Thursday May 16 2019, Weekly News Digest

consumer debt

News Comments Today’s main news: iintoo picks the meat off the bones of RealtyShares. Kabbage, Affirm, SoFi among CNBC’s Disruptor 50. LendInvest cuts rates, product fees. Tencent profits, revenues surge. Pleo raises $56M. Prospa closing in on IPO. Paytm offers credit card. Today’s main analysis: LendingTree Personal Loan Offers Report. Is POS trend putting pressure […]

The post Thursday May 16 2019, Weekly News Digest appeared first on Lending Times.

consumer debt

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United States

United Kingdom

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United States

This crowdfunding firm just picked the carcass of RealtyShares (The Real Deal), Rated: AAA

New York-based iintoo acquired RealtyShares’ assets, Inman reported. The move boosts the company’s portfolio size to $2.5 billion assets under management from $1 billion, according to the company.

Current and former investors in RealtyShares will be able to access iintoo’s crowdfunding platform, the report said. The deal — terms of which were not disclosed — is a joint venture between iintoo and Texas-based real estate firm RREAF Holdings, LLC, which will manage the investment porftolio.

Meet the 2019 CNBC Disruptor 50 companies (CNBC), Rated: AAA

14. Kabbage

Founders: Rob Frohwein (CEO), Kathryn Petralia (President), Marc Gorlin
Launched: 2009
Headquarters: Atlanta
Funding:
 $489 million
Valuation: $1.2 billion (PitchBook)
Key technologies:
 Artificial intelligence, cloud computing, machine learning
Industry: 
Credit, financial services, lending

26. SoFi

So far, 600,000 members, $30 billion in loans

33. Affirm

Founders: Max Levchin (CEO), Nathan Gettings, Jeff Kaditz
Launched: 2012
Headquarters: San Francisco
Funding:
 $800+ million
Valuation: $3 billion (PitchBook)
Key technologies:
 Machine learning, software-defined security
Industry: 
e-commerce, financial services, fintech

New LendingClub Account Performance – Q1 2019 (Lend Academy), Rated: AAA

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

Source: Lend Academy

Personal Loan Offers Report – April 2019 (LendingTree), Rated: AAA

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 9.23% in April.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 9.23%, an increase of 13 basis points from the prior month and an increase of 188 basis points from the same period one year ago.
  • At $20,810, the average loan amounts offered with the best APRs to all borrowers with a score of 760 was up 0.33% ($69) from last month, and down 9.44% ($1,964) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 5.15% on average, and loan amounts of $19,489. A borrower with this APR and loan amount would save $1,565 by consolidating debt with a 10% APR over a three-year term.

Is the Point-of-Sale Trend Putting Pressure on Plastic? (Markets Insider), Rated: AAA

The latest entrant to the credit market, point-of-sale loans, may be shaking up how consumers finance large purchases. According to the TransUnion (NYSE: TRU) Q1 2019 Industry Insights Report, this phenomenon, combined with the popularity of credit card reward programs, may be particularly taxing for the private label card category.

Year-over-Year Origination Growth

Card Type Q4 2018 Q4 2017 Q4 2016 Q4 2015 Q4 2014 Q4 2013
Private Label -5.5% -6.7% -3.8% -0.1% 4.1% 9.2%
 Bankcard 2.9% 0.1% -4.4% 15.1% 7.4% 18.1%

Q1 2019 Credit Card Trends

 

Credit Card Lending Metric

Q1 2019 Q1 2018 Q1 2017 Q1 2016
 Number of Credit Cards 432.8 million 416.5 million  405.8 million 386.4 million
Borrower-Level Delinquency Rate (90+ DPD)  1.89%  1.78%  1.69%  1.50%
Average Debt Per Borrower $5,554 $5,472 $5,332 $5,193
Prior Quarter Originations* 16.5 million 16.0 million 16.0 million 16.7 million
Average New Account Credit Lines* $5,296 $5,283 $5,262 $5,091

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Growth in Personal Loans Led by Super Prime Consumers

Personal loan balances continued to climb in Q1 2019, growing 19.2% year over year to a new high of $143 billion. Over the past four years total balances have nearly doubled, growing from $72 billion in Q1 2015. Growth is occurring across all risk tiers with originations increasing 9.7% to 5.0 million in Q4 2018.  Super prime borrowers had the largest growth on the origination front with an increase of 22.5% year-over-year, compared to 19.5% over the same period last year.

Q1 2019 Unsecured Personal Loan Trends

 

Personal Loan Metric

Q1 2019 Q1 2018 Q1 2017 Q1 2016
 Total Balances $143 billion $120 billion $102 billion $93 billion
Number of Unsecured Personal Loans  21.4 million 19.2 million 16.9 million 15.4 million
Number of Consumers with Unsecured Personal Loans  19.3 million 17.6 million 15.7 million 14.7 million
 Borrower-Level Delinquency Rate (60+ DPD) 3.47%  3.51% 3.72% 3.59%
 Average Debt Per Borrower $8,618 $7,986 $7,603 $7,544
 Prior Quarter Originations* 5.0 million 4.6 million 3.7 million 4.1 million
Average Balance of New Unsecured Personal Loans* $5,432 $5,044 $5,132 $5,077

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Credit Card Loan Performance (PeerIQ), Rated: AAA

US consumer credit grew by $10.3 Bn in March, at a 3.1% annualized rate, the slowest in nine months. Revolving credit outstanding decreased by $2.18 Bn indicating that consumers ended the quarter more cautious about borrowing. US GDP growth has been propelled by rising consumer spending and a slowdown could put a dampener on growth.

