Thursday June 20 2019, Weekly News Digest

ASIC borrowers

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

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

ASIC borrowers

News Comments

United States

United Kingdom

China

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News Summary

United States

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

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

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

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

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

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

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

Inflation Miss (PeerIQ), Rated: AAA

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

Source: Bloomberg, PeerIQ

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

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

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

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

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

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

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

All 68 of them.

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

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

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

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

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

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

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

CoreLogic Launches Marketrac Platinum (CoreLogic), Rated: A

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

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

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

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

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

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

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

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

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

According to a 2019 research study by

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

Source: Refinitiv

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

Landbay

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

Proplend

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

CrowdProperty

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

Rebuildingsociety – the Underperformer

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

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

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

The Chinese P2P Lending Market

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

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

Source: iiMedia Research

But the bad numbers don’t end here:

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

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

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

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

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

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

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

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

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

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

European Union

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

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

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

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

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

International

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

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

Australia

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

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

Source: Cuffelinks

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

Source: Cuffelinks
India

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

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

Watch the video here.

Asia

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

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

Canada

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

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

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

AltFi Toronto Summit 2019 (AltFi), Rated: B

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

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

Authors:

George Popescu
Allen Taylor

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

Thursday September 28 2017, Daily News Digest

Chinese billionaires

News Comments Today’s main news: PayPal likely to buy big target like Square or Klarna soon. LendingTree acquires non-lending assets of SnapCap. Funding Circle boost revenues, narrows losses. ZhongAn raises $1.5B in Hong Kong IPO. Funding Societies intros first crowdfunding chatbot in Southeast Asia. Today’s main analysis: Hong Kong private wealth sees double-digit growth. Today’s thought-provoking articles: The next […]

Chinese billionaires

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Middle East

Canada

News Summary

United States

PayPal A Buyer, Not Seller, And May Seek A Big Target (Investors.com), Rated: AAA

Cash-rich PayPal Holdings (PYPL) is likely to pull the trigger on a big acquisition soon, and may be eyeing Europe or a big target like Square (SQ), says a Wall Street analyst.

Ellis says PayPal has $6 billion in cash on its balance sheet and could raise $4 billion or more by selling off its consumer credit business.

“While there are a number of potential candidates, we see the acquisition of a European payments asset as the most likely,” added Ellis in the report. “We believe the top candidates are Adyen, Klarna, Square and Stripe.”

Both Square and Stripe, however, would be costly acquisitions. Square’s market valuation tops $10 billion, while privately-held Stripe’s latest funding round in December gave it a whopping $9.2 billion valuation.

LendingTree Acquires Non-Lending Assets of SnapCap (PR Newswire), Rated: AAA

LendingTree, Inc. (NASDAQ: TREE) announced today that it has acquired certain assets of Snap Capital LLC, a tech-enabled online platform connecting business owners with lenders offering small business loans, lines of credit and merchant cash advance products through a concierge-based sales approach.

The acquisition purchase has a possible total consideration of $21 million, which consists of $12 million in cash at closing, and contingent consideration payments of up to $9 million.

The Next Billion-Dollar Startups 2017 (Forbes), Rated: AAA

Every year for the past three, Forbes has gone looking for 25 young U.S. companies with a strong shot at reaching a valuation of $1 billion or more. This year, with the help of TrueBridge Capital Partners, we asked venture firms which companies they thought most likely to hit the billion-dollar mark soon. Then we cut that list down to a final 25, evaluating strategies, funding and competitive challenges as well as estimating current revenues.

Blend

Founders: Erin Collard, Nima Ghamsari (CEO), Eugene Marinelli; Equity raised: $160 million; Estimated 2017 revenue: $27 million; Lead investors: 8VC, Founders Fund, Greylock Partners, Lightspeed Venture Partners

What it does: Makes cloud-based software that lenders use to originate mortgages online. Today, Blend works with about 30 mortgage originators, including Wells Fargo, U.S. Bancorp and Mason-McDuffie Mortgage. It also plans expansions into student and auto loans.

Fundbox

Founders: Yuval Ariav, Tomer Michaeli, Eyal Shinar (CEO); Equity raised: $108 million; Estimated 2017 revenue: $55 million; Lead investors: General Catalyst, Khosla Ventures, Spark Capital

What it does: Provides short-term financing to small businesses. Fundbox intends to reduce the cash-flow headaches of small companies, both those waiting for payment and those that need short-term credit to pay what they owe. Fundbox started as an invoice-financing company, lending money to small businesses against their accounts receivables at rates lower than those for cash advances and without prepayment penalties. Its new model, expected to launch in 2018, is meant to work like a credit card for business-to-business transactions. A company that owes money has Fundbox pay the invoice. The company that is owed gets its cash immediately (minus a small interchange fee). Meanwhile, the first company has 60 days to repay Fundbox before being charged interest. With U.S. businesses doing some $41 trillion in business-to-business transactions a year, the potential market is enormous, but setting up such a network is hard.

Plaid

Founders: William Hockey, Zach Perret (CEO); Equity raised: $60 million; Estimated 2017 revenue: $40 million; Lead investors: Goldman Sachs, New Enterprise Associates, Spark Capital

What it does: Makes software that helps technology startups and banks work together. Plaid’s products provide authentication of accounts and routing numbers, income validation and real-time balance checks. Among its customers: Venmo, Robinhood, Coinbase and Clarity Money.

Shinola Finds Kindred Partner in Affirm (BusinessWire), Rated: A

Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced that Detroit-based design brand, Shinola, is using Affirm’s point of sale service to put customers first in an era when a merchant’s values often outstrip price for shoppers’ making a buying decision — especially among millennials.

Known for its dedication to thoughtful manufacturing by creating jobs and making watches, bicycles, leather goods, journals, jewelry, and audio equipment of the highest quality, Shinola is obsessive about customer experience to ensure a high-touch shopping experience that accurately matches the finely crafted watches, bicycles, jewelry, bags, accessories and gifts for sale on its website.

Since Shinola began offering Affirm’s financing to its shoppers, the company’s average order value (AOV) has increased by 52 percent. Also, 50 percent of the Affirm users on Shinola’s site are now between the ages of 18 and 34, a market Shinola has been working to grow.

Nearly 90 percent of marketers said customer experience would be their primary differentiator this year, according to a recent study by research and advisory firm Gartner, Inc. And, the majority of respondents — 55 percent — in a recent survey conducted by Affirm and Qualtrics of more than 1,000 22 to 44-year-olds in the U.S. said they prioritize a company with high values and ethical business practices, over minimizing their out-of-pocket costs.

How CRE Fundraising Is Changing and Why (Commercial Property Executive), Rated: A

Jason Burian: The number of closed-end private real estate funds in the market raising capital over the past three years:

  • January 2015 – 478
  • January 2016 – 492
  • January 2017 – 525 (record high)

Closed-end private real estate dry powder over the past three years:

  • December 2015 – $229 billion
  • December 2016 – $237 billion
  • July 2017 – $255 billion (record high)

CPE: Is the real estate crowdfunding industry a solution? What are the risks?

Burian: I see real estate crowdfunding as an alternative to traditional private equity real estate and an alternative source of investors and not as a solution to any problem. As we know, it is just an avenue for every day individual investors seeking exposure in their portfolios to real estate without acquiring shares of REIT’s.

