The alternative lending juggernaut shows no sign of slowing down and is enjoying remarkable growth all around the world. The Latin American & Caribbean (LAC) industry is also enjoying the wave; the 2017 Americas Alternative Finance Industry Report highlighted the region as a hot spot of lending growth with volumes jumping by over 200% in […]
The alternative lending juggernaut shows no sign of slowing down and is enjoying remarkable growth all around the world. The Latin American & Caribbean (LAC) industry is also enjoying the wave; the 2017 Americas Alternative Finance Industry Report highlighted the region as a hot spot of lending growth with volumes jumping by over 200% in the completed year 2016. The industry grew from $110 million to an estimated $342 million with business lending accounting for 57% of the total pie.
Source: 2017 Americas Altenative Finance Industry Report
Brazil: A Gold Mine for Alternative Lenders
The so-called Big 5 economies of the region are Brazil, Mexico, Argentina, Chile, and Venezuela. In total, there are 25 countries across Central America, South America, and the Caribbean. The South American market (i.e. basically ex-Mexico) in general, and specifically Brazil, has always been hampered by a lack of banking services, which has opened the floodgate for fintech startups to tap this $6.5 trillion economy. Brazil is an extreme case in point on how lucrative the market can be. 160 million adults are using some kind of banking service, but only 55 million are borrowers, as per Brazil’s central bank. Add to that almost 20 million unbanked people, and you can see the size of the opportunity for a lending startup. Moreover, 85 percent of Brazilians now live in cities; but, 40 percent are excluded from the traditional banking system as per São Paulo-based Itaú Unibanco, the largest private bank in South America.
Yet, the Brazilian population is heavily smartphone-dependent, and fintech lenders have leveraged this to offer differentiated banking and credit services. This gap seems to have been identified by leading US VCs as well. Nubank, a digital finance company that launched a no-fees credit card in Brazil, became the first investment in South America for Sequoia, DST Global, Founders Fund, and QED. It has now raised a cumulative equity and debt funding of over $377 million.
Source:
An underlying reason behind the unprecedented adoption of alternative lending has been the severe banking crisis that hindered the region for more than a decade. With the economy gaining momentum, there is huge latent credit demand, both from individuals as well as SMEs. For instance, Brazilian consumers pay an average of 190 percent a year for unsecured overdraft, credit cards, and consumer loans from banks. The Brazilian government is firmly behind these fintech startups as they look to democratize lending, and more importantly, lower borrowing costs for their voters.
Creditas – Creditas was founded in 2012 by Sergio Furio and has a headquarters in São Paulo, Brazil. It has raised over $77 million in various rounds of funding. Formerly BankFacil, Creditas is a digital lending platform focused on secured lending. The firm funds its customer loans both through investors and financial institutions. Core products include a version of home equity and auto loans in which borrowers offer their residences or vehicles as collateral.
Geru – Launched in 2013, Geru is headquartered in São Paulo. A simple, fast, fair, and cost-effective online loan platform, Geru was inspired by the international model of marketplace lending and provides registration and credit rating services for people who wish to obtain a loan. It offers loans up to $10,000 with an interest rate ranging from 1.88%-5.02% per month, and terms ranging from 12 to 36 months.
GuiaBolso – Brazil’s leading personal finance platform, GuiaBolso has millions of users who have downloaded its finance app and consumer credit marketplace. It has raised over $60 million in funding.
Apart from the above, there are many Brazilian fintech lending startups like Simplic, Biva, and Noverde that are charting their own path in the Brazilian lending market.
Non-Brazilian Alternative Lenders
Credivalores-Crediservicios – Launched in 2003, Credivalores-Crediservicios is headquartered in Bogotá, Colombia. It has raised $34 million from various rounds of funding. It is a non-banking financial company that provides consumer loans for individuals and small companies. The firm also focuses on payroll-deduction loans and consumer lending collected through public utility bills as well as discounting checks and insurance policy financing to low and middle-income individuals.
Sempli – Sempli was started in 2016 by Esteban Velasco and Felipe Llano. Its headquarters is in Colombia. An online lending platform for small and medium enterprises in Colombia, the firm has raised $3.6 million from various rounds of funding. It offers loans ranging from $10k-$100k for working capital and/or business expansion.
Afluenta – Started in 2010 by Alejandro Cosentino, Afluenta is headquartered in Buenos Aires, Distrito Federal, Argentina. It has raised over $13 million in various rounds of funding. Afluenta is the first and only marketplace lending company for consumer and SME loans operating in more than one country in Latin America. Afluenta successfully launched its services in Argentina where their lender base achieved net USD yields of +20% in the last three years. It currently operates in Argentina, Mexico, and Peru with plans to expand to Colombia & Brazil. It has lent over $460 million and has granted 11,403 loans so far.
Future Outlook
Even though the region has been engulfed by a recession for the last decade, the World Bank still expected the Latin American economy to grow by 1.8 percent in 2017 and 2.1 percent in 2018. The UK and US have matured as markets with leaders in almost every emerging niche. South America provides an untouched hunting ground for fintech lending expansion. The light-touch regulatory rule and implicit government banking to expand credit services should see the region emerging as a hot bed for alternative lending innovation.
News Comments Today’s main news: Elevate customers save more than $2B. Overstock launches SEC-compliant ICO alternative. RateSetter trims secondary market fees. PeerStreet funds over $500M in loans with zero investor losses. Qudian leads 2 IPO launches totaling $869. Kabbage on the road to $161M raise. Today’s main analysis: International P2P lending volumes. Today’s thought-provoking articles: Renren’s Joe Chen’s sneaky SoFi share grab. Hedge […]
Hedge Funds flip ICOs. AT: “I don’t know why this seems like big news, but it shouldn’t be. The question is, how long before the SEC clamps down on the practice?”
