Friday July 7 2017, Daily News Digest

mobile banking

News Comments Today’s main news: Orchard Platform, Experian partner on big data. Marlette closes $369 ABS transaction. OCC seeks to make banks fintech enforcers. MarketInvoice Q2 results. Dashu Finance raises $117M. BNI Europa enters Portuguese market with Puzzle. TWINO expands into central Asia. Today’s main analysis: The state of consumers and technology (a must-read report). International P2P volumes. Today’s thought-provoking articles: High-tech, low-effort loans […]

mobile banking

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

Orchard Platform, Experian collaborate on big data challenges (Cision), Rated: AAA

Experian® and Orchard Platform, the provider of data, technology and software to the online lending industry, have joined together to announce a strategic collaboration that will give institutional investors access to Experian’s depersonalized consumer credit data. Orchard’s institutional clients can use depersonalized credit data for ongoing monitoring of borrower creditworthiness for loans in existing portfolios. Experian also will provide access to anonymized historical data sets for enhanced credit modeling, analytics and reporting.

Delivering greater transparency, high-quality data and analytical tools to the market is central to the mission of both companies. Orchard’s institutional clients should benefit from the use of Experian data to not only make more informed investment decisions through refined credit modeling but also through the ability to manage risks more effectively with more current loan data. Experian has been harnessing the power of data for many years to help consumers, financial institutions and governmental organizations make more informed and effective decisions. Raw data without the right level of interpretation is nothing more than untapped potential.

Marlette Funding Closes $ 369 Million Securitization Transaction (BusinessWire), Rated: AAA

Marlette Funding, LLC, a leading provider of online consumer lending platforms and services, announced it has closed its third securitization from its proprietary “MFT” shelf. Approximately $369 million of Best Egg unsecured personal loan collateral was financed via three classes of Notes and one class of Certificates with certain loan sellers retaining risk on a portion of the Certificates.

The transaction was significantly oversubscribed and successfully priced well inside the two previous Marlette sponsored offerings. In this transaction ratings for each of the offered Notes attained one higher category to AA (sf), A (sf) and BBB (sf), respectively, by Kroll Bond Rating Agency (KBRA). Underwriting the transaction were Goldman Sachs, who served as the structuring agent, Deutsche Bank and Citi.

This transaction, in similar vein to MFT 2017-1, involved the sale of loans by Marlette and four other whole loan buyers who accessed the securitization markets via the MFT shelf.

The State Of Consumers And Technology: Benchmark 2017, US (Bank Innovation), Rated: AAA

The US market is fueled by empowered customers, who experiment with and rely on technology. In 2017, for example, 14% of US online adults use a fitness tracker, 8% use a smart speaker with a personal assistant, and 7% use Apple Pay.1 Forrester’s Empowered Customer Segmentation shows that about a quarter of US online adults are Progressive Pioneers, the most empowered consumers who lead the demand for product and experience innovation. Smartphone and tablet usage is now common among mainstream US consumers: Three-quarters use a smartphone, and half use a tablet.

Get the full report here.

The high-tech, low-effort loans winning over online shoppers (American Banker), Rated: AAA

In a study of more than 2,000 consumers conducted by Researchscape and sponsored by Klarna North America, 47% said that when shopping online, they would like to be presented with the option of instant financing.

The customer types in very little information — in some cases, nothing more than a name and email address. No effort is required.

Behind the scenes, Klarna’s underwriting software takes in data from more than 100 sources and uses artificial intelligence to make a credit decision in less than a tenth of a second.

Jim Lofgren, Klarna’s CEO for North America, theorizes that instant loans have become popular as a reaction against widely publicized card fraud and data breaches. Essentially, people are drawn to not having to surrender a bunch of information.

“The phone is only this big and you don’t like the inconvenience of having to pull up the card and keypunch all those numbers in and verify everything every time you want to make a purchase,” Lofgren said. “Instant financing lends itself well to the smartphone environment.”

Aaron Allred, CEO of Acima Credit, a provider of instant leases at the point of sale, gives a lot of credit for the growing U.S. market in the U.S. to Affirm, a startup based here.

Lofgren calls Klarna’s credit issuing platform the “secret sauce of what we do.”

It takes into account more than 180 creditworthiness variables.

Goldman Sachs is working on an iPhone app for the masses  (Business Insider), Rated: A

Goldman Sachs, which has been expanding its offerings to retail consumers in recent years, is building an iOS app for its growing crop of digital retail banking services, according to a job listing on the company website.

Here’s the job posting (emphasis added):

We are looking for an expert iOS developer to work on a greenfield enterprise-grade project delivered on iOS platforms.  Our goal in engineering is to facilitate the creative, iterative, and data driven creation of our all digital retail bank. As a Mobile Developer you will be working closely with our marketing team and UX designers to build mobile user experiences which will be A/B tested for effectiveness and impact to our clients. The code you write will reach millions and help redefine the firm.”

BETTERMENT CEO: We ‘could become the Amazon of financial services’ (Business Insider), Rated: A

Betterment, the largest independent roboadviser in the world, with $9 billion under management and 270,000 customers, thinks it might be able to do the same in finance.

Chaparro: Incumbents have had their own robo offerings for years, and they have their big brand and infrastructure to back them up. What makes you so certain Betterment can survive up against such competition?

Stein: For the same reason why we often see those few innovators break out.

You could also ask “Why did Amazon break out and become the dominant online retailer?” — some would say dominant retailer period. And why wasn’t it Barnes and Nobles, Target, or Walmart, or anybody else? It is because Amazon has a specific focus. They didn’t have conflicts with a set of existing infrastructure and systems and people who were built around doing things the old way.

In Lending, Next-Day Payout Doesn’t Cut It (PYMNTS), Rated: A

“So, many of these lenders have been wrestling with this problem for a long time,” said Edwards. “The number one complaint they get after a loan is approved is, ‘Why do I have to wait on my money?’”

That speed factor is why some online lenders may lose market share to competition. If a borrower’s car breaks down and he needs the vehicle to get to work, an online loan that takes a week for funds to transfer to his account won’t be much help. Instead, Edwards said, those borrowers are going to go to someone who can provide cash immediately.

The emergence of push payments and instant funding perfectly addresses this need for lenders. Push payments use the same mechanism as pull payments — only in reverse, moving funds from a business to a consumer. They deploy existing rails to do this, instantly transferring funds to credit and debit cards or a PayPal account.

For Ingo Money, API technology has been critical to making it easy for lenders and other companies to deploy push payment capabilities.

What Fintech Entrepreneurs Can Learn From Big Tech Companies (Entrepreneur), Rated: A

You may have heard of a number of successful “big tech” execs leaving behind great jobs at companies like Apple and Google to develop a new passion project in fintech. The trajectory from big tech to fintech is becoming increasingly common. What makes for a successful transition and what can big tech folks take with them in their new ventures?

Mission matters.

This is a lesson I learned repeatedly at Google. What you are trying to do as a company, and often as a team within a company, matters. It’s not simply having a mission, but having a mission that galvanizes others to action.

Leverage the “tech method.”

A huge lesson I learned from my career is the benefit of building a platform that empowers an ecosystem. Think about Android, AirBnB or Amazon. If your business model is designed to benefit other participants in the ecosystem, rather than competing with them, it can have far-reaching impacts that turn an industry in your favor. If you can create a system that connects buyers, sellers, service-providers, etc., you have the ability to change how that industry functions.

