Friday July 5 2019, Weekly News Digest

Friday July 5 2019, Weekly News Digest

News Comments Today’s main news: Kabbage secures $200M. Funding Circle plummets 20%. Zopa to raise 200M GBP pre-IPO. RateSetter Isa attracts over 250M GBP in subscriptions. OakNorth doubles staff. Funding Societies tied up in SME financing. Today’s main analysis: Recession talk, global easing, and SoFi rated pass-thru innovation. Today’s thought-provoking articles: 10 years of marketplace […]

The post Friday July 5 2019, Weekly News Digest appeared first on Lending Times.

Friday July 5 2019, Weekly News Digest

News Comments

United States

United Kingdom

International

Southeast Asia

Other

News Summary

United States

Kabbage secures 0M to fuel its AI-based loans platform for small businesses (Tech Crunch) Rated: AAA

Kabbage, the AI-based small business loans platform backed by SoftBank and others, is adding more firepower to its lending machine: the Atlanta-based startup has secured an additional $200 million in the form of a revolving credit facility from an unnamed subsidiary of a large life insurance company, managed and administered by 20 Gates Management, and Atalaya Capital Management.

The money comes on the heels of a $700 million securitization Kabbage secured just three months ago and it is notable not just for its size but its terms: it’s a four-year facility, a length of time that underscores a level of confidence in the company’s performance.

Recession Talk and Global Easing; SoFi Rated Pass-Thru Innovation (PeerIQ), Rated: AAA

In FinTech financing news, Ocrolus, led by CEO Sam Bobley, successfully raised $24 million in their Series B led by Oak HC/FT.

Source: PeerIQ, Goldman Sachs

SoFi Pass Thru Security

SoFi this week secured a provisional A-rating from DBRS on a $200 MM pass-thru security consisting of student refi loans [ PSR and announcement ]. Notably, the structure is the first CUSIP that does not rely on over-collateralization or subordination to provide credit enhancement for investors. This is a promising innovation from the first FinTech to crack open the securitization market for student refi loans.

Ten Years of Investing in Marketplace Lending (Lending Academy) Rated: AAA

This month marks ten years since I made my first investment in what was then called peer to peer lending.

Ten Ways Marketplace Lending Has Changed Since 2009

  1. Scale
  2. The Rise of Institutional Investors
  3. The Rise of Automation

Home Affordability in the “13 Original Colonies” (DS News) Rated: A

To celebrate the Fourth of July, LendingTree, the nation’s largest online loan marketplace, has taken a look at the states that were present at the birth of the country,” said LendingTree Chief Economist Tendayi Kapfidze.

New Hampshire is the most affordable of the original 13 states, with a median home value of $244,900 and a median salary of $71,305. New Hampshire capital Concord is also the most affordable capital, with a median home value of $212,600, and a median salary of $61,310.

The least affordable state is New York, with a median home value of $293,000, which is less than Massachuset’s median value of $352,600, but New York’s median income is slightly less, at $62,765, plus an affordability surplus of just $292.

Embracing The Digital Lending Revolution (Monja Blog) Rated: A

A recent report by McKinsey & Company pointed out that in the traditional lending process of most banks, the “time to decision” for small business loans is usually from three to five weeks, while the “time to cash” can take up to three months. Personal loans usually have shorter processing times but still, take days or even weeks.

Digital lending helps banks retain individual and business customers by making the process more convenient and faster. According to an extensive survey by the American Bankers Association in 2018, an overwhelming majority of banks agree that some level of digitalization is vital to keeping their loan customers from going elsewhere.

Funds raised for direct lending hit a fresh high this year, raising concerns the market could be running a little hot amid the deluge.

Capital One keeps closing branches, even as rivals open them (American Banker) Rated: A

The McLean, Va., company, with roughly $373 billion of assets, has shuttered more than half of its branches over the past decade, including nearly 50 in the second quarter alone, according to a recent analysis by Sandler O’Neill & Partners. It now has fewer than 500 branches in eight states and the District of Columbia.

Policing The Internet Is Critical To Protecting Online Lending Consumers (Forbes) Rated: A

In May, the United States Federal Reserve issued its “

How Two College Dropouts Made $ 860 Million by the Time They Were 23 (Fortune) Rated: A

They are the founders and top executives of Brex Inc. a fintech startup recently valued at $2.6 billion, with an unlikely origin story.

Brex, which launched its first product last year, has become a fintech darling, catapulting its founders into the ranks of the richest entrepreneurs — on paper at least. Today their stakes in the company are worth an estimated $430 million each, according to an analysis by EquityZen, a marketplace for shares of tech firms that haven’t yet gone public.

A ‘turtle bank’ plays catch-up in small-business lending (American Banker) Rated: B

Provident Financial in Iselin, N.J., has partnered with a fintech to become a stronger small-business lender.

The $9.8 billion-asset company is working with Fundation to offer unsecured small-dollar loans to commercial clients. While available in Provident’s more than 80 branches, applications for loans as big as $250,000 are also being accepted online.

United Kingdom

Funding Circle shocks the City, plummeting 20% after slashing growth forecasts thanks to Brexit (Evening Standard) Rated: AAA

The FTSE 250 company now expects 20% revenue growth this year, half its previous guidance of 40%, amid slumping demand for loans from small businesses.

The latest miserable update sent its shares down 20%, or 34p, to 129.6p and piles more pain on investors after a torrid nine months on the stock market. Since going public the shares have fallen 70% amid wider concerns about the peer-to-peer lending model.

Funding Circle bins the boasts as Brexit bites (Brinkwire) Rated: A

As if to show what’s possible, the online lending platform had itself valued at a remarkable £1.5bn in the flotation last year. Investors were invited to ignore current losses and feel the growth in revenues – up 55% to £142m in 2018, it turned out.

Few businesses, even fintech operators with smart kit and a big marketing budget, can sustain that pace, but Funding Circle still reckoned 40% was on the cards this year.

Companies & Markets show: Fintech’s big bang (Investors Chronicle) Rated: A

Digital editor Graeme Davies in discussion with James Norrington and Alex Newman on the latest problems for Funding Circle, Jupiter’s fund manager departure and the massive opportunities in the fin tech space both now and in the future.

Is Funding Circle the barometer for SME opinions on Brexit? (Daily Fintech) Rated: AAA

Loans under management on the platform are up 37% for the first half of 2019 compared to the same period in 2018, currently sitting at £3.5 billion. Originations are up 14% on the prior corresponding period, at £1.2 billion. All healthy figures in their own right.

separate study by academics at St Andrew’s University found that in 2016, 25% of businesses viewed Brexit as a major obstacle to their success. This number had jumped from 16% in the year prior, when they were surveyed right after the referendum.

Zopa plans £200m fundraise ahead of bank launch and IPO (P2P Finance) Rated: AAA

ZOPA is reportedly looking to raise up to £200m as it gears up for its bank launch and a possible stockmarket flotation.

The peer-to-peer consumer lender is in talks with private equity firms and sovereign wealth funds about the fresh funding, which could be secured in the next few months, chief executive Jaidev Janardana (pictured) told Bloomberg.

RateSetter’s Isa attracts more than £250m in subscriptions (Bridging & Commercial) Rated: AAA

RateSetter has revealed that its Isa has attracted over £250m in subscriptions by the end of June.

The P2P lender’s RateSetter Isa — which was launched in February 2018 — received £50m of Isa inflows in the last three months alone.

More than 600,000 customers have used RateSetter to invest or borrow and it has originated £3.3bn of loans, which has generated over £135m in returns for investors to date.

FINTECH UNICORN OAKNORTH DOUBLES STAFF (Business Cloud) Rated: AAA

Challenger bank OakNorth has doubled its staff after securing more than $1 billion in funding.

The London-based unicorn has also signed a five-year deal to provide its technology platform, OakNorth Analytical Intelligence, to Dutch lender NIBC Bank.

With a valuation of $2.8bn, it has rapidly grown to become one of Europe’s most valuable companies, having raised more than $1bn, a record for a European FinTech, from the likes of Japan’s SoftBank Group.

Moneybox launches ISA partnership with OakNorth Bank (AltFi News) Rated: A

OakNorth’s growing role as the go-to ISA partner to the digital disruptors of UK fintech has been further cemented. The bank, which was briefly Europe’s most valuable fintech earlier this year, has today joined forces with Moneybox to offer the latter’s 200k-strong, and growing, user base a Cash Lifetime ISA.

The Moneybox Cash Lifetime ISA, with an interest rate of 1.4 per cent, is designed to help customers who are saving for their first home with its government-backed 25 per cent bonus up to £1,000 per year. Users can open an account with £1.

Nutmeg is another fintech offering the Lifetime ISA while, Skipton – the UK’s fourth largest building society – says it has had over 130,000 accounts opened to date.

OakNorth also powered tax-wrapped savings accounts for Monzo’s c.2m customers in March, although they were not Lifetime ISAs. OakNorth reported a 220 per cent increase in profits last year to £33.9m.

FIBA to publish default rates of lenders (Bridging & Commercial) Rated: A

Adam Tyler, executive chairman at FIBA, said the move followed concerns about the transparency of default rates in the industry, which was raised by members and lender partners.

Mark Posniak, managing director at Octane Capital, initiated the conversation about default interest last week via LinkedIn.

Growth Street rockets past £500m of matched loans (Business Love London) Rated: A

Growth Street, which is reinventing the business overdraft, has hit a big milestones in June. It has now matched over £500m worth of investor funds on its platform since launch in 2014.

LendingCrowd partners with Brismo for verified returns data (Fintech Finance) Rated: A

LendingCrowd, Scotland’s only fintech lending platform, has today announced that it is the latest leading marketplace to partner with Brismo to provide sophisticated and independently verified performance metrics for investors.

Brismo is a London-based provider of lending performance data that uses detailed loan information to analyse and verify returns, allowing investors to perform like-for-like analysis.

Purplebricks $ 5m US retreat shows startups need to slow down (Sifted) Rated: A

Britain’s online estate agent Purplebricks this week said it would pull out of the US to focus on its hometurf.

The peer-to-peer industry isn’t doing enough to protect investors (City AM) Rated: A

Many peer-to-peer lenders target unsophisticated retail investors, who can invest as little as £100. And yet, there is a relatively high cost to on-board small investors, because platforms have to handle customer calls, and anti-money laundering requirements.

There have been dozens of failures, but the closure of Lendy has shocked the industry. The high-profile peer-to-peer lender accrued more than £160m on its loan book, and by the time the administrators were called, £90m was believed to be in default.

Lendingblock partners with institutional crypto platform Caspian (Institutional Asset Manager), Rated: B

Lendingblock, a regulated, open exchange for institutional borrowing and lending of digital assets, has partnered with Caspian, the institutional crypto trading platform. 

This partnership enables essential market infrastructure for borrowing and lending digital assets to be scaled to institutions globally.

China

Breakneck growth in China’s credit-card debt since 2012 raises worries about a potential bust (South China Morning Post) Rated: AAA

Credit-card debt has grown more than sixfold in China since 2012, mirroring booms in other Asian markets that ended badly and raising concerns about the potential risks to Chinese banks, according to a new report from S&P Global Ratings.

The credit rating agency said that unsecured consumer lending in the mainland is expected to increase at a rate of 20 per cent annually for the next two years, a slight slowdown, but reminiscent of problematic booms in Hong Kong, South Korea and Taiwan.

Source: South China Morning Post

It is rash to expect a rerun of past stock market booms in China (Financial Times) Rated: A

One way to profit from Chinese equities is to play a familiar paradox. Market participants know that when economic growth ebbs significantly, Shanghai share prices tend to rally.

The key to this incongruity might be called the “Communist party put”. In the same way that Alan Greenspan, former chairman of the US Federal Reserve, used to relax US monetary policy when dynamism stalled, a tactic known as the “Greenspan put”, China’s ruling party often steps in when commerce starts to wilt.

Regulators curb market irregularities (Ecna) Rated: A

China has spared no efforts to carry out supply-side reform and fight against financial market irregularities by better regulating high-risk institutions to make overall risk manageable, officials of the China Banking and Insurance Regulatory Commission said on Thursday.

In the past two years, China reduced high-risk assets worth 13.74 trillion yuan ($2 trillion), restraining the flow of resources from the real economy — the part of the economy that produces goods and services — to the virtual economy, said Zhou Liang, vice-chairman of the CBIRC, at a news conference.

European Union

Fintech Lender creditshelf Doubles Loan Volume in First Half of 2019 (Crowdfund Insider) Rated: AAA

creditshelf Aktiengesellschaft, a Germany based online lender, says it lending volume has more than doubled in volume during the first 6 months of 2019. In comparing the first half of 2019 versus the first six months of 2018,  creditshelf reports that the volume of arranged loans was  € 35.8 million or 132 % higher year-on-year (prior at € 15.4 million).

June 2019 was the strongest month in creditshelf’s history with arranged loans of € 12.2 million.

The company says the pipeline for the second half of the year is well filled.

PropertyBridges attracts first tranche of peer-to-peer loans for Limerick housing project in record time (Irish Examiner) Rated: A

A project to develop 16 houses in Pallaskenry, Co Limerick, is well on track to raise the €2.4m in funding that it pitched out to peer-to-peer investors just a few weeks ago, having very quickly raised the first tranche of €665,000.

PropertyBridges.com, who are leading the financial management of the project, will raise the remainder in three further tranches when the development progresses over the next 12 months.

International

International P2P Lending Volumes June 2019 (P2P Banking) Rated: AAA

Arboribus is listed for the last time, as the platform will cease to originate new loans.

Generic Looks to Launch Tokenized Peer to Peer Lending Platform (Crowdfund Insider) Rated: A

Blockchain startup Generic wants to create a tokenized bridge for peer to peer lending/merchant cash advanced credit, according to a note from the company. While not live yet, Generic claims it will “create a direct bridge between users and companies looking for funds, without an intermediary.”

FinTech is ‘new normal’ as majority are regular users (FS Tech) Rated: B

A global survey of 883 consumers from the UK, Europe, Asia, Africa, Latin America and Australasia, by financial advisory company deVere Group found that 55 per cent were using FinTech services online or via mobile on a regular basis to access and manage their money.

Australia

Loans.com.au passes on the full rate cut, now offers mortgage rates as low as 3.03% (Mozo) Rated: AAA

This afternoon, however, loans.com.au will be bucking the trend. The online lender announced it will be passing on the cut in full to its variable home loan customers, effective immediately.

The changes will apply to both new and existing customers, and will see owner occupiers looking at rates as low as 3.03% (3.05% p.a. comparison rate*) – among the more impressive on the market. Below, we’ve compiled some stellar loans.com.au home loans for you to check out.

India

Expectations of the Fintech Industry From the Union Budget of 2019 (Entrepreneur) Rated: AAA

The online lending industry has emerged as a massive relief for both individuals and small businesses that have historically been facing a lack of funds and were rendered underserved by traditional financial institutions. But for the digital model to truly thrive, fintech lenders need to have ready access to the credit guarantee schemes being initiated by the government to build a supportive financial structure. For instance, recent government initiatives like that of SIDBI wherein loans can be provided in under an hour, or its subsidiary MUDRA have only been supporting banks, NBFCs, and micro-finance institutions. But their penetration levels are relatively low, because of which a substantial portion of these funds remain unutilized. Therefore, the fintech industry expects the government to extend credit and allow the players to participate in these recent initiatives and other measures being undertaken.

‘P2P model is a solution for many small businesses’ (Deccan Herald) Rated: A

P2P model is a solution for many small businesses that are struggling for funds. Digital lending has changed the face of many developing countries’ economies because of the transparent environment and paperless approvals.

So, from the perspective of Peer-to-Peer (P2P) industry in India, it has tremendous opportunities because this industry is still at a nascent stage and requires encouragement through tax benefits.

Canada

BMO LAUNCHES DIGITAL-ONLY LINE OF CREDIT SERVICE (Betakit) Rated: AAA

Bank of Montreal is launching a new digital-only lending solution, allowing customers to apply for a personal line of credit directly from their mobile devices.

Through the new solution, BMO said customers can apply for credit by taking a short application, receiving a decision on their loan within minutes. Customers will get a real-time decision on their application, as well as faster access to credit, allowing them to tap into their loans within 48 hours of approval.

Asia

Funding Societies in SME Financing Tie-Up (Finews) Rated: AAA

Funding Societies has entered into a partnership with Lazada Malaysia to offers merchants on the e-commerce marketplace short-term financing, Malaysian newspaper «The Star» reported on Thursday.

As part of the tie-up, the peer-to-peer lending platform will leverage alternative data from Lazada as part of its risk assessment, which will provide more opportunities for online businesses to get tailor-made financing products conveniently, the firm said in a joint press statement.

Helios P2P Sri Lanka’s First Peer-To-Peer Lending Platform Secures Second Round Funding (Daily Mirror) Rated: A

Helios P2P – Sri Lanka’s First Peer-To-Peer Lending Platform secured their second round of funding from John Keells X which is the corporate accelerator of John Keells Holdings PLC. Helios P2P were winners of the 2017 John Keells X accelerator programme and the first startup to receive funding for the second stage of the accelerator.

The peer-to –peer lending industry, valued globally at $64 billion in 2015, is growing at a compound annual growth rate of approximately 50%.

Budget Expectations 2019: P2P lending hopes for these policy changes (Banking & Finance) Rated: A

So what will it be – fiscal consolidation or a focus on growth? Getting the balance right is the key here. The top priority according to Abhishek Gandhi, Co-Founder & CFO, RupeeCircle from this budget is to tackle consumption slowdown and boost it by cutting taxes which will increase the spending power of the people, especially in rural areas and the lower income groups. The subliminal effect of this step will boost investments as well. This will especially be a shot in the arm for the Peer-to-peer (P2P) the lending landscape which has been affected by the sluggish pace of policy changes in the past several months (understandably due to the impending general elections of 2019).

Visa Indonesia opens applications for fintech innovation competition (Jakarta Post) Rated: B

Visa Indonesia, a subsidiary of California-based payment systems provider Visa, opened on Wednesday applications for its Visa Everywhere Initiative competition, which is designed to crowdsource financial inclusion solutions from local financial technology (fintech) start-ups.

Authors:

George Popescu
Allen Taylor

The post Friday July 5 2019, Weekly News Digest appeared first on Lending Times.