Government regulation is always a risk for this relatively new industry sector. There are questions about the amount of government regulation and whether there is enough to make it a safe playing field. Until crowdfunding matures, with the proper level of regulation, there is always a risk that someone is taking advantage of that gap that currently may exist.

A new survey has concluded that then it comes to researching mortgages, Millennials prefer the D.I.Y. aspect of the online world, while Baby Boomers prefer to communicate with people.

According to the survey, “The Digital Mortgage Experience: A Study of Shifting Borrower Expectations,” from Los Angeles-based Velocify, more than one-third of all borrowers prefer self-service websites, especially during the research stage of getting a mortgage. But as the process evolves, demographic shifts occur. The survey found Millennials were 45 percent more likely to find their lender online than Baby Boomers, who were 87 percent more likely to use their current bank or lender for their home loans.

Boost Insurance Raises $ 3M in Funding (Finsmes), Rated: A

Boost Insurance USA, a NY-based technology-enabled insurtech development platform provider, raised $3m in funding.

The round was led by Norwest Venture Partners with participation from IA Capital Group, Greycroft Partners, and re/insurance industry leaders State National Companies (NASDAQ: SNC) and Nephila.

3 Stocks That Could Double Your Money (The Motley Fool), Rated: A

Company Recent Stock Price
Lending Club (NYSE:LC) $5.97
Fitbit (NYSE:FIT) $6.52
Etsy (NASDAQ:ETSY) $17.01

DATA SOURCE: TD AMERITRADE. PRICES AS OF SEPT. 26, 2017.

Finally starting to grow again

Peer-to-peer lending platform Lending Club has lost roughly three-fourths of its market value since its first trading day in 2014, thanks to several quarters of stagnant growth and a scandal that worried investors.

However, the company’s most recent earnings report shows that things may finally be starting to pick up, with 10% growth in loan originations, higher profit margins, and impressive revenue growth. In addition, the company said it could be on the verge of profitability by the start of 2018, and it expects double-digit sequential revenue growth in the third quarter of this year.

Lending Club’s current loan portfolio represents roughly 0.4% of the U.S. consumer lending market, and if the company could even manage to boost its market share to one or two percent, it could mean a big payday for the company’s investors.

Sumero Leads $ 45M Growth Equity Round in Treasury Fintech Kyriba (Xconomy), Rated: B

After raising $23 million in a Series D funding round last September, Kyriba says today it has raised $45 million in a growth equity round led by Sumeru Equity Partners, a tech-focused private equity firm that specializes in mid-market deals. Previous investors Bpifrance, Iris Capital, Daher Capital (all growth equity funds) joined the deal, along with HSBC.

The venture rounds are over for Kyriba, a cloud-based provider of corporate treasury and financial management software that is based in New York and San Diego.

Amazon effect’ makes advising smaller clients less profitable (Financial Times), Rated: B

Daniel Ketchum prides himself on his low fees and independence, but after 27 years as a financial adviser he is finding it harder to make a living working with smaller clients.

Increased government regulations and savers becoming more knowledgeable about investing have created what he calls the “Amazon effect” for US financial advisers.

But the US Department of Labor’s fiduciary rule, which came out this year, is making it harder for him to make a profit from advising small plans, he says.

The regulation requires advisers servicing retirement accounts to work in the best interest of the client and has disrupted the wealth management industry.

“I am trying to see if there’s an area where we can do this online and don’t need to leave the office,” he says. “If every plan had the economics of the smaller guys, it would be tough to pay staff, office rent and marketing.”

PayPal’s Cofounder Says Amazon Is “Not Yet” A Monopoly (BuzzFeed), Rated: B

Max Levchin, a cofounder of PayPal and former chairman of Yelp who is now CEO of the online lending startup Affirm, told BuzzFeed News on Wednesday that Amazon has “not yet” become a monopoly because of competition from major retailers like Walmart as well as from smaller brands, which are investing in ways to attract and keep customers in the real world as well as online.

Walmart is still much larger than Amazon in terms of net sales. During 2017 fiscal year, Walmart reported$485.9 billion in revenue and $481.3 billion in net sales. Amazon, on the other hand, reported about $136 billion in net sales in 2016.

United Kingdom

Funding Circle boosts revenues, narrows losses in 2016 results (AltFi), Rated: AAA

The UK’s largest marketplace lending platform marginally narrowed its losses in 2016. Funding Circle, a business loans marketplace, lost £35.7m in 2016, slightly down from £36.9m in the previous year. Meanwhile the platform boosted revenues by 59 per cent to £50.9m, and saw its total loans outstanding climb 61 per cent to £1.37bn, according to a Companies House filing.

Funding Circle has also flagged that its group operating results for the first half of 2017 demonstrate that revenue growth has accelerated further, approximately doubling year-on-year.

The UK Punches Above its Weight in Alternative Finance & Crowdfunding Can Provide a More Robust Funding Ecosystem (Crowdfund Insider), Rated: AAA

Crowdfund Insider recently spoke with Raghavendra Rau to better understand his perspective on the crowdfunding market. Rau is the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School. He is also a founder and Director at the Cambridge Centre for Alternative  Finance (CCAF). At the most recent CCAF annual conference in Cambridge, Rau shared some insightful research he had recently completed on the global crowdfunding market.

First, to clarify, in the UK crowdfunding encompasses both debt and equity so peer to peer lending (IE Marketplace Lending) is included in aggregate terms. It is more about many people (and perhaps some institutions) funding a single project. Rau, in his research, emphasizes that in the UK the debt crowdfunding market is far larger than the equity side. This makes sense and mirrors the public markets. Yet access to capital at a very early stage may require equity capital. But globally, over 90% of the crowdfunding market is debt, not equity. It is a debt financed world, at least for SMEs, said Rau.

“Yes, there is definitely potential here. Usually you have two types of firms. Most small enterprises do not require equity. They require debt. Debt means you have to have approximately stable cash flows. Equity means you have to convince the investors that you have an amazing idea that is going to pay off in several years and I am going to let you (the investor) share in this. This is more risky for the investor and so all SMEs are not suitable candidates to raise equity.”

Rau said there are two different paths. Banks or crowdfunding. With crowdfunding there is less paperwork. It is easier to process and in some instances less risk averse. Banks are pulling back from lending across the spectrum. SMEs, the engine of economic growth, are not getting the necessary capital via the traditional route.

So has the UK crowdfunding system been effective?

In the broader scope of things, China is the largest alternative finance market in the world. The US comes in a distant second. The UK is a strong third. But given the relative size of the UK economy, Rau calls the UK performance “extremely impressive.”

The UK is recognized as the top Fintech hub in the world but this required policymakers to be more creative and to take some chances. So far, it has paid off.

How FAs Engage Third-Party Services is Changing (Financial Advisor IQ), Rated: A

Wealth Mosaic aims to build “a resource covering all of the main business needs of wealth managers” in about a dozen verticals, says its co-founder Stephen Wall, who has worked as a wealth management consultant with Boston-based Aite Group and Scorpio Partnership in London. At first, though, he says the service will focus where it’s needed most: on technology and data resources as well as consulting and research options.

Though Wall sees a role for Wealth Mosaic with all “different types of wealth managers,” he sees particular growth opportunities helping “smaller independent” firms that lack in-house consulting arms to help them match their needs to third-party providers, whether the services in question are critical to the firm’s core mission or add value around the edges.