Use your network.

Leverage your network in a way that also allows them to participate in your cause. The successful big tech to fintech pioneers do not view the companies they have left as something in the past, but rather an ongoing support group.

Get creative.

We do lots of things, but one amusing yet somehow successful example is taking pictures of people wearing our PeerStreet hats.

Finra Fines Have Skyrocketed for Offenders (Financial Advisor IQ), Rated: A

The industry’s self-regulator imposed 624 monetary sanctions in 2016 – a 10% drop from the 691 it doled out the year prior, according to the report. But revenues from fines grew to $173.8 million in 2016 from $80 million in 2015, according to the regulator.

Finra also ordered firms to pay back $27.9 million in restitution to investors last year, according to the report. The fines helped the regulator post net income of $57.7 million in 2016, compared to a net loss of $39.5 million the year prior, Finra says.

In addition to a boost from fines, the regulator’s portfolio returns grew $70.9 million year-on-year, according to the report.

Two major lending changes mean it’s suddenly easier to get a mortgage (CNBC), Rated: A

First, the nation’s three major credit rating agencies, EquifaxTransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete. Specifically, the data must include the person’s name, address, and either date of birth or Social Security number.

Of about 220 million Americans with a credit profile, approximately 7 percent have liens or civil judgments against them. With these hits to their credit removed, their scores could go up by as much as 20 points, according to a study by credit rating firm Fair Isaac Corp. (FICO).

In addition to the FICO changes, mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan. The two are raising their debt-to-income ratio limit to 50 percent of pretax income from 45 percent.

Creating a Bridge Between Fintech and FinServ (qlik), Rated: A

With this in mind, I recently set out to create examples of utilizing the Qlik platform in the Fintech space.

Ripple distributed financial ledger:

Working with our Qlik partner (Pomerol Partners) we utilized the Restful API’s provided by Ripple to access all 8.7 million payments transacted on the Ripple platform.

Lending Club peer-to-peer lending and alternative investing:

Whether it is Fintech, Insurtech, Regtech or any other new & exciting technology, there is one certainty…the data from these systems will need to be combined with other information to get a complete picture of the customer relationship, profitability and risk profile of the business.

OCC SEEKS TO MAKE BANKS FINTECH ENFORCERS (Yodlee), Rated: A

But, even amidst serious uncertainty with regard to the future of a federal charter for certain fintech firms, the OCC continues to demonstrate that it has every intention of continuing to expand its jurisdiction over the fintech market. Earlier this week, the agency released supplementary guidance to its risk management bulletin on third-party relationships for federally regulated banks. The new guidance very broadly defines third-party relationships as “any business arrangement between the bank and another entity, by contract or otherwise.” The guidance further notes that “If a fintech company performs services or delivers products on behalf of a bank or banks, the relationship meets the definition of a third-party relationship,” and the OCC would require that the bank include that fintech firm as part of its OCC-supervised third-party risk management process.

Bank web lending can be faster and cheaper (Banking Exchange), Rated: A

The company, with four subsidiary banks in New York and Pennsylvania, continues to do a traditional community banking business. Yet, just as every local retailer is potentially competing with Amazon and Walmart.com, Tompkins and other commercial lenders face competition from the likes of Kabbage and other business-oriented online lenders that promise fast online service with minimal hassle.

A year and a half ago, the parent company began evaluating web-based services from outside vendors that could help its subsidiary banks deliver what customers desired. What they found was a service that could integrate with their existing systems and credit standards—as a pure technology play, not a substitute for the bank’s own lending.

In January the company began rolling out Lightning Loans, beginning with the Tompkins VIST affiliate.

Payday Lender Taps Wall Street For Cash As Regulations Bite (ValueWalk), Rated: A

As lenders grow, they’re turning to the ABS market for funding as a natural step of diversifying. Securitisation trades began in 2014 and are slowly gaining traction around the world. Last year, P2P Global Investments Plc and Zopa Ltd. produced Europe’s first securitization of unsecured consumer loans originated online. The $179 million transaction was backed by 27,137 lines from individuals. This deal followed Funding Circle’s first securitization of peer-to-peer loans, comprising small-business debt — another first for Europe.

And as the pace of securitization picks up for peer-to-peer, other short-term non-traditional lenders are looking to get into the market. According to the June 30 issue of the Asset-Backed Alert, payday lender DFC Global is eyeing securitization as a funding source.

At least one other payday lender, Check ‘n Go, is known to be looking at the asset-backed bond market as a funding source.

Legislative Update 160 (Experian Email), Rated: A

Highlights:

  • The CFPB estimated in its May 2015 study “Data Point: Credit Invisibles” that more than 45 million American consumers are credit invisible, meaning they either have a thin credit file that cannot be scored or no credit history at all.
  • On June 8, the US House of Representatives passed the Financial CHOICE Act on a strictly partisan vote with Republicans supporting the bill and Democrats opposing it. In addition to making broad changes to the Dodd-Frank Act, the bill would substantially transform the CFPB into an enforcement agency by repealing the Bureau’s supervision authority, abolishing the UDAAP provision
    and prohibiting the public disclosure of complaint data.
  • On June 12, the US Treasury Department released a report on the Administration’s priorities for financial regulatory reform. The report was requested as part of the President’s February Executive Order on Dodd-Frank Reform.
  • Massachusetts H.B. 157 stipulates that no person or company engaged in trade or commerce shall have a right to obtain, possess, sell, lend, distribute, disseminate or use any person’s account number without his/her prior written permission. Account number is defined to include each person’s social security number, driver’s license number, license plate number, bank account number, credit card number, account number at a retail store which sells goods or services, account number at a business which sells goods or services on-line, telephone number and all other account numbers of all kinds and varieties.

See the full legislative update here.

Public Pensions Should Weigh Pros and Cons of Alternative Investments (Plan Sponsor), Rated: A

The allocation to alternative investments more than doubled from 9% to 24% during 2005 to 2015, according to data by the Public Plans Database (PPD), which accounts for more than 95% of pension assets. Between 2010 and 2016, traditional equity returned about 14% compared to private equity at 25% minus fees.

In 2005, for example, the maximum share held in alternatives by any plan was less than 30% and half of plans held less than 10%. As of 2015, however, the maximum allocation among plans was more than 50%, and only 9% of plans held less than 10% in alternatives.

New Teeth Dental Solutions Provides Exceptional Dental Implant Dentistry (Digital Journal), Rated: A

Another unique service that New Teeth Dental Solutions offers is their financing options. Dental service is considered a compulsory service to all people, and at a patient’s convenience, the clinic provides a choice between dental loans (CareCredit, Healthcare lending) and patient financing plans (Lending Club) that allow a low monthly payment with no down payment for at least three to seven weeks.

18 States Sue Betsy DeVos for Refusing to Enforce Student-Loan Protections (New York Magazine), Rated: B

Federal law already allows borrowers to apply for loan forgiveness if they attend a school that deployed fraudulent advertising or violated state consumer-protection laws. But the process for securing such forgiveness can be cumbersome. And some schools limit their students’ capacity to win settlements in fraud cases, by forcing them to pursue justice through arbitration instead of the court system.

These defects became conspicuous during the Obama administration’s final years, as hundreds of for-profit colleges collapsed amid accusations of widespread fraud. The demise of the mega-chain Corinthian Colleges, alone, led to more than 15,000 loan discharges, totaling $247 million.

