Thursday March 15 2018, Daily News Digest

Thursday March 15 2018, Daily News Digest

News Comments Today’s main news: Yirendai releases Q4 & FY 2017 results. LendInvest intros fixed rate notes. Virgin Money launches financial well being portal for employees. LHV to open bank in UK to serve fintechs. Today’s main analysis: A European manifesto for an age of irrelevance. Today’s thought-provoking articles: GM launching P2P car renting service. A European manifesto for […]

Thursday March 15 2018, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

GM Launching Peer-To-Peer Car Sharing (PYMNTS), Rated: AAA

According to Fortune, the peer-to-peer car share service will allow car owners to rent out their vehicles when they aren’t using them.

Sources said the program will begin this summer through the automaker’s Maven car-sharing unit, which allows owners to put their vehicles on the platform for rent and share their profits with GM.

The service could become a full-scale business if the pilot proves to be a success. A spokesman for GM declined to comment.

Ameritech Financial: FinTech Leader in Student Loan Document Preparation Industry (PRNewswire), Rated: A

FinTech companies are focusing on using technology to drive their services and offerings and support their clients. Commonly, this means financial institutions are operating online. For Ameritech Financial, a document preparation company focusing on helping federal student loan borrowers apply for existing federal repayment plans, the private company uses technology in every part of its business to support clients in their search for relief from high student loan payments.

Growing Fintech Companies Partner to Revolutionize Digital Mortgage Technology to Make Buying a Home Easier (Benzinga), Rated: A

WebMax, a digital mortgage solution provider, and FinLocker, a financial data and analytics platform, announced today that they finalized a partnership as a result of successful execution on their five joint customers. The partnership aims to build on 17 months of collaborative efforts to further propel lenders into the digital mortgage revolution.

According to the Mortgage Bankers Association, between 2010 and 2017, mortgages took 70 percent longer to close and origination costs skyrocketed 80 percent as the burden of regulatory compliance grew.

 

Fintech Mobile App Pockitapp Announces Partnership With Dwolla (Crowdfund Insider), Rated: B

On Tuesday, fintech mobile app Pockitapp announced it has teamed up with Dwolla to deliver back-end banking integration services. According to Pockitapp, Dwolla provides a secure online payment system and mobile payment network to enable auto clearing house (ACH) transfers, including vendor payments. Pockitapp reported that working with Dwolla allows the fintech startup to offer access to all financial institutions rather than just one.

United Kingdom

LendInvest Returns to Retail Bond Market with Fixed Rate Notes (Crowdfund Insider), Rated: AAA

LendInvest, a UK based online marketplace platform for property finance, has announced a proposed issuance of  5.375% fixed rate bonds due October 2023 by its wholly-owned subsidiary, LendInvest Secured Income plc.

LendInvest’s first bond issuance is trading on the LSE (LIV1) and was issued in August 2017 after raising £50 million from both retail and institutional investors. This new issuance is expected to trade on the LSE as well.

Virgin Money introduces financial wellbeing portal for employees (Pensions Expert), Rated: AAA

In March 2017, the Financial Advice Working Group produced a report for HM Treasury and the Financial Conduct Authority on financial wellbeing in the workplace.

The report said: “Many employees are struggling with their finances: they face increasing personal debt, demanding financial commitments, and a limited ability to save for the future.”

It features guidance on common money issues, such as improving credit scores and dealing with debt. The site also provides tips and guidance with links to the company’s benefits.

Estonia’s LHV to open UK bank to serve fintech industry (Finextra), Rated: AAA

Estonia’s LHV Bank is swimming against the Brexit tide by setting up shop in the UK to service the country’s thriving fintech market.

LHV UK is currently recruiting and intends to be in a position to start servicing new financial intermediaries by H2 2018. Banking services on offer will include real-time payments, overdraft facilities, and forex.

Industry reacts to Spring Statement 2018 (Bridging & Commercial), Rated: B

The chancellor addressed the House of Commons earlier today to provide an update on the overall health of the UK economy.

Mr Hammond also revealed the government’s progress since the Autumn Budget 2017 and discussed new measures to help achieve policies introduced last year.

Mr Hammond announced that the government was working with 44 areas on their bids for the £4.1bn housing infrastructure fund.

He also announced that London would be receiving £1.67bn of funding to support the development of a further 27,000 affordable homes by the end of 2021/22.

Small businesses need to explore finance options available to them (London School of Business & Finance), Rated: A

The study found that start-ups are nearly twice as likely to use personal savings as those that have been in business for a decade or more, suggesting that small businesses in the UK are not seeking support from high street lenders.

The study also showed that small businesses are more ambitious than older companies when it comes to their growth plans, with 14% predicting business growth in the next three months compared to 3% of businesses that have been trading for longer.

The top forms of finance for small businesses over the past 12 months were revealed in the research, with more than 35% of start-ups using personal finances and 15% relying on money from family members.

 

Why brexit could be a good thing for the UK’s Fintech industry (Computer Business Review), Rated: A

The UK fintech scene has the world’s biggest financial centre at its disposal. UK fintech’s will enjoy privileged access, in geographical and regulatory terms, to the enormous B2B market that the City of London gives them access to.

They will also have privileged access to the UK’s highly competitive retail finance market, worth £58 – £67 billion a year. There are also signs that leaving the EU could help invigorate at least some segments of that market. A recent article in the FT — not by any means a Brexitcheerleader — reported that small-to-medium UK providers of retail banking services are actively looking forward to Brexit in the hope that it will free them from onerous EU regulations designed for huge ‘too large to fail’ banks but now applied to all financial institutions, even smaller ones.

China

Chinese Fintech Yirendai Unveils Fourth Quarter & Full Year 2017 Financial Results (Crowdfund Insider), Rated: AAA

The company reported that in the fourth quarter of 2017, it facilitated RMB 13,438.5 million (US$2,065.5 million) of loans to 202,370 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 95%; 74.6% of the borrowers were acquired from online channels; nearly 100% of the loan volume originated from online channels was facilitated through mobile.

During that quarter, Yirendai facilitated 233,374 investors with total investment amount of RMB 15,967.4 million(US$2,454.2 million), 100% of which was facilitated through its online platform and 92% of which was facilitated through its mobile application. Also in the fourth quarter, total net revenue was RMB 1,824.8 million (US$280.5 million), an increase of 21% from the previous quarter and 70% year-over-year; net income was RMB 448.8 million (US$69.0 million), an increase of 48% from the previous quarter and 18% year-over-year.

Yirendai also noted that in the full year of 2017 it facilitated RMB 41,406.1 million (US$6,364.0 million) of loans to 649,154 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 102%; 72.9% of the borrowers were acquired from online channels; nearly 100% of the loan volume originated from online channels was facilitated through mobile.

China’s $ 814 Billion Fund Will Cut Exposure to Volatile Markets (Bloomberg), Rated: A

China Investment Corp., which recently sold its shares of Blackstone Group LP, is seeking to boost alternative and direct investments to 45 percent or more of its overseas portfolio in the next three years, from about 38 percent at the end of last year, President Tu Guangshao said in an interview in Beijing.

The divestment of the Blackstone stake, one of the first investments for the wealth fund that was started in 2007 with an initial $200 billion, may signal CIC’s pursuit of steadier returns. It ends a wild ride for CIC — Blackstone shares plunged 89 percent from the U.S. firm’s IPO to a February 2009 trough, but have since surged almost nine-fold.

European Union

Sit Back, Relax, and Pray for the Best: A European Manifesto for the Age of Irrelevance (INTL FCStone  Email), Rated: AAA

About a year ago, European indices were outperforming, pundits were certain that the Euro would fall to parity with the dollar, and the biggest political risk was France. A year later, the Eurostoxx 50 Index has underperformed almost every major global index (in local currency at least), M. Draghi spends his press conferences talking down the Euro, and France has become the continent’s anchor of stability.

Source: INTL FCStone
Source: INTL FCStone

The Eurozone manufacturing PMI fell to 58 last month, the European Commission Economic Sentiment Indicator fell in the past two months, and, most worryingly for the European Central Bank and the normalization of monetary policy, headline inflation fell to 1.2% last month, against 1.9% a year ago. To add insult to injury, this European soft patch is taking place just as U.S. growth accelerates: the Citigroup Economic Surprise Index for the U.S. has jumped to 45, against minus 22 for the Eurozone.

Bottom Line:
1 – European indices have underperformed since May and recent economic data has disappointed
2 – The European economy is not rolling over: it is settling at a sustainable growth rate
3 – M. Draghi turned a treacherous press conference into a success
4 – Greek bonds could benefit from the normalization of European monetary policy
5 – The European discount reflects the continent’s irrelevance. That may not be such a bad thing.

See the full report here.

LENDO DAZZLES AT 2018 GIBRALTAR INTERNATIONAL FINTECH FORUM (Olive Press News), Rated: B

Lendo’s CEO, David Honeyman, joined a panel of experts including the managing director of the Gibraltar Stock Exchange Nick Cowan to discuss the crypto industry.

International

How Peer-to-Peer Lending Companies Could Benefit From Blockchain (guruFocus), Rated: AAA

Some of the blockchain’s strongest marketing points include its ability to democratize markets and, given the way peer-to-peer lending platforms operate, they could do a lot better if they adopted the use of blockchain. This could result in companies like LendingClub Corp. (NYSE:LC) and Hexindai Inc. (NASDAQ:HX), which have experienced mixed performances since going public, expand their addressable market by targeting customers that hold crypto assets of some form.

With blockchain technology, however, borrowers can tokenize the assets they own and add them to the distributed ledger infrastructure to sell, trade or use as collateral for loans. Some of these assets may not qualify as collateral in the mainstream lending market, but with blockchain technology and through tokenization, assets such as patents, intellectual property or even branding can be tokenized and used as collateral for hard money loans.

There are companies that have already launched this type of service. SALT Lending, which allows cryptocurrency traders to use their investments in the market as collateral for loans, is a perfect example. However, analysts suggest peer-to-peer lending platforms that are already established could do even better since their profiles are already proven as good alternatives for sources of loans in the credit market.

Understanding the global growth in direct lending (TMF Group), Rated: A

It’s a maturing market that’s here to stay. European direct lending has grown from a relatively unknown asset class to raising around US$22bn in 2017 alone. According to research by the Alternative Credit Council (ACC), the global direct lending market is expected to break the US$1tn mark by 2020. That’s quite a trajectory.

P2P platforms and crowdfunding sites also have an important role to play. We’re seeing them dominate the €50,000 – €1m loan range . Larger deals are more appropriate for asset managers, who have the necessary scale and risk analysis expertise.

India

Fintech startup Avail Finance raises $ 17.2 million from Matrix Partners, Ola founders, and others (The Financial Express), Rated: A

Fintech startup, Avail Finance, has raised 17.2 million in an investment round led by Matrix Partners india. The round also saw participation from Ola’s co-founders – Ankit Bhati and Bhavish Aggarwal, Co-Founder and CEO of Flipkart – Binny Bansal, Freecharge founder – Kunal Shah and founder of Mswipe – Manish Patel. The funds raised include debt and credit lines from multiple NBFCs.

 

Asia

Open banking eases regulatory hurdles in fintech (The Korea Herald), Rated: A

One of the key topics at this week’s Money 20/20 Asia fintech trade show is also the so-called open banking that allows more flexibility when these small players in the market launch their own financial services.

It is long since an established bank has shared its license and regulatory expertise through an open platform based on application programming interface, or API, but related technologies are thriving recently along with the fever for fintech across industries.

