- Today’s main news: SoFi’s new CEO wants to get the company ready to go public. Revolut’s transaction volumes increased 700%. China to crackdown on non-bank lending. Blender raises $16M.
- Today’s main analysis: Stay away from LendingClub’s notes and shares.
- Today’s thought-provoking articles: Legacy banks, digital startups see opportunity to go beyond storing money. LendingBlock aims to mainstream crypto lending. Marketplace lenders raises almost $9B last year.
- SoFi CEO aims to take SoFi public. AT: “It’s about time, and the company probably would have already started the paperwork had it not been for the scandal that erupted late last year around the former CEO Mike Cagney.”
- Bank charter remains open for SoFi. AT: “Why close doors that need not be closed?”
- Should investors stay away from LendingClub’s notes, shares? AT: “Hobbyist investor Kevin Mackie shares his experience with LendingClub.”
- Legacy banks, digital startups see opportunity to go beyond storing money. AT: “Financial services have grown more complex in the last few years. Technology has enabled greater innovation and specialization, but this will only continue. It’s been a long time since banks saw themselves as simply places people store money. Now, however, it’s essential that they think of themselves otherwise.”
- Retail banks are missing out on digital financial advice opportunities.
- Why neobanks need to find a niche offering. AT: “This makes a lot of sense.”
- How Capital One is rethinking its approach to products.
- Are banks serious about mobile security?
- Bringing credit invisibles into focus with alternative financial data. AT: “And I would argue there is one other category of credit invisibles – those who choose not to enter into debt, for whatever reason.”
- Mobile payments to hit $3T in two years.
- BREAKFORM / RE closes subdivision development via crowdfunding in 72 hours.
- Credible appoints new CFO.
- New York wants to revamp Bitlicense.
- Revolut transaction volume increases 700%. AT: “That’s a big leap in 12 months. I’d be curious about what caused it.”
- LendingBlock wants to popularize crypto lending.
- Big banks roll out new financial apps.
- NatWest sets up network of fintech accelerator hubs.
- MPLs raised almost $9B last year.
- ID Finance uses behavioral metrics to bolster security.
- Celsius is a digital wallet and a P2P lending platform.
- India: P2P lenders gain popularity in small cities.
- Israel: Blender raises $16M.
- Brazil: Airfox launches mobile app for unbanked.
- Canada: Big banks strive to give better digital financial advice.
- Africa: PayJoy takes smartphone financing to Tanzania with Vodacom, CBA.
- Africa: PayJoy partners with Allied Mobile to take more smartphones to Africans.
- United States
- Anthony Noto’s Mission as SoFi CEO: Get the Startup Ready to Go Public (Bloomberg), Rated: AAA
- SoFi’s new CEO says bank charter remains an option (American Banker), Rated: A
- LendingClub’s Underwriting: Stay Away From The Notes And The Shares (Seeking Alpha), Rated: AAA
- Legacy Banks and Digital Startups See a Big Opportunity to Move Beyond Simply Storing Money (AdWeek), Rated: AAA
- Retail Banks Are Missing Opportunities to Give Digital Financial Advice (Wealth Management), Rated: A
- Why neobanks need to find a niche offering (Tearsheet), Rated: A
- How Capital One is rethinking its approach to products (Tearsheet), Rated: A
- Are banks too blasé about mobile security? (American Banker), Rated: B
- Bringing Credit Invisibles Into Focus with Alternative Financial Data (LendIt), Rated: A
- Mobile Payments In US To Reach $ 3 Trillion Within Two Years (Payment Week), Rated: A
- BREAKFORM | RE Closes a Small Lot Subdivision Development in Record Time Via Crowdfunding (PRWeb), Rated: A
- Credible Appoints Chris Bishko as Chief Financial Officer (BusinessWire), Rated: B
- New York Lawmakers Open to Revisiting the BitLicense (CoinDesk), Rated: B
