Wednesday May 16 2018, Daily News Digest

Lending Tree Stock price

News Comments Today’s main news: Auto loan delinquency rate hits 5.8%. RateSetter reaches 100M GBP in investor returns. Marcus may expand to Germany. OurCrowd surpasses $1B AUM. liwwa lends $11M to SMEs. Today’s main analysis: LendingTree among the 5 worst finance sector stocks, according to Nasdaq. Today’s thought-provoking articles: 3 ways technology shifts consumer approach to debt. New reporting rules […]

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News Summary

United States

Anthony Noto’s first shareholder letter as SoFi CEO outlines company values, growth areas (CNBC) Rated: AAA

But it’s the growth of new products at SoFi that will most likely attract the attention of investors, as the company tries to justify its $4.4 billionprivate market valuation.

In the letter, Noto said the SoFi at Work program, which partners with companies to help their employees pay off student loans and other debt, expanded its funded loan volume by 118 percent from a year earlier. The program, used by over 700 businesses, was launched in September 2016, so the growth is coming off a small base from last year at this time.

SoFi CEO Noto on 3 things his fintech company must do from CNBC.

Auto Loan Delinquency Rate Reaches High of 5.8 Percent (PYMNTS) Rated: AAA

Borrowers in the U.S. are defaulting on subprime auto loans at a higher rate than during the financial crisis in 2008.

Data from Fitch Ratings shows that the delinquency rate for subprime auto loans more than 60 days past due reached the highest since 1996 at 5.8 percent.

The default rate during the 2008 financial crisis was around 5 percent.

 

5 Worst-Performing Finance Sector Stocks to Steer Clear Of (Nasdaq) Rated: AAA

Based in Charlotte, NC, LendingTree, Inc. TREE operates as an online loan marketplace for consumers seeking loans and other credit-based offerings. This Zacks Rank #5 stock has a VGM Score of D. Shares of the company have lost 18% so far this year. The 2018 earnings estimates have been revised 5.7% down over the last 30 days.

Source: Nasdaq

3 Ways Technology Is Shifting Consumers’ Approach to Debt (Newsmax) Rated: AAA

The emergence of fintech and blockchain are making the loan experience streamlined and accessible to ordinary consumers, as well as to people who have issues with their credit score, businesses interested in alternative interest plans and people who are hesitant about taking loans from banks for whatever reason.

Peers Over Institutions

P2P lenders pool together smaller amounts contributed by investors and lend the money out to consumers through digital platforms. Recently, P2P platforms like Lending Club and Prosper are making available loanable amounts of around $30,000 to $40,000 at competitive interest rates and with easier application processes.

Credit Scores Matter Less

As of 2017, those aged 18-29 have an average score of just 652 which is lower than previous generations and has become an issue as they start settling down and are in need of loans for mortgages.

Fintech and blockchain, however, are starting to minimize the overall impact of credit scores in an effort to bring more financial inclusion. They can include factors such as: salary, purchasing history, educational attainment, and even social media activity.

The Drive to Decentralize

The centralized approach of financial institutions controlling the people using their systems financial activities is also being challenged.

Decentralization has been key to blockchain’s growing appeal.

 

 

Earnest vs. SoFi: Which Personal Loan Is Best for You? (Student Loan Hero) Rated: A

It’s possible to get up to $100,000 from SoFi. With Earnest, you’re limited to a maximum of $75,000.

Source: Student Loan Hero

Because you can borrow more with SoFi, you also get access to longer loan terms — up to seven years. The longest term with an Earnest loan is five years.

Finally, SoFi doesn’t have a minimum credit score requirement, while you need a score of at least 680 to qualify for a loan with Earnest.

Even though Earnest has a minimum credit score of 680, the lender also takes into account your education, job history, and other data to help determine an interest rate.