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

Other

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 May 2 2019, Weekly News Digest

fintech deals india china

News Comments Today’s main news: OnDeck publishes Q1 financial results. LendingClub to move 350 jobs out of San Francisco to Utah. Salary Finance picks SoFi co-founder Dan Macklin as CEO. Klarna rolls out payment plans for physical stores in UK. HeZhong International sets terms for IPO. India tops China as Asia’s top fintech funding source. Today’s […]

The post Thursday May 2 2019, Weekly News Digest appeared first on Lending Times.

fintech deals india china

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

OnDeck Reports First Quarter 2019 Financial Results (PR Newswire), Rated: AAA

OnDeck today announced first quarter 2019 net income of $5.9 million, Adjusted Net Income of $8.3 million and gross revenue of $110.2 million.

Net income was $5.9 million, or $0.07 per diluted share, and decreased from the prior quarter’s net income of $14.0 million, 0.18 per diluted share, primarily due to higher loan loss provision, higher operating expenses and an accrual for income taxes.  Net income significantly improved from a loss of $1.9 million, or $0.03 per diluted share, in the year-ago period reflecting higher interest income from asset growth.

Adjusted Net Income was $8.3 million, or $0.10 per diluted share, and decreased from $15.9 million, or $0.20 per diluted share, in the prior quarter and increased from $6.4 million, or $0.08 per diluted share, in the year-ago period, reflecting the  aforementioned drivers.

Loans grew 3% sequentially and 19% from a year ago to $1.2 billion. Originations were $636 million, down from $658 million in the fourth quarter and up 8% from $591 million in the year-ago quarter.  The annual growth was broad-based with increases from both domestic and international operations as well as in both term loan and line of credit offerings. The average term loan size was unchanged sequentially at $53 thousand and was down from $58 thousand a year ago. Unit volume decreased 5% sequentially and increased 15% from the year-ago quarter.

Gross revenue was $110.2 million, essentially unchanged from the prior quarter, and up 22% from the year-ago quarter driven by higher interest income. Loan Yield of 35.6% decreased from 36.6% in the prior quarter reflecting a decline in portfolio performance while pricing was generally stable, and was unchanged from the year-ago quarter.

Interest expense of $11.3 million was essentially unchanged sequentially and decreased from a year ago despite a higher debt balance as borrowing rates improved. The Cost of Funds Rate continued to improve to 5.4%, a 20 basis point sequential improvement and a 140 basis point improvement from the year-ago quarter, as we refinanced debt at lower costs. First quarter financing activity included the extension and upsizing of four debt facilities aggregating to $595 million with improved terms.

Net Interest Margin was 29.5%, down from 30.0% the prior quarter as lower asset yields more than offset the impact from improved borrowing costs.  The increase in Net Interest Margin from 27.8% in the year-ago quarter was driven by improved borrowing costs.

Provision for loan losses increased to $43.3 million and the Provision Rate increased to 6.8%. The 15+ Day Delinquency Ratio increased 120 basis points sequentially to 8.7%.  Approximately half of the increase was in loans 15-89 days delinquent reflecting credit testing and economic trends, and the balance was in loans 90-days or more delinquent reflecting the change in our collection strategy for late-stage delinquencies. The Net Charge-off Rate increased to 12.2% and remains near the low end of our 12%-14% target range. The Reserve Ratio increased 30 basis points sequentially and 50 basis points from a year ago to 12.5%, reflecting portfolio quality trends and a higher proportion of 90-day plus delinquent loans, which have higher reserves.

Operating expenses increased from the comparable periods to $48.3 million, reflecting growth in the business and investments in our strategic initiatives, primarily technology and analytics. The Efficiency Ratio was 43.8%, up from 41.1% the prior quarter but improved from 49.3% in the year-ago quarter, while our Adjusted Efficiency Ratio* of 41.0% increased from 39.4% in the prior quarter and 40.1% in the year-ago quarter.

Provision for income taxes was $1.7 million compared to zero in 2018 when taxable income was completely offset by operating loss carryforwards. The effective tax rate was 24% and reflected a 21% U.S. federal rate, local and state income taxes, and losses in international subsidiaries.

Total assets increased 5% sequentially and 18% from a year ago to $1.2 billion primarily reflecting loan growth. Cash and cash equivalents was unchanged from year end at $60 million and decreased from $70 million a year ago. Other assets and other liabilities increased over the comparable periods as we recorded a net $28 million right-of-use asset in other assets and an equivalent increase in other liabilities stemming from the adoption of a new lease accounting standard. The 3% sequential increase in debt to $842 million was consistent with the growth in loans.

Total OnDeck stockholders’ equity of $309 million increased $10 million, or 3%, from year end and $45 million, or 17%, from a year ago.  Book value per diluted common share outstanding of $3.89 increased from $3.77 at year end and $3.40 a year ago.

Food Truck Satisfies as OnDeck Small Business of the Month (Yahoo! Finance), Rated: B

OnDeck today announced that Me So Hungry, a food truck business based in California, is its Small Business of the Month for April 2019. Owned by brothers Cory and Mike Ewing, Me So Hungry is the first food truck business to receive the OnDeck recognition.

LendingClub to slash San Francisco office, move 350 jobs to Utah (Mercury News), Rated: AAA

LendingClub, the online-loan marketplace, plans to wind down customer support operations in its home city of San Francisco and shift staff to Utah as it seeks to trim costs.

In an internal memo to staff reviewed by Bloomberg, Chief Executive Officer Scott Sanborn said LendingClub aims to have its teams completely out of San Francisco by December.

About 350 jobs will shift to Lehi, Utah, where LendingClub recently opened a new office.

SoFi Co-Founder Steps Back Onstage with Salary Finance (newKerala), Rated: AAA

Salary Finance announces SoFi co-founder Dan Macklin will be joining as CEO, Salary Finance Inc. (the US arm of the group).

Strong GDP Growth Continues (PeerIQ), Rated: AAA

Source: Bloomberg, PeerIQ

LendingTree Study Finds Tesla Drivers Have Highest Average Credit Scores (Yahoo! Finance), Rated: AAA

LendingTree today released its study ranking car brands by their buyers’ average credit score. Tesla buyers have the highest with a score of 740. Chrysler buyers have the lowest scores, with an average score of 656.

Key findings

  • Luxury brand buyers occupied the top spots. TeslaPorsche and Lexus lead with average credit scores of 740, 727 and 699 respectively.
  • Chrysler buyers had the lowest average credit score at 656, but it’s worth noting that this still falls in the “fair” range. It’s also right around the average credit score for all used car purchases.
  • For most auto makes, a credit score in the good range (670-739) was enough to be approved for an auto loan. Of the 30 different makes analyzed, 22 had an average approved credit score fall into that range

Read the full report here.

Understanding Sequential Pay Structures (DBRS), Rated: AAA

In a January 2019 newsletter, DBRS discussed the Evolution of the Shifting Interest Structure in residential mortgage-backed security (RMBS) transactions. Another common structure in RMBS transactions is the sequential pay structure.

The sequential pay structure is one of the most elementary and straight-forward structures in RMBS. Post-crisis, the sequential pay structure and its variations have been widely used in seasoned re-performing loan (RPL) and non-Qualified Mortgage (QM) transactions. Such structure largely benefits the senior classes in payment priorities over the subordinates.

Source: DBRS

Read the full report here.

Finitive Raises $ 6 Million Series Seed Round Led By Atomic Labs (PR Newswire), Rated: A

Finitive (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today that the firm raised approximately $6 million in a series seed financing. The round was led by Atomic Labs with participation from Ninepoint Partners – one of Canada’s leading private credit fund managers – as well as other investors and members of the management team.

Goldman Sachs, Regions help raise $ 55M for construction-lending fintech (American Banker), Rated: A

Built Technologies, a construction lending fintech platform, has raised $55 million in funding through Goldman Sachs and a handful of investors including Regions Financial, the company said Monday.

The Nashville, Tenn., company finished $31 million in series B funding through Goldman Sachs with the remainder amount raised by venture capitalists and Regions. The funding will help the 5-year-old fintech invest in research and development while building out its national client base, according to the firm’s CEO and co-founder, Chase Gilbert.

A busy month for fintech funding (American Banker), Rated: A

Novo, a challenger institution in the field of small-business banking, and the no-code platform provider Unqork held Series A funding rounds.

The online lender Upstart, which raised $50 million in a Series D round, says it can both lower loan loss rate and increase the number of customers underwritten.

Extend is building a platform to distribute digital cards by partnering with payment networks and card issuers. Another startup, MotoRefi, claims it can save consumers an average of $100 a month on vehicle refinancing by connecting them to trusted credit unions and community banks.

Moving Beyond Financial Literacy to Financial Empowerment (Lend Academy), Rated: A

Some of my thinking was prompted by this recent column in American Banker by Jennifer Tescher, the CEO of the Center for Financial Services Innovation (CFSI).

There are several companies in this space doing great work in creating high quality products: EvenPayActivTrueConnect and HoneyBee all offer options to employers that help their employees who need access to quick financing. Even has a groundbreaking deal with Walmart that has resulted in 300,000 employees using their pay advance app.

MoneyLion has four million users and they are focused on ending financial stress for all Americans by taking a holistic approach and being proactive in providing help. Dave helps the 30 million people who are hit by overdraft fees each year by advancing $75 from their next paycheck. Tally is a fully automated debt manager to help consumers get out of credit card debt.

Inside Varo Money’s three-year quest for a bank charter (American Banker), Rated: A

Just ask Colin Walsh, the co-founder and CEO of Varo Money, who began discussions with regulators three years ago to charter a national bank. Though the fintech won approval from the Office of the Comptroller of the Currency last year to move forward, it is still waiting on an answer from the Federal Deposit Insurance Corp.

Cross River Teams Up With RS2 To Offer New Digital Banking Experience (Crowdfund Insider), Rated: B

Cross River, a bank that delivers advanced financial and compliance products/services to the fintech industry, announced on Monday it has teamed up with RS2 to offer a new digital banking experience. Through the collaboration, Cross River and RS2 will provide merchants with a global payment experience for processing credit and debit card transactions, as well as digital banking for their workers and consumers.

Blend’s Erin Collard: Mortgages are the data superset of every other financial product (Tearsheet), Rated: A

Financial technology company Blend began building its platform by helping traditional institutions digitize mortgages, working with firms like Wells Fargo, US Bank and some regional banks and credit unions.

New York launches its own ‘mini CFPB’ (American Banker), Rated: A

New York has created a statewide financial protection division that will focus solely on corporate compliance and consumer issues, following similar efforts by New Jersey and Pennsylvania.

The New York State Department of Financial Services on Monday named Katherine A. Lemire, a former assistant U.S. attorney, to be executive deputy superintendent of the agency’s newly created Consumer Protection and Financial Enforcement division.

Think Finance to Pay CFPB $ 7 for Loan Violations (Bloomberg Law), Rated: A

A bankrupt payday lender will have to pay a $7 civil penalty to the Consumer Financial Protection Bureau over nearly $50 million in loans it issued in states where they were not legal, according to bankruptcy court filings.

Judge Brian Morris of the U.S. District Court for the District of Montana granted a stay in the CFPB’s litigation against Think Finance LLC on April 30, pending activity in the bankruptcy court.

Capital One drives auto finance deal with CarGurus (Finextra), Rated: A

CarGurus today announced a partnership with Capital One Auto Finance that will benefit both consumers and dealers.

The Most Powerful Women in Banking (American Banker), Rated: A

Camille Burckhart, Popular Inc.

Chief information and digital officer

Jacqueline Howard, Ally Financial

Senior director, corporate citizenship

Carrie Lichter, Fifth Third

Chief operational risk officer

Now you can pay for your flights in instalments with these booking companies (Lonely Planet), Rated: A

Online travel apps CheapOair and OneTravel will soon operate a new feature that allows customers to pay for their airfare in instalments. It means that customers don’t have to pay for the full cost of their flight upfront and can instead spread the cost out into more manageable payments that suit individual budgets, choosing between three-, six- or 12-month instalments. Fareportal, the company that operates CheapOair and OneTravel, said its partnering with online lender Affirm to introduce the new feature.

For example, a $300 (£230) purchase at 10% APR spread out over three months would cost $101.69 (£78) per month.

A recent study by the U.S. Chamber of Commerce revealed that Mississippi, Nebraska and Maine are the three states where small to medium businesses have grown the most year over year. This is according to sales in Amazon stores, specifically. More than half of the items sold in Amazon stores are from small to medium businesses.

The top 10 fastest-growing states breaks down as follows:

  1. Mississippi
  2. Nebraska
  3. Maine
  4. Texas
  5. Indiana
  6. Colorado
  7. North Dakota
  8. Vermont
  9. Wisconsin
  10. Missouri

The third-party physical product sales, which is what gets sold on Amazon stores primarily, passed $160 billion in 2018. Nearly 20% of rural small businesses generate 80% of their revenue by selling products online.

Unlocking the Digital Potential of Rural America (American Innovators), Rated: AAA

Unlocking the digital potential for rural small businesses across the country could add $47 billion to the U.S. GDP per year.

Increased adoption could grow annual revenues of rural small businesses by more than 21% over the next three years – the equivalent of $84.5 billion per year – with states in the South seeing the greatest benefit

Online tools and technology have the highest potential impact on rural small businesses with revenue under $100,000

Read the full report here.

Proof of Work: the slow but steady process of institutional adoption (The Block), Rated: A

Antonio from dYdX

dYdX is a decentralized exchange for margin trading, borrowing, lending, and eventually derivatives. dYdX allows traders to trustlessly short and get leverage on crypto assets.

  • DAI lending rate has been high due to strong demand to go leveraged long on ETH, peaking at over 77% APR returns for lenders over the weekend

Brendan from Dharma

Dharma is the easiest place to borrow and lend cryptocurrencies. It enables non-custodial peer-to-peer lending through smart contracts on Ethereum.

  • #ReFi with #DeFi continued in full force, leading to over 1.7m in borrow volume (nearly all Dai-denominated)

Lendio Franchise Opens in Erie to Expand Access to Capital for Local Businesses (Lendio), Rated: B

Lendio has announced the opening of a new Lendio franchise in Erie. Through the Lendio franchise program, John Fee, a local business owner himself, will help other entrepreneurs in the community apply for loans, review their options and secure funding, easing their financial hurdles.

Fundbox Selected By Brandwise To Power Net Terms For Suppliers, Agencies, And Retailers (Yahoo! Finance), Rated: B

Today Fundbox announced that the sales technology leader Brandwise and Fundbox have entered into an exclusive agreement whereas Fundbox will be Brandwise’s business-to-business (B2B) trade financing partner.  Brandwise will leverage Fundbox’s business capital platform to power financing terms within the Brandwise ecosystem of 250,000 retailers.

White Oak Commercial Finance Adds to its ABL Originations Team (Yahoo! Finance), Rated: B

White Oak Commercial Finance, LLC (“White Oak”), an affiliate of White Oak Global Advisors, LLC, announced today the appointment of Michael Goletz to Director of ABL Originations, covering the Midwest U.S. region. Mr. Goletz joins from WNB Specialty Finance, a division of Woodforest National Bank, where he was responsible for sourcing and structuring asset-based lending debt facilities ranging from $5 million to $25 million.

Urjanet Announces 2019 SPARK Award Winners (PR Web), Rated: B

Urjanet, the global leader in utility data aggregation, today announced the winners of its 2019 SPARK Awards: AvidXchange, Bright Power, SimpleBills and Guppy – four companies at the forefront of using utility bill data to better serve their customers, community partners, and the environment.

  • Most Innovative Use of Utility Data: SimpleBills. In addition to utility bill management, residents can use SimpleBills to report their utility bill payment history to credit bureaus through a unique opt-in service.
  • Leader in Financial Inclusion: Guppy. Through its partnership with Urjanet to acquire user-permissioned utility data, Guppy enables greater access to financial services for consumers, as well as background and ID checks for businesses, all while keeping the end user in control of their own data.
United Kingdom

Klarna gets physical: All UK payment methods now available in-store (Fintech Finance), Rated: AAA

Global payments provider Klarna has today announced that all its alternative payment options are available both in-store as well as online.

Klarna’s alternative payment options include:

  • Shoppers can pay later, up to 30 days after delivery of goods
  • Shoppers can pay for purchases in 3 equal instalments collected monthly
  • For higher-ticket items, consumers can use Klarna’s consumer finance in 6-36 month payment plans

£1bn debt fund launched for UK non-bank lenders (P2P Finance News), Rated: A

EUROPEAN Risk Capital (ERG) has launched a £1bn multi-client debt programme for UK-based, mid-market non-bank lenders.

The programme – titled ‘CreditStream’ – has a minimum deal target size of £10m, making it primarily suited to mid-sized lenders including bridging and development lenders, second charge mortgagees, consumer and SME funders, auto/equipment finance companies, and fintech lenders. The maximum deal size can be in excess of £100m.

Lendy execs launch wage advance firm (P2P Finance News), Rated: A

Companies House documents show Brooke and Kelly, whosecurrent role at Lendy remains a mystery, set up a firm called Copious Capital in July 2018.

Copious Capital’s launch product is Pay Me Today, described as an “antidote to payday lending,” which lets companies approve and arrange salary advances for staff who need access to money before payday.

Lendy’s operations manager Pamela Guillamón owns between 25 per cent and 50 per cent of Pay Me Today, according to Companies House documents.

Woodford’s peer-to-peer exodus continues with VPC sale (Citywire), Rated: A

Fund manager Neil Woodford has followed his £88 million sale of his stake in peer-to-peer lending trust P2P Global Investments (P2P) by offloading his entire £40 million stake in rival VPC Specialty Lending (VSLV).

Relendex ‘very keen’ to get behind modular housing (Development Finance Today), Rated: A

Relendex is “very keen” to get behind modular housing, according to its chief operating officer Max Lehrain.
Development Finance Today recently reported on the difficulties lenders faced when funding modular builds, however Fintan explained some ways Relendex was able to feel comfortable with supporting such schemes.

OakNorth continues supporting British SMEs with senior lending hires (Fintech Finance), Rated: B

OakNorth – the bank for entrepreneurs, by entrepreneurs – is bolstering its regional presence with the appointment of four senior team members in Manchester, the Midlands and the South West.

Christopher Swarbrick, who has 18 years’ banking experience, joins as a Senior Director, Debt Finance. 

Christopher Richards joins from RBS where he spent 11 years and most recently held the role of Senior Relationship Manager, managing a portfolio of 40 complex banking relationships.

