- Today’s main news: Zopa is profitable again. Capital One limits access to alt lenders. SimpleNexus raises $20M. Funding Circle changes projected returns. Metro Bank launches digital bank in Australia.
- Today’s main analysis: Deep dive into Amazon.
- Today’s thought-provoking articles: Deep dive into Amazon. More Chinese P2P lenders fall under regulatory scrutiny. How blockchain can assist banks with consumer lending. SMBs access over $1B through Kabbage during non-banking hours.
- Capital One limits access to alternative lenders. This could be the start of a new trend. If banks believe they can develop their own technology cheaper and more profitably than partnering with alternative lenders, then they will try to make it on their own. This is a shot across the bow.
- Amazon deep dive. PeerIQ looks at Amazon’s lending business model more soberly than CB Insights.
- SimpleNexus raises $20 million. There is still a lot going on in alternative lending beneath the top surface.
- TD Bank partners with BizEquity.
- Small businesses access more than $1 billion through Kabbage during non-bank hours. This represents a clear advantage for online lenders. Banking hours don’t mean much when borrowers can fill out an application and be notified of loan approval outside of banking hours.
- LendingPoint upsizes mezzanine financing.
- Amit Aggarwal refines the real estate platform.
- 60-second review of marketplace lending.
- Banks enter arms race to compete for small business customers.
- Millennials with student debt get a retirement perk.
- Lending to digital natives.
- Zopa is back in the black.
- Funding Circle changes projected returns.
- Funding Circle fund warns on dividends.
- Trufin has four divisions.
- Open banking could be worth 7.2 billion GBP by 2022.
- Investor says there is too much money in tech.
- More P2P lenders collapse under regulatory scrutiny.
- Zibang Financial Service Internet Technology is under investigation.
- 51 Credit Card heads for $174 million IPO.
- Look&Fin partners with Atradius.
- Azlo, Green Dot offer lending products for gig economy.
- Latvia pushes fintech innovation.
- INLOCK conducts poll on future of ILK token.
- Spotcap hires executives.
- Harmonic Fund Services go live on Finastra.
- How blockchain can assist banks with consumer lending.
- Bitcoin millionaires use SALT lending for liquidity.
- United States
- Capital One restricts third-party data access, upsets customers (Payments Source) Rated: AAA
- Slightly weak US GDP growth, Amazon Deep-Dive (PeerIQ), Rated: AAA
- Digital Mortgage Platform SimpleNexus Raises $ 20M In Growth Capital (FinSmes) Rate: AAA
- TD Bank Teams Up With Fintech BizEquity to Enhance Commercial Customer Experience (Crowdfund Insider) Rated: A
- Small Businesses Access More Than $ 1 Billion of Working Capital During Non-Banking Hours through Kabbage (PR Web) Rated: A
- LendingPoint Upsizes its Mezzanine Financing, Bringing it to More Than $ 50 Million (Business Wire) Rated: A
- Amit Aggarwal: Refining A Real Estate Platform (Think Realty) Rated: A
- Marketplace Lending: 60-Second Market Review and Insights (Credit Chronometer) Rated: AAA
- Battle for small-business customers spurs arms race at banks (American Banker) Rated: A
- A retirement perk for millennials who are buried under student debt (LA Times) Rated: A
- Lending to Digital Natives: A Map to the Millennial Market (Credit Union Times) Rated: A
- United Kingdom
- Zopa back in black (The Times) Rated: AAA
- Funding Circle changes projected returns (Peer2Peer Finance) Rated: A
- Funding Circle fund warns on dividend as currency costs bite (Citywire) Rated: A
- SHARE PUNT OF THE WEEK: Recent AIM entrant Trufin is a financing business with four divisions (This is Money) Rated: A
- Open Banking could be worth £7.2bn by 2022, report shows (London School of Business & Finance) Rated: A
- HEAVYWEIGHT INVESTOR SAYS ‘TOO MUCH MONEY’ THROWN AT TECH (Business Cloud) Rated: A
- More P2P lenders collapse amid tough regulations (Global Times) Rated: AAA
- Another Online Lender Falls Under Investigation (Caixin Global) Rated: A
- 51 Credit Card hits road for $ 174m IPO (Global Capital) Rated: A
- European Union