Private Equity’s Plan to Beat the Low-Cost Investing Robots (Bloomberg) Rated: A

Private equity firms smell money in the financial advice business. Last month, Hellman & Friedman LLC paid $3 billion to buy Financial Engines Inc., an online retirement planning service. Thomas H. Lee Partners LP in October took a stake in HighTower, a Chicago-based wealth adviser with $50 billion under management at the time. And in April 2017, private equity giant KKR & Co. and Stone Point Capital LLC bought a majority share of Focus Financial Partners LLC in a deal that valued the wealth manager at $2 billion.

 

Ex-Citi, Comcast execs raise $ 100M more for Fair Square credit cards (The Enquirer) Rated: A

Fair Square Financial LLC, the two-year-old, 50-worker Wilmington company that markets the Ollo credit card, says it has raised $100 million more from Orogen Group, the New York investment firm headed by former Citigroup CEO Vikram Pandit; Atairos Group, headed by former Comcast chief financial officer Michael Angelakis; and others.

Fair Square, which has lent MasterCard holders about $400 million since early last year (using the Bank of Missouri’s lending powers), is one of a string of software-intensive lenders and financial service firms that have sprung up in Wilmington in recent years, capitalizing on the area’s concentration of credit card managers and workers.

Cracking 2 Myths Of Online Lending (Benzinga) Rated: A

Of the many informative and innovative sessions powering the 2018 Benzinga Global Fintech Awards, none may be as important to the future of lending as the fireside chat between Cornelius Hurley, Executive Director at Online Lending Policy Institute, Colin Darke, General Counsel at Rocket Loans, and Jeremy Potter, Associate Counsel at Quicken Loans.

One of the main catalysts of the chat was a discussion about Hurley’s two main myths surrounding the future of lending:

  • Online lending is unregulated and is a shadow banking component.
  • There is a nexus between payday lending and online lending.

AlphaPoint Launches Framework for Real Estate Blockchain Tokens (CoinDesk) Rated: A

A longstanding real estate and private equity firm, Muirfield Investment Partners, has joined with AlphaPoint in an effort to offer its investors a more easily tradeable way to participate in the property market.

The idea is to use blockchain as a conduit for introducing more liquidity into the real estate market.

AlphaPoint’s plan is to see everything go on the blockchain. The actual asset won’t be on paper and tokenized, but that documentation will be stored using the tech. Further, it can use software to pay out dividends, if those are part of the deal, and to ensure that assets aren’t transferred to people they shouldn’t be.

Need to attract millennials? Offer student loan benefits (HR Morning) Rated: A

If you want to attract and retain millennials, it’s all about the benefits. And no perks are more sought after among this group than studen loan benefits. In this post, guest author Alyssa Schaefer, the chief marketing officer of Laurel Road, a national online lender, explains why employers can’t wait to roll out student loan benefits if they’re serious about hiring the best and brightest millennials.

BorrowersFirst Shut Down: What This Means for Current and Prospective Borrowers (Student Loan Hero) Rated: A

That’s why it’s so frustrating when the company you borrowed from sells your loan to another lender or stops servicing loans altogether.

Unfortunately, if you have BorrowersFirst personal loans, that’s exactly the position you’re in. BorrowersFirst no longer offers personal loans or manages loans for people who borrowed from it in the past.

Market Guide for Identity Proofing and Corroboration (Whitepages PRO) Rated: A

In the new guide, Gartner discusses these key findings:

  • Data breaches have led to rampant compromise of personally identifiable information (PII). As a result, correctly reciting PII is worthless as a stand-alone method of corroborating a person’s claimed identity.
  • Onerous “identity proofing” methods for new-account opening and as part of step-up or multifactor authentication use cases increase customer abandonment. This creates a competitive liability when customer attrition and market share loss exceed the potential fraud loss.
  • Many technologies used in online fraud detection use cases, such as device reputation, can be used in identity proofing and substantiation use cases. In addition, these technologies can be invoked to elevate trust during subsequent interactions.