Source: Bloomberg, PeerIQ

30 and 90-day delinquency rates from credit card master trust data

Source: Bloomberg, Bank Credit Card Trust Data, PeerIQ

Declining Credit Enhancement in US MPL ABS is Unwarranted (Crowdfund Insider), Rated: A

Fitch is out with a report on marketplace lending (MPL) asset-backed securities (ABS) stating declining credit enhancement is unwarranted.

Fitch states that credit enhancement (CE) levels of ‘Asf’ category rated US MPL ABS have meaningfully declined since 2017, while asset quality remained relatively steady. As a result, bondholders of more recently issued transactions have less loss protection for the same amount of asset risk.

PeerStreet Reports Accelerating Growth as the Real Estate Platform Tops $ 2 Billion in Property Lending (Crowdfund Insider), Rated: A

This past March, PeerStreet, a real estate crowdfunding platform, announced that it had topped $2 billion in transactions and over $1 billion in Assets Under Management. Three months early in January, that transaction number stood at $1.7 billion. If that pace holds, PeerStreet should be nearing $3 billion in transactions by the end of the year thus firmly establishing itself as a leading property lending platform. While some sectors of real estate crowdfunding have struggled, PeerStreet does not appear to be one of them.

WealthStone Announces Real Estate Platform (Yahoo! Finance), Rated: A

WealthStone LLC announces the formation of its new real estate platform.

Typical investments require between $10 million to $100 million in total capitalization per project, including prudent leverage. These assets are expected to provide a total annualized return of 10% to 12%, including an annual cash dividend of 5% to 8% to the equity invested in its projects.

WealthStone aims to allocate approximately $300 million of equity capital for an estimated $700 million of total investments in a variety of real estate ventures during its current deployment phase.

Fintech seeks to help customers avoid overdrafts — with assist from a big bank (American Banker), Rated: A

The savings app provider Digit on Tuesday unveiled an instant withdrawals feature that will let users move money from their Digit account to their bank account instantly. This can help them meet emergencies and avoid incurring overdraft fees and resorting to payday loans.

Startup Launches To Combine All Of Your Credit And Debit Cards Into One Digital Card (Forbes), Rated: A

Forget checking your balance on your mobile phone. Startup Binji wants you to use your debit card instead.

In stealth mode for the past twelve months, the Irvine, California fintech is launching a debit Mastercard that enables consumers to consolidate as many as twenty-four credit cards and debit cards into a single account.

Connecting the Unbanked to A Friendlier Ecosystem (Cryptopolitan), Rated: A

P2P lending platforms like AssetStream are introducing significant improvements in the world of financing, which makes lending and borrowing friendlier and more easily accessible services.

How do We Empower a Growing Number of Small Enterprises? (Cryptopolitan), Rated: A

To be exact, if a company with relatively worse credit score applies for a large loan, let’s say $1 million, they’re more likely to be approved than a smaller, more trustworthy company that applied for a $100,000 on the same terms.

Data privacy, AI, regulation: Small-business lending is changing fast (American Banker), Rated: A

“We used to have 14,000 banks. When I started at the SBA, we were down to about 8- or 9,000 banks. Now we’re down to 5,000 banks.”

Much of the technology that is transforming how small-business lending gets done is coming from fintechs, and Mills sees “the next wave of the fintech evolution” as a partnership between these innovators and banks. “Particularly small banks,” she says.

Listen to the podcast here.

Goldman Sachs execs are opening up about their plans for Marcus (Business Insider), Rated: A

The bank has made more than $5 billion in consumer loans since making the first loan in October 2016. It has also attracted more than $46 billion in deposits.

Talwar’s comments may foreshadow the next phase of Marcus’ growth, which will center on three pillars:

1. Free financial-management software offered by Clarity Money, which was bought by Goldman last year and is likely to be rebranded at some point.

2. Direct-to-consumer products such as loan and deposit products, potentially in addition to wealth-management and insurance products.

3. Strategic partnerships.

Walmart Offers Even.com To Improve Employee Financial Health (Forbes), Rated: A

Although Even.com can let Walmart employees access their wages ahead of payday, that is its least important features, according to its CEO, Jon Schlossberg. For $8 a month — like many employees Walmart pays a share of the fee — it aims to improve financial wellness. It shows  users with a glance at a smart phone how much they have left to spend safely and helps them save for specific goals.