International P2P lending volumes for September 2017. AT: “Assetz Capital and Funding Circle see significant increases in new loans issued from last month and last year same-month. MoneyThing saw no new loans, the sharpest decline at 100%.”
Elevate Credit, Inc. (“Elevate” or “the company”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced their customers have saved more than $2 billion, versus what they would have paid for payday loans. $613 million of these cumulative savings were incurred in the first half of 2017 alone.
But in Silicon Valley Renren’s founder and CEO, Joseph “Joe” Chen, is no outcast. He is a well-connected guru and mentor who sits on the boards of companies in which Renren has invested, like LendingHome, Fundrise, and Motif Investing. Chen also sits on the board of Social Finance, known as SoFi, which has been under fire due to a mounting sexual harassment scandal that recently saw Mike Cagney resign as SoFi’s CEO and chairman.
Chen is cooking up a deal that will allow shareholders of Renren who are “qualified purchasers” and “accredited investors,” to exchange their shares in the company for ownership in a spinoff entity consisting of its investment portfolio, including Renren’s stake in SoFi. Other shareholders who do not qualify would instead get a cash payment reviewed by a special committee of Renren’s board.
Under the spinout plan, Chen, who owns 31% of Renren’s stock, SoftBank, which owns 39% of Renren, and DCM, which owns 8.6%, will likely increase their SoFi holdings. Most of the shareholders owning the remaining 20% of Renren would lose their exposure to SoFi given that they appear to largely be individual retail investors, Securities & Exchange Commission filings show. This would leave them with a yet-to-be determined dividend, and a holding in a declining, money-losing Chinese internet company.
Renren still has its stake in SoFi, which together with some other Renren investments is worth more than Renren’s market capitalization of $630 million.
Online retail giant Overstock.com is currently not only offering custom jewelry or discount mattresses but has been delving into cryptocurrency through Overstock.com, its subsidiary focused on Blockchain ventures.
In their Overstock.com, they are now in a joint venture together with RenGen and Argon Group to launch an Automated Trading System (ATS) for trading tokens issued via ICOs.
According to reports, $2 billion has been raised in token sales this year alone.
Hedge funds are proving to be first among equals when it comes to digital token sales by technology startups, receiving preferential discounts and terms and then often cashing out. While legal, the maneuver is drawing comparisons to some of the eyebrow-raising practices that took place during the IPO heyday of the 1990s, when many preferred investors would quickly resell shares for big profits.
“It’s not healthy for the ecosystem, and it’s pretty abusive,” said Kyle Samani, a managing partner at Austin, Texas-based Multicoin Capital, which invests in ICOs. “They are getting a discount because they are a big name, and they think it’s going to draw the retail investor. It’s the greater fools theory –- I’ll buy it if there’s someone who’s more of a fool than me.”
Source: Bloomberg
Startups often announce, with much fanfare, that such-and-such funds and big-name investors have participated in the presale. What isn’t as well publicized is that the early investors — and, possibly, even the startup’s founders — can often cash out right after the ICO.
Source: Bloomberg
More than 80 percent of ICOs are doing presales, according to Lex Sokolin, global director of fintech strategy at Autonomous NEXT.
PeerStreet funds over half a billion in loans, maintains zero losses to investors (PeerStreet Email), Rated: AAA
PeerStreet, the real estate investing platform for real estate debt, has just hit the milestone of having funded half a billion in loans and with zero losses to investors since the company launched in 2015.
Platforms in the P2P and crowdfunding space are seeing increasing competition and scrutiny, but PeerStreet has continued to offer investors access to quality loans and high yields, earning the public testimonial of some high-profile users, such as
Online SME lender Kabbage is raising $161 million, according to a filing with the Securities and Exchange Commission. The Fintech firm filed the Form D last week indicating it had already received $80,573,040 with the same amount remaining to be raised.
Kabbage, which is mulling an IPO, has raised about $80 million on the planned raise, according to a Securities & Exchange Commission filing. The fintech, valued at more than $1 billion, announced a $250 million investment from SoftBank last year.
It’s only been a few weeks since the blockbuster announcement that SoftBank is investing $250 million into Kabbage, which thrust the small business lender into the spotlight for a few reasons, not the least of which was the more than $1 billion valuation that has been speculated for Kabbage.
This valuation, of course, is in stark contrast to that of OnDeck, which also lends to small businesses.
“All of our bank partnerships are technology integrations where our technology sits in their systems. They use our technology to deliver the customer experience. And I think what SoftBank saw in us was that potential. Whatever the valuation was I can assure you it was a result of a lot of due diligence on the part of SoftBank,” she said.
What value do the three big ratings bureaus, Equifax, Experian and TransUnion, provide today in our emerging digital economy?
Increasingly in a world where payments may involve a peer to peer exchange, a global transfer, and more and more often a mobile phone transaction, the definition of good credit is going to change and widen.
Today, Experian maintains credit information on 215 million American consumers [Experian]. That’s over two-thirds of the total U.S. population [U.S. Census]. Roughly half of the population in the US has a FICO credit score that is less than 650, meaning that nearly half of people in the US cannot get credit from banks today.
The Equifax debacle turned up the volume on the call for change. We’re about to see more innovative ways of looking at credit, most of them built by mobile-first fintech companies.
Companies like PayPal, Kabbage, SmartBiz, Square, and others have stepped in to look at new ways to determine creditworthiness. Rather than depend solely on a single score like FICO, they are looking at a more holistic picture of a credit applicant.
SoFi, another lending startup, is using AI to analyze data from sources other than credit card information. And ShoCard, a blockchain-identity management system (IMS), teamed up with Creditinfo to let a customer claim their identity and manage who it gets shared with.
Chad Swenson of Lantern Credit believes your credit should be under your control. “Companies,” he says, “now have the ability to work with multiple alternative data streams outside of the traditional data delivered from the bureaus.”
