brainer.

Founded in 2007, Lending Club is the world’s largest P2P lending platform with over $20 billion in loan issuance. Lending Club has grown exponentially and currently has a 45% market share. It raised over $900 million from its IPO in 2014, but its share price has since fallen 72%.

Launched in 2006, Prosper was the first P2P platform in the US. It has since funded over $6 billion in loans and serviced over 2 million customers. Prosper grades borrowers through its Prosper Score. This proprietary system focuses on criteria such as debt-to-income ratio and other “soft checks” conducted by credit bureaus.

Launched in 2014 by a bunch of ex-Googlers, Upstart has originated more than $300 million worth of loans. Upstart uses unique grading criteria. It looks at FICO scores but also considers educational background. The firm has the lowest default rates across the industry thus far. Over 94% of loans are on track to be repaid in full. The company makes its money solely on origination fees from the borrower.

Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands. Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands.

Why More Consumers Are Seeking Alternative Investments (Newswire.net), Rated: A

However, modern consumers are starting to look at alternative investments, which stray from “conventional” standards either because they’re riskier, newer, less tested, or involve unknown variables. What you need to know about alternative investing is this: it’s on the rise, and there may be a benefit in jumping in early.

Types of Alternative Investments

  • Private lending. Private lending has grown in popularity in recent years, thanks to peer-to-peer apps that make it possible, such as Lending Club. Here, you may lend some of your own money to one or more private borrowers, who pay you back with interest.
  • Currencies. Currencies are constantly shifting in value against each other as various countries grow or shrink economically. Investing in a country’s currency when they’re poised for growth with an app like XE could result in a major gain.
  • Other tech-based solutions. There is also a rising number of new apps and technological solutions opening the doors to new investment possibilities. The rise of machine learning and automated investing solutions, like Wealthfront, is an example of this.

Manhattan Beach’s PeerStreet opens real estate investing to individuals (TBR News), Rated: B

Headquartered in Manhattan Beach just across the street from the town’s iconic 24-hour diner, The Kettle, PeerStreet may be located in a small beach town, but the reach of this real estate investment firm is national.

Crosby describes PeerStreet as an eTrade for real estate investing.

The business began right in the heart of Manhattan Beach, and currently has 50 employees. According to Johnson, they’ve recently received funding from venture capitalist Andreesen Horowitz and investor Michael Burry.

United Kingdom

Peer-to-peer lender Zopa passes £2 billion loans milestone (Business Insider), Rated: AAA

Zopa, the fintech businesses credited with inventing peer-to-peer lending, has passed £2 billion ($2.5 billion) in loans over its online platform.

The milestone means Zopa is still just about Britain’s biggest peer-to-peer lender by historical loan book. Funding Circle, which lends to small businesses, has lent £1.92 billion since its launch in 2010.

Zopa says in a release on Monday that the £2 billion in lending represents 300,000 loans made to 246,000 borrowers since its founding in 2005. 75,000 investors funded the lending over the platform.

Five mistakes to avoid when starting a fintech company (Banking Technology), Rated: AAA

However, what I feel very comfortable doing is pointing out some things that failed companies do, based on my experience in Startupbootcamp as well as building a number of successful companies. Here it goes:

  1. They forget to validate

Intuition, experience and opinions are important and helpful. However, building a fintech start-up based only on these three is very risky. A business can’t be built on limited data. Without really understanding if there is a real pain you are solving, a need you are fulfilling or knowing how many people would pay for your product or service you are multiplying the possibility of going after the wrong market, building the wrong solution or having the wrong commercial model or doing the wrong thing.

  1. They lose focus

 

Successful entrepreneurs focus on one thing at a time and they are very good at saying “No” to anything that would distract their real focus. This does not mean that they are not aware of what is going on around them or blindsided to changes or competition but they just know how to use their time efficiently.

  1. They focus too much on being “investable” and forget to build a sustainable business

It is easy to fall trapped to the chants of investors. It can be easy to believe that you have a sustainable business when an investor says that the company you started working on 12 months ago is worth £2 million. That does not mean that you have a business. It means that you can build a viable business. The criterion that investors use is not normally sustainability but potential for a large payout. Sometimes, those two factors are contradictory. Investors have to go for big money and some of these attempts fail.

  1. They don’t invest enough in team and culture

Building a fintech company is hard. The pressure is incredibly strong and never stops. Under continuous pressure, it is very easy for teams to crack and fall apart which in many occasions kill the company. A start-up’s biggest challenge is getting the team right and having the different skill sets covered to succeed. Complementing each other’s strengths and weaknesses is extremely important in small teams, especially with co-founders.

  1. They underestimate what it takes

The journey of an entrepreneur is incredibly hard and requires grit, execution and a lot of patience. In many cases, entrepreneurs get caught in the “fintech celebrity” hype and think that being on panels, and ranking high in different top lists and Twitter means success. Building a real business takes a lot of hours “in the basement”. Once the reality hits, many founders get bored and quit or fade.

