Monday November 27 2017, Daily News Digest

fintech TransUnion

News Comments Today’s main news: Ant Financial bans high-interest consumer loan products. Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS. Funding Circle to launch Isa next week. Zopa reforms how returns are displayed. Robo-advisors in China must be licensed. CreditEase to pioneer fund of funds for direct real estate purchases. New Zealand publishes first P2P/crowdfunding statistical returns. Today’s main […]

fintech TransUnion

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS (Asset Securitization Report), Rated: AAA

LendingClub’s third self-sponsored securitization of online marketplace loans is benefiting from the company’s recent tightening of credit standards.

The loans backing the $330 million Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 involve borrowers with higher FICO scores that have allowed LendingClub to reduce its credit enhancement levels on the deal.

CLUB Credit Trust 2017-P2 has a collateral pool of 22,062 prime, consumer loans with a cumulative net balance of $368 million, or an average balance of $16,681.

TransUnion Study On FinTech Market; PayPal Enters Robo Advice Market (PeerIQ), Rated: AAA

The Federal Reserve Bank of New York reports that household debt totaled $12.95 Tn last quarter – the 13th straight quarterly increase. As a share of GDP however, household debt stands at 66% below a peak of 87% in early 2009.

PayPal continues to expand the range of its consumer offerings. PayPal started with payments initially, moved to personal and small business loans, and is now delivering asset management solutions. The partnership will offer Acorns a unique channel for customer acquisition and allow Acorns to compete with Betterment and Wealthfront. Paypal led a $30 Mn investment round in Acorns Grow in April 2016.

FinTechs are Growing and Taking Market Share

FinTech’s market share has grown from virtually zero in 2012 to 30% in 2016. The outstanding balances on personal loans have doubled to over $100 Bn in 2017 from late 2013, with 128 lenders making more than 10,000 personal loans annually. FinTechs compete with banks to originate loans to prime consumers, and FinTech’s originate 30% of their loans to non-prime consumers where there is less competition from banks.

Source: TransUnion

FinTechs Have The Most Robust, Risk-Based Pricing

Source: TransUnion

Brian Dally of Groundfloor (Lend Academy), Rated: A

In this podcast you will learn:

  • Where the idea for Groundfloor come from.
  • Why Brian decided to start in the real estate asset class.
  • How many states they are operating in today for both borrowers and investors.
  • How they go about sourcing real estate deals.
  • Why they decided to focus on non-accredited investors.
  • How their securities offering is structured.
  • The minimum investment allowed per deal.
  • How returns have been for investors.
  • Which side of the marketplace is constraining growth today.
  • How they differentiate themselves from their competition.
  • The performance of their loan book to date.
  • Their business model and how they make money.
  • Details of their first institutional investor and why this is good for retail investors.
  • Their goal for an institutional/retail investor mix.
  • What the future holds for Groundfloor.

Online lenders pull out the popcorn, as the Trump administration fights to control the CFPB (TechCrunch), Rated: AAA

Republican lawmakers have long sought to reduce the CFPB’s oversight. Now dueling appointments put its immediate future in question. Last night, President Trump named his budget director, Mick Mulvaney, as acting director of the agency hours after its current leader, Obama-appointed Richard Cordray, announced he would leave the job.

To counter the administration’s plans, on his way out the door, Cordray named his chief of staff, Leandra English, as the agency’s deputy director.

Under the law, the appointment should make English the agency’s acting director, though the White House says that Mulvaney plans to show up at the CFSB Monday morning anyway. The White House further says Mulvaney will keep his current job as head of the Office of Management and Budget.

If the Trump administration follows through on its threats, Mulvaney will lead both agencies until a permanent head of CFPB is chosen and confirmed by the Senate.

Nobody Knows Who the Consumer Financial Protection Bureau’s New Boss Is (New York Magazine), Rated: A

On his way out, he appointed his chief of staff, Leandra English, to take over the CFPB, citing the Dodd-Frank Act, which states that the agency’s deputy director will take over the agency if the director leaves. Trump responded by naming Mulvaney as expected, pointing to the Federal Vacancies Reform Act as justification for his move.

The eventual director must be confirmed by the Senate; Trump’s pick is expected within weeks.

3 trends powering the rise of financial robo-advice (VentureBeat), Rated: A

1. Availability of data

We generate more than 2.5 billion GB of data every day.

In one notable example, JP Morgan and Intuit earlier this year announced their companies will make data available via the Open Financial Exchange API. Their goal is to make it easier and more secure for consumers to use their data across various financial apps and websites.

2. Increased power and storage

  • Google Tensor Processing Unit.
  • Nvidia Volta.
  • Huawei Kirin.

3. Advancements in AI

In particular, deep learning and boosting models enable significant leaps forward in the application of machine learning. These include design concepts such as Google’s Capsule Network, which offers an alternative to traditional neural nets, and replicative and transfer learning, which enable pattern discoveries and accuracies impossible by human counterparts.

The results of studies using these ideas are impressive. In one example, University of Mannheim researchers showed how ontologies help some machine learning models validate data 50 times faster. And Google’s AutoAI demonstrated it can create better machine learning code than the researchers who made it.

Student debt relief trumps other benefits (Employee Benefit Adviser), Rated: A

Student loan repayment programs are climbing the pantheon of employee benefits, suggests a recent survey of full-time workers with student loan debt.

Pollfish found that 23% would gladly give up healthcare benefits for a student loan repayment benefit. In addition, 46% would relinquish paid time off and 33% would do the same for retirement benefits in exchange for a repayment benefit. Also, 53% said they’d consider a salary cut in exchange for a student loan repayment benefit.

Of 1,000 college graduates polled by SoFi, an online personal finance company, 90% were more willing to accept a job offer at a new company if their employer offered a student loan contribution benefit. In the Pollfish survey, 84% gave the same response.