Millennials Are Helping to Sound the Credit Card Alarm (Bloomberg), Rated: A

First, the charge-off rate among card issuers in the first quarter increased to the highest level in almost seven years. The figure is effectively a gauge of “bad debt” — it reflects the percentage of loans companies have concluded will never be repaid. As Bloomberg News’s Jenny Surane noted last month, executives like Capital One Financial Corp. CEO Richard Fairbank chalked that up to the length of this economic expansion causing some negative credit events during the financial crisis to disappear from credit bureau reports, essentially making risky borrowers look stronger.

Crypto Startup Launches Bitcoin Term Deposit Offering 9% Annual Interest (CryptoGlobe), Rated: A

A Delaware-based cryptocurrency startup called BitLeague has recently launched a Bitcoin term deposit product designed to bring mainstream-like services to the crypto economy and attract new users.

The move was announced at Consensus 2019 and, according to a press release, the term deposit will offer 9% annual interest, with a lock-in period of 3 to 36 months.

Human Rights Watch Comment on CFPB Proposal (HRW.org), Rated: A

According to research by the Pew Charitable Trusts, approximately 12 million Americans take out payday loans and 2.5 million take out vehicle-title loans each year.[3] The short-term nature of these loans and their repayment structure drive about 80 percent of borrowers to re-borrow frequently and repeatedly pay fees to refinance their accumulated debt.[4]  The 2017 rule establishes logical baselines for consumer protection, including by requiring lenders to verify that borrowers have the ability to repay the loan and its associated fees prior to issuing a loan.

The vast majority, around 73 percent, of survey respondents reported household incomes under US$40,000, with an average of two children each, and nearly half had taken out a payday, auto title, or both types of short-term loans. People reported taking out loans most often to cover unexpected expenses, but also for their everyday expenses and groceries. More than half of those who took out a loan said they had trouble repaying their loans and associated fees.[8]

Fintech charter delayed following court ruling: Otting (American Banker), Rated: A

In a recent sit-down with American Banker, Otting said he no longer expects to have a fintech firm formally apply for the new special purpose bank charter in the second quarter of the year, after a federal judge ruled May 2 that the New York State Department of Financial Services could continue with its case to invalidate the charter.

Accomplished Human Resources Executive Joins Online Small Business Lender (OnDeck), Rated: B

OnDeck today announced the appointment of Deb Stroff as the company’s Chief People Officer.  Ms. Stroff will be responsible for leading all aspects of people strategy, including overseeing organizational design, total rewards, talent management, recruiting, leadership development and learning, as well as driving the talent agenda forward as OnDeck continues to grow in scale and complexity.

Roostify and Docutech Join Forces to Amplify the Consumer Experience (Roostify), Rated: B

Roostify announced the finalization of its integration with Docutech, a provider of document eSign, eClose and print fulfillment technology.

By joining forces with Docutech, Roostify consumers can now view, complete, and eSign documents, all within the Roostify platform.

CrowdStreet Appoints Award-Winning FinTech Innovator Donna Wells to its Advisory Board (Yahoo! Finance), Rated: B

CrowdStreet, Inc., a technology provider with an online marketplace for direct equity investment in commercial real estate (CRE), today announced the appointment of financial technology entrepreneur Donna Wells to its Advisory Board. The news comes on the heels of the company passing the $500 million threshold in total online investments with a record number of new individual investors.

Cadre Expands Executive Team, Appointing Sam Mischner as Chief Commercial Officer (Yahoo! Finance), Rated: B

Cadre announced today that Sam Mischner has joined the company in the role of Chief Commercial Officer. Mischner brings expertise in strategic sales and operational excellence to Cadre, where he will oversee marketing, sales, and operations.

LendingPoint CEO Chosen as Entrepreneur of the Year Finalist Southeast by EY (BusinessWire), Rated: B

LendingPoint is excited to announce that CEO and founder Tom Burnside was selected as a finalist for EY’s Entrepreneur of the Year Southeast. The program recognizes entrepreneurs in more than 145 cities around the world who demonstrate excellence and extraordinary success in areas such as innovation, financial performance, and personal commitment to their businesses and communities.

United Kingdom

LendInvest cuts rates and product fees (Mortgage Introducer), Rated: AAA

LendInvest has dropped its product fees and lowered interest rates for both of its 5-year fixed rate buy-to-let remortgage products for a limited time.  

The products will be available on standard property cases up to 75% loan-to-value and up to £250,000 in loan size.

The products are offered at an interest rate of 3.60%, with the ICR calculated at the pay rate, or at an interest rate of 3.49% with the ICR calculated at 5%. Both products will have zero product fee.

CapitalRise secures new institutional funding line to write larger loans (AltFi), Rated: A

Specialist property lending platform CapitalRise has secured a £30m institutional funding line from a major financial institutional investor, as it looks to expand its loan book.

The new £30 million facility was received from a UK bank, whose name is undisclosed.

OakNorth completes £30m loan-on-loan facility with Hilltop Credit Partners (Fintech Finance), Rated: A

OakNorth – the bank for entrepreneurs, by entrepreneurs – has completed its first finance deal with Hilltop Credit Partners, a specialist funding partner for small and mid-sized residential property developers and housebuilders.