Welendus – One Week on Seedrs (Welendus Email), Rated: A

One week has passed since the release of our Seedrs fundraise campaign with significant results.

Over the past week, Welendus attracted over 50 investors and raised over 25% of our target which only proves the level of interest people have in Welendus. The level of engagement and the discussion is another indication of how much people love Welendus.

We are raising £300k for equity in our company and would like to invite you to be one of our first investors and shareholders. You can access our Seedrs campaign at

Assetz Capital CEO Stuart Law Shares His 2017 P2P Lending Predictions (Crowdfund Insider), Rated: A

Nearly one month after ringing in the new year, Stuart Law, CEO and co-founder of peer-to-peer lending platform Assetz Capitalprovided his alternative finance predictions for 2017. 

Law stated:

“Brexit has already had a very positive effect on the peer-to-peer (P2P) market, and all indications signal that it will grow further in 2017 whilst bank lending remains subdued. With the larger platforms announcing record second half results in the six-month period after the Brexit vote, they are also attracting increasing amounts of capital in the form of equity.  Smaller P2P players however will likely struggle to lure the necessary lending or growth capital to survive independently, so we expect a degree of consolidation and some to drop out of the market altogether.

Alternative finance has certainly started to make its mark with savvy investors, but the biggest attraction to date will be the Innovative Finance (IF) ISA.  We predict that this will attract a huge amount of capital onto the main platforms and represent as much as 30% of all capital inflows to P2P platforms this year, assuming all large P2P lenders such as Assetz Capital get approved before the end of March 2016, and perhaps as much as 50% in 2018.

“The desire to invest in secured loans will increase amongst lenders and professionals.”

P2P Lender Flender Closes Successful Seedrs Campaign (Crowdfund Insider), Rated: A

P2P lending platform Flender has officially closed its successful equity crowdfunding campaign on Seedrs. Originally seeking £500,000, the initiative secured a total of £501,700 from more than 230 investors.

Flender stated it does not consider itself a traditional P2P platform with an anonymous marketplace. Instead, its team believes that it will help businesses create lasting bonds with customers, and for consumers to reach through their existing networks and be part of each other’s success. And at the same time, underpinned with legal contracts created by the platform between borrowers and lenders.

ArchOver Announces P2P Business Lending Services Expansion (Crowdfund Insider), Rated: A

On Friday, peer-to-peer business lending platform ArchOver announced it is expanding its current “Secure & Insured” lending model by launching “Secure & Assigned” business loans.

According to the lender, the first Secured & Assigned loan will be for Ergowealth, a firm of chartered financial planners based in Marlow, Buckinghamshire.

The loan announcement comes just a couple of months after ArchOver revealed it was extending its exclusive partnership with international credit insurer and collections company Coface by a further three years.

Banks and lenders face clampdown from the Bank of England on household borrowing (This is Money), Rated: A

The Bank is due to release figures this week showing that the growth in personal loans and credit cards is running at more than 10 per cent a year.

Lenders have been slashing rates in the past six weeks and banks including TSB are offering unsecured personal loans at less than 3 per cent.

The rock bottom rates come alongside cheap loans by peer-to-peer lenders which bypass the banks by allowing loans between private individuals. Ratesetter and Zopa are offering loans at just 3.1 per cent and 3.2 per cent respectively.

Funding Circle welcomes new BDM (Bridging & Commercial), Rated: B

Funding Circle has announced the appointment of Sarah Beard as its new business development manager.

Prior to joining Funding Circle, Sarah spent three years at Lease Plan as an account manager and three-and-a-half years at Hitachi Capital Business Finance, where she managed a portfolio of 30 introducers.

Sarah, who will be based in Bristol, said she was very excited about joining the company.

European Union

Spanish Banks Lead FinTech VC Investments Against Their European Peers (The Corner), Rated: AAA

Citi’s analysts also take a look at how different the FinTech evolution has been in the West: (1) the U.S. pivoted to InsurTech in 2016; and (2) two of the largest U.S. FinTech VC funding rounds in 2016 were in the health insurance space. Big data, the Internet of Things (IoT), and wearable devices, among other trends, will help insurance companies use FinTech to be more creative and customized.

Europe remains a laggard for start-ups/VC investing at about 10% of global FinTech VC investment in 2015-16. This is not a big surprise as Europe has a smaller VC market versus the U.S., it has none of the large technology/Internet companies that exist in the U.S. or China and its banking system (despite the sector’s weak stock prices, earnings and capital challenges of the past decade) offers more of a full-service provision versus U.S. or Chinese peers.

As reported by Citi:

European banks are increasingly interested in FinTech and with more bank investors and affiliates, we will see more of a shift to business-to-business (B2B). In 2017 we expect more focus on B2B FinTech topics, such as Artificial Intelligence, especially in London which is a hotspot with DeepMind and its concentration of universities; regulatory tech both in the U.K. and the U.S.; and cybersecurity primarily in the U.S. and Israel.