Eighteen states and the District of Columbia reject that rationale. On Thursday, 19 Democratic attorneys general, led by Massachusetts’s Maura Healey, filed a lawsuit against the Trump administration in federal court, accusing DeVos of refusing to enforce duly enacted regulations in violation of the Administrative Procedures Act. They are hoping to convince a federal judge to order the administration to implement the new rules.

Elevate to Release Second Quarter 2017 Earnings on Monday, July 31, 2017 (BusinessWire), Rated: B

Elevate Credit, Inc. today announced that it will release its second quarter 2017 financial results after the market closes on Monday, July 31, 2017.

United Kingdom

Peer-to-Peer Lender Flender Celebrates First Wave of Successfully Funded SME Loans (Crowdfund Insider), Rated: AAA

The recently launched peer-to-peer lending platform, Flender, announced on Thursday it is celebrating the successful funding of its first batch of SME loans. According to the online lender, companies that received their requested funding include one of Europe’s fastest growing lingerie retailers, a café, and coffee roasting chain, a further education provider and developers of non-toxic disinfectant technology.

MarketInvoice sees record-breaking Q2 (AltFi), Rated: AAA

The growth builds on its previous record set in Q1 2017, with the firm funded invoices worth £161.9m in Q2 2017 providing UK business with critical working capital.

June 2017 was the company’s busiest ever month funding invoices worth £64.2m. The value of invoices funded is up 57.2 per cent from £103m (Q2 2016) to £161.9m (Q2 2017), and the current cumulative value of invoices funded stands at £1.34bn.

VPC Speciality Lending fund sees income growth but NAV hit (AltFi), Rated: A

The £350m VPC Speciality Lending fund saw a fall in its net asset value [NAV] of 0.68 per cent in May after a 0.62 per cent income return but a -1.3 per cent capital loss. It’s income return was the fifth consecutive payout increase.

Bridging ‘dabblers’ expected to exit the market (Mortgage Solutions), Rated: A

Earlier this week, asset finance lender Borro announced it was leaving the bridging sector with new chief executive officer John Allbrook citing overcrowding in the market as the reason for the decision.

“However, if you are well funded and provide a first-class service there is plenty of business. I suspect the cost of funding was prohibitive for Borro which was only a small player. Potentially others will exit this market, such as the ‘dabblers’ who may excel elsewhere but have been drawn into the property market seeing the potential returns while not realising what is involved and how competitive it is.”

Some of the UK’s hottest fintech firms went down, including Monzo and Revolut (Business Insider), Rated: A

A number of UK fintech startups encountered technical issues on Thursday, warning customers that their payments may not go through.

App-only banks and firms including Monzo, Revolut, Loot, Starling Bank, and Curve all ran into problems due to a supplier that provides some of their underlying technology.

How fintech can beat the banks and offer you competitive savings rates (Startups.co.uk), Rated: B

Rather than the modest 0.1% or 0.5% offered by most banks, the alternative saving and investment sectors have seen significant growth, offering rates of up to 15% per annum.

Peer-to-peer loans

This is currently one of the most popular ways to obtain a higher interest rate, with the peer-to-peer (P2P) lending industry estimated to reach £7bn in 2017.

Equity crowdfunding

This allows you to pitch to purchase a stake in a small business or start-up. Usually through a platform like Crowdcube, the business states how much of a stake they are willing to give up based on their valuation e.g. 7% or 15%.

Product Savings Rate Per £1,000 per annum Source
Peer to peer loans 3.3% to 9.9% £1,033 Zopa
Innovative Finance 8% £1,080 Innovative Finance ISA
Property investing 3.5% £1,035 Landbay
Business loans 10% to 15% £1,150 Rebuilding Society
Guarantor loans 10% £1,100 Guarantor My Loan
Equity Crowdfunding 1% to 20% Depends Crowdcube
China

PAG, Primavera Lead $ 117M Round In Online Unsecured Loan Lender Dashu Finance (China Money Network), Rated: AAA

Asian alternative investment management firm PAG and China-focused private equity firm Primavera Capital Group have led a RMB800 million (US$117 million) series C round in Dashu Finance, a Shenzhen-based online lender of unsecured loans to small and micro enterprises that traditionally could not secure funding from banks.

Dashu specializes in credit analysis based on big data, a method traditionally applied only to credit card loans and micro loans. It has issued over RMB200 billion in accumulated unsecured loans to individuals over the past several years, it said in an announcement.

In addition, Dashu offers its credit analysis tools to traditional financial institutions such as banks. To date, it has helped commercial banks issue micro loans worth roughly RMB10 billion. The cumulative non-performing loan ratio of these loans is around 2.3%, it says.

P2P firm Jusheng gets new funding (Shanghai Daily), Rated: A

ONLINE finance firm Jusheng Assets announced yesterday in Shanghai to finish a new round of finance, which made its registered capital hit 300 million yuan (US$43.5 million) and triple the previous level.

The new investor Zhejiang Fengzhou has core business in tourism, hotel and construction materials, which will help the platform find projects related to consumption upgrade as the national strategy, said Yang Dengpeng, chairman of Jusheng.

European Union

Challenger Bank BNI Europa Announces “Puzzle”, an Online Lender to Streamline Consumer Credit (Crowdfund Insider), Rated: AAA

Announced today, “Puzzle“, as it has been named, is the first totally digital and real time credit application in the Portuguese market.

“Puzzle” offers credit of up to three thousand euros with different payment maturities and is intended to be a quick response to small credit needs.

Accel leads Series B round for PayFit (PE Hub), Rated: A

PayFit, which simplifies payroll management and core HR processes for SMBs, announces that it has closed a €14 million Series B investment led by global venture capital firm Accel, with participation from Xavier Niel and Otium Venture.

Founded just one year ago, the startup has grown to have more than 600 clients and a team of more than 40 employees. This round will enable PayFit to continue to expand its suite of digital HR processes, kickstart its international expansion, with an initial focus on Europe, and double its workforce by 2018.

PayFit’s ambition: become the go-to solution to manage core HR and payroll processes for SMBs in Europe
PayFit drastically simplifies payroll management, which can be complex, expensive and time consuming for businesses of all sizes, particularly SMBs in countries with complicated labor laws. PayFit’s Software-as-a-Service solution is fast, intelligent, intuitive and automated. It allows employers to easily manage payroll on their own, saving time and money, and comply with local labor laws without having to be a payroll expert.

Accelerating internationalization – first step: Europe
The startup is planning to launch internationally with an initial focus on Europe. Rollout will begin with Spain, Italy, Germany and the United Kingdom. Markets with labor laws that can be as complex as those in France are a particular focus, as PayFit can bring significant core HR and payroll improvements to local businesses. In each market, PayFit will launch a fully localised version of its solution, covering all relevant regulations.

International

Why Banks And Startups Should Collaborate On Fintech (Forbes), Rated: AAA

Volume migration to pure digital players remains in the low single digits in the US, multiple challenger banks in the UK are facing funding and regulatory issues before they are even out of the gate, and many of the more successful fintech insurgents have been bought by incumbent banks just as they matured into legitimate competitors. Disruption of the banking industry hasn’t turned out to be a dramatic big bang; instead, the erosion of bank profitability by low interest rates and increased regulatory costs has triggered an industry-level response in which banks are using technology to improve efficiency and the customer experience. Instead of going extinct, the dinosaurs have been evolving.