The Most Well-Funded Fintech Startup In Each State (CB Insights), Rated: A

State Company Total Equity Funding ($M)
Arizona CampusLogic $ 17.5
Arkansas LumoXchange $ 0.2
California SoFi $ 2,040.5
Colorado IP Commerce $ 54.7
Connecticut PayVeris $ 14.2
DC Fundrise $ 52.6
Delaware College Avenue Student Loans $ 50.0
Florida YellowPepper $ 34.0
Georgia Kabbage $ 490.0
Idaho VisitPay $ 18.4
Illinois Avant $ 655.0
Indiana Allied Payment Network $ 2.6
Iowa Dwolla $ 39.1
Kansas C2FO $ 99.7
Kentucky Inked Brands $ 4.0
Louisiana Zlien $ 7.2
Maryland Regent Education $ 39.7
Massachusetts Toast $ 138.0
Michigan Clinc $ 7.5
Minnesota Bright Health $ 240.0
Missouri Clearent $ 27.5
Nebraska D3 Technology $ 35.6
Nevada Filament $ 31.8
New Jersey Billtrust $ 104.5
New York Oscar Insurance Corporation $ 727.5
North Carolina AvidXchange $ 558.2
Ohio Aver $ 23.2
Oklahoma CreditPoint Software $ 1.1
Oregon NVoicePay $ 21.5
Pennsylvania InstaMed Communications $ 101.9
Rhode Island Upserve $ 191.5
South Carolina Ceterus $ 10.2
South Dakota ReliaMax $ 3.9
Tennessee Digital Reasoning Systems $ 75.6
Texas BigCommerce $ 164.5
Utah MX $ 54.1
Virginia StreetShares $ 18.9
Washington Avalara $ 253.0
Wisconsin Dynamis Software Corporation $ 4.3
Source: CB Insights

Bridge loan helps borrowers as they pursue graduate degrees (SFGate), Rated: B

The sellers wanted to accept the offer but were concerned about the VA financing with an online lender who was unresponsive to the listing agent’s calls. The Realtor advised the couple that if they could find a local lender who could preapprove them with conventional financing, their offer would be accepted.

Wyatt held a video conference with the couple to clarify the structure of the file and learned that both clients were pursuing their graduate degrees and took time off work to attend classes. In addition, the co-borrower had recently received an employment offer for a salaried position.

United Kingdom

Funding Circle Isa to launch next week (Bridging&Commercial), Rated: AAA

Peer-to-peer platform Funding Circle has announced that it will start rolling out its Isa account to all current investors from next Thursday (30th November).

UK peer-to-peer lenders plan to raise millions from ISAs (Financial Times), Rated: A

Britain’s largest peer-to-peer lenders plan to raise hundreds of millions of pounds from savers in the coming weeks even as many of them say they will reduce higher risk lending in case there is a downturn.

“We expect a lot of demand,” Samir Desai, chief executive of Funding Circle, told the Financial Times. “We have done lots of surveys and a huge proportion of the base told us they would like to put all of the money they invest with us through the ISA.”

Zopa addresses default concerns by reforming how returns are displayed (P2P Finance News), Rated: AAA

ZOPA is working on improving the way long-term returns are displayed so investors do not become overly concerned with monthly defaults in their portfolio.

The peer-to-peer lender said it is working on a prototype that would show investors their current portfolio performance, a range of what their returns will be and what their target rate is.

The display, currently in testing, includes a graph showing portfolio growth, and the net cash earnings after losses, a range of what the returns will be that narrows closer to maturity and what the target rate is in comparison to what was advertised.

Welendus launches new £150,000 crowdfunding campaign (P2P Finance News), Rated: A

PEER-TO-PEER payday loan platform Welendus has launched a new crowdfunding round on Seedrs this morning to raise an additional £150,000.

The lender, which raised £100,000 from investors during a Seedrs fundraise in March, has already reached 92 per cent of its target by attracting funding from the existing crowdfunding backers.

NatWest joins the robo-advisers (This is Money), Rated: A

High-street bank NatWest has launched a fully regulated robo-advice proposition charging £10 for customers seeking to invest sums as low as £500.

Unlike some rival robo-advisers that offer guidance based on responses to just a few questions, or simplified advice that doesn’t factor in your complete financial position, NatWest said its process will offer full-fat advice akin to the traditional face-to-face process but online.

57% of SMEs support European Free Trade Agreement (Bridging&Commercial), Rated: A

More than half of small business owners (57%) are supportive of joining the European Free Trade Agreement (EFTA), a new survey has revealed.
Research by peer-to-peer platform Funding Circle has found that the key reasons cited by businesses for wanting to join the EFTA included the ease of exporting and importing (59%), a larger customer base (46%) and lower tariffs (42%).

 

Was the Budget boom or bust for personal finance? (P2P Finance News), Rated: A

PEER-TO-PEER lenders are split about the outcome of the Budget for people’s finances.

RateSetter said there was “a notable absence of measures to help people put away more for the future” in Wednesday’s fiscal event, but Lending Works called it “a boost for personal finance”.

Rethinking bricks and mortar: alternatives for property investors (Your Money), Rated: B

A mismatch of supply and demand has made UK property more unaffordable than ever for would be buyers. Property investors pursuing the buy-to-let route are also facing challenges due to a recent crackdown in tax legislation. Against this backdrop, peer to peer (P2P) and equity crowdfunding have grown in popularity as alternative ways to access the property market.

Key considerations before picking an investment route

 

  • Investment risk
  • Debt or equity
  • Liquidity
  • Who’s the provider

RateSetter Appoints Richard Steele Regional Manager of Midlands (Crowdfund Insider), Rated: B

UK-based peer-to-peer lending platform RateSetter announced on Friday it has appointed Richard Steele as its regional manager for the Midlands. According to the online lender, Steele has more than 15 years of business lending experience and prior to joining RateSetter, he held the relationship manager position at Barclays and business development manager at BCRS Business Loans.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

On November 17th, top financial regulators in mainland China (including PBOC, CBRC, CSRC, CIRC and SAFE) released a new set of rules covering the country’s asset management market. It is the first time that the regulators designated one of the articles to Robo-advisors.

According to the article, financial institutions that conduct Robo-advisory services or AI-driven investment programs should be granted license from financial regulator before carrying out any operations.

Here Comes Tencent Credit

Two years ago, Ant Financial, the financial affiliate of Alibaba, launched its own credit scoring system Sesame Credit. This week, Tencent, Alibaba’s main rival in China, finally followed suit by launching a similar and competitive product, Tencent Credit. The credit score ranges between 300 and 850.

Sesame Credit Ceases Cooperation with Cash Loan Platforms

On November 21st, a cash loan platform told the media that they had received a notification from Sesame Credit, the credit scoring services of Ant Financial. According to the notification, Sesame Credit will cease to cooperate with cash loans from December 12th of 2017 due to some of its illegal behavior regarding interest rate setting and debt collection.

