Thursday June 20 2019, Weekly News Digest

ASIC borrowers

News Comments Today’s main news: LendingClub expands borrower program. Funding Circle forced to narrow range of valuation. Yirendai revenues come from haircut loans. Chinese P2P lenders explore southeast Asia. Borrowell passes 1M members, raises $20M. Today’s main analysis: 5 ASIC findings on marketplace lending. Today’s thought-provoking articles: US Core, inflation ease. Fintech lending algorithms discriminate […]

The post Thursday June 20 2019, Weekly News Digest appeared first on Lending Times.

ASIC borrowers

News Comments

United States

United Kingdom

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News Summary

United States

LendingClub Expands Program to Help Borrowers Actually Pay Off Debt (Lend Academy), Rated: AAA

LendingClub shared a few stats on borrowers who choose this method:

  • Save an average of nearly $900 over the course of their loan
  • Cut their credit card interest rate nearly in half
  • Increase their credit score in just three months

The product has been tested for over a year and LendingClub is working with a partner network of over 1,700 credit card, bank and loan companies to make the process seamless. What’s interesting is borrowers can add up to 12 creditors per loan which is an important feature since borrowers often hold balances across many cards.

Turning Lending Club’s Worst Loans into Investment Gold (Towards Data Science), Rated: A

This is a writeup of a machine learning project I completed. In this post I hope to:

  • Describe my algorithm for predicting loan defaults.
  • Use the algorithm to construct a portfolio of clean loans

Inflation Miss (PeerIQ), Rated: AAA

US Core CPI rose by 2% YoY in May, just at the Fed’s target rate but below economists’ expectations. Consistently low inflation is boosting calls for a rate cut next week. The market is pricing in a 24% probability of a rate cut next week and a 76% probability of a rate cut in September.

Source: Bloomberg, PeerIQ

Fintech algorithms discriminate 40% less than traditional lenders (Quartz), Rated: AAA

Algorithmic fintech lending is less discriminatory against minorities than traditional loan officers, according to a recent study of US mortgages. The findings signal hope that technology could provide financing that’s more fair, but the research also underscores how widespread discrimination remains.

The US housing market has long been prejudiced against minorities. When Latino and Africa-American borrowers are looking to buy a home, they usually end up paying 7.9 basis points (0.079 percentage points) more than whites to take out the mortgage, and 3.6 basis points more when they refinance the debt, according to a National Bureau of Economic Researchworking paper published this month.

Buttigieg worries tech may add racial bias to credit decisions (American Banker), Rated: A

Pete Buttigieg said the way credit scoring is done in the U.S. is fraught with inequality and he’s worried the process may get worse with systems based on artificial intelligence.

Commercial Real Estate Crowdfunding Eyes ’18-Hour Cities’ for Small Investors (The Street), Rated: A

When Clear Point Gardens, a 604-unit apartment complex in Columbus, Ohio, recently changed hands, it produced a nearly 43% gain in 16 months, an amazing windfall for investors in the deal.

All 68 of them.

The sale of Clear Point, financed with help from investors on CrowdStreet’s online platform, is the latest example of how online syndication is revolutionizing the way deals are financed in the $6 trillion commercial real estate market.

HSBC launches digital mortgage platform with help from Roostify (HousingWire), Rated: A

One of the world’s largest banks is about to join the digital mortgage revolution, as HSBC Bank USA, the U.S. arm of HSBC Group, announced that it is partnering with Roostify to launch a digital mortgage platform.

Mirador’s Trevor Dryer: ‘The world doesn’t need another high price lender’ (Tearsheet), Rated: A

Trevor started Mirador to fill this void of bank-originated small business lending. We talk about why he started Mirador with a lending as a service model and what painpoints he was addressing.

Dave is launching a checking account that helps users build their credit score (Business Insider), Rated: A

The Los Angeles-based company, backed by investors including Mark Cuban, the DJ Diplo, and hedge fund Mark 2 Capital, said on Tuesday it’s rolling out a new checking account product that reports all rent payments to credit agencies. The new feature, added to Dave’s original app, helps customers to build their credit. Dave plans to begin reporting utility payments later this summer.

CoreLogic Launches Marketrac Platinum (CoreLogic), Rated: A

With Marketrac Platinum, lenders and title companies can utilize the interactive platform to identify top performing real estate agents and brokerage firms to prioritize professional relationships based on market trends.

Zirtue Revolutionizes Peer-to-Peer Lending (IT Business Net), Rated: A

Sprout Mortgage Launches ACORN Automated Underwriting System (Yahoo! Finance), Rated: A

Sprout Mortgage, the innovative force in Non-QM lending, today announced the launch of its ACORN automated underwriting system (AUS) as part of an ongoing effort to deliver value-added services to its third-party origination clients.

Finicity Integrates with LendingQB to Optimize Mortgage Origination Process (PR Web), Rated: B

Finicity announced today an integration with LendingQB. LendingQB’s platform now uses Finicity’s digital Verification of Assets (VoA) solution to allow lenders to free up resources, increase processing speed and reduce mortgage fraud while providing borrowers with a more efficient and positive experience.

Cardholders Seek to Capital-ize on Madden (The National Law Review), Rated: A

Last week, three Capital One cardholders filed a putative class action in the Eastern District of New York, Cohen v. Capital One Funding, LLC,1 alleging that the rates of interest they paid to a securitization trust unlawfully exceed the sixteen percent threshold in New York’s usury statutes.  The Plaintiffs seek to recoup the allegedly excessive interest payments and an injunction to cap the interest rates going forward.

Fundbox Tapped By Top B2B E-Commerce Software Provider OroCommerce to Power Net Terms (Fundbox Email), Rated: A

According to a 2019 research study by

Cross River poaches execs from student refinancing firm Laurel Road (American Banker), Rated: A

Cross River Bank, a Teaneck, N.J.-based bank that focuses most of its energy on supporting fintechs, is hiring several people from the student loan refinancing company Laurel Road to its capital markets team.

Cross River’s fintech partners include Affirm, Circle, Best Egg, Coinbase, Rocket Loans, Stripe, Upstart and Transferwise.

Optimizely Closes $ US105M Financing Round (Which-50), Rated: A

Optimisation platform Optimizely has closed US$105 million in financing, including US$50 million in Series D funding. The funding, led by Goldman Sachs Private Capital Investing, also included Accenture Ventures.

Austin Niemiec Named New Executive Vice President of Quicken Loans Mortgage Services (Yahoo! Finance), Rated: B

Quicken Loans Mortgage Services (QLMS), the second largest mortgage lender serving the needs of brokers, regional banks and credit unions, today announced that Austin Niemiec has been named Executive Vice President.

Self Lender Awarded Inaugural Inclusive Fintech 50 (PR Newswire), Rated: B

Self Lender is pleased to announce its inclusion in the inaugural list of winners of the Inclusive Fintech 50. The Inclusive Fintech 50 is a competition launched in February to help early-stage fintech companies attract capital and resources to benefit the world’s 3 billion financially underserved people. The competition was organized by MetLife Foundation and Visa Inc., with global nonprofit Accion and World Bank Group member IFC.

United Kingdom

No sign yet of breaking out of circle (The Times), Rated: AAA

The early days of a company’s life on the stock market tends to set the tone for what follows. The grief around Funding Circle’s listing began even earlier and has continued to plague it.

Days before trading in shares of the specialist online lender began at the end of September, Funding Circle and its bankers were gunning for a valuation of up to £1.75 billion, only to be forced to narrow the expected range shortly before it came to market, and then to price the shares at the lower level of 440p apiece.

Source: Refinitiv

Three Biggest Overperformers And One Underperformer In Peer-To-Peer Lending (4th Way Email), Rated: AAA

Landbay

  • Over £300 million lent.
  • Maximum loan size to property valuation (LTV) 80% – better than all the major high-street banks.
  • Average LTV: 72% – highly suitable for these kinds of mortgages.
  • Average rent: 190% of the monthly mortgage payment.
  • Over 90% of mortgages are to experienced and professional landlords.
  • Reserve fund: 0.6% of outstanding mortgages – modest but useful.
  • Type of lending: residential BTL.
  • Typical risk of this type of bank lending: very low.
  • P2P bad debts: none.
  • Interest rate: 3.54% after expected bad debts.

Proplend

  • £65 million lent.
  • Maximum loan size to property valuation (LTV) 75% and investors can choose to limit to 50% – lower than all high-street banks.
  • Average LTV  60% – highly suitable for these kinds of mortgages and loans.
  • Minimum rent on rental properties usually 110% of the monthly mortgage payment.
  • Type of lending: residential and commercial rented properties up to five years; some development lending; a mix of senior and junior debt (junior means other lenders get repaid first if the borrower’s property has to be forcibly sold to repay the loans).
  • Typical risk of this type of bank lending: low to moderate for shorter-term rental properties; moderate to high for developments and junior debt.
  • P2P bad debts: none.
  • Interest rate: 7.32% to 9.43% after expected bad debts (7.32%-12.13% before bad debts).

CrowdProperty

  • £35 million lent.
  • Maximum loan size to property valuation (LTV) 70% and investors can choose to limit to 50% – lower than all high-street banks.
  • Average LTV  61% (against starting value of property) – very low for these kinds of loans.
  • Type of lending: property development lending.
  • Typical risk of this type of bank lending: moderate to high.
  • P2P bad debts: none.
  • Interest rate: 8% after expected bad debts (7.32%-12.13% before bad debts).

Rebuildingsociety – the Underperformer

  • £15 million lent.
  • Type of lending: unsecured small business lending to sub-prime.
  • Typical risk of this type of bank lending: moderate to high.
  • P2P bad debts: 17% of total lent in pounds
  • Interest rates: estimate an average 5% after heavy losses.

British Business Bank adds £60m firepower to non-bank lender (AltFi), Rated: A

Simply, a non-bank lender, focused on SME asset financing has scored a a third financing tranche of £60m from the British Business Bank.

One fifth of UK investors upping exposure to debt investments (Investment Week), Rated: A

One-fifth of UK investors are increasing their exposure to debt amid low interest rates and Brexit uncertainty, according to research from FJP Investment, which found this number climbs to 34% when 18-to-35 year-olds are considered in isolation.

However, the independent survey – which comprises 950 investors – discovered 44% of participants are more focused on short-term debt investments over this financial year due to both political and economic uncertainty; this figure rose to 68% among under 35s.

OakNorth completes loan to Oncore IT for the acquisition of Fuse Technologies (Fintech Finance), Rated: A

OakNorth – the bank for entrepreneurs, by entrepreneurs – has provided a loan to Oncore IT, a managed service and cloud platform provider.

The finance has been used for the acquisition of Fuse Technologies, a London based provider of unified communications tools.

Brexit and drive for growth sees IT fintech salaries surge (AltFi), Rated: A

London-based java developers lead the pack, commanding starting salaries of up to £60,000, followed by software developers in the capital on up to £55,000.

Intense competition between UK-based fintechs – lead by Revolut, TransferWise, OakNorth and Funding Circle – and high street banks attempting to upgrade their services has led to bidding wars in order to gain top level IT professionals, said the report called The UK Fintech Revolution.

Lloyds first to launch open banking app for credit cards and savings (Fintech Futures), Rated: A

Customers of Lloyds Bank, Halifax and Bank of Scotland are the first to see their savings accounts and credit cards in one place, thanks to open banking technology, reports Jane Connolly.

J.P. Morgan working on a secretive digital banking project based out of London (TechCrunch), Rated: A

A number of incumbent banks are known to be developing new digital-first products in a bid to keep the new wave of challenger banks at bay and now it appears that the latest to make that move is J.P. Morgan.

According to sources, the investment bank has begun recruiting for a secretive skunkworks project within London’s booming fintech industry. Very few details are known about what exactly J.P. Morgan plans to build, although TechCrunch understands the bank is busy hiring high level developers with full-stack and cloud-based dev skills for the new project, along with other personnel.

Following Facebook’s Libra launch, UK regulator hints at greater Big Tech scrutiny (AltFi), Rated: A

The FCA says technology is dramatically changing the markets it regulates and blurring regulatory boundaries in a new report into its activities.

China

Yirendai Revenues Come From Suspect Haircut Loans (Seeking Alpha), Rated: AAA

Over 60% of YRD’s FY 2018 revenues stem from “haircut loans” (P2P service fees charged to borrowers) that are prohibited by Chinese regulation. Recent developments in the P2P lending sector with regards to questionable lending practices, unethical collections, and usury are not being disclosed in YRD’s SEC filings, leaving U.S., Canadian, and international investors completely in the dark.

The Chinese P2P Lending Market

Unlike in developed countries, there are no administrative bodies (such as the U.S. Securities Exchange Commission) which regulate peer to peer lending exchanges in China. Instead, such services are regulated by self-organized internet associations and retail banks. The lack of meaningful oversight has caused the Chinese P2P lending market to bubble into $178.9 Billion in FY2018, almost 22 times the size of the P2P lending market in the United States and 447 times that of Japan’s.

Over 850+ fraudulent/ponzi lending platforms were exposed in FY 2018 alone.

Source: iiMedia Research

But the bad numbers don’t end here:

– The total loan volume amounted to 245.9 billion in Q12019, down -55.5% Y/Y.

– 85.7 in new loans were lent in March 2019, down -53.5% Y/Y.

– Principal balance of all loans: 8,029 CNY billion, down -3.6% Y/Y.

– sum of P2P lenders and borrowers, up 21%.

Chinese P2P lending platforms look to Southeast Asia amid industry purge back home (Technode), Rated: AAA

A slew of Chinese fintech and peer-to-peer (P2P) lending platforms are looking to more lenient markets in Southeast Asia (SEA), following a prolonged industry crackdown in China that has left the sector reeling.

Over the past year, China’s regulatory clampdown on risky financial practices has wiped out more than half of the country’s P2P lending platforms. As of May, just 900 survived, down from almost 1,900 recorded a year ago.

In early June, Indian daily newspaper the Economic Times reported that Chinese fintech companies, including WeShare, 9F Group, and CashBUS, are exploring investment opportunities in the country’s burgeoning online lending sector, particularly in the P2P lending space.

XW Bank Welcomed by IMF as One of 6 Outstanding FinTech Companies From China (Yahoo! Finance), Rated: A

The International Monetary Fund (IMF) welcomed 6 outstanding FinTech companies from China including Ant Financial, WeBank and XW Bank.

European Union

Snask helps Klarna to communicate its ‘smooth’ banking offer with off-the-wall film and photography (Creative Boom), Rated: A

When Stockholm studio Snask was approached by Klarna, one of Europe’s biggest banks, to help communicate how its revolutionary payment solutions make life easier for its customers, it set out to create seven “never-seen-before” worlds.

LHV Bank Integrates Estateguru Investments in Online Banking Dashboard (P2P-Banking), Rated: A

You might wonder why that is relevant as most readers are unlikely to be LHV Bank customers. LHV Bank is a bank in Estonia.

I think it is highly interesting, as it is – to my knowledge – the first time a bank has integrated p2p lending investments in its customer interface. So the LHV bank customers, not only see their accounts and stock depots, but also their Estateguru investments conveniently listed in their online bank dashboard. Much has been talked about what role could banks have in p2p lending (mere transaction banks? providing credit lines?) and also there is a lot of speculation if PSD2 (open banking) will help fintechs to seize the access to the customer from banks because they could control the user interface in the future. But this is actually a first step a bank takes in the opposite direction. By aggregating “non-bank” information inside the dashboard, they aim to make the banking interface more useful for the customers.

International

How Klarna is Helping the World Shop Like a Queen (Power Retail), Rated: AAA

Klarna is the latest Buy Now Pay Later (BNPL) app to sweep through the world. Originating in Sweden, the BNPL platform allows users to purchase goods and schedule repayments in timeslots. At this point in time, Klarna is the first and only BNPL platform that’s available in the U.S. It’s also available in the UK, Denmark, Norway, Belgium and many other European countries.

Australia

Five key ASIC findings on marketplace lending (Cuffelinks), Rated: AAA

In April 2019, the Australian Securities and Investments Commission (ASIC) released its third report on marketplace lending, the Survey of marketplace lending providers: 2017–18The report paints a clear picture of a once-nascent industry enjoying growth with new borrowing increasing by nearly 45% in the 2017-18 financial year. The report notes that this growth is moderating compared to the near doubling in funds borrowed the previous year (from $156 million to $300 million). By contrast, the Australian Bureau of Statistics (ABS) reports that overall personal lending has declined by an astonishing 24% in the 12 months to March 2019.

Source: Cuffelinks

The ASIC report found that the average interest rate charged for marketplace loans entered into during the 2017–18 financial year was 11.5%, up from 10.5% in the 2016–17 financial year.

Source: Cuffelinks
India

All you need to know about P2P lending and Commodities (India Times), Rated: AAA

Vinay Mathews, Founder and COO, Faircent and Sanjay Gakhar, Vice President, MCX talks about the benefits of investing via the P2P platform and Commodities, ET Wealth investment Workshop in Delhi Listen in!

Watch the video here.

Asia

Indonesian firms turn to P2P lenders for funds (Asia-First), Rated: AAA

Small companies in Asia-Pacific are tapping new funding sources, according to the Economist Intelligence Unit (EIU) study commissioned by Mastercard, with peer-to-peer (P2P) lending platforms in Indonesia reportedly posting USD1.4bn worth of transactions in 2018, an increase from USD20m in 2016.

Canada

Borrowell passes one million members, raises $ 20 million in new capital (Zone Startups), Rated: AAA

RFI alumni company Borrowell announced that it had reached significantly more than a million users, making it Canada’s largest consumer fintech company by that measure.

In addition to this membership milestone, Borrowell also confirmed that it has received $20 million in Series B funding.

AltFi Toronto Summit 2019 (AltFi), Rated: B

WED, 9 OCTOBER 2019, 08:30 – 17:30 EDT

Blind Bird tickets are now on sale at a 50% discount ahead of the Summit’s agenda being announced later this Summer.

Authors:

George Popescu
Allen Taylor

The post Thursday June 20 2019, Weekly News Digest appeared first on Lending Times.

Tuesday February 13 2018, Daily News Digest

china asset-backed securities

News Comments Today’s main news: SoFi’s adjusted 2017 profit was $126M. Funding Circle lent over 117M GBP in January. CreditEase Fintech Investment Fund invests in Fair. FT Partners advises Yapstone on $71M Series C round. LendingKart raises Rs1,129 crore. Today’s main analysis: Why China isn’t worried about the slowdown in asset-backed securities. Today’s thought-provoking articles: Goldman’s fintech approach to […]

china asset-backed securities

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Canada

MENA

News Summary

United States

Fintech SoFi blames missed earnings on borrowers skipping payments, increased hiring costs (San Francisco Business Times), Rated: AAA

SoFi said it made an adjusted profit of $126 million after pulling in revenue of $547 million for all of 2017, but did not break out figures for the fourth quarter.

(MarketWatch), Rated: A

SoFi Turns Losers Into Winners (and Investors) with the So Money Sweepstakes (PR Newswire), Rated: A

From February 12th through 16th, SoFi will award $25 in a SoFi Wealth account to 200 losers of HQ Trivia each day. To enter for a chance to win, all people need to do is Tweet to @SoFi on Twitter with a screenshot of their HQ loss screen and the hashtag #SoMoneyEntry. In addition to the $25, winners will also receive SoFi’s new card game, “So Money,” featuring playful questions that aim to encourage people to talk more openly about their financial lives.

Goldman Sachs is taking a fintech approach to grow its consumer lending business (Econsultancy), Rated: AAA

Two of the biggest proofs of Goldman’s transformation were its launch of GS Bank, a internet bank with a $1 deposit requirement, and Marcus, an online consumer lending platform through which well-qualified consumers could obtain personal loans of up to $30,000. GS Bank has since been merged into Marcus, which now serves as Goldman’s consumer brand.

As QZ pointed out, “Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years, as much as it expects for its trading operations.”

As detailed by the Wall Street Journal, Goldman is reportedly in talks with Apple to offer buyers of Apple devices financing at point-of-sale. “Customers purchasing a $1,000 iPhone X could take out a loan from Goldman instead of charging it to credit cards that often carry high interest rates,” the Journal explained.

This type of financing is big business: by one estimate, $80bn of the $200bn consumers borrowed using retailer-affiliated credit cards or point-of-sale loans went towards big-ticket items including electronic gadgets.

Source: Econsultancy

The Future of Banking (Crowdfund Insider), Rated: AAA

The Use of Artificial Intelligence (AI) Will Increase

Artificial Intelligence (AI) will have a major role in banking for both the short-term and long-term. First, we will see AI help banks with fraud mitigation. Today, most fraud is detected through computer patterns that alert a fraud team who would then take the necessary steps to try to prevent or mitigate the threat. Now that technology has made access to money fast and easy, the transaction volume has increased exponentially.

Banks and Non-Banks Will Form Closer Partnerships

By tapping into a non-bank’s customer base, it will lower the bank’s cost of acquisition while providing more value for the customer. Banks will also realize that non-banks provide them with valuable data from their customer bases that they can leverage to provide a customized banking experience as well as a source for additional revenue streams.

There Will Be More Competition in the Digital Banking Space

Whether it’s JPMorgan Chase with Finn, or Greenhouse by Wells Fargo, big banks are entering into the digital banking space full force with the hope of attracting young consumers. Then you have digital banks like Ally, USAA and Capital One 360 who truly made a major effort in 2017 to attract millennials by tweaking their product, tone, messaging and branding to make sure they start penetrating that segment. We will continue to see that this year.

You still have niche financial products like Sofi that focuses on student loans or Stash Invest that focuses on investing, which are playing in the digital banking space.

Lastly, you have neobanks like Moven, GoBank, Simple and Varo who will continue to flourish and grow, but will be threatened by giants like Amazon, Google and Apple.

Cybersecurity will Get an Upgrade

After the highly publicized and damaging Equifax security breach that affected approximate 145 million Americans, we will surely see a modernization and upgrade of cybersecurity.

We spoke with the creator of the Chase Sapphire Reserve about millennials and the other challenges she’ll confront at JPMorgan (Business Insider), Rated: A

JPMorgan Chase, on the other hand, recently announced plans to expand its network. It’ll add 400 new branches in 15 to 20 new markets over the next five years — an investment spurred in part by the savings from the recently enacted tax law.

JPMorgan has, of course, culled some branches over the years, but far fewer than its peers — just 484, or 8.6%, since 2012, compared with cuts of more than 30% by its competitors Citigroup and Capital One over the same period.

BI: How does what happened with the Chase Sapphire Reserve phenomenon translate to the rest of the Chase consumer business?

Codispoti: The fact that we were able to break some myths with millennials. When I first took the job there was kind of this general consensus in the market that millennials wouldn’t pay a fee for a credit card or wouldn’t be interested in premium products — it just isn’t true. So I think we’re kind of breaking those myths when we think about banking and home lending as well.

We’ve shared in the past that we’ve had some extremely successful initial tests with the Sapphire Reserve customer, offering them a home lending offer of 100,000 points if they completed a home-lending mortgage with us. And 50,000 points for those who upgraded to Chase Private Client and deposited $100,000 into an account. We saw extraordinary results, greater than we ever expected. So clearly this is an engaged customer base, they love the Reserve brand. It transcends card into other areas of their financial life.

Citi Ventures’ Vanessa Colella: ‘No one runs innovation, it’s all about unleashing it’ (Tearsheet), Rated: A

As one of the largest financial institutions in the world, Citi takes its innovation efforts seriously. Combining internal and external models of collaboration with a disciplined corporate venture arm, the financial services giant ensures that it has a lot of coals in the innovation fire.

Real Estate Investment Platform, Sharestates, Continues Impressive Growth Launching New Marketplace in Arizona (AltFi), Rated: A

Today, Sharestates, an online real estate investment platform, announced today their inception into the Arizona Banking Department roster of lenders as Sharestates Investments LLC, NMLS ID number 1538766. With this launch, Sharestates will be offering their loan products to the real estate speculation and development community in a statewide effort.

As a part of Sharestates’ launch into the Arizona market, the company will be attending the 45th Pitbull Hard Money Conference located at the We-Ko-Pa Resort and Conference Center in Scottsdale, Arizona. The event will be held March 14-15, 2018 and members of the Sharestates team will occupy booth #417.

Sharestates has funded more than 895 individual loans, providing an average return on investment of 10.42%.