- Belgian Lending Marketplace Look&Fin Partners with Insurer Atradius (Crowdfund Insider) Rated: AAA
- Azlo and Green Dot Offer New Lending Products for Gig Economy Workers (Bank Innovation) Rated: A
- Latvia Pushes Fintech Innovation (Inside Bitcoins) Rated: A
- INLOCK to Conduct Poll to Determine the Future of Its ILK Token Model (Tech Bullion) Rated: B
- Spotcap Expands C-Suite As Business Matures (Spotcap) Rated: B
- Harmonic Fund Services live with Finastra for loan servicing (Finastra) Rated: A
- Blockchain can assist banks with consumer lending (Digital Journal) Rated: AAA
- Bitcoin Millionaires Turn to SALT for Liquidity (BTC Manager) Rated: A
- Metro Bank founder joins digital challengers in Australia (Financial Times) Rated: AAA
- The magic of crowdfunding (The Manila Times) Rated: AAA
- Blockchain mortgages, touted for real estate investors, get thumbs-down on security concerns (Financial Post) Rated: AAA
Capital One restricts third-party data access, upsets customers (Payments Source) Rated: AAA
Capital One Financial Corp. is limiting how account data flows to outside apps for managing finances, prompting a backlash from the bank’s customers who say they have been locked out of their own information.
A technology upgrade led to the disruption, people familiar with the situation said. Plaid Technologies, whose software is used to connect banks with third parties, is unable to link with some Capital One accounts, according to the people, who requested anonymity because they weren’t authorized to speak publicly.
Slightly weak US GDP growth, Amazon Deep-Dive (PeerIQ), Rated: AAA
US Q1 GDP growth was revised slightly lower from 2.2% to 2% driven by lower-than-expected growth in services. This slowdown in growth seems to be temporary as the Atlanta Fed is projecting a blistering 4.5% GDP growth rate for Q2.
Amazon Treading Carefully with Its Financial Services Ambitions
A new report by CB Insights details Amazon’s “barreling into” the financial services sector, notably in payments and lending. Our view on Amazon is more sober.
In the absence of a clear regulatory swim lane, Amazon will continue to partner with financial institutions to provide lending services. The major lending products Amazon offers today are executed with highly regulated banking partners. Amazon for instance has developed co-brand relationships with JPM, Synchrony and AmEx.
Also, Amazon is courting major financial services institutions as customers of its cloud business so the company has a delicate balance that it needs to maintain between disrupting the financial services industry and losing its clients and partners.
Amazon’s Lending Products
Amazon has made a foray into consumer lending mainly with the help of co-branded credit cards. The company has also made ~$3 Bn in small business loans, but that standalone effort has now fallen to the wayside with the new small business lending partnership with AmEx.
Amazon’s international investments in fintech products have been concentrated in India where Amazon will finance commercial loans to Amazon’s sellers. However, unlike the model in the US where Amazon lends on its own balance sheet, Amazon will utilize a marketplace model with six participating banks at the outset. The lending program has grown 150% in the first five months of this year (total volumes are unreported).
Digital Mortgage Platform SimpleNexus Raises $ 20M In Growth Capital (FinSmes) Rate: AAA
SimpleNexus, a Lehi, Utah-based company that brings the home mortgage process to mobile devices through a dynamic digital mortgage platform, raised $20m in growth capital.
Insight Venture Partners made the investment.
The company intends to use the funds to accelerate its continued growth and expansion.
TD Bank Teams Up With Fintech BizEquity to Enhance Commercial Customer Experience (Crowdfund Insider) Rated: A
The bank revealed that through its relationship with the Philadelphia-based fintech it now offers a service that typically costs several thousand dollars free of charge to small and mid-size companies. BizEquity delivers a detailed report with valuation information and key industry performance indicators to TD Bank relationship managers, who then share it with the business owner.