Chinese fintech firm CreditEase to pioneer funds of funds as alternative to direct real estate purchases (SCMP), Rated: AAA

CreditEase, one of China’s largest financial technology companies, has set its sights on funds of funds focusing on real estate projects as founder and chief executive Tang Ning anticipates a new property investment scenario.

At present, high-net-worth individuals in China seeking returns from property investment often directly buy and own residential or commercial units, betting on the appreciation of assets.

CreditEase, which specialises in lending to small businesses and consumers as well as wealth management for affluent investors, plans to set up a clutch of funds of funds that will allocate capital to leading global real estate funds managed by big names such as Blackstone and KKR.

China Online Lender Qudian’s Latest Plunge Knocks CEO From Billionaire Ranks (Forbes), Rated: A

Qudian lost 24.3% on Friday to end at $12.22, the worst close since it listed at $24 on Oct. 18.  Friday’s decline left Luo’s fortune at $776 million.

Luo, 34, ranked No. 255 on the 2017 Forbes China Rich List published on Nov. 16 with an estimated fortune of $1.48 billion.

Shares in Qudian, which is 11% owned by Alibaba Group affiliate Ant Financial, and other Chinese online lenders have been falling on reports that regulators plan to tighten restrictions on microlenders. On Friday, Qudian said it would cap charges and costs to customers linked to Alipay at an annual interest rate of 24% (see announcement and details here).  Qudian also said it is working to extend credit through its own app where it can charge up to an annual rate of 36%.

Alibaba Affiliate Bans High-interest Consumers Loan Products (ValueWalk), Rated: AAA

Ant Financial, the financial arm of Alibaba, has barred consumer loanswith an annual interest rate above 24% on its Alipay platform.

Ant Financial stated that it has increased monitoring of the financial service providers on Alipay and its credit platform, Sesame Credit, and found some inappropriate collection methods and interest rates above legal limits, according to Reuters. Further, Alibaba’s Ant Financial stated that it would withdraw cooperation with some cash loan providers. Sesame Credit is a proprietary credit scoring system, which gives Alipay e-wallet users a credit score.

China Fintech Firm Is Said to Mull Fate of $ 500 Million IPO (Bloomberg), Rated: A

LexinFintech Holdings Ltd., owner of Chinese online lending platform Fenqile, plans to meet advisers this weekend to discuss the fate of its proposed U.S. initial public offering, people with knowledge of the matter said.

The company aims to decide whether to imminently start its IPO roadshow or wait for a later date when market sentiment may be better, according to the people.

Yirendai Awarded ISO 27001 Certification (Business Insider), Rated: A

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) announced today that it has been awarded certification to the international standard for Information Security Management (ISO 27001) from British Standards Institution.

The ISO 27001 certification is an internationally recognized best practice framework for an information security management system (“ISMS”) and specifies the requirements for establishing, implementing, maintaining and improving information security management within an organization. It also takes into account risk assessment and risk treatment with regards to security of information.

Tencent to set up fintech lab in Xiongan (ECNS.cn), Rated: B

Tencent Holdings Ltd, Asia’s most valuable firm, is planning to set up a financial technology lab and digitize public medical services in the Xiongan New Area, as part of a broader push to gain a foothold in China’s latest economic zone.

European Union

One Idea to Make Europe Bigger in Tech Is to Pay Employees More (Bloomberg), Rated: AAA

Europe isn’t producing the kind of large, globally-influential technology companies like those coming out of the U.S. and China. A perennial question is why?

One reason might be that European startups don’t give employees as much of a chance to strike it rich, according to a new study by the European venture capital firm Index Ventures. While startup employees in the U.S. are often rewarded with stock options — allowing them to cash out handsomely if a company is sold or goes public — young firms in Europe don’t offer the same scale of incentives.

In an analysis of 73 companies, Index found that European employees own on average about 10 percent of the startup where they work, compared to 20 percent for U.S. workers. European companies often skew stock options to executives rather than rank-and-file employees.

A tech VC explains why Revolut is such a hot ticket as the fintech app hits 1 million users (Business Insider), Rated: A

Revolut announced the milestone on Friday, saying that customers have now completed 42 million transactions on its app worth a combined $6 billion (£4.5 billion). The company began as a foreign exchange app linked to a pre-paid card but has since branched out into broader financial services, such as current accounts, insurance, and investments.

Revolut, which is applying for a full European banking license, said that 42% of its customers are aged 25-35, “a clear indication that traditional banks are no longer meeting the needs of younger, tech-savvy generations.”

Flender closes in on £2m funding round (Independent), Rated: A

Dublin-based peer-to-peer lending business Flender is close to raising more than €2m in its latest funding round.

Some €400,000 of the money has been raised from its own platform – the first peer-to-peer equity investment on an Irish platform. Terms are close to being agreed for the remaining balance of a £2m (€2.25m) round.

CS Invests in Swiss Fintech (finews), Rated: B

Credit Suisse has bought a majority stake in Tradeplus24, a Zurich-based fintech firm specialized in small- and mid-sized business loans. The Swiss bank bought into a series A1 financing through its subsidiary, SVC, the bank said in a statement.

International

2 investment trusts for income investors seeking reliable high yields (The Motley Fool), Rated: AAA

With interest rates still near historic lows, it can be hard to find mainstream investments that will pay out a significant yield.

But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector. It’s an investment trust that offers investors a ready-made and diversified portfolio of peer-to-peer loans, saving time from building a portfolio from scratch and enabling investors to earn income straight away. At its current share price, it has a trailing 12-month dividend yield of 6%.

ETHLend – A Fully Decentralized & Democratized P2P Lending Platform On The Ethereum Blockchain (Chipin), Rated: A

The main feature of ETHLend is the financing options available in ETH, which allows users to borrow or lend ETH using ETHLend’s digital tokens in an efficient manner or by using ENS domains as a collateral.

The ETHLend platform can be also used as a tool for both B2B and B2C transactions.

An interesting aspect of ETHLend is that both borrowers and lenders will receive 0.1 credit tokens (equal to 1 ETH) each for every loan that is repaid successfully.

These credit tokens can then be used as collateral for loans on the platform or sold for profit.