Evan Singer, CEO of SmartBiz, a company devoted to helping small businesses secure loans, says that other metrics like your bank rating (how you use your bank rather than your credit) is another important piece of the puzzle often ignored.
CrowdStreet, provider of the leading commercial real estate investment platform for investor acquisition and relationship management, today announced several enhancements to its flagship Sponsor Direct white-label software platform designed to address the needs of modern investment firms. With these new features, Sponsor Direct is now the only software offering that combines support for financial advisor accounts with a suite of tools specifically developed to help them engage, communicate with and service their investors. Hines Securities Inc. is the first firm to leverage these new capabilities, relying on Sponsor Direct to provide easy-to-use online real estate capital fundraising functionality to financial advisors.
CrowdStreet’s proven software solutions currently support more than 53,000 investors, managing more than 1,000 offerings and $3.7 billion in invested capital. Since its launch, the CrowdStreet software platform has been used to raise more than $260 million and distribute more than $684 million to investors.
ATM fees have reached an 11-year record high, and New Yorkers are paying the second highest rates, says Bankrate’s annual Checking Account Survey for 2017.
The national average ATM fee is $4.69, equaling the average ATM surcharge of $2.97 plus the average out-of-network fee your main bank charges of $1.72.
Cities whose fees top over $5 include Pittsburgh ($5.19), New York ($5.14), Washington, D.C. ($5.11), Cleveland ($5.11) and Atlanta ($5.05).
Even the lowest fees still don’t drop below $4 with Milwaukee at $4.19 and Dallas at $4.07.
Overall, ATM withdrawal fees have risen by 55% over the last ten years and there is little to curb this growth.
1031 Crowdfunding, LLC announced today that the Company moved up in the rankings for the 2017-2018 Top 100+ Real Estate Crowdfunding Sites to #4 overall and maintained its position as #1 ranked Real Estate Crowdfunding site for 1031 Exchanges.
The Real-Estate Crowdfunding Review conducted in-depth research of over 100 real estate crowdfunding sites to form the reviews and rankings provided in the Top 100+ Real Estate Crowdfunding Sites. Site features most highly-valued included: pre-funding, low investor fees, low investors minimums, bankruptcy protection, velocity, positive investor feedback, co-investment by the company, and venture capital funding in the company.
13 sites in the former top 25 have fallen completely out of the rankings due to abandoning their business model or challenges. 5 sites have improved tremendously with substantially increased volume, and a few of these that were lower ranked have leaped up the charts as well.
Tier 1: Best of the Best
These sites have it all: High transparency, co-investment, pre-funding, high-volume, average to low fees, excellent bankruptcy protection, strong administration and customer service, and strong financial backing.
None. No site has all these features yet, but we hope that will change by the time of our next review.
Tier 2: All-Stars
These sites are all extremely strong in the majority of the fundamentals that are most important to investors.
There are 2 types of sites in this category. The 1st are up-and-coming sites that may not be as polished as competitors but have some sort of promise or potential for the future. The 2nd are sites that did well in last year’s rankings, but since then have had substantial investor complaints, decreasing volume or other challenges.
Following an antitrust review that lasted almost a year, the Department of Justice has greenlighted a real-time payments network being developed jointly by the nation’s largest banks.
The government’s approval may boost the prospects of a system that is being built by The Clearing House, the payments firm co-owned by JPMorgan Chase, Citigroup, Bank of America, Wells Fargo and a host of other banks.
Has the state of consumer credit changed post-crisis? Lending Club Chief Executive Scott Sanborn said he believes that the “new normal” in consumer lending is riskier.
Wages are stagnant, Sanborn said, and a greater portion of many consumers’ income now goes toward repayment of debt. Credit cards, student loans, and auto loans are among the major drains on the consumer wallet today, he noted.
A common use of marketplace lenders’ credit is debt consolidation loans, undertaken by consumers to bring down their overall borrowing rates.
Lending Club is not alone among nonbank digital lenders in going beyond traditional credit criteria. A co-panelist with Sanborn, Sarah Friar, chief financial officer at Square, said that her company—which recently applied for an industrial bank charter in Utah—doesn’t use FICO ratings at all. Friar said Square—which began as a payments mechanism and has expanded into small business credit—looks at financial accounts, number of employees, and status versus other players, among other factors.
LendingTree®, the nation’s leading online loan marketplace, has released the findings of its study on how well residents in the top 50 U.S. metropolitan areas are spending within their means – or aren’t.
Among the 50 ranked metro areas, residents are, on average, using 30 percent of their revolving credit lines — such as credit cards and home equity lines of credit, or HELOCs. They also have mortgage balances averaging 79 percent of their annual income and non-housing debt balances averaging 44 percent of annual income, and have had five credit inquiries in the last two years.
Greenville, SC takes the top score, despite having the second-lowest average income among the 50 cities ranked at $65,503 per household.
Goldman Sachs GroupInc.GS 0.40% is weighing a new trading operation dedicated to bitcoin and other digital currencies, the first blue-chip Wall Street firm preparing to deal directly in this burgeoning yet controversial market, according to people familiar with the matter.
Goldman’s effort is in its early stages and may not proceed, the people said.
RATESETTER has announced that it is simplifying the way investors can access their money, with one single “transfer fee” when selling loans on the secondary market.
Lenders are currently charged two fees when selling out existing RateSetter loans, but from 2 November this is being streamlined into a single charge. The fee will be a percentage of the capital being withdrawn, and will be fixed for each market.
Property finance platform LendInvest has called on government to do more to support small builders after discussing the subject with a group of influential MPs.
The event follows the publication of a report by LendInvest earlier this year on the challenges faced by property SMEs. These include constrained access to finance and distorted policy around regulation, taxation and access to land.
At the time of the report LendInvest said only 12.5% of new homes built today are constructed by small builders, down from 37.5% before 1990.