London-based TransferWise, which allows consumers to transfer money internationally at a fraction of the traditional cost, is actually disruptive because it lowers fees by smart trade matching between buyers and sellers.

But TransferWise is an exception. Most fintechs have struggled to create sustained competitive differentiation.

This doesn’t mean that banks can be complacent. The asteroid strike on the banking industry is still possible, but is far more likely to come from existing tech giants than small startups. Amazon is now lending a billion dollars a year to merchants on its platform, a drop in the ocean for the largest commercial banks, but a statement of intent. While it hasn’t happened yet, Accenture research suggests that the combined disruption from fintech startups and Google, Apple, Facebook and Amazon could cause full-service banks in developed markets to lose about 35% of their market share over the next five years.

International P2P Lending Volumes June 2017 (P2P-Banking), Rated: AAA

 

The unconquerable attraction of cash (ATM Marketplace), Rated: AAA

An online survey of consumers in France, Germany, Israel, the U.K. and the U.S. poll revealed that fintech does appear to be gaining traction, with Israel emerging as a leader in early-adoption, according to a press release.

Nevertheless, cash remains king in most of these countries. For instance, in Germany, 75 percent of adults still use paper currency and coins to make purchases at least once a week.

What is more, nearly 1 in 10 Israeli adults say they have used alternative financing or lending services within the last 12 months.

Source: ATM Marketplace

 

Source: ATM Marketplace
Source: ATM Marketplace
Australia

KKR bids $ 500 million for Australian mortgage lender Pepper (PE Hub), Rated: A

U.S. private equity giant KKR & Co LP moved to bolster its presence in Australia’s lucrative mortgage market on Wednesday, joining a rush of players hungry for a slice of a property boom even as the sector shows early signs of slowing.

KKR Credit Advisors LLC made a $500 million bid for non-bank lender Pepper Group Ltd at an indicative price of A$3.60 per share, a 4 percent discount to Tuesday’s close. Pepper shares sank 7.2 percent to A$3.48 on Wednesday.

India

How alternative lending startups are rewriting traditional lending habits in India (India Times), Rated: AAA

People like Desai form the key clientele for financial-technology startup MoneyTap, which has developed a lending product called Credit Line—essentially, it assigns Rs 25,000 to Rs 5 lakh to a borrower deemed eligible for a loan.

The startup has nearly 300,000 registered users in about six months of launch. Like MoneyTap, which recently raised about $9 million from Sequoia India and others, a dozen-odd startups have attracted a string of investors to back them in the past few months.

EarlySalary secured $4 million from IDG Ventures and Diwan Housing Finance, and PaySense recently raised $5.3 million from Jungle Ventures.

The lending models are diverse—to allow customers to buy online; to buy consumer durables from regular stores; providing salary advances; or helping cover unplanned requirements such as medical bills.

Yes Bank taps AI to directly offer small loans to students (India Times), Rated: A

Yes Bank has partnered with fintech startups like Redcarpetup, Anytime Loans and FRS Labs among few others to adopt innovative technology based solutions for various businesses, such as lending, anti-fraud detection and easier customer onboarding processes.

Redcarpetup will allow the bank to lend to students, which is something banks have never done before. The technology company has identified about 100 colleges in the National Capital Region and underwrites applicants on the basis of the college, the type of course, their education background and their social circle.

Anytime Loans is an automated P2P lending platform that uses artificial intelligence to read facial features and feed it into a predictive model that determines the borrower’s propensity to default. The company has disbursed Rs 68 crore over the last 30 months to 38,700 entities for personal loans, business loans and education loans. Its gross defaults are at a low 0.6 per cent.

Where is fintech headed? Seven start-ups chart their course (livemint), Rated: A

Atyati Technologies: Mobile delivery

Bengaluru-based Atyati Technologies Pvt. Ltd, is a technology platform provider for the rural banking sector in India.

The company’s long-term vision is to have more services and products—custom lending products, insurance, e-tailing, etc.—across more geographies and more points of service, besides achieving quality-of-service levels in remote areas that are on a par with those in the metros.

FinBox: Banking on apps

This fintech aims to increase the revenue of lenders by increasing the number of customers on their books by reducing the cost of acquiring and servicing the loan—which it essentially does by building software tools such as application programming interfaces (APIs) and software development kits (SDKs).

FlexiLoans: Data-driven

The goal of FlexiLoans, the fintech platform run by Mumbai-based FlexiLoans Technologies Pvt. Ltd, is to provide working capital financing to small- and medium-sized businesses in India that are currently underserved by traditional institutional channels due to lack of collateral or inadequate credit history.

FundExpert: Robo adviser

Gumption Labs Software Solutions Pvt. Ltd, which launched FundExpert’s automated investing platform in 2016, wants to make monitoring investments “super-easy, using algorithms”.

IndianMoney.com: Financial guidance

Today, IndianMoney.com boasts of being “India’s largest financial education company”, with over 200 employees, serving 80,000 financial intermediaries and 3 million consumers.

KrypC: Blockchain riders

This fintech provides blockchain technology solutions to various organizations to enable them “to utilize blockchain features such as privacy, security and trust”, among others.

Turtlemint: Insuring its future

Touted as India’s first online-offline insurance platform, Turtlemint is building a pan-India network of offline partners and, according to co-founder and CEO Dhirendra Mahyavanshi, has been “a pioneer” in the online insurance aggregation domain with offerings like ‘match score’, ‘policy recommender’, ‘renew in a snap’, etc.

Fintech is now an innovator and enabler, says KPMG India’s Neha Punater (livemint), Rated: A

“This industry is definitely a force to reckon with,” Punater added, pointing out that the global annual growth of the fintech sector at 55% is not led by volume expansion but by investment, which shows investor confidence in the space. “Compared to about 12,000 global start-ups, there are about 900 Indian fintech firms—and over 120 of them were started in 2016 alone. An investment of $2.25 billion has been infused into Indian fintechs from 2010 to 2016,” she added.

The Indian fintech market, according to her, typically mirrors global trends. “Payments-related companies have the highest market share at 25% in India and in the world. Payments, lending and wealth management are growing, while P2P (peer-to-peer) lending, blockchains and payment banks are still nascent. Many payments-related activities are still in the business-to-consumer space but we haven’t seen much happening on the business-to-business side,” she added.

According to Punater, wealth tech is the third-largest sector in the fintech space and is still relatively small.

Asia

 

TWINO expands into Central Asia with Kazakhstan loans (IBS Intelligence), Rated: AAA

TWINO, a European peer-to-peer lending platform, has announced that it has started to list short-term loans via its Kazakhstan originator.

Kazakhstan is the sixth country to appear on the peer-to-peer lender’s platform. It is also the first time a European peer-to-peer lender has expanded into Central Asia.

The Kazakh loans have a duration of one month and will offer investors a return rate of 11% per annum.

Convenience drives growth of South Korean P2P lenders (Asian Review), Rated: A

The Korea P2P Finance Association said that accumulated loans of its 56 members reached 1.2 trillion won in June, up 665.1% from a year ago when the total reached 152.6 billion won. Month-on-month, total loans rose 17.5%.

“It is very convenient. Borrowers can get short-term loans quickly while investors enjoy higher profitability,” said Kim Soo-hyun, an analyst at Shinhan Finance Investment. “They may threaten banks’ business in the long term, if they become equipped with more advanced technology infrastructure.”