Advisers warned of robo-advice ‘cliff edge’ (FT Adviser), Rated: A

A panel of experts at the Chartered Institute for Securities and Investment’s financial planning conference in Newport today (26 September) said robo-advice did not necessarily pose a risk to financial advice as long as advisers adapted.

George Rooke, head of UK portfolio management at Wealthsimple, said there were advisers who would “struggle” because of their refusal to engage with robo-advice.

Michelle Pearce, co-founder of robo-adviser Wealthify, said advisers did not necessarily have to worry about being replaced by companies such as hers.

British Business Bank reaffirms support for fintech in new report (P2P Finance News), Rated: A

THE BRITISH Business Bank (BBB) has published a new report underlining the importance of diverse sources of funding for smaller businesses, including peer-to-peer lending.

The report, titled The Benefits of Diverse Finance Markets for Smaller Businesses, explains why and how the state-backed lender works to increase the number of providers and finance options available to small firms in the UK.

“To date £135m is committed to five fintech alternative lending partners. These partners cover a wide range of products including P2P term loans, invoice finance and merchant cash advances.”

Spotcap Announces UK Fintech Fellowship Winner (Crowdfund Insider), Rated: B

Spotcap, an online lender for SMEs, has announced Mohammed Hussan as the winner of its Fintech Fellowship 2017. The Fellowship awards one aspiring masters or MBA student with a £8,000 stipend towards their studies.

China

Online Insurer ZhongAn Raises $ 1.5 Billion in Hong Kong IPO (Caixin), Rated: AAA

ZhongAn, the online insurance seller with ties to China’s two largest internet companies, raised $1.5 billion from its Hong Kong IPO as investor flocked to the biggest listing to date by a new generation of Chinese financial technology (fintech) companies.

Shares of ZhongAn Online Property & Casualty Insurance Co. Ltd. were priced at HK$59.70 ($7.64) apiece, representing the top of their previously indicated range, according to a company announcement on Wednesday to the Hong Kong stock exchange. The offering raised HK$11.5 billion after being nearly 400 times oversubscribed.

ZhongAn Surges in HK Debut, Boding Well for Future Tech Listings (The New York Times), Rated: A

ZhongAn Online Property & Casualty Insurance Co jumped 18 percent on debut on Thursday after the biggest ever IPO by a financial technology firm in Asia, boosting Hong Kong’s hopes of luring future Chinese technology startups away from New York.

It also bodes well for expected listings from other fintech giants in Hong Kong, including Alibaba affiliate Ant Financial and peer-to-peer lending and wealth management platform Lufax.

Both Ant Financial and Lufax are considering IPOs in the city, sources previously told Reuters, although the timing for the deals is uncertain.

Private wealth in Hong Kong sees double-digit growth in 2017 (The Asset), Rated: AAA

THIS July, Hong Kong’s private wealth management industry recorded a 14% increase in assets under management (AUM) compared to a year ago. Hong Kong’s wealth management professionals believe that the growth is primarily driven by mainland China’s growing wealth, according to a recent report.

The estimated total private wealth in terms of AUM in Hong Kong is over US$800 billion as of July 2017, according to a survey by Private Wealth Management Association (PWMA) and PwC. This is an increase of 14% from US$700 billion in July 2016. PWMA’s annual members survey was produced with PwC in July 2017, with 33 out of 45 PWMA member firms participated.

In the survey, 100% of respondents cited mainland China as the main driver of growth in Hong Kong’s private wealth AUM. This may be unsurprising, as China has become home to the highest number of billionaires in the world. According to Hurun Report in 2016, China now has 568 billionaires, surpassing the 535 billionaires in the US, and now ranks first globally.

China’s Ant brings in CK Hutchison as Hong Kong payments partner (Reuters), Rated: A

Ant Financial, the payment affiliate of Alibaba Group Holding Ltd, said it will create a joint venture this year with CK Hutchison Holdings Ltd to operate its payment app in Hong Kong, ending Ant’s solo management of the service.

The new venture will allow Ant Financial’s Alipay to offer services via companies under CK Hutchison, which operates ports, retail, infrastructure and telecommunications businesses across 50 countries.

Ant Financial currently operates its payment app under the Alipay brand in Hong Kong, which offers transaction services at around 4,000 outlets in the city. The new joint venture will take over operation of the app, though it will still be branded Alipay, it said on Tuesday.

European Union

Fintech Group signs Kommunalkredit (Finextra), Rated: A

Kommunalkredit is a specialist bank for infrastructure financing based in Vienna, with a branch office in Frankfurt am Main. Its new online offering KOMMUNALKREDIT INVEST targets retail investors, who want to deposit their savings at attractive conditions. Their funds will be used to support key infrastructure investments made by Kommunalkredit such as schools, hospitals, care homes, wind farms, solar energy installations, waste-to-energy facilities, and transport projects.

FinTech Group provides a broad range of fully digital solutions and interfaces for KOMMUNALKREDIT INVEST: they include frontend processes such as online account openings, e-banking, and identification solutions such as video identification, e-signature and mTAN. On the backend side, FinTech Group will also run a data warehouse and carry out compliance monitoring as well as regulatory reporting.

Milan opens ‘Fintech District’ (Finextra), Rated: B

Thirty firms – ranging from start-ups to established corporates – have already selected the Fintech District as their home; they include businesses working in crowdfunding, peer-to-peer lending, blockchain and cryptocurrency-based technologies, and robo-advisory.

International

FinTech Has Yet To Make Impact On Trade Finance Gap (PYMNTS), Rated: AAA

Trade finance revenue is slipping at the world’s largest banks, especially as companies struggle in a global trade environment operating with a $1.5 trillion gap in trade finance availability.

According to the ADB’s latest survey findings, though, outlined in its Trade Finance Gaps, Growth and Jobs report, FinTech players have yet to make a meaningful impact on the trade finance industry.

The survey polled more than 515 banks and 1,336 companies across 103 countries, finding that FinTech innovators can, indeed, help address the $1.5 trillion trade finance gap which disproportionately impacts small- and medium-sized businesses (SMBs).

Approximately one-fifth of the companies surveyed said they had used some type of digital finance, alternative lending or FinTech platform to access trade finance, according to the ADB results.

Leveraging Alternative Data to Energize Your Lending Portfolio (LendIt), Rated: A

Banks aren’t just dealing with customers who want lending and credit information faster. Government regulations are also requiring them to do so, such as Australian banks requiring affordability checks as part of new consumer loans.

Venkat Srinivasan, Head of Lending at Monzo, said that as a new digital bank, they began to question why it was often a month or two months before consumers could see the transaction come through on their banking or credit card. Venkat noted that while technology is improving and customers are evolving, data availability is evolving at the same time.

Roger Vincent, Head of Banking and Innovation at Equifax, discussed how they’re finding new ways to store data, facilitate data movement, and turn data into insights in the form of scores and characteristics.

Phil Grady, CEO of Castlight Financial, discussed how they created a business that has taken traditional credit data from consumers and integrated it with transactional data. This involves categorizing income and expenditures, and then determining essential expenditures versus non-essentials. This enables Castlight to determine consumers’ real disposable income, which in turn helps lenders make better lending decisions. This type of granular level data has allowed Castlight to create the first real-time Financial Capability Formula.

Only three per cent of advisers offer robo-advice (AltFi), Rated: A

Only three per cent of 162 advisers surveyed said they offered fully automated wealth management services, the research found.