The £30m loan-on-loan facility will be used to support the recently launched real estate development lending platform, led by Paul Oberschneider, who has more than 25 years of experience in property development and asset management. Backed by Round Hill Capital, a global real estate investment firm with a focus on macro-driven residential real estate investment strategies, Hilltop Credit Partners aims to help developers who know their local markets but need access to tailored financing solutions in order to fund their projects.

Crypto lending platform for business launches this month (Yahoo! Finance), Rated: A

London-based financial services firm Mode has announced its first product – a crypto-backed lending platform for businesses – will launch later this month.

The company is aiming to become the UK’s first fully-regulated digital-asset bank as it works on building an ecosystem of products and services designed to bridge the gap between digital and traditional finance.

The service is aimed at companies which hold Bitcoin and Ethereum – whether through direct purchase, investment, or as payment from clients.

How to Build Your Own Startup with Micro-financing? (Cryptopolitan), Rated: A

A report on This is MONEY shows that more than 50% of UK startups with less than 50 employees were rejected for bank loans. More so, 37% of SMEs are likely to give up their search for loans after their first approach is rejected.

P2P investing not always ‘high-risk’ (FT Adviser), Rated: A

Imagine an asset class where investor returns have been overwhelmingly positive every year since its inception and incredibly stable, hovering around the mid-single digits, without the rollercoaster of the stock market.

OakNorth completes £2.5m loan to multi-site specialist school, Cressey College (fe news), Rated: B

OakNorth completes £2.5m loan to multi-site specialist school, Cressey College, to support the groups growth strategy.

Finastra appoints Mark Miller as Chief Financial Officer (Virtual Strategy), Rated: A

Finastra has announced the appointment of Mark Miller as Chief Financial Officer (CFO) effective May 13, 2019.

Mark is a seasoned finance executive, with nearly 25 years of global technology, finance and operational experience. He has worked at several industry-leading companies including, most recently, Marketo, where he was CFO and travel technology firm Sabre Corporation, where he spent 18 years in a number of leadership and executive roles including CFO.

China

Tencent profit tops forecast as fintech and cloud revenues surge (Reuters), Rated: AAA

Tencent Holdings Ltd posted record quarterly profit on Wednesday, smashing market expectations, as the social media and gaming giant booked a rise in the value of its investments while fintech and cloud revenues helped make up for declines in games.

In the three months ended March, Tencent saw 17% growth in net profit to 27 billion yuan ($3.93 billion), beating the 19.4 billion yuan average of 13 analyst estimates compiled by Refinitiv.

Boosting profit was a 46% rise in “net other gains”, such as from investments, to 11.1 billion yuan. Revenue, however, came in just shy of analyst estimates at 85.5 billion yuan, with growth at an all-time low of 16%.

European Union

Business card management platform Pleo raises $ 56m (Fintech Futures), Rated: AAA

Fintech Pleo, the business spending platform based around smart company cards, has raised $56 million in a Series B financing round led by Stripes, a New York-based growth fund.

Pleo will use the funding round to more than triple its headcount, from 120 to 400 employees by the end of 2020 and to accelerate product development as it aims to service the entire purchase process for SMEs across the whole of Europe. This includes adding credit, invoices, mobile payments, a vendor marketplace, VAT reclaim and more.

International

More global banks commit to Finastra’s Fusion LenderComm (Realwire), Rated: A

Finastra has signed three global banks on its Fusion LenderComm platform as part of a coordinated campaign, including BNP Paribas, Natixis and Societe Generale. With NatWest, which joined recently, the ramp up signals a move towards a new era of efficiency in this complex space.

How to capture Gen Z spend (Drapers Online), Rated: A

In a survey, 58% told Klarna that they would pay more than $5 (£3.90) for one-hour delivery – if brands cannot compete, then consumers will take their custom elsewhere.

Leading the way in terms of sustainability, 72% said they would pay more for sustainably sourced products, 55% would abandon a purchase if it was not sustainable, and 83% said it is important that brands prove be “pro-equality”.

Klarna found that most of this generation still frequent the high street, and do so more than any other age group.

Australia

Prospa IPO books close; on track for June 11 listing (AFR), Rated: AAA

Investment banks Macquarie and UBS are set to underwrite Prospa’s $610 million sharemarket float after running a bookbuild to sell the shares.

The brokers closed the bookbuild at 2pm on Wednesday and funds were told the lead managers had secured enough support to raise the $110 million required for Propsa’s initial public offering.

Home loan discount frenzy drives bargains for borrowers (Mozo), Rated: A

Popular online lender Tic:Toc has launched a $1,000 cashback offer for all new customers, while competitor loans.com.au has dropped its variable rate below 3.50% to match Tic:Toc’s ultra low rates. Homestar has a competitive low rate plus fee waiver offer on the market, while Virgin Money is enticing new customers with Velocity rewards points.

India

India’s largest mobile wallet company Paytm now offers a credit card (TechCrunch), Rated: AAA

The firm, operated by One97 Communications, today unveiled Paytm First Credit Card with lofty benefits as it races to bulk up its financial offerings. The cards, issued by Citi Bank, will be the first in the country to offer unlimited, one percent cashback on purchases, Paytm claimed in a statement. The company is hoping to rope in about 25 million credit card customers in the coming months.