Realty Mentors Launches Its New Investment Advisory Business (Realty Biz), Rated: B

Realty Mentors announced a new investment advisory business. According to the article in Crowd Fund Insider.com, the company which is a commercial real estate diligence and underwriting company and is an affiliate company of CreditVest is claiming to be the first of its kind to launch in the commercial real estate crowdfunding industry.

When it comes to the real estate crowdfunding industry, their services will encourage new investors to enter the market because they will have the benefit of an objective and independent third party advising them.

Vishal Garg of Better Mortgage (Lend Academy), Rated: A

Our latest guest on the Lend Academy Podcast also thought it was crazy and decided to actually do something about it. Vishal Garg is the CEO and Founder of Better Mortgage and a few years back he missed out on buying his dream home because of the clunky and slow mortgage process. So, he started a company to completely turn this process on its head.

Stock Market Volatility & Your Retirement, Who You Gonna Call? Robo Or Human Advisor (Forbes), Rated: A

Spooked investors looking for reassurance beyond the panic in the headlines have two options to turn to. They can call up a financial advisor, or they can go on the Internet. Artificial intelligence, or fintech’s application of AI, robo advisors, are viewed by many as the future of affordable and effective retirement and investment advice. These algorithms are seen as thetechnology that will disrupt, if not replace, human advice.

Most robo advisor websites provide real-time quantitative information about the market’s performance. But information alone is not necessarily what people are looking for when they are faced with uncertainty. Market performance is public, but the impact on retirement investments is profoundly personal.

That observation touches on the key difference and perhaps the strategic advantage of human advice versus advice by algorithm alone. Clients, which for now are primarily of the human variety, are looking for someone to help them cope and to care as much as they do, as well as someone who has the discipline and expertise to provide perspective to what is otherwise presented in the news as chaos.

Klarna Announces Progressive Parental Leave and Benefit Policy for U.S. Employees (PR Newswire), Rated: A

Global payments provider Klarna (www.klarna.com) has implemented a new parental leave and benefits policy that offers all of its U.S. employees who become parents a comprehensive package that includes 20 weeks of leave at full pay, a flexible, part-time work week “ramp-up period” on their return and a two-year child care subsidy.

As of January 1, 2018, Klarna’s full-time and part-time female and male employees who become parents—either biologically or through adoption—are eligible to receive the new parental leave and benefits. In addition, applicable benefits of the new policy will be extended retroactively to U.S. employees who became parents in 2017.

The new Klarna parental leave and benefits policy for U.S. employees has three core components:

  • Parental Leave: The new parent may take 20 weeks of leave at full pay, and with full health and welfare benefits, during the child’s first two years.
  • Ramp-Up Period: Upon returning to work, employees will have the option to return to work on a part-time schedule.
  • Child Care Subsidy: Upon their return to work, Klarna will provide new parents with a child care benefit during the child’s first two years that will subsidize parents up to $250 per month to defray costs.

Trump Administration Plans To Defang Consumer Protection Watchdog (NPR), Rated: A

Within weeks of coming on board, Mulvaney has worked to make the watchdog agency less aggressive. Under his leadership, the CFPB delayed a new payday lending regulation from going into effect and dropped an investigation into one payday lender that contributed to Mulvaney’s campaign. In another move that particularly upset some staffers, the new boss also dropped a lawsuit against an alleged online loan shark called Golden Valley Lending. The suit says the lender illegally charges people up to 950 percent interest rates. It took CFPB staffers years to build the case.

Bonenfant sent NPR a screenshot from the Golden Valley website. It says on her $900 loan, her scheduled payments in less than 12 months will total $3,735, or more than four times what she borrowed.

Bonenfant has so far paid more than $3,000 to Golden Valley and rung up more than $1,000 in overdraft fees at her bank.

The lawsuit was moving forward until Mulvaney came on board, when it was suddenly dropped.

Federal Rent-a-Bank Bill May Harm Financially Distressed Consumers (Pagosa Daily Post), Rated: A

Recently, it was announced that the U.S. House of Representatives is likely to vote, the week of February 12, on H.R. 3299, the so-called “Madden fix” bill which would preempt state interest rate caps and open the flood gates to online predatory lending. The bill is spearheaded by U.S. Reps. Patrick McHenry (R-N.C.) and Greg Meeks (D-New York).

There are signs that some online lenders are making large numbers of loans that consumers will not have the ability to repay:

  • News reports show that delinquencies and charge-offs at marketplace lenders are rising.
  • One lender has had so many of its loans fail, that it had to repay investors for their losses in consecutive securitizations of the loans it bundled up and sold to Wall Street.
  • One online lender reportedly failed to verify a borrower’s income for a full two-thirds of its loans in 2016.
  • Moody’s credit-rating firm likens this industry to mortgage lending in the years leading up to the 2008 financial crisis in that “the companies that market the loans and approve them quickly sell them off to investors,” relieving themselves of the risk of the loan later going bad.
  • Many marketplace lenders make very large loans of $30,000-$50,000 or higher, and even 36% is a very high rate for such loans. Many states have tiered rate caps in recognition that interest becomes more unaffordable the larger the loan. Iowa, for example, caps interest at 21% for loans over $10,000.
United Kingdom

Funding Circle lends over £117m in January (Bridging&Commercial), Rated: AAA

Funding Circle has announced that it lent more than £117m last month to UK businesses.
The largest portion of funding went to businesses in the South East (22.1%), followed by companies based in London (16.2%), the Midlands (14.4%) and the South West (11.7%).
The property and construction sector received the largest part of the funding (17.6%), followed by professional and business support (13.5%) and retail (11.9%).

Referral schemes: make money from your friends and family (Love Money), Rated: B

People using peer-to-peer platform Funding Circle can net £50 if they recommend a friend or relative who goes on to lend at least £2,000.

Normally, Zopa investors can earn up to £50 if the person they recommend lends £2,000 with the platform. They’ll receive £50 too.

FSB launches new FinTech funding platform for SMEs (Tamebay), Rated: A

The Federation of Small Businesses (FSB) has launched a new fintech platform to provide small businesses and self-employed people with greater access to funding to help them grow and develop their enterprise..

The average amount a small business applies for from an alternative finance provider was found to be £39,000 in the survey, with equipment purchases and working capital for short-term operations or late payments being among the top reasons for businesses seeking finance.

LendInvest Announces Launch of Product Transition Process to Support Developers Throughout Their Projects (Crowdfund Insider), Rated: A

On Monday, LendInvest announced the launch of its new process for development finance borrowers to transition seamlessly between products. According to the online lender, the Product Transition process allows existing borrowers to transfer easily between specialized loans that are tailored to support them at each stage in their development project.

Mobile banking start up Fiinu launches Seedrs crowdfunding campaign (AltFi), Rated: B

Banking start up Fiinu has today launched a crowdfunding campaign on Seedrs,as it seeks £500k in seed funding to support its development and an application for regulatory approval from the Financial Conduct Authority (FCA).

China

CreditEase FinTech Investment Fund to Invest in Automotive Financial Technology Company Fair (Business Insider), Rated: AAA

CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its venture fund, CreditEase FinTech Investment Fund (“CEFIF”), recently joined a group of prestigious investors to support California based Fair’s strategic expansion. Other investors in this round of financing include Siemens-backed next47 global venture fund, BMW i Ventures, Millennium Technology Value Partners, 137 Ventures, G Squared and Upfront Ventures.

Fair is a mobile technology platform that allows customers to lease and return a car with flexible terms entirely by using a smartphone.

Why China Isn’t Worried About a Slowdown in This Lending Market (WSJ), Rated: AAA

China’s market for asset-backed securities—which bundle up car loans, mortgages, consumer loans and other receivables into bondlike products—surged in 2017, led by issuers including the financial affiliate of Alibaba Group Holding Ltd. and other nonbank lenders. Total issuance of such instruments, which are mostly denominated in yuan, jumped 90% to over $220 billion last year from 2016, according to S&P Global.

The country is now the world’s second-largest market for securitized assets after the U.S., where issuance reached $510 billion in 2017, it said.

In the past couple of months, however, issuance in China of securities backed by unsecured small consumer loans has slowed sharply. This came after Chinese financial regulators took steps to curb a proliferation of internet lenders making microloans, small, short-term loans that typically carry high interest rates. These small loans represent roughly 40% of all consumer loans backing asset-backed securities in the country, according to S&P.

Around $1.3 billion worth of securities backed by unsecured microloans were issued in January 2018, down from $3 billion in the same month a year ago and versus a peak monthly issuance volume of nearly $7 billion last autumn, according to data provider Wind Info.

Source: The Wall Street Journal

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

WeChat has permanently banned over 1000 “cash loans” mini programs which violated its verification and operation rules. Xinhuanet has reported that there were multiple mini programs about “loans” on WeChat (e.g. unsecured loans and quick loans), ranging from 200 to 100,000. Complaints about the illegal credit products reached over 1,000 on one of China’s leading complain platform Ts.21.com

Hong Kong Monetary Authority (HKMA) announced that it would amend the relevant regulations on virtual banks.

Official documents show that the original guidelines require that a virtual bank incorporated in Hong Kong must hold at least 50% of its shares by an officially recognized and reputable bank or financial institution. The new ordinance recommends that non-financial institutions could register an “intermediary holding company” first when setting up a virtual bank, and then use the company to controls the virtual bank. This means that the authorities in Hong Kong have lowered the entry threshold on the financial qualification of virtual bank applicants. Non-financial institutions, including technology companies, can also apply to own and operate virtual banks in Hong Kong.

This week, LähiTaksi, a Finnish taxi company from Helsinki, announced that it would soon accept Alipay payments.

European Union

Robo firms signal their advice intentions (Money Marketing), Rated: A

Robo-advisers will increasingly move towards hybrid models over the next year, combining the human touch with machine learning, experts predict.

Scalable Capital, the Europe-wide robo firm, which has received financial backing from investment giant BlackRock, has just started offering telephone and face-to-face advice for clients who want to progress beyond an initial free session.

Nutmeg and Moneyfarm have both signalled plans to move in a similar direction, while Wealthify, which saw Aviva take a majority stake last year, won’t rule out taking this step in the future.

International

The Most Important FinTech Innovations that Will Change Our Lives in the Near Future (Interesting Engineering), Rated: AAA

It is largely evident that we are looking at inevitable digital disruption in financial services. The traditional banking system is yet to see any major technological innovation in lending whereas the FinTech firms have made huge investments in the same area. China moved96% of its e-commerce sales without the services of a bank. A report by Cisco pegs the peer to peer lending volume in China at approximately $66 billion, for the US that number stands at $16.6 billion, and for the UK it is $5.4 billion. Clearly, the opportunities aren’t fictional, and technology will guide this paradigm change.

American FinTech giants include Stripe, a San Francisco based firm valued at $5 billion, Credit Karma, another Silicon Valley-based FinTech firm valued at $3 billion.

The UK lags behind the US by quite a distance, but is second overall with $5.4 billion investment in the same time frame, thus confirming its position as one of the world’s leading FinTech hubs. Its FinTech bigwigs include TransferWise, DueDil, AstroPay, GoCardless and Digital Shadows.

FT Partners Advises YapStone on its million Series C Financing Round (FT Partners), Rated: AAA

FT Partners is pleased to announce our role as exclusive strategic and financial advisor to 

Source: FT Partners

Read the full transaction profile here.

ETHLend alters terms to encourage use of its own digital currency (P2P Finance News), Rated: A

CRYPTO-BACKED peer-to-peer lending platform ETHLend has reached more than £2m of loans as it announces new incentives to encourage users to transact with its LEND token.

Borrowers can post any digital currency as collateral and loans can be made in Bitcoin or Ethereum or LEND. But ETHLend now wants more people to use the LEND token as the means of exchange so it has said anyone providing funds in LEND won’t have to pay any transaction fees.

There is also a 50 per cent discount when the LEND coin is posted by borrowers as collateral.

Australia

DirectMoney a leading ASX gainer after revealing Alceon investment (Proactive Investors), Rated: AAA

DirectMoney Ltd (ASX:DM1) is an ASX leading gainer intra-day on news of a strategic investment by alternative investment manager Alceon.

The investment comprises an initial placement of $600,000 at $0.042 per share and is equivalent to a 3.1% interest.

India

Lendingkart raises total of Rs1,129 crore after latest funding round (livemint), Rated: AAA

Rs565 crore

What is it? The amount raised in equity funding by Lendingkart Technologies, a fintech start-up that provides online loans to small businesses. The latest fund raise, announced on Monday, takes the total amount raised by the Lendingkart Group to Rs1,129 crore.

Tell me more: Lendingkart’s latest funding round was led by Singapore’s Fullerton Financial Holdings, and also saw participation by existinginvestors, namely Sistema Asia Fund, Bertelsmann India Investment, Mayfield India, India Quotient and Saama Capital.

India fintech seeking to raise at least US$ 87m to grow tech capabilities (Business Times), Rated: A

AN Indian fintech company is seeking to raise over US$87 million of equity funding to expand its technological and analytics capabilities.

Lendingkart Technologies will be doing so through series C capital-raising, with the initiative led by Singapore’s Fullerton Financial Holdings, along with participation from existing investors.

Canada

Payday Loan Use Among Heavily Indebted Borrowers On The Rise (Payment Week), Rated: AAA

Payday loan use among heavily indebted Ontarians continues to escalate, as Ontario in 2017 involve payday loans, up from 27% in 2016.

The average number of payday loans outstanding at the time of insolvency declined to 3.2 in 2017, after peaking at 3.5 loans in 2014. However, the average payday loan size in 2017 is $1,095, an increase of 12.4% from $974 in 2016.  One in ten (9%) loans are $2,500 or more, up from 6% in 2016.

The average insolvent payday loan borrower owes $3,464 in payday loans, or $1.34 for every dollar of monthly take-home pay, on top of $29,997 in other unsecured debts. They are using payday loans to keep up with existing debt repayment.

Borrowell Gives Birth To New TV Campaign (Borrowell Email), Rated: A

Borrowell is making its first major foray into television with a 30-second spot that launches today, called “Home Birth.” Created by Toronto-based agency Conflict, the commercial aims to raise awareness of Borrowell’s free credit score monitoring service.

MENA

Saudi startups have wider funding options amid huge fund volumes (Saudi Gazette), Rated: AAA

In an interview, Nawaf Al Sahhaf, CEO of Badir, said financing options for these startups include without limitation Venture Capital firms, angel investors, accelerators, and incubators in addition to new alternatives such as crowd funding or even P2P lending platforms.

Venture Capital funding is an essential piece of the startup jigsaw.

Venture Funding is unique, however in its characteristic. I define a startup as a company that is looking to receive funding from a venture capitalist. This means that they meet several basic criteria for growth 1) a strong founding team 2) a solution to a clear and identifiable problem 3) a clear path to monetization and most important 4) a scalable product that has a regional if not global market.

All of these criteria are essential to be eligible for Venture Funding. Many of these criteria may not be applicable or sufficient for alternative funding channels including debt, bank funding or grants.

UAE ranked third for Islamic Fintech start-ups (Gulf Today), Rated: A

The UAE is ranked third in an analysis of Islamic Fintech start-ups, according to a survey by Bloomberg Intelligence, issued today. Malaysia and the United Kingdom are ranked first and second.

Crowdfunding and peer-to-peer (P2P) financing could be a game-changer in Islamic finance, it suggests, giving wider reach and potential to close the gap for small and medium enterprises, SMEs, which generated about 60 per cent of UAE GDP in 2014, with Dubai’s regulator introducing the first tailored regulation for crowdfunding in the GCC.

Authors:

George Popescu
Allen Taylor

Thursday January 25 2018, Daily News Digest

blockchain equity rounds

News Comments Today’s main news: SoFi to roll out checking accounts. Zopa re-opens to new customers. Roostify integrates with LendingTree. China regulator says credit market should adopt blockchain. ETHLend hits 1M GBP in P2P crypto loans. Borrowell launches free Equifax credit report monitoring. Brazilian payments company sets post-Snap IPO record. Today’s main analysis: Blockchain equity funding vs. ICOs. Today’s thought-provoking articles: […]

blockchain equity rounds

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Egypt

Canada

South America

News Summary

United States

SoFi will roll out checking accounts this spring (Tearsheet), Rated: AAA

SoFi is rolling out checking accounts without a banking license, demonstrating the new reality that a company doesn’t have to be a bank in order to bank customers.

By partnering with the Wilmington, Delaware-based WSFS Financial, SoFi will roll out a fee-free checking account and debit card this spring in a bundle it’s calling SoFi Money, designed to address the pain points customers have with day-to-day banking products, like high fees and clunky digital interfaces, executives said at a media gathering in New York Tuesday morning. SoFi Money will include peer-to-peer transfers between SoFi customers, mobile check deposit and high yield interest rates on deposits (0.75 to 0.85 percent). It will be available first to current SoFi members before the broader rollout.

Five challenges facing SoFi’s new CEO (American Banker), Rated: A

Reforming SoFi’s culture.

Determining when to go public. SoFi has a number of key shareholders who might like to access wealth that is tied up in the company’s shares. That list includes the Japanese conglomerate SoftBank, which led a $1 billion equity financing round in 2015, and the venture capital firm Silver Lake Partners, which led last year’s $500 million round. That round reportedly valued the privately held company at more than $4 billion.

Deciding how to grow. But while student loan refinancing proved to be an excellent way to find new customers during a period of low interest rates, that opportunity is now shrinking, as rising interest rates reduce the spread between what borrowers pay the federal government and what SoFi can offer.

Yes or no on a bank charter? 

Proving that he has the right background. Noto does not appear to have any experience in consumer financial services, which could be viewed as a weakness.

Roostify Announces Integration With LendingTree (BusinessWire), Rated: AAA

Roostify, a provider of automated mortgage transaction technology, today announced that it has integrated its online mortgage platform with LendingTree (NASDAQ: TREE), the online loan marketplace. The new integration makes it easier than ever for consumers to locate and apply with the right lender.

Lenders can utilize the new integration to create a seamless path for consumers to search, select, apply for, and close a loan online. Consumers selecting an offer on LendingTree from a lender using Roostify will be able to authenticate into the lender’s Roostify-powered online experience, with all information securely pre-populated. The consumer can move from shopping around to getting their loan in just a few clicks, streamlining the experience and improving lead quality for lenders.

The integration will enter general availability in Q1 2018 for all joint clients of Roostify and LendingTree.

2018’s Best Online Checking Accounts (WalletHub), Rated: AAA

More than 6 in 10 people don’t realize that online-only banks offer better rates and lower fees than their counterparts with branch access, according to WalletHub’s 2018 Banking Survey. But it’s true. What online-only accounts lack in terms of face-to-face interaction, they make up for with superior terms. For example, the average online checking account costs 47% less than its branch-based counterpart, according to WalletHub’s latest Banking Landscape Report. And the average online savings account pays 457% more interest than the branch alternative.

Best Online Checking Accounts – Editors’ Picks

Best For… Online Checking Account Best Feature
Overall Aspiration Summit Account APY up to 1.00%
Highest APY Consumers Credit Union Free Rewards Checking APY up to 4.59%
Debit-Card Rewards Bank5 Connect High-Interest Checking Account 1 point per $2 spent
No Monthly Fee BofI X Checking


Capital One 360 Checking Account

No ATM fees


No ATM fees

International Travel Charles Schwab High Yield Investor Checking No foreign fee
Money Management Tools PNC Bank Virtual Wallet Spending analysis

RealtyMogul Boosts REIT Cred with Hire of Industry Veteran Aaron Halfacre as President (Crowdfund Insider), Rated: A

RealtyMogul, a leading real estate crowdfunding platform offering Reg D (accredited) and Reg A+ (both accreds and non-accreds) investment opportunities in commercial and residential property, has hired a new President to help lead the firm. Aaron Halfacre, a 20 year real estate executive, has joined RealtyMogul bringing in institutional expertise including in the hot REIT sector.

Aaron Halfacre Becomes RealtyMogul’s First President (Bisnow), Rated: A

A former Campus Crest president and chief investment officer, Halfacre took a year and a half break after the publicly traded student housing REIT was acquired by Harrison Street Real Estate Capital in a $1.9B deal.

As president of RealtyMogul, Halfacre will be responsible for creating a strategy, growing assets and augmenting business growth. He will serve as a voting member of the firm’s investment committee, which has invested in more than $1.4B of real estate since 2013, the company reports.

Juvo Receives Investment from Samsung to Boost Smartphone Usage Among Underbanked (Finovate), Rated: A

Mobile identity company Juvo has received an investment from Samsung NEXT, an off-shoot of Samsung that launched in 2013 to create new software and foster a startup culture at Samsung. The amount of the investment was undisclosed and adds to the San Francisco-based company’s $54 million in equity funding.

The bigger story here is that the investment is a strategic one. Samsung will bring Juvo access to billions of underbanked prepaid users across the globe. This will help Juvo enable MNOs to increase smartphone adoption among prepaid mobile subscribers.

The challenger bank Chime says it has 750,000 millennial customers (American Banker), Rated: A

Chime, a mobile-only neobank for millennials, said Tuesday that it has opened 750,000 accounts to date and is signing up users at a brisk pace this month.

The growth is extraordinary. While there are many other mobile-only challenger banks in the U.S. — including Qapital, Digit and, more recently, Varo and Douugh — few have racked up large numbers yet. Chime touts a low-fee checking and savings account with a debit card and an app that provides automated savings and real-time notifications; there are no monthly or overdraft fees nor minimum-balance requirements. The Bancorp Bank holds the federally-insured accounts.

The reason why most people get rejected for a personal loan (Yahoo! Finance), Rated: A

LendEDU, a marketplace for loans and financial products, just released data showing that 76% of people who apply for a personal loan are declined. One of the main reasons for rejection? A low credit score. The average American has a credit score of 687. Meanwhile, the average FICO credit score of an approved applicant was 741.

Of those who do get approved, LendEDU predicts that just 35% went on to accept the personal loan.

Currently, 16 million consumers have an unsecured personal loan. According to a TransUnion, personal lending balances grew a steady 10.8% in the second quarter of 2017, totaling $108 billion.

Back in 2010, fintech only made up 3% of personal loan lenders. In 2015, Transunion says that number jumped to 30%.

Why fintech is still a way off disrupting lending (Financial News), Rated: A

But of the many things that banks do, lending to small and medium sized companies (‘SME’ lending) is one of the more complex areas to emulate. It is also politically charged. As such, there is some evidence that the disruption attempted in the area of lending is itself being disrupted by the practicalities of a complex area of finance.

Citi’s mobile app is lagging behind its peers (Tearsheet), Rated: A

The fourth-largest bank by assets grew its total active mobile users 21 percent year over year to nine million, the bank reported last week in its fourth-quarter earnings.

By contrast, Chase reported 30.1 million users, Bank of America 24.2 million and Wells Fargo 21.2 million.

Citi’s growth rate for 2017 was stronger though, at 21 percent year over year, than its peers’. Chase reported 13 percent growth, Bank of America 12 percent and Wells Fargo 8 percent.

Mulvaney outlines new CFPB governing philosophy (The National Law Review), Rated: A

In a memorandum to CFPB staff and a Wall Street Journal article, Mr. Mulvaney described his governing philosophy for the CFPB’s exercise of its authority.

  • While observing that there will be times when “dramatic action” is needed to protect consumers and that, at such times, he expected the CFPB “to be vigorous in [its] enforcement of the law,” Mr. Mulvaney stated that “bringing the full weight of the federal government down on the necks of the people we serve should be something that we do only reluctantly, and only when all other attempts at resolution have failed.”
  • In using its enforcement authority, the CFPB will focus on “quantifiable and unavoidable harm to the consumer” and when such harm does not exist, the CFPB “won’t go looking for excuses to bring lawsuits.”  In addition, there will be “more formal rule making and less regulation by enforcement”  because “the people we regulate should have the right to know what the rules are before being charged with breaking them.”
  • CFPB priorities should be guided by data such as 2016 complaint data which showed that “almost a third of the complaints” received by the CFPB related to debt collection and “[o]nly 0.9% related to prepaid cards and 2% to payday lending.”
  • In light of the Dodd-Frank Act requirement for the CFPB to “consider the potential costs and benefits to consumers and covered persons,” CFPB decisions should be driven by quantitative analysis.  Although qualitative analysis can play a role, it should not be to the exclusion of measurable “costs and benefits.”

Read the memo for yourself here.

What you thought you knew about millennials is wrong (American Banker), Rated: A

Sixty-three percent say they are saving money. This is very close to the rate of Gen Xers (64%) and baby boomers (75%).

Fifty-four percent of millennials say they are on a budget, the same level as Gen X and only slightly below the rate of boomers (57%).