- United Kingdom
- Transaction volumes increase 700pc at fintech firm Revolut (Independent.ie), Rated: AAA
- Lendingblock Aims to Popularize Crypto Lending in a Secure and Transparent Way (cryptovest), Rated: AAA
- Britain’s big banks play catch up with fintech with new apps (Reuters), Rated: A
- NatWest sets up network of fintech accelerator hubs (Finextra), Rated: B
- Screws to tighten further on non-bank lending (The Standard), Rated: AAA
- European Union
- European Fintech Alliance raises bank API fears (Finextra), Rated: A
- Marketplace lenders worldwide raised nearly $9bn last year (P2P Finance News), Rated: AAA
- Online lender ID Finance bolsters security with beahvioural biometrics (Finextra), Rated: A
- Celsius: Get Dollars When You Need Them or Get Paid to HODL (cryptovest), Rated: A
- ‘Essential’ brokers advising Xinja on mortgage strategy (TheAdviser), Rated: A
- Mortgage franchise sees decline in loan settlement (AustralianBroker), Rated: A
- P2P platforms as NBFCs gaining popularity in small cities, but there’s a catch (Financial Express), Rated: AAA
- Peer-to-Peer Lending Startup Blender Raises $16 Million in Debt Financing and Equity (CTech), Rated: AAA
- Latin America
- Airfox Launches Mobile App in Brazil, Giving Unbanked Access to Financial Services (PRWeb), Rated: A
- Big banks strive to give better digital financial advice (BNN), Rated: AAA
- PayJoy Partners With Vodacom & CBA to Bring Smartphone Financing to Tanzania (Crowdfund Insider), Rated: AAA
- PayJoy Teams Up With Allied Mobile to Bring More Smartphones to Africans (Crowdfund Insider), Rated: A
Anthony Noto’s Mission as SoFi CEO: Get the Startup Ready to Go Public (Bloomberg), Rated: AAA
Anthony Noto, the new chief executive officer of Social Finance Inc., is looking to steer the company out of crisis and get it in shape for a potential initial public offering.
The vision for SoFi outlined by Noto didn’t stray far from the one set by his predecessor Mike Cagney, who was ousted after accusations of sexual misconduct inside the company. Noto wants to create a broad online financial-service company, adding checking and savings accounts and wealth management to the main business of refinancing student loans.
SoFi’s new CEO says bank charter remains an option (American Banker), Rated: A
In an interview during his first day on the job, Anthony Noto did not promise any big course changes, though he did leave open the possibility that SoFi will revive its quest to get a banking license.
LendingClub’s Underwriting: Stay Away From The Notes And The Shares (Seeking Alpha), Rated: AAA
I bought my first batch of $25 notes on April 22, 2016. Now, it is important to note that LendingClub is very clear in its advertising that “99% of portfolios with 100+ Notes have seen positive returns.” So I suppose I added a level of risk by not having a portfolio worth at least $2500. But even still, returns can be .1% annualized and count as ‘positive’, but that is not an acceptable return by anyone’s standards given the risks involved in lending to strangers.
To date, I have received $436 in payments, $96 of which is interest. I have lost $100 on notes that have charged-off, meaning that there is zero expectation of future payment and LendingClub collectors have stopped attempting to reach the borrower. I also have a note that is late, and based on how things have gone so far, I fully expect that to charge-off too and will lose the $11.50 still owed. In short, I have already lost almost 20% of my initial investment, crossing my fingers that none of the 14 notes I still have that are current don’t enter a late status with more than a year to go before the oldest reaches full term. My results have been dismal.
LendingClub’s ratings are A-G, with A being the safest. As you can see, the vast majority of my portfolio sits in A-C, with one E and one G note (LendingClub did away with F and G notes last year).