The penetration of credit cards remains very low in India with under 50 million peoplepossessing one.

SIDBI’s pilot scheme for fintech NBFCs to boost digital lending (Business Line), Rated: A

To give a fillip to digital lending, Small Industries Development Bank of India (SIDBI) has put together a pilot scheme to extend financial assistance of up to 10 crore to new-age fintech non-banking finance companies (NBFCs) engaged in financing small businesses and other income-generating activities.

Asia

P2P lending in Vietnam (krASIA), Rated: AAA

In Vietnam, where the economy is booming, approximately 79% of the population is unbanked. Without a banking account, it is almost impossible for people to access financial services such as insurance and loans. The phenomenon is called “financial exclusion.”

The country has an internet penetration rate of 67%, higher than the region’s average of 58%, and nearly three-quarters of the adult population owns a smartphone.

Vietnam is fertile ground for massive fintech adoption, particularly in peer-to-peer (P2P lending).

P2P Lending to Overcome Financial Exclusion (SME Magazine), Rated: A

The global P2P market is estimated to be worth US$490 billion in 2020. By then, Vietnam’s own P2P market is expected to be US$7.8 billion, almost doubling from US$4.4 billion in 2017 according to estimates by APAC-focused consulting firm Solidiance. Currently, there are over 40 P2P lenders operating within Vietnam; several of which are prominent due to their size and reach.

Innoven Capital pulls in USD 200 million from Temasek and UOB (krASIA), Rated: A

Singapore-headquartered venture debt firm Innoven Capital received an additional USD 200 million in funding from its shareholders – Temasek Holdings and United Overseas Bank (UOB). The firm said it’s doing this in anticipation of the massive potential that Asia’s venture debt space offers.

Canada

Koho Secures $ 42M in Series B Funding (Finsmes), Rated: AAA

Koho, a Toronto, Canada-based fintech company that provides Canadians with a mobile current account and Visa card, closed a $42m Series B funding round.

Authors:

George Popescu
Allen Taylor

Business card management platform Pleo raises $56m

The post Thursday May 16 2019, Weekly News Digest appeared first on Lending Times.

Wednesday March 15 2017, Daily News Digest

funding circle

News Comments Today’s main news: Enter the bear market in bonds? D+H launches cloud-based small biz lending platform for banks. Over 50K investors register with RateSetter. Revolut partners with Lending Works to offer cut-price instant credit. Blender procures Electric Money Institution license. Blackmoon partners with ID Finance. Today’s main analysis: Fundbox study reveals impact of late SMB payments. The British Business Bank […]

funding circle

News Comments

United States

United Kingdom

European Union

MENA

News Summary

United States

Enter the Bear Market in Bonds? (WSJ), Rated: AAA

Stocks and bonds struggled while the dollar climbed Tuesday.

The yield on the 10-year Treasury note on Monday rose to 2.609%, the highest since September 2014. That’s up from 1.867% on Election Day, and nearly double the all-time low of 1.366% hit last July.

Bill Gross, the famed bond investor, underlined the 2.6% yield in January as the pivot point that will usher in the long-anticipated bear market in bonds. Mr. Gross warned that, should yields march above that threshold, it would indicate a “secular bear market has begun.” A break above 2.6%, he observed in chartist vernacular, would break a downward trend line that has been in place for the past three decades.

 

Fundbox Study Reveals Impact of Late SMB Payments (Fundbox Email), Rated: AAA

Late and unpaid payments cripple small businesses (SMBs) and it’s something they have to deal with on a daily basis. In fact, 64% of SMBs are affected by late payments on open invoices. I would like to give you an early look at a new Fundbox study, which dug deeper to understand the microeconomic impact that takes place when a business is paid late.

Key findings include:

  • Hiring freeze – 23% can’t hire new employees
  • Owner pay cuts – 79% of SMB owners said they can’t pay themselves
  • New equipment gets the squeeze – 23% can’t invest in new equipment
  • Can’t advertise – 20% can’t spend on marketing efforts
  • Reduced Payroll – 18% hold back on pay increases or bonuses for employees
  • Inventory freeze – 17% can’t build up inventory

If paid on time, Fundbox estimates that these SMBs across the U.S. could hire an additional 2.1 million employees, which would reduce unemployment by 27%.

Fundbox helps SMBs overcome cash flow gaps by funding outstanding invoices. Attached please find the infographic. Would you like to also see the release? I can also connect you with Prashant Fuloria, Chief Product Officer at Fundbox who can discuss the critical need for services that solve cash flow gaps.

 

D+H Launches Cloud-Based Small Business Lending Technology (D+H Email), Rated: AAA

DH Corporation (TSX: DH) (“D+H”), a leading provider of technology solutions to financial institutions globally, today launched Total Lending™ Small Business, a new digital, mobile-first lending solution designed to boost profitability of financial institutions and improve the lending experience for small business owners across the United States. Now, banks and credit unions can deploy an intuitive, online loan application for small businesses, enabling more application throughput than the traditional paper-based branch model.