They are diligent about savings and budgeting: 67% of millennials who have a savings goal stick to it. And 73% of millennials on a budget adhere to it regularly.

And 59% say they feel financially secure, compared with 54% of Gen Xers and 63% of baby boomers.

Making it in GR: Lessons in crowdfunding (Rapid Growth), Rated: A

Last month’s “Making it in Grand Rapids” article focused on the ever-expanding alternative financing options for entrepreneurs, such as: impact investment funds, peer-to-peer lending solutions and crowdfunding platforms. Grand Rapids entrepreneur Don Rhoads is Owner/Inventor of At Last Industries (At Last), which created the BedBud Alarm. He is also Head of Development at Cut Through Creative. Rhoads shares his progression from having an idea through the development and launch of his Kickstarter campaign—and the insights he learned along the way.

RG: A recent Small Business Credit Survey reported that “70 percent of startup applicants are in need of funding to support [their growth]” and that “52 percent of startups [have] applied for financing.” Did you pursue any avenues before deciding on crowdfunding?

DR: Yes. I actually applied for and presented at a 5×5 Night. Unfortunately, I didn’t win that one, but as much as I was disheartened, I was still [determined to] fulfill the product. Also, through traditional bank loans, I applied through my current bank. It was a little bit difficult. In a startup, it is difficult to put a value on a business. [Banks] want capital behind it because most startups fail anyway, so they want some substance behind you so they can get their money back. I was told I would need to be a little bit further down the line to get additional funding.

Technology and the Future of Financial Advice (Janus Henderson), Rated: A

Technology arrives in waves and is embraced over an adoption curve. These waves are growing stronger – in large part because technology is becoming ever more powerful. Over time, we have seen these waves play out in financial planning, too.

It is worth looking at two of the challenges faced by the industry now. The first is demographics. Clients have grown older and wealthier, but they are not being replaced within the market for traditional advice services. This is creating an advice gap for firms who need to replenish their client bases.

The second big issue is that consumer engagement is challenging. Long-term thinking hurts. As Daniel Kahneman articulated in Thinking, Fast and Slow, human beings do not easily think about the future in an analytical way and there remains room for improvement in financial literacy among the public. Add to that the low levels of customer trust for the industry and many consumers are not switched on to the benefits of financial advice.

Source: National Financial Literacy Test Results.
United Kingdom

P2P platform Zopa re-opens to new customers (Financial Times), Rated: AAA

Zopa, the UK’s first peer-to-peer lender, has reopened its platform to new customers after having to close to new money last year amid high demand for its new Innovative finance Isa (Ifisa) product and a long-running imbalance between lenders and borrowers.

Fintechs impatient as British banks seek extra time to open up (NASDAQ), Rated: A

Financial technology firms were supposed to start breaking into mainstream banking this month when new rules forced Britain’s nine big banks to loosen their grip on the industry.

But many fintech companies are still waiting with frustration on the sidelines after the banks delayed making the changes.

Financial technology firms were supposed to start breaking into mainstream banking this month when new rules forced Britain’s nine big banks to loosen their grip on the industry.

But six of the nine banks have asked Britain’s regulator for an extension to the January 13 deadline for putting in place the ‘open banking’ regulation, which overlaps with a new European Union directive known as PSD2.

UK fintech takes the lead in the Forbes 30 under 30 (AltFi), Rated: A

The gender balance has been particularly notable in the finance sector this year, as Forbes named Starling Bank’s Chief Platform Officer, Megan Caywood, and Lendable co-founder Victoria van Lennep alongside her business partner Martin Kissinger, as ones to watch.

In the technology category, Monzo co-founder Jonas Huckestein and the co-founders of digital receipts startup Flux all found themselves highlighted by Forbes.

China

China’s Banking Regulator Pushes Blockchain Adoption for Credit Market (CoinDesk), Rated: AAA

Blockchain technology should be adopted as part of a plan to boost development of China’s secondary loan market, according to a paper by the China Banking Regulatory Commission (CBRC).

Published on Jan. 19, the paper, drafted by a special committee, covers a variety of topics around developing and regulating financial technologies. In a section on the future development of China’s credit market, it suggests the country should double down its adoption of blockchain technology.

Download and read the report yourself here (in Chinese).

Ant Financial and the Greening of Fintech (The Diplomat), Rated: A

Ant Financial, an affiliate of Alibaba, is one clear example of a company using fintech to encourage a greener world.

Ant Forest is the world’s first largescale, bottom-up pilot in greening citizens’ consumption behavior through the use digital technology and social media. It is an app that Ant users can voluntarily engage with to reduce their carbon footprint and encourage their social networks to do the same. Users that perform carbon-reducing activities, such as paying bills online or walking to work, relative to a predetermined benchmark, are rewarded “green energy” points. As users accumulate enough points virtually, a real tree is planted. To date, Ant Forest has planted saxauls, willows, and Scots pine trees in Inner Mongolia and Gansu.

Ponzi scheme sparks protests (The Standard), Rated: B

Chinese authorities are struggling to quell protests after the collapse of an investment scheme that took about 30 billion yuan (HK$36.7 billion) from millions of depositors.

Hundreds of people marched on Monday in Nanjing, where Qianbao started in 2012, shouting for officials to act. But a video shows police grabbing investors as others yelled about being beaten up.

European Union

Ten User’s Pain Points Digital Banking and FinTech Should Care Of (Finextra), Rated: AAA

Studies have shown that users tend to quickly switch products and services. This also concerns banks as the competition and the number of Open Banking services increase due to the implementation of the European Directive PSD2.

1. Onboarding

Onboarding becomes particularly important in digital era. It can be a productive introduction to a new service or a challenging obstacle that deters customers. The banks of the future should provide a full digital onboarding.

2. Authentication

Log in difficulties or problems shouldn’t create obstacles for the customer. After all, no one would go to a restaurant with a locked door.

5. Transactions

Users should be able to fully control their banking. It is crucial for them to find a certain transaction and download a payment slip. View transaction history is among the TOP 3 customer scenarios. This function should be simple and understandable. Users want to filter their transactions to find specific items, view detailed information, report a violation, check payment status, export and save them, etc.

6. Payments

We are pleased to see that bank payment interfaces are becoming simpler each year. Digital technologies allow us to move complex banking procedures to the background. Challenger Banks ar a good example here.

The purpose of payment limits is to ensure the user’s security. The user should have online access to a flexible configuration of any financial transaction.

8. Notifications

There shouldn’t be too many notifications, only relevant ones.

Conclusion

Being in the users’ shoes and finding pain points in products and services will be a crucial competitive advantage. Companies recognising this issue will take a leading position in the future financial market.

International

ETHLend hits £1m crypto-P2P loans milestone (P2P Finance News), Rated: AAA

CRYPTO-BACKED peer-to-peer lending platform ETHLend has funded $2m (£1.4m) of loans in just over a month since launching.

The platform, which lets investors back business and personal loans worldwide n the Ethereum (ETH) digital currency, only went live in December but says it has already facilitated 438 loans.

Its biggest loan so far was for 83ETH, equivalent to £58,681.

Blockchain Startups Absorbed 5X More Capital Via ICOs Than Equity Financings In 2017 (CB Insights), Rated: AAA

In Q1’17, 19 ICOs closed for about $21M. Three quarters later, in Q4’17, over 500 ICOs closed for almost $3B. According to CB Insights, 2017 saw over 5x more capital deployed in ICOs than in equity financings to blockchain startups. Q4’17 alone saw that number jump to 7x.

In total, ICOs raised over $5B across nearly 800 deals in 2017. To put those numbers into context, equity investors deployed $1B in 215 deals to the sector.

GDS Link Acquires Fraudscreen, the UK’s Leading Provider of Analytics to Predict Payment Intent (GDS Link Email), Rated: A

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business lending and leasing, today announced that it has finalized the acquisition of 

Finastra sees accelerating FusionFabric.cloud adoption (Finastra Email), Rated: A

At its regional flagship thought leadership event, Finastra Universe Paris,Finastra today welcomed new companies to the FusionFabric.cloud open architecture. Among the early adopter Fintechs, consultants, banks and academics using the platform to develop and deploy innovative apps are Efficiency MC, Conpend and BankBI. In addition, Thomson Reuters joins Finastra’s innovation ecosystem as a data provider.

Thomson Reuters is currently embedding its instrument reference data into FusionFabric.cloud.

Paris-based system integrator, Efficiency MC, is using the platform to develop an interest rate derivatives pricing model app.

European Fintech, Conpend, is using FusionFabric.cloud to develop apps for corporate banking.

Cloud focused Fintech, BankBI, has a Performance Management and Analytics application for FusionFabric.cloud to complement the Finastra retail banking solutions, including C-suite dashboards.

Australia

The everyday Aussie is increasingly choosing a peer to peer personal loan – here’s why (mozo), Rated: AAA

ASIC’s second marketplace lending survey revealed that $300 million worth of personal and business loans were written by peer to peer lenders during the last financial year – almost double the amount commissioned during the 2015/2016 financial year.

The snowballing popularity of these types of loans is measured by the fact that, as of June 2017, the industry had 7,768 investors and a further 18,746 borrowers – numbers that had doubled over the preceding 12 months and are only set to grow in the new year.
Comparatively, at the lowest peer to peer rate in the Mozo database of 6.99% (on offer from Harmoney), the average Aussie borrower would pay just $5,634 in interest on the same loan – saving more than $4,000 in the process.

Stuart Stoyan is FinTech Australia’s new chair (Business Insider), Rated: B

Stuart Stoyan, the founder and CEO of Melbourne-based fintech MoneyPlace, which in 2015 became Australia’s second fully licensed marketplace lending platform, has become FinTech Australia’s new chair.

India

RBI Directions On Peer To Peer Lending Platforms: Frequenly Asked Questions (Mondaq), Rated: AAA

2.2  Electronic platforms connecting banks and NBFCs to borrowers

The RBI has clarified that electronic platforms that assist only banks, non-banking financial  companies (“NBFCs”) and other regulated All India Financial Institutions (“AIFls”) to identify  borrowers will not be considered peer to peer lending platforms  (“P2P Lending  Platforms”).   However, in cases where,  apart from banks, NBFCs and AIFls, or other retail lenders use the  electronic platform for lending, the platform will have to register separately as a non-banking  financial platform –  peer to peer lending platform (an “NBFC-P2P”).

2.3  Leverage ratio and investible funds for an NBFC-P2P

The RBI has clarified that for an NBFC-P2P, customers’ funds lent or borrowed by using the platform  is not reckoned as an outside liability of the NBFC-P2P, for the purpose of determining the  leverage ratio of the NBFC-P2P.

(a)  Do the P2P Lending Platforms have to fulfil the 50-50 test issued by the RBI to fall  within the purview of the P2P Directions?

The RBI, with its clarification that an existing NBFC cannot operate as an NBFC-P2P, has clarified  that the 50-50 test set out by the RBI to qualify as a non-banking financial company is not  applicable to an NBFC-P2P.

VC Firm 3one4 Capital Announces Second Fund With An Initial Corpus Of $ 39 Mn (Inc42), Rated: A

With closed commitments for $39 Mn, the 3one4 Capital team will look to enhance its deep involvement model across its investment domains. The fund will invest early stage startups with ticket sizes of $250K to $2 Mn.

Asia

Tryb Group raises $ 30M to develop fintech platforms for Southeast Asia (TechCrunch), Rated: A

Tryb Group, a Singapore-based organization focused on fintech services in Southeast Asia, has landed a $30 million investmentfrom Makara Capital.

For a Western comparison, Tryb aspires to be like LendingClub with a focus on digitizing the predominantly analog systems of financial services and banking in Southeast Asia, a region of over 600 million consumers.

“There’s strong demand to start buying ASEAN credit, with Japanese, Chinese, American and other investors looking to buy up $50-100 million worth. But they don’t know where to start since it’s all on paper,” he said.

Currently, the Tryb business doesn’t make direct revenue. It holds stakes in a number of businesses — including MC Payment which is in the process of going public in Singapore — but Gnirck said it has two acquisitions that he expects to finalize in the coming months.

Genie ICO Adds Cryptocurrency Heavyweight David Drake and Other Experts to Its Advisory Board (CoinTelegraph), Rated: B

Joining the Crowd Genie advisory board is David Drake, Founder and Chairman of LDJ Capital, who is also a global pioneer in the cryptocurrency industry and has written for more than 100 publications on innovative investing. Also joining the board is serial entrepreneur Petter Sehlin, who is a Founding Partner of global angel fund True Global Ventures and founder of the Polarchain blockchain. The founders of one of the world’s most comprehensive online cryptocurrency databases and information resources, AllCoinWiki, Anders Larsson and Joakim Holmer have also joined the board.

MENA

Egypt’s fintech startups are growing in number, value, and specialization (wamda), Rated: AAA

Financial inclusion is critical in reducing poverty and achieving shared economic growth, as mentioned The Global Findex Database 2014: Measuring Financial Inclusion around the World’: When people can participate in the financial system, they are better able to start and expand businesses, invest in their children’s education, and absorb financial shocks.

According to figures shared with Wamda by the World Bank Global Findex database, only 14 percent of adults in Egypt have an account as of 2014, and eight percent use an account to make digital financial payments. The Findex said that about 86 percent of adults in the country do not have an account and are therefore considered unbanked.

The model of Fawry, has demonstrated the validity of such business models, and has driven several concepts to launch.” Fawry, which was launched in 2008, provides payment solutions through ATM machines, mobile wallets, and retail points.

Egypt-based fintech startup Moneyfellows raised $600,000 from a group of investors led by Dubai Angel Investors and 500 Startups. This web and mobile-based platform founded in December 2014, allows users to create, manage, and track money circles (group money lending) online with members of their social networks. The startup makes money by charging users a small fee when they withdraw their payout from their money circle. So far, the startup has around 2,600 paying users and about 240 active circles.

Vapulus, which launched in December 2017, partners so far with 400 retail and F&B merchants in the country, and aims to reach 16,000 within one year of operation. The startup is a mobile app and mobile POS service for both individuals and sellers.

Canada

Borrowell launches free Equifax credit report monitoring, a Canadian first (GlobeNewswire), Rated: AAA

Borrowell today announced that it is providing Canadians with free access to their Equifax credit reports. For the first time, Canadians will be able to monitor important information in their Equifax credit report on a monthly basis, including credit utilization, inquiries and credit account history, for free online.

To date, Borrowell has provided credit information to nearly half a million Canadians.

Canada Venture Capital 2017 (CB Insights), Rated: A

Annual funding to Canada hits high in 2017

  • Total annual funding reached $2.7B, distributed across 333 deals in full-year 2017.
  • Total funding increased 7%, while deal activity decreased by 12%.
Source: CB Insights
South America

NYSE’s Biggest IPO Since Snap Is $ 2.3 Billion for Brazil Fintech (Bloomberg), Rated: AAA

PagSeguro Digital LTD, a payments company owned by Brazilian media group Universo Online SA, raised about $2.27 billion in an initial public offering on the New York Stock Exchange, according to Bloomberg data.

The company, which has a similar model to Jack Dorsey’s Square, sold shares at $21.50 each, above the top of the price range of $17.50 to $20.50 in the offering prospectus, with demand higher than underwriters expected. The equity offering is the largest on the New York Stock Exchange since Snap Inc in March 2017. Investors warmed to the stock, which rose as much as 36 percent to $29.25 in early trading.

Authors:

George Popescu
Allen Taylor

Alternative Lending In Canada

Canada alternative lending

In many ways, Canada has long lived under the shadow of the U.S. The alternative lending industry has proven to be no exception. The last few years, however, have seen Canada turn the corner on marketplace lending (MPL). With MPL markets around the world (especially Europe, U.S., and UK) maturing, startups around the world are […]

Canada alternative lending

In many ways, Canada has long lived under the shadow of the U.S. The alternative lending industry has proven to be no exception. The last few years, however, have seen Canada turn the corner on marketplace lending (MPL).

With MPL markets around the world (especially Europe, U.S., and UK) maturing, startups around the world are scampering to find new locations and new opportunities to tap. Though it is not fair to term Canada as a new entrant to the fintech ecosystem, it has finally garnered the attention as one of the most promising alt-lending hubs.

Canadian Alternative Lending Numbers

 

Source: Alternative Finance Benchmarking Report 2016

As the above image indicates, the Canadian alternative finance industry is on a strong growth momentum. All segments of alt-lending (consumer, SMB, real estate) have shown multiple times growth albeit on a very low base. With a GDP of over 1.5 trillion dollars, it is a massive market for lenders. The current size of the market does not even reach a billion dollars, a paltry sum for a country with household debt over 2 trillion dollars.

A Supportive Regulatory Framework

Ontario Securities Commission (OSC), the fintech regulatory body of Canada, has been very supportive of the industry and is one of the major tailwinds for alternative lending in Canada. In October 2016, OSC started LaunchPad with an aim to support and guide fintech startups with compliance. This initiative was followed by the establishment of a Fintech Advisory Committee in January 2017, which helps apprise the regulator on fintech-related developments as well as regulatory challenges faced by businesses. Feedback from the committee will be used by OSC to frame future regulatory guidelines.

Lending startups will still have to comply with different regulatory compliance obligations depending on what kind of financial services are offered by them. Also, depending on which province they are operating in, they will be subject to different regulation and licensing requirements.

Leading P2P Lenders in Canada

  • Lendified was founded in 2015 by Troy Wright and is headquartered in Toronto, Ontario. It raised $80 million in a couple of funding rounds. Small business owners can apply online in under 10 minutes, receive an instant quote, and get funded in as fast as 48 hours. It offers loans ranging from CAD $5,000 to CAD$150,000 with APR ranging from 8%-18% and terms ranging from 6-24 months.
  • Borrowell was founded in 2014 by Andrew Graham and Eva Wong.  It’s also headquartered in Toronto. It recently raised over $57 million in funding for aggressive expansion and offers free credit score monitoring, personal loans, and product recommendations. It has lent over $10 million to over 10,000 customers. Borrowell offers loans ranging from $1,000-$35,000 and offers two terms–36 months or 60 months–with APRs ranging from 5.6%-25%.
  • Financeit was founded in 2011 by Casper Wong, Michael Garrity, and Paul Sehr. Headquartered in Toronto, it has managed from inception to raise over $38 million and recently was acquired by Goldman Sachs for an undisclosed amount. Over the years, Financeit has worked with over 7,000 merchants and processed over $2.5 billion in loan applications. Financeit offers a platform that allows businesses to offer consumer financing to their customers from various devices in Canada. It works with multiple lending partners and automates the banking role for its partner financial institutions, entirely managing loan origination, credit adjudication, regulatory reporting, loan servicing, and collections.
  • FundThrough was founded in 2014 by Steven Uster. Its headquarters is in Toronto, and it has raised over CAD $26 million in multiple funding rounds. FundThrough is an innovative technology company helping American and Canadian small business owners improve their cash flow through invoice factoring and financing. It charges 0.5% fees on the top of the funding amount and the borrower has to repay within a period of 12 weeks. The average invoice ranges from $1000 to $100,000 while the average outstanding loan is around $50,000-100,000.
  • Lendful Financial was founded in 2015 by Alex Benjamin and is located in Vancouver, British Columbia. It has raised $15 million in multiple funding rounds and offers three-to-five-year, fixed-term loans to credit-worthy borrowers with a credit score of 650 and over. It offers loans up to CAD $35,000 with APRs starting from as low as 7.9%. Loan terms range from 3 to 5 years.
  • Lending Loop was founded in 2014 by Brandon Vlaar and Cato Pastoll. Headquartered in Toronto, it has raised $12 million in debt and equity. Lending Loop is Canada’s first and only regulated peer-to-peer lending marketplace focused on small businesses. Its core focus is on providing businesses with accessible capital at a fair rate of interest through a simple online process. Loans range from $5,000- $250,000 with rates starting as low as 5.9% and terms from 3-60 months.
  • Progressa was founded in 2013 by Ali Pourdad, David Gens, and Michael Jover. Since inception, it has raised over $11 million. Progressa is a direct-pay lending platform that helps Canadian individuals who are in debt pay back their due bills. It pays its users’ bills directly so they are able to manage debt, interest payments, and collections. The platform provides users with partial payment loans between $1,000 and $15,000 with payback terms ranging from 6 to 60 months. It enables its users to get access to automated interest rate reductions every six months helping them cut down borrowing costs with good payment behavior.

Conclusion

From a global point of view, Canada is a relatively small market and still at a nascent stage. But the supportive regulatory framework coupled with growing interest of VCs and investors in the Canadian market says that major expansion is just around the corner. The Canadian market would also be conducive for U.S. players looking to expand their geographical ambitions.

Authors:

Written by Heena Dhir.

Thursday November 16 2017, Daily News Digest

securitization

News Comments Today’s main news: Marcus surpasses 2017 goal. LendInvest gets into buy-to-let. Top 3 spots on KPMG Fintech 100 list are all Chinese. Lendix launches SME bridge loans in France, Spain, and Italy. Mauritia issues draft P2P lending rules. Marlette closes fourth securitization in a year. Today’s main analysis: Rising challenges unlikely to deter U.S. securitizations. Today’s thought-provoking articles: […]

securitization

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Canada

Russia

News Summary

United States

Marcus from Goldman Sachs Surpasses 2017 Goal (Bank Innovation), Rated: AAA

Martin Chavez, chief financial officer for Goldman Sachs, showed in a slideshow at a Bank of America Merrill Lynch event yesterday that Marcus had already surpassed $1.96 billion in originations as of Nov. 9.

What that means is that from Nov. 9 to Nov. 14, over a span of five days, Marcus originated more than $40 million in loans.

Rising challenges unlikely to deter U.S. securitization in 2018 (Asset Securitization Report), Rated: AAA

As a result, Fitch’s outlook for U.S. structured finance ratings is predominately stable for 2018. That said, given where we are in the credit cycle, Fitch is keeping a close watch on select asset types that could run into some issues over the next 12 months.

Entering 2018, Fitch has either Positive or Stable Outlook on over 90% of its rated securitized bonds.

Perhaps the most notable change that has manifested from risk retention is the shrinking universe of originators bringing new securitizations to market. This is particularly notable in the universe of CMBS originators, which has shrunk from a high of roughly 40 to now less than 20 due to a combination of risk retention and Reg A/B.

Competitive pressures, long in place for subprime autos, are escalating in a marketplace ABS environment that is struggling to find its footing by testing recent underwriting models, asset quality and, in some cases, business models. Delinquencies and chargeoffs of existing assets continue to increase as marginal borrowers increase their leverage. Not likely to help is the drive for growth among large marketplace lenders coupled with rising market pressure from competing banks like Goldman Sachs (Marcus), Discover, and Suntrust. And unless originators tighten their credit policies with discipline, the strain will intensify.

Source: Asset Securitization Report

Online lenders should heed criticism of their effect on borrowers (American Banker), Rated: AAA

The consumer lending industry is abuzz about the Federal Reserve Bank of Cleveland’s recent report on debt consolidation and online lending. This excellent piece of research concludes that, on average, online installment loan borrowers fall into more debt after taking out a loan, experience hits to their credit score and history as a result, and take out online loans despite having access to traditional banking and credit channels.

The first two conclusions are damning, especially as these loans are often marketed as a way to help consumers consolidate credit card debt and improve their finances. At the end of the day, a lender’s duty is not merely to avoid losses. Any loan must be suitable for the customer — which means it should be made only if the lender believes it is improving the customer’s financial health. A lender not guided by that principle should be prepared for severe criticism as well as elevated losses down the road.

But it would be nonsensical to discredit or ignore the study because it includes online lenders beyond well-known fintech names.

The Best of Both Worlds with Prosper for Borrowers and Lenders (DoughRoller), Rated: AAA

Founded in 2005, and generally recognized as the first peer-to-peer (P2P) lending platform in the US, Prosper has funded more than $10 billion in loans since.

While borrowers can get personal loans ranging in size between $2,000 and $35,000, investors can put as little as $25 toward funding those loans.

There is one exception, however. You cannot use loan proceeds for post-secondary educational expenses. That’s because some of the rules in federal law aren’t compatible with P2P lending. More specifically, with education loans, the borrower must have at least 30 days to accept or reject a loan offer.

Medical procedures available for financing under the PHL program include:

  • Cosmetic dentistry
  • Bariatric surgery
  • Cosmetic and plastic surgery
  • Fertility and reproductive procedures

All Prosper loans have a term of either three or five years.