How Peer-To-Peer Financing Could Open Up the Property Market to Millennials (Leap Rate) Rated: A

Peer-to-peer (P2P) lending has increased in popularity over recent decades, spurred on by the age of connectivity. Blockchain startups have been quick to recognize the benefits that the new technology can bring to P2P finance, directly connecting individuals who wish to exchange value without the need of any intermediaries such as banks.

Now, one startup plans to use artificial intelligence (AI) and machine learning in combination with blockchain technology to create a P2P lending platform for home loans. This could prove to be an ideal solution for frustrated millennials, who may be more open to using new technology to achieve their property ownership goals.

Beyond bitcoin: Blockchain firms look to provide social good (BizWest) Rated: B

Possible social good applications include peer to peer lending, digital identities (ideal for refugees), protection against runaway inflation, campaign finance reform, direct democratic votes, solar energy trading and freedom of speech free from censorship.

United Kingdom

RateSetter Milestone: £100 Million in Investor Returns (Crowdfund Insider) Rated: AAA

UK Peer-to-peer lending platform RateSetter has topped the milestone of returning £100 million in pre-tax interest payments to its investors. RateSetter reports accomplishing this without any individual investor losing a penny.

 

New reporting rules push down Funding Circle fund’s returns (Peer2Peer Finance) Rated: AAA

THE Funding Circle SME Income Fund (FCIF) has reported its first drop in net asset value since 2016 after adopting new IFRS 9 reporting standards.

The new accountancy standards mean funds have to include potential losses in their portfolio. The fund, which invests in loans originated by peer-to-peer lender Funding Circle, revealed its returns were down 0.6 per cent in April after allowing for a 1.1 per cent provision.

This was the first drop in NAV since the fund’s first monthly update in November 2015 when it was down 0.1 per cent. The NAV had been consistently positive up until last month.

European Union

Goldman Sachs eyes Germany for expansion of Marcus (Financial Times) Rated: AAA

As Marcus looks to launch a UK savings product soon the bank is already eyeing additional European markets; they plan to make Germany the next stop, though it might be looking at 2019 or beyond; Marcus is slowly becoming an important part of the overall Goldman strategy as they look to diversify; their consumer brand has a goal to boost Goldmans’ revenues by 5 percent in three years.

 

Azbit ICO (AZS Token): Crypto Exchange And Investment Platform? (Bitcoin Exchange) Rated: A

Azbit, found online at Azbit.com, is an online trading platform that comes with built-in margin trading and algorithmic trading tools.

A pre-ICO Azbit tokens begins on July 1, 2018.

Azbit has an electronic payment system that will provide support and processing for all online and cryptocurrency payments, then offer additional services like instant exchange, a P2P debt platform, and P2P lending backed by your crypto portfolio.

Lithuania central bank welcomes Chinese FinTech companies (English News) Rated: B

Lithuania invites Chinese companies and investors to take advantage of a friendly and flexible FinTech environment in the country which offers broad development possibilities, chairman of the Board of the Bank of Lithuania, said on Tuesday ahead of his trip to Beijing.

It is estimated that by 2024 the annual growth of the global peer-to-peer lending market will amount to almost 50 percent in the country.

MENA

OurCrowd Surpasses $ 1 Billion AUM (Finovate) Rated: AAA

Equity crowdfunding platform OurCrowd recently reached a major milestone. The Israel-based company has surpassed $1 billion in assets under management.

OurCrowd is currently backing 150 startups across the globe and has previously helped 20 startups successfully exit from funding since its launch in 2013. One of OurCrowd’s most notable investments is Hyperloop, which it backed before Virgin Group invested in the company last year.

Jordanian fintech start-up lends over $ 11 million to SMEs (CPI Financial) Rated: AAA

liwwa, an Amman-based fintech startup and a peer-to-peer lending platform, announced the issuance of over $11 million in debt to small businesses across more than 300 loans since its inception.