Lenders focusing on real estate projects are leading the market, with the biggest lender, Tera Fintech, accounting for 147.5 billion won of total loans in June, followed by Roof Funding with accumulated loans of 114.3 billion won.

Deputy Finance Minister I of Malaysia: Disruption in Banking is The Normal (SAT PR News), Rated: B

In a room of over 200 senior level bankers, Deputy Finance Minister I, YB Dato’ Wira Othman Aziz made a call to Malaysian banks during his opening speech at the 9th BankTech Asia Conference & Exhibition, an event co-organized by Knowledge Group of Companies, to disrupt themselves before others do it for them.

Quoting recent studies from Gallup which states that more than half of Malaysian banking consumers are indifferent towards their primary banks, YB Dato’ Wira Othmanbrought attention to this point to illustrate the industry’s need for an overhaul to remain relevant.

Authors:

George Popescu
Allen Taylor

Thursday May 25 2017, Daily News Digest

P2P global investments

News Comments Today’s main news: Investors pressure OnDeck to make bigger expense cuts. LendingClub celebrates 10 years in business. Zopa launches ISA. Earnest is not for sale, after all. Orca to launch new P2P rating service. Moody’ downgrades China on debt risk. The first ETF for ABS. Today’s main analysis: Orchard Platform reports Q1 results. Today’s thought-provoking articles: 10 years of excellence […]

P2P global investments

News Comments

United States

United Kingdom

China

  • Moody’s downgrades China on debt risk. GP:”Unclear if this will have a real effect on the capital markets but it will certainly anger the Chinese government. If I were the Chinese government I would setup my own rating agency and build it into a real credible agency and not a government puppet so that the day when I need my own rating agency to maybe skew a little bit the ratings it will be credible enough.”
  • Chinese investors among majority of EB-5 visa recipients. AT: “It’s not surprising. One reason cited in this story is the harsh treatment offered to Christians by the Chinese government, so many of these families are using financial concerns as a cover up for religious oppression concerns. Both are legitimate.”

European Union

International

Australia

India

Asia

Middle East

News Summary

United States

OnDeck under pressure to make bigger cuts to cost base (Financial Times), Rated: AAA

Activist investors are turning up the heat on OnDeck, the online lender, which said this month it would curb originations and cut costs in an attempt to turn a profit by the end of the year.

The company still needed to think bigger, according to Mario Cibelli, managing partner at Marathon Partners Equity Management, who wrote to board members in April urging them to take an axe to the $194m annual cost base and explore a sale of the business. Net revenues, after loan-loss provisions and funding costs, came to $109m last year.

Pressure on OnDeck is likely to come from other quarters too. EJF Capital, an activist investor, has built a stake equivalent to about 9 per cent of the shares outstanding since the turn of the year, according to disclosures tallied by Bloomberg. In February the Arlington, Virginia-based group, which ranks as OnDeck’s second-largest shareholder with more than 9 per cent, said it may seek talks with management.

LendingClub Celebrates Ten Years of Online Lending (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC), the largest marketplace lender in the US, is celebrating its tenth anniversary. It is pretty hard to believe that LendingClub is now ten years old.

To paraphrase the LendingClub history:

  • Within the first 100 days of its existence, LendingClub originated its first $1 million in loan. The average interest rate, at that time, stood at 12.6%. By the end of 2007,  LendingClub had originated about 500 loans for a total of $3.5 million.
  • In 2010, LendingClub originated $10 million in a single month.
  • By 2012, LendingClub has originated $1 billion loans as institutional money becomes more interested in the Fintech platform. The following year, the first banks start investing on the LendingClub platform.
  • In 2014 Lending Club launched its IPO – the second largest for the year.
  • By 2017, LendingClub has originated more than $26 billion in loans as it enters the next decade of financial innovation.

10 Years of Excellence & Innovation (LendingClub), Rated: AAA

  • 2007 By August, the LendingClub website launches. By year’s end, approximately 500 loans worth over $3.5 million are made. 
  • 2008 The subprime mortgage crisis spreads; global markets sell off and the Great Recession takes hold. Despite the chaos and potential risk of halting its burgeoning business, LendingClub demonstrates its commitment to working with regulators, entering a six-month quiet period to register with the SEC and prepare to issue a security (the Note) that can be offered and sold to investors through its website.
  • 2009 LendingClub continues to stay focused on the opportunity to deliver investment alternatives to investors and introduces LendingClub IRAs to allow investors to use the platform to work toward their retirement goals.
  • 2010 Propelled by its SEC registered Notes and a robust investor base, LendingClub crosses $100 million in loans and 10,000 borrowers in the first quarter. By March, the company captures 79% of the U.S. marketplace lending market after facilitating $8,664,750 in monthly loan originations.
  • 2011 LendingClub continues to innovate on its borrower and investor offerings, surpassing $200 million in loans for borrowers at the beginning of the year. 
  • 2012 In 2012 alone, U.S. banks close 2,267 branches and approve a record-low 14.8% of small business loan requests. LendingClub is named to the World Economic Forum’s Technology Pioneers 2012 list and originations top $1 billion.
  • 2013 LendingClub welcomes its first bank investor partners to the platform – Titan Bank and Congressional Bank.
  • 2014 A big year for tech IPOs, LendingClub is one of the biggest of the year, coming in second to Alibaba and listed on the NYSE alongside others, including Virgin America and GoPro.
  • 2015 Big banks continue to cut back on loans to small businesses, making it difficult for them to get access to credit. LendingClub becomes a founding member of the Small Business Borrower’s Bill of Rights and expands small business products to include a small business line of credit. 
  • 2016 LendingClub launches its auto refinance product, delivering a lower-cost alternative to car owners. 
  • 2017 LendingClub looks toward a new decade of financial innovation, leveraging the power of its marketplace model to deliver more value to both borrowers and investors. An investor mobile application is launched, making it easier than ever for retail investors to track their progress.

Thank you for 10 years (LendingClub Email), Rated: AAA

From the LendingClub newsletter:

Over the past 10 years, you have helped power the loans facilitated by LendingClub’s platform for borrowers looking to finance their financial lives. Together, we have helped nearly 2 million borrowers access affordable credit. That means we’ve helped finance debt consolidation, home improvement projects, medical expenses and weddings for millions of people in the United States.

  • More than 160,000 retail investors have gotten unprecedented access to invest in consumer credit through LendingClub’s platform
  • Nearly 2 million borrowers have gotten access to affordable credit through LendingClub’s marketplace
  • 98% of investors who invest in 100+ Notes of relatively equal size have seen positive returns
  • 1,700 loans are reviewed per day, and more than 50,800 loans per month
  • Loans receive full commitment in 3-4 days on average
  • Auto refinance customers saved an average of $1,500
  • Borrowers pay 24% lower in interest than they were paying on their outstanding debt or credit cards
  • 73% of borrowers experience a FICO score increase three months after obtaining their loan–with an average score increase of 28 points!