The study, which was conducted by research firm Platforum on behalf of JP Morgan, also found that only 14 per cent plant to implement it in the next two years.

Australia

Alternative Finance: Australia Becoming Regional Leader (Canstar), Rated: AAA

Australia’s alternative finance market has grown by 53% over 12 months according to a report released by KPMG, becoming the second largest in the Asia-Pacific region.

The report revealed Australia’s alternative finance market increased from US$27 million in 2015 to US$610 million in 2016 as Aussies turn to peer-to-peer lending (P2P), balance sheet business lending and crowdfunding.

In the US$245.28 billion Asia-Pacific alternative finance market, China was found to be the leader, accounting for 99.2% and representing 85% of the total global market.

P2P consumer lending was Australia’s second most popular alternative finance model behind balance sheet business lending, increasing from US$43 million in 2015 to over US$158 million in 2016.

India

Funding Societies introduces Miyu, the friendly Chatbot (Business Insider), Rated: AAA

Funding Societies, Singapore’sand Southeast Asia’s leading crowdfunding platform, has announced the launch of its chatbot Miyu. This is the first such chatbot created by a crowdfunding company in Southeast Asia. Miyu works round the clock to answer queries that a business owner or an investor may ask about the products and services offered by Funding Societies.

“We created Miyu via self-learning with guidance from our seniors. She is different from most other chatbots in the financial services space. Personally, I like that Miyu can escalate to human support whenever required, giving our users a seamless experience,” said Sherman Lim, who is a Singaporean and majors in Economics and Strategic Management at Singapore Management University (SMU).

The future plans for Miyu include acting as a Virtual Relationship Manager who can assist SMEs in loan application, and help investors navigate through the platform, initiate video chats with real customer experience managers as well as perform account opening and management activities such as investments, deposits, withdrawals, etc. without human intervention at any time of the day.

Fintech firms look to disburse loans, offer digital expertise under Mudra (livemint), Rated: A

Financial Technology (Fintech) firms are in early discussions with the government and Micro Units Development & Refinance Agency Ltd (MUDRA), exploring opportunities under the Pradhan Mantri Mudra Yojana (PMMY), said three people close to the development.

So far, PMMY loans have been extended by all public sector banks, regional rural banks (RRBs), cooperative banks, private sector banks, foreign banks, micro finance institutions and non-banking finance companies. Fintech companies have not been involved yet.

Under Shishu, refinancing is provided for loans up to Rs50,000. Kishor offers refinancing for loans above Rs50,000 up to Rs5 lakh whereas, Tarun provides refinancing for loans above Rs5 lakh up to Rs10 lakh. Mudra also offers services like credit guarantee for micro units and securitization of loan assets against micro enterprise portfolios.

Middle East

Dubai Economy signs new deal to develop emCash (Tahawul Tech), Rated: A

Emcredit, a subsidiary of Dubai Economy, and the UK-based Object Tech Group have signed a partnership deal to facilitate financial transactions through contactless payment.

Emcredit and Object Tech will develop a competitive, accountable and legally compliant emCash ecosystem together. Several associated products to protect emCash wallet and digital documents, enable direct real-time settlement and peer-to-peer lending, and provide credit rating based on the distributor ledger of emCash will also be developed.

emCash is based on blockchain technology and will be the digital currency in emPay wallet. The payment method, according to Dubai Economy, will allow the UAE residents to make varied payments through the near field communication (NFC) option on their phones. With emCash, emPay users will have the option of a secure digital currency, and merchants can receive such payments in real time without going through intermediaries.

Canada

The Digital Banking Underdog: Toronto Emerges as Global FinTech Leader (Let’s Talk Payments), Rated: A

It’s estimated that in 2017 alone, nearly $60 billion worth of payments will be made on mobile platforms. Comparing these figures to just two years ago, only $8.71 billion worth of transactions were made digitally in 2015.

In line with other frontrunners in the industry, such as London, Silicon Valley and New York City, Toronto, Canada, my hometown, stands apart as an emerging FinTech ecosystem, and it’s become a well-recognized leader amongst the largest and most stable financial centers in the world.

Ontario has been a global leader in digital payments for more than a decade, with Toronto leading in a high concentration of cryptocurrencies,blockchain, alternative lending and e-commerce growth verticals.

Authors:

George Popescu
Allen Taylor

Tuesday July 18 2017, Daily News Digest

fintech adoption

News Comments Today’s main news: Laplanche shares vision for Online Lending 2.0 at Lang Di Fintech. Elevate named a great place to work (again). FinLeap raises 39M Euro. Crunchbase-like database launches in Singapore. Today’s main analysis: Ant Financial poised for more growth. Fintech use reaching mass adoption among digital consumers. Today’s thought-provoking articles: OCC vs. New York DFS.  Ant Financial […]

fintech adoption

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

Elevate Named Great Place to Work by Independent Analysts for Second Year in a Row (4-Traders), Rated: AAA

Elevate was recently certified as a great workplace by the independent analysts at Great Place to Work®. Elevate earned this credential based on ratings provided by its employees in anonymous surveys. A summary of these ratings can be found at 

“According to our study, 87 percent of Elevate employees say it is a great workplace,” says Sarah Lewis-Kulin, Vice President of Great Place to Work Certification & List Production.

79% of Elevate employees completed a survey, resulting in a 90 percent confidence level and a margin of error of ± 2.04.

Ex-LendingClub CEO Laplanche sees new Upgrade venture growing loan volumes (Yahoo! News), Rated: AAA

Online lender Upgrade, launched by former LendingCLub Corp CEO Renaud Laplanche in April, expects to grow its loan volumes and add new asset managers to its roster of buyers in coming months, Laplanche said in an interview on Monday.

Upgrade has been testing its credit quality and risk management systems, compliance framework and other operations, as well as building up its infrastructure to deal with rising volumes before ramping up the service, Laplanche added. The company has signed up six asset managers who are already buying or plan to buy loans originated by the company, including Jefferies LLC and an unnamed Hong Kong firm, he said.

OCC vs. New York DFS: Battle for the Future of FinTech (Bloomberg BNA), Rated: AAA

In the rapidly developing world of financial technology it often is unclear who has the legal authority to regulate the activities of newly created companies. Many of these companies do not neatly fit into any established regulatory scheme. However, answering the question of who will be creating the regulatory rules for FinTech companies is important both for regulators and the FinTech companies themselves.

State Regulators Want to Regulate FinTech

Over the past several years, state regulators have been staking out positions as leading regulators of FinTech companies.

During this same period, federal regulators have announced the intention to assert control over the regulation of FinTech companies.

The OCC indicated that its authority to grant FinTech Charters to nonbank FinTech companies stems from 12 C.F.R. § 5.20(e)(1), which states that the agency may grant such charters to institutions that conduct “at least one of the following three core banking functions: receiving depositions, paying checks, or lending money.”

The Lawsuit

The DFS did not limit itself to criticizing the proposed FinTech Charters. On May 12, 2017, the DFS filed a lawsuit against the OCC in the District Court for the Southern District of New York, alleging that the OCC’s proposed FinTech Charters exceeded the agency’s statutory authority under the National Banking Act and violated the Tenth Amendment. Based on these claims, the DFS sought declaratory and injunctive relief that would declare the proposed FinTech Charters to be unlawful and prohibit the OCC from creating or issuing these charters in the absence of express authorization from Congress.