Online lenders that are repaid from people’s salaries have raised more than £175m in recent months, marking out the nascent sector as one of the hottest areas of the UK financial technology market.
Legal & General, the insurer, will on Wednesday announce that it is leading the latest £40m investment in SalaryFinance, which provides loans to employees of 50 groups in the UK and plans to expand in the US.
Founded by three former executives from Google, PA Consulting and Royal Bank of Scotland, SalaryFinance combines with companies to offer their employees loans at lower rates than credit cards or payday lenders.
The company has an unusually low default rate of 0.5 per cent because of the security of deducting repayments directly from a borrower’s salary, and the extra information it gains about its customers by tapping into their employer’s payroll systems.
Despite the high number of UK consumers who use financial products and the extent of financial services penetration in the country — 91% of people across the UK have a current account, and 67% use contactless payments at least once a month — awareness of fintech services in the UK remains low, according to a Source: Business Insider
According to the latest Buy-to-Let Index from online mortgage lender LendInvest, Luton has managed to hold on to the top spot as the best place for buy-to-let investment.
Luton has seen a 4.51% increase in rental price growth and an average yield of 4.51%.
Chinese online lender Qudian Inc. launched an estimated $769 million initial public offering on Tuesday, adding to a growing IPO pipeline along with private equity-backed medical device company OptiNose Inc., which set terms on a projected $100 million offering.
Beijing-based Qudian plans to offer 37.5 million Class A shares priced between $19 and $22, raising $768.8 million if shares price at midrange. Qudian, represented by Simpson Thacher & Bartlett LLP, is directly offering 35.6 million shares in the IPO while various existing shareholders are selling 1.9….
Robo.cash, an automated P2P lending platform that includes a buyback guarantee, recently celebrated its own steady growth during 2017 Q2, noting that its total amount of investments now exceeds €1.8 million. In addition, nearly €400,000 in loans were added in August alone, while the average invested amount per investor gained 2.2% to the previous month at €3,270 in August. More than 900 investors have joined the platform in the first six months of operation.
GoldMint, a blockchain-based startup that helps gold owners profit from digital assets backed 100 percent by physical gold, recently announced an innovative collaboration with the mineral production company Eurasia Mining .
Through this agreement, GoldMint is establishing a method for applying blockchain-based technology to the development of resource industry projects.
Last year, State Bank of India (SBI) announced that the ceiling limit for its foreign educational loans would be raised from Rs 30 lakh to Rs 1.5 crore.
According to statistics, about45 per cent of international students in US alone comprise of Chinese or Indian students.
Here’s a quick look at the financial loan options other than SBI:
The Indian Government has installed the portal ‘Vidya Lakshmi’ that allows students to check out various loan options and fund providers. Loans are provided in four slabs — Below Rs 4 lakhs, between Rs 4 lakhs and Rs 7.5 lakhs; and above Rs 7.5 lakhs with differing interest rates for each slab.
Credila, an HDFC Ltd. Company, India’s first dedicated educational loan company, offers loan approvals before you secure admission. You can get loans up to Rs 2.5 crores.
Prodigy Finance offers competitive loans which does not need a co-signer or collateral. Students can start repaying six months after graduation, and there are no penalties for early repayment. You can also avail of their $10,000 scholarships, which is being given away this year to mark their decade of business.
GyanDhan, India’s first educational loans marketplace, offers 100 per cent financing for top B-Schools and engineering schools. They offer loans with collateral starting as low as 9.1 per cent.
Avanse Educational Loan covers 100 per cent of study abroad expenses on a floating interest of 12 per cent to 17 per cent.
Nationalised banks are offering a comparatively lower rate of interest between 9 per cent to 13 per cent on an average.
Money Forward, a well-established financial tech startup, has launched its IPO, marking a watershed moment for Japan’s burgeoning fintech scene.
The firm, started in 2012, is now worth US$505 million after listing on the Mothers Index Futures section of the Tokyo Stock Exchange, which is designed for high-growth and emerging stocks.
Payday Loan Ranger is a loan service that specializes in providing loans from $50 to $1000.
Payday Loan Ranger’s popularity rises from the fact that it completely simplifies the process and never makes it as hectic and difficult as similar services. Their entire service is reduced down to three simple steps, applying online, searching for the best lenders, and then receiving the cash as early in the first 24 hours.
With over 2,000,000 applications already processed, it has become one of the most popular services used for such transactions and continues to rise in usage as it seems people are truly in need of such a novel service.
The issue of financial exclusion can be summarized into two categories: unbanked and underbanked. Unbanked individuals do not have an account at a regulated financial institution, while underbanked individuals have accounts, but frequently use alternative or unregulated financial services.
Unbanked individuals are faced with a heavy economic burden when conducting even the most basic financial transactions. For example, cashing a cheque can cost the average person with full-time employment as much as USD$20,000 over his/her lifetime. Western Union, as an example, charges as much as USD$42 to send a USD$500 remittance to Barbados. ‘Underground’ alternative financial service providers levy as much as USD$10 on every USD$100 transferred.
Another reason for unbanked individuals is attitudinal and behavioral; they really do not trust banks. This sentiment may not be all that unfounded, as a number of the banks across the Caribbean region have been reducing the teller services that unbanked individuals are familiar with and prefer, forcing more (non-technical) customers to online channels, regularly increasing service fees, and even worse, looking to divest their retail operations in favor of corporate banking and wealth management business units.
To obtain Bitcoin, you must already be “economically included” — both in terms of Internet and financial access.
Predatory businesses are convenient where the unbanked live. Rural areas like Trelawny, Jamaica or Mayaro, Trinidad are home to large swathes of unbanked households. Traditional banks don’t see a viable business cases for locating a branch or satellite office in such districts. This means that check cashing and money changing businesses that charge exorbitant rates are the only real means of conducting transactions. Kenya’s M-PESA succeeded because it leveraged an existing network of agents and vendors.