European Crowdfunding Networks Calls for Members to Assist with EU Crowdfunding Regulatory Review (Crowdfund Insider), Rated: AAA

The European Crowdfunding Network (ECN), a pan-European alternative finance advocacy group, is asking members to participate regarding input on the Capital Markets Union.  Specifically, the ECN will be working with the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) regarding input on obstacles to cross-border

The ECN will also launch an open survey to all EU securities and lending crowdfunding platforms with will deliver input for the European Commission’s review of the Capital Market Union and which will be followed up by individual interviews with interested parties.crowdfunding for both online lending (peer to peer lending) and equity crowdfunding.

Australia

Tyro, RateSetter, Stockspot and Westpac on 2016 and the year ahead (The Mitchel Lake Group), Rated: AAA

CK: The transferability of information is huge with a growing number of middleware, SaaS applications and APIs. Sharing data and improving collaboration in the market is continually on the improve, benefiting the customer.

DF: Investors are much more discerning in the businesses they back. This will be better in the medium term, but it’s been difficult for some businesses locally.

CB: This year Stockspot became the first robo-adviser in the world to give clients the flexibility to personalise their portfolio with the launch of Stockspot Themes. We’ve already managed to generate some fantastic net returns for early adopters (6.2% and 9.2% per year) while charging clients less.

DF: For RateSetter, expanding our offering from consumer lending to business lending was a significant development. In Australia there’s been a real lack of business financing options outside residential property-secured bank finance and expensive short-term working capital finance, so we’re excited that RateSetter now offers Australian businesses a low-rate funding alternative to help them grow and prosper.

JS: My biggest highlight has been Tyro receiving a bank license. We are the only tech company to have achieved this so far. This was such a massive win for us and the sector. Following this, we were then able to deliver next-gen banking, a cloud-based, totally mobile & totally integrated banking solution for SMEs and growth companies.

JS: The FinTech community has limited potential if banking is not opened up. In a way, Australia is cursed by the entrenched bank oligopoly. If we don’t get our act together and open up banking, the next-gen banking providers will not be Australian.

CB: There are two things the Government could do to improve fairness for consumers when it comes to investing and superannuation. One is to require all superannuation and managed funds to provide fee and performance data to comparison websites so consumers can easily compare fund options. The second is to implement a public tender for the right to manage default super funds as outlined by the [Grattan Institute]( Chile established public tenders for the right to manage default super funds and it has reduced average annual super fees by 50%.

John Cummins Appointed New CIO for Australian Marketplace Lender SocietyOne (Crowdfund Insider), Rated: A

The Australian largest marketplace lending platform SocietyOne announced John Cummins has joined the group as CIO, according to The Advisor. Reporting to SocietyOne CEO and MD Jason Yetton, Cummins will be responsible for SocietyOne’s funding requirements to support demand from an expanding number of borrower customers, including building on SocietyOne’s existing network of investor funders which features large financial institutions, mutual banks, credit unions, high net worth individuals and SMSFs.

India

India Money Mart Serves as a P2P Lending Platform (Military Technologies), Rated: A

With India Money Mart serving as a P2P lending platform, borrowers and lenders find transactions easy. This online market place provides a reliable platform for both lenders and borrowers in India with a minimal operational cost.Lenders and borrowers can avail loan facilities at their own will. Borrowers can choose single or multiple lenders at the same time. IMM ensures that these transactions are carried forward without any hassles or meeting one another personally.

Through an easy lending process, Kissht helps consumers avail quick loans (YourStory), Rated: A

There is an entire population that has the money to repay loans, yet mainstream banks reject their loan applications. This does not favour consumer spending, although consumption has grown in this country. According to data available with the RBI there are only around 27 million credit cards in the country, and 300 million bank accounts. In 2016, although personal loans were 22 percent of all bank credit disbursed, several Indians remained without personal credit.

With this as the backdrop, Krishnan Vishwanathan, a consultant from McKinsey, wanted to find a fix to help people consume. Giving up his lucrative career, he set up Kissht, which means EMI  in Hindi, to provide collateral-free loans for products that consumers want to purchase. The total loans disbursed so far are to the tune of Rs 17 crore, with over 9,000 customers.

Asia

Peer-to-peer lending platform awaits BOT nod (The Nation), Rated: A

VORAPOL PHORNVANICH, chief executive of PeerPower, a financial-technology start-up, aims to create a new online peer-to-peer lending platform for investors and borrowers.

“At present, investors and savers in Thailand earn a relatively low return on their funds, averaging 0.5 per cent for savings accounts, 2-2.5 per cent for fixed deposits and 4-4.5 per cent for corporate bonds.

“On the other hand, if you are a borrower, you have to pay a relatively high interest rate on consumer loans, which have no collateral. Interest rates are currently as high as 15-36 per cent per annum. The interest-rate spread is huge, so we think this new online platform can help narrow the gap between deposit and lending rates as happens in other countries.”

Authors:

George Popescu
Allen Taylor