5 notable startup trends seen at Top100 Indonesia Qualifier Roadshow (E27), Rated: B

The roadshow yesterday also saw a presentation by TaniJoy, which aims to help vegetable farmers get capital through a P2P lending platform.

Authors:

George Popescu
Allen Taylor

Thursday December 21 2017, Daily News Digest

PBC interest rates

News Comments Today’s main news: SoftBank leads $120M funding round for Lemonade. Shareholders file class action against Qudian. RateSetter looks to cautious growth in car financing. LoanBook rakes in 650K GBP on Crowdcube. Prospa planning a 2018 IPO. Today’s main analysis: Muddy Waters goes cold on China Internet Nationwide Financial Services Inc. (CIFS). Today’s thought-provoking articles: Two big banks […]

PBC interest rates

News Comments

United States

United Kingdom

China

European Union

Australia

India

Asia

Canada

News Summary

United States

SoftBank leads a $ 120 million round for insurance startup Lemonade (TechCrunch), Rated: AAA

The SoftBank Group has finally made a good tech investment around real estate.

After investing $4.4 billion in what is essentially a bespoke office space rental business (WeWork) and another $450 million in Zillow for rich people (Compass), the gargantuan Japanese tech investor is leading a $120 million round of funding for Lemonade, a startup providing renters and homeowners insurance.

Additional investors in the round include previous backers Alphabet’s investment firm, GV, General Catalyst and Sequoia Capital.

Shareholder Class Action Filed Against Qudian Inc. – QD (GuruFocus), Rated: AAA

The law firm of Kessler Topaz Meltzer & Check, LLP announces that a shareholder class action lawsuit has been filed against Qudian Inc. (NYSE: QD) (“Qudian” or the “Company) on behalf of investors who purchased the Company’s securities between October 18, 2017 and November 20, 2017, inclusive (the “Class Period”).

Qudian shareholders may, no later than February 12, 2018, petition the Court to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, or other counsel, or may choose to do nothing and remain an absent class member.

Two Big Banks Set to Launch Their Own Online Lending Platforms (Lend Academy), Rated: AAA

A little over a year ago Goldman Sachs launched their consumer lending platform Marcus as part of a digital strategy to move into the retail banking segment. They have since grown faster than any online lending platform with originations approaching $2 billion. Goldman Sachs now believes revenues from online loans will equal that of trading in the near future.

U.K. based Barclays has been increasing their footprint in the U.S. the last few years through the Barclaycard brand. They are now one of the top 10 credit card issuers in the US.  News broke last month that Barclays would be launching a digital bank in 2018 and rebranding from Barclaycard to Barclays in the US.

Pittsburgh based PNC Financial Services Group is one of the top 10 largest banks in the US with $371 billion in assets. They are looking to launch their online consumer lending product in new branches and through their mobile wallet product.

From On Fire To Under Fire: Marketplace Lending Enters 2018 Taking On Flak (ValueWalk), Rated: A

After a meteoric rise, marketplace lending has had its share of challenges and scrutiny, but the future should still be bright for such an industry on the forward edge of technology and consumer needs. Yet marketplace lending seems to be ending 2017 under an unwarranted attack from regulators and commentators determined to find similarities in marketplace lending to the subprime mortgage market in the years leading up to the financial crisis.

EquityMultiple CEO Charles Clinton Highlights Real Estate Opportunities & Disruption, Predictions for 2018 (Crowdfund Insider), Rated: A

CEO Charles Clinton and CIO Marious Sjulsen co-founded EquityMultiple with a shared vision of transforming real estate investing through tech and by providing new access to private transactions while streamlining the investment process.

Erin: Please share EquityMultiple’s latest stats.

Charles: We’ve funded 32 investments to date and are expecting to hit around 100% year-over-year growth in dollars invested. For investments that have fully repaid or are currently cash-flowing to investors, we’re averaging around a net 9% annualized dividend.

Erin: What sets EquityMultiple apart from its industry peers? How will EquityMultiple continue to differentiate itself?

Charles: We’ve taken a different path from most of our direct competitors and I suspect that will continue. This started at the very beginning – rather than look for venture capital financing, we sought out a real estate firm to partner with and found that in Mission Capital, a national capital markets firm that has done over $70 billion of business in its 15-year history.

Erin: Earlier this year you stated that individuals made up 100% of EquityMultiple’s investments. Has institutional money entered into this investment flow?  Why or why not? What are your methods of tapping into new investors?

Charles: We are still 100% focused on individual investors by design. We feel that individual investors are the customers that we provide the most value to. For institutional investors, there often is no real accessibility issue for getting into commercial real estate. Individual investors, on the other hand, are significantly under-allocated into real estate by comparison.

Krawcheck expands Ellevest robo to three service levels with more human advice (InvestmentNews), Rated: A

Investors can access the robo-adviser by itself for 25 basis points (formerly 50 basis points), which includes algorithmic portfolio construction, tax minimization strategies, and now support from human advisers via email and text.

For 50 basis points and an account minimum of $50,000, investors can access Ellevest Premium, which includes the technology platform as well as personalized goals-based planning from an adviser with certified financial planner credentials.

Why Employers Need To Help Workers Deal With Income Volatility (Forbes), Rated: A

Roughly a quarter of American families suffer a major disruption to their income each year, according to the Urban Institute. Nearly one in five of those families suffer an income drop of 50% or more: a potentially catastrophic shock for low-income families.

But it’s not just these one-time shocks that affect families’ ability to plan and save — it’s the month-to-month fluctuations, as well. The JP Morgan Chase Institute foundthat, between 2012 and 2015, 55% of the bank’s customers regularly experienced more than a 30% change in income — up or down — from one month to the next.

BankMobile deploys AI, alternative data to lend to FICO-poor students (American Banker), Rated: A

BankMobile has become the first bank to start using online lending software developed by Upstart, which is designed to use artificial intelligence and alternative data to determine the creditworthiness of consumers with thin or no credit files.

BankMobile, the digital-only subsidiary of Customers Bank in Wyomissing, Pa., which is due to be spun off and merged with Flagship Community Bank in mid-2018, is planning to use the software to offer its first credit product to the students it reaches through relationships with 800 universities.

 

Merrill Lynch Fined $ 1.4M Over Supervisory Failures (Financial Advisor IQ), Rated: A

Finra has fined Merrill Lynch $1.4 million for alleged supervisory failures related to extended settlement transactions, the industry’s self-regulator says in a press release.

From April 2013 through June 2015, the wirehouse allegedly didn’t collect enough margin to offset credit, market and exposure risk presented by the longer time period between trades and settlements inherent in such trades, Finra says.

‘Banks can’t attract the talent they want or need’ (Tearsheet), Rated: A

Banks have always proclaimed themselves as technology companies with banking licenses. But culturally, banks are still banks: conservative. Innovation teams can only innovate so much before someone in legal or compliance tells them no; they can only move so fast before someone tells them to slow down.

In this installment of Confessions, in which we trade anonymity in exchange for honesty, we spoke with an analyst at a startup attached to a large bank about internal innovation, attracting strong talent and why alternative bank service companies should get serious about becoming or partnering with a bank.

10 who had a rough year in 2017 (American Banker), Rated: A

Move over Wells Fargo, another prominent financial firm has taken your place as the poster child for bad behavior.

Equifax, the credit reporting agency whose primary responsibility is to protect consumers’ personal information, became public enemy No. 1 this year when it revealed that thieves hacked into its database and stole the personal information — birth dates, credit card data, Social Security numbers — of some 145 million consumers.

Runway Growth Credit Fund Successfully Closes $ 275 Million Equity Offering with Increased Investment from Oaktree Funds (BusinessWire), Rated: A

Runway Growth Credit Fund Inc. (“Runway Growth Credit”), a provider of term debt to fast-growing companies seeking an alternative to raising equity, today announced the successful closing of its $275 million initial equity capital raise with an increased commitment to $139 million from OCM Growth Holdings, LLC, an entity owned by certain investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”), along with commitments from other investors.

Investors Commit 0 Million to tZERO ICO (Coindesk), Rated: A

As reported by CoinDesk, the first leg of the sale – in which the firm is selling Simple Agreements for Future Equity (SAFEs) that will later be redeemed for tokens by accredited investors – began yesterday, albeit a bit laterthan planned. Hiccups aside, Byrne told CoinDesk the sale ultimately attracted a big crowd – some 2,000 accredited investors.

As such, he indicated the company may move to shorten the initial two-month timeframe for the token sale.

Some of the offers, he said, were as high as $5 million or more for single token allocations.

OCC’s Otting sees future for fintech charter, CRA reform (American Banker), Rated: A

Comptroller of the Currency Joseph Otting said in a press conference Wednesday morning that there is a place in the banking world for some kind of fintech charter, though the exact parameters of such a charter are still unclear and have to be worked out.

“I’m not sure what it looks like, and how it’s funded, but I do think there’s a space there that a technology solution can solve,” Otting said when asked whether he sees a future for the Office of the Comptroller of the Currency’s nascent fintech charter.

BLACKSTONE LOOKS AT THE SECONDARY PRIVATE EQUITY MARKET (All About Alpha), Rated: A

An October paper put out by Strategic Partners Fund Solutions, of Blackstone, argues that (despite risks and drawbacks) investing in the secondary private equity market  can still be a smart play, offering “accelerated returns with lower volatility, lower loss rates, and greater downside protection” than the primary market.

How the digital community is supporting small business (Rapid Growth Media), Rated: A

The 2016 Small Business Credit Survey, published by the Federal Reserve Bank of New York, reports that startups are more likely than their mature counterparts to be undergoing growth and planning to add jobs. The report shows 70 percent of startup applicants are in need of funding to support this growth, versus 60 percent of mature applicants. Additionally, in 2016, 52 percent of startups applied for financing.

The Credit Survey highlights that only “31 percent of startup applicants were approved for the full amount of financing sought”.

Debt crowdfunding: Peer-to-Peer lending

Lending Tree was a revolutionary option for individuals to secure financing when they simply wanted to compare options or if they may not have been bankable. Kiva, for example, allows lenders to contribute small amounts, sometimes as little as $25, to help fund requests.

As of October 2017, Kiva reports funding over 1M loans resulting in $1 billion being lent.

Equity crowdfunding

Now, instead of searching for affluent individuals looking to invest in a business, entrepreneurs can turn to sites like MicroVentures. MicroVentures is a public, online venture capital investment bank. Investors have the opportunity to invest as little as $100, which opens up the market to a much larger pool of potential investors. This option is best suited for established companies with strong historical performance and larger financial needs. Since their launch in 2011, MicroVentures reports facilitating over 160 investments, resulting in over $100M in capital investment to date.

Mayor Kasim Reed Announces Bank on Atlanta Initiative (AJC.com), Rated: B

Bank on Atlanta, a financial access program that will focus on providing free or low-cost banking products, along with financial education and financial counseling, to unbanked and underbanked residents in the city of Atlanta has been created.

Research shows that relying on alternative financial service providers such as check-cashing or payday lending establishments makes it hard for residents to rise out of poverty in our city.

9 Holiday Gift Cards That Give You Something for Nothing (TheStreet), Rated: A

Online student loan marketplace LendEDU.com studied the most sought-after gift cards and listed them in descending order: Amazon (AMZN – Get Report) , Walmart (WMT – Get Report) , Target (TGT – Get Report, Best Buy (BBY – Get Report) , and Subway. But these cards sold for only 2% to 5% less than face value, compared with 1-800-Flowers (FLWS – Get Report) , H&M or Dress Barn gift cards which offered, on average, 30% off face value on their sites. Even Dunkin’ Donuts (DNKN – Get Report) and Godiva mark down their gift cards by 25%.