Globally, mobile banking is overtaking branch-centered activity more and more — for example, in Norway, 91% of the population use online banking channels. The explosion of fintech companies that are ‘unbundling’ traditional banking functions, added to the maturity of the first generation of Internet banking solutions, are hastening this trend. Consequently, the amalgamation of omni-channel banking, fintech platforms, and open APIs are obscuring the lines between traditional and alternative finance.
Moreover, besides remittances, financial inclusion also includes micro-credit, micro-insurance, cooperatives, peer-to-peer lending, rural/agricultural credit, mobile money, mobile vouchers, and a number of other alternative financial services. Financial inclusion is multi-faceted, and Bitcoin has yet to distinguish itself in any of the aforementioned categories.
The Caribbean region has serious online trust issues. In 2016, OAS and IDB published a report titled, ‘Cybersecurity: Are We Ready in Latin America and the Caribbean?’ Researchers conducted assessments of 13 Caribbean nations, including Bahamas, Barbados, Jamaica, and Trinidad & Tobago. The methodological framework covered ‘Culture & Society’, and one of the key findings was the extremely low levels of online trust in the region. Caribbean people do not trust that their online activities aren’t being monitored, they do not trust their service providers, they do not trust social networks, they do not trust their search engine provider, they do not trust companies to keep their personal data safe and secure, and most relevant — they do not trust online and mobile banking platforms.
News Comments Today’s main news: China’s tech giants are pouring billions into U.S. startups. Zopa puts investors on waiting list. RateSetter investors embrace provision fund rules. Latvia breaks RE dev crowdfunding record. Ping An Bank to provide third-party depository service to P2P lenders. Carilend to open first P2P lending platform in Caribbean. Today’s main analysis: Marketplace Lending 2.0. How Brexit could […]
China’s tech giants pour billions into U.S. startups. GP:” China for most of humanity’s history had #1 GDP, population and was #1 in many other metrics. One, and Americans in particular, shouldn’t underestimate the China and the Chinese business sofistication and accumen. In countries like Indonesia and Philippines Chinese business man have a respected reputation. China is also flush with capital and has a capital markets sector that is not mature yet. I see this as a huge opportunity, which has to be approached extremely carefully.” AT: “Marketplace lenders interested in setting up shop in China, the world’s largest P2P market, should see this as an opportunity to get a foot in the door.”
Why ‘challenger banks’ haven’t taken off in the U.S. GP:” From talking first hand with people who work at the most innovative banks in the US I do believe that the regulator is in fact the main reason.” AT: “One word: Trust.”
MPL 2.0. GP:” A must read, and one of the most interesting charts I’ve seen in a while : default trends in different markets.” AT: “This special report from Deloitte is a must-read.”
Six ways Marcus strives to gain an edge. GP:” The most interesting part of the article is that I don’t see the real edge listed: the cost of capital from the ex-GE bank. That is their real edge. Everything else listed here is nothing special many other companies don’t also do.”
Backed secures first institutional debt capital. GP:” This is usually the most difficult step. However, having secured it, it should now be easy for Backed to get to the $20mil in origination per year that will open for them the real capital markets.”
Zopa introduces investor waiting list. GP:” Perhaps another way of doing this would be to have a waiting dollar list, not a waiting investor list: each investor can invest $x per month, depending on platform needs. This way you don’t lose clients who see no activity for some time and you take a token of their participation to have them commit and stay committed. ” AT: “Regulated growth is the best kind of growth.”
How Brexit could help Berlin take London’s fintech crown. AT: “I have to say, though I’m a firm believer that it will take a lot of mojo to overtake the UK as the world’s leader in P2P lending and fintech, there is a compelling argument that Berlin’s growth could be fueld by U.S. and Asian companies choosing Germany over the UK to gain access to European markets post-Brexit. Howevr, they’ll still need a presence in the UK if they want access to the UK market. Whether business interests lean toward Berlin over London in the aggregate and over the long haul, however, remain to be seen.”
Joe Chen, CEO of Chinese social networking service Renren, first met SoFi CEO Mike Cagney in Palo Alto in 2011 and, over coffee, decided to invest in the fast-growth, disruptive online finance start-up. That initial $4 million investment helped SoFi get its start and led to two more financings within three years, with Renren contributing a major chunk of some $230 million raised.
Similarly to Renren, China’s tech titans Baidu, Alibaba and Tencent are leading a surge of Chinese investment in cutting-edge U.S. technology start-ups with bold ambitions to expand their footprint, attract top talent and gain an edge in innovation.
Collectively known as the BAT, China’s giant technology companies that dominate search, e-commerce and mobile messaging in their home market are going global. The United States is their primary shopping place to diversify and build out their brands.
China’s four largest internet companies — the BAT plus e-commerce company JD.com — have invested $5.6 billion in 48 U.S. tech deals over the past two years, according to CBI Insights data.
Last year Chinese investors put a record $45.6 billion in U.S. companies, triple the amount for 2015, according to research group Rhodium Group in New York City.
Besides its groundbreaking investment in SoFi, Renren has invested in a series of U.S. fintech start-ups, leading a $31 million lead investment in crowdfunding real estate site Fundrise in 2014 and leading a $40 million investment in U.S.-based stock-trading outfit Motif in 2015.
For the founders of U.S. tech start-ups, getting cozy with Chinese acquirers and investors can make good business sense. With a Chinese investor, their business gains a competitive edge in the exceedingly difficult-to-penetrate China market. Getting funds from China’s leading tech companies can help U.S. companies gain an entry point to China, an immediate on-the-ground presence and strategic insights such as how to best customize products for the local Chinese market.
Digital banks, big in the U.K., have a trust problem in the States.