Here are the details of the upcoming LEND token sale:

Token name: LEND

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th November, 2017 – 27th December, 2017

Token sale target: 37,600 ETH (hard cap)

Token exchange rate: 1 ETH = 25,000-27,500 LEND (depending on period of sale)

Celsius – The P2P Decentralized Credit Protocol Built On Smart Contract Technology (Chipin), Rated: A

The modern credit system is a mess, particularly for millennials and the Generation X youths.

Celsius is a P2P and blockchain-powered global credit network designed to improve the efficiency of modern credit and financing systems.

There are 4 types of loans in the Celsius platform:

    • The platform will enable millennials to establish a digital credit score and be issued a credit line; the credit can then be accessed by a sponsored credit card from Celsius.
    • Celsius will also allow the platform’s users to expand their credit limit against their own cryptocurrency asset holdings they have at Celsius. The extended credit can be easily accessed through several options.
    • Members can also choose to lend any cryptocurrencies they own and earn up to 5x the normal interest rates they get from banks. Finally, members can borrow cryptocurrencies in a secure and transparent manner
    • To safeguard the platform’s ecosystem, both lenders and borrowers on Celsius are verified and carefully selected to prevent fraud.

Here are the details of the upcoming DEG token sale:

Token name: DEG

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th of January, 2018 – TBA (pre-sale is currently LIVE)

Token sale target: $100,000,000 (hard cap)

Token exchange rate: $0.20 = 1 DEG

Australia/New Zealand

Why SocietyOne needs more than its billionaire backers (Financial Review), Rated: AAA

The other is it’s in the midst of what is expected to be its last funding round before listing the business, raising up to $20 million in equity based on a valuation of up to $200 million, which is based on a multiple of one times its loan book.

The raising, managed by Venture Advisory and due to close late this month, is part of a long-term, highly anticipated plan to target a sharemarket listing in 2018.

SocietyOne is expected to need a book worth $500 million or so before it starts breaking even.

Chief executive Jason Yetton has said previously the company is eyeing a 2 per cent to 3 per cent share of the $105 billion consumer finance market in the long term, of which credit card debt comprises $42 billion.

Fortress backs $ 120m capital raising by MoneyMe (Financial Review), Rated: AAA

Global credit investor Fortress Investment Group will invest $100 million in debt capital to support MoneyMe’s consumer lending growth as the fintech considers an initial public offering in early 2019.

Fortress’s investment is part of a $120 million asset-backed securitisation deal, which also includes a $20 million bond, issued by Evans & Partners, which was oversubscribed.

MoneyMe, which has made $150 million in personal loans to 70,000 customers in the past four years, is both cash flow positive and profitable, very rare for an Australian fintech.

Of its $150 million in lending, $80 million has been advanced in the past 12 months.

New Zealand’s Financial Markets Authority Publishes First Peer-To-Peer/Crowdfunding Statistical Returns (MondoVisione), Rated: AAA

The Financial Markets Authority (FMA) today published its first statistical reporton peer-to-peer lending and crowdfunding in New Zealand.

The data shows $259.9 million is currently loaned to individuals and $29.5 million loaned to businesses through peer-to-peer lending in the year ending 30 June 2017.

A total of $74.2 million was raised from investors through crowdfunding, including wholesale investors, in the same period.

Tic:Toc to undercut broker distribution in white label play (TheAdviser), Rated: A

Mortgage brokers are facing a double threat from online lender Tic:Toc, which is seeing a surge in demand from consumers and interest from banks and non-bank lenders looking for cheaper distribution.

The fintech started lending four months ago and has received approximately $330 million of applications in that time, with conversions hovering around 17 per cent this month.

Financial regulator shines light on P2P lending, crowdfunding (Stuff), Rated: A

Kiwis have nearly 17,000 loans through “peer-to-peer” lending platforms, but more than one in 12 borrowers were behind on repayments, according to the Financial Markets Authority.

There were 16,977 loans outstanding with P2P lenders at the end of June, it said, of which 1469 were in arrears. The average size of loans being taken out was $8771.

During the year, 833 loans with a total value of $8.5 million were written off.

Why banks and fin-techs need each other (NZ Herald), Rated: B

Chris Russell, HSBC New Zealand chief executive, said history was littered with banks who had spent large sums of money on developing new technology, only to find it had gone in another direction while it was working on it.

Globally Russell said HSBC was setting up innovation labs to work with financial technology firms and it was China and India where it saw the biggest sources of development.

In New Zealand it is also partnering with a local fin-tech, although Russell won’t name who yet.

India

The quick and safe way to build a credit score (livemint), Rated: A

If you are new in the workforce, you can start by getting a low-limit credit card from the bank where you have a salary account, said Sumit Bali, senior executive vice president and head-personal assets, Kotak Mahindra Bank Ltd.

Alternative credit scoring

While the RBI-regulated credit bureaus are currently not allowed to use alternative data for credit scoring; in other developed markets parameters like utility bill payments, insurance premium payments have been used for credit scoring (read more on it here.

However, financial institutions including top public and private sector banks and NBFCs in India, have started using alternative data in multiple verifications and validations across the credit value chain, Agarwal said.

Asia

Considering an ICO… then read this (The Star), Rated: AAA

The ICO euphoria is likely being fuelled by the fact that despite all the negative news surrounding ICOs and cryptocurrencies, the price of bitcoin has generally kept soaring, despite the many mini crashes it tends to suffer.

For sober markets like Malaysia and Singapore, the regulators’ stance is clear. They are not outlawing ICOs but making a simple statement: if fund-raising is your main objective, then please take note of existing securities laws, which have been built and refined over a very long time.

Malaysia should not become a hotbed for dodgy ICOs.

Asian regulators should focus on light touch for ICOs (Asian Review), Rated: A

China banned initial coin offerings in September as “a form of unapproved illegal public financing behavior.” South Korea followed suit a few weeks later. Regulators in Hong Kong, Singapore, the U.S. and other countries have also expressed concerns. What is it that has them so worried?

Africa

A Digital Transactions Takeover right under our nose – Cassava Fintech (Newsday), Rated: AAA

Cassava Fintech is a specialized Pan-African Fintech company that delivers innovative digital transaction solutions across the mobile ecosystem. Sounds fancy right? Not quite. Simply put Econet’s vision has expanded beyond Telecoms and our Zimbabwean borders. Econet’s premise sits within an inclusive connected future that leaves no African behind.

Fintech SMEs to drive 72% of bank innovation (The Star), Rated: A

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

81 per cent of financial institutions said they are currently partnering with start-ups or intend to in the next 12 months.