Consumer Unsecured Q1 2017 (Orchard Platform), Rated: AAA

Key Insights

  • Origination volume increased in Q1, continuing the trend that began last quarter. Q1 origination volume was up 4.6% from Q4, though still down 44% from Q4 2015, when the market reached its highest originations. Early indications in 2017 are that investor sentiment is improving, and we believe we’re likely to see increased investment over the next quarter.
  • 2014 and 2015 vintage charge-offs have increased more steeply than in prior years. We believe there are two main sources driving this increase. First, individual platforms have shown increasing charge-offs during these years. We do not have strong evidence of the reasons for this deterioration, but in recent months, some of the larger platforms have reworked their credit models which they believe should address the increases they have seen. Second, and also important to note, is that 2014 and 2015 vintages experienced substantial growth in subprime originations, which tend to charge-off at higher rates. The increase in subprime loans as a percentage of the overall market skews the results for recent years upward when compared with the originations from previous years that had a smaller percentage of subprime loans.
  • Borrower rates rose slightly in Q1, increasing 24bps from Q4 levels. The long-term trend over the last three years has been decreasing interest rates, in part driven by the decline of subprime originations in the past year. This will be an interesting statistic to monitor in the coming year as the Fed continues to raise interest rates in line with their tightening policy.
Source: Orchard Platform Quarterly Industry Report
Source: Orchard Platform Quarterly Industry Report
Source: Orchard Platform Quarterly Industry Report

With an Asset-Backed Debt ETF, the Bet Is If You Can Pay What You Owe (Bloomberg), Rated: AAA

BlackRock Inc.’s planned iShares Consumer Asset-Backed Securities ETF will invest in notes supported by consumer loans, such as student debt and credit cards, according to a regulatory filing on Friday. If approved, it will be the first ETF to target the ABS market.

Consumer debt has ballooned in recent years as Americans ramp up borrowing and capitalize on historically low interest rates. Household debt topped $12.7 trillion in the first quarter, up 1.2 percent from the end of 2016. Signs of trouble are however brewing, with suspicions of fraud in some auto loan applications, a decline in credit-card recovery rates and an increase in late payments on private student loans.

The iShares MBS ETF has $10.6 billion under management while the iShares CMBS ETF oversees $240 million, data compiled by Bloomberg show.

Futuristic Fintech, With a Female Focus (WSJ), Rated: A

SCOTT SAUNDERS, CEO of the online lending company Payoff, did not set out to build a personalized financial coaching app for women. In 2014, he began assembling a team that eventually included a cognitive neuroscientist, a marketer, an advertising executive and the data scientist behind eHarmony’s match algorithm. The goal: to build an app that used psychological testing to match users of both genders with artificially intelligent financial coaches. By focusing on the intersection of money and psychology, Saunders hoped to minimize financial stress and maximize the pleasure users get from spending and saving.

Earnest Not for Sale. Securitization is Moving Forward (Crowdfund Insider), Rated: A

Last week, Crowdfund Insider referenced a report in Bloomberg that Earnest was looking for buyers as it struggled to raise new funds. A company representative has now stated that Earnest is not looking to sell the company.

Zibby Announces $ 13.5 Million Investment led by CURO Financial Technologies Corp. and MissionOG (LendIt), Rated: A

Zibby, the omnichannel lease‐to‐own payment option for online and in‐store shopping, today announced a $13.5 million investment led by CURO and MissionOG, with participation from Blumberg Capital, Tribeca Venture Partners and other institutional investors. This brings Zibby’stotal capital raised to more than $150 million. With the investment, Zibby will further expand its presence among retailers to offer non‐prime and near‐prime customers a monthly payment option for furniture, appliances, electronics and other consumer durables.

Baltimore fintech startup Blispay raises $ 12 million (Baltimore Sun), Rated: A

Blispay, a Baltimore-based financial technology company, has raised $12 million to accelerate the marketing and sales outreach for its financing platform.

The Series A round was led by FirstMark, Accomplice and NEA. New investors included Camden Partners and F-Prime Capital. The round brings the company’s total funding to just under $25 million.

Frost & Sullivan Commends AutoGravity for Transforming Automotive Financing Industry (Frost & Sullivan), Rated: A

Based on its recent analysis of the automotive financing industry, Frost & Sullivan recognizes AutoGravity with the 2017 North American Frost & Sullivan Entrepreneurial Company of the Year Award. AutoGravity’s first-of-its-kind FinTech platform empowers car buyers to browse any new or used car, get multiple binding financing offers in minutes and select the deal and lender that’s right for them. Just months after launching its native mobile app in the summer of 2016, AutoGravity introduced new car leasing and used car loan features with the aim of transforming the auto financing industry.

While simplifying the financing process for customers, AutoGravity’s app also saves dealers the effort of educating customers on various models and financing options. Additionally, it saves time by eliminating the need to apply for financing at the dealership and process pages of paperwork. Most significantly, it supports dealers by providing them with qualified, enthusiastic car buyers.

Currently, AutoGravity has 60+ employees, and has recorded 350,000 app downloads in just one year. It has expanded to 48 states in the United States and has on-boarded many of the nation’s top-20 automotive lenders, as well as 1,500+ dealers. Due to these successes and its ability to break new ground in the auto financing industry, Frost & Sullivan is pleased to present AutoGravity with the 2017 North American Entrepreneurial Company of the Year Award.

Fintech Tools That Can Change The World Of Finance (Forbes), Rated: A

According to an EY study last year, fintech is growing in popularity, with roughly 15.5% of digitally active consumers using financial tech products — a figure that was likely to double within 12 months. The United States had the second-highest adoption rate of fintech tools (16.5%), following Hong Kong with 29.1%.

  • 1. Artificial Intelligence – Fenergo deploys A.I. to analyze unstructured data, including social media, intracompany communication and linguistics in order to more effectively satisfy Know-Your-Customer and Anti-Money-Laundering requirements. – Jason LeeDailyPay
  • 2. Peer-To-Peer And Apple Pay 
  • 5. Riskalyze, RetireUp and Asset-Map – Riskalyze provides a user-friendly and client-facing software that allows us to tell the story of risk, which we believe is crucial for an investor to understand in order to have success. RetireUp, a user-friendly income planning tool, and Asset-Map offer very visual understandings to clients on where they stand when it comes to their finances. – Lance ScottBay Harbor Wealth Management
  • 7. PeerStreet And WorldRemit – Services like WorldRemit are empowering immigrants with better choice, security and transparency in sending money back home to their loved ones. – Binna KimVested
  • 8. Faster Payment Rails – Our old ACH network is improving. Instead of settling payments once per day, as it has for decades, it will start to settle multiple times per day. This will improve settlement success rates and prevent e-check kiting. Coming right behind this improvement are a number of real-time payment initiatives. – Charlie YouakimSezzle
  • 9. Decision Logic – I’m excited about Decision Logic because it provides lenders the ability to verify a borrower’s sensitive information and understand their borrower’s financial history. – Chad OtarExcel Capital Management, Inc.
  • 10. Peer-To-Peer Lending
  • 11. Robo-Advisers
  • 12. Greenlight – I just got my ten-year-old daughter a Greenlight card. It allows me to automate her allowance and potentially control the spaces where she spends money. – Matthew MayAcuity 

Fintech reinvents lottery bonds (Financial Times), Rated: A

Silicon Valley entrepreneurs have a knack for taking old things and making them look new. The latest example of which is Long Game, which TechCrunch tells us is “a bank account, with a twist”:

The personal finance app allows users to play games and win cash prizes up to $1 million. It may sound like a gimmick, but these are FDIC-insured accounts backed by Blue Ridge Bank in Virginia.

[…]

In addition to the possibilities of cash rewards, users accrue .1 percent interest. She hopes that participants will take saving seriously and view the games as a bonus.

While Long Game touts the $1 million prize possibility, so far the largest check they’ve written is $1,000. Like the actual lottery, it’s an odds-based game and the chances of the app making you a millionaire are 1 in 227 million.