Third, even if the OCC prevails and begins granting FinTech Charters, state agencies such as the DFS will still attempt to regulate FinTech companies. This could lead to future disputes over the nature and scope of the federal preemption of state regulations, which will add to the confusion over which regulations apply to which FinTech companies.

As a result of these issues, FinTech companies have little idea what the future regulatory terrain will look like. This uncertainty makes it difficult for companies to predict the future regulatory cost of business decisions they would like to make today.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Worthy provides users with the unprecedented ability to spend their way to retirement by investing retail round-ups into high-yielding fixed interest bonds, the proceeds of which fund growing businesses. In doing so, anyone has the capability to build a nest egg, enhance portfolio returns, mitigate risk, and generate both social as well as financial returns. Worthy investors grow their portfolios while simultaneously supporting American entrepreneurs.

Stash, now valued at $ 240 million, lets anyone start investing in the stock market with just $ 5 (Business Insider), Rated: A

Krieg and Robinson realized then that they had an opportunity to help.

They founded Stash, an app that lets you build a portfolio and start investing with only $5, plus it teaches you the ins and outs of the stock market.

Krieg and Robinson realized then that they had an opportunity to help.

The company launched in October 2015 and just closed on a $40 million Series C led by Coatue Management. That brings Stash’s total funding to $78 million and values the New York-based startup at $240 million, according to a person familiar with the company.

Stash makes money by charging a subscription fee of $1 per month for accounts with less than $5,000. When an account has more than $5,000, Stash charges a fee of 0.25% fee.

Stash now has about 850,000 customers nationwide.

Why Robo-Analysts, Not Robo-Advisors, Will Transform Investing (The Financial Revolutionist), Rated: A

Robo-advisors and robo-analysts are both important to enabling wealth management firms to cut costs without sacrificing quality of advice, but the importance of a robo-analyst to enhance the quality of investment advice shouldn’t be underestimated.

Today, many of the tasks performed by robo-advisors are low value-added services such as determining and communicating asset allocation strategies (e.g., 60% equities, 30% fixed income and 10% cash). In fact, these services are so low value-added that advisors cannot make money doing them unless they are bundled with higher value-added services.The value proposition of a robo-analyst is very different.

Specifically, by shining an analytical light in the dark corners of financial filings, robo-analyst technology can identify many critical data points overlooked by most research analysts today. No longer must investors rely on the headlines or management-manipulated earnings. With new technologies, investors can receive a much fuller, more comprehensive analysis of financial filings, company profits and valuation so as to make better informed decisions than ever before. As a result, robo-analyst tech raises the analytical bar universally, enabling investors to transcend the short-sighted and high turnover trading mentality that, in the long run, does more damage to investors than good.

Bankers Worry About Jobs Lost to Automation (Newsmax), Rated: A

A quarter of banking’s “front line” professionals are worried about losing their jobs to robots and artificial intelligence-boosted mobile apps, according to a LinkedIn survey.

In the poll of 1,012 pros from financial technology, investment banking, retail and corporate banking, financial and hedge fund management, accounting, insurance, and private equity, 25 percent said they are concerned automation will impact their job security – with 34 percent of retail bankers saying it is a significant concern for them.

The survey also found 42 percent of financial services pros think financial technology is a “direct threat” to traditional financial services, compared with 13 percent of professionals who work in traditional financial services, and 18 percent of all the financial professionals.

Matthew Wong of CB Insights on Insurtech (Lend Academy), Rated: A

In today’s episode of the Lend Academy podcast we have Matthew Wong of CB Insights. He has been following innovation in the insurtech space for some time and his weekly insurtech newsletter has a subscriber base of more than 18,000 people.

In this podcast you will learn:

  • Matt’s background and how he first became involved in insurtech.
  • What CB Insights does.
  • The headwinds facing insurance industry incumbents today.
  • Why millennials are not buying insurance as much as other generations.
  • Why insurtech is hot right now when it comes to VC investments.
  • Some of the most interesting companies in the insurtech space right now.
  • Why it will probably take a long time for these startups to get to scale.
  • Why Matt likes Zhong An Insurance, the first and largest online insurer in China.
  • How the incumbent insurance companies have been reacting to this surge in startup activity.
  • Why Munich Re is one of the most interesting incumbents.
  • Matt’s view on what SoFi is doing partnering with a life insurance company.
  • The endgame for many of the insurtech startups.

Solar Loans Are A Risky Investment But Not Unlike Other ABS (ValueWalk), Rated: A

Solar loans are on the rise as the industry undergoes a transition and credit investors consider whether these asset-backed securities are worth the risk. In some ways, they’re similar to other types of collateral, and credit investors are already used to dealing with the types of risk they pose. However, analysts at Moody’s warn that they’re one of the riskiest securitization asset classes.

The reason solar loans are so new is because until now, the residential solar market has been dominated by third-party ownership of solar panel systems via power-purchase agreements and leases. GTM Research projected late last year that 2017 will be the year direct ownership of residential solar panels retakes its position as the top solar financing model.

The firm projected that 55% of the U.S. residential solar capacity that’s installed this year will be bought by customers who either pay in cash or take out a loan to finance their systems.

Jefferies gives IBM Watson a Wall Street reality check (TechCrunch), Rated: A

IBM’s Watson unit is receiving heat today in the form of a scathing equity research report from Jefferies’ James Kisner. The group believes that IBM’s investment into Watson will struggle to return value to shareholders.

The narrative isn’t the product of any single malfunction, but rather the result of overhyped marketing, deficiencies in operating with deep learning and GPUs and intensive data preparation demands.

If job postings are any indication, IBM is not keeping pace with other technology companies in hiring machine learning developers.

Cascade Fintech Signs 3-Year Contract for AU10TIX ID Authentication & Onboarding Automation (WVAlways.com), Rated: A

US prepaid card and P2P payment services provider Cascade Financial Technology Corp has signed a 3-year contract to power customer onboarding and KYC with 2nd generation ID authentication and onboarding automation. AU10TIX Secure Customer onboarding (SCO) cloud service that already powers major players across financial services markets, is known not only to increase KYC robustness and fraud protection but also improve customer conversion success chances and operating efficiency.

The future of Millennial banking (Marketing-Interactive), Rated: A

In the last ten years, the fundamental assumption that financial institutions are the only avenue to financial transactions is being called to question, especially by Millennials, who are by far the most entrepreneurial generation.

In a disruptive world, what does the future of banking and finance look like? How can and should financial institutions adapt to remain relevant, or even lead in this era of change?

  • Seamless, efficient and fast

Payments are perhaps the most basic and prevalent interaction with finance for the masses, yet for the longest time, payments to businesses saw minimal innovation. P2P transfers were never a focus for banks since it was a zero commission business. This was a pain-point to Millennials, who are used to sending everything from photos to documents electronically – having to withdraw physical cash or obtaining account details to securely transfer money for lunch is considered old fashioned!

  • Flexibility and access to funds

Traditional unsecured loans might require a strong financial history or proof of steady income stream, which would be unlikely if the individual were not taking a salaried job. Cash advances on credit cards would usually incur overly high interests costs.

This creates opportunities for peer to peer (P2P) lending marketplaces such as Prosper and Lending Club, platforms which create alternative ways to access cash loans while providing alternative yields on deposits.