The minimum requirements are:

  • A minimum FICO score of 640, based on a TransUnion FICO 08 score
  • Debt-to-Income (DTI) ratio below 50%
  • Stated income greater than $0 (you must have an income)
  • No bankruptcies filed within the previous 12 months
  • Fewer than seven credit bureau inquiries within the last six months
  • A minimum of three open trades reported on your credit report

Interest rates are between a minimum of 3.00% for the best AA rated borrowers to a maximum of 36.00% for the lowest rated HR borrower grades.

Source: DoughRoller

Prosper for Investors

Prosper advertises that the average rate of return by investors on the platform is 7.41% per year.

Loans rated HR have a much higher average return, at 11.73%.

You can open either a General Investment Account or an IRA. Available IRAs include traditional, Roth, SIMPLE, SEP and rollover IRAs (IRA accounts are held with Millennium Trust Company). At this time, Prosper has made only individual accounts available. You cannot hold an account jointly with someone else.

For regular investment accounts, the minimum is $25. For IRA accounts, the minimum is $5,000.

Similar to other P2P platforms, when you invest with Prosper, you don’t actually invest in whole loans. Instead, you invest in small slivers of those loans, referred to as “notes.” The notes are in denominations of $25. This means that you can spread an investment of $1,000 across as many as 40 different loans.

The servicing fee is 1% of the outstanding balance of a loan. That means that if the loan pays 8%, your net return will be 7%.

Source: DoughRoller

Marlette Funding Closes Fourth Personal Loan Securitization Within Past Year (LendEDU), Rated: A

Last week, marketplace lender Marlette Funding announced the closing of its fourth proprietary securitization. The transaction was worth an estimated $312 million, and it is the fourth securitization announcement since August of 2016 from Marlette Funding.

eOriginal Named as One of Fastest Growing Companies in North America on Deloitte’s 2017 Technology Fast 500 (eOriginal), Rated: A

eOriginal, Inc., today announced it has been named to Deloitte’s Technology Fast 500 list as one of North America’s fastest growing technology, media, telecommunications, life sciences, and energy companies. eOriginal earned the rank of 294 by more than doubling revenues during the evaluation period of FY 2013 through FY 2016.

Betterment, the investing startup with $ 11 billion in assets, is rolling out a new service to make charitable giving easier (Business Insider), Rated: A

Betterment, the New York-based roboadviser, announced Wednesday a charitable giving feature that’ll let users donate shares of their account to partnered charities.

The firm, which manages $11 billion for over 300,000 customers, partnered with 11 charities for Betterment Charitable Giving, including Big Brothers Big Sisters of NYC, UNICEF, and World Wildlife Fund, according to a news release. The new feature is set to go live November 28.

Subprime car loans souring faster at nonbank lenders (American Banker), Rated: A

Despite signs of trouble in subprime auto lending, U.S. banks and credit unions are well positioned to ride out any market turbulence, a new report from the Federal Reserve Bank of New York suggests.

More than $435 billion in auto loans to borrowers with credit scores below 660 were outstanding during the third quarter of this year, the report found. That total has been climbing steadily since bottoming out at $249 billion in early 2011. Delinquency rates have also been rising as it has become easier to qualify for an auto loan.

Fidelity latest financial firm to facilitate data sharing with fintechs (American Banker), Rated: A

Fidelity Investments is joining the ranks of financial firms sharing customer account data with others through an application programming interface.

The new service, called Fidelity Access, will give third parties access to Fidelity customers’ account data for use in apps and services like tax preparation, budgeting, financial planning, spending analysis and portfolio advice — provided the Fidelity customers give their OK. Customer data to be shared includes Fidelity account balances, securities holdings, and transactions.

These are the most valuable fintech companies in America (MarketWatch), Rated: A

Stripe Inc., whose software is used by businesses to accept and track digital payments, leads the way as the most valuable fintech startup in the U.S., with a $9.2 billion valuation.

And just to be clear, fintech startups are nowhere near close to catching up to the big banks. Wells Fargo & Co. has a market cap of more than $266 billion, and Bank of America Corp. has a market cap of more than $273 billion.

RealtyProfits Offers Accredited Investors an Innovative Platform to Invest in the Real Estate Sector (Digital Journal), Rated: A

RealtyProfits (www.RealtyProfits.com) announces today an exciting and innovative investment opportunity, RealtyProfits IV, with a Preferred Return of 12 percent per annum, available exclusively to accredited high net-worth individuals and institutional investors. The private preferred equity securities, available for purchase at www.RealtyProfits.com, are being offered through WealthForge Securities, LLC, a registered broker/dealer and member of FINRA/SIPC.

The geographically diversified portfolio includes properties in 700 cities coast to coast, with a current estimated value of $1.73 billion and more than $700 million of equity in more than 5,900 portfolio properties. The properties include primarily single-family homes and condominiums ranging in value from $100,000 to more than $2,500,000.

Accredited investors can start investing with as little as $20,000. RealtyProfits IV offers monthly cash distributions. Preferred equity investors receive all distributions made by RealtyProfits IV until fully repaid. The Preferred Return is 12 percent per annum, with initial monthly Base Preferred Return payments at 6 percent per annum anticipated depending on cash flow during each of the first 24 months.

Reality Shares Teams up with Nasdaq to Launch Blockchain Tech Index (BusinessWire), Rated: A

Reality Shares and Nasdaq announce the creation of the Reality Shares Nasdaq Blockchain Economy Index, a smart-beta index that tracks the growth and development of leading global companies creating and implementing blockchain solutions.

An ETF that will track the Index is already in the works, with Reality Shares filing for it on November 2, 2017.

Reality Shares and Nasdaq compiled the index by utilizing internal and external research and their proprietary Blockchain ScoreTM ranking system. The Index is comprised of global companies that seek to capitalize upon transformational blockchain technology that may potentially disrupt the markets in which they operate.

How to Choose Between a Peer-To-Peer Lending or Traditional Loan (Experian), Rated: A

Shopping for a loan at a P2P provider is a two-step process. First, based on a credit score (or credit scores) and your answers to a few basic questions—your full name, address, date of birth and annual income—the lender determines which loan offer(s) to extend to you. (It’s possible at this juncture that the lender will decide not to extend any loan offers; if they do, they’ll explain why.)

Once you choose the loan you want, the lender does a more detailed credit check and may ask you to verify your income and to provide additional background information.  Each P2P site has its own lending criteria, including minimum credit scores, and additional information requirements vary accordingly. Some P2P lenders want information on your educational background; others want work history or details about your financial assets. In most cases, you can submit the necessary documents electronically.

The first step in the P2P loan-approval process gets one or more of your credit scores by a method known as a soft inquiry—the same process you use when you check your own credit scores. Soft inquiries have no impact on your credit scores. However, the hard inquiries traditional lenders make when you apply for a credit cards or bank loans are reported to the national credit bureaus. They appear on your credit reports, and typically cause temporary credit-score drops of several points.

In the second step of P2P loan approval, the lender performs a hard inquiry to confirm your credit score and, likely, to review your full credit report.

Before you apply for a P2P loan

  • Take a look at the fine print on the bottom of each provider’s homepage, to get an overview of the loan amounts they offer and the rates and fees they charge.
  • Make sure the lender operates in your state.
  • Check your FICO Score and review your credit reports for any major negative entries. Accounts in collection, liens and civil judgments are among the items that could torpedo your loan application, even if you meet the credit-score requirements.
  • Determine the amount of money you need and watch out for tempting upsells.
  • Consider using the Experian loan-referral tool to explore offers from multiple P2P lenders (and possibly traditional lenders as well).

Resignation of CFPB head gives Trump opportunity to erase Elizabeth Warren’s legacy (Legal Insurrection), Rated: A

Richard Cordray, an Obama appointee and head of the Consumer Financial Protection Bureau (CFPB) announced to staff in an email Wednesday his plans to resign. While he’s yet to confirm his plans, there’s speculation Cordray will return home to run for Ohio’s governorship.

Seven Signs That the Bond Bull Market is Over (INTL FCStone), Rated: A

  • The bond bear market is already here: short and medium-term treasuries have lost value in the past 5 years
  • Buybacks have fallen to a five-year low, and big repurchasers have underperformed
  • Oil prices are at a 30-month high, and the futures curve is in backwardation
  • The long and the short ends of the yield curve are moving together again
  • The Chinese trade surplus has shrunk from 10% of GDP to almost zero in the past ten years
  • The U.S. deficit is growing again, an unprecedented phenomenon in times of expansion and peace
  • Small bubbles are popping out: Auckland houses, Ethereum crypto coins, and collectible cars
Source: Global Macro Report, INTL FCStone

Read the full report here.

Spring Framework Creator Launches Atomist for Development Automation With $ 22 Million in Series A Funding (Marketwired), Rated: A

Today on stage at Structure 2017, Atomist is formally launching and unveiling its Development Automation Platform with an Open Source client and API. As part of today’s launch, Atomist is announcing $22 million in Series A funding from Accel and Matrix Partners.

Bestow Gives Texas Residents First Access to On-Demand Life Insurance (PRWeb), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced the early access roll out of its comprehensive, full-stack, digital life insurance solution in Texas. For the first time Bestow’s solution is available to the public, giving Texas residents primary access to apply for the only on-demand life insurance solution, instantly and without a medical exam.

Leveraging applied intelligence and algorithmic underwriting, Bestow redefines the way consumers research, buy and manage life insurance. Using data to calculate risk, Bestow removes the need for a medical exam and streamlines the entire process into a matter of minutes. The Texas launch gives consumers access to choice term life insurance plans, including a unique two year term policy never before available for life insurance. Additionally, customers can choose between ten or twenty year term life insurance.

The Zebra Raises $ 40 Million, Taps New CEO To Expand Beyond Car Insurance (Forbes), Rated: A

The Zebra, which has always described itself as the Kayak of car insurance, has hired a longtime Kayak executive as its new CEO.

The Austin-based company, which allows drivers to compare prices for car insurance online, said on Tuesday that it has tapped Kayak’s former president Keith Melnick to run the company.

The Zebra also said it has raised $40 million in a Series B funding round, led by Accel Partners. That brings its total funding to $61.5 million.

MarketScout in Dallas Creates $ 25M Insurtech Venture Fund (Insurance Journal), Rated: B

Dallas-based insurance exchange and MGA MarketScout announced it has launched MarketScout InsurTech (MIT), which will make investments in tech-enabled insurance distribution. The initial funding of $25 million will come exclusively from MarketScout Corp., parent of MIT, according to the firm.

House Financial Services Committee Approves Legislation to Help Keep Lending Partnerships Between Banks and Online Lenders (Crowdfund Insider), Rated: A

The House Financial Services Committee has approved HR 3299 or the “Protecting Consumers’ Access to Credit Act of 2017.” The bill “restores consistency” in lending laws across state boundaries. HR 3299 impacts the case of Midland Funding, LLC v. Madden – an ongoing law suit that has the potential to undermine online lenders. Sponsored by Congressman Patrick McHenry, includes an important statement that clarifies allowable interest rates on loans potentially ending the issue associated with the law suit.

How Do You Beat a Robo-Advisor? Trust (Think Advisor), Rated: A

“Technology by itself cannot create trust,” Robert C. Merton, a Nobel laureate in economics now teaching at MIT, recently told ThinkAdvisor. “The successful advisor must have the trust of their clients.”

Given the importance of trust in the advisor-client relationship, Merton recommends financial advisors (the breathing kind) should:

  • Check what they are doing to retain and enhance trust with their clients.
  • Make sure the business model being used supports the creation of trust.
  • Take advantage of technology to improve/enhance what the advisor does.
  • Do not view technology as a “competitor or substitute” for the advisor.
  • Understand and assess the financial technology they employ to certify trusting its use in client solutions.

HFLA launches initiative to help underserved reach financial stability (Cleveland Jewish News), Rated: A

The Hebrew Free Loan Association has launched its Looking to the Future Initiative with support from the St. Luke’s Foundation and the PNC Foundation. The initiative accounts for $73,000.

The initiative enables HFLA to increase its lending of interest-free loans to Cleveland’s underserved neighborhoods and grows the organization by expanding its reach, according to a news release. HFLA received a $63,000 grant from the St. Luke’s Foundation and a $10,000 grant from the PNC Foundation to launch the effort.

Fundation Purchases Select Assets from Able Lending to Enhance Partnership Strategy (BusinessWire), Rated: B

Fundation Group LLC, a digitally-enabled lender and credit solutions provider, today announced that it has acquired a variety of assets from online small business lender, Able Lending of Austin, Texas.

Former Capital One Executive Troy Jamison Joins Victory Park Capital as Chief Risk Officer (BusinessWire), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Troy Jamison joins as chief risk officer for the firm’s nonbank financial services portfolio. Jamison is based in Chicago and reports directly to CEO and Co-Founder Richard Levy.

CFPB updates website to officially address end of arbitration rule (Housingwire), Rated: B

The Consumer Financial Protection Bureau finally updated its website to acknowledge President Donald Trump revoking the controversial arbitration rule.

blog post from Ballard Spahr previously stressed the importance of the CFPB updating its website to note the rule’s override since the rule was killed nearly two weeks ago.

The webpage for “Arbitration agreements” now has an update on the top that states:

On Nov. 1, 2017, the President signed a joint resolution passed by Congress disapproving the Arbitration Agreements Rule under the Congressional Review Act (CRA). Pursuant to the joint resolution, the Arbitration Agreements Rule has no force or effect. The materials relating to the Arbitration Agreements Rule on the Bureau’s website are for reference only.

HOUSE FINANCIAL SERVICES COMMITTEE PASSES SMALL BUSINESS CREDIT ACT (Coalition for Small Business Growth Email), Rated: B

The 

United Kingdom

LendInvest launches into buy-to-let (Mortgage Strategy), Rated: AAA

LendInvest is launching a range of buy-to-let loans aimed at professional landlords and investors.

Rates start at 3.69 per cent for a two-year fix at 60 per cent LTV.

The firm will offer loans of between £50,000 and £5m, up to a maximum LTV of 80 per cent.

Citigroup joins the AI bandwagon (Business Insider), Rated: A

Citigroup 

Source: Business Insider

SyndicateRoom Alum Squirrel Launches Crowdcube Funding Round (Crowdfund Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, has launched an equity crowdfunding round on Crowdcube. This initiative debut comes less than one year after the company completed its SyndicateRoom funding round with £585,000 in funds. Squrriel is now seeking £400,000.

Government unveils financial package to support tech (P2P Finance News), Rated: A

THE GOVERNMENT has given a £21m boost to a technology programme that has supported firms such as Zopa and Funding Circle as part of a range of measures to boost the tech sector.

The funding will make Tech City UK and Tech North one national organisation called Tech Nation and help grow government-backed startup support programmes such as Founders Network, Northern Stars, Future Fifty and Upscale.

Cash Converters International Ltd reports security breach and ransom demand (The Motley Fool), Rated: A

Payday lending and pawnbroking business Cash Converters International Ltd (ASX:CCV) announced a cybersecurity breach in its UK operations last night.

Sadly, computer system integrity is becoming an increasingly relevant – and often overlooked – concern for investors, with a vast majority of companies relying in one way or another on computer systems.

Valorem Foundation Launches All-New Cryptocurrency Platform (PR Newswire), Rated: A

Valorem Foundation, a Blockchain startup specializing in stabilized value-based exchange and transactions, has announced the launch of its new cryptocurrency platform. The company has developed a multi-layered platform to disrupt and expand the following services globally: microloans, car loans, student loans, rent payment, P2P networks, buying and selling of goods & services, business investing, real estate crowdfunding, and insurance.

Empowering the world: How you can make money through improving lives (City A.M.), Rated: A

This sea change should explain why investment firm Ethex has managed to scoop up so much support in its short history – raising more than £50m since 2013.

Its business model has a peer-to-peer lending feel – that is, it uses a digital platform to allow retail investors to lend to individuals and entrepreneurs.

But it comes with a twist, because Ethex is a not-for-profit organisation which lets you invest in companies that have a positive impact – socially and environmentally.

If you want to get involved, the platform has a minimum investment of £50, which arguably makes it more accessible to younger generations.

Trussle hires VP engineering from Funding Circle (Mortgage Introducer), Rated: B

Trussle has appointed Matthew Gretton as vice president of engineering from peer-to-peer lending platform Funding Circle.

China

Alibaba affiliates sweep top 3 spots in global fintech ranking (Asian Review), Rated: AAA

Financial technology companies linked to China’s Alibaba Group Holding took over the podium in KPMG’s latest Fintech 100 list, announced on Wednesday.

Ant Financial, which runs Alibaba’s massive Alipay e-payments network, took the No. 1 spot on the list, which was compiled with fintech accelerator H2 Ventures. Online property insurer ZhongAn Insurance and microloan provider Qudian placed second and third; both have received investments from Ant.

See the full list here.

One of China’s hottest companies rebuffs criticism about transparency (CNBC), Rated: A

Despite public criticism about a lack of transparency in some practices, Ant Financial is doing things the right way, a senior executive at the company said Wednesday.

“The demand for these securities is very healthy and continuing to expand,” Douglas Feagin, senior vice president and head of global business at Ant Financial, told CNBC’s “Street Signs.” “That, at the end of the day, is the ultimate barometer of whether you’re giving enough information to investors to invest.”

Ant Financial will use local partners in Southeast Asia: executive from CNBC.

Earnings at Some U.S.-Listed Chinese Microlenders Taper (Caixin), Rated: A

In the three months ending Sept. 30, Yirendai’s net income was down 12% to 303 million yuan ($45.7 million) from 344.3 million yuan a year ago, the company said Wednesday. Another Chinese microlender, China Rapid Finance Ltd., earlier reported a wider net loss of $4.4 million in the third quarter. Although Qudian Inc., a larger player that listed in New York last month, recently posted a four-fold increase in its third-quarter net profit from a year ago, citing better operational efficiency and its growing borrower base.

Cinda International Leads Massive Round In Chinese Fintech Company 9f Group (China Money Network), Rated: A

Beijing-based fintech company 9f Group has raised a massive new funding round from Cinda International Holding Ltd, a subsidiary of state-owned China Cinda Asset Management Co., Ltd., Focus Media Information Technology’s Chairman Jiang Nanchun, video game developer Youzu Interactive’s chairman Lin Qi and an unnamed Chinese industry fund.

The company did not disclose financial details except to say that it raised “hundreds of millions of U.S. dollars” in the latest financing deal, according to a company announcement. It is also unclear how the company is valued in the round, but 9f Group is listed on China Money Network’s China Unicorn List with a US$1 billion valuation when it last raised a US$110 million series B round in 2015.

European Union

For Spain’s banks, survival means digital (Financial Times), Rated: AAA

Santander’s Openbank has changed a great deal since it was founded as Spain’s first telephone banking service in 1995. Now a fully digital operation, its mobile app allows users to temporarily disarm a lost credit card, as well as to check whether fellow Openbank customers are buying or selling a given stock at any moment. Currently, it has some 1.2m customers in Spain and more than €8bn ($9.3bn) in assets under management.

In recent years, Spain’s two biggest banks — Santander and BBVA — have increased their financial and managerial investment in fintech, digital banking and big data. Like their peers, they are convinced that the days of branch-based lending are drawing to a close.

Spanish banks average about €15m assets under management per employee, says Daragh Quinn, banks analyst at investment bank Keefe, Bruyette & Woods. At a digital operator like Openbank, that number is close to €60m.

The digital push is on two fronts: first, a mobile app that allows customers to access almost all of the bank’s products without going into a branch. Second, a venture capital approach whereby banks invest in or partner with fintech start-ups to add products.

Online Lender Lendix Launches Flexible SME Bridge Loans in France, Spain & Italy (Crowdfund Insider), Rated: AAA

Lendix, online lender for SMEs in continental Europe, has announced the launch of a new financing product: the Flexible Bridge Loan. This product is designed to will allow a greater number of French, Spanish and Italian SMEs to benefit from the speed of execution of Lendix’s lending platform while leaving them the possibility of setting up an overall refinancing solution with other financial institutions.

The Lendix Flexible Bridge Loan is a 5-year amortizable loan with a standard commitment for the first 9 months and the possibility of early repayment at no cost for the remainder of the loan term, even in the event of refinancing by other financial institutions.

Swedish $ 370 Billion Home-Loan Market Gets New Mortgage Fund (Bloomberg Quint), Rated: A

As investors wonder whether Sweden’s housing market is headed for a correction, the country’s first mortgage fund is about to enter the $370 billion Swedish home-loan industry.

Stabelo plans to pool capital from Swedish institutional investors in exchange for fixed-income securities. That money will then be lent to home buyers. The fund starts offering its products this week and will work with Avanza Bank AB, Sweden’s largest online lender. Avanza, which owns just below 20 percent of Stabelo, will handle distribution and marketing.

International

Has P2P marketplace lending become B2P? (Cuffelinks), Rated: AAA

Due to this issue, the original incarnation of peer-to-peer lending has not lasted. As the CEO of Zopa, a UK-based P2P lender said,

“As bad debts soared, the approach was abandoned and Zopa was moulded into a ‘big sausage machine’. Its technology now links lenders with a pool of borrowers without any direct contact or the need for investors to make credit decisions.”

Australia’s major peer-to-peer lender is SocietyOne. It currently has $350 million borrowed through its platform, and is growing rapidly. In fact, loan volumes in the first three quarters of this year have totalled $141 million so far, surpassing the $139 million in loans facilitated over the entire course of 2016, as shown below.

Source: Cuffelinks
Australia/New Zealand

Exemption for personalised digital (robo) advice (Scoop), Rated: A

Following the FMA’s release of its second consultation paper on personalised robo-advice (now called digital advice), the leading law firm has published its tips for providers looking to develop digital advice platforms.

Head of Russell McVeagh’s Corporate Advisory group, Dan Jones, says the exemption is a necessary first step in putting the New Zealand financial advice regime on equal footing with overseas regimes, and may provide particular assistance to New Zealanders in KiwiSaver.

India

How P2P lending can be a route to creating financial inclusion (Daily News & Analysis), Rated: A

For years, banks have had a monopoly in lending money to businesses and individuals. However, the 2007-08 financial crisis created a havoc, rapidly-expanding the funding gap. This led to the advent of a niche fintech vertical, peer-to-peer (P2P) lending.

The geographical reach of a P2P lending platform is far superior, with the major differentiator being its online interface. Such digital financial services play an important role in supporting the objective of financial inclusion. Anybody, from the remotest areas, having access to internet, can be eligible to get/give a loan.

In the age of digitisation where almost everyone has access to internet, such platforms have the potential to change the financial graph of a country.

Are P2P platforms safe for lending and borrowing? (India Times), Rated: B

While banks and non-banking finance companies (NBFC) are the readily available sources for loans, who does the P2P platform cater to? “Unfortunately, banks in India follow mediocre credit assessment policies which are suited only for borrowers who can offer collateral or have an impeccable credit history. In practice, majority of the borrowers lie in between these extremes. Therefore, majority of Indians can borrow on P2P platforms,” says Raghavendra Pratap Singh, co-founder, i2ifunding, an online P2P lending marketplace.

RBI has put a cap on the amount that can be borrowed and lent. The aggregate exposure of a lender or the maximum that one may borrow at any point of time, across all P2Ps, shall be capped at Rs 10 lakh. Even the exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000 and the maturity of the loans shall not exceed 36 months. “More clarity from RBI is expected on how the regulator intends to monitor the compliance of this aspect and how it will fix the responsibility,” says Singh.

Risks for a lender
Since this is an unsecured loan where there is no face-to-face interaction, a P2P lender needs to be aware of the risks involved. Bubna says, “All investments involve risk. However, in comparison to equity or commodity market investments or real estate, P2P lending has lower risk as it is addressed by on-boarding high quality borrowers. Further, lenders are suggested to create a diversified portfolio of loans.”

Asia

Introducing ACE, Crowdo’s New Artificial Intelligence Due Diligence System (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding unveiled today its proprietary Artificial Intelligence driven due diligence system, Crowdo ACE, aimed at benefiting both their borrowers and investors. Crowdo ACE takes into account a few thousand unconventional and alternative attributes and represents a new way to perform due diligence versus traditional means used by conventional financial institutions. It has already been applied to process more than 3,000 loans.

In a largely-unbanked Indonesia, Amartha uplifts women micro-entrepreneurs (YourStory), Rated: A

Twenty-six people, four nationalities, 10 days. Travelling across Southeast Asia as a Startup AsiaBerlin Roadshow delegate to explore startup ecosystems was an experience unto itself.