Legacy Banks and Digital Startups See a Big Opportunity to Move Beyond Simply Storing Money (AdWeek), Rated: AAA
Change can be hard for the financial industry, which is dominated by decades of processes and internal systems. But with a slew of upstarts making their way into the trillion-dollar industry, the old guard is finding innovative ways to beat these challenger brands at their own game.
“A lot of these companies have what we call ‘technical debt’—very expensive mainframe systems that are very difficult to change, run [and are] expensive and obviously that limits their ability to innovate,” said Oliwia Berdak, principal analyst at Forrester Research. “The biggest challenge is often culture … In banks the attitude has always been to perfect [products] before it’s unleashed on customers and [technology] is a big change where you’re working with a certain degree of uncertainty and risk.”
According to data collected by Accenture, 90 percent of banking executives said that their companies needed to “innovate at an increasingly rapid pace just to remain competitive,” but only 47.8 percent say that they are actually “investing comprehensively” in digital.
Another challenge: For all the talk about slick mobile banking apps and services, consumers—gasp—still like going to physical banks to manage financial decisions. Eighty-seven percent of customers enjoy going to a physical bank and prefer to interact with a human while there, per Accenture.
Retail Banks Are Missing Opportunities to Give Digital Financial Advice (Wealth Management), Rated: A
Why neobanks need to find a niche offering (Tearsheet), Rated: A
Customers still aren’t excited about digital-only banks. Less than 10 percent of Americans looking to open a checking account would consider doing so at a digital bank, according to a new report by Cornerstone Advisors.
For example, San Francisco-based neobank Chime’s customers are mostly middle-income millennials, with a median age of 29 and incomes between $45,000 to $65,000. Chime says it caters to a gap in the market for younger customers who felt larger institutions weren’t meeting their needs.
Neobanks should focus on a “clear, differentiated value proposition” for the customer, but too many of them are just adding a little technology to a customer experience that’s not terribly different from what the big banks offer, said Satya Patel, a partner at Homebrew, a seed-stage venture capital firm based in San Francisco and an investor in Chime.
How Capital One is rethinking its approach to products (Tearsheet), Rated: A
For the past year, Capital One has been rethinking how it can get out of the too-common approach of “innovating” by layering new technology on top of an old product — it’s realized it needs to entirely reconsider the customer’s interaction with it.
Are banks too blasé about mobile security? (American Banker), Rated: B
About a third of companies have knowingly sacrificed security for expediency or business performance, according to a newly published study, and researchers said that bankers’ responses were consistent with the group as a whole, which included health care and other sectors.
Bringing Credit Invisibles Into Focus with Alternative Financial Data (LendIt), Rated: A
Ten percent of the U.S. adult population do not have a credit score or history with any of the big three credit bureaus.
That’s 1 in 10, or roughly 26 million people who are considered “credit invisible.”
But the financial underserved market spends $173 billion in fees and interest to use $1.94 trillion in financial services, according to the 2017 Center for Financial services Innovation study.
There are four basic categories of people who fall under the credit invisibles umbrella:
- Millennials: People between 18– 34 and have not yet borrowed money or gotten a credit card.
- Low-Income: People who don’t make enough money to gain access to credit.
- Recent immigrants: People who recently moved to the U.S. but haven’t established credit.
- Mass-affluent: People who earn more than $100,000 per year and pay with cash instead of credit.
Mobile Payments In US To Reach $ 3 Trillion Within Two Years (Payment Week), Rated: A
in 2015, mobile payments in the US represented $550 billion. That’s good by most any standard, but the growth expected is staggering. By 2020, that number is projected to hit $2.8 trillion. That represents a compound annual growth rate (CAGR) of 39.1 percent, which is far beyond most any but the most unlikely investments.
China represents $5.5 trillion in mobile payments use as of right now, a combination of various societal factors like a comparative eschewing of the personal computer in favor of the mobile device, as well as a near-ubiquity of locations that accept the system.