Small Businesses Access More Than $ 1 Billion of Working Capital During Non-Banking Hours through Kabbage (PR Web) Rated: A
Kabbage, Inc., a global financial services, technology and data platform serving small businesses, reports its 145,000-plus small business customers accessed over 300,000 loans during non-banking hours, reaching a record total of more than $1 billion in funding. In total, Kabbage has now provided access to more than $5 billion in funding to its customers across America. The non-banking hour analysis illustrates how Kabbage’s fully automated lending solutions remove the age-old hurdle of normal business hours by offering companies 24/7 access to working capital online.
LendingPoint Upsizes its Mezzanine Financing, Bringing it to More Than $ 50 Million (Business Wire) Rated: A
LendingPoint announced it closed an increase of its mezzanine financing, bringing the total of the facility to $52.5 million.
Paragon Outcomes Management LLC provided the financing that closed earlier this month. Paragon and LendingPoint have been building upon a successful relationship started with their first mezzanine credit facility in January 2017 of just $20 million, which was upsized just seven months later, and now has been upsized again to $52.5 million.
Amit Aggarwal: Refining A Real Estate Platform (Think Realty) Rated: A
Amit Aggarwal joined Auction.com as its chief technology officer in late 2017, but the experienced senior information technology (IT) leader had his eye on the needs of the national housing market for more than a decade before the hire. As early as 2005, Aggarwal was watching the residential real estate industry, considering the early signs of what he refers to as “cracks” in the then-booming housing ecosystem and working on a solution. By the time the market melted down in 2007, Aggarwal had been instrumental in the design and implementation of the workflow processes and platforms that served as the underpinning for the foreclosure crisis, including working closely with Fannie Mae and several of the country’s biggest banks and mortgage lenders.
Aggarwal took his passion for purifying and refining technology, processes, and real estate transactions with him when he joined Auction.com.
Marketplace Lending: 60-Second Market Review and Insights (Credit Chronometer) Rated: AAA
Seven securitizations totaling $4.3 billion closed in Q1 2018, up 34% versus a year ago and representing the second-highest issuance in any quarter (after Q4 2017). Q1 issuances comprised $2.1 billion in student loan ABS, more than double Q1 2017 and the highest ever quarterly issuance of student deals. Total ABS issuance is expected to climb to $18 billion in 2018, up 30% from 2017.
Delinquencies increased in Q1 2018 across the consumer credit space, and reports of an influx of defaults on marketplace loans have prompted online lenders, including Lending Club and Prosper, to tighten their underwriting guidelines. The bright spot has been the student loan sector. The sector, led by SoFi which issued its largest ever student deal in Q1 at $1 billion, has been performing well, driven by refinance loans made to borrowers with strong credit profiles.
Battle for small-business customers spurs arms race at banks (American Banker) Rated: A
Surveys of small-business owners show an increasing level of confidence and commercial-and-industrial lending is up. The Small Business Administration’s 7(a) loan guarantee program seems poised for a fourth consecutive record year.
To capitalize, banks are investing in technology to make faster loan decisions. They are also hiring more lenders to better serve this segment. Now, bankers and other industry observers are hoping it all leads to increased earnings.
A retirement perk for millennials who are buried under student debt (LA Times) Rated: A
A new benefit program at Abbott means she won’t have to choose between paying down student debt and saving for the future. For any U.S.-based employee who puts at least 2% of their salary toward student loan payments, the healthcare company will contribute the equivalent of 5% of their salary into their 401(k) plan.
Lending to Digital Natives: A Map to the Millennial Market (Credit Union Times) Rated: A
Millennials are a major demographic, yet they are not being served by credit unions. Only 32% of millennials are currently using a credit union compared to 50% of baby boomers, according to the Financial Brand.
Time reported the average 2016 college graduate will enter the workforce with $37,172 in student loan debt. They will change jobs four times in their first decade after college and their salaries are 20% lower than those of baby boomers at the same age, according to CNN.