  • Information access

Websites such as MoneySmart, DirectAsia, GoBear and Milelion position themselves as third-party and an unbiased advisor of investment products and policies. They perform the heavy lifting of trawling through multiple sites to aggregate and analyse information, empowering consumers to make informed purchases in the shortest time.

  • The reversal to brand love

The answer lies in placing the consumer in the centre of their businesses and asking the right questions constantly to redefine scope of value-add. It is an iterative journey, and worthwhile to include consumers as co-creators in product design and transformation.

Wela, the World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors, Available for Android Devices (Marketwired), Rated: B

Wela, a personal finance app that pairs artificial intelligence (AI) and human advisors, announces today it is available for download on Android devices in addition to iOS. Wela pairs real financial advisors with AI through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps, Wela also offers access to real financial advisors via phone, video chat or in-person at no additional cost.

The Android app contains the full functionality of the iOS version and employs the same innovative features that allow users to track all their financial accounts in one place. Wela protects user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Benjamin pulls linked account information to run a complete analysis, helping users take steps toward financial wellness based on three main pillars: creating an emergency reserve, paying off debt and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Three Leading Lawyers Take the Helm of Manatt’s Financial Services Group (BusinessWire), Rated: B

Manatt, Phelps & Phillips, LLP, today announced new co-chairs of the firm’s industry-leading financial services group, with the appointment of Richard Gottlieb, Brian Korn and Donna Wilson.

Gottlieb is a partner in the firm’s Chicago office, Korn is based in Manhattan, and Wilson practices in Manatt’s Los Angeles office.

United Kingdom

MarketInvoice Stands at £1.34 Cumulative Invoices Funded (Crowdfund Insider), Rated: AAA

This past February, MarketInvoice shared it had funded invoices over £1.1 billion since platform launch in 2011. The online lender said it expects to top the £2 billion in invoices funded by the end of the year.

In Q2 of 2017, MarketInvoice announced that it had funded invoices from UK businesses worth £161.9 million. Compare this amount to the £103 million funded in Q2 of 2016 and the platform is generating some serious momentum.

In the first quarter of 2017, MarketInvoice generated £130 million in invoice finance.

RateSetter’s new chairman heralds benefits of provision fund (P2P Finance News), Rated: AAA

RATESETTER’S new non-executive chairman Paul Manduca (pictured) has heralded the peer-to-peer lender’s “simplicity”, citing its provision fund as an example, on his first day in his new role.

The asset management veteran said that financial innovation can sometimes result in overly-complex products that investors cannot understand, which is “complacent and out of step with what customers want”.

Activist investor increases stake in Ranger Direct Lending fund (AltFi), Rated: A

The LIM Asia Special Situations Master Fund has increased its stake in the £243m Ranger Direct Lending fund, following the portfolio’s move to a double-digit discount.

The Hong-Kong based fund had already invested in the closed-ended portfolio, which invests in a host of online lending platforms, owning less than 4 per cent. Last week it increased its holding to 5.48 per cent (on the 7th July).

Assetz Capital Continues UK P2P Expansion with Scotland Appointment (Crowdfund Insider), Rated: A

Assetz Capital is continuing its strategy of establishing a local presence across the UK with the appointment of Ian Craig as Regional Relationship Director to help manage operations in Scotland. The appointment comes as Assetz Capital says growth in Scotland continues with a target of £50 million in lending (subject to two upcoming completions). Assetz Capital says it is well on its way to becoming the second largest alternative finance lender in Scotland.

Craig will be responsible for helping local Scottish businesses acquire finance through the peer-to-peer platform and ensure borrowing with Assetz Capital runs seamlessly.

P2P lenders helped British Business Bank fund £717m of SME loans last year (P2P Finance news), Rated: A

PEER-TO-PEER lenders were among the delivery partners helping the British Business Bank (BBB) fund £717m of loans to small businesses last year, the firm’s annual report revealed.

The state-backed institution, which has channelled funds through P2P platforms such as RateSetter, Funding Circle and MarketInvoice, facilitated 94 per cent of its finance through banks outside of the ‘big four’ last year, up from 90 per cent in 2015 and 79 per cent in 2014.

The BBB has a key performance indicator of having more than 75 per cent of its finance facilitated through providers other than the four largest banks over five years, so it has already surpassed that aim.

China

Renaud Laplanche Shares His Vision for Online Lending 2.0 at Lang Di Fintech (Lend Academy), Rated: AAA

In his first public appearance in over a year Renaud Laplanche, the CEO of Upgrade, gave a presentation this past weekend at Lang Di Fintech, LendIt’s annual Chinese conference, in Shanghai. Titled Online Lending 2.0 he laid out his vision for where he thinks the online lending industry is going next.

He talked about how one of the big innovations in Online Lending 1.0 was the introduction of more data into the underwriting process. Ten years ago, which marked the beginning of Online Lending 1.0, this new data allowed more accurate underwriting of consumers. But in Online Lending 2.0 this has expanded dramatically with not just more data but new and better tools available to analyze this data.

The two key data points that are being added in Online Lending 2.0 are location data and free cash flow analysis. We need to adjust underwriting to take into account location because a consumer in New York City has a much higher than average cost of living while a consumer in Greenville, SC has a much lower than average cost of living for example. This is why Debt-to-Income (DTI) is less important than free cash flow today.

Alibaba Affiliate Ant Financial: World’s Largest Fintech Poised For More Growth (Seeking Alpha), Rated: AAA

Ant Financial, Alibaba’s (NYSE:BABA) financial affiliate, is the largest fintech in the world, and leads the pack of the world’s largest fintech unicorns, the top four of which are from China, the largest fintech market in the world: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion) (NASDAQ:JD), and Qufenqi (US$5.9 billion).

Alipay

Payments make up the biggest portion of fintech in China and this is expected to be the same going forward.

Mobile phones function as mobile wallets for about 425 million Chinese, or 65% of all mobile users. This is the highest penetration rate in the world. At 38 trillion yuan (US$ 5.5 trillion) last year according to data from iResearch, China is the world’s largest mobile payments market and is over 50 times bigger than the American market where mobile payments reached US$112 billion.

China’s e-commerce market is expected to continue its upward climb. Online sales represented 16.4% of China’s total retail sales in the first half of 2016 and this is expected to climb to 21.7% by 2020 which should benefit Alipaygoing forward.

Wealth Management

Wealth management is the largest area of fintech after payments.

There are about 325 million Chinese investors in Yu’e Bao, a number almost as big as the population of the United States and the fund has more assets than the rest of the top 10 Chinese peers combined.

The majority of Yu’e Bao users are millennials under the age of 30 and about 99.7% of its investors are individuals, according to its annual report, rather than companies or financial intermediaries as is usually the case at other Chinese money-market funds.

Credit scoring

Data from the World Bank’s Global Findex study revealed that the bank account ownership rate among individuals aged 15 and older is quite high in China (79% in 2014) yet credit usage is relatively low at 14% in 2014.

The People’s Bank of China covers credit profiles for just about 25% (around 350 million) of China’s 1.3 billion population and shares this data only with selected banks. This absence of reliable credit scoring is partly the reason individuals and small enterprises experience difficulty obtaining a loan from China’s state-controlled banking system which tends to favor large corporates and state-owned enterprises.