Authors:

George Popescu
Allen Taylor

Funding Commercial Real Estate Loans Online

commercial real estate loans

P2P lending was born out of unsecured lending between individuals. The ticket size was usually a few thousand dollars. In a sign of how much the market has evolved, fintech lenders now cover commercial real estate loans with ticket sizes ranging from $1 million to $20 million. This evolution is being led by a host […]

commercial real estate loans

P2P lending was born out of unsecured lending between individuals. The ticket size was usually a few thousand dollars. In a sign of how much the market has evolved, fintech lenders now cover commercial real estate loans with ticket sizes ranging from $1 million to $20 million. This evolution is being led by a host of players with RealtyMogul, Sharestates, Patch of Land, and Money360 dominating their respective niches.

Money360 is an online marketplace for commercial real estate loans and caters to both institutional as well accredited retail investors. They secure the property with a first priority lien against income-producing commercial real estate, and, for the borrower, they focus on bringing convenience, speed, and reasonable commercial terms to the deal. Along with this, they run an investment management company, M360 Advisors, which manages diversified fund vehicles for institutional and accredited retail investors.

Money 360’s Background

Co-founder Evan Gentry started MoneyLine Lending Service, a mortgage lending company that transitioned into a mortgage tech company. The company was sold to Genpact, a spinoff from GE. He then started G8 Capital in 2007, a private real estate investment firm specializing in the acquisition of commercial real estate and non-performing loans. The company made most of the real estate meltdown in 2007-08 and bought non-performing residential as well as commercial loans. From 2007-2014, the company acquired distressed assets (major commercial real estate loans) worth $800 million. As the market has normalized, the company stopped acquiring further loans.

Gentry and his partner Daniel Vetter founded Money360 in 2010. It was a logical step forward considering Gentry had ample experience in mortgage, real estate, and investments, as did Vetter, a veteran of PIMCO and alumnus of Harvard Business School. After closely studying the business models of LendingClub and Prosper, and beta testing it on the real estate market, they zeroed in on commercial real estate bridge loans.

How Money360 works

In the beginning, they would source commercial projects that needed funding and potential investors who wanted to invest in the project; for instance, 10 investors pitched in for a $5 million loan. This model was not scalable and they shifted their focus into selling loans to whole loan buyers. In order to attract accredited retail investors, Money360 needed a more refined and sophisticated product; they needed to be diversified across multiple loans. Inspired by LC Advisors, they launched M360 CRE (a commercial real estate income fund), which was launched last year and is on track to achieve a fund size of $180 million this month.

The company does not crowdfund its loans. They either buy loans through the fund or partner with whole loan buyers like federal credit unions and banks.

Products and performances

Money360 has two primary products:

  1. Bridge Loan – Available for commercial real estate for a maximum of two years. Returns range from 8%-10%, loan-to-value (LTV) is usually 65%-70%, but in some cases can go up to 80%. Loan size is between $1 million to $20 million and, to safeguard its interests, Money360 holds the first lien position. The company did $45 million in loans in April and in the process broke its monthly record. The secret behind its success is a well-executed business model. Though they leverage technology for underwriting and processing, origination and due diligence are still performed using traditional models. Money360 have eight development officers who work with local borrowers and brokers around the country. By the end of the year, the company wants to cross the elusive $100 million per month mark.
  2. Permanent Capital – They also offer competitively-priced 7-10 year loans, which are funded in-house and then syndicated to banks and credit unions.

The Money360 Difference

The team at Money360 is immensely experienced, and that is proving to be a difference maker in the highly competitive commercial loan market. The CTO has over 20 years experience in mortgage technology and, with his expertise, the company has developed technology that allows them to accelerate the underwriting and closing process as well as streamline the entire back-end process. This allows investors and whole loan buyers to track details of every single deal in a detailed manner.

Another difference is the reputation of management. Unlike other players in the industry, the company and its founders have a proven track record of scaling up companies into multi-billion dollar entities. Because of that, it is easier for the company to attract investor interest as compared to competitors.

Compliance & Investors

Accredited retail investors own the real estate loans through a REIT structure, which gives them diversification across all loans in the fund. They use marginal leverage and are able to provide returns of 8%-10%. Money360 have been able to attract influential institutional investors and have one of the largest banks in South Korea as an investor in the fund.

The company expects to become the market leader in the commercial loan segment in terms of origination by the end of the year. After successfully carving its niche in the market, the company is now looking for strategic partnerships to extend its dominance.

Competitors

Considering commercial real estate is a multi-trillion dollar market, fintech startups represent a very small fraction. Most of its competitors deal in crowdfunding whereas Money360 specializes in being a direct lender. This difference is a major competitive advantage as it shortens the time period for processing and allows for more flexibility to the borrower. Also, competitors mainly focus on fix-and-flip real estate. Having already fixed and flipped 4,000 residential properties in G8, they know it is a cyclical market, which is why they are concentrating on stable and more permanent commercial loans.

Even Realty Mogul, one of the most famous online real estate crowdfunding marketplace, prefers equity over debt funding, or, in some cases, both types of funding are done. This is fine as long as project/asset is performing, but in the case of a non-performing asset/project, a conflict of interest arises between equity and debt holders.

Conclusion

Money360 is headquartered in Ladera Ranch, California and has a team of 30 people. The company has the benefit of a hugely experienced founding team coupled with a razor sharp focus on what it does best. The company’s focus limits its reach, but the niche it has chosen is a trillion dollar market, which it is clearly dominating.

Author:

Written by Heena Dhir.

Tuesday June 27 2017, Daily News Digest

shadow banking

News Comments Today’s main news: Venmo is testing a physical debit card. Zopa shares its banking plans. Ranger Direct Lending enters arbitration with Investee Princeton. Aegon Life explores digital channels for selling policies. Today’s main analysis: What’s driving the growth of shadow banking? Today’s thought-provoking articles: Prosper performance update for May 2017. The fastest consumer lenders to $1B in […]

shadow banking

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United States

United Kingdom

China

European Union

International

Australia

India

Canada

News Summary

United States

Venmo is testing its own physical debit card (recode), Rated: AAA

Venmo has been testing its own version of a physical debit card that would allow people who use its app to make purchases in brick-and-mortar stores using money stored in their Venmo account, according to multiple sources.