Africa

Cellulant Raises $ 47.5M in Series C Funding (Finsmes) Rated: AAA

Cellulant, a Nairobi & Lagos–based digital payments provider, raised $47.5M in Series C funding.

The round was led by TPG Growth’s The Rise Fund, with participation from Endeavor Catalyst, Satya Capital, Velocity Capital & Progression Africa.

Led by Ken Njoroge, co-founder and Group CEO, and Bolaji Akinboro, co-founder and CEO, Cellulant Nigeria, Cellulant provides a digital payments platform that delivers connected, flexible payment options for consumers and businesses, and works with financial institutions, governments and mobile network operators to increase transparency and expand their reach in Africa.

 

Authors:

George Popescu
Allen Taylor

Thursday January 19 2017, Daily News Digest

millennials financial goals and dating

News Comments Today’s main news: UK P2PFA publishes Q4 data. Trended data better at assessing auto loan risk. Today’s main analysis: Millennials find apps better for personal finance than dating. Today’s thought-provoking articles: Student-loan startup raises money from Suber. SoFi expands mortgage line into Australia. Rupaiya Exchange to disburse Rs 100 cr loan. United States Millennials use apps […]

millennials financial goals and dating

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United States

MILLENNIALS FIND APPS MORE HELPFUL FOR PERSONAL FINANCE THAN DATING (SoFi), Rated: AAA

Personal finance can be frustrating. And your financial future can suffer without the right strategy.

That’s true for everyone, but it’s especially for millennial professionals ages 25 to 34 and Gen Xers ages 35 to 44. On top of having student loan debt and dealing with an ever-increasing cost of living, both groups have a tough time figuring out who to trust and what advice to take.

Gen Xers feel more empowered by money than other age groups

While only 18% of respondents say that thinking about their financial future makes them feel empowered, those ages 35 to 44 feel the most empowered. Perhaps that’s because as professionals rising in their careers, they’re thinking about what money will enable them to do.

For millennials, earning a higher salary is a financial priority
It’s been reported that millennials, on average, are willing to take a $7,600 pay cut in exchange for an improved quality of life/work. But our findings show something different: For these ambitious professionals, earning a higher salary is, indeed, a financial priority. While it’s true that millennials experience wage stagnation, there are a number of ways to change that.

25-34 year olds talk to parents and/or siblings more than any other group, and reach out to financial advisors only slightly more than 35-44 year olds.

But in comparison to other groups, 35-44 year old professionals do the least when it comes to structuring their long-term goals. Among all groups, those making more than $100,000 were the most likely to look at the big picture.

But with 38.4% of 25-34-year-olds indicating they were less than successful in accomplishing their priorities, that’s sure sign they could use more help in setting investment goals and creating good financial habits for reaching them.

While only 10.8% of 25-34-year-olds have used digital tools to actually achieve financial milestones, that’s still more than any other group.

Trended data better at assessing auto loan risk, analysis shows (Automotive News), Rated: AAA

Auto loan accounts could jump 11 percent a year if lenders use trended data, according to Equifax’s December 2016 Consumer Credit Impact analysis.

Especially in the automotive industry, Equifax expects more reliance on data insights as the market settles into a “post-recession norm,” a company statement said. “It will be vital to leverage as many insights about consumer debt behavior as possible to more confidently assess risk for a stable portfolio performance in support of a healthy loan marketplace.”

Equifax began using trended data for mortgage underwriting in September. It’s currently testing a specially designed risk-assessment model for auto lending.

In Equifax’s auto loan overpay analysis, it found that 77 percent of consumers who overpaid in year one also overpaid in year two. For those who overpaid in year one but did not in year two, “that nuance is very important,” Maynard said.

Student-Loan Startup Raises Money from Prosper’s Suber, Others (Bloomberg), Rated: A

Credible, which offers an online exchange for student and personal loans, raised $10 million from investors including Ron Suber, the president of Prosper Marketplace Inc., and Regal Funds Management to expand its business of matching borrowers with lenders.