Mother tells of ‘devastating’ impact caused by collapse of Eridge firm London Capital & Finance (Times Local News), Rated: B

THE mother of two sons, one of whom is autistic, has told of the impact on their lives brought about by the collapse of a Tunbridge Wells based investment firm.

Around 11,500 people are set to lose a total £237million following the demise of the company based at Eridge Park.

LCF were selling unregulated mini-bonds, offering investors an eight per cent return for money that was purportedly being lent to a range of businesses.

China

HeZhong International sets terms for $ 5 million US IPO (Nasdaq), Rated: AAA

HeZhong International Holding, which operates a peer-to-peer lending marketplace in China, announced terms for its US IPO on Wednesday.

The Shenzhen, China-based company plans to raise $5 million by offering 1.3 million shares at a price of $4. At $4, HeZhong International Holding would command a market value of $55 million.

European Union

Which digital banks have the best overdrafts? (AltFi), Rated: AAA

Starling Bank

The London-based challenger bank charges 15 per cent equivalent annual rate for arranged overdrafts.

Charges £2 a month for unarranged overdrafts as well as the standard rate of interest. Will waive charges if your monthly overdraft interest comes to less than 10p for the month. Operates a monthly fee cap of £2.

Runner up

Monzo

Customers with arranged overdrafts are charges a 50p charge every day your account is overdrawn by more than £20, up to a maximum charge of £15.50 a month.

The Rest

B

The digital lender, launched by Clydesdale and Yorkshire Banks in 2016, charges a 12.5 per cent equivalent annual rate on arranged overdrafts. On top of this it charges a fee of £6 a month. The bank charges £6 a day for unarranged overdrafts.

N26

The Berlin-based app-only bank, with more than 2 million customers in 24 countries, said it will launch an overdraft facility for its 200,000 UK account holders “soon.”

55 Investors Become the Co-Owners of a Building in Western Switzerland (Yahoo! Finance), Rated: A

Foxstone (www.foxstone.ch) announces the acquisition, in crowdinvestment, of a residential building in Concise (VD) by 55 investors, of all ages and all backgrounds. They acquired a share of the building in co-ownership with a minimum amount of CHF 50’000.-

The total amount raised in co-ownership was CHF 3,250,000 for an acquisition price of the building of CHF 6,800,000, the remaining balance being financed by a mortgage. The net return on equity is 6.53%, which represents an annual return of CHF 3,265 for a CHF 50’000 investment. The Régie du Rhône takes care of the day-to-day management of the building.

How BBVA overhauled its mobile banking app (American Banker), Rated: A


International

Global fintech investment doubled in 2018 (HousingWire), Rated: AAA

Total global fintech investment increased from $50.8 billion in 2017 to a full $111.8 billion in 2018, according to KPMG’s The Pulse of Fintech, a biannual report that highlights key trends in fintech across the globe.

But the report showed something interesting when it comes to fintech – payments and lending continued to attract the most significant investment dollars globally.

China’s fintech funding dipped significantly in Q1 2019 (Business Insider), Rated: AAA

Global fintech funding was down 13% from $7.3 billion in Q4 2018 to $6.3 billion in Q1 2019, according to a new report from CB Insights.

However, deal numbers increased from 427 in Q4 2018 to 445 in Q1 2019, despite early stage funding dipping, while mid- and late-stage funding increased. Moreover, funding actually ticked up 1.5% year-over-year (YoY) from $6.2 billion in Q1 2018.

P2P Industry is Likely to Shine Despite Troubles in China (Learn Bonds), Rated: A

According to a PWC report, the U.S. P2P market is likely to reach $150 billion by 2025. Another report from Allied Market Research indicates that Peer to Peer (P2P) market could grow at a CAGR of 51.5% from 2016 to 2022.

Efma White Paper Covers Potential of SME Ecosystem (Monitor Daily), Rated: A

Drawing insight from recent research, case studies and observations from bankers working closely with SMEs, this digest outlines the main challenges facing banks today when trying to attract SME customers, such as intense competition from new entrants like Alibaba-backed online lender MYbank and Tencent-backed WeBank in China. In other markets, like the UK, 63% of financial services players in 2018 didn’t exist a decade before.

Authors of the 2019 Geneva Report on the World Economy seek market participant input (Fintech Policy), Rated: B

The topic of this year’s Geneva Report on the World Economy will be “the future of banking.”

The authors of the report (Kathryn Petralia, Kabbage; Thomas Philippon, NYU Stern School of Business; Tara Rice, Bank for International Settlements and Nicolas Veron, Peterson Institute for International Economics and Bruegel) are asking for input from market participants.

Asia

India unseats China as Asia’s top fintech funding source (TechCrunch), Rated: AAA

China’s massive fintech industry took a beating in recent months as the government continued to wind down online lending nationwide, rattling investor confidence.

Funding for fintech startups shrank 87.6 percent year-over-year to $192.1 million during the first quarter of 2019, a new reportfrom data provider CB Insights shows. India, which recorded $285.6 million raised for fintech startups in the period, overtook China to be Asia’s top fundraising hub for financial technology. Both countries clocked in 29 fintech deals, suggesting a cooling investor sentiment in China which saw its height of 76 deals just three quarters ago.

Source: CB Insights
India

Coming Together of Traditional Lenders and Fintech Players, Creating Better Opportunities (Entrepreneur), Rated: AAA

Fintech driven alternative lending is the second most funded and one of the fastest growing segments in the Indian fintech space. At last count, there were over 20 plus digital, alternative lending companies, each with their version of the truth, and probably another twenty in the stealth mode.

One thing common with most new age lending companies is that they rightly understand that they have a better chance of succeeding by collaborating with the existing lenders like Banks and NBFCs.

Canada

MOGO: A Rapidly Growing Canadian Fintech Provider (Yahoo! Finance), Rated: AAA

Mogo (MOGO) is a rapidly growing Canadian fintech company with over 800K members that generates revenues from a series of innovative products to help consumers manage & control their financial health.

  • Mogo is a high growth disruptor. Was the company not fighting the headwinds of strategically exiting the short-term loan business that it phased out throughout 2018, it would have shown 71% revenue growth on what it calls “core revenues” or revenues of continuing operations. Core revenue, excludes the company’s legacy short term lending revenue which Mogo fully exited at the end of Q3 2018. In 2018, the company generated $61 million in total revenues representing 26% growth, spurred by a doubling of its subscription and services business to $27 million. In the most recently reported quarter, Q4 2018, Mogo’s core revenue increased 75% versus the same period in 2017 with Subscription & Services revenue having its fourth consecutive quarter of at least 100% year over year growth. In 2018, it added more than 210,000 new members to reach 756,000 members on December 31, 2018 (up 39%), and on March 21st it announced it has surpassed 800,000 members.
  • Based on a combined value of the company’s lending business and its subscription services and fee generation business we believe the company is worth $7.67 per share when compared with other companies in these spaces.
Africa

The Legal and Regulatory Framework Governing Financial Technology (Fintech) in Nigeria (Lexology), Rated: AAA

FinTech is also gaining traction in the areas of lending and alternative financing (such as peer-to-peer lending, business-to-consumer lending, and so on), as well as financial and insurance products.

Pursuant to the Banks and Other Financial Institutions Act, Chapter B3 LFN 2004, an entity that wishes to provide marketplace lending may do so by registering as a bank or Other Financial Institution (“OFI”).

The use of airtime for the repayment of loans to a mobile lender could constitute a premium rated service, the provision of which requires the approval of the NCC.

Authors:

George Popescu
Allen Taylor

The post Thursday May 2 2019, Weekly News Digest appeared first on Lending Times.

Tuesday October 30 2018, Daily News Digest

Synchrony Q3 Earnings

News Comments Today’s main news: SoFi caught with alleged misleading ads. The Motley Fool recommends LendingClub. Prosper performance update. Australia’s fintechs are beginning to make profits. Elevate Credit plunges from record low. Today’s main analysis: Loan growth at credit card issuers. Today’s thought-provoking articles: Down payment affordability by state. Crypto lending and the turbulent 2018 market. Do banks or fintechs do […]

Synchrony Q3 Earnings

News Comments

United States

United Kingdom

International

Other

News Summary

United States

FTC puts student lenders on notice by citing misleading ads at SoFi (American Banker) Rated: AAA

SoFi has agreed to settle federal charges that it misled borrowers about how much they could save by refinancing their student loans. The charges were issued by the Federal Trade Commission, which warned other student lenders to steer clear of similar violations.

The commission voted 5-0 on Monday to issue the administrative complaint and accept the agreement with SoFi. The company, which agreed to stop exaggerating potential savings, was not required to pay a civil penalty.

According to the FTC, SoFi over the past two years has inflated — at times doubling — estimates of the average borrower’s savings from student loan refis. The San Francisco company, which in one ad claimed that SoFi customers save an average of $22,359, did so, in part, by excluding from its calculations borrowers who refinance their loans with longer terms and pay more over the lifetime of their loans, the agency said.

Online Student Loan Refinance Company SoFi Settles FTC Charges, Agrees to Stop Making False Claims About Loan Refinancing Savings (FTC) Rated: A

Online student loan refinancer SoFi has agreed to stop misrepresenting how much money student loan borrowers have saved or will save from refinancing their loans with the company, in order to settle Federal Trade Commission charges that it deceptively advertised inflated figures for more than two years.

According to the FTC, one online SoFi ad claimed, “Refinancing student loans saves $22,359 on average,” while another ad told readers to “Start saving on your student loans. Average monthly savings $292.”

6 Great Stocks Under $ 6 (The Motley Fool) Rated: AAA

LendingClub — $3.13

Peer-to-peer lending doesn’t get a lot of love on Wall Street, but it’s a win-win for folks looking to borrow money and risk-tolerant income investors willing to lend out their money in the chase for higher yields. LendingClub has had a rough first few years as a public company, and it wasn’t until just a few weeks ago that it settled up on Federal Trade Commission and SEC complaints stemming from company disclosures that ultimately cost its CEO his job.

The platform’s popularity continues to grow. Revenue rose 27% in LendingClub’s latest quarter, and loan originations rose 31% to hit a record $2.8 billion. Guidance wasn’t great. Profitability remains a challenge. The depressed stock has some serious upside as demand for peer-to-peer lending gains — pun intended — interest.

Prosper Performance Update: September 2018 (Prosper Blog) Rated: AAA

Highlights from the September report include:

  • In September, 61% of originations were rated AA-B as Prosper continues to reduce the risk profile of originations on the platform.
  • Dollar WA FICO for the month of September was 717, remaining flat month-over-month and increasing 10 points since Q3 2017.
  • Average loan size on the platform is approximately $13,300, approximately $280 lower since 2018H1. This decrease is driven by our continued focus on limiting loan amounts based on a borrower’s income and ability to pay.
  • WA Borrower Rate for September originations on the platform increased by 10 bps compared to August as the portion of originations rated AA-B decreased slightly.

Loan Growth at Credit Card Issuers (Peer IQ) Rated: AAA

American Express Q3 Earnings

Revenues at AXP grew by 9% YoY to $10.1 Bn to achieve record levels. Earnings grew by 22% YoY to $1.7 Bn. NII also grew 17% YoY to $2 Bn. AXP’s premium customer base saw record-low delinquency rates while the net charge-off rate increased slightly YoY to 1.7%.

Source: Peer IQ

Capital One Q3 Earnings

COF’s revenues were flat YoY at $7 Bn, but earnings grew by 36% YoY to $1.5 Bn. Growth in NII was modest at 2% YoY to $5.8 Bn. COF was the only issuer who saw a drop in the net charge-off rate by 20 bps YoY to 2.4%. COF also saw its provisions for loan losses decrease by 31% YoY driven by improving credit quality of the credit card and auto loan portfolios. This release in provisions consequently led to a 3% YoY drop in allowance for loan losses to $7.2 Bn on loan growth of 1% YoY.

Source: PeerIQ

Synchrony Q3 Earnings

SYF’s revenues grew by 9% YoY to $3.3 Bn. Earnings grew by 21% YoY to $0.7 Bn. NII grew by 9% YoY to $4.2 Bn. SYF had the highest net charge-off rate of 5% among all issuers, which stayed flat YoY. Loans grew by 14% YoY to $88 Bn. Provision for loan losses grew by 11% YoY and the total allowance for loan losses increased by 16% YoY to $2.9 Bn, slightly outpacing loan growth.

Source: PeerIQ

LendingTree Ranks Down Payment Affordability by State (Lending Tree) Rated: AAA

Key findings

  • Average down payment percentages for conventional 30-year, fixed-rate purchase mortgage offers stayed about the same from the second quarter to the third quarter, rising 0.03 percentage points (18.02% to 18.05%).
  • At the same time, average down payment amounts decreased nearly 10% in the third quarter, falling from $52,480 to $47,265.
  • The average loan amount offered to potential homebuyers fell around $28,000 from $285,903 in Q2 to $257,749 in Q3.
Source: Lending Tree

 

Source: Lending Tree

Average mortgage down payments drop in Q3 (Mortage Professional America) Rated: A

Average down payment amounts for conventional 30-year, fixed-rate purchase mortgage offers declined during the third quarter, while down payments as a percentage of the price stayed about the same, according to an analysis by LendingTree.

Average amounts fell by almost 10% during the third quarter, decreasing to $47,265 from $52,480. At the same time, average down payment percentages were steady from the second quarter, rising 0.03 percentage points to 18.05% from 18.02%.

The Credit Junction Secures $ 23 Million Equity Investment from Century Equity Partners (New York Business Journal) Rated: A

The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $23 million growth equity investment from Century Equity Partners (“Century”). Century focuses on making investments in lower middle market companies that have demonstrated value propositions to the financial services industry. This investment provides The Credit Junction with growth capital to expand its ability to provide financing solutions to Supply Chain America, as well as commercialize its proprietary data and risk analytics platform.

This marks the second meaningful financing announcement for The Credit Junction in recent months, as the company secured a $150 million credit facility from MidCap Financial in March 2018.

Surge in Mobile Fraud and Phishing, Balancing Customer Friction and Fraud Prevention Are Biggest Challenges for Businesses (PR Newswire) Rated: A

IDology today released its Sixth Annual Fraud Report, confirming the growing importance of balancing customer friction and fraud prevention, cited by businesses this year as the number one challenge in fighting fraud. The report reveals a surge in mobile and phishing fraud schemes, a focus on artificial intelligence and machine learning as the growing trends in identity verification, and the strategic role identity verification plays in the quest to gain a competitive edge, retain and attract customers, and increase revenue.

Phishing and Mobile Fraud Surge

Credit card fraud and account takeovers remain the most widespread forms of fraud, but phishing schemes and mobile fraud have surged.

  • The prevalence of mobile fraud surged dramatically with an increase of 117% over the previous year (one of the highest year-over-year increases among the fraud vectors measured this year in the survey). The number of businesses that feel their industry is least prepared to detect and prevent mobile device attacks increased 167% compared to a year ago.
  • Businesses reported a 63% increase in mobile fraud. All types, including porting, spoofing, hacking and fraudulent change events, are on the rise. Caller ID spoofing increased by 74%, porting by 69% and SMS interception by 50% compared to 2017.
  • Phishing, which can be linked to 93% of last year’s security breaches and has steadily risen each year, increased in prevalence by 66%.
Source: IDology

ABS Professionals Demonstrate Enthusiasm Despite Rising Interest Rates, Survey Finds (ABL Advisor) Rated: A

Capital One survey conducted at ABS East 2018—a conference convening professionals from across the asset-backed securities (ABS) industry—found that most respondents (94 percent) expect buy-side interest in ABS to increase or remain the same in the coming year while only 6 percent expect it to decrease.

Of the challenges facing the industry, only 15 percent of ABS professionals elected increases in interest rates. For the majority of respondents, uncertainty around regulatory requirements (30 percent), increased credit risk (25 percent) and increased competition (24 percent) pose the greater challenges for their businesses over the next 12 months.

State Regulators File Second Lawsuit Opposing OCC Fintech Charter (National Law Review) Rated: A

The Conference of State Bank Supervisors (CSBS) has filed a second lawsuit in D.C. federal district court to stop the Office of the Comptroller of the Currency (OCC) from issuing special purpose national bank (SPNB) charters to fintech companies.  A similar lawsuit was filed last month in a New York federal district court by the New York Department of Financial Services.

Stephanie Klein of Braviant Holdings (Lend Academy) Rated: A

While the non-prime consumer lending space is less competitive than prime there are many companies doing interesting things. We heard the recent news of US Bank entering the space and just today I read that the CFPB intends to change the rules for payday lenders in the new year. It is certainly a dynamic space that will be going through lots of changes in the near future.

Our next guest on the Lend Academy Podcast is Stephanie Klein. She is the CEO of Braviant Holdings, a non-prime lender that has been around since 2014. Stephanie actually has quite a long history in the non-prime space going back more than a decade to her time with Al Goldstein’s (the CEO of Avant) first lending company, CashNetUSA.

Online subprime lender Elevate Credit plunges from record low after earnings (Market Watch) Rated: AAA

Elevate Credit Inc. ELVT, -32.13% closed at a record low Monday, then plunged more than 20% in after-hours trading following an earnings report that included lowered annual guidance and myriad concerns that cropped up in the quarter. Chief Executive Ken Rees called the quarter “unexpectedly challenging” in the announcement, and then ticked off the reasons for the performance.

Elevate, which offers loans online to subprime customers through different products, reported a third-quarter loss of $4.2 million, or 10 cents a share, on revenue of $201.5 million, after reporting a profit of a penny a share on sales of $172.9 million a year ago. Analysts on average expected earnings of 13 cents a share on sales of $200.2 million, according to FactSet.

The company chopped its annual forecast, which previously called for earnings of 55 cents to 90 cents a share on sales of $790 million to $810 million. Now, Elevate expects earnings of 23 cents to 32 cents a share on sales of $790 million to $795 million in 2018. After shares closed at an all-time low of $6.35 Monday, they fell to about $5 in after-hours trading.

Equifax launches real-time Open Banking ID checks (Peer2Peer Finance) Rated: A

CREDIT referencing agency Equifax has teamed up with Open Banking technology provider consents.online to allow it to match customer data and transactions in real time.

It will be used within Equifax’s bank account verifier system that lets lenders compare sort codes and account numbers to its own database.