One potential advantage is that it would allow Venmo users to immediately spend money that is sent to them via the app without having to wait a business day for a deposit of those funds to appear in their bank account.

Prosper Performance Update: May 2017 (Prosper), Rated: AAA

Today we are sharing performance data for the Prosper portfolio for May 2017.  The weighted average coupon for assets originated through Prosper’s platform in May 2017 was 16.34%i, the highest for a monthly vintage since 2013.

Additional highlights from the May Update include:

  • Continued credit tightening can be seen via an increase in expected loss rate, coupon, Loss/FICO, and Coupon/FICO compared to prior months.
  • Prepayments for the 2017 origination months continue to trend above prior vintages.
  • 2015 and 2016H1 vintage delinquencies continue to trend below their prior peaks.

What’s driving the growth in ‘shadow banking’ (Chicago Booth Review), Rated: AAA

According to Chicago Booth’s Gregor Matvos, Booth PhD candidate Greg Buchak, Columbia’s Tomasz Piskorski, and Stanford’s Amit Seru, much of the growth is due to regulations that have pushed banks out of traditional lending businesses. The researchers also attribute some growth to online technology that has lowered the barrier to entry in markets where lenders once needed networks of physical branches to have any hope of building business.

The researchers focus on the US residential lending market, the largest consumer loan market in the country—and the market that drew the most attention from regulators after 2008. Between 2007 and 2015, shadow banks nearly tripled their market share, from 14 percent to 38 percent.

During the study period, lenders that originated loans online (fintech lenders) saw market share rise from 4 percent to 13 percent—but that remains less than half of the shadow-banking sector.

Source: Review.ChicagoBooth.edu

Fiserv partners with fintech startup to launch digital adviser (American Banker), Rated: A

The core banking software provider Fiserv and the fintech startup GoldBean have partnered to provide a digital adviser meant to provide that extra assistance.

GoldBean has an “investing for beginners” platform that was designed to promote financial literacy. By analyzing people’s spending, it creates customized portfolios featuring companies and brands with which end users are already familiar. GoldBean is a graduate of the INV Fintech Accelerator run by Fiserv and Bank Innovation.

Fiserv hopes that by integrating GoldBean education and advice into its Unified Wealth Platform, some of these investors will eventually interact with the human wealth managers who use Fiserv’s platform, for instance when they need to talk about a life change.

Amazon, Klarna, And The ‘Creative Destruction’ Of The Banking System (Seeking Alpha), Rated: A

As a consequence, Klarna has become “one of the most highly valued technology groups in Europe. A round of fundraising in 2015 valued it at $2.25 billion. And it is solidly profitable.”

The crucial thing here is that Mr. Siemiatkowski wants Klarna to stay focused. He believes that other innovative FinTech organizations will fill in the rest of the financial landscape. That is, banking will be done by numerous FinTech companies moving at the speed of technology innovation, not at the speed of ordinary banks.

First, there is so much to be gained from creating a network or a platform that is more inclusive than separate “specialists” joining together to create “full bank offering.”

Second, there is the issue of regulation. Banks are heavily regulated.

What Mr. Bezos of Amazon.com and Mr. Siemiatkowski of Klarna seem to be doing is reinventing banking on the basis of a payments platform that can serve many purposes. The “creative destruction” of the banking system as we know it appears to be just beginning.

The Fastest Consumer Lenders to $ 1 Billion in Originations (Lend Academy), Rated: A

Anyway, I did a little digging and through publicly available information I was mostly able to figure out how quickly many of the major platforms reached their first billion in total loans issued.

1. Marcus – 8 months

2. SoFi – 14 months – Based on data from Kroll Bond Rating Agency, we know that by August 1, 2016 (when the SCLP 2016-2 securitization closed) SoFi had issued at least $1.3 billion in loans based on the loan pool balance of their first three personal loan securitizations. Based on that data I estimate they crossed the $1 billion mark around April of 2016, 14 months after they launched the product.

3. Marlette – 17 months

4. Avant – 28 months – Avant launched in January of 2013 and when they crossed $1 billion in May 2015 they were the fastest platform to that milestone at the time.

5. Lending Club – 65 months – Lending Club was the first platform to cross a billion dollars back in November 2012.

6. Prosper – 98 months – Prosper was the first marketplace lender to launch in this country all the way back in February 2006. For many years it was just Lending Club and Prosper in the online consumer lending space and for much of that time Prosper was the market leader. Prosper crossed $1 billion in April 2014. They took over seven years to do their first $500 million and just 11 months for them to go from $500 million to $1 billion in total loans issued.

ezVerify and LendingPoint Launch ezCarePoint for Medical Payments (BusinessWire), Rated: A

Today at the HFMA ANI 2017 conference, ezVerify and LendingPoint announced an exclusive partnership that will make it easier and more affordable for consumers to pay their medical bills. Working together, the two companies will provide a new service called ezCarePoint, which will allow patients to accurately predict their out-of-pocket expenses and apply for flexible payment plans and loans to cover the costs of medical procedures.

According to a report by The Commonwealth Fund, more than 30 million people do not get necessary medical attention out of fear that doing so would be financially burdensome. Many Americans do not have a clear understanding of their insurance coverage and out-of-pocket obligations — as a result, consumers face medical costs they weren’t expecting, and practitioners lose money on unpaid bills.

By integrating the ezVerify and LendingPoint technologies, ezCarePoint will help patients verify their insurance coverage and payment responsibility for health care services before the procedure takes place, preventing incidents where patients unexpectedly find themselves responsible for bills outside of their insurance coverage. If the patient can’t pay the out-of-pocket costs up front, they will have the option to apply for a loan and payment plan quickly and easily from the ezCarePoint platform. Patients will be notified of approvals in a matter of seconds, and upon approval, LendingPoint will pay the loan proceeds to medical practitioners within one business day to pay the patients’ out-of-pocket medical costs up front.

Euler Hermes Digital Agency Announces CRiskCo Partnership (PR Newswire), Rated: A

Euler Hermes, the world’s leading trade credit insurer, today announced an innovative partnership with fintech credit risk analysis company, CRiskCo. With a focus on revolutionizing factoring, trade and supply chain finance, CRiskCo uses state-of-the art artificial intelligence (AI) credit analysis and fraud detection processes.