Here is the GAO Report on Fintech that was Delivered to Congress (Crowdfund Insider), Rated: B

This one falls under recently discovered. The Government Accountability Office (GAO) published a report on Financial Technology, or Fintech, for Congress this past April.

The GAO explained;

“You asked us to provide information on the fintech industry, including the marketplace lending subsector, such as its structure and development over the last several years, as well as how federal regulators supervise fintech firms. This report, the first in a series of planned reports on fintech, describes four commonly referenced subsectors of fintech: marketplace lending; mobile payments; digital wealth management; and distributed ledger technology and their regulatory oversight.”

Ann Fulmer Joins FormFree as Chief Strategy and Industry Relations Officer (PR Newswire), Rated: A

FormFree today announced that it has hired mortgage loan quality subject matter expert and analyst Ann Fulmer as its chief strategy and industry relations officer. FormFree’s flagship product, AccountChek, is an asset verification app that streamlines the loan underwriting process for both borrowers and lenders, resulting in higher borrower satisfaction and shaving more than a week off the time it takes to close a loan.

In her role, Fulmer will drive FormFree’s strategic planning and implementation, manage the firm’s institutional relationships and interactions with federal and state regulators and oversee outreach to industry associations and advocacy groups. In addition, she will spearhead the firm’s long-term development of a comprehensive mortgage compliance solution.

New fiduciary rule for financial advisers expected to go into effect in June (Pittsburgh Post-Gazette), Rated: B

Secretary of Labor Alexander Acosta on Tuesday made it clear that the U.S. Department of Labor would not delay the implementation of the rule,  announcing the agency’s intentions in a Wall Street Journal opinion column.

Tuesday’s announcement that the rule is going forward may not be the end of the discussion.

How Small Businesses Can Benefit from Loyalty Programs (Kabbage), Rated: B

Almost all companies find that they have to spend less money to keep customers than they have to spend to attract new people through the door or to their shopping website. Some companies may access small business loans for their initial investment. They understand that they can benefit from this investment because it provides them with an efficient way to market. The extra profits will allow them to pay the loan back and keep more for themselves.

United Kingdom

Zopa announces ISA launch (Finextra), Rated: AAA

Zopa, the pioneering financial services company, announces today that it will launch its Innovative Finance ISAs in June (pending HMRC approval). With demand expected to be high, existing customers will be given priority access ahead of new customers.

In preparation for the Innovative Finance ISA, Zopa is also revamping its investor products by introducing Zopa Core and announcing the retirement of Zopa Access and Classic. Investors in Zopa Core will lend in the same risk markets as Access and Classic (A*-C) but will not be covered by the Safeguard fund. Zopa Core will offer a higher target return of 3.9% after fees and expected credit losses, as compared to 3.7% and 2.9% for Classic and Access.

The Innovative Finance ISA will be launched in four phases:
1. The first stage (from 15th June) will be focused on existing customers who want to open a new IFISA (limit of £20,000) and lend through Core and Plus.
2. The second stage (1st July 2017 to 31st July 2017) will enable existing customers to sell their current loans and re-purchase similar loans in an IFISA wrapper. This will allow investors to retain Safeguarded loans in the IFISA. Any investing through new lending, or relending as capital is returned, will be onto Plus or Core only.
3. The third stage (from August 2017, but dependent on meeting demand for new IFISAs) will allow existing customers to transfer existing ISA investments with other providers to Zopa.
4. And finally, once we have met demands of existing customers, we will welcome investments from new customers.

UK P2P Lending Market Researcher Orca Dives into P2P Provider Rating Services (Crowdfund Insider), Rated: AAA

Orca, an independent data, research and analysis providers on the UK P2P lending market has announced its plans to launch its own four-factor rating service for individual P2P providers, the Orca Rating. The rating will be designed in partnership with Dublin City University’s Irish Centre for Cloud Computing and Commerce research team, to respond to the growth of the asset class and the demand for more independent analysis and information on P2P lending.

The Orca rating will individually analyze four factors — performance, liquidity, operator health and security — aiming to go beyond existing single platform ratings and enable advisers and investors to assess all fundamental criteria at once when comparing and choosing P2P lending platforms.

According to Orca data, the P2P market has now surpassed £9B cumulative total lent with 2016 alone seeing a 40% increase in investment in the asset class.

P2P lender ArchOver granted full FCA authorisation (Finextra), Rated: A

ArchOver, the peer-to-peer (P2P) business lending platform, has secured full authorisation from the Financial Conduct Authority (FCA) to operate as a P2P lending platform (Article 36H).

Since launching in September 2014, ArchOver has facilitated over £35 million of investment over its platform, operating under interim permissions granted by the FCA. Full authorisation will support ArchOver in attracting new lenders to the platform and allow it to continue working with businesses to make access to funding as easy and simple as possible.

M&A hits Alternative Credit: MW Eaglewood to merge with Pollen Street Capital (AltFi), Rated: A

The respective managers of the £822m P2P Global Investments and the £200m HoneyComb investment trusts will merge, creating one of the largest specialist asset management  firms focused on non-bank lending.

MW Eaglewood and Pollen Street Capital, the respective two parties, are under discussion as to adjustments to their mandates but Lindsey McMurray, managing partner of Pollen Street, will become head of the new firm which will be called Pollen Street Capital.

P2P Global Investments is the largest closed-ended fund investing in non-bank lending in the UK, having launched three years ago. While, as its name suggests, it originally was a vehicle for exposure to the P2P and marketplace lending market it has moved more into niches within the alternative Credit spectrum in recent months.

Should more bridging lenders launch mobile apps? (Bridging&Commercial), Rated: A

Moving to an app-based approach is something that many players in the bridging industry would like to do sooner rather than later, according to LendInvest.

The comments follow the news that bridging lender Henley Finance will be releasing its first app on 1st June in order to make applying for finance easier.

Are FinTech brands a real alternative to traditional banking? (The River Group), Rated: A

Now, mobile banking has been a ‘thing’ for more than a decade and, according to research by ING, 55 per cent of us in the UK are managing our finances this way, with a further rise of 12 per cent expected this year.

Atom pitches itself as so customer-centric that you can personalise the app and actually choose the colours of the logo and how the name of your bank appears on your phone. Its tone is highly conversational, quirky without seeming unprofessional.

Atom pitches itself as so customer-centric that you can personalise the app and actually choose the colours of the logo and how the name of your bank appears on your phone. Its tone is highly conversational, quirky without seeming unprofessional.

Whereas traditional banks are still perceived as slow, Monzo demonstrates the speed of its technology.

Both businesses are inviting collaboration to help develop their services – Monzo through sharing its API so customers can build apps using their own data, and Atom through inviting members to join its community.

China

China Hit by First Moody’s Downgrade Since 1989 on Debt Risk (Bloomberg), Rated: AAA

Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth.

Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative.

Total outstanding credit climbed to about 260 percent of GDP by the end of 2016, up from 160 percent in 2008, according to Bloomberg Intelligence. At the same time, China’s external debt is low by international standards, at around 12 percent of gross domestic product, according to the International Monetary Fund, meaning that a downgrade isn’t likely to be as disruptive as it would be for nations more reliant on international funding.

While China’s debt risks have been swelling for years, the cut by Moody’s comes as some of those pressures ease. Nominal economic growth in the first quarter rose at the fastest pace since 2012 — 11.8 percent in current-price terms — making the problem of excess leverage a little more manageable, while the return of factory price inflation is beefing up profits for indebted state-owned industries, helping them service and repay loans.