RealtyMogul Hires New Chief People Officer (BusinessWire), Rated: B

RealtyMogul, a unique commercial real estate private markets investing platform, today announced the addition of Soley Van Lokeren as Chief People Officer.

Credit Karma adds Gannesh Bharadhwaj as General Manager, Credit Cards (Credit Karma), Rated: B

Credit Karma, the leading personal finance technology company in North America, today announced it has appointed Gannesh Bharadhwaj as general manager of credit cards. Previously president of Renew Financial, Bharadhwaj brings a strong background in financial institutions as Credit Karma remains focused on using innovative technology to bridge the gap between banks and consumers.

The Small Business Benefits of Being Charitable (Business2Community), Rated: B

Entrepreneurs can make charity a part of their approach to business, and in a variety of ways. A survey by Funding Circle revealed some interesting figures, as reported by Joshua Sophy last December for smallbiztrends.com.

  • Of 1,400 small business owners polled, 52 percent said they were donating or had already donated to charity.
  • 46 percent planned to donate “up to $1,000.”
  • 44 percent preferred to donate cash.
United Kingdom

RateSetter plans ‘cautious growth’ in car finance market (P2P Finance News), Rated: AAA

RATESETTER is planning to grow its motor finance division to take advantage of the huge opportunities it sees in the market.

The peer-to-peer lender entered the consumer hire purchase industry in May when it acquired Vehicle Credit Limited out of its parent company’s administration as part of its wholesale lending “interventions”. Vehicle Credit Limited has now been integrated into the group as part of RateSetter Motor Finance.

Chip, the chatbot savings app, raises over £1M in crowdfunding with plans to apply for a banking license (TechCrunch), Rated: A

Chip, the chatbot app that plugs into your bank account and lets you automatically save for a rainy day, has raised nearly £1.1 million on equity crowdfunding platform Crowdcube.

The fund raise, which is part of a larger £2.4 million funding round, forms part of plans for the London-based startup to apply for a banking license so that it has more flexibility regarding the kinds of products it can offer in the future. The app currently claims 30,000 active users “who are collectively saving millions a month”.

China

Muddy Waters Is Short China Internet Nationwide Fncl Srvcs Inc (CIFS) (ValueWalk), Rated: AAA

We conclude that China Internet Financial Services Inc. (NASDAQ:CIFS) is a King Zero – just another worthless China fraud, says Muddy Waters Research.

  • Every one of the purported borrowers to which CIFS disclosed having made loans (accounting for 84.2% of loan balances) appears to be a sham counterparty.  (The purported borrowers of the remaining 15.8% of reported loan balances were not disclosed; however, we strongly suspect that most – if not all – of these loans and associated income are also fabrications.)
  • CIFS’s recently announced “big data” company purchase also appears to be a lie.
  • 47.3% of CIFS’s reported 2016 net income purportedly was generated by its Kashgar subsidiary; however, that subsidiary existed for only two days in 2016.
  • CIFS is too good to be true – claiming to turn a seeming commoditized business model into an overnight juggernaut with purported gross margins over 97% and net margins over 70%.
Source: ValueWalk

Read “The Farce Awakens: CIFS” in full here.

China Ripe for Auto Finance Boom as Consumer Penetration Rate Rises (Auto Finance News), Rated: AAA

Since 2009, China has surpassed the United States as the largest market for new-vehicle sales, according to Deloitte Consulting LLC. And now, auto finance is starting to catch up.

For many years, the Chinese automotive market has been propped up by government incentives like tax breaks, which encouraged customers to purchase cars. So far, this incentive has led to more than 2 million cars being sold a month, with growth running up 15% last year, the Wall Street Journal reported in March. But as the tax breaks are expected to wind down, auto lenders have a greater opportunity to step in and capture marketshare in China, where penetration rates remain lower than other developed nations.

In the U.S., for instance, 84% of new cars in the U.S. were financed in 2014 compared with 20% in China, according to Experian. The Chinese auto finance rate rose to 38% in 2016, and is expected to rise steadily in the next few years; reaching an estimated 55% in 2021, according to ReportLinker.

Debtors in China are placed on a blacklist that prohibits them from flying, buying train tickets, and staying at luxury hotels (Business Insider), Rated: A

China maintains a public blacklist of debtors that effectively restricts their movements and their spending habits.

The country’s highest court publishes the names and ID numbers of “dishonest people” on its website and restricts those people from flying domestically, using high-speed trains, or enrolling their children at expensive private schools.

Defaulters are also prevented from staying at hotels with three-stars or more. They also face tougher exams if they want to join the civil service, and are charged higher fees for booking cars. The bans work by linking to a person’s ID number. Some people used their passport when travelling to circumvent the ban, but that loophole now appears to be closed.

European Union

Spanish Marketplace Lending Platform LoanBook Secures £650,000 Funding Target on Crowdcube (Crowdfund Insider), Rated: AAA

LoanBook, a Spanish marketplace lending platform, has successfully secured its initial £650,000 funding target from more than 200 investors through equity crowdfunding platform Crowdcube. Founded in 2013, LoanBook claims to be Spain’s largest marketplace lending platform, with a 4-year track record of working capital lending to Spanish SMEs and 40% market share.

Two Additional Ways to Improve API Security for Fintech startups (Finextra), Rate: AAA

It’s simple: the probability of being under cyber attack is 100%.

With high probability and high impact, the risk is very high that API’s in the PSD2 era will enable a New Normal in Bank Robberies. Not IF, rather WHEN and WHO.

1. Consider new AI-based approaches in vulnerability scanning.

2. Know what’s under the hood

Think of the Infineon-developed RSA Library version v1.02.013, which lead to Estonia having to reissue over 750,000 certificates, part of their National ID scheme. Or the 2014 GnuTLC bugwhich allowed a Man-in-the-Middle attack due wrong behavior during a TLS handshake.

My advice is to keep track of all dependencies and track vulnerabilities in all underlying components. OWASP has a project calledDependency-Check aimed to do just that.

5 hugely successful Nordic entrepreneurs share their advice to young people (Business Insider), Rated: A

iZettle CEO Jacob de Geer says you should team up with peers – and experiment.

“Apart from getting the business started, is to experiment with whatever idea you have. Most of your trials will fail, but one in 100 will work. If you view problem solving as a way of increasing the value of the company that you are building, then you are off to a good start.”

Klarna co-founder Sebastian Siemiatkowski thinks it’s important to have a holistic approach to problem solving.

When I advise young entrepreneurs, I tell them, “It’s not about figuring out the best business ideas, and it’s not about solving problems theoretically, but it’s about testing your ideas. It’s about coming up with an idea, and then trying it and learning from it.”

A small fintech company surges 250% after launching a blockchain-focused business unit (Business Insider), Rated: A

Australia

Online lender Prospa joins the 2018 IPO pipeline (Financial Review), Rated: AAA

Investment bankers lining up for a stronger 2018 pipeline of initial public offerings have online business lender Prospa in their sights.

Street Talk understands a handful of banks have pitched their wares to Prospa’s chief executives Greg Moshal and Beau Bertoli in recent weeks ahead of a planned run at the local bourse some time next year.

India

“Five best alternative investment strategies to consider in 2018” (Business Today), Rated: AAA

Alternative investing is as much a mindset, as it is about specific investments. Here are some alternative investments approaches culled from our members around the world that are applicable to any investment decisions.

Invest in markets or assets that your analysis leads you to believe will do well; don’t invest in a product just because it’s likely to (or, worse, has in the past) “outperform the market”.

Understand that returns are one-dimensional, risk is multi-dimensional

You should constantly revisit your assumptions of the return drivers of the investment (much more so than its price performance), in case they change and you need to rethink your investment.

When we’re asked to define alternatives, we often end up saying “well, anything that’s not traditional”. Actually that’s not quite such a lame definition; alternative investment practitioners know that the best opportunities are usually those that are yet well known or exploited, and hence the field of “alternative investment” is one populated by investment ideas that may not be immediately obvious.

Diversification is the only free lunch – make sure you are diversified

Alternative asset classes: P2P lending emerges as viable option in India (Financial Express), Rated: A

India has a unique problem of too much money chasing too few customers. So at one end, we have traditional salaried class getting loan offers and at the other end, people are left at the mercy of hawkish money lenders ever-more resembling Shakespeare’s Shylock. Clearly, P2P lending and borrowing is the disruption that was waiting to happen as banks and NBFCs have successfully struggled at twin accounts of making credit affordable and accessible in a credit-hungry nation.

Regulations helped fintech mature in 2017; yet 2018 may prove challenging for cos to navigate (Economic Times), Rated: A

If 2016 saw demonetisation change India’s fintech ecosystem forever, this year will be remembered for the Reserve Bank of India’s (RBI) multiple regulations aimed at organising the sector. Recognition of peer-to-peer lending startups, revised guidelines for digital wallets, finalising charges for digital payments—the second half of the year saw it all, setting the template for a more mature yet challenging 2018.

Meet The Top 20 Finalists Of The 5th Edition Of Wharton India Startup Challenge (Inc42), Rated: B

The 22nd Wharton India Economic Forum (WIEF) has announced the finalists of the Yes Bank – Wharton India Startup challenge.

Perpule: Perpule’s 1Pay is a self -checkout app for express checkouts and easy payments in Perpule’s partnered stores like Hypercity, Spar etc.

Capzest: Capzest is a digital lending platform focused on providing unsecured credit to individuals for income generation purposes. It secures partnerships with income generation service platforms and provides short term capital to their various stakeholders. It was founded in October 2015 in Mumbai by Rohan Adlakha andSayantan Sarkar.

Luharia Technologies Pvt. Ltd: Based in Hyderabad, Luharia Technologies owns and operates peer-to-peer platforms for businesses and individuals. Founded by ISB alumni Keerthi Kumar Jain, Luharia’s flagship solution is Vote4Edu, which is an online peer-to-peer lending platform for K-12 education loans. The company also runs Vote4Cash, a P2P marketplace where borrowers can avail cash loans. Machine Bank, an infrastructure ecommerce platform, and P2P lending platform SMEBank are also owned by Luharia Group.

Asia

Cyberattack brings a cryptocurrency exchange to its knees (Business Insider), Rated: A

A South Korea-based cryptocurrency exchange was brought to its knees by a cybersecurity attack.

Yapian, the operator of crypto-exchange Youbit, halted trading of cryptocurrencies on its venue Tuesday and filed for bankruptcy after a hack, according to reporting by The Wall Street Journal.

The Journal reported the exchange had 17% of its digital currency holdings stolen.

How to get a personal loan without a credit score? (Asianet Newsable), Rated: B

Your credit score reflects how well you have treated your credit in the past. It is one of the most important factors that lenders consider while evaluating a loan or credit card application. But what if you don’t have a credit score?

  1. NBFCs

If your bank has rejected your personal loan application, approach NBFCs. Since they usually target customers with low or no credit score, they are more flexible with credit scores than banks.

  1. Peer to Peer Lending

Since P2P platforms connect borrowers and investors online, they run with lower overheads and resultantly offer services cheaper than what traditional financial institutions have to offer. There are over 40 peer-to-peer lending platforms in India that are helping a large section of people who have been failed to qualify for loans from banks.