Christophe Spoerry, Euler Hermes Digital Agency (EHDA) co-founder, said, ” EHDA and CRiskCo are working together to evolve trade credit insurance and risk management, particularly at the transaction and single invoice cover levels. This has the potential to offer small-medium enterprises (SMEs) significantly more protection when doing business, by providing innovative, simple and affordable customer analyses.”

EHDA recently launched its first breakthrough product – Single Invoice Cover – which protects companies from non-payment by business customers. Cover is provided transaction by transaction while optimizing end-to-end supply chains and extending optimal credit terms to buyers. Based on a proprietary application program interface (API), it creates a seamless process for businesses, while facilitating a comprehensive and granular management of credit exposure.

RIAs Should Embrace Alternative Investments or Risk Client Attrition (WealthManagement.com), Rated: A

Before the emergence of crowdfunding-style investment platforms, it was hard for investors to reap the benefits of investing in a diversified portfolio of rental real estate. They can now, and you can show them how.

Wealth management is a “share of wallet” game. If you diversify your solutions, clients will end up with more diversified risk—and that’s the point.

Lending Club’s first securitization is a big deal (American Banker), Rated: A

Lending Club’s first securitization of its own consumer installment loans is an important step in rebuilding its business following a scandal last year over its corporate controls.

The company has been seeking to broaden its funding sources after concerns about the integrity of its data caused many investors to pause or scaled back their purchases. Lending Club originally acted purely as a matchmaker, connecting borrowers with lenders over its platform. It did not hold on to the loans.

Money in Cleveland tech-startup community begins to circulate (Cleveland.com), Rated: A

Splash Financial is a perfect example of this long journey.

Splash Financial completed a $3.3 million financing round in January of 2017 from several local angels and will become the newest entrant in the booming digital lending marketplace that includes LendingClub, OnDeck, SoFi and Cabbage.

The company is now working with banks to help build an efficient lending platform where a strong capital source (i.e. – the banks) do not have immediate access to the doctor marketplace.

1 in 5 Small Business Owners Would Give up a Vacation Day Rather Than Their Smartphone (Small Biz Trends), Rated: A

According to a recent survey of small business owners on their mobile device use by peer-to-peer lending marketplace Funding Circle, one in five (20.4 percent) small business owners said they would rather give up a vacation day than their smartphones for a week.

Funding Circle also found more than half (56 percent) of small business owners surveyed find their smartphone gives them the flexibility to work wherever and whenever they want, so they can make time for other passions.

Nearly half (49 percent) said their smartphone keeps them in closer contact with loved ones while away from home — via tools like text messages throughout the day and video calls while traveling for work.

Forty-four percent said having their smartphone helps them relax during vacation time because it gives them peace of mind to know if there’s a problem with the business at home, they are accessible.

Follow the yellow Laurel Road (Transform Magazine), Rated: A

National online lender Laurel Road, previously known as Darien Rowayton Bank Lending Division, is a division of the Connecticut-chartered Darien Rowayton Bank, which launched over a decade ago in 2006. Wishing to define its bank lending division as the first source of income advice and financial security for the state’s many university students, DRB turned to the New York office of international design agency Brand Union to create an identity and help carve out its unique path.

Laurel Road’s new strapline, also developed by Brand Union, is ‘Rewarding determination’ and acts with double meaning, being reminiscent of both the student’s educational motives and the lender’s financial role. It also serves to encourage its customers to pursue their college journey to its conclusion,

loanDepot: “The Momentum is Just Starting” (Crowdfund Insider), Rated: B

One of the most promising is loanDepot, the creation of CEO Anthony Hsieh, has become one of the top mortgage lenders in the US. Additionally, loanDepot has migrated into the personal loan space too challenging online consumer lenders like LendingClub.

RealtyShares Sources Debt For Seattle Student Housing Deal (Bisnow), Rated: B

RealtyShares, an online marketplace for real estate investing, has sourced $11.9M for the acquisition and partial recapitalization of a 10-property portfolio of student housing in Seattle.

3 Alternative Ways To Hedge Against A Market Downturn (NASDAQ), Rated: B

When approached correctly, peer-to-peer lending can be among the safest ways to invest right now.

The key to making it safe is to diversify across many loans. Diversification eliminates the risk of default because any single loan you invest in can default without sinking the entire investment.

I consider peer-to-peer lending via a reputable platform the safest way to invest right now while still earning respectable returns on your money.

United Kingdom

Zopa boss Janardana details plans for customer-centric bank (AltFi), Rated: AAA

Zopa aims to launch its bank next year with a series of products based on simple, flat pricing – and a direct challenge to the industry’s traditional strategy of milking their large “back books” of existing long-term customers who rarely switch or shop around.

Jaidev Janardana, Zopa’s chief executive confirmed in an exclusive interview that credit cards and auto-finance would be among the first products, and would charge a single rate for all customers, instead of ultra-low teaser offers that flip to high rates after a fixed term, catching borrowers who do not switch.

He pointed out that Zopa already follows this approach in its P2P lending with all investors receiving the same rate, and returns changing for everyone simultaneously. The company expects to apply to the Prudential Regulation Authority for its banking licence later this year.

Ranger Direct Lending Enters Arbitration Against Investee Princeton (London South East), Rated: AAA

Ranger Direct Lending Fund PLC said Monday it has entered arbitration proceedings against the parent company of investee firm Princeton Alternative Income Fund Ltd, following a provision taken over a loan portfolio.

Ranger said Monday it is now seeking to enforce redemption and provision of financial information rights against Princeton via the arbitration proceedings.

Lendy highlights gap between property prices and key influences (Bridging & Commercial), Rated: A

Lendy stated that residential property prices have risen by 20% since the start of 2014, however, the LPP, the new property market index, has only increased by 17% during the same period with the gap between them continuing to grow.

Fintech credit firm Quint posts record revenues (Express), Rated: A

FAST-growing UK fintech group Quint is forecasting a £50 million plus turnover this year after seeing a record 64 per cent rise in growth and revenues rise to £32 million.

The main drivers are the launch of its consumer credit comparison site MoneyGuru.com as well as strong growth in its lending platform Monevo and Monevo data services business.

Racefields to buy and sell debt from bridging lending market (Bridging & Commercial), Rated: A

Racefields is seeking to connect with bridging lenders who are interested in refinancing parts of their loan book after opening a trading room to buy and sell debt from the bridging market.