Moody’s lowered China’s credit-rating outlook to negative from stable in March 2016, citing rising debt, falling currency reserves and uncertainty over authorities’ ability to carry out reforms. About a month later, S&P Global Ratings also warned that rising local debt was pressuring the nation’s rating.

S&P currently rates China’s foreign and local-currency long-term debt at AA- with a negative outlook, and Fitch places an A+ rating on both foreign and local currency long-term debt with a stable outlook.

Chinese Investors Among Majority Of EB-5 Visa Recipients (NPR), Rated: A

The EB-5 visa grants permanent U.S. residence to anyone investing a half million dollars in a U.S.-based development project. Eighty percent of EB-5 recipients are Chinese.

WANG: (Through interpreter) Actually, everyone I know has applied for EB-5s. We’re just ordinary people. We’re not wealthy.

WANG: (Through interpreter) I’m only doing this for my son’s education. He is in a good local school, but all they do is study for tests. The Chinese education system turns everyone into the same type of person.

European Union

Narrow Escape for German RECF, Green Crowdinvesting Now in Legislator’s Crosshairs (Crowdfund Insider), Rated: AAA

The Financial Committee therefore rejected the proposal to extend the prospectus exemption of crowdinvesting ‒which currently applies only to the suboptimal shareholder loans, to all securities, including equity shares. The committee also concluded against raising the threshold of fundraising requiring a prospectus from €2.5 million to €5 million, and in favor of keeping the crowdinvesting ceiling per project per retail investor at €1,000 (€10,000, if qualified investor).

On one issue, however, the German crowdfunding sector breathed a sigh of relief: the proposal made by credit institutions to exclude real estate crowdfunding from the KASG has been taken off the table.

The opponents to real estate crowdfunding had alleged that real estate should be excluded from the crowdfunding exemptions because real estate projects did not foster innovation, as projects in crowdfunding should, and because crowdfunding them could trigger to a real estate bubble. These arguments were successfully rebuffed.

Next to real estate, green Crowdinvesting is also a very successful branch of German crowdinvesting. Its most common form is the refinancing of existing renewable energy (photovoltaic, wind and bioenergy) plants through platforms such as fairzinsung, Greenvesting, GreenXmoney LeihDeinerUmweltGeld und Wiwin. The yield is guaranteed by feed-in tariffs. Other platforms, such as Bettervest, specialize in energy-efficiency projects. Several, such as ecoligo facilitate investments in renewable energy in developing countries. Many of the platforms are not only financial brokers between issuers and investors, they are also expert advisors, shareholders, or service operators for the issuers.

In the eyes of the legislator, human or capital ties between issuers and platforms pose a risk of conflict of interest and should be forbidden. According to the committee, a platform tied to an issuer would not be able to vet its projects with the necessary objectivity, hence would not properly defend the interests of the investors.

International

Ant Financial close to buying MoneyGram (New York Post), Rated: AAA

Chinese billionaire Jack Ma’s Ant Financial is moving closer to getting regulatory approval to buy MoneyGram, The Post has learned — despite concerns in Washington about money laundering.

“Ant and its advisers are working very constructively with [federal regulators]” to close the $1.2 billion MoneyGram acquisition, a source close to the situation said, referring to the Congressional Committee on Foreign Investment in the United States, or CFIUS, which must approve the transaction as it involves a major foreign investment in a company in a key business sector.

Shareholders of Dallas-based MoneyGram, a money-transfer company, approved the sale to Ant for $18 a share on May 16.

How to Make it as a Woman in FinTech: “Don’t Wait to Become a Leader” (Finovate), Rated: A

Adding to our stellar line up of leading women in FinTech, we speak to Alex Foster about how she has become Head of Insurance & Finance Sector & Post Trade Services at BT, and what she would suggest if you were just starting out as a woman in tech.

What was your light bulb moment?

My light bulb moment came about four to five years ago, when I began working with bankers, some who were friends, leaving their traditional roles on the trading floor to create new and exciting FinTech, RegTech, and InsurTech companies. As we know, these start-ups are a growing source of innovation in the financial markets industry.  But their small size can create challenges around market adoption, delivery and meeting the stringent contractual or compliance expectations of large financial institutions. We started to work with these companies to help them scale-up to obtain a global reach. I realised the monumental impact that these technologies and FinTech firms could achieve when the right partnerships are in place.

Peter Leonidou Parts Ways with Leverate to Head Early-Stage Fintech Firm (Finance Magnates), Rated: B

Leverate, a technology provider specializing in brokerage solutions for the financial services industry, has parted ways with its Head of B2B Sales Peter Leonidou, who ends a two-year tenure with the technology provider, Finance Magnates has learned.

Peter leaves Leverate to join PROTECHFX LTD, a fintech startup, which according to its website is just starting out on its journey, or at best still operating in its early stages.

Australia

FinTechs Afterpay, Ratesetter and Society One pick up Finnie awards (Mozo), Rated: AAA

The winners of FinTech Australia’s inaugural Finnie Awards have been announced, with familiar names Afterpay, Ratesetter and SocietyOne among them.

The awards were handed out across 17 categories, including workplace diversity, insurtech and peer-to-peer lending, to recognise innovation and excellence in the FinTech space.

Online lender RateSetter was a finalist for the FinTech of the Year award, and also successfully took out two spots, for Excellence in both consumer and business lending. These awards were both focused on “outstanding B2B lending results through innovative yet stable, sustainable operations.”

SocietyOne, another online challenger to the big banks, won for Excellence in Peer-to-peer Lending. The award recognised a peer-to-peer platform that showed stringent security measures, a strong market reputation, ease of application and competitive interest rates and loan terms.

India

Startup Insurance Company Acko General Insurance Raises $ 30M (IndianWeb2), Rated: A

Set-up by Varun Dua, previously founder of Coverfox, Acko General Insurance  has received it’s in principle regulatory clearance to launch a General Insurance business in India.

In a regulated business, Acko has raised $30mn, which in effect makes it one of the largest seed rounds for a startup in India.

Asia

The first Internet life insurance company and Thai life opened (STCN), Rated: AAA

Recently, the first domestic Internet life insurance company and Thai life officially opened. It is understood that the original vice president of insurance and property insurance Li Yuquan in the life of the ceremony was held. In August 2016 the Insurance Regulatory Commission to the peace and life of the preparation and approval, the general manager is the former deputy general manager of the sea life Wang Hao.

In January this year, Hetai Life Insurance was approved by the China Insurance Regulatory Commission. Registered capital of 1.5 billion yuan, registered in Jinan City, Shandong Province. The legal representative of the company Liu Xin.

Middle East

Dubai Regulator Launches Special Testing Licensing for Fintech Startups (Finance Magnates), Rated: A

The Dubai Financial Services Authority (DFSA) today released the details of its Innovation Testing Licence (ITL) which allows fintech firms to go through a special testing stage prior to their approval as fully operational firms.

Fintech operators will be able to use the ITL licence to test their products for a period of 6 to 12 months, which could be extended upon DFSA’s discretion.

Successful applicants will then be required to obtain a full financial services licence to continue formally operating. By contrast, fintech firms that fail to meet the outcomes detailed in the regulatory test plan will have to cease activities.

Authors:

George Popescu
Allen Taylor