The Series B funding round was led by Regal, and included existing investor Carthona Capital, Credible founder and Chief Executive Officer Stephen Dashsaid this week in an interview. The firm’s Series A round was for $10 million and much of it is still in the bank, Dash said.

Credible closed its Series A in 2015 in a fundraising led by Soul Htite, founder and CEO of Dianrong.com and co-founder of LendingClub, according to TechCrunch. Suber also participated in that round.

Sharestates Tops $ 275 Million in Real Estate Investment (Crowdfund Insider), Rated: A

Sharestates, a real estate crowdfunding platform, has hit $275 million in loans since platform launch in 2015.  The milestone makes Sharestates one of the largest online real estate investment platforms of its kind.  Sharestates said the December 2016 was the most active month in the platform’s history originating more than $42 million in loans. Sharestates said that loan volume has nearly doubled in just three months.

As of December 30, 2016, Sharestates reported having returned more than $151 million to its investors with no loss of principal and yielded a net average annual return of 11% to investors.

BorrowersFirst® Secures Additional $ 100 Million in Funding (Yahoo! Finance), Rated: A

BorrowersFirst (), a national online consumer lending platform, announced today that it has secured an additional $100 million in debt financing to accelerate loan originations and fund continued growth of its balance sheet. With this new facility, BorrowersFirst has now secured an aggregate of $400 million in capital to support its profitable growth.

The additional $100 million senior debt commitment comes from Waterfall Asset Management, a SEC-registered specialist credit advisor focused on high yield asset backed security (ABS) and loan investments.

BorrowersFirst loans are originated by Cross River Bank (CRB), a leader in marketplace lending.

This lawyer refinanced his student debt with a fintech start-up and deeply regrets it (CNBC), Rated: A

After graduating from law school in 2009 with more than $250,000 in debt, Josh Garber refinanced $80,000 of his student loans with online personal finance startup SoFi, a decision he now sorely regrets.

The company, he said, offered a better interest rate than his other lender and a program that allowed him to defer payments if they were higher than a certain percentage of his income, similar to how federal loans work.

SoFi has since scrapped that loan program, and every three months its debt collectors come after him for repayments he cannot afford to make, he told CNBC.

SoFi disputed Garber’s description of the terms and details of the program and said he never produced proof of income.

“We’ve never offered an income-based repayment plan, but we can offer members forbearance for up to 12 months if they can show us economic hardship. So incorrect to say we took away a program,” a spokesman for SoFi told CNBC.

Lending Club Schedules Q4 Earnings Release for February 14th (Crowdfund Insider), Rated: B

Lending Club (NYSE: LC), the leading US marketplace lending platform,  will issue its Q4 earnings report on Tuesday, February 14, 2017, after market close. Lending Club will host a conference call to discuss the fourth quarter financial results at 2:00 p.m. PT / 5:00 p.m. ET on the same day. The earnings report will be viewed as a benchmark measure on the marketplace lending industry.

A live webcast of the call will be available at under the Events & Presentations menu. To access the call, please dial +1 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 2560900, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).

To access the confernece call,  dial +1 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 2560900, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).

PayPal Names Airbnb Executive To Its Board (PYMNTS), Rated: B

PayPal announced Tuesday (Jan. 17) it has appointed Belinda Johnson, chief business affairs and legal officer at Airbnb, to its board of directors. Johnson will serve on the audit committee at PayPal. Her appointment, while disclosed Tuesday, was effective as of Jan. 12.

PayPal said the addition of Johnson to the board will increase the number of directors to 10.

United Kingdom

UK P2PFA Publishes Q4 Data (Crowdfund Insider), Rated: AAA

During the final three months of 2016, more than £843,917,964 million of new lending was transacted through P2PFA member platforms, with a total of almost £3 billion lent during the year. The P2PFA pointed to strong growth in the number of investors and borrowers.