Canada

RATEHUB REPORTS GENERATIONAL DIVIDE WHEN IT COMES TO TRUST IN FINTECH (Betakit), Rated: A

A RateHub report examining FinTech trends in 2017 found that there is a generational divide when it comes to trust in the emerging technology.

Nearly twice as many millennials (44 percent) and Generation Xers (42 percent) said they trust robo-advisors, compared to baby boomers (23 percent).

Forty-seven percent of millennials and forty-eight percent of Gen Xers trust marketplace lenders, compared to 23 percent of boomers.

Online banking and contactless payments were the two most trusted FinTech offerings this year, capturing the trust of 85 percent and 62 percent of Canadians on average.

Access the full report here.

Authors:

George Popescu
Allen Taylor

Wednesday August 9 2017, Daily News Digest

SoFi mortgages

News Comments Today’s main news: U.S. credit-card debt hits new record. LendingClub raises its outlook. OnDeck shares rise 17%. Zopa’s disappearing capital from IFISA. Ping An to invest in AI. Blackstone assumes majority stake in Banco Popular’s real estate portfolio. Securities and Exchange Board of India to study impact of fintech on financial markets. Today’s main analysis: SoFi bank charter could […]

SoFi mortgages

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

CARICOM

News Summary

United States

U.S. Credit-Card Debt Surpasses Record Set at Brink of Crisis (Bloomberg), Rated: AAA

U.S. consumer credit-card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008.

Outstanding card loans reached $1.02 trillion in June, data from the Federal Reserve show, as lenders including Citigroup Inc. and JPMorgan Chase & Co. compete to sign up cardholders who may carry balances — a relatively lucrative business in a prolonged period of low interest rates.

 

The tide may be turning for LendingClub (LC) (Markets Insider), Rated: AAA

LendingClub on Monday posted its second highest quarterly revenues in its history. And Wall Street has responded.

Net revenue spiked 35% to $139.6 million in the second quarter, beating Wall Street’s average estimate of $136.4 million, according to Thomson Reuters.

Loan originations were up 10%.

Credit Suisse sent out a note to clients Tuesday morning outlining its case for a 25% boost in LendingClub’s stock price.

Lending Club Beats The Street And Raises Its Outlook (PYMNTS), Rated: AAA

By the numbers, the performance was also in line with what investors wanted to see — revenue was up 35 percent to $139.6 million during Q2, a solid beat on the analysts’ consensus estimate of $136.4 million. Originations returned to growth in the second quarter, up 10 percent to $2.15 billion. Meanwhile, operating expenses fell by 12.5 percent to $165.1 million in the quarter.

Revenue for the year — on the strength of that big performance — got an upward revision to the range of $585 million to $600 million, a reasonable pick-up on the previous forecast of $575 million to $595 million.

Has Lending Club Reached A Turning Point? (Benzinga), Rated: AAA

Following a beat-and-raise quarter from LendingClub Corp LC, analysts surmised the company may have reached an inflection point.

Credit Suisse analysts Stephen Ju and Christopher Ford noted this is the first quarter in about a year in which the company reported year-over-year growth in loan originations. The analysts expect ongoing acceleration throughout the next four quarters, as the company continues to recover.

Canaccord Genuity expects originations to grow sequentially in the third quarter or fourth quarter, aiding revenue growth acceleration in the second half of 2017 and notable sequential margin expansion.

The firm maintains its 2017 earnings per share estimate at 3 cents but nudged up its 2018 earnings per share estimate from 19 cents to 20 cents.

OnDeck shares rise on sunny outlook for loan growth, profitability (Reuters), Rated: AAA

Shares of OnDeck Capital Inc (ONDK.N) rose as much as 17 percent on Monday after the online lender said it had made progress on a plan to cut costs and improve the credit profile of its borrowers, and expects to reach double-digit loan growth again by next year.

SoFi Bank charter could test CRA status quo (Market Intelligence), Rated: AAA

Social Finance Inc., or SoFi, on June 6 applied for a bank charter with the Federal Deposit Insurance Corp.

S&P Global Market Intelligence research shows SoFi originated 1,160 mortgages in 2016, with only two of those mortgages, or 0.2%, made in distressed or underserved tracts, a CRA measure. Across the U.S., 2.0% of all mortgages were in underserved areas that year.

Of the $8 billion in total loans that SoFi said it originated in 2016, about $810 million were property loans, according to S&P Global Market Intelligence data. None of the mortgages issued by the parent company were in SoFi Bank’s proposed CRA assessment area of Salt Lake City and nearby areas.

Fewer than 1.00% of SoFi’s consumer loans are made to borrowers in Utah, according to reports for the company’s asset-backed securities issued in 2015, 2016 and 2017. The securitization documents cover $4.6 billion in principal loan balances.

SoFi’s CRA strategy will revolve around financial literacy, education and scholarships, according to its application. SoFi stated it will measure the success of its CRA plan in terms of employee hours devoted to community service, the number of scholarships awarded and the percent of its investment pool that goes into Utah Housing Bonds.

The 10 Biggest Fintech Companies In America (Forbes), Rated: AAA

Financial technology companies in the U.S. raised $3.5 billion in the first half of 2017, according to KPMG, as investors rushed to place bets in buzzy sectors like insurance and digital currencies.

The U.S. is now home to 13 fintech unicorns who have scored valuations of at least $1 billion.

  1. Stripe – Value: $9.2 billion
  2. SoFi – Value: $4.3 billion
  3. GreenSky  Value: $3.6 billion
  4. Credit Karma  Value: $3.5 billion
  5. Oscar  Value: $2.7 billion
  6. Avant  Value: $2 billion
  7. Zenefits Value: $2 billion
  8. Prosper  Value: $1.9 billion
  9. AvidXchange  Value: $1.4 billion
  10. Robinhood  Value: $1.3 billion

Betterment Introduces New Features And Pricing Plans (Forbes), Rated: A

Betterment’s three new features went live in late July. The features are:

  • Financial Advice Via App: Through Betterment’s mobile app, clients can now message a licensed financial expert. Experts can answer questions like how to set goals, which tax features to use, and how much risk to take in investing.
  • Socially Responsible Investing (SRI) Portfolio Options: These options give customers a way to invest in a globally diversified portfolio of companies considered socially responsible.
  • Combining Plus and Premium Plans: Betterment is now combining its Plus and Premium plans, which allow customers to now make unlimited phone calls to certified financial professionals. The new, combined plan charges a .4% annual fee.

The first feature, the ability to get financial advice through an app, attempts to address a big issue with robo advisors. Many investors want a human touch. They want to talk to an advisor from time to time. This will no doubt be true during the next bear market. Betterment’s new feature attempts to address this need.

The new pricing plan will benefit investors who were already using the higher-level Betterment plans. Those who were Plus customers can now get more personalized advice for the same fee and those who were Premium customers are paying less for the same service–always a good thing.

The Premium plan now gives customers access to more holistic investing advice. This advice can run the full scope of your investments, from your 401(k) to real estate to individual stocks to your Betterment portfolio.

Fed study finds expanded credit access resulting from fintech lending (Ballard Spahr), Rated: A

The study’s key findings include:

  • The fintech lender’s consumer lending activities penetrated into areas that could benefit from additional credit supply, such as areas that have lost a disproportionate number of bank branches and highly concentrated banking markets.
  • Consumers presenting the same credit risk could obtain credit at lower rates through the fintech lender than through traditional credit cards offered by banks.
  • The lender’s use of alternative credit data allowed consumers with few or inaccurate credit records (based on FICO scores) to access credit at lower prices, thereby resulting in enhanced financial inclusion.

SMARTPHONES MAY BECOME SMART ATM’S WITH NEAR FIELD COMMUNICATION (Fintech Today), Rated: A

You may no longer need to worry about carrying your ATM card with you everywhere as long as your bank’s ATM and smartphone are equipped with near field communication technology (NFC). NFC, a method of wireless data transfer that detects and enables technology to communicate, is reportedly being rolled out at banks across the country. Financial institutions believe that cardless or “Smart ATM’s” are the wave of the future and they are enabled as long as ATM’s and customers have a smartphone or mobile device equipped with NFC.

It’s been estimated that 2.2 billion smartphones will be equipped with NFC by 2020.

Robos, digital platforms and human financial advice: What investors really want (Investment News), Rated: A

The emergence of robo-advice and robo-investing platforms in recent years has led many traditional advisory firms to place a greater emphasis on their digital footprints. A growing number, in fact, are moving to offer digital versions of their “human” services. The 2017 InvestmentNews Adviser Technology Study, for example, showed that 7% of independent advisory firms offered a robo-advice option at the end of 2016, compared with just 3% two years earlier. At the same time, 19% of the firms that do not offer a robo-advice option intend to introduce one in 2017—nearly double the number that indicated that intention in 2015.

Only about 4% of the mass affluent and high-net-worth individuals in our survey reported that they use an automated investing or robo-advice tool.

Source: Investment News

For context, some 49% of individuals in our study currently use a financial adviser; the balance are self-directed investors.

Online Lender Better Mortgage Now Available in 13 States as it Expands into Florida (Crowdfund Insider), Rated: A

Better Mortgage is now available in 13 different states as it has received a license to lend to house hunters in Florida.  The Sunshine state is an important addition to the online lenders services as Florida is a popular vacation home state.

Better Mortgage says it is continuing to expand its footprint in the US. The lender is now available and improving access to homeownership in 13 markets including; Arizona, California, Colorado, Connecticut, Washington, DC, Florida, Georgia, Illinois, New Jersey, North Carolina, Oregon, Pennsylvania and Washington. Better Mortgage says that it is seeing particularly strong uptake in Seattle, Washington, San Francisco, California, and Washington, D.C.

Real Estate Crowdfunding Platforms: What to Look For (Equities.com), Rated: A

While each offers a unique focus and value proposition to investors, platforms have now consolidated into several main categories of business model:

  • eREITs: Fundrise and RealtyMogul, two of the original players the real estate crowdfunding space, have pivoted to offering semi-blind funds that aggregate properties throughout the country.
  • Commercial equity investing: probably the closest to the original ideal of real estate crowdfunding, these platforms offer CRE equity opportunities to accredited investors, allowing them to participate in high-upside, larger commercial projects. While the return potential is often great, these tend to be the longer term and riskier than other RECF investments.
  • Debt investing: Some platforms take some or all of an existing real estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.

Some platforms (like EquityMultiple, see below) perform their own diligence on investments, which should give you some comfort as an investor. Even so, you’ll want to understand some key components of any deal you consider, and be sure it aligns with your investing objectives before pulling the trigger. Here are some of the main things to consider:

  • Risk Factors – Examples of risk factors are tight construction timelines, a precarious labor market in the area, an unsubstantial track record or aggressive leverage on the part of the Sponsor who originated the deal.
  • Payout Structure – Be sure to understand where your investments fits in the capital stack, and what order you will be repaid principal and profits relative to the Sponsor and other LP investors.
  • Cash Flow and Liquidity – Simply looking at how many dollars you’re expected to receive over the lifetime of a deal (the simple return) or even a time-weighted return (IRR – internal rate of return), won’t give a complete picture of the timing and magnitude of returns.

Developer of Vacant Lots in New Orleans Has Crowdfunding Success (Next City), Rated: A

Small Change, a real estate crowdfunding portal, recently completed the sale of its first-ever offering open to all investors — and raised $95,000. Thirty-nine investors put in an average of $2,435. The minimum investment was $500. The money will help OJT (Office of Jonathan Tate), a New Orleans-based developer, finance the construction of two affordable single-family homes, on vacant lots.