Users will be able to match identity information such as the consumer’s name, address and date of birth with transaction data provided through Open Banking, helping them verify who someone is faster and help avoid fraud.

5 Ways Online Loan Lenders are Changing the Financial Landscape (The Libertarian Republic) Rated: A

Perhaps you didn’t know that about 80 percent of American households are in some form of financial debt.

  1. Fast Access to Credit

Traditional banks have a bad reputation for playing hardball with loan applicants. Borrowers have to fill out more than a couple of forms and wait for days, weeks even, to get an approval. Never mind a simpler clerical error can get your request turned down.

  1. Credit Process Automation

One of the reasons traditional lenders take ages to approve and disburse credit is that they have to manually verify borrowers’ details.

  1. Introduction of New Lending Models

You don’t just walk into any bank or credit union and apply for a loan.

  1. Bad Credit? No Problem

The only other thing that is certain besides death and taxes is a traditional lender turning down a borrower with poor credit.

  1. Millennials Are Having Their Way

Being a millennial is a full-time job – with no paid overtime. From having people label them needy and entitled to being the objects of hate for older generations, it’s tough being a millennial.

Money20/20 Las Vegas: Wealthfront’s Freemium Tool Shows How Robo-Advisors Can Capture Market Share from Incumbents (The Fintech Times) Rated: A

At Money 20/20 in Las Vegas, Wealthfront announced it is opening up its financial planning service to anyone for free. The freemium service is currently in beta and will be available by the end of this year.

Heike van den Hoevel, Senior Wealth Management Analyst at 

The U.S. Financial Industry Could Be More Innovative. But Should It? (Barrons) Rated: A

American banking is apparently just a bit too boring, the Federal Deposit Insurance Corp. has concluded. Its chairwoman, Jelena McWilliams, told the American Bankers Association conference that the agency will open an innovation office.

This is related to, but slightly different from, the tack taken in July’s report from the Treasury Department that laid out more than 80 recommendations to help nonbank financial firms. The idea then was that nonbank financial firms, which get called fintechs for marketing reasons, don’t get a fair shot because of the regulatory advantages enjoyed by regular old banks.

The message was that regulation was stifling innovation by not regulating nonbank financial firms. Companies like Square, for instance, should be able to get banking charters if they want. (Which they do.)

McWilliams seems to see the problem from the perspective of banks rather than from nonbanks and comes to what looks like a contradictory position: Nonbank fintechs are innovating like crazy and banks aren’t keeping up. But there’s nothing exactly contradictory about saying nonbanks could be doing more things under a more accommodating regulatory regime and that banks aren’t innovating as fast nonbanks.

Walker & Dunlop Selects SS&C to Support $ 78 Billion Loan Portfolio (SS&C) Rated: B

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced that Walker & Dunlop has selected SS&C as a technology and services partner to deliver a highly-automated solution for loan servicing, asset management, insurance compliance, document management and investor reporting. This partnership reinforces SS&C’s commitment to the agency/multifamily market.

SS&C will provide cloud-based software and outsourcing services including Precision LM for loan servicing, and AWD, an enterprise business process management system, which combines automation, workforce optimization and digital transformation for insurance compliance and renewals. SS&C’s integrated solution supports a broad range of commercial/multifamily loan programs, such as Freddie Mac (including Freddie K securitizations), Fannie Mae, HUD, Bridge, Life Company and more.

Commerce Bank Supports FinTech Startups through Partnership with SixThirty (Business Wire) Rated: B

Commerce Bank announced today a multi-year partnership with SixThirty, a St. Louis-based venture fund that invests in financial technology (FinTech) startup companies. SixThirty targets investments in late-seed stage startups that have a product and market traction and are starting to earn revenue. Its portfolio and pipeline represent some of the most innovative and promising FinTech ideas from around the world.

Through its strategic relationship with SixThirty, Commerce will provide hands-on training and mentoring to the companies selected to take part in SixThirty’s business development program. Commerce team members will also participate in networking opportunities with leading technology and financial services institutions and some of the brightest and most innovative minds in the country. Additionally, Commerce will have the ability to make direct investments in ideas that present strategic, long-term opportunity to the business and the needs of our customers.

The Schall Law Firm Announces the Filing of a Class Action Lawsuit Against Jianpu Technology Inc. (Business Wire) Rated: B

The Schall Law Firm, a national shareholder rights litigation firm, announces the filing of a class action lawsuit against Jianpu Technology Inc. (“Jianpu” or “the Company”) (NYSE: JT) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission.

Investors who purchased the Company’s shares pursuant to and/or traceable to the Registration Statement and Prospectus issued in connection with Jianpu’s initial public offering on or about November 16, 2017, are encouraged to contact the firm before December 24, 2018.

United Kingdom

The House Crowd opens £15m property development project to investors (Development Finance) Rated: AAA

A£15m crowdfunding property development project in Altrincham from the House Crowd has opened for investment.
The property crowdfunding and P2P lending platform is scheduled to complete the land purchase in November and start the build in January.

The House Crowd gives retail investors the chance to make an investment – starting from £1,000 – in property developments and builds the properties itself.

The site is in Altrincham town centre and will result in a total of 40 units comprising 31 apartments, eight townhouses and one commercial unit (pictured above).

P2P sector queries data used to justify tabled investor restrictions (Peer2Peer Finance) Rated: A

The industry gathered at a Peer-to-Peer Finance Association (P2PFA) event held in London last Wednesday, to discuss the Financial Conduct Authority’s (FCA’s) review of the sector ahead of the 27 October deadline for feedback.

The most contentious element of the FCA review was its proposals to introduce categorisation and appropriateness tests for P2P investors. Under the proposed changes, platforms would be restricted to marketing to those who are certified as sophisticated or high-net-worth investors or those that certify that they will not invest more than 10 per cent of their net portfolio in P2P.

At the P2PFA event, which was held under Chatham House rules, stakeholders suggested that the FCA had misinterpreted the findings of a 2016 survey conducted by the Cambridge Centre for Alternative Finance, which collected responses from investors. It was suggested that the FCA had used these findings as justification for the proposed marketing restrictions.

nCino to Present at Upcoming Fintech Industry Conferences (PR Newswire) Rated: B

nCino, the worldwide leader in cloud banking, today announced that members of the company’s leadership and market development teams will speak at two upcoming fintech industry conferences.

Nathaniel Ward, nCino’s regional vice president of market development for EMEA, will be speaking at MoneyLive Nordic Banking 2018 in a session titled: New Models in Banking: The Impact of Digitalisation. This session will explore the benefits and opportunities of cloud banking, and how to enable a workforce through digital transformation. This session will take place on 8 November at 09.45 at the Copenhagen Marriot Hotel.

Later in November, nCino’s chief innovation officer, Nathan Snell, will participate in a fireside chat at LendIt FinTech Europe 2018. In a session titled: The Rapid Pace of Product Launches in the Digital Age, Snell will discuss AI’s potential impact on the future of banking.

International

Crypto Lending Platforms Navigate Turbulent 2018 Market (Forbes) Rated: AAA

The surge of cryptocurrencies and “hodling” investment strategies of 2017 precipitated a flood of crypto asset-backed lending platforms coming to market.

The idea is a simple – take the concepts and models of traditional asset-backed lending and implement them with new “crypto assets” like Bitcoin and Ether. So if cryptocurrency miners or hodlers need short term access to fiat currency to pay expenses but don’t want to liquidate their positions, they can take out loans against the value of their crypto assets.

As such, platforms like ETHLend, SALT Lending, Nuo Lend and a plethora of others provide an alternative vehicle for investors who want to simultaneously hold and use their cryptocurrency.

Nexo Shares Positive Testimonials From XRP Users One Week After Launching Lending Service (Blokt) Rated: A

Nexo writes that it has received a huge inflow of corporate as well as individual XRP users who sought Nexo loans by keeping their crypto holdings as collateral. The loans ranged between $1,000 to $2,000,000. The service provider goes on to suggest that it is humbled as well as thrilled by the recognition it has received from the XRP community. The firm went on to share some testimonials by clients.

Australia

Australia’s fintech startups are starting to make profits (Business Insider) Rated: AAA

Australian fintech revenues are up 2.25 times and more of the startups have hit profitability as the local sector matures, according to the latest EY Census released at the FinTech Australia Intersekt conference.

Almost one in five (19%) fintech companies are now profitable with those aged three years or older now making up 43% of the local industry, up from 31% last year and just 20% in 2016.

The 2018 EY FinTech Australia Census, now in its third year, paints a picture of a sector now established and coming into its own as an alternative within the financial services landscape.

Forget flower crowns, personal loans are the latest wedding trend, says RateSetter (Mozo) Rated: A

From eco friendly decor to cupcake tiers, there’s always a new wedding trend on the rise. But according to recent research by peer-to-peer lender (P2P), RateSetter, low rate personal loans are also becoming many couples’ wedding essential.

A big reason loved up couples are opting for personal loans to help pay for their big day is to minimise credit card debt – 40% of RateSetter customers admitted to have taken out a personal loan to avoid using their plastic.

Contrary to the popular belief that men are not as involved in wedding planning, the data revealed that men were 66% more likely to take out a personal loan, compared to women (34%).

India

Banks or FinTechs – Who Does a Better Job for Business Loans? (Entrepreneur) Rated: AAA

Budding entrepreneurs with revolutionary business ideas (usually) need financing to keep their operations running. Banks have encouraged the growth of small-scale industries with access to credit, but the supply cannot keep up with the demand. Enter: Financial technology companies, aka FinTechs.

The global FinTech industry is maturing rapidly – with over $41.7bn invested in just the first half of 2018. Part of those deals was for FinTech lenders, who have supported the trend of industrialisation by granting business financing to those who were denied from traditional banks.

Asia

In brief: P2P lender PeopleFund raises $ 11m from Kakao, 500 Startups, more (Tech In Asia) Rated: AAA

PeopleFund, Korea’s fast-growing financial technology platform that connects borrowers and investors, has secured US$11M in series B funding.

The funding was led by KakaoPay, a subsidiary of Kakao that allows payments within Korea’s popular chatting app, KakaoTalk.

Returning investors included Dayli Financial Group, 500 Startups, and D3 Jubilee.

Authors:

George Popescu
Allen Taylor

Monday July 2 2018, Daily News Digest

Monday July 2 2018, Daily News Digest

News Comments Today’s main news: Zopa is profitable again. Capital One limits access to alt lenders. SimpleNexus raises $20M. Funding Circle changes projected returns. Metro Bank launches digital bank in Australia. Today’s main analysis: Deep dive into Amazon. Today’s thought-provoking articles: Deep dive into Amazon. More Chinese P2P lenders fall under regulatory scrutiny. How blockchain can assist banks with consumer lending. SMBs access […]

Monday July 2 2018, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Capital One restricts third-party data access, upsets customers (Payments Source) Rated: AAA

Capital One Financial Corp. is limiting how account data flows to outside apps for managing finances, prompting a backlash from the bank’s customers who say they have been locked out of their own information.

A technology upgrade led to the disruption, people familiar with the situation said. Plaid Technologies, whose software is used to connect banks with third parties, is unable to link with some Capital One accounts, according to the people, who requested anonymity because they weren’t authorized to speak publicly.

Slightly weak US GDP growth, Amazon Deep-Dive (PeerIQ), Rated: AAA

US Q1 GDP growth was revised slightly lower from 2.2% to 2% driven by lower-than-expected growth in services. This slowdown in growth seems to be temporary as the Atlanta Fed is projecting a blistering 4.5% GDP growth rate for Q2.

Amazon Treading Carefully with Its Financial Services Ambitions

A new report by CB Insights details Amazon’s “barreling into” the financial services sector, notably in payments and lending. Our view on Amazon is more sober.

In the absence of a clear regulatory swim lane, Amazon will continue to partner with financial institutions to provide lending services. The major lending products Amazon offers today are executed with highly regulated banking partners. Amazon for instance has developed co-brand relationships with JPM, Synchrony and AmEx.

Also, Amazon is courting major financial services institutions as customers of its cloud business so the company has a delicate balance that it needs to maintain between disrupting the financial services industry and losing its clients and partners.

Amazon’s Lending Products

Amazon has made a foray into consumer lending mainly with the help of co-branded credit cards. The company has also made ~$3 Bn in small business loans, but that standalone effort has now fallen to the wayside with the new small business lending partnership with AmEx.

Amazon’s international investments in fintech products have been concentrated in India where Amazon will finance commercial loans to Amazon’s sellers. However, unlike the model in the US where Amazon lends on its own balance sheet, Amazon will utilize a marketplace model with six participating banks at the outset. The lending program has grown 150% in the first five months of this year (total volumes are unreported).

Source: CB Insights

Digital Mortgage Platform SimpleNexus Raises $ 20M In Growth Capital (FinSmes) Rate: AAA

SimpleNexus, a Lehi, Utah-based company that brings the home mortgage process to mobile devices through a dynamic digital mortgage platform, raised $20m in growth capital.

Insight Venture Partners made the investment.

The company intends to use the funds to accelerate its continued growth and expansion.

TD Bank Teams Up With Fintech BizEquity to Enhance Commercial Customer Experience (Crowdfund Insider) Rated: A

TD Bank announced on Tuesday it has formed a new partnership with BizEquity to provide its small and mid-size business customers and prospects from Maine to Florida a no-cost comprehensive business valuation through a cutting-edge digital application.

The bank revealed that through its relationship with the Philadelphia-based fintech it now offers a service that typically costs several thousand dollars free of charge to small and mid-size companies. BizEquity delivers a detailed report with valuation information and key industry performance indicators to TD Bank relationship managers, who then share it with the business owner.

Small Businesses Access More Than $ 1 Billion of Working Capital During Non-Banking Hours through Kabbage (PR Web) Rated: A

Kabbage, Inc., a global financial services, technology and data platform serving small businesses, reports its 145,000-plus small business customers accessed over 300,000 loans during non-banking hours, reaching a record total of more than $1 billion in funding. In total, Kabbage has now provided access to more than $5 billion in funding to its customers across America. The non-banking hour analysis illustrates how Kabbage’s fully automated lending solutions remove the age-old hurdle of normal business hours by offering companies 24/7 access to working capital online.

LendingPoint Upsizes its Mezzanine Financing, Bringing it to More Than $ 50 Million (Business Wire) Rated: A

LendingPoint announced it closed an increase of its mezzanine financing, bringing the total of the facility to $52.5 million.

Paragon Outcomes Management LLC provided the financing that closed earlier this month. Paragon and LendingPoint have been building upon a successful relationship started with their first mezzanine credit facility in January 2017 of just $20 million, which was upsized just seven months later, and now has been upsized again to $52.5 million.

Amit Aggarwal: Refining A Real Estate Platform (Think Realty) Rated: A

Amit Aggarwal joined Auction.com as its chief technology officer in late 2017, but the experienced senior information technology (IT) leader had his eye on the needs of the national housing market for more than a decade before the hire. As early as 2005, Aggarwal was watching the residential real estate industry, considering the early signs of what he refers to as “cracks” in the then-booming housing ecosystem and working on a solution. By the time the market melted down in 2007, Aggarwal had been instrumental in the design and implementation of the workflow processes and platforms that served as the underpinning for the foreclosure crisis, including working closely with Fannie Mae and several of the country’s biggest banks and mortgage lenders.

Aggarwal took his passion for purifying and refining technology, processes, and real estate transactions with him when he joined Auction.com. 

Marketplace Lending: 60-Second Market Review and Insights (Credit Chronometer) Rated: AAA

Seven securitizations totaling $4.3 billion closed in Q1 2018, up 34% versus a year ago and representing the second-highest issuance in any quarter (after Q4 2017). Q1 issuances comprised $2.1 billion in student loan ABS, more than double Q1 2017 and the highest ever quarterly issuance of student deals. Total ABS issuance is expected to climb to $18 billion in 2018, up 30% from 2017.

Delinquencies increased in Q1 2018 across the consumer credit space, and reports of an influx of defaults on marketplace loans have prompted online lenders, including Lending Club and Prosper, to tighten their underwriting guidelines. The bright spot has been the student loan sector. The sector, led by SoFi which issued its largest ever student deal in Q1 at $1 billion, has been performing well, driven by refinance loans made to borrowers with strong credit profiles.

Battle for small-business customers spurs arms race at banks (American Banker) Rated: A

Surveys of small-business owners show an increasing level of confidence and commercial-and-industrial lending is up. The Small Business Administration’s 7(a) loan guarantee program seems poised for a fourth consecutive record year.

To capitalize, banks are investing in technology to make faster loan decisions. They are also hiring more lenders to better serve this segment. Now, bankers and other industry observers are hoping it all leads to increased earnings.

A retirement perk for millennials who are buried under student debt (LA Times) Rated: A

A new benefit program at Abbott means she won’t have to choose between paying down student debt and saving for the future. For any U.S.-based employee who puts at least 2% of their salary toward student loan payments, the healthcare company will contribute the equivalent of 5% of their salary into their 401(k) plan.

Abbott’s twist works around the tax penalty, because 401(k) payments are tax-free. Steve Fussell, a human resources vice president at Abbott, says the benefit also helps employees kick off their retirement savings early, which can make a huge difference over several decades of work. Only about a third of millennials are currently contributing to the company’s retirement plan, compared with 90% of the workforce overall.

Lending to Digital Natives: A Map to the Millennial Market (Credit Union Times) Rated: A

Millennials are a major demographic, yet they are not being served by credit unions. Only 32% of millennials are currently using a credit union compared to 50% of baby boomers, according to the Financial Brand.

Time reported the average 2016 college graduate will enter the workforce with $37,172 in student loan debt. They will change jobs four times in their first decade after college and their salaries are 20% lower than those of baby boomers at the same age, according to CNN.

United Kingdom

Zopa back in black (The Times) Rated: AAA

Peer-to-peer lender Zopa scraped back into profit last year, but rising default levels have led it to crack down on who it allows to borrow, writes Rosamund Urwin. The company, which has lent out £3.3bn in total, matches borrowers with investors wanting to lend. It has applied for a banking licence and wants to launch its bank within a year. A float has been pencilled in for 2020.

Funding Circle changes projected returns (Peer2Peer Finance) Rated: A

FUNDING Circle has altered its projected returns, meaning that investors lending across the platform’s full risk spectrum are expected to earn less money and those opting for lower-risk loans could earn more.

The peer-to-peer business lender said on Friday that that its projected returns for its Balanced account – which invests in the full range of businesses across all risk bands – will now be six to seven per cent.