Amartha has so far disbursed over $13 million to 60,000 women micro-entrepreneurs and aims to improve their income, and ultimately quality of life.

Aria: Amartha is an Indonesian financial technology startup that focuses on providing affordable financial access, and mentorship to the unbanked population living below the poverty line. Amartha operates much like a peer-to-peer lending platform, and so far, has disbursed more than $13 million to 60,000 borrowers. The borrowers are mostly women micro-entrepreneurs and Amartha aims to improve their income, and ultimately alleviate their status through financial inclusion.

Aria: When we started operations in April 2016, we disbursed $40,000 a month. By the end of 2016, we were disbursing $800,000. Today, on average, we disburse $2.5 million per month. So far, we have disbursed more than $13 million, across more than 60,000 borrowers. The average ticket size of a loan now is around $300.

We charge a fee based on the profit sharing principle. Of the 22-30 percent annual interest rate paid by borrowers, we collect 11-13 percent for our revenue.

Africa

The Mauritian Financial Services Commission Issues Draft Peer-To-Peer lending Rules (Mondaq), Rated: AAA

Following the announcement of the Government on peer-to-peer lending and funding in the 2017-2018 Budget, the Mauritian Financial Services Commission (“Commission”) has issued draft rules on 10 November 2017 to regulate the peer-to-peer lending sector – as sector which has grown rapidly in other countries.

In the region, Kenya and Africa are leading in the peer-to-peer business lending market. According to a study conducted by the University of Cambridge, within Africa, South Africa had the largest number online alternative finance platforms, with $15 million raised in 2015 (The Africa and Middle East Alternative Finance Benchmarking Report, February, 2017).

Borrower and lender – a borrower must be a resident in Mauritius; however, there is no residency requirement for the lender.

Restrictions on amounts  Hence, a lender, who is a legal person, cannot lend more than MUR 500,000 (approx. GBP 11,000) in any 12 months’ period. A lender, who is a natural person, cannot lend an amount in excess of 10 per cent of his income or a maximum of MUR 300,000 (approx. GBP 6,600), whichever is lower, in any 12 months’ period.

Obligations of a P2P operator – the Peer-to-Peer operator must publish the following information on its website:

  • details of how the P2P lending will operate
  • measures to prevent money laundering and combatting terrorist financing
  • security measures to ensure data protection
  • dispute resolution mechanism.
Canada

Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A

Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. 

Russia

Moscow Is On Its Way To Becoming A Smart City And Fintech Powerhouse (Forbes), Rated: A

Its citizens and businesses are also quick to adopt the latest disruptive technologies such as fintech and cryptocurrencies. Moscow has a 35 percent fintech adoption rate, higher than New York’s 33.1 percent.

Authors:

George Popescu
Allen Taylor

Thursday November 9 2017, Daily News Digest

credit cards

News Comments Today’s main news: Lending Club plots two ABS before end of year. Scott Sanborn speaks to Lending Club’s Q3 results. Alibaba funds WeLab. Aegon sees strong Q3. Prospa originates over $500M. Jumo wins Mastercard Foundation prize. Today’s main analysis: Top cities maxed out on credit card debt. Today’s thought-provoking articles: Did Lending Club just land another blow to […]

credit cards

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

Middle East

Africa

Canada

News Summary

United States

Lending Club plots two ABS before year end (Global Capital), Rated: AAA

Lending Club is looking to price two more ABS deals this quarter, as the company plans to shrink its proportion of bank funding in the year ahead, executives said on a third quarter earnings call this week.

LendingClub Corp’s (LC) CEO Scott Sanborn on Q3 2017 Results – Earnings Call Transcript (Seeking Alpha), Rated: AAA

In Q3, we delivered $154 million in revenue, the highest in the company’s history, and up 34% year-over-year, and 10% sequentially. As importantly, we generated an EBITDA of $21 million. That’s almost 5x the level of last quarter. And we’ve narrowed our GAAP losses by almost $19 million, down to $6.7 million.

We processed a record number of applications, bringing the total borrowers served by Lending Club to over 2 million since launch and an improved efficiency from last quarter.

To put that into perspective, it took 8 years for us to reach our first 1 million, and we’ve helped an additional 1 million borrowers in just the last 2 years.

Although we anticipate some short-term volume effects as we calibrate our targeted marketing to the new model, the 58% annual growth in applications we saw in Q3, combined with the conversion efforts we now have in testing, give me confidence about our outlook in 2018.

Separately, we continue to broaden our mix of investors. As part of that, we delivered on our goal to complete a second securitization that included a total of 33 investors, 10 of which were new to the LendingClub platform.

Another Blow to Online Lenders (WSJ), Rated: AAA

Lenders should be judged not on how fast they grow during good times, but how they perform in periods like today when consumer defaults are ticking up. On that basis, LendingClub LC -15.93% looks unprepared and investors are right to be skeptical of the online lender.

LendingClub, the most prominent of the online lenders, said loans to certain borrowers at the low end of the prime credit spectrum “are not currently meeting our expectations.” It will start limiting these loans, which account for around 3% of total loans, and temporarily halt their sale to investors. It will also temporarily halt this lending, which accounts for around 3% of its total loans, and also adopt a new credit model that tightens criteria for these borrowers.

Online lenders’ credit models, which analyze various factors beyond traditional credit scores, are supposedly one of their core strengths. That loans are performing worse than expected at LendingClub is a sign the models might be flawed.

Source: The Wall Street Journal

TOP MAXED-OUT CITIES (Builder Online), Rated: AAA

LendingTree®, the online loan marketplace personified by Lenny the little green guy who has the banks crawling to him, released on Wednesday the findings of its study on which cities have the dubious distinction of containing the most consumers with signs of being maxed-out with their credit cards.

Credit card balances in the U.S. are now almost $800 billion, the highest since 2009, according to Federal Reserve data.

The Most Maxed-Out Places

#1 San Diego, California
Maxed-out score: 98
San Diego residents carry $6,629 in credit card balances on average. Nearly one in five (18%) have at least one card maxed-out. That’s second only to Oklahoma City, where 18.5% of residents have a maxed-out card. San Diego residents also use more of their credit lines overall, with 32.8% utilization.

#2 Los Angeles, California 
Maxed-out score: 93
Los Angeles residents also push their credit further than most, with 17.5% of residents having at least one maxed-out card. Those that do have a maxed-out card have 1.33 maxed-out cards on average. Balances average $6,472, a touch lower than their neighbors to the South in San Diego, helping utilization come in at 32.0% versus San Diego’s 32.8%.

#3 San Antonio, Texas
Maxed-out score: 92
San Antonio residents don’t face the same high cost of living that Southern Californians deal with, but they share an affinity for using their credit cards. The study findings revealed that 17.2% of San Antonio residents have a maxed-out credit card, and their total credit card balances average $6,474, similar to those among Southern Californians.

Federal Court Grants Class Certification in the LendingClub Case, But Denies Motion to Enjoin the State Court Case (The National Law Review), Rated: A

LendingClub is facing two parallel securities litigation cases stemming from alleged false statements it made in connection with its initial public offering (“IPO”).

With respect to the motion to intervene, the federal court granted the motion, for the limited purpose of allowing the state court case plaintiffs the opportunity to “set forth their argument for why they are the better representative” of the class.  Additionally, the federal court granted the motion to intervene “on the condition that they remain under this Court’s jurisdiction so that the undersigned judge may coordinate their action with the federal action to avoid any prejudice to absent class members.”

The California state court plaintiff then argued that class certification should be denied in the federal court case because certain theories of recovery that were dismissed in the federal court case remained active in the California state court case, making the state court case “superior.”

The federal court plaintiffs responded that their proposed class was in fact superior because the price of LendingClub’s stock was lower on the day they brought the federal suit.

The federal court declined to enjoin the California state court case.  However, it did express “concerns” with “the current form of state plaintiffs’ class notice, which fails to notify class members of the parallel federal action, the pendency of Cyan and its potential effect on their case, or the potential that the filing date of their suit could substantially limit damages.”

TRACEABILITY

Lastly, the federal court addressed an issue of first impression raised by LendingClub and the individual defendants regarding the traceability of the federal plaintiffs shares.

Because of this trading pattern, the traceability of the lead plaintiffs shares turned on whether the court adopted a “last-in, first-out” (“LIFO”) or “first-in, first-out” (“FIFO”) method to calculate holdings.

If the lead plaintiff’s transactions were accounted for using LIFO, all of its holdings as of the end of the lock-out period would remain traceable to the lock-up period.  If, however, the court adopted a FIFO calculation, the lead plaintiff would have been deemed to have owned no shares traceable to the IPO.  First, the court noted that “[w]hether LIFO or FIFO applies is a matter of first impression in the Section 11 traceability context.”  The court ultimately held that LIFO applied because the majority of courts use the LIFO method to estimate losses under the PSLRA when determining a putative lead plaintiff’s stake in the litigation, and “[i]t would be incongruous to measure losses by one method, yet measure traceability by the opposite method.”

Square Patent Suggests Potential Move Into Crowdfunding (CB Insights), Rated: A

Is Square considering a move into crowdfunding? A patent filed in March 2015 and granted in September 2017 suggests that might be the case.

The patent, titled “Mobile point-of-sale crowdfunding,” outlines a method for merchants to request crowdfunding from patrons based on their processing history.

The patent reads:

“Thus, the merchant has conveniently acquired a new espresso machine, customers may benefit from the new espresso machine, and investors have received a return on investment with the added security that the techniques described herein provides (e.g. underwriting of the crowdfunding project by the payment processing system and direct repayment to the investors from POS transactions processed for the merchant by the payment processing system).”

Source: CB Insights

Square Filed a Crowdfunding Patent that was Granted in September 2017 (Crowdfund Insider), Rated: A

Will Square ever pursue this concept? Probably not, at least not in the near term. They are still too busy figuring out vendor loans, which is probably are far more profitable vertical.

Wela Announces Record Year of Growth, Passes $ 1 Million in ARR (Marketwired), Rated: A

Wela today announces it has passed $1 million in annual recurring revenue (ARR), one of several achievements to mark 2017 as a record year of growth for the personal finance app. In the last two quarters, Wela doubled its total users and amount of linked accounts. Additionally, Wela Strategies, an extension of the app that manages investment accounts, passed $135 million in assets under management. Wela’s growth is evidence of a demand among millennials and young families for a personal finance solution that delivers advice in the way they want to receive it — through the convenience of an app that incorporates artificial intelligence (AI), through the skill provided by a human advisor, or a combination of the two offerings.

In 2017, Wela’s staff doubled in size, adding key management roles, including a chief technical officer, product manager and user experience manager. In an effort to better serve its rapidly growing user base, Wela plans to hire additional support for its customer experience, financial advisory and development teams in the next few months.

Acorns Buys Retirement Savings Fintech Startup Vault (Benzinga), Rated: A

Acorns, the fintech app that lets users automatically invest small amounts, announced Tuesday the purchase of Portland-based fintech startup Vault, which sells automated retirement investment plans to small businesses.

One financial fear scares millennials even more than death (CNBC), Rated: A

Death can be a frightening thought. But, according to a survey from financial-advice website Credible, there’s one thing that scares millennials even more: having credit-card debt.

Of the 500 Americans polled who are currently in credit card debt, more than 33 percent said debt is the scariest aspect of their daily lives.

The findings make sense, according to Credible. Americans hold more than $1 trillion in credit card debt and, among the respondents, the average debt is a whopping $5,290.

When asked how they got into debt, 34 percent said it was due to an emergency expense, 32 percent said their debt is due to a large one-time purchase and 4 percent said they choose not to pay their debt despite having the resources to do so.

Source: CNBC
Source: CNBC

Behavioral finance can attract fee-based assets (Investment News), Rated: A

Based on the latest research conducted at our annual ELEVATE fee-based advisory conference, one of the most important ways for independent firms to help advisers succeed in this kind of asset gathering is to help them lead with behavioral finance, and to complement that effort with client segmentation that captures qualitative and emotional factors for the adviser.

Aging pre-retirees and retirees need enhanced guidance in navigating the emotionally charged life planning decisions many of them increasingly face. Meanwhile, the highest long-term growth potential client segment, Millennials, generally opt for advice from individuals who build a truly personal connection with them, in a relationship that is as much social as it is professional.

Small Business Administration’s New York office tops billion in guaranteed loans (Westfair Online), Rated: A

Loans to small business owners backed by U.S. Small Business Administration guarantees increased 36 percent in number and 15 percent in dollar amount in the SBA’s New York district in the 2017 federal fiscal year, putting the district office over $1 billion in annual loan program lending for the first time.

In the seven-county lower Hudson Valley region, the SBA guaranteed 500 loans worth $191 million.

Goldberg said 36 percent of the region’s SBA loans were under $50,000; 42 percent went to minority-owned businesses; and 16 percent, or $160 million, went to women-owned businesses.

The top five lenders by dollar amount in the Hudson Valley were Empire Certified Development Corp. $40,726,000; Manufacturers and Traders Trust Co., $11,393,800; Noah Bank, a minority-owned bank headquartered in Elkins Park, Pennsylvania, $9.12 million; Celtic Bank Corp., based in Salt Lake City, $7,886,400; and Cross River Bank, based in Fort Lee, New Jersey, $7,768,100.

In Westchester County alone, the top five SBA lenders in number of loans were TD Bank, with 42; JPMorgan Chase Bank, 39; Wells Fargo, 14; Citibank and Manufacturers & Traders Trust Co., both with 11; and New Millennium Bank, headquartered in Fort Lee, with nine loans.

The top five lenders in Westchester County by dollar amount were Empire State Certified Development Co., $8,866,000; Newtek Small Business Finance Inc. in New York City, $5,917,400; Live Oak Banking Co., of Wilmington, North Carolina, $5,165,000; TCF National Bank, based in Wayzata, Minnesota, $4,995,500; and NewBank, $4,540,000.

Wells, JPM go mobile-only in pursuit of millennials (American Banker), Rated: A

There’s any number of reasons megabanks are rolling out mobile-first banking offerings, from evolving consumer demand to increased competition from fintechs to a significant generational transfer of wealth.

But the biggest motivation for banks like Wells Fargo to develop new smartphone apps may be to ensure they get clients early in their financial lives and keep them.

The ten-year ticking timebomb (The Finanser), Rated: A

I’ve been saying for so long now that banks need to replace core legacy systems that I’m boring myself, but here I go again. The reason I’m talking about it again is that, even though some disagree and think they can fudge the issue with plug-ins, I believe that the new competition will decimate banks that don’t replace their core systems.

If you are tech first, your singular focus is on agility. It’s about fast change cycles in a microservices architecture using a SDK (software developer kit) network of APIs (Application Programming Interfaces). It’s about speed, change, service, updates, vision.

If you are finance first, your singular focus is on stability. It’s about slow change cycles in a monolithic architecture using control systems and sign-off structures that avoid any exposures. It’s about risk, security, stability, control, management.

The good reason why banks make bad fintech partners (American Banker), Rated: A

Banks admit it — they are annoying fintech partners.

But, bank executives counter, fintechs are no treat either.

To manage risk and protect customers, a big part of the bank’s job is to build a “governance structure” on top of the technology that fintech executives have built.

Bankers also said that a key part of their role in fintech partnerships is simply educating tech executives about what, exactly, banks do.

Keith Noreika from OCC: The US Banking Industry Needs More Competition, Not Less #Fintech (Crowdfund Insider), Rated: A

Acting Comptroller of the Currency Keith Noreika delivered a speech today discussing the US banking industry. In the speech, Noreika makes an important point: US banks need more competition, not less. He also intimates that mixing commerce and banking can deliver benefits to consumers. Take this one step further, and Noreika is indicating big tech, like Amazon, Apple, Google, Facebook and more, should be allowed to become banks.

“Meaningful competition could have a number of other positive effects besides tempering the risk concentrated in having just a few mega banks. It could make more U.S. banks globally competitive and promote economic opportunity and growth domestically. For banking customers, particularly those underserved by traditional banks, more competition could result in better banking services, greater availability, and better pricing. If a commercial company can deliver banking services better than existing banks, we hurt consumers by making it hard for them to do so.”

Mr. Cooper Invests in Homeowner’s Insurance Platform Matic Insurance (CoverageR), Rated: B

Mr. Cooper, the nation’s largest non-bank mortgage servicer, today announced that it has led the Series A funding round in Matic Insurance, a digital insurance agency whose technology enables homebuyers to obtain homeowner’s insurance seamlessly during the mortgage process .

Matic’s insurance marketplace will enable Mr. Cooper to provide customers a convenient and modern way to shop for insurance while helping them obtain competitive insurance policy quotes and bind within minutes instead of days, all part of a digital mortgage application interface planned to launch in 2018.

LendUp Hires First Chief Financial Officer, Announces Significant Growth Milestones (PR Newswire), Rated: A

LendUp today announced that Bill Donnelly, former VP of Global Financial Services for Tesla, has joined as its first CFO. The company further strengthened its leadership team with the addition of a General Manager for its loans business and a Chief Data Scientist.

Donnelly is a 30-year consumer credit veteran with extensive experience in credit cards and loans products. Donnelly spent the last four years with Tesla as VP of Global Financial Services, responsible for providing financing solutions for Tesla’s customers across 29 countries. He also served as President of Tesla’s captive finance company, Tesla Finance LLC, which offered an industry-leading leasing program innovative for its consumer-friendly agreement and for being the first end-to-end electronic lease with the ability to execute contracts on a vehicle’s touchscreen.

In addition to Donnelly, Anu Shultes has joined as General Manager of the company’s loans business, which recently surpassed $1.25 billion in originations.

Dr. Leonard Roseman has joined LendUp as Chief Data Scientist, to lead a growing team that uses Machine Learning to improve financial inclusion through expanded credit access and lowering the cost of credit to borrowers.

Concord Servicing Corporation Names New President and COO, and Adds New CFO (PRWeb), Rated: B

Concord Servicing Corporation, a leading force in the financial portfolio servicing industry, has announced a strategic reorganization of its senior management team. Changes at Concord include the promotion of Executive Vice President Shaun O’Neill to President and Chief Operating Officer, and the addition of financial industry veteran Stephen Bertrand to serve as Chief Financial Officer.

Finance Professionals Consider Bank Branch Closings, Fintech (Utah Business), Rated: B

The Economist reports that, nationally, banks have closed over 10,000 branches in the past decade. In the first six months of 2017, 869 branches closed across the U.S.

Mobile banking apps on phones have become the new ‘branches’ even as some brick-and-mortars have shuttered, continued Roger Shumway, EVP of Bank of Utah. “I don’t think branches have declined, they’re just in your hand,” he said. “For community banks, the niche you see in Utah is that they can talk to a real decision-[making] person. If they get into an issue, there’s a face, and [an app on] a phone that they love.”

“We see overall that there’s been a 30 percent drop in branch transactions, but if you look at the overall transactions including electronic, transactions are actually up,” said Zupon.

United Kingdom

Coutts claims Facebook is financial adviser of the future (FT Adviser), Rated: AAA

A combination of the rise of robo-advice and the habits of millenials could mean social media platforms such as Facebook could become major players in the financial advice market in the future, according to Coutts.

He noted that Facebook already has a service allowing individuals to make payments, and said financial advice may be a next step for the social media giant as it seeks to grow.

Analysis from IRN Consultants highlighted recent research which showed each new robo-advice customer signed up is losing the company £162.50 on average in the first year and only making £17.50 in subsequent years.

One of the companies the report pointed to was Nutmeg, whose accounts for 2014 showed revenues of £635,000 compared with operating expenses of £5.9m.

Taming the beast – the need for regulation in peer-to-peer lending (Financier Worldwide), Rated: A

Under existing Financial Conduct Authority (FCA) guidelines, peer-to-peer (P2P) lenders operate within a virtually unregulated space. While this is not damaging in itself, it does create a number of risks, as the FCA has acknowledged. The most significant of these risks are that as companies become more sophisticated, their resemblance to traditional financial institutions increases, but their regulatory obligations do not.

Over the past year, there has been a noticeable rise in the number of P2P lenders using low rates as an advertising measure. Unlike credit card providers that must give 50 percent of all applicants the headline rate they advertise, P2P providers can simply pick a rate and then advertise it, as, unlike their counterparts, it is very difficult for the legitimacy of their offer to be checked.

It is clear that there is a requirement for greater industry guidelines, so it can sometimes seem mystifying that bespoke regulations have not already been put in place. Simply put, this is because the P2P industry is developing at a much faster rate than the regulatory bodies are acting.

Challenger bank teams up with direct lending fund (AltFi), Rated: A

The RM Secured Direct Lending investment trust has signed a Revolving Credit Facility of £10m with challenger bank OakNorth.

Yolt announces integration with Starling Bank (AltFi), Rated: A

The money management app backed by ING has integrated with its first mobile-only bank, adding Starling Bank to its platform alongside incumbents.

Starling Bank marks the 29th bank, and first digital bank, to partner with Yolt using API integration.

New £20m fund to invest in companies helping the poor (Financial Times), Rated: A 

The Fair By Design fund will invest in companies tackling the so-called “poverty premium” — the extra costs the poorest pay for essential goods and services, such as energy, credit and food. About 6m households pay an average of £500 a year in higher charges.

The £20m fund was launched on Wednesday and hopes to raise £11m from companies, charitable foundations and rich individuals.

It will invest in companies tackling four areas: energy, finance, insurance — where the poor pay more because they cannot get credit or live in high-crime areas — and so-called “geo-based premiums” based on location.

Fair for You, an online lender, is one business seeking investment. The not-for-profit company offers cheaper loans to those with bad credit records, who go to rent-to-own providers such as BrightHouse, which an independent survey found charged more than £1,000 over three years for its cheapest washing machine. The regulator in October forced it to pay £14.8m compensation to 249,000 customers.

Committee considers how to help during Universal Credit roll out (ViewNews), Rated: B

COUNCILLOR Ros Kayes is calling on Bridport Town Council to support the local Citizens Advice Bureau as the roll out of Universal Credit in the town draws closer.

Cllr Kayes reported that Universal Credit would be rolled out in Bridport on December 4th and it is then when those claiming benefits will have to start the process of receiving the credit and will no longer receive any money from existing credit.

China

Alibaba funds lending startup WeLab to help it break out of China (Tech in Asia), Rated: AAA

Lending startup WeLab is flush with cash today after announcing US$220 million in its latest funding round. It operates WeLend in Hong Kong and Wolaidai in mainland China.

Online shopping giant Alibaba is among the investors, throwing in cash from the Alibaba Hong Kong Entrepreneurs Fund it set up in 2015.

China Financial Super Regulator Begins Operations (Caixin), Rated: A

A new cabinet-level committee that will coordinate various regulators to oversee China’s sprawling financial industry started operating, according to the state-run Xinhua News Agency.

The committee, known as the Financial Stability and Development Committee, held its first meeting on Wednesday, Xinhua said.

The committee will review a strategic plan of financial reforms; coordinate China’s monetary policy and financial regulation; and forge policies on financial risk management so as to maintain country’s financial stability, Xinhua said.

Will President Xi Jinping Let Markets Decide China’s Future? (Wharton), Rated: AAA

The outlook for reforming China’s developing financial markets and the banking system remains obscured, in part, by a lag in the timing for key appointments such as a successor for Zhou Xiaochuan, longtime head of the People’s Bank of China. Some newly appointed party leaders, including Xi’s close economic adviser Liu He, are thought to support more market-oriented reforms.

With the economy still growing at an annual pace of over 6% and financial markets seemingly on an even keel, Xi’s team can claim to have weathered the post-2008 financial crisis with few major hiccups. But rising levels of corporate, banking and government debt have prompted the International Monetary Fund to raise the alarm. Estimates of the ratio of non-performing loans to total lending in the banking sector range as high as 35%. Most economists and banking analysts say the real level is likely much lower.

The level of debt in the Chinese economy skyrocketed after Beijing unleashed record amounts of stimulus — at least 17.5 trillion yuan ($2.6 trillion) — to help fend off the worst impact of the 2008 financial crisis. That credit binge has not yet been fully digested. In the years since, the level of debt surged further, much of it as “off balance sheet” lending by so-called shadow banks that operate outside the state-dominated formal banking industry.

Moody’s Investor Service estimates that the size of shadow bank lending has more than doubled since 2012, growing more than 20% in 2016 to reach 64 trillion yuan ($10 trillion), or about 86.5% of China’s GDP.