The homes will be in New Orleans’ Milan neighborhood, which is two-thirds black and one-third white, and has a median income around $33,000.

Mixing technology and old fashioned salesmanship, Voya expands (Financial-Planning.com), Rated: A

So it has to move beyond the perception that it is a singular service provider, says Voya Financial Advisors’s Tom Halloran, president of its broker-dealer. One way the firm is doing that is by tying together its institutional businesses with retail, mixing technological innovation with old fashioned salesmanship, even considering the deployment of a robo advice platform.

A former Microsoft and Yahoo exec explains how treating your job like a report card can help you get a raise (Business Insider), Rated: B

In fact, it’s up to you to track your performance and ensure that your compensation reflects it, said Joanne Bradford, chief marketing officer of online lender SoFi, on a recent episode of the “So Money” podcast.

Clark County Common Pleas Court cases (Springfield News-Sun), Rated: B

Velocity Investments, LLC, assignee of Lending Club Corp., v. Joshua R. Hawk, judgment for $17,947.

United Kingdom

Investors remark on “disappearing capital” from Zopa IFISA due to IT glitch (P2P Finance News), Rated: AAA

SEVERAL lenders who invested through Zopa’s Innovative Finance ISA (IFISA) have complained that small amounts of money were disappearing from their account.

The issue occurred when funds were invested in the ISA Plus product and appeared to be missing capital rather than negative interest, investors on the P2P Independent Forum said.

Zopa is understood to be rectifying the technical issue.

Report proposes new ways to get people investing (AltFi), Rated: AAA

A new report on savings and investment suggests that savers are missing out on billions of pounds by spurning investment opportunities, including peer-to-peer lending. The report is supported by RateSetter, one of the UK’s largest P2P operators, and was produced by the Social Market Foundation think tank.

The report found that savers are holding more than £200bn in cash above and beyond what is referred to as the “rainy day” level. “Rainy day” funds – which are held in cash in case of emergency – are defined by the report as three months’ worth of income. The Social Market Foundation says that this idle pot of £200bn could have generated returns of £94bn over the past five years, had it been invested in the FTSE 100, or £40bn, if invested via P2P lending.

Ranger Direct Lending fund’s woes continue (AltFi), Rated: A

The £240m Ranger Direct Lending fund was announced its latest dividend of 24.26 pence per ordinary share for the 3-month period to 30 June 2017, its lowest in more than a year.

Its latest numbers show returns were again comparable to the last few months. This was due to a combination of expenses such as legal fees and higher than expected cash levels. In 2017, excluding the estimated dividend mentioned above, a total of 55.44 pence per share has been paid in dividends to ordinary shareholders. In 2016, a total of 89.61 pence per share was paid in dividends to ordinary shareholders.

 

Octopus the latest firm to offer the peer-to-peer Innovative Finance Isa, promises investors interest before Octopus (City A.M.), Rated: A

Investment firm Octopus seems to have its tentacles in all the pies, as it has today become the latest business to offer an Innovative Finance Isa.

Octopus is also aiming to dismiss the risks associated with peer-to-peer lending by contributing five per cent of every loan from its own pocket. Any losses suffered will come out of this sum first, meaning investors can get their initial investment back plus any interest due to them before Octopus earns anything.

Investors will be able to put as little as £10 in the tax-free product, and up to their annual Isa allowance which currently stands at £20,000.

ThinCats Receives Full Authorization By the Financial Conduct Authority (Crowdfund Insider), Rated: A

ThinCats, an alternative lending industry leader, announced on Tuesday it has received full authorization by the Financial Conduct Authority (FCA). According to the online lender, the approval highlights its commitment to protecting consumers and also developing the alternative finance industry as a vital source of capital for businesses and income for investors.

China

With $ 1b war chest, Ping An set to become AI innovation giant (China Daily), Rated: AAA

Chinese financial giant Ping An Insurance (Group) Co will spend more than 7.77 billion yuan ($1.16 billion) on technology research and development this year, and artificial intelligence will be the focus of that R&D, according to a senior executive of the company.

Established in 2008, Ping An Technology has about 4,000 technology workers and has paid attention to R&D in cognition, robot advisory and cloud businesses. Their applications are mainly used in finance and healthcare industries; up to now, there have been more than 200 application scenarios.

Micro-bank micro-credit balance of over 100 billion, has launched the enterprise loan products “micro-credit” (01Caijing), Rated: A

On the evening of August 7, the public bankers issued a friend said that the balance of micro-loan loans over 100 billion. According to the public bank in 2016 annual report, the balance of micro-loan loans 7 months increase of nearly 300%.

In addition, July 16, the public bank retail credit director Fang Zhenyu Lundi summit speech revealed that the balance of microfinance loans 76 billion yuan, which means that the balance of 72 days of microfluice increased by 24 billion yuan. At the same time, he also revealed that the daily loan loans to 150,000 pen, up to 20 to 300,000 pen, the daily repayment of the number of 200,000 pen, a single loan approval time is 0.3 seconds, almost real-time approval. In the allocation of talent, the public bank IT department staff accounted for 57%, background managers accounted for 6%, business and support staff accounted for 37%.

LangDi FinTech Conference in Shanghai. The Biggest Fintech Meetup In The World! (Crowdfund Insider), Rated: A

Last year, the conference had a massive showing of over 1,300 attendees. This year, the conference nearly doubled to 2,400 attendees. There was hardly any place to stand when Soul Htite of DianRong and Renaud Laplache of Upgrade took the main stage to talk about Fintech entrepreneurship.

Gopher Asset Management had investment associates in just about every session at the conference looking for the next investment opportunity. Gopher is a subsidiary of Noah Holding Limited (NOAH:NYSE), one of the biggest wealth management companies in China with a current market cap of USD $1.7 billion.

Galaxy Internet, another Chinese venture capital firm is actively seeking investment opportunities in the area of finance, ecommerce, payments and big data. 

Borrowell is owning the Canadian market in a big way. They just raised a $12 million round. Borrowell is helping Canadian’s to build credit starting with affordable loans. In a short amount of time, Borrowell has amassed over 300,000 borrowers and is looking to expand into other markets.

Jack Quigley, Founder and CEO of CrowdFundUp. He’s probably the hardest working man in Fintech. He’s constantly making deals and connecting dots. He’s 100% committed to China and recently moved to Shanghai and I think he’s not leaving until he brings home the trophy. I visited his office in Shanghai, overlooking a bustling city. CrowdFundUp will be China’s gateway into commercial real estate in Australia.

European Union

Blackstone to take majority stake in Banco Popular’s real estate portfolio (PE Hub Network), Rated: AAA

Banco Popular S.A. (‘Popular’) has today approved the sale of a majority stake in its real estate portfolio to Blackstone Real Estate Partners Europe V (‘Blackstone’). The agreement has been reached following a competitive process in which three international companies with long track records in the management of real estate assets presented offers. Blackstone was selected as the successful bidder after submitting the best offer in terms of both its value and management plan.

The agreement was confirmed after the European Union Directorate General for Competition today approved the acquisition of Popular by Banco Santander S.A. (‘Santander’) with no restrictions.

The transaction will involve the creation of a company to which Banco Popular will transfer assets with an aggregate gross book value of approximately €30 billion, as well as 100% of the share capital of Banco Popular’s real estate management company, Aliseda.

The valuation attributed to the Spanish assets of the business (e.g. properties, loans and tax assets, not including Aliseda) is approximately €10 billion. This is consistent with the valuation and provisions made by Santander during the acquisition of Popular and does not, therefore, result in any material capital gain or loss for Santander or Popular. The final valuation is subject to change depending on the assets remaining within the business at closure and following the integration of Aliseda.

Blackstone will own a majority 51% stake in the new company while also assuming management responsibilities, while Banco Popular will own the remaining 49% stake. As a result, the aforementioned assets will no longer be consolidated on Banco Popular’s balance sheet.

VC’s behind Zopa, Revolut, Transferwise & Clear Score confirmed for judging panel for PitchIt event (London Loves Business), Rated: A

Representatives from Venture Capitalists: Seedcamp, Blenheim Chalcot, CommerzVentures, and Balderton Capital will form the judging panel of experienced VCs from and around Europe.

Collectively, these four firms are some of the most active investors in the European fintech category and have played key roles in the success of several of the largest fintech successes in Europe.

Lithuania Seeks to Become Fintech Center as Bank of Lithuania Looks to Launch Regulatory Sandbox (Crowdfund Insider), Rated: B

Lithuania is the latest country joining the Fintech revolution by recognizing the importance of fostering a regulatory environment that is conducive to change and challenges established norms. The Bank of Lithuania is out with a statement regarding the launch of a sponsored Fintech Sandbox.

The following measures are will apply:

  • Relatively easy and low-cost authorization process: following submission of all necessary documents, it takes only 3 months for the Bank of Lithuania to take a decision on the issuance of an electronic money or payment institution license. In other EU countries, the process may take 12 months and more.
  • Access to the Bank of Lithuania payment infrastructure for non-banking sector companies planning to provide payment services, thus avoiding a middleman.
  • Newcomer program. The Bank of Lithuania applies a one-stop shop principle for meetings and consultations with potential financial market participants.
  • Specialized banking license. In order to establish a bank in Lithuania that would provide usual banking services, the lowest initial capital requirement in the entire euro area – EUR 1 million – is applied. This is five times less than the requirement applied to banks that provide the full range of services, including investment ones.
International

The Russian Connection (To Alt Lending Globally) (PYMNTS), Rated: AAA

ID Finance Co-Founders Boris Batine and Alexander Dunaev were far from newcomers to the world of finance when they started up their business in 2012. Long before founding a data science, credit scoring and digital finance company, the Russian-born and U.K.-educated entrepreneurs met while working abroad at Renaissance Capital and Deutsche Bank.

And so, in 2012, with only a few hundred thousand of their own dollars to get up and running, ID Finance launched in one of those underserved markets — their home market of Russia.

By 2015, the firm was profitable, and in 2016, it officially relocated it headquarters to Barcelona, Spain, one of three nations outside Russia ID Finance has expanded its efforts into — Belarus and Brazil being the other two.

These days, the firm originates 50,000 new loans a month — loans that it mostly finances off its own balance sheet, as opposed to selling them off on a marketplace. As of February of this year, the firm raised $50 million in debt from a consortium of banks to fund further expansion in South America.

A New $200 Million Fund

As ID Finance has expanded around the world — and partnered with various FIs — its founders realized that there are a host of small businesses that are simply being underdeveloped because they are almost invisible to investors.

Working with Elbrus Capital Fund Manager Yury Popov and asset management company Da Vinci Capital, the FinTech Credit Fund is being jointly offered as a $200 million debt finance fund aimed at FinTech companies focused on alt lending innovation. The funding from the credit fund, according to Batine, is aimed at helping up-and-coming FinTech lenders fund their own loans — and finance their loan portfolios.

“The alternative lending market is worth a potential $2 trillion, and we see a huge opportunity to back the billion dollar companies of tomorrow focused on digital lending,” Dunaev said.

How this social entrepreneur is bringing banks to the fingertips of the unbanked (Huffington Post), Rated: A

Humaniq was launched in 2016 with a vision to build a world where the unbanked and underbanked around the world also have access to the banking and financial transactions. An estimated 2 billion people can be brought under the umbrella of financial inclusion with Humaniq’s services.