The target rate on the Balanced account had previously been 7.2 per cent.

Meanwhile, Funding Circle’s Conservative account – which only invests in businesses assessed as lower risk – is now offering a projected return ranging between five and 5.5 per cent.

Funding Circle fund warns on dividend as currency costs bite (Citywire) Rated: A

Shares in Funding Circle SME Income (FCIF) fell today after peer-to-peer lending fund said the rising currency costs would force it to cut its dividend.

Shares fell 2.1%, or 3p, to 102p after it reported a ‘material increase’ in the cost of hedging, or removing the impact of the investment company’s holdsin dollar-denominated loans.

As a result the company, which mainly lends to small and medium-sized businesses in the UK, would only be able to pay a fully covered annual dividend of 5p to 6p per share from the third quarter of 2018. This is down from the current annual dividend of 6.5p, a potential decline of 8%-23%.

SHARE PUNT OF THE WEEK: Recent AIM entrant Trufin is a financing business with four divisions (This is Money) Rated: A

Recent AIM entrant Trufin is a financing business with four divisions. DFC lends to firms selling motorbikes, caravans, yachts and industrial kit, areas that mainstream banks may not be willing to touch.

Oxygen Finance helps councils make savings by prompting them to pay suppliers early, and Satago helps smaller businesses manage their cash flow. Lastly, it holds a 15 per cent stake in peer-to-peer lender Zopa.

Trufin is applying for a UK banking licence, which could help lower the company’s funding costs and boost margins. Zopa has also proposed a new funding round, which could increase the value of Trufin’s stake.

Open Banking could be worth £7.2bn by 2022, report shows (London School of Business & Finance) Rated: A

A report from Big Four accountancy firm PwC has predicted that the Open Banking sector could be worth £2.8bn by the end of the year and £7.2bn by 2022.

SMEs were shown to be more aware of the effects of Open Banking than retail customers and are also willing to make use of the data-sharing scheme, with 40% saying that they would share their financial transaction information.

When it comes to what information individuals would be willing to share, just 10% cited transaction history, while 12% said that they would share information about their financial products.

Banks were also found to still be popular with businesses, with 72% favouring them over fintech companies and peer-to-peer lending firms. This was also found to be the case for 65% of individuals.

HEAVYWEIGHT INVESTOR SAYS ‘TOO MUCH MONEY’ THROWN AT TECH (Business Cloud) Rated: A

One of Britain’s most high-profile investors has expressed concerns about “too much money being chucked” at tech businesses in the UK.

Moulton has also been an active tech investor over the last three decades, having backed peer-to-peer lending marketplace Funding Circle “very early on”, and estimates that around 50 of his 120 current investments have a link to technology.

However speaking to BusinessCloud at an investment roundtable in London organised by the Lancashire Investment Readiness Programme, the 67-year-old said the return on investment in technology is is relatively “poor”, particularly in the UK, and fears that it could become worse.

China

More P2P lenders collapse amid tough regulations (Global Times) Rated: AAA

As China has been ramping up efforts to strengthen regulations on the online financial industry, an increasing number of Peer-to-Peer (P2P) lending platforms have found themselves collapsing. As such, experts have warned investors of the perils of illegal financial activities that offer lucrative rewards.

After several P2P firms such as lianbijr.com and txslicai.com.cn were investigated by police in June, another Shanghai-based online lender reportedly collapsed.

Yilongcaifu and its parent company Fuxing Group have been shut down and are under investigation by police, news site stcn.com reported on Thursday.

Another Online Lender Falls Under Investigation (Caixin Global) Rated: A

Another online peer-to-peer (P2P) lender has fallen under investigation on suspicion of illegal fundraising as the crackdown continues on China’s scandal-plagued internet finance industry.

Shanghai police have detained four senior executives of Tangxiaoseng, an online lending platform controlled by Zibang Financial Service Internet Technology Co. Ltd., since police began investigating the platform on June 16, Caixin has learned.

51 Credit Card hits road for $ 174m IPO (Global Capital) Rated: A

51 Credit Card opened books on Friday for its HK$1.4bn ($173.9m) listing in Hong Kong, with 10 firms in the syndicate.The Chinese online peer-to-peer lending platform is offering 118.7m primary shares for HK$8.5 to HK$11.5 each, which could raise between HK$1bn and HK$1.4bn.

Sponsors China Merchants Securities and Citi are leading the trade alongside CLSA, which is a global co-ordinator.

European Union

Belgian Lending Marketplace Look&Fin Partners with Insurer Atradius (Crowdfund Insider) Rated: AAA

Today June 28, Belgium-based SME lending platform Look&Fin announced that it has partnered with credit insurer Atradius to offer a 100% guarantee on the capital lent to SMEs by its retail investors. The move is dramatically closing the gap between marketplace lending and bank lending. SME borrowers will get marketplace loans at lower interest rates, closer to the banks’ and retail investors will enjoy bank-level security for their investment.

Headquartered in the Netherlands, Atradius is the second largest global credit insurance leader with operations in more than 50 countries around the globe and total revenue of more than €1.8 billion.

Azlo and Green Dot Offer New Lending Products for Gig Economy Workers (Bank Innovation) Rated: A

Azlo will begin offering lending services to small businesses and gig economy workers this fall, the company announced last week. The fintech, which is backed by BBVA Compass, will be partnering with an undisclosed “non-traditional lending platform” to originate loans. These loans will range between $10,000 and $100,000, and even less Azlo CEO Brian Hamilton told Bank Innovation.

To determine a borrower’s creditworthiness, Azlo will not be looking at FICO scores. Instead, it will look at data collected from payment tools using APIs connected to platforms like Stripe, Square, and PayPal, in an Azlo account.

Latvia Pushes Fintech Innovation (Inside Bitcoins) Rated: A

Riga-based online lending marketplace Mintos, which just turned an annual profit for the first time, is now looking for global expansion.

Alongside Mintos, some of Latvia’s most well-known fintech startups include peer-to-peer lending marketplace Twino, and micropayment app Monea.

INLOCK to Conduct Poll to Determine the Future of Its ILK Token Model (Tech Bullion) Rated: B

INLOCK(INCOME LOCKER), a blockchain and smart-contract based peer-to-peer lending platform that enables crypto assets to be used as collateral, today announced that it will be hosting a community poll to help inform the development of its ILK token model.

Amidst preparation for the initial token sale and throughout the business screening process, INLOCK found that its token model with fractals created an unnecessary inconvenience for its users, leading to an overwhelming number of requests for a token split.

Spotcap Expands C-Suite As Business Matures (Spotcap) Rated: B

Fintech business lender Spotcap recently expanded its C-Suite to include two newly created roles.

Linh Bergen-Peters joins the company as Chief Marketing Officer and Martin Gawlak as Chief People Officer. These new roles will be instrumental in ensuring Spotcap’s continued growth. The company increased its gross revenue by more than 100 percent between May 2017 and May 2018, and doubled the size of its loan book during the same time period.

Linh Bergen-Peters joins Spotcap from HID Global and will be responsible for Spotcap’s multinational marketing strategy. Linh is a highly experienced global marketer, having held senior roles in leading technology companies such as AMD and Hewlett Packard, building and marketing high-tech brands.

International

Harmonic Fund Services live with Finastra for loan servicing (Finastra) Rated: A

Harmonic Fund Services has gone live with Finastra’s Fusion Loan IQ solution. The independent fund administration and alternative asset fund servicing firm will leverage the platform — traditionally used by banks and increasingly by service providers, to service their bilateral, specialised and syndicated loan portfolios — to provide a new loan administration and agency service to its diverse alternative investment funds client base.

Blockchain can assist banks with consumer lending (Digital Journal) Rated: AAA

The finance sector has been in the lead in terms of implementing blockchain and tokenization. The next area where the technology is likely to be applied is with traditional loans.

The advantage of cryptocurrency assets as collateral lies in the efficiency the digital currency can bring into the entire lending process. For any cryptocurrency asset approved by the lender, blockchain allows for immediate validation of its authenticity, ownership and worth. This should enables anyone to get immediate backing for a loan, provided they have a verifiable means of making repayments.

The types of startups that are making in-roads in the finance space include Ripple, a real-time gross settlement system, currency exchange and remittance network. Ripple is by companies such as UniCredit, UBS and Santander. A second is the Depository Network [DEPO]. This is a multi-platform network enable lenders, including peer-to-peer lending marketplaces, banks, other credit institutions to accept digital assets as collateral.

Bitcoin Millionaires Turn to SALT for Liquidity (BTC Manager) Rated: A

SALT Lending offers a peer-to-peer lending platform that allows cryptocurrency holders to use their Bitcoin and Ethereum as collateral for loans.

A Peer-to-Peer Lending Platform

Dave Carlson, who runs a cryptocurrency mining operation in Washington, has used SALT for this very purpose. With electricity expenses running as high as $250,000 per month, Dave needed $1 million to cover operating expenses for Giga-Watt, his mining operation. However, the potential for a price surge made him reluctant to exchange his cryptocurrency for cash.  He found an alternative in SALT, which The Wall Street Journal has reported is helping Bitcoin millionaires “unleash their fortunes.”

Australia

Metro Bank founder joins digital challengers in Australia (Financial Times) Rated: AAA

Serial banking entrepreneur Anthony Thomson, co-founder of Metro Bank in the UK, is helping to set up a new digital bank in Australia that aims to shake up a market dominated by the Big Four institutions.

The bank, named 86 400 after the number of seconds in a day, is initially being funded by Cuscal, an Australia payment services company.

Asia

The magic of crowdfunding (The Manila Times) Rated: AAA

Here in the Philippines and in many countries around the world, not only is the family the basic unit of society, but it also serves as the primordial foundation for economic activity.

Crowdfunding, through its biggest platform, Kickstarter, proved to be a very effective mode of hosting linkages between entrepreneurs and investors. Since its inception in 2009, Kickstarter has successfully funded 130,000 projects having around $3.76 Billion worth of pledges on all its projects. The huge acceptance and positive reception of these crowdfunding platforms continue to grow. In fact, it is estimated that it will be a $300 Billion industry by the year 2025.

Another type is “Peer-to-Peer Lending” that enable proponents to gain funding outside the traditional banking system through the risk-taking investors who are willing to shed a buck or two towards the growth of their loan portfolios.

Bermuda

Blockchain mortgages, touted for real estate investors, get thumbs-down on security concerns (Financial Post) Rated: AAA

Blockchain advocates have long touted the technology’s ability to disrupt entrenched business models. Now, several companies want to use it for real estate crowdfunding in a bid to circumvent the banks.

Bermuda-based Viva Network wants to exploit the blockchain’s ability to store records and transfer value quickly across international borders.

Targeting Bermuda as its first market, the company would use local mortgage professionals to run “mortgage hubs” that would evaluate and underwrite mortgages. It would divide each mortgage into 100,000 FMS units that could then be listed on the company’s blockchain-based exchange. Investors would purchase an FMS using Viva’s blockchain-based VIVA tokens and would harvest principal and interest payments from the property’s owner each month.

Inventions funded by

Authors:

George Popescu
Allen Taylor

Monday June 4 2018, Daily News Digest

Average segment revenue Qudian

News Comments Today’s main news: Yirendai announces earnings results. LendingCrowd goes over 3M GBP in loan originations in May. Starling seeks 80M GBP in funds. Transferwise partners with first European bank. Today’s main analysis: Is Qudian too risky? Today’s thought-provoking articles: The most well-funded tech startups in each U.S. state. Alipay isn’t just for the Chinese. International P2P lending volumes […]

Average segment revenue Qudian

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

The United States Of Startups: The Most Well-Funded Tech Startup In Every US State (CB Insights) Rated: AAA

Using the CB Insights database, we identified the most-well funded VC-backed technology startups by state based on disclosed equity funding. We excluded funding from debt as well as lines of credit, and only considered companies that have raised at least $1M of equity funding since 2015 to date (5/23/18).

Source: CB Insights

Citi has announced a direction for a new digital bank (Business Insider) Rated: A

A digital-only bank can allow Citi to continue onboarding new account holders despite its shrinking physical presence.

And because Citi already has 10 million active mobile banking customers as of Q1 2018, which represents 25% year-over-year (YoY) growth, it’s likely that consumers with Citi accounts will continue to do their mobile banking through Citi, so it’s a good move for the firm to target another customer base by leveraging its card network and cobrand partnerships.

How Capital One sees digital identity as a business opportunity (American Banker) Rated: A

Capital One has taken a different tack, spending much of the past year building out a digital identity platform that it can potentially position as a service it would sell to businesses.

By buying the startup Confyrm and hiring its founder, consumer identity expert Andrew Nash, the bank is taking another step toward making a business out of addressing the industry’s digital identity needs, industry observers say.

Source: American Banker/Experian

Hottest Alternative Lending Options Available for Small Businesses (All Business) Rated: A

Here are some trending alternative lending options—one of them may be just right for your SME.

Revolving business line of credit-Individuals and corporations are eligible to take out revolving lines of credit; this type of credit line allows entrepreneurs to pay a commitment fee and then utilize funds on an as-needed basis.

Unsecured business loan-Secured business loans require collateral and unsecured business loans do not. If you’re an entrepreneur and would prefer not to borrow money without putting your home, auto, or business inventory (or something else along those lines) up as collateral, then seeking out an unsecured business loan from an alternative lender may be your most practical option.

Crowdfunding-This funding method involves raising capital via individual investors, friends, customers, and family. It’s about tapping into the collective efforts of a big group of people, mostly through crowdfunding platforms and social media networks.

Too broke to own a home? These startups will fund your American Dream (Fast Company) Rated: A

Loftium, a Seattle-based startup, will contribute to a buyer’s down payment in exchange for Airbnb income.

Loftium has so far closed on nearly 50 homes, says Yifan Zhang, cofounder and CEO.

Other startups are taking a similarly innovative approach to the staid, highly regulated housing market. HomeFundMe, for example, helps homeowners crowdsource down payment funds from family members, friends, and employers. Point, based in San Francisco, buys equity from existing homeowners, and then cashes out when they sell–a homeowner-friendly twist on home equity lines of credit (HELOCs).

Laurel Road, MoviePass Join Forces  (Broadway World) Rated: A

Laurel Road, an online lender and FDIC-insured bank, has announced an exclusive, first-of-its-kind partnership with MoviePass, the nation’s premier movie theater subscription service, designed to further amplify savings and value for its customers.

As part of the agreement, MoviePass customers who refinance their student loans with Laurel Road will receive a free annual membership to MoviePass.

How credit card issuers are prepping for the next downturn (American Banker) Rated: A

Is the next turn in the credit cycle right around the corner? Or is it still years away?

The answer has big ramifications for the $1 trillion credit card industry, which has enjoyed unusually strong profits in the post-crisis period, but typically suffers during recessions.

At an industry conference in New York, credit card industry executives said Thursday that they still see sunshine on the horizon. But they were also careful to make clear that they are taking steps to prepare for rainy days ahead.

2018 Rising Stars: Viral Shah (Housing Wire) Rated: B

Viral Shah is cofounder and head of capital markets at Better Mortgage, where he oversees financial product innovation, the mortgage marketplace and corporate nance. Shah’s experience includes consumer nance, capital markets, corporate development and strategy.

Shah led the acquisition and integration of the mortgage lender that Better Mortgage purchased in 2015, while concurrently running the $30 million Series A capital raise.

Shah built out the capital markets infrastructure for the company, obtaining multiple warehouse lines and establishing a loan marketplace representing $700 billion of annual demand and 70% of the mortgage market, including some of the largest GSEs, banks, hedge funds, REITS and asset managers.

PeerStreet’s Nia Patel Named One of HousingWire’s 2018 Rising Stars (Business Wire) Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that Nia Patel has been named to HousingWire’s 2018 Rising Stars list of young leaders to watch in the housing industry. HousingWire’s 2018 Rising Stars list recognizes talent that demonstrate leadership and innovation, inspiring not only those within their company, but also their communities and the industry at large.

United Kingdom

LendingCrowd Milestone: Celebrates Record Month For Loan Origination (Crowdfund Insider) Rated: AAA

LendingCrowd, one of the UK’s fastest-growing alternative finance lenders to the SME market, announced on Friday it is on course for continued expansion after completing loan deals totaling to more than £3 million during May, marking the p2p lending platform’s best month ever. The company also reported that despite the month having two bank holidays it also saw its deal volumes reach a fresh record and secured loans for 36 small business covering a wide range of sectors across Britain.

UK challenger bank Starling seeks £80m funding (Fintech Futures) Rated: AAA

UK challenger bank Starling is looking to raise £80 million in its latest quest for funding – and it has ended its relationship with TransferWise.

In addition to the cash injection, Starling is hiring a new international advisory firm, as it potentially hunts for action beyond the UK. Starling is already in Ireland.

Catch the budgeting bug: apps aimed at millennials (The Sunday Times) Rated: A

Chip promises to help you save “without feeling it”. You link the app to your current account (12 providers are signed up); it works out what you can afford and sends this money every few days to a savings account paying 1% interest. It’s free, regulated by the Financial Conduct Authority (FCA) and available for iOS and Android.

Plum uses Facebook Messenger to analyse your cashflow before banking money. You can invest it in peer-to-peer platform RateSetter and earn up to 3% interest (RateSetter is not covered by the Financial Services Compensation Scheme). Plum is free and available for iOS and Android.

If you are self-employed or do freelance work, Coconut allows you to track your income and outgoings and any tax you owe.

In the red: the soaring cost of middle-class borrowing (The Times) Rated: A

This week the city regulator, the Financial Conduct Authority (FCA), said charges for dipping into an unarranged overdraft, something 13 million people do each year, can be ten times higher than the cost of paying off the same amount on a payday loan.

While 19 million people use the planned overdraft that comes with their bank account, most don’t see this as debt and will also probably have paid charges.

UK financial watchdog calls for ‘radical overhaul’ of high-cost credit (Financial Times) Rated: A

The UK financial regulator called for a “radical” overhaul of rules surrounding bank overdrafts and rent-to-own businesses on Thursday, dismissing criticism that it was dragging its heels in its efforts to protect vulnerable customers.

The Financial Conduct Authority said forcing banks to give more transparent information about overdrafts would save customers more than £200m a year. The regulator said it would consider more fundamental changes in future, such as a ban on fixed fees and ending distinctions between unarranged and arranged borrowing costs.