That model hasn’t really caught on in the U.S., though, where startups are mostly building technology-based solutions for payments, investing and lending – anything that doesn’t require opening a bank account with an unknown entity. Building that type of business profitably is hard: the cost of customer acquisition is high and complying with complex financial regulations can be a big undertaking.
BankMobile, a rare U.S. success story, offers a compelling case study. With about 2 million accounts since its 2015 launch, it has grown so quickly Customers is selling it to Flagship Community Bank in Clearwater, Florida. (The Durbin Amendment of the Dodd-Frank Act requires companies with more than $10 billion in assets cap their interchange fees at 44 cents, and Customers’ asset size is just below that. BankMobile’s revenue comes mostly from interchange fees on debit cards.) The $175 million deal is expected to close before the end of the third quarter.
Luvleen Sidhu, president and chief strategy officer, said one of the main reasons BankMobile has been so successful is it is acquiring new customers at a low cost – about $10 per account, she specified, compared to the roughly $300 she said it generally costs to acquire a customer returns come out to “maybe $85 a year” in revenue.
U.S. startups are joining banks, not challenging them.
However, it will take more than a better customer experience enabled by technology to motivate customers to open an account or switch from their current bank, despite their general dissatisfaction with the current financial system, Khan said. These new experiences need to focus more on customer behavior – something banks get but startups need to work on more. What will ultimately make a digital bank stand out from legacy banks that are improving digitally is the way it handles data.
That’s why it’s important to remember a tech giant like Facebook or Amazon could get into banking services before a digital bank even takes off, Khan said. If it’s a competition for customer trust, the tech company could beat out all the banks.
But 12 months later, we see a picture that is much bigger in scope than just MPL-bank convergence. Marketplace lending is an integral piece of a larger fintech puzzle that is transforming the financial services industry. We expect that asset classes such as small business, student, and unsecured consumer will move almost completely to digital platforms in the medium term, while other asset classes, such as residential mortgages and auto lending will get there more slowly.
Further out, we see a technology platform-enabled lending environment moving from a predictive to a prescriptive analytics stage.
It’s tackling a pain point for consumers: credit card debt.
It’s kicking it old school with direct mail.
It’s borrowing culture and office design strategies from startups.
It’s light on fees.
It’s turned off automated voice response.
It lets people defer payments. This isn’t for everyone necessarily, but those who make 12 consecutive payments on time earn a pass. They can contact the bank to defer one payment with no fees or extra interest, so a 32 -month loan becomes a 33-month loan.
The digital crowdfunding trend in America started in 2003 when ArtistShare launched as the world’s first donation crowdfunding platform for creative artists. Crowdfunding has surely stimulated the national and global economy over the years, but equity crowdfunding is a federally regulated tool with the ability to shift power from large, robust institutions to the individual entrepreneur and investor.
Equity crowdfunding acts as a catalyst for individuals to collectively combat institutional discrimination along with the very real wealth and unemployment disparity between races in the country. While organizing a crowdfunding campaign strategy is complex in nature, leaders across the country are working hard to make this crowdfunding easier and more accessible to everyone.
Below are a few leaders making a difference in the minority community:
Dar’shun Kendrick at Minority Access to Capital– Securities lawyer with a focus on helping minorities access capital the legal way.
Maureen L. Murat, Crowdie Advisors– Future lawyer with a passion for immigration and securities law helping entrepreneurs raise capital via equity crowdfunding.
Kendrick Nguyen and Paul Menchov at Republic– Equity crowdfunding platform highlighting minority, female, and impact investing offerings.
Devin Thorpe, Champion of Social Good– Journalist, author, and avid speaker on a mission to solve some of the world’s biggest problems before 2045 by championing the work of change agents who will do it.
Lynn Da, Buy The Block– Advocate for minority investment education and access to real estate crowdfunding investments. Platform set to launch April, 2017.
StartingFive Partners and General Catalyst Partners, FundLatinos– These two groups came together to develop this donation crowdfunding platform to bring together with the vision to build the tools, technology and partnerships needed to foster a trusted environment for Latinos to raise money for personal and community causes that matter.
Charlie Jackson, CEO at Texas Diversity Fund– Equity crowdfunding platform with a focus on encouraging diversity in entrepreneurship.
Backed, the online lending platform that has digitized co-signing of personal loans, today announced it has finalized its debt financing deal with Israel’s largest financial institution, Harel Insurance and Finance. Harel has also participated in Backed’s extended seed round, and has become a lead equity investor. Backed and Harel are setting up an independent special purpose funding vehicle for financing its growing loan portfolio.
Backed was founded with the mission of helping individuals with thin or no credit history gain access to fair loans. Its unique co-signing mechanism is fully digitized, and allows the Backer (co-signer) to keep track of the loan progress and to step in to cover missing payments if necessary. Backing is designed to help borrowers and Backers avoid defaults, rather than impose added risk on the co-signers. Simultaneously, the co-signing model allows Backed to offer competitive returns to its investors, with reduced risk due to its co-signing mechanism.
LendingHome’s online mortgage is the first to prioritize the customer experience by putting control over the process into the hands of the homebuyer. While the first wave of digital lenders brought the old-school paper mortgage application online, retrofitting it to be accessed via the Internet, much of the process is still controlled by the lender offline and is opaque and confusing for the homebuyer. In contrast, LendingHome has created the next-generation digital mortgage that gives homebuyers confidence and control over the process with a dynamic, interactive online experience. It also offers a faster, simpler, and more transparent mortgage process than the outdated paper-laden methods still used by many lenders.
It gives homebuyers confidence and control over the process with a range of loan options, innovative features, and trustworthy resources to choose from. It includes the ability to:
Select the right loan for your needs anywhere, anytime: Borrowers can select from a range of loan products at competitive rates. Using LendingHome’s Trade Points tool, they can configure the loan that’s best for their needs without wasting time going back and forth with a loan officer.