Tell us more about Humaniq and the problem you solve?

Humaniq is on a mission to bring new mobile digital services and financial inclusion solutions to the 3.5 billion unbanked / under banked globally who have no access to the digital economy.

How does Humaniq work, especially with respect to privacy and security?

Humaniq offers a biometric blockchain app that can be used in any simple smartphone device.

The Humaniq LITE app is part of a broader humanitarian capitalism venture. Humaniq has a digital currency tied to it, known as HMQ.

Who’s your target audience and how exactly do you help?

We are working with emergent economies – where people live on USD$2.50 a day. Many of them do not have documentation and have had little or no education.

Our first big pilot will be in Ghana with local and international organisations, targeting 18 to 40-year-old low-income smartphone users and merchants in suburban areas including the capital city of Accra.

How did you acquire your first customer and how long did that take?

We did various test in India and Africa with previous test versions of our app. We are also working with Brazilian organizations.

With regards to funding, how did you fund your business? How hard was it and how much time did it take to acquire those funds?

Our business model has thrived on the P2P innovation and blockchain driven crypto economics. We built our model on the back of a crypto, Ethereum driven smart contract Initial Coin Offering(ICO).

Australia/New Zealand

New Zealand advice industry to be overhauled (Financial Standard), Rated: AAA

The New Zealand government is looking to remove the distinction between class and personal advice, as well as allow the provision of digital advice as it seeks to overhaul the country’s regulatory regime for financial advisers.

Unlike the FA Act, the new Bill enables the provision of more types of advice by being technology-neutral, lifting the existing restrictions around advice needing to be provided by a human adviser.

In turn, this allows for the provision of robo-advice and works to future-proof the legislation for technological developments. It also serves to increase the New Zealand population’s access to quality financial advice.

‘Non-bank’ status drives IOOF results (IFA.com.au), Rated: A

IOOF has credited the structure of its “non-bank-aligned” dealer groups and “open architecture” culture with a dramatic increase in revenue inflows from its financial advice business.

The results reflect a 131 per cent year-on-year increase in advice net inflows, according to a statement from IOOF, with $3.0 billion in total advice net inflows for the 2017 year.

India

SEBI Constitutes CFRT Committee To Study Impact Of Fintech On Financial Markets (Inc42), Rated: AAA

The Securities and Exchange Board of India (SEBI) has formed a Committee on Financial and Regulatory Technologies (CFRT) to examine ongoing and medium-term trends related to fintech in the securities and financial markets worldwide.

Thus, regulators are faced with the challenges as well as opportunities to evolve their functioning more effectively through the adoption of new technology solutions. It is in this context that the CFRT committee will help the SEBI deal with relevant risks and challenges.

The Committee would examine, deliberate and advise the SEBI on an ongoing basis on the following issues:

  • Recent and medium term trends (within next 5 years) in fintech developments in securities market worldwide.
  • Opportunities and challenges from new fintech solutions and its impact on Indian Securities Market.
  • Fintech solutions for further widening and deepening of Indian securities market.
  • Approach and framework for the regulatory sandbox in Indian market conditions to facilitate the adoption of fintech and promote financial innovations.
  • Preparing the Indian securities market and regulatory framework to adapt to new fintech solutions while promoting market integrity, market development, consumer protection and managing change, business models and market disruptions.
  • Assessing technological solutions for SEBI regulatory functions viz. information management and data mining, risk management including cyber security, intermediary supervision, consumer protection, etc., through the application of new technological solutions like applying distributed ledger technology, Big Data, data analytics, Artificial Intelligence, machine learning etc.
  • Technology capacity building by Indian securities market in general and SEBI in particular.

Start-up funding may come under SEBI lens (The Hindu), Rated: A

The Committee on Financial and Regulatory Technologies will, among other things, deliberate on financial technology solutions for “further widening and deepening of the Indian securities market” through traditional and alternative platforms, including peer to peer lending and equity crowd-funding.

While questioning the manner in which these entities help start-ups raise funds, the regulator has said that any violation would be “construed as organising an unrecognised stock exchange” and that SEBI would be “constrained to initiate action.”

Under the current legal framework, issue of shares to more than 200 persons constitutes a public issue and needs SEBI approval.

Rubique Appoints Vodafone Ex- M-Pesa CEO Suresh Sethi & Alexia Yannopoulos of Apis Partners as Directors (PR Newswire), Rated: A

Rubique, the one-stop online marketplace providing technology-enabled end-to-end solutions to financing needs of individuals & SMEs has announced the appointment of two directors- Suresh Sethi, EX-CEO & Managing Director of Vodafone M-Pesa and Alexia Yannopoulos Director at Apis Partners LLP.

Asia

CFTE is Helping MAS Assist ASEAN Finance Professionals Gain FinTech Skills (Cryptocoins News), Rated: AAA

The Centre for Finance, Technology and Entrepreneurship (CFTE) has revealed that it is setting up an international hub in Singapore designed to aid finance professionals gain the necessary skills in FinTech.

Working closely with the Monetary Authority of Singapore (MAS), CFTE has been formalizing plans to expand its education platform to the Association of Southeast Asian Nations (ASEAN), according to a report from FinTech Finance.

CFTE is to deliver courses that cover a range of areas in the finance industry. These include artificial intelligence, application programming interfaces (APIs), coding, blockchain, and RegTech. They will either be delivered online or via in-class training.

P2P lending growth slows in July (Yonhap News), Rated: AAA

South Korea’s peer-to-peer lending growth slowed in July after financial regulators asked lenders to tighten guidelines for individual investors, industry data showed Tuesday.

According to data compiled by the Korea P2P Financial Association, lending between peers grew by 104.7 billion won (US$93.1 million) in July to a cumulative 1.2 trillion won.

In comparison, P2P lending grew by 172.8 billion won in June.

P2P financing industry to absorb investors’ demands (Korea Herald), Rated: A

It is especially likely to absorb the investor cluster who, under the government’s new restrictive measures on real estate transactions, are swiftly turning away from banks and seeking for an alternative source of investment income, according to industry watchers.

In late May, the association enforced a set of guidelines, setting a 10 million won ceiling on the investment per business unit, responding to the government’s gesture to protect investors from potential dangers of the new investment platform.

INDONESIAN peer-to-peer (P2P) lending marketplace PT Amartha Mikro Fintek (Amartha) encourages and targets “millenials” to invest in micro-businesses and SMEs through the Amartha Short Movie Festival.

The Amartha Short Movie Festival is a competition divided into two categories which are short documentaries with the theme empowering micro-businesses and short fiction movies with online peer-to-peer lending as the theme. Applications are open from August 8 to October 9, 2017.

CARICOM

Vincentian Set to Launch the Region’s First Equity Crowdfuning Startup Company (St. Lucia Times), Rated: AAA

Global Domination Capital is set to be the regions’ first fintech startup company, offering equity crowdfunding and peer-to-peer lending solutions to the OECS countries and  the CARICOM member states. This includes Barbados, Jamaica, The Bahamas, Trinidad and Tobago and The Turks and Caicos Islands.

Global Domination Capital is expected go live and accept both new investors and borrowers to the platform by late September.

Authors:

George Popescu
Allen Taylor

Wednesday December 21 2016, Daily News Digest

Wednesday December 21 2016, Daily News Digest

News Comments Today’s main news: Klarna looking at competing with PayPal in the U.S. LendInvest to launch auction finance product. Today’s main analysis: KPMG report on online lending in continental Europe: a must read. Today’s thought-provoking articles: 2017 tech trends in China. MPL ABS. Entrepreneurs likely to plunder savings. United States Klarna takes aim at PayPal in U.S. GP: […]

Wednesday December 21 2016, Daily News Digest

News Comments

United States

  • Klarna takes aim at PayPal in U.S. GP: “I continue to see Klarna as a point of sale financing company that is a serious challenger for the top position.” AT: “This shouldn’t come as any surprise. We now live in a global village. Competition has taken on a brand new face with the rise of technology and second- and third-world countries gaining greater access to consumers, technology, and capital. Klarna actually has the clout to compete with PayPal and could very well become a major player in the U.S.”
  • MPL ABS compares well in 2016. GP: ” ABS sets the tone for the cost of capital for the entire industry. This is great news.”
  • SoFi targets HENRYs. AT: “This isn’t really news, but it bears reminding that MPL essentially thrives because of this market.”
  • Earning interest on Bitcoin with BTCjam. AT: This is a part of a four-part series on P2P lending with Bitcoin.”
  • 7 ways to invest $1,000. AT: “Increasingly, I’m seeing more popular publications recommending P2P lending as an option for everyday investors. Lending Club is a popular option, but I wonder how many of these pundits recommend LC because that’s what they’re familiar with. Do they try out other platforms?”
  • 7 ways to finance your first real estate investment. AT: “Again, two of the solutions are alternative lending platforms. This is getting trendy–in a good way.”
  • The worst CEO screw-ups of 2016. AT: “LC made the list, as did Zenefits.”
  • Why Trump could be good for Silicon Valley. AT: “Could be. But put me in the skeptical camp.”

United Kingdom

European Union

China

India

United States

Buy now, pay later: Klarna promises to be an alternative to your credit card (Forbes India), Rated: AAA

A faint smile lights up Sebastian Siemiatkowski’s face as he recounts how his humble online-payments startup bagged the Warren Buffett of venture capitalists (VCs) as a board member.

Today Klarna’s ambitions go beyond cocky. It’s gunning for the $93 billion US market for credit card issuing, an industry that’s dominated by giants such as American Express and Capital One, with PayPal and ambitious startups in close pursuit. Like PayPal, Klarna is an online-payments platform with an emphasis on “buy-now-pay-later” financing. “We’re a bank,” Siemiatkowski says from a stark conference room in Klarna’s head office.

Klarna’s main competition: PayPal, whose financing business, PayPal Credit, formerly known as Bill Me Later, has been steadily growing since 2008, albeit with an embarrassing blip. Last year, the Consumer Finance Protection Bureau forced PayPal to pay a $25 million fine for sneakily signing people up for credit. Yet today “it’s one of our fastest-growing businesses,” PayPal spokesman Josh Criscoe says, increasing at a 27 percent annual clip.

Even more similar to Klarna is Affirm, a San Francisco startup launched by Max Levchin, a PayPal co-founder. Affirm is also racing to partner with merchants (it has 800 so far) to offer payment options, including financing, as an alternative to credit cards.

Klarna processes 40 percent of all Swedish online payments.

Once you check out, Klarna pays your bill and emails you an invoice. The startup’s foray into financing—and beyond plain-vanilla payments processing—is what got investors like Sequoia so excited. Its latest investment round, in December 2015, brought its valuation to $2.3 billion.

Perhaps Klarna’s boldest innovation is its email-and-address method of establishing the creditworthiness of its customers. No other online-payments company takes such risk on both the consumer and the merchant, the company claims.

Remarkably, Klarna’s bold bet on people’s honesty and solvency has worked. Its default rates are under 1 percent. Credit card default rates in the US have averaged 2.2 percent for 2016.

Klarna’s geography is relevant for another reason: Scandinavians are bored of cash, and Sweden is on track to become one of the first countries that is truly cashless. Homeless magazine peddlers carry card readers, and churches take their tithes through SMS. Half the branches of Sweden’s biggest banks don’t even have cash on hand or take cash deposits. Americans aren’t ditching cash as quickly, but to Klarna’s benefit right now, they’re bigger on digital payments.