Lending

Credit data from the system will also be used to support lending activities at Ant Financial’s MYbank, an internet-only bank which provides loans to SMEs. Set up in mid-2015, the bank will extend loans up to US$800,000 as well as smaller loans that state banks usually don’t pay much attention to.

China has just 8.1 commercial bank branches and 55 ATMs per 100,000 people. This compares with US and Canada which have 28.2 branches and 222 ATMs per 100,000 people and in Europe where there are 28 branches and 81 ATMS per 100,000 people.

PBOC calls upon fintech firms to help fund system to monitor online transactions (SCMP), Rated: A

China’s central bank has urged financial technology (fintech) companies to help pay for a government-controlled monitoring system to watch over financial transactions on the internet.

Sun Guofeng, director general of the People’s Bank of China’s research institute, said the fast-growing fintech businesses have ratcheted up pressure on authorities to invest heavily in regulatory technology, or regtech, but he pointed out that it would be unfair to cover the costs by using taxpayers’ money.

Merger and acquisition may be the future trend for P2P lending sector (Xing Ping She), Rated: A

Recently, Dianrong announced that the company has purchased Quark Finance, Quark Credit Workshop and its related branches and teams. Before that, the merger has been spread for a long time. The merger seems indicate a direction for P2P lending platforms: small platforms might be realise the compliance requirements by being merged, and big platforms also could expand and increase their market share through the acquisition. Thus, mergers and acquisitions might become the next new wave of the P2P lending industry in China.

PwC: Fintech Survey China 2017 (Crowdfund Insider), Rated: A

There are three main areas of finance that are poised to be irreversibly changed, according to PwC. Consumer banking, investment & wealth management and transfers & payments are becoming pretty much all digital and data driven.

Some high level bullet points on China and Fintech include:

  • 68% of financial institutions expect to increase Fintech partnerships in the next three to five years
  • 85% believe mobile apps are the fastest growing customer channel
  • 71% regard price wars as one of the challenges of Fintech
  • Personal loans are at the top of the list for moving to Fintech over the next 5 years

Download the full report here.

European Union

German fintech factory FinLeap raises EUR39 million (Finextra), Rated: AAA

FinLeap, the startup platform behind Germany’s solarisBank, has secured EUR39 million in equity capital to support its ongoing fintech incubation programme.
Having launched twelve fintech ventures so far – including bank account switching platform FinReach, digital debt management outfit Pair Finance, insurance broker Clark, and Germany’s solarisBank – FinLeap is already active in ten European countries.

Regulating FinTech: the Way Forward (Fexco), Rated: A

On Friday 14th July Brian hosted an event at the European Parliament offices in Dublin entitled ‘Regulating FinTech: the Way Forward’. Speakers at the event were the Minister for Financial Services Michael D’Arcy TD, Neil Ryan, COO Quaternion Risk Management; Derek Butler, CEO Grid Finance; Camille Blackburn, Central Bank of Ireland, and Ruth McCarthy, Director of the FinTech and Payments Association of Ireland and CEO of FEXCO Corporate Payments.

The panel discussed regulatory responses to FinTech services at EU and domestic level, as well as examining opportunities within the FinTech ecosystem in Ireland.

Strong networks, good government supports and the presence of major innovators are enabling Ireland to stay at the cutting edge, and these factors will help Ireland to achieve its IFS2020 target for job creation in financial services.

Bricknode: Reporting To fFnancial Regulators With The XBLR Format Creates Confusion (Mondovisione), Rated: A

Financial institutions of various types are required to conduct periodic reporting to local regulators, like the Swedish Financial Inspection and EU-authorities like the European Banking Authority. Following the financial crisis of 2007/2008 numerous resolutions were past to increase regulations of the participants in financial markets. These initiatives are now being implemented regularly. Both MiFID II and MiFIR are scheduled to be implemented as of January 2018 with extensive reporting requirements and scarce information of how this should be implemented practically. During 2017, financial institutions and FinTech companies were impacted by EU-reporting in practice. One example is the reporting file format called XBLR were a lot of confusion exists.

International

Fintech Use Reaching ‘Mass Adoption’ Among Digital Consumers (The Financial Brand), Rated: AAA

Findings from the EY Fintech Adoption Index 2017, published by EY, indicate that fintech firms are approaching mass adoption among digitally active consumers. Leveraging digital technology, combined with personalized solutions, fintech firms are differentiating the customer banking experience. Simplicity, clean design, personalization, real-time insights and transparency are the defining components of these new solutions.

The four key themes that emerged from the 2017 EY Fintech Adoption Index were:

  1. Fintech services have reached mass adoption in most global markets
  2. New services and players are driving increased adoption
  3. Fintech users prefer digital channels and technologies
  4. Fintech adoption will continue to gain momentum

According to the EY report, some of the primary strategies used by fintech firms to gain traction include:

  • Offering a service for free or at a much lower cost that traditionally had a cost associated
  • Solve a problem an existing customer base
  • Provide an entirely new service
  • Create word-of-mouth advocates
  • Build a strong brand identity
  • Leverage highly targeted marketing

The most dramatic variance between fintech users and non-users is the ways consumers prefer to manage their lives. According to EY, “64% of FinTech users prefer managing their lives through digital channels, compared to 38% of non-FinTech users. FinTech users are also more likely to be users of non-fintech digital platforms, such as on-demand services (digital taxis, online food, etc.) and the sharing economy (bike and housing rentals).”

India

Alt Lending platform OxyLoans plans to raise Rs 200 cr debt (MoneyControl), Rated: AAA

The city-based alternative lending platform, OxyLoans, today said it is planning to raise a debt of Rs 200 crore to meet the requirements of borrowers.

He said they have over 240 asset-backed applications from borrowers, and expressed hope to complete the process (raising debt of Rs 200 crore) within six months.

Thatavarti further said that OxyLoans, which has set a loan disbursal target of Rs 156 crore in three years, has facilitated loans to the tune of Rs 64 crore in the last nine months.

This startup is an end-to-end digital platform for lenders and borrowers – TachyLoans (KnowStartup), Rated: A

TachyLoans is an online lending marketplace catering to both Individuals & Small and Medium Enterprises (SMEs). Their platform is based on Peer-to-Peer lending paradigm that uses the proprietary credit decision model designed with some of the best and innovative practices in the financial industry using the cutting edge technologies like Artificial Intelligence & Machine Learning and is built through state of the art technology.

Founded by Brahma, TachyLoans is based out of Bangalore and was established in the year 2016. Brahma brings to the table more than 20 years experience and expertise in Retail Banking, Sales, Marketing and Operations.

When airlines don’t have parachutes, why should P2P lending platforms have LPF? (India Times), Rated: A

The regulations will lay out the corporate structure that each of the platforms would need to follow and most importantly the DOS and Don’ts related to dealing with lenders and borrowers. However, of late, there has been an interesting trend of platforms coming up with a lender protection fund. What does it do? In case a lender loses the money he has extended to a borrower as a loan, the lender protection fund is expected to cover the losses for the investor. On the face of it, it sounds like a good idea, but if you dig deeper, there are several issues.

The flyer is aware of the risk, but he trusts the plane. You have a life vest under your seat for an emergency landing on water, but you do not have an escape pod that can be activated if a flight is about to crash. Similarly, the lender on a P2P site should be able to trust that the lending platform has built a system that can help Lender earn higher returns by mitigating risk. While a P2P platform cannot shirk its responsibilities when it comes to investor protection, having a fund to mitigate losses is not the answer. Proper systemic safeguards and strong ethics should alone suffice.