European Union

Aegon Reports Strong Increase in Earnings and Capital Ratio in 3Q 2017 (Guru Focus), Rated: AAA

Net income increases by 31driven by US

  • Underlying earnings up by 20% to EUR 556 million reflecting favorable claims experience, higher fee revenue as a result of favorable equity markets, and lower expenses in US
  • Gain from fair value items of EUR 159 million driven by positive real estate revaluations and hedging gains in US
  • Charge from assumption changes and model updates of EUR 198 million caused by conversion of the largest block of universal life business to a new model
  • Higher underlying earnings, fair value items and realized gains drive increase in net income to EUR 469 million
  • Return on equity for the quarter increases to 8.9%

Strong increase in Solvency II ratio to 195%

  • Solvency II ratio increases by 10%-points compared with last quarter to 195%. Capital generation and benefit from divestment of UK annuity book more than offset interim 2017 dividend
  • Capital generation of EUR 809 million including favorable market impacts and one-time items of EUR 485 million
  • Holding excess capital temporarily decreases to EUR 0.9 billion driven by capital injection into Dutch business
  • Gross financial leverage ratio improves by 20 basis points sequentially to 29.2% as a result of retained earnings

Strategic highlights

  • Aegon launches mutual fund joint venture in Mexico
  • Robot processes customer requests to improve administrative efficiency in Dutch business
  • Aegon Asset Management receives top ratings for responsible investment
  • Launch of mobile- and user-friendly global careers site

French Lending Platforms Adopt Common Performance Indicators (Crowdfund Insider), Rated: A

On 8 November 2017, the French Crowdfunding Association Financement Participatif France released the common set of performance indicators that member platforms specializing in loans, mini-bonds (a debt instrument specific to SME lending marketplaces) and bonds are invited to publish.

Key indicators give a clear picture of crowdlending risk and its cost:

  1. The share of borrowed capital already repaid. The older the loans, the higher the portion already repaid.
  2. The portion of interest due already paid. The older the loans, the higher the share of interest already paid.
  3. The net internal rate of return representing the annual profitability of the loans, net of known or proven losses at the date of calculation.
  4. The maximum possible internal rate of return representing the annualized yield of loans if all loans were repaid in accordance with the original schedule.
  5. The annual cost of risk represents the decrease in profitability caused by delays and defaults relative to the maximum possible rate of return. This is the difference between (4) and (3).
Source: Crowdfund Insider

German fintech company TIS raises $ 12 million from 83North (Tech.eu), Rated: B

Treasury Intelligence Solutions (TIS), a German fintech company, has raised $12 million in funding from 83North with Target Partners and Zobito.

International

Post-crisis restrictions on international banking can blunt growth prospects in developing countries (The Financial), Rated: AAA

Growing restrictions imposed on foreign banks operating in developing countries since the 2007/9 global financial crisis are hampering better growth prospects by limiting the flow of much-needed financing to firms and households, a World Bank report warned on November 7.

Rise of Developing Economy Banks

As advanced economy banks retrenched after the crisis, developing country banks stepped into the void and expanded across borders, accounting for 60 percent of new bank entries since the downturn. The result has been an increase in banking relationships between developing countries and regionalization of international banking operations.

For example, Africa’s Ecobank started in Togo and now has operations in 33 countries across the continent. It also has offices in Paris, Beijing, Dubai, Johannesburg, and London, which allows it to attract capital from wealthy countries to invest across Africa.

At the same time, the total asset size of the world’s largest banks increased by 40 percent, raising concerns that regulatory efforts since the crisis have failed to address the risk of banks that are too big to fail. Nearly 30 percent of developing countries have put in place restrictions on foreign bank branches. These curbs are depriving many economies of opportunities to access global credit that could benefit businesses and households.

How blockchain will change major industries (The Next Web), Rated: A

Real estate

There is a long string of middlemen (think brokers, titling agencies, inspectors, etc.) who slow down the process, amplify human error, and drive up the costs of doing business.

A public, distributed blockchain ledger that acts as a living database for all deals, negotiations, and settlements in the industry can overcome many of these shortcomings and reduce the need for “trust managers.”

One of the most exciting companies in the space is REALISTO, who employs the Ethereum blockchain to overcome many of these inefficiencies. Every investment made via their crowdfunding platform is mirrored on their blockchain and verified via smart contracts.

Banking

With the formation of blockchain consortia – or groups of financial institutions that collaborate to develop blockchain solutions – blockchain is already set to affect the way financial institutions process payments and handle settlements.

Traditionally, settlements between merchants and banks can take up to days. As consumers, you would have to wait three to five days for your payments to be cleared and verified behind the scenes after swiping your debit card at a local merchant.

By digitizing payments on a secured network, blockchain can serve the 2 billion unbanked people ignored by institutional banks. To use cryptocurrencies, all you need is a smartphone – no minimum account balance, credit history, or banks.

A Combination of Blockchain and Standard Verification for Effective Decentralized Lending (Live Bitcoin News), Rated: B

Blockchain lending is a development that is growing in popularity and offering alternative and less stressful ways of acquiring loans quicker and more efficiently even at lower interest rates.

Lendoit offers a robust system which overlaps between blockchain technology and conventional verification systems. Therefore, prior to borrowing, intending borrowers are subjected to standard KYC verification during application, while other aspects of the loan acquisition and repayment processes are based on an Ethereum Smart Contract.

Australia/New Zealand

Australian Online Lender Prospa Tops Key Milestone as it Originates Over $ 500 Million in Loans (Crowdfund Insider), Rated: AAA

Prospa has claimed first in the race to originate over half a billion in small business loans. The online lender states that over the past 12 months, Prospa has experienced dramatic growth, doubling the size of its loan book. Prospa has now provided credit to more than 12,000 SMEs in Australia and is the number one online lender in the country. Prospa will provide loans of up to $250,000 with a term of 3 to 24 months.

Peer-to- peer home lending restrictions in Queenstown welcomed (Voxy), Rated: A

Queenstown Lakes District Council’s (QLDC) announcement and vote to amend its District Plan, restricting the number of days some houses can be used for short term peer to peer lending through sites such as AirBnB, will go a long way to improving rental affordability and shortages for workers in the region.

The report commissioned by QLDC from Infometrics shows AirBnB occupied 14% of the District’s housing stock in the June 2017 quarter.

Asia

Asian fintech funding exceeds $ 1b in 2017 (Deal Street Asia), Rated: AAA

Asia experienced a solid increase in fintech investment in Q3 2017, with $1.21 billion raised across 41 deals. China accounted for more than 50 per cent of all Asian fintech investment at $745 million.

Notably, corporate participation in Asia fintech venture capital (VC) deals remained high at 22 per cent of overall round counts, although actual direct investment was minimal in 2017 with just $840 million invested YTD in associated deal value.

In Singapore, an Indo-Asia Pacific business hub, the fintech sector saw $25.3 million over six deals in Q3 2017, with the Monetary Authority of Singapore (MAS) continuing to be the key driver of the city-state’s fintech ecosystem.

Source: Deal Street Asia
Middle East

National Bonds challenges UAE’s ‘financial advice dilemma’ with new investment app (The National), Rated: A

Dubai-based investment company National Bonds is moving into the financial advisory space with a new digital app offering low-cost investment options, its chief executive has revealed.

The company plans to challenge poor advice, offered by UAE financial advisory firms, by launching an upgraded app in the second quarter of next year to offer customers access to a variety of investment choices – not just National Bonds, Mohammed Al Ali, its chief executive told The National.

Africa

Jumo Wins Third Annual Mastercard Foundation Clients at the Centre Prize (BusinessWire), Rated: AAA

The Mastercard Foundation today presented its third annual Clients at the Centre Prize to Jumo. The US$150,000 prize recognizes the innovative work of the South African-based company as a large-scale, low-cost financial services marketplace that serves poor people.

The Prize highlights best practices in financial services where client satisfaction is a priority. Close to 100 financial service companies around the world submitted entries to the competition.

The other two Prize finalists were ftcash, one of India’s fastest-growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans, and Destacame, a free online platform in Latin America that empowers users by giving them control over their data to build their financial capabilities and to access financial products.

Uganda: Accra Summit to Pave Way for Financially Empowered World (The Monitor), Rated: A

The Mastercard Foundation is hosting its fifth annual and largest Symposium on Financial Inclusion (SoFI) in Accra, Ghana.

The symposium, which ends today, champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.

Uganda launched its National Financial Inclusion Strategy (NFIS) 2017 – 2022 which seeks to reduce financial exclusion from 15 to five per cent by 2022.

Canada

Borrowell wins Deloitte Fast50 award (Borrowell Email), Rated: A

Borrowell has won a Companies to Watch award as part of the Deloitte Fast50 program. We are one of only eleven companies across Canada to win that award this year, and the only company from Toronto. Fast50 winners in the category for established companies include well-known names like Shopify, SkipTheDishes, Wave and Influitive. The list was announced an hour ago. 

George Popescu
Allen Taylor

Friday July 21 2017, Daily News Digest

RateSetter

News Comments Today’s main news: SoFi CEO: why Etherium is worth more than Bitcoin. Affirm has 1,000 retail partners. Wells Fargo joins digital mortgage revolution. AutoGravity has half a million users. LendInvest launches retail bond offering. N26, Lydia support Apple Pay in France. Borrowell raises $57M in Canada. Today’s main analysis: RateSetter moves to protect users. Today’s thought-provoking articles: Takeaways from […]

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United States

Why Ethereum Is Much More Valuable Than Bitcoin (Fortune), Rated: AAA

As lending startup SoFi expands from student loans to full-service banking, it is also venturing into one of the trendiest areas among big Wall Street banks at the moment: blockchain.

An upstart cryptocurrency, Ethereum’s price has surged so dramatically in recent months that it now commands nearly as much market share as Bitcoin itself. Driving that rise is excitement about the way Ethereum allows its blockchain technology to be used to develop myriad other projects, as Cagney described.

In particular, SoFi, which is valued at more than $4 billion, is exploring a way to use blockchain to revolutionize title insurance, a standard requirement for many home buyers.

How SoFi is developing its financial services offerings (Tearsheet), Rated: AAA

SoFi has always been as much about culture and brand before product and tech. Now that it’s postponed its initial public offering in December (it raised $500 million in private funding shortly after) it has the luxury of time to develop its financial services offerings.

“While we run positive contribution margins around our credit products… it pales in comparison to what the lifetime value of that relationship is worth,” CEO Mike Cagney said at Fortune’s Brainstorm Tech conference in Aspen, Colorado Wednesday morning. “Not having that deposit product means that the bank, if it has that deposit product, is going to constantly try to cross sell [customers] and pull them back to the bank. That introduced this vulnerability in the business.”

There are also no branches planned for the non-bank financial services company, he confirmed, citing that in the 40 SoFi events he’s hosted and attended almost all other attendees have said they haven’t walked into a branch in the last five years, he claims.

SoFi is also in the exploratory stages of how to use alternative data like cell phone data for credit scoring as well as distributed ledger technology for title insurance.

U.S. banks are valued at between $2,000 and $100,000 per customer. SoFi currently has 250,000 members today and anticipates 500,000 by end of year. Cagney said it’s not unrealistic to get two million customers at “$25,000 to $50,000 per customer, which gets us in the $50 to $100 billion valuation range.”

Affirm now has 1,000 retail partners (TechCrunch), Rated: AAA

Today Affirm has announced it has more than 1,000 merchants signed up to offer its financing options at checkout, helping to reduce the friction around making large purchases and, by extension, increasing sales for its partners.

While promoting its most recent milestone, Affirm is also trying to get across the message of how it’s different — and frankly, better — than point-of-sale financing options of the past. As a result, the company is pushing a marketing campaign around “honest finance” to enumerate the ways in which Affirm helps consumers by providing more access and better terms for big-ticket items.

Affirm Challenges Retailers, FIs To Practice ’Honest Finance‘ (PYMNTS), Rated: AAA

“Finance is pretty broken.”

So started Affirm’s Co-Founder and CEO Max Levchin’s remarks at his firm’s first-ever AFFIRMation conference for its retail partners in San Francisco yesterday.

He’s on a mission to fix a system that he believes doesn’t really serve anyone’s long-term interest nearly as well as it could or should. When it comes to the extension of credit, Levchin says that customers often lose out, retailers end up with angry customers who frequently feel ripped off and FI’s alienate their customer base.

Broken by the Numbers

“Sixty percent of Americans fear credit cards,” Levchin noted.

“[Most consumers] think getting involved with using a card will cost them a lot more than they bargain for. A third fear they will overspend. And they are right; that’s what happens, and the industry does very little to help them create necessary guardrails.”

Bad Faith

In fact, Levchin noted, the industry doesn’t want to create guardrails, because a lot of players have literally built products that bet against the consumer.

Deferred interest — the “dirty little secret” of consumer credit that bears a retailer’s logo and accompanies those too good to be true offers — means that even one day late on a payment 59 months into a 60-month loan, means interest gets calculated back to day one.

Bad Long-Term Thinking

Last quarter, on the occasion of its one millionth consumer installment loan, Affirm reported a 75 percent increase in purchase value on purchases made using Affirm, a 20 percent lift in POS conversion and a repeat rate of 25 percent of borrowers returning.

And Affirm’s net promotor score: It’s 82, slightly trailing Starbuck’s 85, but not by much.

Affirm is looking to retailers across the country to join in pledging to abandon “predatory consumer credit practices” and has also challenged the nation’s financial institutions to do the same.

Nation’s largest lender finally hops on digital-mortgage bandwagon (Mortgage Professional America), Rated: AAA

Wells Fargo CEO Tim Sloan said that the bank expects to launch a digital mortgage application tool by the end of next year, according to a report by the Charlotte Business Journal. Sloan made the announcement during an earnings call on Friday.

Sloan told investors that Wells Fargo doesn’t currently have as many online loan products as it would like, the Charlotte Business Journal reported. He said that employees are currently testing the online mortgage tool, and that the bank plans to run a test with customers this year before a full rollout in 2018.

AutoGravity Now Has Over 500,000 Users (Crowdfund Insider), Rated: AAA

AutoGravity says it has now surpassed 500,000 in just one year. AutoGravity is an App-based online lender targeting the auto financing space. Pick the car and request a loan all on your smartphone. It’s that simple.

Additionallly, AutoGravity shares that more than $500 million in financing has been requested through the AutoGravity platform.

Fundrise Officially Announces New eFunds (Crowdfund Insider), Rated: A

Fundrise, a leading online marketplace for real estate investing, has officially announced the availability of their new eFunds.

The “featured” eFund starts with the Los Angeles market. The LA eFund aims to provide housing for the underserved millennial homebuyer.

Fundrise has also launched a DC eFund.

PayPal Completes Acquisition of TIO Networks (BusinessWire), Rated: A

PayPal Holdings, Inc. (NASDAQ:PYPL) and TIO Networks Corp. (TSXV:TNC) today announced that PayPal has completed its previously announced acquisition of TIO Networks. In accordance with the terms of the Arrangement announced on February 14, 2017, PayPal acquired all of the outstanding shares of TIO for $3.35 CDN ($2.64 USD) per share in cash or an approximate $302 million CDN ($238 million USD) equity value.

LendKey Announces Series C Funding (PR Newswire), Rated: A

LendKey, the leading lending-as-a-service solution for banks and credit unions, today announced $13 million in Series C funding, $8 million in equity and $5 million in debt financing. North Atlantic Capital, based in Portland, ME, led the round with participation from each of LendKey’s existing investors including DFJ, Updata Partners, Gotham Ventures, and TTV Capital.

The Series C funding will enable the company to expand its services and staffing. LendKey plans to grow its regional office in Cincinnati, Ohio and expand its account development and sales teams.

Mobile savings and investment service Acorns is on track to do 1 billion trades in 2017 (TechCrunch), Rated: A

The company now boasts more than 2 million investment accounts (with 600,000 opened in 2017 alone) and is on track to do 1 billion trades in 2017 through the proprietary broker-dealer that it created.

Still, the numbers were impressive enough to attract Bain Capital Ventures to commit another $35 million to the company, bringing Acorns total Series D financing to $70 million. Previous investors PayPal, Greycroft Growth Fund, e.Ventures Growth Fund, NYCA, Capital Group, Rakuten, Point72 and Ashton Kutcher’s Sound Ventures also participated in the round.

Unifund CEO Consumer Credit Caution: “Time To Stop Getting Lost In The Averages” (PYMNTS), Rated: A

Fifty years ago, when customers thought about using credit, it was in the context of buying something expensive that they really needed — a refrigerator, a washer/dryer, a car — with the intention to pay off that loan balance quickly.

Credit as a Currency

For super-prime customers — those for whom credit cards are basically payment cards because those consumers pay them in full monthly and never accrue any interest — Rosenberg said that card “borrowing” is an incentive-driven system. The customer gets cash back, rewards points, airline miles, hotel stays — and those incentives have very successfully attracted consumers to use them to buy things. Rosenberg noted that for a large segment of consumers, buying something without using a credit card is almost a foreign concept because the card offers them access to a more valuable form of currency.

But a more artificial intelligence-driven, machine learning system, Rosenberg said, will allow those customers who are locked out of the credit market today to be seen more clearly by creditors, and to be given incentives that are more explicitly tailored to their wants.

A Better Subprime Experience

The problem with the categorizations of “prime” and “sub-prime” borrower is that they are somewhat less hard and fast than people like to think they are. Rosenberg explained that there aren’t simply two classes of buyers — those who pay their bills and those who don’t.

But, Rosenberg said, the truth is most people pay bills in the order of absolute necessity, and when things get bad financially because a job was lost or an economic catastrophe has happened, that order gets very utilitarian. Car payments get paid, because car companies have no sense of humor and will repossess a car. But eviction from a house takes longer, which means a person with a more pressing need would rather skip their mortgage for a few months than not buy medication they need. And credit card bills? Those quickly fall to the bottom of a pile.

Bank of America Unveils New Mobile Capability to Apply for Business Advantage Term Loans and Credit Lines (BusinessWire), Rated: A

Bank of America today announced enhancements to its mobile app experience that add on-the-go convenience to small business banking and lending. With the suite of updates, Bank of America small business clients can now apply for a Business Advantage Term Loan or Business Advantage Credit Line from any Bank of America digital platform – including the Bank of America mobile banking app, and bankofamerica.com.

More than 1.3 million small business clients are active users of the Bank of America mobile banking app, an increase of 14 percent over the past year.

December 2016 Fed Rate Hike: Most Consumers Fared Well, But It’s a New Dynamic for Consumers and Lenders Alike (TransUnion), Rated: A

TransUnion (NYSE:TRU) released an analysis today showing that most borrowers were able to absorb their increased monthly payment obligations after the Federal Reserve Board rate hike last December.

TransUnion’s study identified these 63 million consumers because they carried debts for which the minimum monthly payment due was tied to the market interest rate, such that a rise in rates from the December rate hike could cause an increase in payments required. TransUnion used its CreditVision® aggregate excess payment (“AEP”) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to identify 10.6 million of these consumers who were at elevated risk of not having the capacity to absorb a rate increase of 0.25%.

Banks That Don’t Invest in Technology Risk Falling Behind Permanently (Forbes), Rated: A

Wack points to a new study of mortgage lending, Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks, co-written by business school professors at the University of Chicago, Columbia Business School and Stanford Graduate School of Business.

The researchers found that some banks find themselves trying to play catch-up to competitors that long ago allowed borrowers to apply for mortgages online. The institutions that have been slow to adopt online applications for mortgage lending are losing market share to their competitors. Meanwhile, non-bank lenders have grabbed a substantial piece of the market; so-called “shadow banks” lend money but don’t use bank deposits to finance the transactions. They now write 38% of all home loans — almost triple their share in 2007. Further, the shadow banks now originate three-fourths of all loans to low-income borrowers insured by the Federal Housing Administration (FHA).

I’m a banker and I say let SoFi into the club (American Banker), Rated: A

As the president of a small community bank, I feel the need to respond to certain misleading comments that have been made by banking industry representatives and community activistsrecently in opposition to the Social Finance application to charter an industrial bank.

I feel the need in particular to respond to comments as reported in the press by a representative of the Independent Community Bankers of America, an industry trade association I support. In essence, this individual stated opposition to SoFi’s recent application based on his assertion that industrial banks don’t follow the same rules as other banks. This assertion is not accurate.

The banking industry is evolving. Doesn’t it make more sense to focus on how to evolve with it rather than how to reduce competition?

Ga. banks less stressed, but lending slowdown a worry (myAJC), Rated: A

Across the nation, bank lending has slowed for most types of loans since the presidential election. Business lending declined in the first quarter and is still crawling at close to its slowest pace since 2011, according to Federal Reserve data.

Overall loan growth is a bit better, but across the board, lending has slowed for debt ranging from auto loans to credit cards to financing for factories, office buildings and small businesses, according to the Fed.

That has made for stiff competition for bankers hunting for loan customers, and because interest rates are still low, banks’ profit margins on their total loan portfolios remain tight.

Last week, Columbus-based Synovus Corp., the second largest bank headquartered in the state, with $31 billion in assets, said its total loans grew by $314 million in the second quarter, up 5.2 percent compared to the first quarter. Synovus banked a $73 million profit during the quarter, 27 percent higher than a year ago.

Synovus’ consumer loans grew at a 16 percent annual pace during the recent quarter, accounting for $2 out of $3 of Synovus’ new loans.

Credit Risk Startup James Closes $ 2.7M Funding Round (Finsmes), Rated: A

James (formerly known as CrowdProcess), a New York-based credit risk startup, closed a $2.7M funding round.

The round was led by Gaël de Boissard with participation from Henry Richotte and BiG Start Ventures. As a result of this deal, Mr. de Boissard has joined James’s Board of Directors.

Investors Approach Investing Differently Across Generations (Plan Adviser), Rated: A

The Dreyfus study found that investors tend to take different approaches to investing based on age. Sixty-one percent of investors 55 years of age or older indicated they have not, or will not, reevaluate their investment approach in today’s existing investing environment. Meanwhile, 65% of Millennials, defined in the study as people between the ages of 21 and 34, had already evaluated their investment approach at the time of the survey. These actions are reflected among 51% of those between the ages of 35 and 54, as well as for 39% of those at least 55-years-old.

OCC FinTech Charter in Trump Administration Cards (JD Supra), Rated: A

In his remarks to the Exchequer Club in Washington, D.C., President Trump’s Acting Comptroller of the Currency, Keith Noreika, came strong to the mic, roundly stating the charter is a “good idea” and flatly saying “yes”, the OCC has the authority to grant the FinTech charter in the face of legal challenges by the New York Department of Financial Services and the  Conference of State Bank Supervisors.

Here are three other takeaways from the Acting Comptroller’s remarks:

  1. The FinTech charter promotes the dual banking system.
  2. The OCC is having informal meetings with interested FinTech companies.
  3. Existing OCC bank charters may be an option now.

Access Anytime, Anywhere Powers Better Consumer Lending (Blend), Rated: A

That’s why we’re harnessing the power of technology to bring consumers closer to their loan officers (LOs) and launching Blend Mobile, the first native mobile application allowing LOs to manage their businesses, including borrower requests and applications, anytime and anywhere.

Robos are offering SRI, so shouldn’t live advisers? (Investment News), Rated: A

“SRI has been one of the most consistent personalization requests we’ve had,” said Dan Egan, Betterment’s director of behavioral finance and investments. “It allows people who want to buy a better world to put their money where their mouth is.”

The nation’s largest robo adviser, Vanguard Personal Advisor Services, which has $80 billion in assets, offers clients a proprietary fund on its digital platforms that tracks a benchmark that screens companies on social, human rights and environmental criteria. Schwab Intelligent Portfolios, which has $19.4 billion in AUM, does not offer an SRI option.

Mastercard Enhances Artificial Intelligence Capability with the Acquisition of Brighterion, Inc. (BusinessWire), Rated: A

Mastercard (NYSE:MA) today announced it has entered into an agreement to acquire Brighterion, Inc., a leading software company specializing in artificial intelligence. This acquisition will further expand its suite of capabilities that deliver an enhanced customer experience and security.

Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act (H.R. 3299) (Factory Email), Rated: B

Passing the Protecting Consumers’ Access to Credit Act into law is critical for the consumer lending industry. We are pleased that forward looking legislators aim to remove the regulatory and capital markets uncertainty caused by court cases such as Madden vs. Midland.