When Tandem met Harrods: we had ‘sir’, but we didn’t have ‘dame’ (AltFi News) Rated: A

When Tandem’s banking plans went up in smoke last year, after a failed fundraise, few could have guessed that it would rise from the ashes on the wings of luxury department store Harrods’ banking arm.

But that is exactly what happened. The digital challenger completed the acquisition of Harrods Bank in January, giving it a banking licence, £80m of equity capital, £400m of deposits and a £375m mortgage loanbook. It has now launched a cashback credit card and fixed savings accounts – not to mention having signed up 100,000 customers.

In announcing that milestone earlier this week, Tandem revealed that its chief executive Ricky Knox (pictured, right-middle) had invited Harrods Bank’s 7,000 global customers to meet face-to-face in his office in the months following the acquisition.

Finance companies and retailers are experimenting with Slack (Tear Sheet) Rated: B

While no major bank has rolled out a Slack bot for customers (though they’ve done so on Facebook messenger or iMessage), challenger bank Revolut is testing its capabilities for business customers.

This week, the bank launched Revolut Connect, a feature that lets business account holders “talk” to companion apps they use frequently for crucial day-to-day functions like payroll and expense management.

China

Yirendai Announces Earnings Results (The Ledger Gazette) Rated: AAA

Yirendai (NYSE:YRD) issued its quarterly earnings data on Thursday, May 24th. The technology company reported $1.72 EPS for the quarter, beating the consensus estimate of $0.99 by $0.73, Briefing.com reports. The firm had revenue of $253.90 million during the quarter, compared to the consensus estimate of $250.75 million. Yirendai had a net margin of 21.93% and a return on equity of 51.90%. During the same period in the prior year, the firm posted $5.81 earnings per share.

Qudian: The Risky Chinese Fintech Opportunity (Seeking Alpha) Rated: AAA

QD’s average loan size is small. Roughly speaking it ranges from $100-200 per customer. The average cash credit was $136, as listed in its IPO prospectus. QD considers that these small credits pose a favorable risk-reward profile because customers are likely always to pay back their debts. Also, since their credit is short term, its risk is lower compared to longer-term credit products.

Source: SEC filings, quote QD, and author’s elaboration
Source: SEC filings, quote QD, and author’s elaboration

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

International Tuition Payment Platform Easy Transfer Receives Tens of Million Yuan in Series A Financing

This week, Easy Transfer announced that it has won tens of millions yuan in Series A financing, which was led by Zhen Fund and followed by IDG Capital. It is reported that this round of investment will be mainly used for product development, team-building and marketing.

The Hong Kong Monetary Authority is Expected to License Virtual Banks by the End of this Year

On May 31st, Hong Kong Monetary Authority (HKMA) issued the revised “Virtual Bank Recognition Guidelines”. The president of the HKMA, CHAN Tak-Lam, said that some interested parties have begun to submit applications to the HKMA. HKMA will carefully and quickly assess the applications and is expected to license virtual banks by as early as the end of this year.

Consumer Finance Company Dauron Secures Tens of Million Yuan in Pre-A Round of Financing

Dauron, an online consumer finance company, announced that it had received tens of million yuan in Pre-A round of financing from Jingbei Investment and Wanrui Factoring.

European Union

Transferwise partners with first major European bank BPCE (City A.M.) Rated: AAA

Out with the old and in with the new: digital money transfer service Transferwise has partnered with Banques Populaires’ and Caisses d’Espargne (BPCE), France’s second largest bank, to integrate its API directly into BPCE’s banking apps.

Set to go live at the beginning of 2019, the partnership between Groupe BPCE, its international banking arm Natixis Payments and Transferwise will see the fintech’s international payments API power all payments made digitally by the group’s 15.1m retail customers at the mid-market exchange rate.

Transactions will also be set at Transferwise’s low-cost 0.5 per cent fee on most routes, and will serve over 60 international destinations. Currently over 3m people use the platform to transfer more than €2m (£1.75m) every month.

How European FIs Are Building Delightful Banking Experiences (Medici) Rated: A

BBVA was the first financial institution in Spain to launch ‘Online Onboarding’via mobile in 2016, which allows anyone to open an account in just a few minutes and start banking right away. This service uses a procedure that verifies a customer’s identity through a selfie and a video call.

The Estonian eID card system is one of the most advanced in the world and serves as the basis for all of the digital services that are available in the country. The system has been in service for 16 years already and represents a highly sophisticated digital access card for all of Estonia’s secure e-services.

Monzo uses a photo of the customer’s passport or DL for identification and matches it to a video selfie; N26 uses passport/ID proof + video chat-based ID verification (in Germany, specific nationalities are also required to check at the closest post office to show their ID); similar to N26, Fidor asks for passport/ID proof + a video chat for ID verification.

International

International P2P Lending Volumes May 2018 (P2P Banking) Rated: AAA

Source: P2P Banking

So you think Alipay is just for the Chinese? (Chris Skinners Blog) Rated: AAA

It all started with a very good sum-up of Ant Financial’s recent $150 billion by Huy Nguyen Trieu, CEO @ The Disruptive Group. Ant were valued at around $50 billion when I first started to focus upon them two years ago, so a tripling in value in two years is notable, especially as it would make them the tenth largest bank in the world by value.

Second point is that valuation of $150 billion. In another conversation on social media, someone questioned that valuation (coincidentally a former member of Standard Chartered, Axel Winter, Former Global Chief Architect & Technology Strategy Head).

Source: Chris Skinners Blog

How Banks Can Stay Relevant in a Changing World (Payments Journal) Rated: AAA

The idea that we don’t care about our finances is counterintuitive. Hot new fintech start-ups and challenger banks are racing to develop apps providing evermore detailed analytics. But to make an impact and deliver real value, Brkic argues that banks need to take a step back and get better at delivering simple services that make a big difference.

Take overdraft charges. A service that alerts the consumer when they are about to go overdrawn and comes up with a solution (such as transferring money from a savings account, or temporarily extending a planned overdraft) is useful because it instantly solves a problem before it arises. For those living pay check to pay check, an avoided overdraft charge is more immediately beneficial than knowing that 10% of income is spent on dining out.

Meet the new bank. Same as the old bank

Advanced algorithms that promote generic, impersonal user experiences should be avoided. To immunise against engineers’ disease, Hammersley contends that inherently human interactions, such as customer service chatbots, should not be left solely in the hands of engineers.

Accessible Data and Artificial Intelligence: Is this the Future of Fintech? (Payments Journal) Rated: A

For organizations faced with the rise in product liability and fraud losses, AI is progressively positioned as a key tech to help robotize instant fraud detection and maximize performance in the near future. In addition, overlooked factors that influence the effectiveness of access data will include:

  • Geographical variances in data
  • Varied risk across products, apps, and channels
  • Accuracy of fraud classification
  • Relatively occurrence of fraud compared to transactions

With the advancements of AI and Accessible Data, we can add in precious metals, international currencies, peer-to-peer lending, identity protection, e-Wallet security, cloud computing access and more into the global payment experience.

Cyber, battery, sports tech win big investments (Isreal 21c) Rated: B

Lending Express of Tel Aviv, San Francisco and New York City, an AI-powered business loan marketplace with more than 55,000 customers in the US and Australia, secured $2.7 million in seed financing.

Millennials and money (Gulf News) Rated: A

Millennials make up about one-fourth of the global population today and are the inheritors of one of the largest inter-generational wealth transfers seen in human history, holding $17 trillion (Dh62.44 trillion) or about 10 per cent of the world’s private wealth. Banks and financial institutions have the challenge of catering to a newer type of customer in a rapidly changing technological environment, blurring boundaries and creating new business paradigms.

For banks, merely building a digital version of a branch is not the answer if your customers have never been to one. As author and futurist Brett King says, a bank is no longer somewhere you go to, it is something you do. Banks that are able to provide anytime, anywhere banking, combining tech and touch intelligently, stand to win.

Australia

How this fintech startup chief facilitated $ 50 million in Australian business loans without stepping foot in the country (Smart Company) Rated: AAA

Business loan marketplace Lending Express launched in Australia in 2016, and since then it’s facilitated $50 million in small business loans. But it was only last month that co-founder and chief executive Eden Amirav first set foot on Australian soil.

Now the Israeli startup has secured $US2.8 million ($3.7 million) in funding, Amirav has plans to further improve the artificial intelligence-enabled platform, and to get his message to even more Aussies.

Using artificial intelligence and machine learning, Lending Express connects small businesses seeking loans with alternative lenders. The business owner fills in an application via the online platform, and Lending Express runs an algorithm, immediately identifying the lenders that would be most likely to approve the loan.

Upcoming IPOs this week (Motley Fool Australia) Rated: A

According to ASX Ltd (ASX: ASX) there is only one IPO this week. That share is:

Prospa Group Limited (ASX: PGL)

Its principal activity is online lending to small businesses.

It’s looking to raise $146.5 million and list on 6 June 2018.

Asia

Fintech in Iran: Challenges and opportunities (Tehran Times) Rated: AAA

According to statistics published by International World Stats (IWS) until December 31, 2017, there are 56,700,000 Internet users in Iran, which is 69.1% of the population.

The internet finance in Iran is now mostly PSP-based, which offers shops online services for accepting electronic payments by a variety of payment methods including credit card and bank-based payments.

Authors:

George Popescu
Allen Taylor

Tuesday May 15 2018, Daily News Digest

McKinsey Asia Personal Financial Services Survey Customers and Digital only Banks

News Comments Today’s main news: Prosper loan originations up 27% year-over-year, over $2B co-sponsored securitizations closed. Funding Circle launches new borrower referral incentive. Renren investors seek to block asset sales. PayMate acquires Z2P Technologies. Today’s main analysis: Singapore’s biggest bank vs. China’s tech giants. Today’s thought-provoking articles: 80% of startup money goes to three states. The Sharestates story: $1B […]

McKinsey Asia Personal Financial Services Survey Customers and Digital only Banks

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Prosper Loan Originations up 27% Year-over-Year; Over $ 2 Billion of Co-Sponsored Securitizations Closed (Business Wire) Rated: AAA

Prosper today reported financial results for the first quarter of 2018. Loan originations increased 27% year-over-year to $744 million, driven by strong demand for the company’s personal loan product and stable funding.

Financial highlights include:

  • Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, was flat year-over-year at $30.5 million in Q1 2018 compared to $30.8 million in Q1 2017.
  • Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, increased $11.6 million or 34% year-over-year to $45.7 million in Q1 2018 compared to $34.2 million in Q1 2017.
  • Net Loss decreased by $12.6 million to ($11.4) million in Q1 2018 compared to a Net Loss of ($24.0) million in Q1 2017.
  • Adjusted EBITDA(1) increased $13.6 million to $4.5 million in Q1 2018 compared to ($9.0) million in Q1 2017, the fourth consecutive quarter of positive Adjusted EBITDA(1) generated by Prosper.
Key Operating and Financial Metrics (Unaudited)
(in thousands)
Three Months Ended March 31,
2018 2017
Loan Originations $ 744,127 $ 585,590
Transaction Fees, Net 31,354 26,869
Servicing Fees, Net 7,184 6,154
Total Net Revenue 30,450 30,845
Core Revenue (1) 45,729 34,152
Net Loss (11,401 ) (24,021 )
Adjusted EBITDA(1) 4,520 (9,039 )

80% of start-up money goes to three states — here’s what one visionary is doing to help spread the wealth (Business Insider) Rated: AAA

Baird: And the microfinance industry is — $30 billion a year around the world is lent in $500 chunks to small businesses, near a 100% repayment rate.

Microfinance is a tool. All investing is a tool. Every microfinance bank, every bank is neither good nor bad, they’re amoral. It’s just what are people trying to do with it. I’ve seen microfinance banks that act in extractive ways and their primary goal is extract as much profit out of poor communities as possible. I’ve seen payday lenders do the same thing. I’ve also seen microfinance banks that are very good and say, “Our core goal is building wealth for the community and we’ve structured our business in a way that works for us.”

One percent of start-up investment goes to African-Americans. Two percent of start-up investment goes to women. There are a lot of people who are overlooked.  So roughly 80% of start-up investment goes to three states: New York, Massachusetts, California. If you’re in Ohio or Florida or Nairobi or Mumbai, it’s really hard to get your idea into the system.

The Story of Sharestates: From Startup to $ 1 Billion in 3 Years (Lend Academy) Rated: AAA

Now, just over a year later, they have announced they recently crossed the $1 billion mark in originations. The company did so in just over 3 years, having officially launched in February 2015, just before LendIt USA that year. They are the second company in the real estate crowdfunding space to do so and are on our list as one of the ten options available for accredited investors in the marketplace lending space.

Originations in the lending space is only one metric. Any lending company’s survival depends on the quality of the loans they are making. According to the Sharestates’ website, investors have earned an average 10.54 percent annualized return. They also report 0% loss of principal for their investors. As of last year when we checked in the company was profitable which sets them up for continued success going forward. We’ve seen very few companies in the marketplace lending space broadly achieve this goal.

BuildDirect Partners With Affirm (Globe Newswire) Rated: A

BuildDirect, the first technology platform for the home improvement industry, today announced its partnership with Affirm Inc., a financial technology company that provides transparent payment alternatives to traditional credit. Now, U.S.-based BuildDirect customers have easy access to flexible and transparent financing options to pay for home improvement and renovation materials over time. At the point of sale, shoppers will see exactly how much they’ll pay in fixed monthly installments over the term they choose.

Banks struggle to combat the cyber crime bad guys (Financial Times) Rated: A

Digital banking has been a big positive for the financial services industry, though it has opened companies to greater cyber risk; cyber criminals now have a lot more entry points when it comes to getting access to funds illicitly; banks have increased their spending on defense but it isn’t enough as they also need to construct better, more secure systems; the CEO of Standard Chartered writes in the FT that banks can better utilize the data they collect, design tech better and work more closely with governments to catch bad actors.

Blockchains Could Be the Answer to Fairer Lending Systems (Nasdaq) Rated: A

The advancement of blockchain technology, this is poised to change. Through the technology, anyone anywhere in the world can raise financing from peers without having to rely on the traditional credit scores and the often heavily bureaucratic conventional mortgage processes.

Blockchain solutions such as Homelend  are making it possible for borrowers to directly reach lenders without depending on any intermediary and with no paperwork. The whole process is safeguarded by smart contracts to ensure that all parties in the deal adhere to their part of the bargain. According to Aneeza Haleem , a senior account manager at Cognizant Technology Solutions, blockchain-powered peer-to-peer mortgage financing significantly reduces the costs involved in the mortgage process.

Will Wells Fargo hurt Zelle by improving on it? (Payments Source) Rated: A

The irony of the explosive growth of mobile P2P is this: As consumers get more comfortable with paying one another through mobile devices, they’re thinking of P2P less as a service that one should find within a bank’s app.

This is a problem for Early Warning’s Zelle, the bank-run P2P network whose main selling point is its integration with banks. It’s a sharp contrast to rivals such as Venmo, which styled itself on a social media app; and Facebook and Apple, which took their own messaging platforms and blended P2P payments into the interface.

Capital One buys digital identity start-up Confyrm (Fintech Futures) Rated: A

Capital One has acquired San Francisco-based digital identity start-up Confyrm as it seeks to capture the market for consumer identity services.

Financial details were not disclosed, but as part of the deal Andrew Nash, founder and CEO of Confyrm, has become managing vice-president of Capital One’s consumer identity services. No word on what happens to the rest of the staff.

Confyrm was founded five years ago and offers help against online fraud.

Where Bank of America uses AI, and where its worries lie (American Banker) Rated: A

Bank of America spends $3 billion developing and buying technology every year, and about three times that on keeping its existing IT infrastructure going, says David Reilly, global banking and markets technology chief information officer.

As you might expect, some of that goes to artificial intelligence technology. The bank does not disclose how much.

An old-school fraud analytics program might see a customer using a card in a place they have never used a card before and block the transaction.

AI can do better.

The one area where banks and fintechs want more regulation (American Banker) Rated: A

Banks, fintech firms and data aggregators are asking regulators to provide more clarity on how to handle consumer data and who is responsible for leaks when it is shared between firms — a request that’s seemingly a reversal from the deregulatory approach the industry often takes.

The potential liability stemming from consumer data has become a critical concern for the financial industry as more data aggregators and fintech firms rapidly enter the space, seeking access to customers’ bank account information in order to offer loans and other products.

Could US Post Offices Become Banks? Here’s How The Plan Would Work (10 News) Rated: A

Now, there are a couple different ways Congress could build banking into the U.S. Postal Service. The first approach would just cover the basics.

That means offering low-dollar checking accounts and debit cards to low-income earners. That would at least offer basic financial services to all Americans, regardless of wealth. And it probably wouldn’t be too tough politically because the big banks typically aren’t interested in these customers.

But Gillibrand’s proposal would go further, allowing the postal service to also make loans of up to $1,000 with a super low interest rate around 2 percent, even to the poorest Americans. Because many of those loans would be at risk of not being paid back, some experts say the interest rate will have to be higher, maybe 25 percent. But that would still be a lot lower than rates from payday lenders, which often have people pay back three or four times what they borrowed.

Citizens Financial To Launch Online Consumer Bank (PYMNTS) Rated: A

Citizens Financial Group announced on Monday (May 14) plans to launch Citizens Access, a nationwide direct-to-consumer online bank.

In a press release, Citizens Financial said the digital platform will offer FDIC-insured deposits products aimed at serving people who want to save and want the flexibility of an online banking service. The company said it will provide digital deposit services at attractive rates and lower costs to help consumers save more for the future. The platform will be launched in the third quarter and will be available throughout the U.S.

 

Now Is the Time to Refinance Student Loans (Pharmacy Times) Rated: B

Refinancing your student loans from pharmacy school can potentially save you a significant amount of money while providing the convenience of making one payment a month. Keep in mind refinancing may not be for everyone. Individuals with a poor credit history, low salary from a pharmacy residency or fellowship, or those who want to keep the provisions in federal loans may want to closely consider their options before jumping right into refinancing their loans.

United Kingdom

Funding Circle launches new borrower referral incentive (Peer2Peer Finance) Rated: AAA

FUNDING Circle is offering £1,500 in Amazon vouchers to anyone who refers a business that takes out a loan of £25,000 or more with the peer-to-peer lending platform.