Lock your rate with the click of a button: Online rate lock allows borrowers to capture available rates in real time without the worry of missing out because the market moved.
Get guidance right when you need it: An educational hub offers advice on complex topics like debt-to-income and loan types. Extensive in-product tips and education are available exactly at the time they’re needed to help throughout the application process. While it’s easy to complete the mortgage process online, LendingHome has personalized loan specialists available to talk to borrowers via phone or chat when needed.
Know what to expect and do at every step: A personalized dashboard lets borrowers know exactly what documentation they’ll need to provide, without the headache of fielding last-minute piecemeal requests via email and phone. A Milestone Tracker lets them know exactly where they stand in the mortgage process and what comes next.
Stay on the same page with your real estate agent: A Loan Tracker tool enables borrowers to seamlessly share the progress of their loan with their real estate agent or partner.
LendingHome’s home financing solution is available at www.lendinghome.com/home-loans to homebuyers in Arizona, California, Colorado, Florida, Georgia, Nevada, Oregon, Texas, and Washington, with more states to be added in the coming months.
There are 15.8 million homebuyers — many of whom are tech savvy — expected to enter the market from 2015 to 2025, according to research from the book. Today, forty-seven percent of homebuyers are first-time buyers, and half (50 percent) are under the age of 36. They have a median age of 33 and nearly six in 10 are Millennials (56 percent) per a recent survey by Zillow Group. Per the same survey, the majority of homebuyers, 87 percent, use online resources to search, shop and purchase their home.
One year after Quicken Loans’ Rocket Mortgage Super Bowl ad ignited a nationwide conversation about the power of the American homebuyer, the largest FinTech lender funded $7 billion of its record $96 billion in total closed loan volume in 2016 through Rocket Mortgage. In just 11 months Rocket Mortgage’s closed volume alone would already rank as a top-30 national mortgage lender, among the nearly 50,000 banks, credit unions, brokers and mortgage companies in the United States.
Monroe Capital Corporation (Nasdaq:MRCC) (“Monroe”) today announced its financial results for the fourth quarter and full year ended December 31, 2016. The Board of Directors of Monroe also declared its first quarter dividend of $0.35 per share, payable on March 31, 2017 to stockholders of record on March 17, 2017.
Fourth Quarter 2016 Financial Highlights
Net investment income of $5.4 million, or $0.32 per share
Adjusted Net Investment Income (a non-GAAP measure described below) of $5.8 million, or $0.35 per share
Net increase in net assets resulting from operations of $7.5 million, or $0.45 per share
Net asset value (“NAV”) of $240.9 million, or $14.52 per share
Paid quarterly dividend of $0.35 per share on December 31, 2016
Alexa Van Tobel launched LearnVest in 2009 with the mission of making financial planning affordable and accessible.
Sallie Krawcheck, a former titan of finance at companies like Citigroup and Bank of America, launched Ellevest in 2016 with the mission of closing the gender investment gap. The robo-advisor works to help women secure their financial futures by taking women’s unique life attributes — such as longer lifespans, different salary curves and more frequent career breaks — into consideration.
A former McKinsey consultant, Jennifer Fitzgerald cofounded PolicyGenius to fill a gap in the insurance industry.
Vicki Zhou, who previously held roles at Citigroup, SFC Associates and Archipelago Capital Management, launched the company in 2013 with Herbert Moore. WiseBanyan’s platform provides users with tailor-made financial plans by recommending and managing an assortment of bonds and stocks, which users can then track, add to or withdraw from.
Orchard Platform is a marketplace lending platform that helps institutional investors, investment managers and loan originators connect and transact. Angela Ceresnie co-founded the company in 2013 with Matt Burton, David Snitkof, Jonathan Kelfer and Phill Rosen.
Hsieh said last year that regulation was a barrier to entry into the business. People are eye-balling entering the mortgage industry because of $9 billion of untapped potential market share, Hsieh said at the time.
Now a year later, Hsieh added to it, stating technology is now a new barrier to entry — no longer just capital and regulatory obstacles.
And there’s data to back his claim. The Mortgage Bankers Associationforecasts$1.63 trillion in total mortgage originations in 2017. So it’s true that more people want in, but greater investment in technology is becoming an ever-increasing necessity.
Citigroup on Thursday announced that Yolande Piazza will serve as the permanent head of its fintech unit.
Piazza had been serving in that role on an interim basis since August, when the previous chief executive of Citi FinTech, Heather Cox, left for a role with USAA.
Sole lead Guggenheim increased the deal size of the Kabbage offering from $500m to $525m before pricing on Wednesday.
The $388.8m ‘A’ notes were priced at 275bp over swaps, while the $83.3m ‘B’ notes were priced at 400bp over swaps. The $27.7m ‘C’ notes and the $25m ‘D’ …
The Hellyer Oaks Technology Park in San Jose has been acquired by Walnut Creek-based Vertical Ventures, but the sale was funded partially by a real estate crowdfunding tool called CrowdStreet.
Zopa, the oldest and largest peer-to-peer lending platform in the UK, has introduced a waiting list for new investors on the platform. The new setup applies to both institutional and individual investors, and follows on from the “platform limit” which was introduced in December.
The newly introduced waiting list is an attempt to place a greater weight of emphasis on existing investors, by moderating the on-boarding of new customers. Zopa doesn’t yet know how long the waiting list will be, but says that it will try to manage it such that it’s never too long.
Of course, this wouldn’t be an issue at all if originations were outstripping investments. It would appear that Zopa is overweight investment at the moment.
RATESETTER’S investors have widely endorsed changes introduced to the provision fund, as hardly any of them have used the one-month window to withdraw their funds without an exit fee.