Zopa back in black (The Times) Rated: AAA
Peer-to-peer lender Zopa scraped back into profit last year, but rising default levels have led it to crack down on who it allows to borrow, writes Rosamund Urwin. The company, which has lent out £3.3bn in total, matches borrowers with investors wanting to lend. It has applied for a banking licence and wants to launch its bank within a year. A float has been pencilled in for 2020.
Funding Circle changes projected returns (Peer2Peer Finance) Rated: A
FUNDING Circle has altered its projected returns, meaning that investors lending across the platform’s full risk spectrum are expected to earn less money and those opting for lower-risk loans could earn more.
The peer-to-peer business lender said on Friday that that its projected returns for its Balanced account – which invests in the full range of businesses across all risk bands – will now be six to seven per cent.
The target rate on the Balanced account had previously been 7.2 per cent.
Meanwhile, Funding Circle’s Conservative account – which only invests in businesses assessed as lower risk – is now offering a projected return ranging between five and 5.5 per cent.
Funding Circle fund warns on dividend as currency costs bite (Citywire) Rated: A
Shares in Funding Circle SME Income (FCIF) fell today after peer-to-peer lending fund said the rising currency costs would force it to cut its dividend.
Shares fell 2.1%, or 3p, to 102p after it reported a ‘material increase’ in the cost of hedging, or removing the impact of the investment company’s holdsin dollar-denominated loans.
As a result the company, which mainly lends to small and medium-sized businesses in the UK, would only be able to pay a fully covered annual dividend of 5p to 6p per share from the third quarter of 2018. This is down from the current annual dividend of 6.5p, a potential decline of 8%-23%.
SHARE PUNT OF THE WEEK: Recent AIM entrant Trufin is a financing business with four divisions (This is Money) Rated: A
Recent AIM entrant Trufin is a financing business with four divisions. DFC lends to firms selling motorbikes, caravans, yachts and industrial kit, areas that mainstream banks may not be willing to touch.
Oxygen Finance helps councils make savings by prompting them to pay suppliers early, and Satago helps smaller businesses manage their cash flow. Lastly, it holds a 15 per cent stake in peer-to-peer lender Zopa.
Trufin is applying for a UK banking licence, which could help lower the company’s funding costs and boost margins. Zopa has also proposed a new funding round, which could increase the value of Trufin’s stake.
Open Banking could be worth £7.2bn by 2022, report shows (London School of Business & Finance) Rated: A
A report from Big Four accountancy firm PwC has predicted that the Open Banking sector could be worth £2.8bn by the end of the year and £7.2bn by 2022.
SMEs were shown to be more aware of the effects of Open Banking than retail customers and are also willing to make use of the data-sharing scheme, with 40% saying that they would share their financial transaction information.
When it comes to what information individuals would be willing to share, just 10% cited transaction history, while 12% said that they would share information about their financial products.
Banks were also found to still be popular with businesses, with 72% favouring them over fintech companies and peer-to-peer lending firms. This was also found to be the case for 65% of individuals.
HEAVYWEIGHT INVESTOR SAYS ‘TOO MUCH MONEY’ THROWN AT TECH (Business Cloud) Rated: A
One of Britain’s most high-profile investors has expressed concerns about “too much money being chucked” at tech businesses in the UK.
Moulton has also been an active tech investor over the last three decades, having backed peer-to-peer lending marketplace Funding Circle “very early on”, and estimates that around 50 of his 120 current investments have a link to technology.
However speaking to BusinessCloud at an investment roundtable in London organised by the Lancashire Investment Readiness Programme, the 67-year-old said the return on investment in technology is is relatively “poor”, particularly in the UK, and fears that it could become worse.
More P2P lenders collapse amid tough regulations (Global Times) Rated: AAA
As China has been ramping up efforts to strengthen regulations on the online financial industry, an increasing number of Peer-to-Peer (P2P) lending platforms have found themselves collapsing. As such, experts have warned investors of the perils of illegal financial activities that offer lucrative rewards.