BREAKFORM | RE Closes a Small Lot Subdivision Development in Record Time Via Crowdfunding (PRWeb), Rated: A
BREAKFORM | RE closed its latest small lot subdivision development project in the prime West Hollywood adjacent neighborhood in record time using Equity Multiple, one of the leading real estate crowdfunding platforms. The offering was 145% subscribed in 72 hours.
Credible Appoints Chris Bishko as Chief Financial Officer (BusinessWire), Rated: B
Credible, the consumer finance marketplace that helps consumers save money and make smarter financial decisions, today announced that it has appointed Chris Bishko as chief financial officer. Mr. Bishko will report to Credible’s founder and CEO Stephen Dash.
New York Lawmakers Open to Revisiting the BitLicense (CoinDesk), Rated: B
A bill to reform the regulation could be introduced “very soon,” State Senator David Carlucci told CoinDesk.
But what is likely to remain is the animosity toward the BitLicense, as evidenced by the small but dedicated protest gathering outside just before the roundtable began, not to mention the grievances aired by the two dozen or so attendees.
Transaction volumes increase 700pc at fintech firm Revolut (Independent.ie), Rated: AAA
Fintech start-up Revolut has seen its monthly transaction volume increase by over 700pc in the last 12 months to $1.5bn (€1.2bn).
Lendingblock Aims to Popularize Crypto Lending in a Secure and Transparent Way (cryptovest), Rated: AAA
Lendingblock aims to become the first to build a marketplace where cryptocurrency lenders meet borrowers, and can exchange their assets across blockchains. The platform aims to bring securities lending to the crypto economy. The current estimates of the market paint a picture of enormous potential for development: in 2017, $2 trillion of assets on loan in traditional securities lending brought approximately $4 billion in revenue. Replicating this in crypto could generate up to $300 million within 3 years as the project notes in its white paper.
Britain’s big banks play catch up with fintech with new apps (Reuters), Rated: A
British retail banks are poised to introduce money management apps to compete with those already launched by financial technology start-ups, betting their trusted brands, broad client base and deep pockets will help them make up lost ground.
NatWest sets up network of fintech accelerator hubs (Finextra), Rated: B
The UK’s NatWest is launching four specialist fintech accelerators based in its Bristol, Edinburgh, London and Manchester sites.
Screws to tighten further on non-bank lending (The Standard), Rated: AAA
China will tighten its crackdown on illegal fundraising to fend off financial risks, according to an inter-agency meeting.
European Fintech Alliance raises bank API fears (Finextra), Rated: A
The European Fintech Alliance has fired another broadside in its tussle with the financial services establishment over PSD2, raising fears that banks will develop substandard APIs as a way to fend off competition.
Marketplace lenders worldwide raised nearly bn last year (P2P Finance News), Rated: AAA
THE GLOBAL marketplace lending sector saw nearly $9bn (£6.45bn) invested across 233 deals last year, marking a new funding record for the industry.
Consultancy firm Fintech Global, who compiled the data, found that equity investment in the sector rebounded to $8.9bn last year after a slowdown in 2016. The total was boosted by the top 10 deals, which raised a combined $4.4bn.
The second half of the year was strongest for funding, with the largest deal of the year closing in the fourth quarter when Shanghai-based peer-to-peer lender Lufax raised $1.2bn.
Online lender ID Finance bolsters security with beahvioural biometrics (Finextra), Rated: A
ID Finance, the emerging markets fintech company, is incorporating behavioural biometrics into its AI-based fraud scoring engine to eliminate fraud, boost loan approvals and reduce the incidence of non-performing loans.
The behavioural biometrics system studies the unique typing and behavioural patterns users display during the loan application process to capture a range of patterns. These include mouse movements, to how fingers interact with a keyboard. The biometrics record patterns such typing speed, typos, flight time between keys, keystroke depressions, as well as the patterns from actual input.