The peer-to-peer finance firm updated its lender terms in early February, one month ahead of changes to its provision fund to address concerns that it was “too binary”.
The average amount invested has now ticked up to over £22,000 – a 0.6 per cent month-on-month increase that also confirms investors feel comfortable with the platform’s strategy.
But Berlin’s gains might not come from a Brexit-driven exodus — that is, from U.K.-based technology companies abandoning their homeland. Instead, its fintech scene will benefit from U.S. and Asian businesses actively choosing Berlin, and not London, as their EU base.
That at least is the prediction from Stefan Franzke, CEO at Berlin Partner, a business development agency. He estimates that Berlin is home to roughly 80 to 100 fintechs and expects that number to double by late 2018.
To be sure, Londoners have played down the Brexit threat to the U.K. capital’s fintech crown.
At the same time, Germany is already catching up, by some measures. Funding inflows for the country’s fintech sector totaled $421 million in last year’s first three quarters, topping the U.K.’s $375 million, as shown in the chart above from accounting giant EY.
But London’s fintech scene is going to be hard to overtake, given advantages like the U.K. capital being a top financial hub and the English language serving as the business world’s lingua franca nowadays.
Latvia’s largest crowdfunded RE dev project – 950,000 euros fully funded in less than 24 hours. (Crowdestate Email), Rated: AAA
A residential real estate project located at Saules Aleja 2A in Riga, Latvia was fully funded on Crowdestate.eu crowdfunding platform. This was the single largest crowdfunding campaign in Latvia for a real estate development. The project is managed by Crowdestate and advised by a leading Estonian residential developer Hepsor OÜ.
The development project will include the purchase of a land plot and the construction of a residential building next to a park and a beautiful pond in the highly sought after Agenskalns neighborhood. In less than 24 hours, 769 investors from 23 countries all over the world participated in funding this project, reaching the record breaking amount of 950 000 euros.
The investment opportunity offers an IRR of 20.46% per annum.
On crowdestate.eu platform anyone can be an investor, with the minimum investment starting from 100 euros. The largest amount invested into the Saules Aleja 2A project was 30 000 euros and the average investment per investor was 1 297 euros.
Fellow Finance is a p2p lending marketplace in Finland. It started 2013 with loans to Finnish consumers, and later added Polish consumer loans and loans to Finnish SME’s. Since launch more than 100 million EUR in loans were funded.
I currently invest only in Finnish consumer loans and concentrate on 3 and 4 star loans for which the market rates are currently 13% and 15%. The Finnish consumer loans are covered by a buyback guarantee of 70%, meaning in case they are 90 days overdue, they will be sold for 70% of outstanding principal to a collection agency.
The market rates do fluctate sometimes at +/- 1%, and I felt it necessary to tweak the rate of my allocator then to keep it bidding (at the best possible rate). Fellow Finance is one of the very few platforms, where investors can configure the autoinvest to buy on the secondary market, but I have not used that.
Overall the website – which is available in english language – is good, only sometimes a tad slow to respond.
Last week, the National People’s Congress (NPC)and Chinese People’s Political Consultative Conference (CPPCC), the country’s top legislative and political advisory body, opened the 2017 sessions in Beijing.
And this year, “Fintech” was once again named as the top keywords of “Two Sessions”:
(15 Top Keywords of 2017: artificial intelligence, virtual reality, Internet+, sharing economy, blockchain, Fintech, content industry, Internet healthcare, automatic drive, platform era, innovation, institutional improvement for internet, information safety, digital economy and smart city)
Ping An Bank is planning to provide third party depository service for P2P online lending platforms.
Here are some main points of the measures:
Actual controllers of P2P online lending platforms must be government, large state-owned enterprises, main-board listed companies, small and medium enterprise board listed companies, or financial institutions with licenses from China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission or Ministry of Human Resources and Social Security;
Platforms must be in operation for more than a year without any negative press reports, and monthly turnover should exceed 100 million yuan;
Platforms should market their depository cooperation with Ping An Bank truly and objectively;
On March 2nd, Wanda Group and China UnionPay officially announced a strategic co-operation. The two sides will develop cutting-edge financial technology to promote the application of intelligent transaction and smart service in commercial scenarios.
On March 2nd, Fintech platform Xiaoying Financial secured 1 billion yuan in Series B funding. The new investors include Suzhou Goldmantis Group, the Industrial Fund of Jinke Entertainment, Shanghai Urban Real Estate Holdings Company, Bo Nian Kang Health Management Group and more.
On March 2nd, prepaid card company Jiangsu Ruixiang announced it had ceased cooperation with more than 50 Lotte Mart stores in Jiangsu provinces.
The Monetary Authority of Singapore (MAS) and the Abu Dhabi Global Market (ADGM) have signed a cooperation agreement to develop and nurture Fintech innovations and entrepreneurs in both countries.
Dubai is certain to benefit from the agreement with Singapore, the latter arguably established as Asia’s and one of the world’s leading Fintech hubs.
Notably, the two authorities will also collaborate on projects that explore the possibility of technologies such as blockchain and distributed ledger technology (DLT), digital and mobile payments, big data and more.
First to be introduced and gained traction in the United States and Europe, this method called peer-to-peer or ‘person-to-person’ (P2P) lending paves the way to democratize the lending while keeping it credible and very secure.
There are less requirements needed compared to the traditional money-lending process. What attracts the borrowers are the low interest rates and the minimal requirements, while the convenience and safety attracts the lenders.
Carilend Ltd officially launched its peer-to-peer (P2P) lending website last week, introducing a process that matches lenders (who can lend from $2 500 up in $25 increments) directly with borrowers (who can borrow from $2 500 to $50 000 in $25 increments, subject to credit referencing and scoring).
Carilend officials said theirs was the first P2P lending site in the Caribbean “aiming to bring together borrowers and lenders to give a better deal and a better experience to both”.