The UK’s third-largest lender to small businesses said the borrowers may need the cash to grow, refurbish, buy stock or equipment, hire more staff or simply boost their cash flow.

HMRC updates crypto investors on tax confusion (Peer2Peer Finance) Rated: A

However, a HMRC representative has told Peer2Peer Finance News that the tax office will deal with cryptocurrency related tax bills “on a case-by-case basis”.

The 2017-18 tax year saw huge volatility across the cryptocurrency sector, with Bitcoin reaching a high of £13,840 in mid-December before ending the tax year at approximately £4,750 per coin. This has led to confusion among retail investors regarding their tax liability, particularly if they sold out of the market at a high, then reinvested the profits only to see any gains wiped out.

Frederic Nze of Oakam (Lend Academy) Rated: A

In this podcast you will learn:

  • What was the catalyst that led to the founding of Oakam.
  • The loan products that Oakam offers.
  • The difference between small dollar loans in the US and the UK.
  • How Oakam is able to find their customers.
  • What percentage of their customers apply for a loan on a smartphone.
  • Why they still have physical stores where people can apply for loans in person.
  • How they have refined their underwriting models over the years.
  • How they are dealing with increased fraud via their online channels.
  • The interest rates they charge.
  • How their customers are able to reduce these rates for future loans.

Technology not size is key to banking success (Financial Times) Rated: A

Antony Jenkins, former CEO of Barclays and now head of 10x Future Technologies, writes in the FT that technology is key to the battle with banks; having technology that is more nimble and focused on the customer will help to better position challengers; UK challengers banks have found it hard to compete against the big names, even with recent consolidation; understanding what the customer needs most and allowing them to access services anytime and anywhere is what firms should focus on.

Fintech most popular sector for HNW investors (Investment International) Rated: B

Capitama’s current registered investors have a total annual investment capacity of £7.6bn. Of this total capacity, investors have expressed an annual investment capacity of £5bn into private equity opportunities, with £2.3bn total annual investment in Debt and Income opportunities. The interest of the registered investors in Philanthropic and Social Impact opportunities currently stands at £300m per year. This is an additional theme on Capitama given the rise in interest in these organisations from wealthy individuals and organisations.

69% of Capitama investors are interested in fintech investment opportunities and 67% want to see software and technology deals. Of the nine different investment types available on Capitama, Growth funding is the most popular, with 83% of Capitama registered Investors interested in this area, followed by Early stage investments (72%), Buy-outs (63%), and Real Estate (47%).

 

 

China

Renren Investors Seek to Block Asset Sales to Chief, SoftBank (Bloomberg) Rated: AAA

A group of Renren Inc. investors are trying to block the private sale of company-owned assets to a consortium that includes its own top executive and major shareholder SoftBank Group Corp.

Renren announced the complex deal in April, which it said was necessary to address concerns that the SEC might deem it an investment company — forcing its delisting if it failed to obtain relevant licenses.

The letter accused management of trying to transfer the assets at values equal to or lower than their book value, neglecting their duty to smaller shareholders and misrepresenting certain financial statements. For example, it says the shares in SoFi — one of America’s biggest student loan refinancers — are being sold at a valuation of $269 million when they could be worth double that amount.

US online lending model is unproven, Eisman of The Big Short fame says in Hong Kong (South China Morning Post) Rated: AAA

Steven Eisman, famous for successfully shorting the US subprime market before the onset of the 2008 financial crisis, has said the online lending business model used in the United States is unsustainable, and that losses from Canadian mortgages could widen.

The one pocket of financial market anomaly in the US was online lending, where, he said, the underwriting of peer-to-peer credit was unproven, as selling a loan to investors such as hedge funds and other financial institutions was an unsustainable business model.

“The problem [with P2P lending] is that selling a loan [online] is not the same as selling a book. You buy a book on Amazon and that’s the end of the transaction. When you make a loan, that’s the beginning of a relationship. The question is how you manage that relationship,” said Eisman.

Soft Chinese Tech IPOs Test Next Wave of Listings (Wall Street Journal) Rated: A

More than a dozen technology companies from China are rushing to go public abroad, in an enticing opportunity for investors but one that has generated poor returns recently.

Shares of most Asian tech companies that have listed in New York and Hong Kong since the start of 2017 have notched lackluster performances, with the bulk trading below their initial public offering prices after strong early gains.

European Union

Bondora Go & Grow – Bondora Rolling Out New Product (P2P Banking) Rated: AAA

Go & Grow is designed for the passive investors as hands off p2p lending. One of the main advantages is that Bondora says it is tax optimised.

The Bondora Go & Grow product features a target interest rate of 6.75% which will accrue daily. It runs completly on autoinvest. The investor just needs to join it and pay money into the Go & Grow account (or transfer it from the normal Bondora account). The Go & Grow account promises daily liquidity. There is a 1 EUR withdrawal fee making small withdrawals expensive but for portfolios of 1000 EUR or more and usual investment horizons this fee is negligible.

Three Year Old Fintech Mintos is Profitable (Crowdfund Insider) Rated: A

Latvian Fintech Mintos is reporting a profit in its brief three year old history. According to the company, the global online marketplace for loans has seen their revenue increase more than four-fold in 2017 to € 2.1 million generating a net profit for the year of € 197,000. Mintos says it has experienced significant growth, making it the “peer-to-peer lending market leader for continental Europe” with a 38% market share.

In aggregate, Mintos has topped € 660 million in investments by investors and the company expects the amount of loans funded to reach EUR 1 billion before the end of this year. As of May 2018, Mintos claims more than 58,000 investors using the platform and this number is expected to surpass 100,000 at some point in 2017. Currently, investors may expect an average 12.1% rate of return.

International

The 30 most valuable VC-backed companies in the world (Pitch Book) Rated: AAA

Ridehailing giants Uber and Didi Chuxing, based in San Francisco and Beijing, respectively, lead the list of most valuable private companies around the globe. And moving down the rankings, the pattern set at the top continues. A total of five of the companies are in the ridehailing industry, and 26 of the 30 are based in either the US or China.

 

Source: Pitch Book

What is Libra Credit: Digital Assets as the Future for International Credit (Coin Central) Rated: AAA

Libra Credit is offering a decentralized lending Ethereum-based ecosystem that helps users get open access to credit anywhere and anytime.

As long as a user has digital assets, they will be able to borrow money from Libra Credit by using those digital assets as collateral. Additionally, these users will be able to build an international credit history – a concept that Libra Credit and its partners plan to push to be recognized globally.

Source: Coin Central

Libra Credit plans to charge a fixed 8% annual interest rate charged by Libra Credit, which is party enabled by its partnerships with traditional finance institutions. The rate is competitive with that of other peer-to-peer lending platforms such as Lending Club and Salt, but isn’t tied to the availability of a peer match.

Source: Coin Central

How Misbehaving Australian Banks Are Causing Global Pain (Bloomberg) Rated: AAA

Australia’s four biggest banks — Commonwealth Bank of Australia, Westpac Banking Corp.National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd. — have been plagued by a string of scandals. The accusations run the gamut from giving misleading financial advice to trying to manipulate a benchmark interest rate. Simmering public resentment — stoked by a sense banks were gouging fees to fuel record profits and executive pay — boiled over last year when Commonwealth Bank was sued for systemically breaching anti-money laundering rules.

The government has announced tough new penalties for corporate wrongdoing and beefed up the regulator’s powers; analysts have trimmed earnings forecasts and speculate future legislation could force the biggest banks to sell off advice businesses.  All this comes at a time when bank profits are under pressure from a slowing housing market, rising costs and increased competition. Most of the banks are trying to simplify their operations and sell non-core operations.

Citi Inks $ 100 Million Trade Finance Deal With Asian Development Bank (PYMNTS) Rated: A

Global financial institution Citi is expanding its existing partnership with the Asian Development Bank (ADB) to share risk in trade finance transactions, reports in The Financial said Friday (May 11).

The ADB’s Trade Finance Program reached a deal worth $100 million with Citi that sees the financial institutions (FIs) sharing risk on trade finance transactions in an effort to bolster support for trade and access to finance across Asia.

 

Australia/New Zealand

FINNIES 2018: Here are all the finalists for Australia’s fintech industry awards (Business Insider) Rated: A

89 companies and individuals were chosen for Australia’s only industry-backed fintech awards, from a record field of more than 200 entries.

Excellence in Business Lending
● Finstro
● Prospa
● Spotcap Australia
● The Invoice Market – tim
● Trade Ledger

Excellence in Consumer Lending
● HashChing
● MoneyMe
● MoneyPlace
● RateSetter Australia
● SocietyOne

Robot financial adviser granted FMA exemption (Radio New Zealand News) Rated: A

The country has its first robot financial adviser after KiwiWealth was given an exemption by the Financial Markets Authority from the current law which requires humans to give financial and investment advice.

But Mr Bishop said it would still have human advisors offer detailed advice and have control of the robot.

India

PayMate Acquires Digital Lending Platform Z2P Technologies to Benefit SMEs (BW Disrupt) Rated: AAA

PayMate, an early pioneer in India’s payments industry and a leading player in electronic Business-to-Business (B2B) payments space, announced today the acquisition of Z2P (Zaitech Technology Pvt. Ltd.), a digital lending platform which provides hassle-free and real-time credit using social and banking data along with proprietary analytics and AI.

The acquisition is expected to be completed by May 2018 and it follows the announcement in February of this year by PayMate of its B2B partnership agreement with Visa.

As a result of the acquisition, PayMate acquires an innovative and proven lending solution in Z2P, which when combined with PayMate’s proprietary B2B payments platform will revolutionize the way businesses manage their payment operations, cashflow, and access to growth capital. PayMate plans to partner with banks and NBFCs to improve the flow of credit to SMEs.

Canada

Last week, Power Financial CEO Jeff Orr told reporters he plans to invest more money in fintech startups as the company looks to find technologies that can be incorporated into its business model and avoid disruptions that have hurt other sectors.

Widely known on the Street for its empire of financial advisers and investment products, Power Financial has spent $320-million in the fintech sector – with more than half the funds being allocated toward online robo-adviser Wealthsimple.

Asia

Singapore’s Biggest Bank Takes on China Giants in Fintech Battle (Bloomberg) Rated: AAA

 

Almost 55% of customers say they would consider branchless digital-only bank

Source Bloomberg

Gupta credits his early recognition of the threat to his early days in Citigroup’s transaction banking division, unusual for a bank CEO, who tend to hail from the retail or investment banking arms of their institutions. That background taught him both the nuts and bolts of banking and the importance of technology, Gupta said. He also dabbled briefly but unsuccessfully in the startup world, when he quit Citigroup in 2001 to found an Internet portal in India, around the time the dotcom bubble was bursting.

Latin America

Morgan Stanley Goes After Brazilian FinTech Market (PYMNTS) Rated: AAA

Bloomberg, citing four people with direct knowledge of the matter, reported that Morgan Stanley purchased $14 million in local subordinated bonds from online consumer lender Geru Tecnologia e Servicos. The Geru bonds, which the company issued in December of 2017, have a four-year maturity and pay about 11.2 percent each year, noted the report.

The company is also reportedly in talks with international investors about raising $50 million via an equity round that QMS Capital is handling. QMS has a 10 percent stake in Geru. General Atlantic could also be an investor in the round of fundraising, noted the report.

Authors:

George Popescu
Allen Taylor

Tuesday February 27 2018, Daily News Digest

LendingClub

News Comments Today’s main news: SoFi’s new CEO wants to get the company ready to go public. Revolut’s transaction volumes increased 700%. China to crackdown on non-bank lending. Blender raises $16M. Today’s main analysis: Stay away from LendingClub’s notes and shares. Today’s thought-provoking articles: Legacy banks, digital startups see opportunity to go beyond storing money. LendingBlock aims to mainstream […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

Australia

Other

News Summary

United States

Anthony Noto’s Mission as SoFi CEO: Get the Startup Ready to Go Public (Bloomberg), Rated: AAA

Anthony Noto, the new chief executive officer of Social Finance Inc., is looking to steer the company out of crisis and get it in shape for a potential initial public offering.

The vision for SoFi outlined by Noto didn’t stray far from the one set by his predecessor Mike Cagney, who was ousted after accusations of sexual misconduct inside the company. Noto wants to create a broad online financial-service company, adding checking and savings accounts and wealth management to the main business of refinancing student loans.

SoFi’s new CEO says bank charter remains an option (American Banker), Rated: A

In an interview during his first day on the job, Anthony Noto did not promise any big course changes, though he did leave open the possibility that SoFi will revive its quest to get a banking license.

LendingClub’s Underwriting: Stay Away From The Notes And The Shares (Seeking Alpha), Rated: AAA

I bought my first batch of $25 notes on April 22, 2016. Now, it is important to note that LendingClub is very clear in its advertising that “99% of portfolios with 100+ Notes have seen positive returns.” So I suppose I added a level of risk by not having a portfolio worth at least $2500. But even still, returns can be .1% annualized and count as ‘positive’, but that is not an acceptable return by anyone’s standards given the risks involved in lending to strangers.

My Portfolio

To date, I have received $436 in payments, $96 of which is interest. I have lost $100 on notes that have charged-off, meaning that there is zero expectation of future payment and LendingClub collectors have stopped attempting to reach the borrower. I also have a note that is late, and based on how things have gone so far, I fully expect that to charge-off too and will lose the $11.50 still owed. In short, I have already lost almost 20% of my initial investment, crossing my fingers that none of the 14 notes I still have that are current don’t enter a late status with more than a year to go before the oldest reaches full term. My results have been dismal.

Source: Seeking Alpha

LendingClub’s ratings are A-G, with A being the safest. As you can see, the vast majority of my portfolio sits in A-C, with one E and one G note (LendingClub did away with F and G notes last year).

Source: Seeking Alpha

Legacy Banks and Digital Startups See a Big Opportunity to Move Beyond Simply Storing Money (AdWeek), Rated: AAA

Change can be hard for the financial industry, which is dominated by decades of processes and internal systems. But with a slew of upstarts making their way into the trillion-dollar industry, the old guard is finding innovative ways to beat these challenger brands at their own game.

“A lot of these companies have what we call ‘technical debt’—very expensive mainframe systems that are very difficult to change, run [and are] expensive and obviously that limits their ability to innovate,” said Oliwia Berdak, principal analyst at Forrester Research. “The biggest challenge is often culture … In banks the attitude has always been to perfect [products] before it’s unleashed on customers and [technology] is a big change where you’re working with a certain degree of uncertainty and risk.”

According to data collected by Accenture, 90 percent of banking executives said that their companies needed to “innovate at an increasingly rapid pace just to remain competitive,” but only 47.8 percent say that they are actually “investing comprehensively” in digital.

Another challenge: For all the talk about slick mobile banking apps and services, consumers—gasp—still like going to physical banks to manage financial decisions. Eighty-seven percent of customers enjoy going to a physical bank and prefer to interact with a human while there, per Accenture.

Source: AdWeek

Retail Banks Are Missing Opportunities to Give Digital Financial Advice (Wealth Management), Rated: A

Most customers who received face-to-face financial advice from their retail bank felt their needs were completely met (58 percent), but satisfaction drops when advice is delivered by other means, according to J.D. Power’s 2018 U.S. Retail Banking Sales Practices & Advice Study. Only 45 percent of customers who received digital advice through their bank’s website or mobile app felt their needs were met and only 33 percent felt their needs were met via email.
The majority of customers surveyed for the study (58 percent) said they want to receive advice through their bank’s website and mobile app, but only 12 percent said they received advice in that manner.

Why neobanks need to find a niche offering (Tearsheet), Rated: A

Customers still aren’t excited about digital-only banks. Less than 10 percent of Americans looking to open a checking account would consider doing so at a digital bank, according to a new report by Cornerstone Advisors.

For example, San Francisco-based neobank Chime’s customers are mostly middle-income millennials, with a median age of 29 and incomes between $45,000 to $65,000. Chime says it caters to a gap in the market for younger customers who felt larger institutions weren’t meeting their needs.

Neobanks should focus on a “clear, differentiated value proposition” for the customer, but too many of them are just adding a little technology to a customer experience that’s not terribly different from what the big banks offer, said Satya Patel, a partner at Homebrew, a seed-stage venture capital firm based in San Francisco and an investor in Chime.

How Capital One is rethinking its approach to products (Tearsheet), Rated: A

For the past year, Capital One has been rethinking how it can get out of the too-common approach of “innovating” by layering new technology on top of an old product — it’s realized it needs to entirely reconsider the customer’s interaction with it.

Are banks too blasé about mobile security? (American Banker), Rated: B

About a third of companies have knowingly sacrificed security for expediency or business performance, according to a newly published study, and researchers said that bankers’ responses were consistent with the group as a whole, which included health care and other sectors.

Bringing Credit Invisibles Into Focus with Alternative Financial Data (LendIt), Rated: A

Ten percent of the U.S. adult population do not have a credit score or history with any of the big three credit bureaus.

That’s 1 in 10, or roughly 26 million people who are considered “credit invisible.”

But the financial underserved market spends $173 billion in fees and interest to use $1.94 trillion in financial services, according to the 2017 Center for Financial services Innovation study.

There are four basic categories of people who fall under the credit invisibles umbrella:

  • Millennials: People between 18– 34 and have not yet borrowed money or gotten a credit card.
  • Low-Income: People who don’t make enough money to gain access to credit.
  • Recent immigrants: People who recently moved to the U.S. but haven’t established credit.
  • Mass-affluent: People who earn more than $100,000 per year and pay with cash instead of credit.

Mobile Payments In US To Reach $ 3 Trillion Within Two Years (Payment Week), Rated: A

in 2015, mobile payments in the US represented $550 billion. That’s good by most any standard, but the growth expected is staggering. By 2020, that number is projected to hit $2.8 trillion. That represents a compound annual growth rate (CAGR) of 39.1 percent, which is far beyond most any but the most unlikely investments.

China represents $5.5 trillion in mobile payments use as of right now, a combination of various societal factors like a comparative eschewing of the personal computer in favor of the mobile device, as well as a near-ubiquity of locations that accept the system.

BREAKFORM | RE Closes a Small Lot Subdivision Development in Record Time Via Crowdfunding (PRWeb), Rated: A

BREAKFORM | RE closed its latest small lot subdivision development project in the prime West Hollywood adjacent neighborhood in record time using Equity Multiple, one of the leading real estate crowdfunding platforms. The offering was 145% subscribed in 72 hours.