Total Lending™ Small Business is designed to empower financial institutions to build a more profitable small business loan portfolio. By bringing the loan process online, banks will benefit from reduced overhead and greater scale. An improved application process will also attract more loan requests from new and existing customers who prefer the convenience of the online or mobile experience.

New Data Shows C&I Lending Can Bring Higher Profitability to Community Banks in 2017 (PayNet Email), Rated: AAA

At $4.4 trillion in trade payables, term loans, and working capital loans, private-company credit represents one of the largest credit markets in the U.S. Today, C&I lending represents about 25% of all loans, down from over 40% in 1950. According to a new study by PayNet, Inc. banks can look to higher profitability in 2017 in their core franchise credit C&I business.

PayNet’s study shows that between 2008 and 2016, banks could have achieved $2.6 billion in additional net income, at a higher risk-adjusted return, had they maintained their share of C&I lending.

Banks can find financial technology useful to reduce the time to underwrite a loan from 50 hours to just over 2 hours. In addition, banks can further utilize technology to lower the cost of loan review by 40% while at the same time increasing the frequency of the loan review cycle from once per year to four times per year for the highest risk accounts.

‘Car vending machine’ firm Carvana hires banks for IPO (Reuters), Rated: A

U.S. used-auto retailer Carvana LLC, which allows customers to pick up cars they buy on the internet from vending machine-like towers, has tapped investment banks for an initial public offering, according to people familiar with the matter.

Carvana has hired Wells Fargo & Co (WFC.N) and Bank of America Corp (BAC.N) to lead its IPO, the people said this week.

Carvana sells cars through its website and operates automated towers that store cars in U.S. cities such as Austin and Dallas in Texas, and Nashville, Tennessee.

This Insurance Startup Wants to Cover Tomorrow’s Self-Driving Cars (Backchannel), Rated: A

Now an auto insurance startup called Root is taking that conclusion to the bank, so to speak. It believes that the investigation, as well as its own studies on the matter, make a strong case that Teslas with Autopilot are safer than just plain humans. So confident is Root about this that, starting today, it is charging Tesla drivers lower fees if they turn on and use the controversial Autopilot feature.

The Tesla discount is a natural outgrowth of Root’s business model, which is based on using technology to identify safe drivers and offer them low rates. If you suck at driving, you don’t get a policy. Before getting coverage, customers must submit to a two-to-three-week testing period, downloading the Root app to their phones, which will use the sensors in the device to track location, speed, acceleration, and whether they are weaving recklessly between lanes at 2 a.m. after leaving a taproom. Or whether they are using the actual phone measuring their driving skills to text while in motion. This actually happens, says Timm, because after a few days drivers forget that they are being monitored and revert to bad habits.

According to Timm, about 70 percent of those who undergo this process will be deemed safe drivers, whereupon the company will offer them a low rate, with the entire transaction done on the phone. (Even your proof-of-insurance card will be stored on the device.) The other 30 percent have to get insurance from Root’s competitors.

One might think this will be a boon for insurers, who will see claims drop dramatically. Timm argues otherwise: The paucity of accidents and claims will drop the real cost of insurance so low that the established companies, stuck with high overheads, won’t be able to cut their prices enough. They will thus be subject to Uber-level disruption from newcomers who will be able to charge fees as low as $30 every six months.

Root has not contacted Tesla directly, but says that even without the car manufacturer’s help, the Root app can figure out when a Tesla owner is using Autopilot. Timm hopes that in the future, the company can work directly with Tesla to get better data.

SmartBiz Loans Adds Former SBA Head of Capital Access to Board of Directors (SmartBiz Loans Email), Rated: B

SmartBiz Loans, the first SBA marketplace and bank-enabling technology platform, today announced the addition of Ann Marie Mehlum to the company’s board of directors, a former Small Business Association (SBA) associate administrator and seasoned banking industry veteran, with more than 30 years’ experience.

As former associate administrator for the SBA’s Office of Capital Access, Mehlum directed the government agency’s flagship credit programs including the 7(a) general business loan guarantee program, the 504 program for real estate and long term asset financing, and the microloan programs, with a combined portfolio of more than $100 billion. The SBA is a federal agency that encourages lenders, typically banks, to originate loans to small businesses by providing a guarantee for these loans.

SmartBiz Loans’ SBA marketplace automatically connects small business owners with the right bank which helps to increase loan application approval rates and speed. SmartBiz®bank partners utilize the SmartBiz software platform to increase their efficiency in processing SBA loans by up to 7­0 percent. SBA loans are widely considered the best type of loan for many small businesses because of their low rates and long repayment terms.

Fintech firm relocating to Orlando and creating high-wage jobs (MRINetwork), Rated: B

Financial tech firm Finexio is moving its hub from Silicon Valley to Orlando – a move that will open up 10 high-wage jobs, the Orlando Business Journals reported. The startup, which offers a business-to-business commercial payment network, recently decided that the relocation is necessary in order to support its growth.