Celsius: Get Dollars When You Need Them or Get Paid to HODL (cryptovest), Rated: A
The global financial system is wobbling. Banks and other traditional financial institutions have so far managed to survive the crisis resulting entirely from their errors, greed, and arrogance. Now, many believe, they won’t live through the crypto revolution unless they embrace it.
Meet the Celsius Wallet – a combination of a digital wallet and a peer-to-peer lending platform where members can earn passive interest on their crypto holdings and use them as collateral to get loans in fiat currencies.
‘Essential’ brokers advising Xinja on mortgage strategy (TheAdviser), Rated: A
The chief executive of banking disruptor Xinja has revealed that mortgage brokers have been involved in the group’s home loan plans and will be “essential” to its strategy.
The crowdfunded online lender recently received an Australian credit license (ACL) from the Australian Securities and Investments Commission (ASIC) and plans to utilise the broker channel to facilitate its digital home loan approval process.
Mortgage franchise sees decline in loan settlement (AustralianBroker), Rated: A
Mortgage franchise Yellow Brick Road posted a 2% decline to $7.74bn in loan settlement volume in the first half of FY18 over the previous period as it reduced its number of branches.
Overall, the company delivered 85% growth in profitability, with net profit before tax increasing to $0.53m in the first half of FY18 over the same period of FY17. It cited higher revenue – up by 5% – and lower costs – down by 4% – as drivers of its result.
The company also expects the addition of a small business lending product through its partner Prospa to provide additional revenue opportunities for its network and support growth in commercial lending.
P2P platforms as NBFCs gaining popularity in small cities, but there’s a catch (Financial Express), Rated: AAA
P Kanwal is from Punjab’s Bhatinda. He has a furniture business which mainly deals in cash, because of which it was difficult for him to get a secured loan from the formal banking system. For him, a Peer-to-peer (P2P) lending platform came as a rescue, which got him an unsecured loan for his kid’s education and expanding his business.
This not just the story of Mr Kanwal, but many more small entrepreneurs who are operating their businesses in Tier-1, Tier-2 cities and far-flung areas, some not even on Google map, who are getting financial support through P2P lending.
The pattern that emerges currently from the P2P lending is that borrowers from tier-2 and tier-3 cities comprised 20% and 17% of the total number of loans disbursed through the platform. The new-to-credit borrowers comprise 35% of fulfilled borrowers, while those with poor credit ratings accounted for 10% of the overall number.
Peer-to-Peer Lending Startup Blender Raises Million in Debt Financing and Equity (CTech), Rated: AAA
Israel-based peer-to-peer lending startup Blender P2P Israel Ltd. has raised $16 million in equity and debt financing, the company announced Monday.
Airfox Launches Mobile App in Brazil, Giving Unbanked Access to Financial Services (PRWeb), Rated: A
More than 44 percent of Brazil’s population is unbanked, another 30-44 percent lack sufficient access to mainstream financial services, and those with credit cards face interest rates upwards of 200 percent (sources: World Bank, Bloomberg).
Big banks strive to give better digital financial advice (BNN), Rated: AAA
CTV’s Chief Financial Commentator Pattie Lovett-Reid discusses the Canadian banks’ quest to deliver quality online financial advice in an effort to catch up with the digital age.
PayJoy Partners With Vodacom & CBA to Bring Smartphone Financing to Tanzania (Crowdfund Insider), Rated: AAA
PayJoy, a San Francisco fintech startup, announced this week it has teamed up with Vodacom and CBA to bring smartphone financing to the country of Tanzania.
PayJoy Teams Up With Allied Mobile to Bring More Smartphones to Africans (Crowdfund Insider), Rated: A
PayJoy, a San Francisco fintech startup, announced on Friday it has teamed up with mobile distributor Allied Mobile to bring affordable smartphone payment plans to markets across the continent of Africa. According to the duo, Allied Mobile will use PayJoy Checkout, an instant paperless finance system for customers without access to formal credit, and the patented PayJoy Lock which enables “pay-as-you-go” access to the phone.