Credible Appoints Chris Bishko as Chief Financial Officer (BusinessWire), Rated: B

Credible, the consumer finance marketplace that helps consumers save money and make smarter financial decisions, today announced that it has appointed Chris Bishko as chief financial officer. Mr. Bishko will report to Credible’s founder and CEO Stephen Dash.

New York Lawmakers Open to Revisiting the BitLicense (CoinDesk), Rated: B

A bill to reform the regulation could be introduced “very soon,” State Senator David Carlucci told CoinDesk.

But what is likely to remain is the animosity toward the BitLicense, as evidenced by the small but dedicated protest gathering outside just before the roundtable began, not to mention the grievances aired by the two dozen or so attendees.

United Kingdom

Transaction volumes increase 700pc at fintech firm Revolut (Independent.ie), Rated: AAA

Fintech start-up Revolut has seen its monthly transaction volume increase by over 700pc in the last 12 months to $1.5bn (€1.2bn).

Lendingblock Aims to Popularize Crypto Lending in a Secure and Transparent Way (cryptovest), Rated: AAA

Lendingblock aims to become the first to build a marketplace where cryptocurrency lenders meet borrowers, and can exchange their assets across blockchains. The platform aims to bring securities lending to the crypto economy. The current estimates of the market paint a picture of enormous potential for development: in 2017, $2 trillion of assets on loan in traditional securities lending brought approximately $4 billion in revenue. Replicating this in crypto could generate up to $300 million within 3 years as the project notes in its white paper.

 

Britain’s big banks play catch up with fintech with new apps (Reuters), Rated: A

British retail banks are poised to introduce money management apps to compete with those already launched by financial technology start-ups, betting their trusted brands, broad client base and deep pockets will help them make up lost ground.

NatWest sets up network of fintech accelerator hubs (Finextra), Rated: B

The UK’s NatWest is launching four specialist fintech accelerators based in its Bristol, Edinburgh, London and Manchester sites.

China

Screws to tighten further on non-bank lending (The Standard), Rated: AAA

China will tighten its crackdown on illegal fundraising to fend off financial risks, according to an inter-agency meeting.

European Union

European Fintech Alliance raises bank API fears (Finextra), Rated: A

The European Fintech Alliance has fired another broadside in its tussle with the financial services establishment over PSD2, raising fears that banks will develop substandard APIs as a way to fend off competition.

Specifically, the alliance of 74 fintechs, challenger banks and fintech associations is unhappy that the Regulatory Technical Standards on strong customer authentication and common and secure communication under PSD2 allow banks the possibility to be exempted by their National Competent Authority from having to accommodate licensed Third Party Payment Services Providers (TPPs) to access accounts via the so called fallback option in case of malfunction of the API.

International

Marketplace lenders worldwide raised nearly bn last year (P2P Finance News), Rated: AAA

THE GLOBAL marketplace lending sector saw nearly $9bn (£6.45bn) invested across 233 deals last year, marking a new funding record for the industry.

Consultancy firm Fintech Global, who compiled the data, found that equity investment in the sector rebounded to $8.9bn last year after a slowdown in 2016. The total was boosted by the top 10 deals, which raised a combined $4.4bn.

The second half of the year was strongest for funding, with the largest deal of the year closing in the fourth quarter when Shanghai-based peer-to-peer lender Lufax raised $1.2bn.

Online lender ID Finance bolsters security with beahvioural biometrics (Finextra), Rated: A

ID Finance, the emerging markets fintech company, is incorporating behavioural biometrics into its AI-based fraud scoring engine to eliminate fraud, boost loan approvals and reduce the incidence of non-performing loans.

The behavioural biometrics system studies the unique typing and behavioural patterns users display during the loan application process to capture a range of patterns. These include mouse movements, to how fingers interact with a keyboard. The biometrics record patterns such typing speed, typos, flight time between keys, keystroke depressions, as well as the patterns from actual input.

Celsius: Get Dollars When You Need Them or Get Paid to HODL (cryptovest), Rated: A

The global financial system is wobbling. Banks and other traditional financial institutions have so far managed to survive the crisis resulting entirely from their errors, greed, and arrogance. Now, many believe, they won’t live through the crypto revolution unless they embrace it.

Meet the Celsius Wallet – a combination of a digital wallet and a peer-to-peer lending platform where members can earn passive interest on their crypto holdings and use them as collateral to get loans in fiat currencies.

Australia

‘Essential’ brokers advising Xinja on mortgage strategy (TheAdviser), Rated: A

The chief executive of banking disruptor Xinja has revealed that mortgage brokers have been involved in the group’s home loan plans and will be “essential” to its strategy.

The crowdfunded online lender recently received an Australian credit license (ACL) from the Australian Securities and Investments Commission (ASIC) and plans to utilise the broker channel to facilitate its digital home loan approval process.

Mortgage franchise sees decline in loan settlement (AustralianBroker), Rated: A

Mortgage franchise Yellow Brick Road posted a 2% decline to $7.74bn in loan settlement volume in the first half of FY18 over the previous period as it reduced its number of branches.

Overall, the company delivered 85% growth in profitability, with net profit before tax increasing to $0.53m in the first half of FY18 over the same period of FY17. It cited higher revenue – up by 5% – and lower costs – down by 4% – as drivers of its result.

The company also expects the addition of a small business lending product through its partner Prospa to provide additional revenue opportunities for its network and support growth in commercial lending.

India

P2P platforms as NBFCs gaining popularity in small cities, but there’s a catch (Financial Express), Rated: AAA

P Kanwal is from Punjab’s Bhatinda. He has a furniture business which mainly deals in cash, because of which it was difficult for him to get a secured loan from the formal banking system. For him, a Peer-to-peer (P2P) lending platform came as a rescue, which got him an unsecured loan for his kid’s education and expanding his business.

This not just the story of Mr Kanwal, but many more small entrepreneurs who are operating their businesses in Tier-1, Tier-2 cities and far-flung areas, some not even on Google map, who are getting financial support through P2P lending.

The pattern that emerges currently from the P2P lending is that borrowers from tier-2 and tier-3 cities comprised 20% and 17% of the total number of loans disbursed through the platform. The new-to-credit borrowers comprise 35% of fulfilled borrowers, while those with poor credit ratings accounted for 10% of the overall number.

MENA

Peer-to-Peer Lending Startup Blender Raises Million in Debt Financing and Equity (CTech), Rated: AAA

Israel-based peer-to-peer lending startup Blender P2P Israel Ltd. has raised $16 million in equity and debt financing, the company announced Monday.

Latin America

Airfox Launches Mobile App in Brazil, Giving Unbanked Access to Financial Services (PRWeb), Rated: A

Airfox, a mobile financial services company, today launched its free Android app in Brazil, giving millions of people unprecedented access to much-needed financing solutions.

More than 44 percent of Brazil’s population is unbanked, another 30-44 percent lack sufficient access to mainstream financial services, and those with credit cards face interest rates upwards of 200 percent (sources: World Bank, Bloomberg).

Canada

Big banks strive to give better digital financial advice (BNN), Rated: AAA

CTV’s Chief Financial Commentator Pattie Lovett-Reid discusses the Canadian banks’ quest to deliver quality online financial advice in an effort to catch up with the digital age.

Africa

PayJoy Partners With Vodacom & CBA to Bring Smartphone Financing to Tanzania (Crowdfund Insider), Rated: AAA

PayJoy, a San Francisco fintech startup, announced this week it has teamed up with Vodacom and CBA to bring smartphone financing to the country of Tanzania.

PayJoy Teams Up With Allied Mobile to Bring More Smartphones to Africans (Crowdfund Insider), Rated: A

PayJoy, a San Francisco fintech startup, announced on Friday it has teamed up with mobile distributor Allied Mobile to bring affordable smartphone payment plans to markets across the continent of Africa. According to the duo, Allied Mobile will use PayJoy Checkout, an instant paperless finance system for customers without access to formal credit, and the patented PayJoy Lock which enables “pay-as-you-go” access to the phone. 

Authors:

George Popescu
Allen Taylor

Will Amazon Lending Disrupt, Displace, or Prop Up Banks?

Amazon Lending

Twenty-two years ago, when Jeff Bezos launched Amazon, no one ever thought the e-commerce startup would transform the retail industry landscape. In June, it made a statement-making purchase by buying Whole Foods for a staggering $13.7 billion. The company took advantage of technology, used an aggressive growth strategy, and disrupted the entire industry. It started […]

Amazon Lending

Twenty-two years ago, when Jeff Bezos launched Amazon, no one ever thought the e-commerce startup would transform the retail industry landscape. In June, it made a statement-making purchase by buying Whole Foods for a staggering $13.7 billion. The company took advantage of technology, used an aggressive growth strategy, and disrupted the entire industry. It started as an online seller of books and CDs in 1995 and now the “everything store” has sales of more than $400 billion.

Amazon’s Lending Business

The company is virtually omnipresent in all businesses, be it furniture, electronics, food or entertainment. In 2012, it added yet another service to its stable: Small business loans.

Considering Amazon enables millions of small companies to sell their products across the globe, having its own lending arm was a no-brainer. Amazon’s entry into small-business lending could transform the banking industry in the same way it revolutionized retail. Just recently, the Seattle-based e-commerce giant announced that it has made $1 billion in small-business loans to more than 20,000 merchants in the United States, Japan, and the UK during the past 12 months. Since Amazon Lending launched in 2011, it has surpassed $3 billion in loans to small businesses. Further, more than 50 percent of the companies eventually take a second loan from Amazon.

Launching its own lending arm is a stroke of genius by Amazon, the company will earn interest on the loans while retailers (with the aid of the loans) will be able to sell more products on the Amazon website and thus will add to Amazon’s earnings. Its big pockets and negative working capital mean it has lots of cash to lend; a mammoth retailer database means it is fairly easy for Amazon to tap into the lucrative space.

“We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan, because we know that an infusion of capital at the right moment can put a small business on the path to even greater success,” said Peeyush Nahar, vice president for Amazon Marketplace, in a company announcement.

How Does Amazon Lending Work?

Amazon’s loan program is by invitation only. It offers short-term business loans ranging from $1,000 to $750,000 for up to 12 months to micro, small, and medium businesses selling on Amazon to help them grow their businesses. Loans are approved within 24 hours and, usually, loan money is used for inventory financing and business expansion.

Unlike traditional lenders, which use lengthy loan applications and require a host of documents, Amazon uses internal algorithms to invite sellers to the program based on the popularity of their products, inventory cycles, and other factors. It does not charge an origination fee or prepayment penalties. Furthermore, after establishing its foothold in SME lending, the company plans to branch out  into other markets where there are a lot more opportunities, such as Canada, India, France, and China.

To Be or Not To Be: A Bank

For now, the lending business is relatively a small part of its operations. But considering its vast resources and huge database, it will be interesting to see whether Amazon scales up its credit business and applies for a banking license.

According to a survey of 32,715 people in 18 countries conducted by Accenture, 31% of the respondents would switch to Google, Amazon, or Facebook for banking, if these companies offered financial services. In another report by CB Insights, Amazon has the highest customer satisfaction at 86% compared to Citi (82 percent), Capital One (80 percent), “all banks” (80 percent), TD Bank (79 percent) and Bank of America and Chase (each 75 percent). With more and more millennials opting against traditional banks, becoming a full-fledged financial institution does seem like a viable option. But will Amazon follow that path?

Regulatory Backdrop

Ever since marketplace lenders gained prominence in the financial circle, there has been a debate raging on whether or not to grant technology companies special banking charters that will allow them to compete with banks nationwide. Right now, the situation is vague with regards to regulations for technology companies. Wal-Mart, in 2006, applied for a banking license to establish an industrial loan company (ILC) in Utah. Eventually, lawmakers and banking groups blocked future banking efforts by Wal-Mart and tried to prohibit commercial companies from obtaining new ILC licenses.

Amazon can cause a similar backlash for itself and would rather want to concentrate on other aspects of its business than deal with the headaches of being a bank. Moreover, providing financial services is merely another avenue for plugging companies into the Amazon ecosystem. So the lending arm (as a non-bank) fits nicely into the overall scheme of things.

The Real Threat of Amazon

Amazon really doesn’t want to displace banks as they are one of the main consumers of Amazon Web Services (AWS). Rather, it wants to disrupt banking services. Amazon Web Services is the biggest provider of cloud computing and controls 45 percent of the global cloud infrastructure market. It is used by most of the major businesses and has become an absolute necessity for the financial sector.

“Amazon Web Services (AWS) is forming the backbone of the financial services ecosystem, with a diverse set of firms – from JP Morgan to startups such as Xignite – adopting AWS for data storage and processing,” a consulting report stated.

Apart from this, legacy banks are losing direct interaction with their customers. For example, USAA and Capital One are both experimenting with Amazon’s digital assistant Alexa as a new consumer banking channel. Amazon is not taking any direct market share from banks; rather, it is becoming the customer interface for banks and putting them in the background.

It will be interesting to see how Amazon shapes its lending business with enterprise AWS contributing a sizeable chunk to the bottom line. But with hundreds of millions of customers and merchants on its platform, you can bet it will be at the vanguard of online lending.

Authors:

Written by Heena Dhir.

Will Amazon Lending Disrupt, Displace, or Prop Up Banks?

Amazon Lending

Twenty-two years ago, when Jeff Bezos launched Amazon, no one ever thought the e-commerce startup would transform the retail industry landscape. In June, it made a statement-making purchase by buying Whole Foods for a staggering $13.7 billion. The company took advantage of technology, used an aggressive growth strategy, and disrupted the entire industry. It started […]

Amazon Lending

Twenty-two years ago, when Jeff Bezos launched Amazon, no one ever thought the e-commerce startup would transform the retail industry landscape. In June, it made a statement-making purchase by buying Whole Foods for a staggering $13.7 billion. The company took advantage of technology, used an aggressive growth strategy, and disrupted the entire industry. It started as an online seller of books and CDs in 1995 and now the “everything store” has sales of more than $400 billion.

Amazon’s Lending Business

The company is virtually omnipresent in all businesses, be it furniture, electronics, food or entertainment. In 2012, it added yet another service to its stable: Small business loans.

Considering Amazon enables millions of small companies to sell their products across the globe, having its own lending arm was a no-brainer. Amazon’s entry into small-business lending could transform the banking industry in the same way it revolutionized retail. Just recently, the Seattle-based e-commerce giant announced that it has made $1 billion in small-business loans to more than 20,000 merchants in the United States, Japan, and the UK during the past 12 months. Since Amazon Lending launched in 2011, it has surpassed $3 billion in loans to small businesses. Further, more than 50 percent of the companies eventually take a second loan from Amazon.

Launching its own lending arm is a stroke of genius by Amazon, the company will earn interest on the loans while retailers (with the aid of the loans) will be able to sell more products on the Amazon website and thus will add to Amazon’s earnings. Its big pockets and negative working capital mean it has lots of cash to lend; a mammoth retailer database means it is fairly easy for Amazon to tap into the lucrative space.

“We created Amazon Lending to make it simple for up-and-coming small businesses to efficiently get a business loan, because we know that an infusion of capital at the right moment can put a small business on the path to even greater success,” said Peeyush Nahar, vice president for Amazon Marketplace, in a company announcement.

How Does Amazon Lending Work?

Amazon’s loan program is by invitation only. It offers short-term business loans ranging from $1,000 to $750,000 for up to 12 months to micro, small, and medium businesses selling on Amazon to help them grow their businesses. Loans are approved within 24 hours and, usually, loan money is used for inventory financing and business expansion.

Unlike traditional lenders, which use lengthy loan applications and require a host of documents, Amazon uses internal algorithms to invite sellers to the program based on the popularity of their products, inventory cycles, and other factors. It does not charge an origination fee or prepayment penalties. Furthermore, after establishing its foothold in SME lending, the company plans to branch out  into other markets where there are a lot more opportunities, such as Canada, India, France, and China.

To Be or Not To Be: A Bank

For now, the lending business is relatively a small part of its operations. But considering its vast resources and huge database, it will be interesting to see whether Amazon scales up its credit business and applies for a banking license.

According to a survey of 32,715 people in 18 countries conducted by Accenture, 31% of the respondents would switch to Google, Amazon, or Facebook for banking, if these companies offered financial services. In another report by CB Insights, Amazon has the highest customer satisfaction at 86% compared to Citi (82 percent), Capital One (80 percent), “all banks” (80 percent), TD Bank (79 percent) and Bank of America and Chase (each 75 percent). With more and more millennials opting against traditional banks, becoming a full-fledged financial institution does seem like a viable option. But will Amazon follow that path?

Regulatory Backdrop

Ever since marketplace lenders gained prominence in the financial circle, there has been a debate raging on whether or not to grant technology companies special banking charters that will allow them to compete with banks nationwide. Right now, the situation is vague with regards to regulations for technology companies. Wal-Mart, in 2006, applied for a banking license to establish an industrial loan company (ILC) in Utah. Eventually, lawmakers and banking groups blocked future banking efforts by Wal-Mart and tried to prohibit commercial companies from obtaining new ILC licenses.

Amazon can cause a similar backlash for itself and would rather want to concentrate on other aspects of its business than deal with the headaches of being a bank. Moreover, providing financial services is merely another avenue for plugging companies into the Amazon ecosystem. So the lending arm (as a non-bank) fits nicely into the overall scheme of things.

The Real Threat of Amazon

Amazon really doesn’t want to displace banks as they are one of the main consumers of Amazon Web Services (AWS). Rather, it wants to disrupt banking services. Amazon Web Services is the biggest provider of cloud computing and controls 45 percent of the global cloud infrastructure market. It is used by most of the major businesses and has become an absolute necessity for the financial sector.

“Amazon Web Services (AWS) is forming the backbone of the financial services ecosystem, with a diverse set of firms – from JP Morgan to startups such as Xignite – adopting AWS for data storage and processing,” a consulting report stated.

Apart from this, legacy banks are losing direct interaction with their customers. For example, USAA and Capital One are both experimenting with Amazon’s digital assistant Alexa as a new consumer banking channel. Amazon is not taking any direct market share from banks; rather, it is becoming the customer interface for banks and putting them in the background.

It will be interesting to see how Amazon shapes its lending business with enterprise AWS contributing a sizeable chunk to the bottom line. But with hundreds of millions of customers and merchants on its platform, you can bet it will be at the vanguard of online lending.

Authors:

Written by Heena Dhir.