MPL ABS ‘compares well’ in 2016 (Structured Credit Investor), Rated: A

Despite significant turbulence earlier in the year, marketplace lending ABS has maintained steady growth and better or similar performance than other areas of the consumer loan ABS sector, according to JPMorgan ABS analysts. They add that the marketplace lending ABS sector has also been one of the fastest growing in ABS, starting with US$3.3bn in 2013 from three programmes to US$9bn across 15 different shelves in 2016, with this year’s total including US$3.4bn from eight marketplace lending ABS programmes.

Furthermore, recent performance data in 2015 and 2016 show MPL ABS has better or similar performance than branch consumer loans and non-prime auto loans on most metrics.

Online banking platform SoFi targets “high earners, not rich yet” (Marketplace.org), Rated: A

Social Finance, or SoFi, is the largest online lender in the country, originating approximately a billion dollars in credit a month across personal loans, student loan refinancing and mortgages. Mike Cagney is the CEO, and he said what’s unique about the company is their focus on HENRYs — the acronym stands for high earners, not rich yet.

“It’s a customer segment the banking industry has struggled to deliver value to, primarily because there’s a lot of misconceptions around millennial customers — the idea that they’re fickle, they’re not loyal…we’ve found that really not to be the case.”

How to earn interest on your Bitcoin – P2P Lending with BTCJam (Deep Dot Web), Rated: A

This is a four part guide on how to earn interest on your Bitcoin from reliable sources. The first part was on how to lend cryptocurrencies using Magnr. Last time we introduced our users to P2P lending, more specifically on Bibond. This time, we’re going to talk about another P2P lending website, BTCJam.

BTCjam was founded in late 2012 and by the end of 2014, BTCjam had facilitated bitcoin loans in excess of $10 million dollars in value with more than 100,000 users in over 200 countries. BTCjam also has an “Autoinvest” feature, which allows you to keep a diversified portfolio without having to monitor the loan offers. This feature will take your designated parameters into account and find suitable investment opportunities.

The 7 best ways to invest $ 1,000 (Business Insider), Rated: B

If you want to invest into the lives of others and earn some interest, there’s a new craze that’s both exciting and reasonable: peer-to-peer lending.

Lending Club is one such peer-to-peer lending service I tried out, and I found it to be very easy to use and reliable (see my Comprehensive Lending Club review).

One of the best features of Lending Club is that you can make investments as small as $25. This means you can diversify greatly between different risk levels in your lending. So whether you are wondering what to do with $100 , how to invest $10000, where to invest $100k or where to invest 500000, Lending Club can offer you many options.

If you’re not very skilled at investing on your own and you’re hesitant to loan money out to particular people online, you might consider hiring a robo-advisor.

7 Ways to Finance Your First Real Estate Investment (if Your Father’s Not Fred Trump) (TheStreet), Rated: B

With difficulties qualifying for mortgages, a string of nonbank lenders, such as SoFi and LendingHome, are taking market share from traditional banks. According to PwC, their market share could grow to $150 billion by 2025, a 33% annual growth rate. As of April of this year, nonbank lenders originated 48% of all mortgages, up by 400 basis points from their 2015 market share.

Unlike big banks, which take a long time to look at income, FICO score, tax returns and more, online lenders process the application online in 20 minutes, according to LendingHome’s website. They close the deal in two weeks — vs. 45-60 days with banks — sometimes funding up to 100% of the purchase.

If hard money and non-banks aren’t your thing, there are other ways to get a deal, like asset-based mortgages. “Buy 2 Rent,” a mortgage product from Blackstone-owned B2R Finance, mainly looks on the rental income the property will produce.

And unlike traditional banks, it doesn’t look at personal income, which is a huge plus if you don’t have stable income (although a 660 FICO score and other underwriting criteria are required).

The Worst CEO Screw-Ups Of 2016 (Forbes), Rated: B

This past February, a BuzzFeed article reported that Zenefits was employing insurance salespeople who didn’t have legitimate state licenses. A few days later, Zenefits COO David Sacks sent an internal email that read, “the fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong. As a result, Parker (Conrad) has resigned.”

Online lending platform Lending Club was once a bright spot in the fintech industry. But its CEO’s problems cast a shadow on the company this year. In the spring Lending Club’s board discovered that Laplanche had a personal investment in Cirrix Capital, but he failed to disclose it before he urged Lending Club to invest $10 million in the company. An investigation also revealed that a Lending Club engineer had falsified information to make some loans look like they had met a loan buyer’s requirements when, in fact, they hadn’t.

Why Trump Could (Cringe) Be Good For Silicon (Fortune), Rated: B

Trump may also benefit startups. A Republican-controlled Congress could end gridlock, creating opportunities to reform laws that are slowing down startups, says Bradley Tusk, CEO of Tusk Holdings, a political consultancy and venture firm known for advising Uber. Areas of interest include contract-worker rights, peer-to-peer lending laws, online gambling restrictions, and scrutiny toward for-profit education.

United Kingdom

Online Property Lender LendInvest to Launch Auction Finance Product (Crowdfund Insider), Rated: AAA

Online lender for short-term property finance LendInvest, will launch a new auction finance product to help brokers and borrowers prepare for the forthcoming 2017 auctions. The auction finance product is designed for borrowers that need their deals to be fast-tracked by their lender.

LendInvest bulleted out some of the features of auction finance product:

  • 50% discount on valuation fees
  • No exit fees
  • Available on loans ranging between £75,000 to £7.5 million
  • Available on terms from 1 to 12 months
  • Available on loans with a maximum 75% LTV

Cure for issues facing Peer to Peer lending isn’t regulation (The London Economic), Rated: A

Last week, the Financial Conduct Authority released their interim feedback of their review of their crowdfunding and peer to peer lending rules. And it didn’t sound good.

Andrew Bailey, CEO of the Financial Conduct Authority (FCA), stated that “fast-moving, evolving” peer-to-peer (P2P) lending industry poses “some quite big challenges in terms of transparency and fairness.”

In a new market that is disrupting traditional finance, there is no point advertising to consumers who are uninformed.

Instead of throwing money into glossy adverts, I believe the best foundations are built by going back to the old days of lending when your bank manager knew you, your family, your business and your friends.  They would never lend to someone unless they met them and got to know them personally.

Entrepreneurs more likely to plunder their savings than borrow from the bank to start-up a business (This Is Money), Rated: A

Research from investment platform Crowdfinders claims just 28 per cent of people would turn to banks or professional institutions for funding, compared to the 35 per cent who would resort to personal savings.

Meanwhile, just 15 per cent said they would turn to friends and family for the cash, probably because two thirds confessed their loved ones don’t have the financial means to support them.

After these funding options, the next most popular avenues were fundraising through the sale of personal items such as cars or luxury items, or looking to a current business or professional network, both of which were cited by 11 per cent of people.

Just one in 20 said they would use peer-to-peer lending platforms or venture capital, and only 6 per cent would apply for a bridging loan or specialist finance.

Major Players in UK Equity Crowdfunding Market (TechBullion), Rated: A

Currently, equity-based crowdfunding is the second most active funding source in the UK, far ahead of private investment and angel network vehicles.

Established in 2011 by Luke Lang and Darren Westlake, Crowdcube is the world’s leading investment crowdfunding platform.
Launched in 2012, Seedrs is the world’s leading equity crowdfunding platform for investing in businesses. It was the first equity crowdfunding platform to get regulatory approval from the Financial Conduct Authority in the UK.

Founded in 2012 by Tom Britton, Goncalo de Vasconcelos and Gonçalo Vasconcelos,   SyndicateRoom is the platform where investors make smarter and more exciting investments.

Founded by Dawn Bebe in 2010 and headquartered in Cornwell, Crowdfunder is the leading UK crowdfunding platform, connecting projects with people to make great ideas happen.

Founded in 2013, CrowdShed operates and offers online funding platforms, helping people, businesses, charities and art projects to get fund.

Venture Founders is an equity investment platform that is designed to make capital more accessible for a range of early-stage and growth businesses.  It offers investors a range of curated, structured, and good investment opportunities.

Angels Den is an investment platform that connects angel investors with businesses.

Founded in 2013 by Ayan Mitra, Code Investing is a digital investment platform that offers investment opportunities in high growth, small to medium companies.

Spacehive is the only UK-based crowdfunding platform exclusively for projects aimed at improving local civic and community spaces. It is also the world’s first funding platform for civic projects.

Crowdfunding site Zopa provides 2 to 5-year low rate loans to borrowers with good credit, and 5 percent interest rates to P2P lending contributors. Zopa is the Europe’s largest P2P lending service having now lent more than £1.8 billion.

Robo-advice ‘failing consumers’ says UK study (IFA), Rated: A

The research – which was conducted by financial information company Boring Money on behalf of the Financial Services Consumer Panel, a statutory body that advises the UK financial regulator – found that robo-advice providers are currently providing insufficiently pro-consumer services on a number of fronts.

It concludes that “many online investment firms” failed to clearly communicate whether the advice provided was regulated or not, to disclose relevant costs and charges and to use language that consumers might reasonably understand.

The consumer body calls on the Financial Conduct Authority (FCA) to enforce existing regulations governing online investment tools as well as to develop a framework for product providers to adopt language that is less reliant on complex industry jargon.

Robo-advisers and the future of financial advice (Capgemini), Rated: A

 

Gomes, Kotlikoff and Viceira developed a lifecycle model in 2008 which includes flexible consumption, investment and labor supply. They optimize a utility function using simulation, recursive Bellman equations and backward induction to derive optimal lifecycle behaviour. Parameter values are estimated using empirical data.ramework to create a portfolio of assets such that the expected return is maximized for a given level of risk. Financial market data is used to estimate expected return, standard deviation and correlation for every asset class.

New technologies can significantly improve the input for these models and increase the quality of the advice. By replacing a questionnaire by more sophisticated data sources and machine learning models, a significant increase in accuracy of risk tolerance, income and consumption estimates can be expected.

More complex is to estimate personal preferences. Since one cannot directly measure emotions, approximating utility and risk tolerance requires creative approaches. Expectations are high for artificial intelligence applications for decision making.

Using powerful machine intelligence, merging more data sources and leveraging scientific results to better understand the client’s situation would lead to a next generation of automated advisers.

European Union

KPMG Report: Online Lending in Continental Europe Q1 through Q3 2016 (Crowdfund Insider), Rated: A

KPMG, along with AltFi data, has published a new report on alternative lending in Europe. KPMG also sourced data from the most recent Cambridge Centre for Alternative Finance report. The document, entitled Alternative Lending Market Trends in Continental Europe 2016, provides an interesting snapshot of online lending beyond the UK.

Following the UK, the top two European countries for online lending include France and Germany. The authors point out that Latvia is breaking away from the pack with the third highest volume of funded loans in 2016 through Q3.

Peer to peer consumer lending is the largest segment of online lending.  Through Q3 of 2016, consumer P2P generated 72% of total lending.

Regarding the largest continental European platforms, Younited Credit in France and Auxmoney in German come in at first and second place respectively.  Mintos and Twino, both operating out of Latvia, are in 3rd and 4th place – punching above their weight class.

China

The Biggest Tech Trends From China To Watch Out For In 2017 (Forbes), Rated: A

Credit cards have never taken hold, with most customers opting instead to use their phones and payment apps such as Alibaba’s payment system, Alipay, and WeChat. An Ernst & Young report found that 40 percent of consumers in China now use new payment methods.