After several P2P firms such as lianbijr.com and txslicai.com.cn were investigated by police in June, another Shanghai-based online lender reportedly collapsed.
Yilongcaifu and its parent company Fuxing Group have been shut down and are under investigation by police, news site stcn.com reported on Thursday.
Another Online Lender Falls Under Investigation (Caixin Global) Rated: A
Another online peer-to-peer (P2P) lender has fallen under investigation on suspicion of illegal fundraising as the crackdown continues on China’s scandal-plagued internet finance industry.
Shanghai police have detained four senior executives of Tangxiaoseng, an online lending platform controlled by Zibang Financial Service Internet Technology Co. Ltd., since police began investigating the platform on June 16, Caixin has learned.
51 Credit Card hits road for $ 174m IPO (Global Capital) Rated: A
51 Credit Card opened books on Friday for its HK$1.4bn ($173.9m) listing in Hong Kong, with 10 firms in the syndicate.The Chinese online peer-to-peer lending platform is offering 118.7m primary shares for HK$8.5 to HK$11.5 each, which could raise between HK$1bn and HK$1.4bn.
Sponsors China Merchants Securities and Citi are leading the trade alongside CLSA, which is a global co-ordinator.
Belgian Lending Marketplace Look&Fin Partners with Insurer Atradius (Crowdfund Insider) Rated: AAA
Today June 28, Belgium-based SME lending platform Look&Fin announced that it has partnered with credit insurer Atradius to offer a 100% guarantee on the capital lent to SMEs by its retail investors. The move is dramatically closing the gap between marketplace lending and bank lending. SME borrowers will get marketplace loans at lower interest rates, closer to the banks’ and retail investors will enjoy bank-level security for their investment.
Headquartered in the Netherlands, Atradius is the second largest global credit insurance leader with operations in more than 50 countries around the globe and total revenue of more than €1.8 billion.
Azlo and Green Dot Offer New Lending Products for Gig Economy Workers (Bank Innovation) Rated: A
Azlo will begin offering lending services to small businesses and gig economy workers this fall, the company announced last week. The fintech, which is backed by BBVA Compass, will be partnering with an undisclosed “non-traditional lending platform” to originate loans. These loans will range between $10,000 and $100,000, and even less Azlo CEO Brian Hamilton told Bank Innovation.
To determine a borrower’s creditworthiness, Azlo will not be looking at FICO scores. Instead, it will look at data collected from payment tools using APIs connected to platforms like Stripe, Square, and PayPal, in an Azlo account.
Latvia Pushes Fintech Innovation (Inside Bitcoins) Rated: A
Riga-based online lending marketplace Mintos, which just turned an annual profit for the first time, is now looking for global expansion.
INLOCK to Conduct Poll to Determine the Future of Its ILK Token Model (Tech Bullion) Rated: B
INLOCK(INCOME LOCKER), a blockchain and smart-contract based peer-to-peer lending platform that enables crypto assets to be used as collateral, today announced that it will be hosting a community poll to help inform the development of its ILK token model.
Amidst preparation for the initial token sale and throughout the business screening process, INLOCK found that its token model with fractals created an unnecessary inconvenience for its users, leading to an overwhelming number of requests for a token split.
Spotcap Expands C-Suite As Business Matures (Spotcap) Rated: B
Fintech business lender Spotcap recently expanded its C-Suite to include two newly created roles.
Linh Bergen-Peters joins the company as Chief Marketing Officer and Martin Gawlak as Chief People Officer. These new roles will be instrumental in ensuring Spotcap’s continued growth. The company increased its gross revenue by more than 100 percent between May 2017 and May 2018, and doubled the size of its loan book during the same time period.
Linh Bergen-Peters joins Spotcap from HID Global and will be responsible for Spotcap’s multinational marketing strategy. Linh is a highly experienced global marketer, having held senior roles in leading technology companies such as AMD and Hewlett Packard, building and marketing high-tech brands.