Blockchain raises $ 40 million from Lakestar and Google’s venture arm (Business Insider), Rated: A

Bitcoin and blockchain technology company Blockchain has raised $40 million (£31.5 million) in its second round of institutional funding.

European venture capital fund Lakestar and GV, Google’s venture capital arm, both led the round. Nokota Management and Digital Currency Group also took part in the investment, as did Blockchain’s existing investors Lightspeed Venture Partners, Mosaic Venture Partners, Prudence Holdings, Virgin, and Sir Richard Branson.

The Series B funding takes the total raised by Blockchain to $70 million (£55.2 million).

Why Sipps aren’t yet embracing P2P (MoneyWeek), Rated: A

Since April 2016, investors have been able to shield gains from peer-to-peer (P2P) lending from the taxman in the innovative finance Isas (IF Isas). And while it has taken a while for most P2P platforms to win the necessary approvals from HM Revenue & Customs and the Financial Conduct Authority (FCA) to offer IF Isas, these products are finally beginning to take off, with several launched since the start of the new tax year. However, the same can’t be said for P2P investments through self-invested personal pensions (Sipps).

Referral schemes: earn over £1,000 through family and friends (BT), 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. However, at the time of writing Zopa isn’t accepting any more investors due to high demand.

Elsewhere, Alliance Trust Savings will give existing customers a £50 Marks and Spencer voucher when they get a friend or family member to open an Investment Dealing Account, ISA or Select SIPP. Your friend will get £25 worth of vouchers, too.

Mutual Scottish Friendly is offering two £25 MyRewards card to their customers – that’s one for the customer and one for the person they recommend.

China

Internet majors, banks edge closer to fintech success (China Daily), Rated: AAA

China’s internet giants that forayed into online finance are now joining hands with banks, their perceived competitors, to succeed together in the booming financial technology or fintech sector.

The latest such partnership is between Tencent Holdings Ltd and Huaxia Bank Co Ltd, which was announced on Thursday.

Tencent’s peers, Baidu Inc and Alibaba Group Holding Ltd, which together comprise China’s “Tech Trinity”, are jostling for supremacy in the internet finance segment. The two already have partnerships or collaborations with the nation’s top lenders.

JD.com Inc, another e-commerce major, has also joined the fintech partnerships fray. It is working with ICBC, China’s largest bank by assets, on fintech, retail banking, loans for small and medium-sized enterprises, and consumer finance.

European Union

Ingenico ePayments Partners with French FinTech Company SlimPay on SEPA Direct Debit (EuroInvestor), Rated: A

Ingenico ePayments, the online and mobile commerce division of Ingenico Group, today announced that it has teamed up with French recurring payments specialist Slimpay to support a SEPA Direct Debit (SDD) solution the company is developing for online merchants to simply and securely create and manage the e-mandates required to process SDD payments. With the partnership, SlimPay joins a rapidly expanding ecosystem of exciting and innovative FinTech companies that work closely with Ingenico to jointly develop new solutions for online merchants.

International

Aegon Life insurance company explores e-commerce channels to sell policies (Financial Express), Rated: AAA

Private sector life insurer Aegon Life Insurance Company is exploring options to sell policies via fintech and e-commerce platforms. The company’s Chief Digital Officer Martijn de Jong said digital channel is to become the primary channel for the insurers to expand customer base.

The company’s first premium income grew by 30 per cent to Rs 10.40 crore during April-May period of the current fiscal, according to data available with Irdai. Aegon Life Insurance is a joint venture between global insurer Aegon and Bennett Coleman & Company (India).

Australia

Digital advice will bypass member apathy, embarrassment (Investment Magazine), Rated: A

Despite the tremendously importance of retirement planning to the long-term financial security of the working population, the majority of Australians tend to neglect their superannuation funds throughout most of their working lives.

For example, more than 50 per cent of Australians now retire on a date not of their choosing. In addition, research from global banking and financial services firm HSBC showed that a staggering 41 per cent of Australian pre-retirees do not receive any retirement advice.

Digital advice allows users to bypass any potential sensitivities they may feel when consulting a human adviser. Those who have limited knowledge about the basics of their own savings goals or liabilities may feel too embarrassed to talk to a professional and therefore switch off from engagement.

India

Fintech Startup Stashfin Raises $ 5 Mn Funding From Snow Leopard Ventures, Others (Inc42), Rated: A

Delhi-based fintech startup Stashfin has raised $5 Mn Pre-Series A funding from Snow Leopard Ventures and Singapore-based Alto Partners. Snow Leopard Ventures is the VC arm of the Kirloskar Group.

Stashfin is the parent company of digital lending platform, StashEasy. It was founded in February 2016 by Tushar Aggarwal.

Middle East

Machine learning is transforming lending (Khalee Times), Rated: AAA

In June 2015, the World Economic Forum published The Future of Financial Services – How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed. The paper defined a taxonomy for disruption in financial services. It identified six broad areas and within them, 11 clusters of disruptive innovation.

The six areas are Payments, Market Provisioning, Investment Management, Insurance, Deposits & Lending and Capital Raising. Of the 11 clusters in the report, the combination of Alternative Lending and Shifting Customer Preference clusters are most relevant to today’s article. Within this combination, the Banking-as-Platform movement is playing a remarkable intermediary role in matching lenders and borrowers via a seamless, transparent, user-friendly standard API based model which leverages advances in processing power, artificial intelligence, user interfaces and design-thinking.

Traditional lenders, i.e. banks, usually find it difficult to match the agility and granular understanding that P2P Lending players have. Banks’ credit evaluation and origination platforms are often industrial-age processes with a large quantum of human intervention.

Canada

Billionaire Buffett throws lifeline to cash-starved Home Capital (Daily Mail), Rated: AAA

Berkshire Hathaway Inc’s commitment of a C$2 billion (US$1.51 billion) credit facility to Home Capital Group Inc, Canada’s largest nonbank lender, marks the billionaire’s latest effort to shore up a company in dire need of cash.

Home Capital shares soared as much as 18 percent, but was still more than two-thirds below the 2014 peak.

Berkshire also agreed through its Columbia Insurance unit to buy up to C$400 million (US$302 million) of Home Capital shares for a 38.4 percent stake, pending shareholder and regulatory approvals.

Home Capital has suffered a deposit exodus resembling a bank run since mid-April, when the Ontario Securities Commission accused it of deceiving investors.

Authors:

George Popescu
Allen Taylor