Further underpinning growth in the country’s fintech segment is a new social credit system that the government expects to fully implement by 2020. The system assigns each citizen and business a credit score based on their social behavior, previous purchases and other financial data. The score would then be used to determine a person’s eligibility for everything from loans and government jobs to where they can travel.

In the meantime, China’s peer-to-peer lending segment is expected to continue to grow over the next year to fill the space left by more traditional banking. China Rapid Finance, one of the country’s largest consumer lending platforms, facilitates in providing loans to online consumers and the middle class, who by and large do not have access to credit scores. The company currently has more than 1 million borrowers, and analysts anticipate that number will rise.

India

P2P lending companies can’t bank on RBI rules this year (India Times), Rated: A

Post demonetisation, peer-to-peer startups expect to see a delay in the final RBI guidelines which were expected to come by October 2016, but which they now believe will be out by March 2017.

As per the consultation paper that came out earlier this year, several players including iLend, Faircent, Venture Catalysts-backed LenDenClub, among others have either begun or are in the process of using escrow or nodal accounts in partnership with banks like IDFC. Demonetisation has also resulted in over 20% increase in lenders seen on the platforms, as well as bigger ticket sizes for some players.

This is a temporary account as it operates until the completion of a transaction process. According to fintech industry experts, this is a natural progression for P2P players. More transparency and security is expected through this process, since transactions will be better recorded and the auditing process will be simpler.

Authors:

George Popescu
Allen Taylor

Monday October 3rd 2016, Daily News Digest

Monday October 3rd 2016, Daily News Digest

News Comments Today’s main news: Smava raises $34m; Lenddo partners with FICO in India. Today’s main analysis : PeerIQ’s analysis of securitization and pricing. Today’s thought-provoking articles: Blackston’s “now is the most difficult period ever“. Lendup has 29% of non-performing-loans. United States Amazing info and data from PeerIQ on the securitization market and loan pricing. […]

Monday October 3rd 2016, Daily News Digest

News Comments

United States

United Kingdom

European Union

China

India

 

United States

Weekly Industry update from PeerIQ, (PeerIQ email), Rated: A

Several marketplace lending ABS deals are coming to market amidst favorable market conditions and impeding risk retention rules.
P2P Global Investments, a UK UCIT investing in marketplace lending loans, sold £114 M ($167.36 MM) of rated notes backed by Zopa loans. The senior bond of the deal—Marketplace Originated Consumer Assets (MOCA 2016-1)—was rated Aa3/AA by Moody’s and Fitch respectively.
Noteworthy is that the deal is the highest rating afforded to any marketplace lending transaction from Fitch. Moody’s assigned a cumulative loss estimate of 7% and expected recoveries of 5%. We show deal structure and pricing below:
The MCOA 2016-1 senior bond priced 75 bps better than April SBOLT 2016-1 deal consisting of Funding Circle loans. Investors noted the quality of the data as a factor explaining the price difference as well as market conditions. PeerIQ also notes the substantial variation in agency provided cumulative loss and recovery estimates on SBOLT 2016-1 in our PeerIQ expects this trend to grow particularly as originators incentivize contributed collateral “club deals” to achieve standardization while also providing a quarterly path to liquidity for whole loan investors.
Sophisticated loan-level analytics are required to accurately value seasoned loans contributed to the collateral pool. Aged portfolios offer greater clarity to loan performance. However, there are other analytical considerations. The average conditional default rates (CDRs) are lower in the first twelve months of consumer loan pool than CDRs in the pool seasoned beyond twelve months. Therefore, seasoned unsecured consumer loans pool tend to have higher cumulative net losses as a percentage of deal balance. As the loans season, the conditional prepayment rates (CPR) tend to be elevated as well.
The price of a seasoned loan is the present value of projected loss-adjusted cashflow for the remaining balance of the loan, discounted at an appropriate rate. We show below the price behavior of a typical 60-month loan over its life while holding the discount factor constant:
As losses ramp up, the loan price drops; and then price exceeds par as risky loans approach maturity. This behavior results from positive survival bias of a loan given its remaining principal balance.
Specifically, in the early life of a loan, the credit loss projection ramps up and dominates the loan coupon—the loan price drops below par. As the loan seasons and survives over time, the credit risk on the remaining principal balance decreases. This survival bias of the credit risk profile leads to certain high credit risk loans valued above par.
For a higher coupon loan, the interest return or carry of the loan dominates loan pricing—the loan price exceeds par. At maturity, if the loan has not experienced any credit impairment, the price of the loan will be par; this leads to a “pull-to-par” profile.

Securitization Tracker Update
We look forward to releasing the Q3 securitization tracker this week. As origination volumes have slowed in certain areas, and as ABS markets started with a slow Q1, readers are asking what is the state of the ABS market? You may be surprised.

Stay tuned as we share volumes, pricings, and our outlook this week.

Funding Circle CEO says it’s a ‘golden age’ for marketplace lending as revenue jumps 144%, (Business Insider), Rated: AAA

The CEO of marketplace lender Funding Circle says the industry is going through a “golden age” despite troubles for platforms like Lending Club this year.

Funding Circle is the UK’s biggest marketplace lender, worth over $1 billion.

Funding Circle CEO Samir Desai told Business Insider: “It was certainly a tough first half of the year with various things going on with Lending Club, which caused investors to take another look, and then the stuff with Brexit. But actually, what I’ve always said is I think we’re in this golden age for our industry.”

So why does Desai think we’re in a golden age? “If you look at the net returns that have been generated by marketplace lending platforms, they have been the highest of any asset class over the last 5 years with the lowest levels of volatility. If you look on the borrower side, borrowers flock in their droves to this kind of customer experience.

Here are the key numbers from 2015:

  • Loan origination up 132% to £727 million;
  • Revenue up 144% to £31.9 million;
  • Loss up 114% to £36.9 million;
  • Loss margin reduced from 132% to 116%.

Funding Circle acquired Zencap last year, a deal that took the peer-to-peer lending platform into Germany, Spain, and the Netherlands.

As a result, Funding Circle doesn’t expect to make a profit this year. As I pointed out recently, the UK’s two biggest marketplace lenders — Funding Circle and Zopa — have lost a combined £50 million over the last decade and Funding Circle has yet to make a profit.

Funding Circle raised £97 million in April last year, taking its total funding to over £200 million.

Le Luel, Funding Circle’s chief risk officer, recently shared the fact that the company dialled back loan volumes in the US after loan performance went off track.

“There are periods where we will bring down origination if we’re not happy about things, that’s a key part of our business model.”

Orchard Weekly Report, (Orchard Platform), Rated: A

Blackstone’s Top Dealmaker Says Now Is The Most Difficult Period He’s Ever Experienced, (Bloomberg), Rated: A

“For any professional investor, this is the most difficult period we’ve ever experienced,” Baratta, Blackstone’s global head of private equity, said Tuesday, speaking at the WSJ Pro Private Equity Analyst Conference in New York. “You have historically high multiples of cash flows, low yields. I’ve never seen it in my career. It’s the most treacherous moment.”

The firm is still selling more assets than it’s buying, according to President Tony James.

Blackstone finished gathering $18 billion for its latest private equity fund last year. The firm also has an energy private equity vehicle, which finished raising $4.5 billion last year.

Blackstone, founded by Schwarzman and Peter G. Peterson in 1985, managed $356 billion in private equity holdings, real estate, credit assets and hedge funds as of June 30.

Fintech Upstart LendUp Fined by CFPB, California Regulator, (Wall Street Journal), Rated: A

LendUp extended nearly 75,200 installment loans in California last year, up about 110% from a year prior, according to the California DBO. The amount lent out on these loans last year surpassed $22 million, up 225%.

Missed payments are also high. Some 29%, or 5,921, of the unsecured installment loans outstanding at the end of last year were 30 or more days past due, according to a report from the California DBO.

United Kingdom

Landbay follows Zoopla pairing with new rental comparison tool, (BDaily), Rated: A

Peer-to-peer (P2P) lending platform Landbay has launched a new comparison tool that will help tenants and landlords to compare their rents against the prevailing market rate as rental values continue to spiral.

The ‘Rent Check’ facility, which has launched today (Monday), utilises data from the P2P lender’s monthly rental index and allows users to compare rental movements for specific property types to check that rents are tracking the wider market.

“Together, Landbay’s Rental Index and the Rent Check tool will give both tenants and landlords a simple way of accessing data from across the UK, not only providing an in depth view of the market, but helping inform their next move.”

Zoopla invested £500k in the startup earlier in the year which guaranteed it exclusivity for new Landbay products that will be rolled out across its network of property websites Zoopla and PrimeLocation.com.

European Union

Smava clinches $ 34m in Series C, (AltFi), Rated: AAA

Smava, a leading marketplace lender in Germany, has clinched $34m in a round led by Runa Capital, with additional participation from Verdane Capital, mojo.capital and a gaggle of existing investors. Runa is an active investor in the alternative finance sector, having already invested in consumer lender Zopa and gateway platforms Lending Robot and Lendio. Verdane is a Scandinavian private equity firm with a track record of investing across the consumer internet space.

Alexander Artopé, CEO and co-founder of smava, said that the $34m will allow the company to expand its customer base, hire additional talent and to enhance its credit scoring technology.

Paschi Said Nearing Deal for Sale of Bad-Loans Platform, (Bloomberg), Rated: A

Investors including Cerved Credit Management SpA and a venture between KKR & Co. and Varde Partners LP submitted non-binding offers on Friday for Banca Monte dei Paschi di Siena SpA’s non-performing loans platform, according to people with knowledge of the matter.

As part of the deal, the lender will also transfer management of an 8.6-billion euro ($9.6 billion) loan portfolio to the platform’s buyer, along with the exclusive management of a portion of Monte Paschi’s future bad loans, the people said, asking not to be identified because the process is private. Monte Paschi, which is being advised by Mediobanca SpA, plans to complete the sale by the end of the year, the people said.

China

No bail-outs in shadow banking, warns China regulator, (Financial Review), Rated: A

China’s banking regulator has indicated that the government would not bail out failed firms in the shadow banking sector despite a string of recent collapses which have triggered protests across the country from disgruntled investors.

Wang Shengbang, a senior official at the China Banking Regulatory Commission, said investors putting their savings into high-yield debt products should be aware of the risks.

Among the most troubled have been peer-to-peer (P2P) online lending platforms. The collapsed Ezubao, which raised more than 74 billion yuan ($A14.5 billion) from nearly a million investors across the country, is being investigated over claims it ran a Ponzi scheme. Some 21 people from the P2P firm were arrested earlier this year.

He said only around 17 per cent of shadow banking products, or around 3.2 trillion yuan ($A640 billion) were held in riskier high-yield products, which is around 1.5 per cent of China’s overall banking assets.

In a recent report, Moody’s said P2P lending did “not pose systemic risks given its small size” at about 1 per cent of total shadow banking assets.

Liu Li-Gang, chief China economist at Citi, said while (NPLs) were higher than official figures indicate, the level was still manageable.

India

FICO and Lenddo Partner to Extend Credit Reach in India, (PR Newswire), Rated: A

FICO, the world leader in credit scoring, has today announced a new partnership with Lenddo, a specialist in credit and verification technologies. Together, the companies plan to develop a credit risk score for consumers in India who have a limited or no formal credit history.

Lenddo was founded in 2011 to improve financial inclusion for 1 billion people around the world, enabling financial service providers to access and serve new and underserved markets using its disruptive technology and leveraging new sources of digital data, such as mobile-social digital footprints.

Author:

George Popescu