P2PFA members represent over 75% of UK p2p lending. Their eight member platforms include; Funding Circle, Landbay, Lending Works, LendInvest, Market Invoice, RateSetter, ThinCats and Zopa.

 

Funding Circle is dominating Britain’s peer-to-peer lending industry (Business Insider), Rated: A

Britain’s peer-to-peer lending industry enjoyed its best quarter of the year in the final three months of 2016, led by big volumes at Funding Circle.

The P2PFA figures point to a sustained recovery from jitters surrounding last year’s Brexit vote. Lending volumes declined between the first and second quarters of 2016 as uncertainty before and directly after the vote to leave the European Union put off investors.

The strong year-end for the sector was largely driven by Funding Circle, which accounted for £305.9 million of the £843.9 million lent in the third quarter, or 35% of all lending.

Financial innovation – a lifeline for SME funding (Banking Tech), Rated: A

The reluctance of banks to lend to businesses in the wake of the financial crisis kickstarted massive innovation in business finance. In particular, peer-to-peer (P2P) lending is often seen as the poster child of innovation in the finance sector, with Zopa, Funding Circle and RateSetter being some of the largest and most well-known P2P lenders.

Yet, focusing only on P2P misses a huge part of the story of how funding in Britain is changing.

European Union

Fintech gets its voice heard at Davos (P2P Finance News), Rated: A

THE WORLD Economic Forum may be the go-to place for political leaders to rub shoulders but fintech trade body Innovate Finance is making sure its bustling sector gets heard in Davos.

The organisation has taken a delegation including peer-to-peer lender Zopa and other technology companies such as Bankable, Bitfury, Deposit Solutions, iwoca, Scalable Capitaland Yoyo Wallet, to the annual meeting in Switzerland this week.

KfW mulls more P2P securitisations (P2P Finance News), Rated: A

KFW, the German state-backed bank that last year invested in Funding Circle’s £129m securitisation, is open to more deals in the peer-to-peer finance sector in 2017.

The development bank bought £44m of the most senior tranche of business loans, which were owned by US asset manager KLS and originated through Funding Circle’s platform.

Last month, KfW said it plans to commit €1.3bn (£1.1bn) to SME securitisation deals in 2017, including up to €500m for transactions from European countries outside of Germany.

Australia

US fintech SoFi targets mortgage lending in Australia (Financial Review), Rated: AAA

One of the best-funded financial technology companies in the US, SoFi, is preparing to launch in Australia to offer mortgages in direct competition with the banks.

In recent days, the San Francisco-based SoFi has used LinkedIn to advertise for a manager of mortgage operations, based in Sydney, along with an operations manager and a marketing manager.

The pending opening in Sydney would be SoFi’s first office outside the US, where it has funded more than $US14 billion in student loan refinancing, personal loans and mortgages since it was founded in 2011. Over the past two years, SoFi, which used to be called Social Finance, has raised $1 billion in new equity funding and grown staff numbers from 200 to 700.

India

This P2P lending platform plans to disburse Rs 100 cr loan in a year (YourStory), Rated: A

Globally, shared economy and funds is a strong concept. It was something that 34-year-old Rohan Hazrati, who was associated as the CFO of a German company, noticed. He had seen people investing and borrowing via peer to peer lending. It was his eureka moment, he realised that there was a need for a more simple and easier lending process in India. That is when he thought of starting Rupaiya Exchange, a P2P (peer-to-peer) lending platform.

Over the past two years, the focus on lending space is fast increasing. In the P2P lending space, there is the Mohandas Pai-backed Faircent, which is a significantly large player in the space, i2ifunding, and IndiaLends.

The team charges a percentage on the loan funded, as success fees. The team has raised an angel round of $200,000 from a group of HNIs and professionals.

Authors:

George Popescu
Allen Taylor