Lead by the Second Circuit Court’s decision, other state regulators are attempting to erode a core tenet of our federal banking system. “Both the ‘valid when made’ doctrine and the exportation of usury rate have facilitated nationwide lending for over a century by allowing the rate of interest on certain loans to remain unchanged after transfer of the loan,” said Gilles Gade, President and CEO of Cross River, an FDIC insured New Jersey State chartered bank and leader in marketplace leading origination. “The ability for banks to sell loans to non-banks is vital to the capital markets ecosystem in general, and to consumers in particular who are getting hurt as access to credit is made more difficult and more expensive. The perenniality of this tenet hinges on a healthy secondary market, increased liquidity, and the securitization of debts ranging from mortgages to credit cards, all of which help facilitate emerging innovations and provide capital that makes credit more accessible and affordable for millions of Americans. We applaud the bipartisan reintroduction of this bill and look forward to its expeditious review and passage.”

Comment by William M. Bell of Factory.

LendingTree Announces Promotion of Sam Mischner to Chief Sales Officer and Head of Mortgage (PR Newswire), Rated: B

LendingTree® (NASDAQ: TREE), the nation’s leading online loan marketplace, today announced that Sam Mischner has been promoted to Chief Sales Officer and Head of Mortgage.  Previously, Mischner served as SVP, Sales and GM, Mortgage.

United Kingdom

Fintech lender LendInvest to launch retail bond offering (AltFi), Rated: AAA

LendInvest, a leading alternative lender in the property space, is launching a retail bond. The bond will offer investors a fixed rate of 5.25 per cent, due 2022.

It is expected to be listed on the London Stock Exchange once the subscription period closes. LendInvest is targeting an initial raise of £50m, and the company expects this to be the first of a number of bond issues over the coming years. The bond has a minimum investment amount of £2,000.

Interest from the bond will be paid semi-annually on 10 February and 10 August each year. The net proceeds will be used to fund the origination and/or purchase of loans which satisfy the company’s eligibility criteria.

RateSetter moves to protect its investors (Business Insider), Rated: AAA

UK marketplace lender RateSetter has given more details on a series of interventions it has made to protect the company’s 50,000 retail investors from adverse consequences related to its lending decisions in the last two years.

Here are the three measures RateSetter has now explained in greater detail:

  • Buying two subsidiaries in a motor finance company. 
  • Wholly buying Adpod, an advertising company. 
  • Ending its partnership with George Banco, a consumer lending platform. RateSetter is withdrawing from the partnership, remaining only as a passive investor, after reviewing the strategy more closely. RateSetter added that George Banco is still repaying its £32 million ($42 million) loan.

Monzo gently rolls out current account (Banking Tech), Rated: A

The bank, which received its full UK banking licence in April, says it’s been using the current account internally and today (17 July) is now inviting some of its customers to join and “help put it through its paces”.

Its aim is to offer a current account to all existing customers by the end of the year. Towards that goal, over the next three months it will roll out between 10,000 and 20,000 current accounts to existing customers. As you probably guessed, users can register their interest on its site. Investors get priority access.

TransferWise’s cofounders have swapped the CEO role between themselves again (Business Insider), Rated: A

Kristo Kaarmann is taking over from Taavet Hinrikus as the boss of the international money transfer business, according to a blog post on Medium that was written by Hinrikus and published on Tuesday.

Next-gen Credit Scorer Aire Raises $ 5m in Series A Funding from Deep-tech VCs (Fintech Finance), Rated: A

Aire today announces the closing of a $5m Series A funding round, led by Sunstone Capital alongside White Star who previously led Aire’s Seed round in 2016.

Aire today announces the closing of a $5m Series A funding round, led by Sunstone Capital alongside White Star who previously led Aire’s Seed round in 2016.

The Lines Are Blurring Between Alternative, Traditional SME Finance (PYMNTS), Rated: A

Alternative lending has shifted from a competitor of traditional FIs to a collaborator, often lending a digital hand to banks in need of upgrading their systems to provide faster, more agile financing to SMEs. A new report from the state-backed British Business Bank (BBB), however, suggests alternative lenders are becoming an increasingly important part of its operations in a different way, highlighting how the lines between alternative finance (AltFin) and traditional finance continue to blur.

The annual report said the BBB facilitated more than $930 million in SME loans last year, and, according to the data, every year more of that money is landing at small businesses thanks to collaboration with alternative lenders like RateSetter and Funding Circle. According to reports, in 2014 the percentage of BBB funds that went through a P2P platform was 79 percent; in 2015, it was 90 percent.

Permira Joins Payments Rush by Buying Into Sweden’s Klarna (U.S. News), Rated: A

Private equity group Permira has bought a stake of at least 10 percent in payments firm Klarna, one of Europe’s most highly valued tech startups, the companies said on Friday.

Permira will acquire the Klarna stake from existing shareholders General Atlantic and DST Global, and the Sweden-based firm’s co-founder Niklas Adalberth.

General Atlantic and DST Global will cease to be shareholders in Klarna after the deal, they added in a statement.

Bank of England opens up payments systems to spur fintech (Tribune), Rated: A

The Bank of England has widened access to Britain’s interbank payments system to increase competition from new fintech firms in the financial system, where the “Big Four” high street banks have long dominated.

The changes, which in practice will come into effect in 2018 once legislative changes have been completed, will enable such non-bank payments services providers (PSPs) to compete better with banks, the BoE said.

There is no ‘existential crisis’ challenge for banks from fintech, HSBC’s digital chief says (CNBC), Rated: A

The idea that big banks are facing an “existential crisis” from financial technology (fintech) challengers is “overblown”, the digital chief of HSBC told CNBC.

Crowdfunding: the stable option in 2017? (The C Suite), Rated: A

Research conducted by Beauhurst on 2016 UK funding deals for non-listed high-growth businesses concluded that crowdfunding outperformed private equity and venture capital. Whilst 2016 saw a decline in the total number of deals financed by equity investors, activity on the leading crowdfunding platforms increased. Crowdcube (launched in 2011) and Seedrs (launched in 2012) accounted for 21% of such equity investment in the UK last year.

According to Beauhurst’s research, Q1 of 2017 has seen a small increase of 2.7% in equity funding in non-listed, high-growth companies. However deal numbers are still 6.72% lower than the same quarter in 2016. The growth has primarily been driven by crowdfunding platforms, with an 11% growth in deal numbers.

Boost for UK fintech as Receipt Bank secures huge $ 50 million in funding (Business Insider), Rated: A

Accountancy software startup Receipt Bank has raised $50 million (£38.4 million) in a Series B funding round led by a New York venture capital firm.

Perfect storm for Scots property borrowers (Scotsman), Rated: A

By 2018, loans from alternative finance schemes such as crowdfunding, peer-to-peer lending and private debt, will be as cost competitive as the retail banks, blowing the finance market wide open for loans in the £500,000 to £10 million range.

Naturally, because alternative lenders such as Funding Circle, The Route and Folk to Folk are settling loans for higher loan-to-value (LTV) ranges (between 60 and 75 per cent), they absorb the risk by charging higher interest on both short- and medium-term loans – currently between 6 and 12 per cent a year.

LTVs in retail banking property loans are settled at around 55 to 60 per cent, but they offer lower loan costs of between 2.5 and 5 per cent. This is all set to change in 2018 – with increased availability of finance for lenders, such as innovative finance ISAs (IFIsa), the cost of capital is set to fall and this will encourage alternative lenders to reduce their interest rates.

Zopa’s Home Improvement Index Reveals: A New Kitchen Can Deliver Over 50% ROI (Crowdfund Insider), Rated: A

On Wednesday, peer-to-peer lender Zopa released its latest Home Improvement Index that indicated a quart of British homeowners looking to improve their homes this summer are choosing to renovate their kitchens and are seeing a 51% return on investment as a result. According to research, 25% of British homeowners undertaking a home improvement are opting for a new kitchen, with the renovation boosting the value of a home by an average of 10%.

Zopa noted that the research found that the average home improvement would increase the value of a home by 9% or nearly £24,000 (£23,837) – based on homeowner’s estimates. The average return on investment was 50%, based on the total amount spent by homeowners.

Opinion split on best P2P marketing techniques (P2P Finance News), Rated: B

Property P2P platform Lendy has recently announced sponsorship of the Cowes Week sailing regatta, while business lender Ablrate has been announced as a sponsor of the PGA EuroPro Tour’s £100,000 Shoot-Out competition.

Other firms such as RateSetter have used adverts on the London Underground and Crowdstacker has run adverts in print publications, while Zopa and Funding Circle have used TV campaigns.

But Frazer Fernhead, founder and chief executive of The House Crowd, prefers to invest in digital marketing.

China

Yirendai Limited: A Growth Play At Deeply Discounted Valuations (Seeking Alpha), Rated: AAA

The ADR has returned a solid 250%+ in a year and a half since then. In comparison, Alibaba stock is up by 83% while NetEase is up by 16% and JD.com has risen just 27.5%. In other words, Yirendai has been the best performing Chinese stock/ADR ever since the company was listed in the US.

Yirendai reported quarterly revenue of $148.42 million for Q1 2017, which grew 75% year-on-year. On the earnings front, the company reported earnings per ADR (EPADR) of 84 cents, a 147% improvement over 34 cents EPADR in Q1 2016. On a trailing twelve month (NYSE:TTM) timeframe, the revenue has grown from $265.2 million in Q1 2016 to $544.6 million in Q1 2017, a 105% year-on-year growth.

We believe that, based on Yirendai’s earnings history and the historical valuation multiples, the stock should easily trade in the $43.4 – $57.7 range, which represents a 65% upside at the higher end.

European Union

N26 and Lydia announce Apple Pay support in France, but major banks are still missing (TechCrunch), Rated: AAA

Apple Pay hasn’t really been a major success in France so far. France’s biggest banks still don’t plan to support Apple’s payment service. But two companies announced today that they were going to add Apple Pay support before the end of the year — Lydia and N26Crédit Mutuel Arkea’s banks also recently announced that they were working on that feature as well.

Crowdfunding and Crowdlending (Soundcloud), Rated: A

Get a unique insight into what crowdfunding and crowdlending are and find out how you can participate in it – either as an entrepreneur or as an investor. Responsible for crowdfunding in DNB, Lars Marthinsen, and CEO of Kameo, Sebastian Martens, are guests at #pengepodden .

International

Finstar commits $ 150m to fintech investment (Finextra), Rated: A

Private equity outfit Finstar Financial Group is planning to pump $150 million into fintech startups over the next five years.

The money will be used to buy stakes in promising fintech startups in Europe, Latin America, Southeast Asia and South Asia, as well as on research and development within portfolio companies.

Baloise invests in insurtech company Trov (Baloise), Rated: A

Baloise is investing in the Californian insurtech company Trov. The start-up offers on-demand insurance for personal items and has already launched in the UK and Australia, and will roll out in the U.S. later this year. For Baloise, this is the first investment arising from its partnership with Anthemis.

Baloise’s investment is part of the Series D financing secured by Trov in April 2017.

Australia

Factor in the robo-advice (The Australian), Rated: A

The disruption is well under way in the US, where two giant companies – Betterment and Wealthfront – have emerged, each with a valuation of more than $5 billion. In recent months Betterment has seemed to outpace Wealthfront in terms of size and growth. Betterment, which has cheaper services, now boasts a client list of 188,000 while Wealthfront has 90,000.

ANZ has put its $4.5 billion wealth advice unit on the block, in a move that followed UBS’s decision to sell its wealth management arm in Australia a year ago. And Platinum Asset Management, the one-time king of specialist overseas fund managers in the local market, has announced a dramatic cut in its fee charges.

In Australia, the SMSF Industry Association tacked a robo-advice questionnaire onto one of its recent surveys and found that 18 per cent of its members – higher than in the general population (13 per cent) – would be willing to try robo services.

Online Lender Prospa is NSW State Winner in 2017 Telstra Business Awards (Crowdfund Insider), Rated: B

Prospa, an online lender to Australian small business, has been awarded the 2017 Telstra New South Wales Medium Business Award in the 2017 Telstra Business Awards.

Prospa said it was the first Fintech company to be awarded the accolade.

India

How Fintech Revolution Is Making Way For A Potential $ 5 Bn Online P2P Lending Empire In India (Inc42), Rated: A

Currently, at a nascent stage, the P2P lending landscape in India is also poised to grow into a $4 Bn-$5 Bn industry by 2023. The domain’s origin actually dates back to 2012, when the first peer-to-peer lending company i-Lend was launched. At present, the P2P lending space is populated by more than 30 players including Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, i2iFunding and many more.

One factor that has played an integral role in the rise of an alternative fintech industry is demonetisationinstated on November 8, 2016. Post the ban on INR 500 and INR 1,000 notes, bank deposits underwent a discernible slowdown. Loans to SMEs and MSMEs reached an abrupt halt, forcing many businesses to seek other methods of financing. Last year, for instance, around 34% of P2P borrowers were actually business owners looking to expand without having to rely on banks.

Singapore Based Bridge Data Centres Looks To Pour $ 500 Mn Into India (Inc42), Rated: B

Bridge Data Centres is looking to invest $500 Mn in India over the next two years. As per reports, the investment will enable the Singapore-based data centre outsourcing (DCO) company to gain a stronghold of the country’s fast-growing market for data centres.

In June 2017, Alibaba revealed plans to set up two new cloud data centres in India and Indonesia, in an attempt to strengthen the company’s computing resources in Asia. Earlier in January 2017, US-based data storage and management firm NetApp launched its Global Centre of Excellence in Bengaluru, as part of a $155 Mn (INR 1,000 Cr) investment. In December last year, Amaravati-headquartered Pi DATACENTERS raised $23 Mn from Epsilon Venture Partners. It was reported that the funds would be used to roll out state-of-the-art data centres across India.

Multinational alternative investment firm Bain Capital recently infused $10 Mn in Bengaluru-based consumer leasing startup RentoMojo has raised $10 Mn in Series B funding round led by Renaud Laplanche. Existing investors Accel Partners and IDG Ventures also participated in the round.

Because the construction and maintenance of data centres is a capital-intensive activity, an increasing number of businesses in India are  enlisting the help of data centre service providers.

Canada

Borrowell raises $ 57M in New Funding to Expand Credit Education and Lending (GlobeNewswire), Rated: AAA

Financial technology company Borrowell announced today it has secured $12 million (CAD) in equity funding and $45 million in new credit facilities. The Series A equity round is being led by Portag3 Ventures LP, Equitable Bank and White Star Capital, with participation by FirstOntario Credit Union and other new and existing investors, and brings the company’s total equity financing to $16.7 million. The credit facilities are being provided by Concentra and FirstOntario Credit Union for the purpose of funding ‘one click’ loans to prime consumers. This latest round of funding will allow Borrowell to provide free credit information and loans to more people.

More than 300,000 Canadians have a Borrowell account, with thousands more signing up each week.

Authors:

George Popescu
Allen Taylor

Friday October 28 2016, Daily News Digest

lending club auto refinancing

News Comments Today’s main news: The FTC explores the future of FinTech, P2P payments. Today’s main analysis : Can P2P lending be saved by auto refinancing? Why investment trusts are back into fashion. Today’s thought-provoking articles: What happens when Millennials are denied credit. Chinese shadow lending takes over the economy. Worldwide, corporate treasurers are increasing FinTech investments. United […]

lending club auto refinancing

News Comments

United States

United Kingdom

European Union

Canada

Australia

China

India

Asia

International

News Summary

United States

FTC Forum Explores the Future of FinTech, Peer-to-Peer Payments (InsideARM), Rated: AAA

Yesterday the Federal Trade Commission (FTC) hosted a forum – the second in its FinTech series – on peer-to-peer payment systems.

The forum panel discussion was labeled: Peer-to-Peer Payments – Their Emergence and Path Ahead. Participating in the panel were the following individuals: Jo Ann Barefoot, Matt Van Buskirk, Beth Chun, Patrick Eagan-Van Meter, Brian Peters, Duane Pozza, and Christina Tetreault. Their bios and backgrounds can be found on the FTC website for the forum.

Though the event was produced by the FTC, not the Consumer Financial Protection Bureau (CFPB), it has become abundantly clear through rulemaking proposals to date (both at the CFPB and state and levels) that technology advancements are going to be essential to the success of those organizations that engage in debt collection (whether creditor, agency, law firm, or debt buyer). Those who run sophisticated companies need to engage in regular research and education about current developments in FinTech.

After initial introductions the panel discussed the benefits of peer-to-peer payment systems to the consumer. The benefits identified included:

  1. Affordability
  2. Accessibility
  3. Speed of transactions
  4. Security

Members of the panel all agreed that the consumer’s cost to use these payment systems was a significant benefit. They discussed how historically, it was very expensive for a consumer to use services such as Western Union or MoneyGram or to use some expedited mail or delivery service to send funds quickly.  Several panel members highlighted how speed of a transaction was critical to the underserved or underbanked segment of the population. These products can process a transaction in seconds.

The panel members also discussed who was currently using these products. To the surprise of nobody, Millennials are currently the largest market segment.

The discussion then moved to how the products were being utilized. Currently 3 types of use were the most predominant; gifts, bill payments, and entertainment. These 3 categories were well over 90% of total usage.

The group then moved onto a discussion of legal issues surrounding the products. The most obvious concern, money laundering, actually had only a token mention from the group.

The biggest legal issue facing the developers of these products was –  to no surprise, the various state and federal consumer protection statutes, with particular emphasis on state Deceptive Trade Practices.

The reason consumer protection statutes were of such concern was a simple statement made during the discussion: “The consumers that use these products may be very tech savvy, but they also tend to be very unsophisticated.”

The panel next turned its attention to some of the risks in this market.  The risk of fraud exists on three fronts. First, international criminal and sophisticated hackers have and are likely to continue targeting companies in this space. That creates exposure. Second, as many of these products are utilized on a handheld device (i.e. a smartphone) the risk of fraud exists if that device is not secure and is lost or stolen. Third, old scams that have existed forever have simply moved their scam to this new platform. A scam that previously involved a stolen checkbook and forged signature has just moved from paper to the digital world.

Could This .2 Trillion Industry Save LendingClub? (The Motley Fool), Rated: AAA

Top peer-to-peer lender LendingClub (NYSE:LC) hasn’t exactly delivered great performance to its stockholders in its short history as a publicly traded company. In an effort to grow the company’s customer base, LendingClub recently announced that it intends to get into a booming $1.2 trillion industry: auto lending.

Since going public in Dec. 2014 for $15 per share, LendingClub’s stock has lost more than two-thirds of its value. The main reason for the decline is a lending scandal that led to CEO Renaud Leplanche’s departure, but there have been questions about the long-term viability of the peer-to-peer lending business for some time now.

In order to refinance through LendingClub, applicants will need to meet the following qualifications:

  • FICO credit score of at least 640.
  • At least three consecutive on-time payments must have been made on the current loan.
  • Vehicle must be less than seven years old and have less than 80,000 miles.

Loans will come with interest rates ranging from 2.49% to 19.99%, depending on the borrower’s qualifications. It’s fair to assume that a borderline applicant (credit score just over 640, a few late vehicle payments, and a vehicle that barely meets the standards) would fall on the upper end of the range. However, since the average car loan has an interest rate between 4% and 5% depending on the terms, I’m assuming that the majority of refinancers will be toward the lower end, if LendingClub’s savings claim is accurate.

There is approximately $1.2 trillion in outstanding auto debt in the United States, and only about $40 billion of that, or 3.3%, is refinanced every year, so there’s clearly a large market to be addressed. In fact, LendingClub believes that the refinancing volume could double if the process were a little easier. In other words, there is an immediately addressable market for an easy-to-use auto loan refinancing platform.

Eve Picker, Founder of Real Estate Platform Small Change, Shares Insight into Reg CF Approval (Crowdfund Insider), Rated: A

Pittsburgh-based Small Change was approved as a Reg CF funding portal by FINRA, an approval the platform believes to be a first for a real estate funding portal.  Small Change is a real estate crowdfunding platform launched by urban evangelist Eve Picker targeting “transformational” real estate projects by connecting developers with investors.

Pittsburgh-based Small Change was approved as a Reg CF funding portal by FINRA, an approval the platform believes to be a first for a real estate funding portal.  Small Change is a real estate crowdfunding platform launched by urban evangelist Eve Picker targeting “transformational” real estate projects by connecting developers with investors.

Picker has developed dozens of buildings in blighted neighborhoods around the city (through companies no wall productions and we do property management), founded a non-profit called cityLAB, built Pittsburgh’s first tiny house, organized a speaker series and a creative school, launched a Pittsburgh e-zine called Pop City, and established downtown Pittsburgh’s first co-working space.

Eve: We don’t believe we can make Reg Crowdfunding work, we KNOW we can make it work. Real estate has proven itself to be a frontrunner when it comes to crowdfunding investment opportunities.  We are certain that this will play out for Regulation Crowdfunding as well. Funding portals are going to provide a very necessary, and highly desirable financing tool for the right sort of projects.  And everyday investors are going to be excited to invest both locally and nationally in projects they are interested in. That’s a perfect match.

Eve: We’ve nearly 8000 followers across the country, growing at 20% per quarter through all of our communications channels, and out of those, we’ve heard from a quite a few real estate developers looking at this as a tool to catalyze projects – and we anticipate hearing from many more. Developers are attracted to our mission of making cities better and offering people the opportunity to directly participate.

Eve: Regulation CF is a thoughtful first foray into the world of securities for everyone – it is altogether groundbreaking. While there may be some shortcomings, there is plenty to work with immediately and that is evidenced by the funding portals that already have a plethora of offerings available.

Eve: We’ve heard the complaints loud and clear, but there is plenty to work with today. We think Reg CF is a great start.  The SEC intended for the first three years to be a trial run so we are going to use the time for that – a trial run!  We’re going to take it slow and steady, and inch into bigger raises.  There is plenty to understand and plenty to get efficient at before we want or need to offer a $5M raise.  Today, we can already let everyone over the age of 18  participate in a completely new way of investing. And we can help developers tap into a completely new pool of investor funds.

Fintech Apptrade’s ‘Stockmarket Of Apps’ Lures Crowdfund Investors (Forbes), Rated: A

Apptrade, a US start-up based in California, has revealed to potential investors attending the CoinAgenda bitcoin and cryptocurrency conference in Las Vegas that is creating and cooking up what the fledgling fintech describes as the ‘Stockmarket of Apps’, complete with “regulatory tools and compliance” mechanisms.

The aim of Apptrade is to create what is touted as a ‘Stockmarket of Apps’, whereby developers can raise money with “regulation-compliant” blockchain tokens. Investors will be able to trade these assets, backed by app revenue streams, on the ecosystem of OpenLedger, a decentralized conglomerate(DC).

The start-up will offer its own token for their ICO, which entitles investors to 10% of the net market value and revenue of the Apptrade portfolio ecosystem.

FTC Hears From Company Leaders as Crowdfunding Grows (Corporate Counsel), Rated: A

Investors poured $22.3 billion into fintech startups around the world in 2015, up 75 percent from the year before, according to the Information Technology & Innovation Foundation.The industry has been hailed for its potential to help communities that are underserved by traditional lending institutions.

But fintech has also attracted scam artists interested in a new mode to prey on consumers. And it’s raised questions about where to—and who should—draw the line between a self-stated developer who clearly never intended to spend donated funds on a promised project and a dreamer whose plans just never panned out. Industry oversight remains a fuzzy area for regulators, with states’ attorneys general, the IRS, the U.S. Securities and Exchange Commission and the FTC having roles in various areas. The FTC is holding a series of public panels on the topic, including Wednesday’s meeting in Washington, D.C.

The industry has urged regulators to take a targeted and light touch with any new rules.

Debunking Millennial Myths (ID Analytics), Rated: A

ID Analytics’ research shows that the most common consequence for an enterprise declining a millennial applicant is that the consumer walks away for at least a year—both from the enterprise and from credit/ service seeking altogether.

Over 6 out of 10 declined millennials are not seen applying again within the ID Network that year—for anything. Of the millennials who continue to apply, only 2 out of 10 continue to seek the same service, with 8 of 10 seeking an entirely different product or service.

While the impact of declining credit to millennial consumers is harmful to the longterm success of entire industries, common questions are, “How often are they actually being declined?”, and “is the issue confined to young millennials”? To answer these questions, ID Analytics segmented millennials into three age groups and measured how often they were declined for credit in a given year.

The recommended path forward is safe engagement of this burgeoning demographic—an approach which requires thoughtful strategies and an expanded view of applicant credit risk which goes beyond traditional credit bureaus. One way to accomplish this is leveraging alternative credit data solutions like ID Analytics’ Credit Optics, which captures fundamental millennial credit behaviors that are missing from most credit scores. It offers risk managers a way to identify “low score” and “no score” consumers of acceptable risk, and break through the myths dragging down the competition.