Launching LPF would in some ways signal that a platform does not have confidence in its own credit evaluation and risk-mitigation system.

Paytm invests in Mobiquest (e27), Rated: B

India’s leading digital payments and m-commerce company Paytm has made an investment in loyalty app developer Mobiquest. The funding amount was not disclosed.

Asia

Fintech non-profit launches database for financial technology startups in Singapore (Tech in Asia), Rated: AAA

The Singapore Fintech Association (SFA) announced today it has created an online directory for fintech companies based in the city-state. The database contains a short description of each company and information about its founding team, funding status, and business model.

Currently listing around 300 startups, the database is free to use and data is maintained by the companies themselves. The directory looks similar to Crunchbase and Tech in Asia’s own startup database, but it’s exclusive to fintech.

The SFA built the directory in collaboration with US data company Let’s Talk Payments and its Medici platform, which provides information and resources about the fintech industry.

South Korean FinTech Firms To Offer International Money Transfer Services (ETH News), Rated: A

According to The Korea Heraldofficials at South Korea’s Financial Supervisory Service (FSS) announced last week that they expect approximately 40 FinTech firms to provide international money transfer services starting August 15.

Per Yonhap News Agency, South Korea’s international money transfer market currently totals approximately 10 trillion won ($8.7 billion). Opening the market to FinTech firms will encourage competition and drive down costs to consumers since the companies can offer money transfer services at much lower prices than traditional banks.

Single transfers via FinTech firms will be capped at $3,000, and individual annual limits will be set at $20,000. For FinTech firms to qualify for the FSS permit, they must possess 2 billion won ($1.77 million) and a debt-equity ratiobelow 200 percent.

Authors:

George Popescu
Allen Taylor

The Rise of UK Institutional Peer-to-Peer Lending

institutional lending

Institutional involvement in UK Peer-to-Peer lending remains low relative to the US, where institutions represent more than two thirds of the market. In 2015, institutions represented just 32% of consumer lending by total volume in the UK and just 25% and 26% of real estate and business lending respectively. So, why might this be? Well, […]

institutional lending

Institutional involvement in UK Peer-to-Peer lending remains low relative to the US, where institutions represent more than two thirds of the market. In 2015, institutions represented just 32% of consumer lending by total volume in the UK and just 25% and 26% of real estate and business lending respectively.

Source: 2015 Nesta Report

So, why might this be? Well, it’s fairly normal for institutional involvement to remain fairly low in the early stages of a new sector. On the most basic level, new sectors are simply not large enough for institutions to invest in, as they often require the ability to write large tickets, in the tens of millions, while also ensuring that they do not represent too large a proportion of a particular provider/platform. Also, until the sector gains the stamp of approval from the regulators and has a decent track record, those in charge of an institution’s wealth are simply unwilling to put their necks on the line for it. Instead, they’d rather invest in well-known, blue chip asset classes which their peers are all invested in too. There’s much less chance someone will get fired for those investments if they get into trouble. Furthermore, the P2P lending ecosystem is still in its early stages, which means that access to independent research and adequate due diligence tools are largely unavailable.

But, the sector is poised for change, and institutional involvement is growing. According to Nesta, in 2013 just 11% of P2P platforms reported some level of institutional funding. By 2015, this had increased to 45%. If we look at the big 3 platforms, which have the scale to accommodate institutions, this trend is certainly clear. Prior to 2014, these platforms had little to no institutional involvement, but institutional lending has increased significantly since then.

Institutional Lending (as a % of total volume)

Source: Orca Analysis and Assumptions. Data unavailable for Zopa in 2017

One of the key milestones for institutional involvement in P2P lending was the involvement of the British Business Bank. The British Business Bank is a UK Government-owned economic development bank established to increase the supply of credit to small and medium enterprises as well as providing business advice services. It has so far invested £135m through a number of P2P platforms including Funding Circle, through which it has invested £100m, Zopa, RateSetter and Market Invoice.

Additionally, there are a number of investment trusts available to investors which raise predominantly from institutions when they launch. Some of the larger investment trusts include P2P Global Investments (£730m), VPC Specialty Lending (£310m) and Ranger Direct Lending (£140m). Institutions have been attracted to these trusts thanks to their promise of high yields in this low yield environment and the belief that the teams involved have the skills to construct the best performing portfolios. Some of these investment trusts ran into a bit of trouble in 2016 when many began to trade at a large discount to NAV (>20%), having previously traded at a premium. Such price to NAV swings can be driven by numerous factors. Although it is likely that lacklustre performance of the underlying loans are a large contributing factor to declining sentiment, other short-term considerations are likely to also be at play. Some short-term explanations were provided by Cormac Leech, a principal at Victory Park Capital, who felt accounting quirks and Brexit / sterling weakening were causing the discount and that that these issues would be ironed out over time. Indeed, since the end of 2016, many of the discounts of the large investment trusts have narrowed by half.

Is this a good, or a bad, thing? There are a few different perspectives to take. Theoretically, institutional involvement is a great thing for borrowers, lenders and aggregators alike. Institutions mean more capital for lending, which in turn helps to grow the sector and stabilise the businesses of the platforms. Institutions help to also raise awareness with other investor groups, thus helping even more capital to flow into the sector. As platforms become larger and more profitable, we may also see cost savings passed on to investors.

This all sounds great, but there are a few snags to be aware of. Relying too heavily on institutional investors may cause investor concentration on the platforms, which leaves platforms vulnerable to being destabilised by just one investor withdrawing. Zopa and Funding Circle have both stated their commitment to retaining a diverse mix of investors, including retail, institutional and government funding. An issue that some of the larger platforms are already facing is that they are struggling to originate enough borrowers to keep up with the supply of lenders. This can cause issues for retail investors, as platforms may reject capital from retail investors (as Zopa has previously done) or platforms may be encouraged to take on riskier loans. The FCA recently stated that they were concerned about potential conflicts of interest that may be created by institutional involvement. The main concern here is that institutions may be able to cherry-pick deals to the detriment of non-institutional investors.

Another issue to be flagged is whether heavy institutional involvement undermines the social purpose surrounding P2P lending (i.e., finance ‘for the people, by the people’), which perhaps undermines the differentiating factor associated with the sector. While this is true to some extent, particularly in P2P equity crowdfunding and donations, P2P lending should ultimately be viewed as an investment opportunity which offers attractive yields with diversifying benefits in a well-constructed portfolio.

There may be some concerns but, on balance, institutional involvement should be seen as a positive sign for the P2P sector. So long as P2P participants remain well-versed on the risks involved and the FCA implements the necessary rules, institutions can help P2P lending to mature and grow in credibility.

Author:

Samantha McBride is a Director at Orca, which provides investors and financial advisors with the research required to perform in-depth due diligence on peer-to-peer investments. Samantha gained her Law degree in 2009 from the London School of Economics and has worked in financial services for the last eight years. Samantha began her career in mergers and acquisitions, working as an Investment Banking Analyst for both Nomura and Deutsche Bank, before moving into Investment Management. Prior to joining Orca, Samantha worked as a Senior Investment Associate at Partners Capital, a global outsourced investment office, and, most recently, a Portfolio Manager & CCO at Elm Partners, a quant-driven, low-cost investment manager.