Harmonic Fund Services live with Finastra for loan servicing (Finastra) Rated: A
Harmonic Fund Services has gone live with Finastra’s Fusion Loan IQ solution. The independent fund administration and alternative asset fund servicing firm will leverage the platform — traditionally used by banks and increasingly by service providers, to service their bilateral, specialised and syndicated loan portfolios — to provide a new loan administration and agency service to its diverse alternative investment funds client base.
Blockchain can assist banks with consumer lending (Digital Journal) Rated: AAA
The finance sector has been in the lead in terms of implementing blockchain and tokenization. The next area where the technology is likely to be applied is with traditional loans.
The advantage of cryptocurrency assets as collateral lies in the efficiency the digital currency can bring into the entire lending process. For any cryptocurrency asset approved by the lender, blockchain allows for immediate validation of its authenticity, ownership and worth. This should enables anyone to get immediate backing for a loan, provided they have a verifiable means of making repayments.
The types of startups that are making in-roads in the finance space include Ripple, a real-time gross settlement system, currency exchange and remittance network. Ripple is by companies such as UniCredit, UBS and Santander. A second is the Depository Network [DEPO]. This is a multi-platform network enable lenders, including peer-to-peer lending marketplaces, banks, other credit institutions to accept digital assets as collateral.
Bitcoin Millionaires Turn to SALT for Liquidity (BTC Manager) Rated: A
SALT Lending offers a peer-to-peer lending platform that allows cryptocurrency holders to use their Bitcoin and Ethereum as collateral for loans.
A Peer-to-Peer Lending Platform
Dave Carlson, who runs a cryptocurrency mining operation in Washington, has used SALT for this very purpose. With electricity expenses running as high as $250,000 per month, Dave needed $1 million to cover operating expenses for Giga-Watt, his mining operation. However, the potential for a price surge made him reluctant to exchange his cryptocurrency for cash. He found an alternative in SALT, which The Wall Street Journal has reported is helping Bitcoin millionaires “unleash their fortunes.”
Metro Bank founder joins digital challengers in Australia (Financial Times) Rated: AAA
Serial banking entrepreneur Anthony Thomson, co-founder of Metro Bank in the UK, is helping to set up a new digital bank in Australia that aims to shake up a market dominated by the Big Four institutions.
The bank, named 86 400 after the number of seconds in a day, is initially being funded by Cuscal, an Australia payment services company.
The magic of crowdfunding (The Manila Times) Rated: AAA
Here in the Philippines and in many countries around the world, not only is the family the basic unit of society, but it also serves as the primordial foundation for economic activity.
Crowdfunding, through its biggest platform, Kickstarter, proved to be a very effective mode of hosting linkages between entrepreneurs and investors. Since its inception in 2009, Kickstarter has successfully funded 130,000 projects having around $3.76 Billion worth of pledges on all its projects. The huge acceptance and positive reception of these crowdfunding platforms continue to grow. In fact, it is estimated that it will be a $300 Billion industry by the year 2025.
Another type is “Peer-to-Peer Lending” that enable proponents to gain funding outside the traditional banking system through the risk-taking investors who are willing to shed a buck or two towards the growth of their loan portfolios.
Blockchain mortgages, touted for real estate investors, get thumbs-down on security concerns (Financial Post) Rated: AAA
Blockchain advocates have long touted the technology’s ability to disrupt entrenched business models. Now, several companies want to use it for real estate crowdfunding in a bid to circumvent the banks.
Bermuda-based Viva Network wants to exploit the blockchain’s ability to store records and transfer value quickly across international borders.
Targeting Bermuda as its first market, the company would use local mortgage professionals to run “mortgage hubs” that would evaluate and underwrite mortgages. It would divide each mortgage into 100,000 FMS units that could then be listed on the company’s blockchain-based exchange. Investors would purchase an FMS using Viva’s blockchain-based VIVA tokens and would harvest principal and interest payments from the property’s owner each month.