United Kingdom

Investment trusts come back into fashion (Financial Times), Rated: AAA

It is no coincidence that as part of his fightback against the asset management “system”, Daniel Godfrey — the ousted chief executive of the UK’s asset management trade body — will launch an investment trust.

Years of quantitative easing and the prospect of rising inflation have boosted the appeal of infrastructure and property, and investment trusts have provided a liquid wrapper for these sectors. Numis, the broker, estimates that 80 per cent of investment trust share issuances in the three years have been in alternative asset classes — including property, private equity, infrastructure, asset-backed leasing and peer-to-peer lending.

Although questions about the quality of the underlying credit-writing remain, the asset class has so far delivered good returns to those investing directly in the loans, — its total return over 3 years has been of 15.86 per cent, according to the Liberum Altfi Index. For investors who are prepared to stomach the risks, the remaining catch is the illiquidity — but this is where investment trusts have stepped in. While no asset manager has invested in peer-to-peer loans directly, plenty have bought shares in the investment trusts. Asset managers including BlackRock, Invesco Perpetual, BNY Mellon and Baillie Gifford have all bought shares in the handful of investment trusts buying peer-to-peer loans.

Another criticism of peer-to-peer lenders is that — for the most part — they do not actually do any lending. Some argue that without so-called “skin in the game”, the lenders are not incentivised to make sure the loan is good.

Is Fintech Being Wooed Away from the UK? (Tech UK), Rated: A

It is no secret that various European governments have seen the UK’s decision to opt for Brexit as an opportunity to lure businesses away from London and to the continent. Bespoke marketing campaigns with offers of tailored assistance directed at UK firms could well accelerate the flight of capital, talent and business following the vote.

The sweeteners on offer could be highly tempting for financial services firms and fintechs, which fear the loss of their ‘passporting’ rights. Current rules mean that any company which is given a licence to conduct regulated activities by UK authorities can, ipso facto, conduct such activity anywhere in the EU without the need for further regulatory authority and without having to establish a base elsewhere. The loss of these rights could significantly damage the UK’s status as a gateway to Europe for big international financial service firms.

Despite the uncertainty surrounding the UK’s financial passporting status and the need in future to reconcile competing data regimes, the UK Government remains steadfast in its optimistic outlook for the UK’s burgeoning fintech industry and related sectors.

P2P lender secures multi-million-pound investment (Bridging & Commercial), Rated: B

Peer-to-peer (P2P) platform LendingCrowd has secured a £2.75m investment from the Scottish Investment Bank (SIB).

The investment is the SIB’s first venture into the alternative finance market and is expected to stimulate loans of up to £35m to Scottish small- and medium-sized enterprises (SMEs).

Borrowers will apply for loans of between £5,000 and £250,000 over terms ranging from six months to five years.

Zopa Announces Zopathon16 Challenge (Crowdfund Insider), Rated: B

Earlier this week, peer-to-peer lender Zopa announced it will be hosting Zopathon16, which is described as a 24-hour opportunity to developers, product people, and designers to present their fintech ideas.

The event will be held on November 18th-19th on the first floor of the Cottons Center in London. The 18th’s schedule is:

  • 5-6pm: Introduction and Inspiration (APIs etc) 
  • 6-7pm:  Meet your team, brainstorming and dinner
  • 7-8pm: Pitching ideas 
  • 8pm onwards: All hands on deck

On the 19th presentations and prizes will happen from 5 to 7pm. To register for the event, click here

European Union

Swedish fintech startup: Norwegian banks are blocking us (Business Insider Nordic), Rated: A

A fintech revolution is sweeping across Scandinavia. People are downloading apps to send money, pay without credit cards and to structure their finance management.

The Swedish fintech company Trustly, founded in 2008, is offering payments online without the use of a credit card. According to the Swedish news paper Dagens Industri Trustly has been partially blocked in Norway by some elements in the banking sector.

Trustly’s troubles in Norway started already in 2014, when they launched in the country. According to the CEO of Trustly, an important certficate for verification, Bank-id, was revoked for those who used Trustly.

Things have gotten so bad that Trustly has fielded a complaint with the Norwegian competition authority.

Fintech: Blockchain And Artificial Intelligence Startups Are Flocking To HEC Paris — Here’s Why (Business Because), Rated: A

Few topics get business schoolers’ pulses racing like financial technology — from blockchain and cryptocurrencies to artificial intelligence, the fintech revolution has already made its way into a suite of MBA degrees.

And according to one top French business school, fintech start-ups like TransferWise or GoCardless now vie with investment banks and traditional financial services companies for digitally skilled, entrepreneurial recruits.

Spreadsheet-savvy MBAs may not seem like the type for fast-paced tech firms, but their growing appetite for MBAs was on full display at HEC Paris’ second annual Fintech Talent Fair this month. From start-ups like Blockchain and PayinTech to larger financial institutions such as Bloomberg and BNP Paribas, companies representing the full fintech spectrum were out in force.

Why should business students consider a career in fintech?

For a lot of reasons actually. First, fintech is probably one of the hottest and most dynamic sectors in tech today. It’s attracting a lot of interest and funding. Second, working in fintech gives you the opportunity to have a real impact on the day to day life of a very large number of people. Lastly, fintech start-ups deal with a fairly complex environment and designing simple products in that environment is a real challenge, and therefore intellectually stimulating. It requires knowledge of a broad array of topics — perfect for business students.

Canada

Uberization of Mortgages Seen Withing 5 Years (Advisor.ca), Rated: A

Advisors may have the ability to offer clients direct online investing in mortgages within five years.

That’s the hope of Lending Loop chief executive Cato Pastoll, who expects peer-to-peer lending in Canada to expand quickly into consumer lending like mortgages after such an evolution of the sector in the U.K. and U.S.

In what’s been called the “Uberization” of lending, California’s Lending Club, the world’s biggest peer-to-peer lender, has plans to move into auto loans and mortgages after American online lender SoFi started offering residential mortgages about a year ago. U.K. peer-to-peer platform Landbay also allows retail and institutional investors to get into the country’s buy-to-let mortgage market.

CIBC partners with fintech innovator Borrowell to deliver “one-click” online loans (Newswire), Rated: A

In a move that changes the traditional process for applying for a loan, CIBC (TSX: CM) (NYSE: CM) announced today it is partnering with Borrowell to offer “one-click” online lending for clients. A first in Canada, the new partnership allows CIBC to leverage the fintech’s unique technology and underwriting approach to adjudicate loans for existing clients online in real time, with funds typically issued the next business day directly into a client’s CIBC account.

The technology allows clients to apply for a loan of up to $35K using a simplified application process, with the ability to securely upload documents online for verification. Future plans to extend the borrowing platform to a wider client base will be based on client experience feedback and input from this first phase.

Australia

Australian FinTech Firms Recognized as World Leaders in FinTech (Cryptocoins News), Rated: B

The annual FinTech 100 list has listed nine Australian FinTech companies among the world’s leaders in the sector, according to a report by StartupSmart, an Australian publication for the startup community.

Compiled by H2 Ventures and KPMG FinTech, it listed Prospa, Tyro, and Society One within the top 50 established leaders category, and HashChing, Afterpay, Brighte, Data Republic, Identitii, and Spriggy within the top 50 emerging firms.

China

China’s shadow bank lending balloons to 58trn yuan, as focus shifts to risks from fintech platforms (South China Morning Post), Rated: AAA

China’s shadow bank lending has grown to more than 80 per cent of the economy, fuelled partly by off-balance-sheet lending originating from lightly-regulated fintech platforms, prompting warnings from analysts of potential risks arising from insufficient supervision.

Moody’s research released on Thursday showed that lending via the shadow banking system grew by 19 per cent annualised in the first half to reach 58 trillion yuan (HK$66.37 trillion), or a 82 per cent of GDP.

Leverage continues to increase throughout the Chinese economy. Total social financing (TSF), a measure of broad credit, has risen to an estimated 220 per cent of GDP at the end of the third quarter, up from 206 per cent of GDP at the start of year, Moody’s said.

Chinese financial website Caixin reported on Tuesday that some financial insiders believe the People’s Bank of China may soon require commercial banks to incorporate off-balance-sheet wealth-management products into the Macro Prudential Assessment (MPA) system, as a way to improve oversight of shadow lending.

India

India Quotient to raise million as part of third fund in 2017 (Economic Times, India Times), Rated: A

Early stage fund India Quotient as a part of its third fund, plans to raise $60 million by January/February 2017. The firm aims to spend 30% of the funds on fintech players within lending, insurance and investment sectors. The remaining portion of the funds will be spent on gaming, media, health and education.

Within fintech the fund is interested in the peer-to-peer lending model as well as online NBFC’s similar to the likes of Capital Float and Lendingkart. India Quotient recently invested $500,000 in CreditMate, a lending startup that focuses on lending to individuals looking to purchase used two wheelers.

Asia

Bitcoin startup Coins raises US million for Asia expansion (The Asset), Rated: A

Digital payments and blockchain startup Coins announced that it has raised a new US$5 million round of funding to further its mission of expanding access to basic financial services to unbanked individuals in the Philippines and throughout Southeast Asia.

The Series A funding round was led by the Accion Frontier Inclusion Fund, managed by Quona Capital, and also includes a number of notable investors such as: Eric Schmidt’s Innovation Endeavors, Pantera Capital, Digital Currency Group, Wavemaker Labs, Global Brain, BeeNext, and Rebright Partners. Amongst the company’s investors are also Kickstart Ventures and Ideaspace Foundation, the investment arms of Globe Telecom and Smart Communications, respectively, the Philippines’ biggest telecommunications companies.

Founded in early 2014, Coins is a mobile-first, branchless, blockchain-based platform that provides consumers with direct access to basic financial services such as remittances, bill payments, and mobile airtime. To provide these services, Coins has partnered with a multitude of banks, financial institutions and last-mile retail outlets, spanning a network of over 22,000 cash disbursement and collection locations in the Philippines alone.

More than 60% of Southeast Asia’s population of 600 million remains unbanked, and less than 5% have a credit card. At the same time, mobile internet penetration is rapidly increasing and bringing millions of people online every month. Coins has been able to capitalize on this technological shift by delivering everyday financial services through its mobile platform. To date, the company has signed up over 500,000 users.

Leveraging the blockchain has enabled Coins to connect its services to partners with a presence in over 40 countries.

International

Corporate treasurers are upping their fintech investments globally (Finder.com), Rated: AAA

Business research firm East & Partners has found corporate treasurers in the UK, Asia and Australia are ramping up their fintech investments. The results came from the Treasury Fintech Index, developed by East & Partners and Contentive Media, and is based on direct interviews with corporate treasurers in eight key global markets.

In the UK, treasurers are forecasting a 14.5% increase in their fintech spend for the coming year, while Australia and Singapore are following closely behind with a planned 12.2% increase.

The Index also found that corporate treasurers are reporting that their companies are directly investing in fintech, with Asia leading in these numbers. Nearly one-third of treasurers in China report their company has already invested in fintech, while over 40% are exploring fintech investment opportunities.

In Australia, 17.6% of corporate treasurers have directly invested in fintechs, while 24.2% are looking at opportunities for investment in the fintech space.

How fintech can help create 1 bln new jobs in Asia and Africa (ING), Rated: A

In a quiet neighborhood in the Turkish city of Trabzon, local residents buy most of their daily necessities at Ergan’s, a family-run supermarket established in 1987 that employs six people. But for a long time, there was one item they couldn’t get: meat.

That changed when the owner, Mehmet Turan Ergan, learned he could apply for a loan from ING using his smartphone. He wanted to create a new butcher section and needed 30,000 Turkish lira (around EUR 9,000) to bMultiplying that kind of job creation using the latest financial technology, or fintech, has great potential to reduce extreme poverty in the developing world, according to ING’s latest ‘A Billion to Gain’ report.uy a glass counter to display the different meat cuts, an extra refrigerator, and a machine to make ground beef.

Within minutes of sending an SMS with his tax number, he received a positive answer. Today his customers have more choice. But more importantly, he created a new job.

Multiplying that kind of job creation using the latest financial technology, or fintech, has great potential to reduce extreme poverty in the developing world, according to ING’s latest ‘A Billion to Gain’ report.

To finance the growth of 1 billion new jobs for the poorest in Asia and Africa, ING estimates that the number of micro, small and medium-sized companies (MSME) must grow by a third (from currently 400 million enterprises to 530 million) and the loan portfolio to this segment by 80% (around USD 5.5 trillion). Traditional banking won’t be able to close this huge credit gap because it’s too costly to maintain a wide branch network, especially in rural areas.

Regulatory Sandboxes: The Road to Fintech Redemption? (Finance Magnates), Rated: A

A race is under way. Spurred by the initiatives of the UK’s Financial Conduct Authority, countries are embarking on missions to establish themselves as the preeminent jurisdiction for all things fintech.

In recent months, countries such Abu Dhabi, Australia, Hong Kong and Singapore have all announced intentions to launch one. Though specifics vary, the programs share a common theme of promoting the growth of fintech within their borders.

The allure of the sandbox is clear. From a global perspective, program adopters demonstrate their commitment to innovation and developing a local fintech ecosystem. Similarly, participants have the opportunity to test and fine tune their ideas in forgiving environments.

This may also encourage them to push the boundaries of innovation. Consumers ultimately benefit through new financial products offering greater choice and competition between incumbents and startups.

The proliferation of these programs presents challenges and opportunities. Firstly, a degree of cooperation among regulators is advisable in order to avoid jurisdictional arbitrage. For instance, a startup refused entry into one sandbox may attempt to participate in another by taking advantage of differing admission requirements.

Small Biz Cash Management Struggles Across The Globe (PYMNTS), Rated: A

Between the rise of blockchain technology, the market debuts of faster payments initiatives and the advancements in virtual card capabilities, small businesses have more choice and power when it comes to their payments needs. But B2B payment habits continue to stifle suppliers’ growth plans across the globe, found the latest Working Capital Outlook Survey released by C2FO this month.

In the U.S., there is evidence that B2B payment practices are improving. Just 14 percent of U.S. SMEs told C2FO that their corporate payers are paying late, down from 20 percent last year. But the U.S. experience is not universal: In the U.K., for instance, 20 percent of suppliers reported having to deal with late payments, up from 11 percent last year.

Italy has the highest rate of late B2B payments, with 50 percent of small businesses there reporting that they have been paid late. France also has a higher rate of late payments at 27 percent, while Germany came in at 18 percent.

Globally, three-quarters of small businesses surveyed said supplier-friendly payment options that support faster payments are important to them. Again, the importance of faster supplier payment options has also increased in the U.S., from 56 percent reporting demand last year to 77 percent this year.

What all of this means, C2FO concluded, is that small businesses need to get creative — and diverse — when it comes to accessing working capital.

Authors:

George Popescu
Allen Taylor

P2P has plenty of growth space in Canada

P2P has plenty of growth space in Canada

Canada has a concentrated banking system. There are 5 major banks which share approximately 80% of the market and because of that they enjoy high profitability. Profit per capita for Canadian banks is 2 times that of its American peers. When it comes to total industry profitability, Canadian banks are ranked 4th in the world. […]

P2P has plenty of growth space in Canada

Canada has a concentrated banking system. There are 5 major banks which share approximately 80% of the market and because of that they enjoy high profitability. Profit per capita for Canadian banks is 2 times that of its American peers. When it comes to total industry profitability, Canadian banks are ranked 4th in the world.

Transaction value in P2P & MPL consumer lending market in Canada was $28 million in 2015, according to a report by University Of Cambridge and Chicago University.

This kind of oligopoly should have encouraged fintechs to disrupt this cozy market. But Canada is still a very small and under-penetrated market in comparison to the US.

There are only a few serious P2P lenders in Canada due to regulatory issues.  High-interest rates, low default rates and lack of choice to consumers are what prompted the decision to launch Borrowell.

Company history

Toronto bases Borrowell was started in 2014 with a seed capital of $5.4 million from 5 investors (Dan Debow, Equitable Bank, John Bitove, Oakwest Corporation, Roger Martin). In the beginning of this year, they raised $6.4 million in debt financing from 6 investors ( Adam Felesky, Equitable Bank, Freycinet investments, Hedgewood, Oakwest Corporation and Power Financial Corporation). Andrew Graham, CEO, and founder has worked at PC insurance, a fast growing consumer firm as a senior director. He holds an MBA degree from Harvard University. Eva Wong, COO, and co-founder has a vast experience of working for both profit and non-profit organizations. Salim Naran, CTO, and co-founder was senior vice president of Paradigm Quest and also co- founder of Beaufine Solutions.

Borrowell is a platform where borrowers and lenders connect in a hassle-free and faster way. Borrowell provides personal unsecured loans ranging from $1,000 to $35,000 for a period of 3 or 5 years. The foremost use for Borrowell loans is debt consolidation.

Credit card interest rates in Canada are exceedingly high, usually between 19.99% and 29.99%. Trying to get out of credit card debt is usually difficult with such high-interest rates. Refinancing credit card debt to a lower rate through traditional bank requires some kind of collateral. Usually, banks require the house of the borrower, whereas Borrowell can facilitate the loan without any collateral.

The startup focuses on providing loans to those with a credit score of a minimum of 660, and on average their clients have an average score of 700. After the approval, depending upon the credit score and other credit worthiness factors, the rate can go as low as 5.6%.

Even if the customer is paying a higher rate of interest, it still will be much lower than what they are paying on their credit cards. Default rate has been really low mainly because the company is relatively new and they only cater to people who have good credit scores, but it might go up in future as their loan book expands.

Business model

Borrowell generates its revenue by charging origination fees. The origination fee is a onetime fee; it covers the cost of evaluating the application, finding the right lender and for providing excellent customer service. It usually ranges from 1%-5% of the loan amount depending upon the credit profile; better the credit profile, lower the fees. The origination fee is added to the loan amount approved. Since regulations vary from province to province, they register individually in each province.

A major concern in marketplace lending is fraud. Borrowell uses both active and passive measures to counter fraud. Their proprietary technical platform solution ensures proper identification and they also use data from 3rd parties to authenticate borrowers. One of its most important backers is the mortgage-focused Equitable Bank. The bank, looking to diversify into new products has been an investor in both the debt and equity of the young fintech startup. Power Financial Corporation, one of the largest and most respected financial institutions in Canada is also partnering with Borrowell to fund borrowers. Association with such giants in the industry gives it a stamp of approval which can be leveraged for further growth.

Marketing channel: Borrowell-Equifax partnership

According to a 2015 survey by Bank of Montreal, around 56% of Canadians have never checked their credit score, and 14% check their scores just once a year. Even, in US survey conducted by Equifax of more than 1,000 customers across the nation, only 27% checked their credit score, with most of them using third party sources to extract their score. Borrowell partnering with Equifax for the free credit score is a great marketing tool to drive initial interest in the company.

An important issue for the company would be to ensure that it is on the right side of the regulators in Canada, who have been extremely slow in opening up to the peer to peer funding model. Also, American lenders were able to leverage the angst against the big banks in the wake of the financial crisis to draw borrowers and lenders. Such apprehension does not exist in the Canadian consumers’ minds. The company will have to be aggressive in its marketing strategy to ensure first movers advantage.

Future

Canadian households owed $1.9 trillion in personal debt as of January this year, a rise of $94.2 billion from a year earlier. Credit-card debt amounts to over $82 billion and consumer installment loan accounts for over $138 billion.

P2P lending is relatively still new in Canada and expected to grow exponentially. Borrowell will definitely get the advantage of starting early and with the backing of prominent Canadian financial institutions, is poised to grow into a Canadian marketplace lending unicorn.

Author: Heena Dhir and George Popescu

George Popescu

P2P has plenty of growth space in Canada

P2P has plenty of growth space in Canada

Canada has a concentrated banking system. There are 5 major banks which share approximately 80% of the market and because of that they enjoy high profitability. Profit per capita for Canadian banks is 2 times that of its American peers. When it comes to total industry profitability, Canadian banks are ranked 4th in the world. […]

P2P has plenty of growth space in Canada

Canada has a concentrated banking system. There are 5 major banks which share approximately 80% of the market and because of that they enjoy high profitability. Profit per capita for Canadian banks is 2 times that of its American peers. When it comes to total industry profitability, Canadian banks are ranked 4th in the world.

Transaction value in P2P & MPL consumer lending market in Canada was $28 million in 2015, according to a report by University Of Cambridge and Chicago University.

This kind of oligopoly should have encouraged fintechs to disrupt this cozy market. But Canada is still a very small and under-penetrated market in comparison to the US.

There are only a few serious P2P lenders in Canada due to regulatory issues.  High-interest rates, low default rates and lack of choice to consumers are what prompted the decision to launch Borrowell.

Company history

Toronto bases Borrowell was started in 2014 with a seed capital of $5.4 million from 5 investors (Dan Debow, Equitable Bank, John Bitove, Oakwest Corporation, Roger Martin). In the beginning of this year, they raised $6.4 million in debt financing from 6 investors ( Adam Felesky, Equitable Bank, Freycinet investments, Hedgewood, Oakwest Corporation and Power Financial Corporation). Andrew Graham, CEO, and founder has worked at PC insurance, a fast growing consumer firm as a senior director. He holds an MBA degree from Harvard University. Eva Wong, COO, and co-founder has a vast experience of working for both profit and non-profit organizations. Salim Naran, CTO, and co-founder was senior vice president of Paradigm Quest and also co- founder of Beaufine Solutions.

Borrowell is a platform where borrowers and lenders connect in a hassle-free and faster way. Borrowell provides personal unsecured loans ranging from $1,000 to $35,000 for a period of 3 or 5 years. The foremost use for Borrowell loans is debt consolidation.

Credit card interest rates in Canada are exceedingly high, usually between 19.99% and 29.99%. Trying to get out of credit card debt is usually difficult with such high-interest rates. Refinancing credit card debt to a lower rate through traditional bank requires some kind of collateral. Usually, banks require the house of the borrower, whereas Borrowell can facilitate the loan without any collateral.

The startup focuses on providing loans to those with a credit score of a minimum of 660, and on average their clients have an average score of 700. After the approval, depending upon the credit score and other credit worthiness factors, the rate can go as low as 5.6%.

Even if the customer is paying a higher rate of interest, it still will be much lower than what they are paying on their credit cards. Default rate has been really low mainly because the company is relatively new and they only cater to people who have good credit scores, but it might go up in future as their loan book expands.

Business model

Borrowell generates its revenue by charging origination fees. The origination fee is a onetime fee; it covers the cost of evaluating the application, finding the right lender and for providing excellent customer service. It usually ranges from 1%-5% of the loan amount depending upon the credit profile; better the credit profile, lower the fees. The origination fee is added to the loan amount approved. Since regulations vary from province to province, they register individually in each province.

A major concern in marketplace lending is fraud. Borrowell uses both active and passive measures to counter fraud. Their proprietary technical platform solution ensures proper identification and they also use data from 3rd parties to authenticate borrowers. One of its most important backers is the mortgage-focused Equitable Bank. The bank, looking to diversify into new products has been an investor in both the debt and equity of the young fintech startup. Power Financial Corporation, one of the largest and most respected financial institutions in Canada is also partnering with Borrowell to fund borrowers. Association with such giants in the industry gives it a stamp of approval which can be leveraged for further growth.

Marketing channel: Borrowell-Equifax partnership

According to a 2015 survey by Bank of Montreal, around 56% of Canadians have never checked their credit score, and 14% check their scores just once a year. Even, in US survey conducted by Equifax of more than 1,000 customers across the nation, only 27% checked their credit score, with most of them using third party sources to extract their score. Borrowell partnering with Equifax for the free credit score is a great marketing tool to drive initial interest in the company.

An important issue for the company would be to ensure that it is on the right side of the regulators in Canada, who have been extremely slow in opening up to the peer to peer funding model. Also, American lenders were able to leverage the angst against the big banks in the wake of the financial crisis to draw borrowers and lenders. Such apprehension does not exist in the Canadian consumers’ minds. The company will have to be aggressive in its marketing strategy to ensure first movers advantage.

Future

Canadian households owed $1.9 trillion in personal debt as of January this year, a rise of $94.2 billion from a year earlier. Credit-card debt amounts to over $82 billion and consumer installment loan accounts for over $138 billion.

P2P lending is relatively still new in Canada and expected to grow exponentially. Borrowell will definitely get the advantage of starting early and with the backing of prominent Canadian financial institutions, is poised to grow into a Canadian marketplace lending unicorn.

Author: Heena Dhir and George Popescu

George Popescu