The company chose Orlando because of its growing reputation as an innovative city, drawing in professionals particularly in the financial technology industry. This move echoes that of other industry giants such as Deloitte and KPMG, which have ramped hiring in Central Florida.

At its new Orlando-based location, Finexio will be looking to hire professionals to work in its corporate headquarters and engineering department.

According to the Orlando Economic Partnership, another reason Finexio chose Orlando is because of the resources available in the area for hiring software engineers. For example, the University of Central Florida is located nearby, which offers a top-tier engineering school.

United Kingdom

Over 50,000 investors register with RateSetter (Bridging&Commercial), Rated: AAA

Peer-to-peer lending platform RateSetter has announced it now has over 50,000 investors.

This was just one of a number of milestones that RateSetter has recently reached, including collecting £1bn of repayments, investors having now earned more than £60m in total interest and more than £1.75bn of loans being delivered to borrowers across the UK.

Revolut partners with P2P lender to offer customers cut-price instant credit (Finextra), Rated: AAA

Revolut has today announced a partnership with peer-to-peer (P2P) loan firm Lending Works to provide instant credit at half the cost of UK banks.

In just two minutes, Revolut customers can now apply for credit from anywhere in the world via their smartphone and receive funds instantly to their Revolut account.
This process cuts out the banks entirely, meaning that Revolut customers are charged just £52 on average to borrow £1,000 over a 12 month period, with a representative APR of 9.9%. In contrast, a recent survey of five major UK banks, whose personal loans are notoriously expensive with time-consuming application processes, showed that consumers are charged £120 on average to borrow the same amount over a 12 month period, with a representative APR of 23.8%*. Credit card rates are also sky-high, reaching a record average purchasing rate of 21.6 per cent APR in March 2016 (Source: moneyfacts).
The new credit features mean Revolut is the first company to approve and pay out P2P loans instantly.
The Revolut app currently offers UK users credit from as little as £500 to a maximum of £5,000, and users can adjust their repayment period between 12 and 60 months. In contrast to many banks, there are no fees to repay the loan early.

The British Business Bank invests £135m in P2P platforms (Bridging&Commercial), Rated: AAA

Since it was established in November 2014, the British Business Bank has invested £135m in peer-to-peer platforms.
Following a freedom of information request submitted by Bridging & Commercial, it was also discovered that in the calendar year 2016, £11.5m was drawn down for participation in loans generated by peer-to-peer lending platforms.

Investment Platform CapitalRise Launches Innovative Finance ISA For Residential Property (Crowdfund Insider), Rated: A

CapitalRise, a London-based property investment platform, announced on Monday it is launching an Innovative Finance ISA (IFISA) wrapper for residential property. According to the platform, the new IFISA allows savers to invest a minimum of £1,000 and up to £15,240 in the current tax year (rising to £20,000 in the 2017-2018 tax year) in residential property, targeting tax-free returns between 10-14% per annum.

Digging into the data: How investor returns change over time (Funding Circle), Rated: A

We used five full years of historical loan performance data to simulate how the returns in a typical investor’s portfolio can change over time. In our example, an investor lent £10,000 across all the loans originated through Funding Circle in 2012. Each month, the loan repayments and interest received were lent to new borrowers.

The below chart shows the annualised return, after fees and bad debt but before tax, earned by the example investor over a five year investment period.

For the first few months the investor’s annualised return is at its highest, at approximately 7.8% after the 1% annual servicing fee is deducted. This is because the investor has typically yet to experience any borrowers being unable to repay their loans.

Bad debts generally start to occur approximately six months after the loans are made. This is reflected in the chart above, where our example investor’s return starts to dip after six months. This trend then naturally decreases over time as the rate at which businesses run into difficulties tends to decrease.

After 18 months the example investor’s return stabilises, then generally increases as recovery payments start to arrive. As of 1st February 2017, 44% of the value of loans defaulted between 2010 and 2014 has been recovered. This trend typically continues for the rest of the investment period, with the example investor ending the five year investment period having earned an annualised return of 6.5% after fees and bad debt.

London Independent Financial Advisor launches robo advice for clients (AltFi), Rated: A

A London-based financial advisor has launched a robo advice like service for its clients. FOL Wealth, began offering its automated service at the end of February to give customers access to low-cost advice.

The wealth manager charges an annual fee of 0.90 per cent with a minimum investment of £1,000.

Nicola Horlick: Why P2P can prove a haven in stormy times (Professional Adviser), Rated: A

Events abroad meanwhile are dominated by what is happening in the US, where the volatility of change and the frequency of significant news events – what journalists call ‘story burn’ – are increasingly alarming.

In the case of Money&Co, the company I founded and of which I am CEO, we bring individuals looking for a good return on capital together with carefully vetted, well-established and profitable small and medium-sized enterprises (SMEs) seeking funds for growth. We have also recently introduced property lending.

As a P2P business lender, Money&Co does what the banks cannot or will not do – we fund SMEs and we provide a gross yield of nearly 9% a year to the lenders, who extend credit via our platform.

To be fair, banks have baggage we do not – for example, headcount, bonus culture and general institutional sclerosis.

The IFISA was launched almost a year ago, but most P2P lending platforms are still unable to offer it, as they require full Financial Conduct Authority (FCA) approval in order to do so. Money&Co has full FCA approval and so we can now offer the IFISA.

Money&Co’s loan book is currently generating an average gross yield of 8.95%. Investors can choose to either roll up the interest in their ISA account or pay the interest out monthly. We take a fee of 1% a year and so the net yield is 7.95%.

We will also be offering asset-backed loans for inclusion in the IFISA.  They will yield slightly less – at around 7% a year net of fees – but I would expect them to be particularly popular with ISA investors.

Fintech firm launches fund due diligence platform (Citywire), Rated: B

Fintech firm Door has launched a digital platform to streamline the fund due diligence process between fund investors and asset managers.

The information will be used by professional fund investors when monitoring and screening funds.

Door is registering fund investor users in groups of 100.

For asset managers, Door is used to reduce the repetitive nature of responding to due diligence requests and help to improve their responsiveness to client requests.

Earn 7% lending cash to strangers: Peer-to-peer trounces the pitiful rates being offered by banks… but there are risks (This Is Money), Rated: B

Yet while the average rate on an easy-access account stands at just 0.37 per cent, the rates on so-called peer-to-peer lending range from 2.6 per cent to 7.2 per cent.

Zopa was the first UK firm to set up in 2005 and now has 75,000 investors on its books.

It was swiftly followed by RateSetter and Funding Circle, which together with Zopa now account for two-thirds of the UK’s peer-to-peer market.

RateSetter alone lent £668 million to individuals and businesses across the UK last year.

It offers three accounts. There is a rolling account — which means your money is not tied in for any length of time — paying 2.6 per cent, a one-year fix at 3 per cent and a five-year deal at 4.8 per cent.

Zopa has three deals on offer, paying 2.9 per cent, 3.7 per cent or 6.1 per cent.

European Union

Blender Procures Electronic Money Institution License in EU (Finance Magnates), Rated: AAA

Blender, an international consumer e-lending platform, has garnered a new license to operate as a financial institution in the European Union – the license recognizes Blender as an E-Money Institution, which includes a range of banking activities for the group, per a company statement.

In particular, Blender can now grant loans, transfer funds between customers and service the platform to other companies. Moreover, the licensing agreement also allows for the execution of most banking activities, except leveraging deposits.

Online Lender Blackmoon Partners with ID Finance to Offer Loans to Investors (Crowdfund Insider), Rated: AAA

ID Finance has integrated with Blackmoon and is now executing investment transactions via the Russian online lending platform. ID Finance is a data science, credit scoring and “nonbank digital lending as an application” provider. ID Finance has is currently operating in Russia, Kazakhstan, Georgia, Poland, Spain and Brazil.

Under the arrangement, loans are screened and scored by ID Finance’s advanced risk assessment system. Blackmoon investors may benefit from interest rates higher than traditional investment tools. If the issued loans meet the strategies of investors that deal with Blackmoon, the system registers the fact of sale, the investor’s funds are transferred to the creditor and the transaction is deemed closed. ID Finance registers the profit by the securitised portfolio and continues servicing borrowers who are redeeming the loans now to the benefit of Blackmoon investors. In this case, Blackmoon ensures execution of transactions, analysis, accounting and investment process management for the investor and lender.

Intel buys Mobileye for .3 billion, fintech funding and acquisitions in Europe, and the EDF Pulse Awards (Tech.eu), Rated: A

On this episode of the Tech.eu podcast, we talk about European fintech funding rounds and an acquisition, Intel’s purchase of Israel’s Mobileye and more.

Listen to the podcast here.

MENA

10 FinTech Firms to Watch in 2017 and Beyond (Tech Financials), Rated: A

These include AimBrain, which has developed a multi-modal mobile biometric authentication platform.

Another two on the watch list are EZMCOM, a developer of a technology that identifies users with their passphrase, voice modulations and facial authentication, with advanced liveness detection features such as movement of lips and blinking of eye, and Crowd Valley, a technology platform that can create, operate and manage online investing or a lending marketplace.

Qumram made their regional debut at Meftech 2017 when showcasing technology that ensures compliance, aids fraud detection and improves customer experience by recording, analysing and replaying every digital interaction – on web, social and mobile.

The Personal Financial Management innovation of Strands is also on display, while White Label Crowdfunding won the delegates over with their online marketplace lending solution that connects credit demand and supply in a transparent and efficient way.

Software company Leveris was also a highlight with their solution that promises to bypass the ‘spaghetti junction’ of IT legacy architecture with a modular banking-as-a-platform (BaaP) solution.

The BlinkID real-time ID scanner by MicroBlink was another star of the show. And making up the impressive list is a platform developed by Agreement Express that allows financial institutions to on-board new clients without requiring paper or ink signatures; and a dynamic Enterprise Planning Platform for Financial Institutions by Inplenion.

Authors:

George Popescu
Allen Taylor